Document:

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                                                                   Exhibit 10.25

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          Confidential Materials omitted and filed separately with the
         SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
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SKYEPHARMA AG / CRITICAL THERAPEUTICS INC

                       DEVELOPMENT AND SCALE-UP AGREEMENT

This DEVELOPMENT AND SCALE-UP AGREEMENT (this "Agreement"), effective as of the
5th day of May 2004 entered into between CRITICAL THERAPEUTICS INC, a company
duly-organized and existing under the laws of the State of Delaware having a
place of business at 675 Massachusetts Avenue, Cambridge, Massachusetts 02139,
USA (hereinafter referred to as "CRITICAL THERAPEUTICS" or "CTI"), and JAGOTEC
AG, a Swiss company having its place of business at Eptingerstrasse 51, CH-4132
Muttenz, Switzerland (hereinafter referred to as "SKYEPHARMA"; CRITICAL
THERAPEUTICS and SKYEPHARMA hereinafter sometimes referred to individually as a
"Party" or collectively the "Parties").

                                   WITNESSETH:

WHEREAS, CRITICAL THERAPEUTICS is a company in the business of developing and
distributing pharmaceutical products, including the Product (as defined below);
and

WHEREAS, CRITICAL THERAPEUTICS is interested to have SKYEPHARMA (i) adapt and
scale-up the Manufacturing Instructions (as defined below) for regulatory and
commercial purposes in the Territories, (ii) to take delivery of the Formulation
(as defined below) and the Manufacturing Instructions from Abbott (as defined
below), and (iii) to manufacture clinical trial material and to produce all
necessary registration batches, all pursuant to the terms and conditions of this
Agreement; and

WHEREAS, SKYEPHARMA through its Affiliates (as defined below) has expertise and
capacities in performing the foregoing activities, all pursuant to the terms of
this Agreement; and

WHEREAS, the Parties intend to negotiate and enter into a mutually agreeable
Manufacturing Agreement (as defined below), pursuant to which SKYEPHARMA may,
upon registration of Product in the Territories, manufacture and supply to
CRITICAL THERAPEUTICS and its marketing licensees Product for use, marketing,
distribution and sale in the Territories.

NOW, THEREFORE, for and in consideration of the premises, mutual covenants and
agreements contained herein, and intending to be legally bound hereby, the
Parties hereby agree as follows:

1.    DEFINITIONS

      For purposes of this Agreement, the terms defined in this Article 1 shall
      have the following meanings:

1.1   "ABBOTT" shall mean Abbott Laboratories of 100 Abbott Park road, Abbott
      Park, Illinois, 60064-3500, USA.

1.2   "ABBOTT LICENSE" shall mean the License Agreement dated March 19, 2004 by
      and between Abbott Laboratories and CTI.

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1.3   "ACTIVE INGREDIENT" shall mean the chemical compound known as Zileuton in
      a form meeting the specifications set forth in the Manufacturing
      Instructions and to be set forth in the Manufacturing Process.

1.4   "AFFILIATE" shall mean, with respect to either Party hereto, any
      corporation, partnership or other entity controlled by, controlling or
      under common control with, such Party, with "control" meaning direct or
      indirect beneficial ownership of more than 50% of the voting power of, or
      more than 50% of ownership interest in, such corporation, partnership or
      other entity.

1.5   "APPLICABLE LAWS" shall mean all applicable laws, rules, regulations,
      including, without limitation, any rules, regulations, guidelines or other
      requirements of any Regulatory Authority, that may be in effect from time
      to time in any country of the Territory and relating to the testing,
      manufacture, use, storage, import, promotion, marketing or sale of an
      ingredient, component or product.

1.6   "AUXILIARY MATERIALS" shall mean any and all materials, ingredients and
      components required and/or necessary for the manufacturing of the
      Formulation and/or the Product under and pursuant to the Manufacturing
      Instructions and the Manufacturing Process, respectively, except the
      Active Ingredient.

1.7   "BATCH" means 450 kilograms of the Product that is of uniform character
      and quality, within specified limits, and is produced during a single
      cycle of manufacture and is designated by a unique batch number.

1.8   "BATCH RECORDS" means the set of detailed manufacturing process
      instructions and data prepared to establish that a particular Batch has
      been manufactured according to cGMP.

1.9   "CGMP" shall mean the Current Good Manufacturing Practices as defined from
      time to time under the U.S. Federal Food, Drug and Cosmetic Act of 1938,
      the Public Health Service Act of 1944 and the regulations promulgated
      under that Act, as may be amended from time to time, and other Applicable
      Laws including the Current Good Manufacturing Practices set forth in 21
      C.F.R. 210 and 21 C.F.R. 211 and relevant FDA guidance documents; and to
      the extent applicable European Community Directive 91/356/EEC, Directive
      2001/20/EC, Directive 2001/83/EC and all relevant implementations of such
      directives and relevant guidelines including the EC Guidelines.

1.10  "CLINICAL SUPPLIES" shall have the meaning set forth in Section 4.1.

1.11  "COMMERCIAL SCALE" shall mean the manufacturing of Batches in conformance
      with all Applicable Laws and on a scale suitable for commercial
      manufacturing and supply as further described in the Manufacturing Process
      after scale-up by SKYEPHARMA pursuant to Article 3 of this Agreement.

1.12  "CONFIDENTIAL INFORMATION" shall have the meaning set forth in Section
      11.1 hereof.

1.13  "CONTROL" or "CONTROLLED" shall mean with respect to (a) any material,
      know-how or other information, or (b) intellectual property right, the
      possession (whether by license other than pursuant to this Agreement) or
      ownership by a Party or its Affiliates of the ability to grant to the
      other Party access and/or a license as provided herein without

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      violating the terms of any agreement or arrangement with any Third Party
      existing before or after the Effective Date.

1.14  "CHANGE IN CONTROL" shall mean with respect to a Party, (a) a merger or
      consolidation of such Party with a Third Party that results in the voting
      securities of such Party outstanding immediately prior thereto ceasing to
      represent at least fifty percent (50%) of the combined voting power of the
      surviving entity immediately after such merger or consolidation, or (b) a
      Third Party, together with its Affiliates, becoming the beneficial owner
      of fifty percent (50%) or more of the combined voting power of the
      outstanding securities of such Party, or (c) the sale or other transfer to
      a Third Party of all or substantially all of such Party's assets that
      relate to this Agreement.

1.15  "CTI INDEMNIFIABLE PERSONS" shall have the meaning set forth in Section
      10.7 hereof.

1.16  "DEVELOPMENT ACTIVITIES" shall have the meaning set forth in Section 2.1
      hereof.

1.17  "EFFECTIVE DATE" shall mean the date first written herein above.

1.18  "EQUIPMENT" shall have the meaning set forth in Section 4.3 hereof.

1.19  "FACILITY" shall have the meaning set forth in Section 4.3 hereof.

1.20  "FORMULATION" shall mean the composition of the galenical form that (i)
      was developed by Abbott prior to the Effective Date and licensed by Abbott
      to CTI pursuant to the Abbott License, (ii) contains Active Ingredient and
      (iii) was or is produced pursuant to the Manufacturing Instructions or the
      Manufacturing Process, as applicable.

1.21  "MANUFACTURING INSTRUCTIONS" shall mean the written instructions,
      specifications, formulae, procedures, tests, standards and other
      instructions for the manufacturing of Formulation as developed by Abbott
      prior to the Effective Date and made available by Abbott to CTI pursuant
      to the Abbott License and as prescribed in the NDA 20-471.

1.22  "MANUFACTURING PROCESS" shall mean the Manufacturing Instructions that are
      adapted and developed by SKYEPHARMA and approved by CRITICAL THERAPEUTICS
      pursuant to Section 3.5 of this Agreement and that contain information
      necessary for the manufacturing in compliance with all Applicable Laws of
      (i) the Formulation at manufacturing site of SKYEPHARMA's Affiliate or any
      other site selected by CRITICAL THERAPEUTICS at its sole discretion, and
      (ii) the Product on Commercial Scale in the Territories, as described and
      submitted in the request(s) of CRITICAL THERAPEUTICS for Registration of
      the Product to any applicable Regulatory Authority in the Territories.

1.23  "MANUFACTURING AGREEMENT" shall mean the Manufacturing & Supply Agreement
      entered into by the Parties at the appropriate time, it being understood
      that the Parties shall use their respective good faith efforts to
      negotiate and mutually finalize and execute such Manufacturing Agreement
      within six (6) months as from the execution of this Agreement.

1.24  "MARKETING APPROVAL" means the approvals issued by any Regulatory
      Authority in accordance with any procedures as may be required by
      Applicable Law to market the Product in the relevant country.

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1.25  "NDA BATCHES" shall mean all batches manufactured to comply with
      Applicable Laws for the registration to any regulatory authority,
      including without limitation the FDA and EMEA, and any successor agency
      thereof.

1.26  "NON-COMMERCIAL SUPPLIES" shall have the meaning set forth in Section 4.1
      hereof.

1.27  "PILOT SCALE" shall mean the manufacturing of Formulation pursuant to the
      Manufacturing Instructions existing as of the Effective Date on a scale
      equivalent to no less than one tenth (1/10) of the Commercial Scale.

1.28  "PRODUCT" shall mean the pharmaceutical formulation containing Active
      Ingredient manufactured and supplied hereunder by SKYEPHARMA in accordance
      with the Manufacturing Process, which has been approved by the Regulatory
      Authority of any of the Territories. For the avoidance of doubt, this will
      be an immediate release formulation and not a sustained or controlled
      release formulation.

1.29  "QUALITY AGREEMENT" shall mean a written agreement describing the
      obligations of the parties with regards to compliance, quality systems,
      and testing and Release of Product as may be required by Applicable Laws.

1.30  "REASONABLE COMMERCIAL EFFORTS" shall mean, with respect to the efforts to
      be expended by a Party with respect to any objective, reasonable, good
      faith efforts to accomplish such objective as such Party would normally
      use to accomplish a similar objective under similar circumstances, it
      being understood and agreed that with respect the development of a
      Formulation or Product, such efforts shall be similar to those efforts and
      resources commonly used by a Party for a similar pharmaceutical product
      owned by it or to which it has rights, which product is at a similar stage
      in its development or product life and is of similar market potential
      taking into account efficacy, safety, approved labeling, the
      competitiveness of alternative products in the marketplace, the patent and
      other proprietary position of the product, the likelihood of regulatory
      approval given the regulatory structure involved, the profitability of the
      product including the royalties payable to licensors of patent or
      intellectual property rights, alternative products and other relevant
      factors.

1.31  "REGISTRATION" means any and all technical, medical and scientific
      licenses, registrations, authorizations and/or approvals of the Product
      (including clinical research authorization, manufacturing approvals and
      authorizations, Marketing Approvals, manufacturing facility approvals or
      authorizations, and pricing, third party reimbursement and labeling
      approvals) that are required by any Agency for the manufacture,
      distribution, use or sale of the Product in any country, as amended or
      supplemented from time to time.

1.32  "REGULATORY AUTHORITY" shall mean any applicable supra-national, federal,
      national, regional, state, provincial or local regulatory agency,
      department, bureau or other governmental entity or authority in any
      country or group of countries of the Territories regulating or otherwise
      exercising authority over the testing, manufacture, use, storage, import,
      promotion, marketing, distribution or sale, and/or to approve the price,
      for pharmaceutical or therapeutic products in any country(ies) of the
      Territories, including, without limitation, the FDA and EMEA, and any
      successor agency thereof.

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1.33  "RELEASE" shall mean quality assurance review of all Manufacturing
      documentation related to a Batch, and confirmation that a particular Batch
      has been manufactured according to the Batch Records and cGMP, and meets
      all Specifications.

1.34  "SKYEPHARMA INDEMNIFIABLE PERSONS" shall have the meaning set forth in
      Section 10.5 hereof.

1.35  "SPECIFICATIONS" shall mean the performance parameters to which the
      Non-Commercial Supplies, ingredients and packaging components must comply
      to be considered acceptable including all written instructions,
      specifications, formulae procedures, tests and standards for the Product,
      including the requirements of all Registrations, as adopted pursuant to
      Section 4.2 or as amended or supplemented from time to time in accordance
      with Section 4.6.

1.36  "STABILITY TESTS" shall mean those tests necessary to establish the
      storage conditions and expiry date of the Product required by 21 C.F.R.
      211.137 and 21 C.F.R. 211.166 or any other Applicable Laws including Part
      I, Module 3 of Annex 1 to Directive 2001/83/EC.

1.37  "TECHNOLOGY TRANSFER PROGRAM" shall mean the program of activities to
      proposed to be performed by SKYEPHARMA hereunder, together with the
      respective time-table for such activities and the budget therefor, as
      attached hereto as Appendix A.

1.38  "TERRITORY" shall mean collectively each of (i) the European Union and
      (ii) the United States of America and (iii) any other country or group of
      countries mutually agreed upon by the Parties.

1.39  "THIRD PARTY" shall mean any person or entity other than a Party or any of
      its Affiliates.

2.    SUBJECT MATTER AND GRANT OF LICENSE

2.1   Subject Matter. Subject to the terms and conditions contained in this
      Agreement and its Appendices, SKYEPHARMA hereby agrees to use Reasonable
      Commercial Efforts to (i) adapt the current Manufacturing Instructions to
      comply with the Applicable Laws for use in the Territories, (ii) scale up
      the Manufacturing Instructions from Pilot Scale to Commercial Scale, (iii)
      amend, change and develop the Manufacturing Instructions to create the
      Manufacturing Process, and (v) develop the Manufacturing Process of
      Formulation at Commercial Scale, and (vi) subject to agreement between the
      parties on SKYEPHARMA carrying out the manufacture and supply of the
      Product, perform all work necessary to enable SKYEPHARMA to manufacture
      and supply Product in accordance with the Manufacturing Process and any
      terms and conditions later agreed to by the parties in the Manufacturing
      Agreement (collectively, the "DEVELOPMENT ACTIVITIES"). Subject to Section
      8.2 hereof, it is understood and agreed by CRITICAL THERAPEUTICS that any
      and all of the activities and obligations of SKYEPHARMA hereunder may be
      assigned to and performed by SKYEPHARMA's Affiliates SkyePharma AG,
      Muttenz, Switzerland, and SkyePharma SAS, Saint Quentin-Fallavier, France,
      without the consent of CRITICAL THERAPEUTICS, and subject to the condition
      that SKYEPHARMA's Affiliates shall assume in writing and comply with the
      all obligations as imposed upon

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      SKYEPHARMA in this Agreement and that SKYEPHARMA shall not be relieved of
      any of its obligations hereunder.

2.2   Technology Transfer.  CTI will provide SKYEPHARMA with access to the
      Manufacturing Instructions and the Formulation following the
      Effective Date.

2.3   Limited License. CRITICAL THERAPEUTICS hereby grants to SKYEPHARMA a
      personal, non-transferable, limited, non-exclusive royalty-free right and
      license without the right to sublicense (hereinafter referred to as the
      "LICENSE") under any of the intellectual or industrial property rights
      Controlled by CRITICAL THERAPEUTICS covering the Active Ingredient, the
      Formulation, the Manufacturing Instructions, the Manufacturing Process
      and/or the Product, solely to the extent necessary for SKYEPHARMA to
      perform, and solely for the purpose of performing, its obligations
      hereunder during the term of this Agreement.

3.    TECHNOLOGY TRANSFER ACTIVITIES

3.1   Development Activities. After the Effective Date and upon receipt of first
      sufficient quantity of Active Ingredient from CRITICAL THERAPEUTICS or its
      designated supplier pursuant to Section 3.2 below, SKYEPHARMA shall
      perform the Development Activities, all pursuant to and in accordance with
      the timetable and other requirements set forth in the Technology Transfer
      Program.

3.2   Supply of Active Ingredient. Promptly after the Effective Date, CRITICAL
      THERAPEUTICS or its designated supplier shall supply SKYEPHARMA or its
      Affiliate designated in accordance with this Agreement on a free-of-charge
      basis from time to time with reasonable quantities of Active Ingredient as
      necessary to perform the Technology Transfer Program in due time as
      described in Appendix A. All such supplies shall be accompanied by
      respective certificates of analysis and conformity. SKYEPHARMA shall use
      or have used all Active Ingredient supplied hereunder solely and
      exclusively in connection with the Technology Transfer Program as set
      forth herein, and all such materials shall be deemed to be the
      Confidential Information of CRITICAL THERAPEUTICS subject to the terms and
      conditions of Section 11 hereof.

3.3   Standard of Effort. SKYEPHARMA undertakes to perform all activities
      hereunder in an efficient, workmanlike and professional manner in
      accordance with all applicable industry standards and Applicable Laws.
      CRITICAL THERAPEUTICS shall use Reasonable Commercial Efforts to support
      SKYEPHARMA or its Affiliates in the performance of the Technology Transfer
      Program as may be reasonably required by SKYEPHARMA from time to time. In
      particular, CRITICAL THERAPEUTICS shall provide information reasonably
      requested by SKYEPHARMA relating to the Active Ingredient, the Formulation
      or the Manufacturing Instructions.

3.4   Reports. SKYEPHARMA shall keep CRITICAL THERAPEUTICS informed on a regular
      basis of the developments achieved under the Technology Transfer Program.

3.5   Delivery. On or before the delivery date set forth in the Technology
      Transfer Program, SKYEPHARMA shall propose to CRITICAL THERAPEUTICS the
      Manufacturing Process for review and acceptance in accordance with Section
      3.6 hereof.

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3.6   Acceptance. Each portion of the Manufacturing Process, and the
      Manufacturing Process as a whole, shall be subject to the review and
      approval of CRITICAL THERAPEUTICS such approval is not to be unreasonably
      withheld or delayed.

4.    MANUFACTURE OF NON-COMMERCIAL SUPPLIES

4.1   Non-Commercial Supplies. Upon acceptance by CRITICAL THERAPEUTICS of the
      Manufacturing Process in accordance with Section 3.6 hereof, and upon the
      written request of CRITICAL THERAPEUTICS, SKYEPHARMA shall use Reasonable
      Commercial Efforts to initiate the manufacture of such quantities of
      Product as CTI may reasonably require in connection with clinical studies
      ("CLINICAL SUPPLIES") and obtaining regulatory approval to market the
      Product in the Territory, including all NDA Batches (collectively, with
      the Clinical Supplies, the "NON-COMMERCIAL SUPPLIES").

4.2   Specifications. Not less than three (3) months prior to the commencement
      of the manufacture of the Non-Commercial Supplies, the parties shall agree
      on the Specifications.

4.3   Manufacturing. CTI will give SKYEPHARMA not less than four (4) months
      prior written notice of its requirements for Non-Commercial Supplies and
      SKYEPHARMA shall supply the Non-Commercial Supplies as required by CTI by
      the delivery date(s) specified in CTI's written notice of its
      requirements. Any manufacture by SKYEPHARMA of Non-Commercial Supplies
      shall be in compliance with the (i) Specifications, (ii) any applicable
      Registrations and Quality Agreement, (iii) cGMP and all other Applicable
      Laws. SKYEPHARMA shall perform such manufacturing at a manufacturing site
      of SKYEPHARMA's Affiliate (the "FACILITY") that will also be suitable for
      the manufacture of the Product for commercial purposes under the
      Manufacturing Agreement. Further, all manufacturing, and in particular all
      aspects of implementation and validation of the Manufacturing Process,
      shall be carried out by SKYEPHARMA on equipment having the same design and
      operating principles (the "EQUIPMENT") as shall, subject to the agreement
      of the Manufacturing Agreement, be used by SKYEPHARMA or its Affiliate to
      manufacture Product for commercial purposes under the Manufacturing
      Agreement.

4.4   Best Efforts. SKYEPHARMA shall use Reasonable Commercial Efforts to
      perform its obligations under this Agreement (including, without
      limitation, the activities set forth in Appendix A) in compliance with the
      terms of the conditions of this Agreement, and those of Appendix A,
      including the time schedule and the costs specified therein. If, in spite
      of such efforts, SKYEPHARMA is unable to meet time limits specified in
      Appendix A hereto, then the Parties agree that they shall immediately
      inform each other of such problems or delays as are encountered or
      envisaged during the course of the Technology Transfer Program and shall
      discuss such problems and delays in order to agree on a mutually
      acceptable revision of the time limits set forth in Appendix A.

4.5   Regulatory Approvals. SkyePharma will obtain and maintain any regulatory
      approvals required by Applicable Laws to manufacture the Non-Commercial
      Supplies at the Facility and will ensure that the Facility and practices
      that shall be used in the performance of the manufacturing contemplated
      hereunder shall conform to the requirements of Applicable Laws, Batch
      Records and Specifications.

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4.6   Changes. SkyePharma may not change the Specifications in any respect
      without the prior written consent of CTI. CTI may amend the Specifications
      on giving SkyePharma not less than thirty (30) days notice of the proposed
      change if:

      (a)   the amendment is reasonably required for the purpose of complying
            with Applicable Laws in which event CTI shall pay to SkyePharma all
            additional reasonable direct costs and disbursements necessitated by
            such amendment as set out under Section 5.2.

      (b)   SkyePharma has given its prior written consent to the amendment.

4.7   Delivery. SkyePharma will deliver to CTI or its designee the
      Non-Commercial Supplies in bulk, EX (Incoterms 2000) the Facility.

4.8   Commercial Manufacturing. The manufacture of commercial supplies of the
      Product shall be subject to a separate Manufacturing Agreement, the terms
      and conditions of which shall be negotiated in good faith by the parties.
      If there is any conflict between the terms and conditions of this
      Agreement and the terms and conditions of the Manufacturing Agreement, the
      terms and conditions of the Manufacturing Agreement shall prevail.

5.    FINANCIAL TERMS

5.1   Pricing. CRITICAL THERAPEUTICS shall pay to SKYEPHARMA as consideration
      for its activities under this Article 3 and Article 4, and as set forth in
      the Technology Transfer Program (including, without limitation,
      SKYEPHARMA's supply to CTI of all Auxiliary Materials), as follows:

      (a)   An installment of USD 250,000 within three (3) business days after
            the Effective Date; and

      (b)   CTI will pay for all activities performed by SKYEPHARMA pursuant to
            Appendix A on the basis of the actual time spent by SKYEPHARMA
            providing services hereunder (excluding, without limitation, travel
            time, vacation, and sick time) [**]; provided, however, CTI shall
            have no obligation to pay any amount in excess of the amounts set
            forth in Appendix A hereto with respect to each cost line item
            identified in Appendix A ([**]) and SKYEPHARMA shall be under no
            obligation to carry out any such further work without the express
            prior written consent of CTI, at its sole discretion. At the end of
            each calendar month, SKYEPHARMA will submit an invoice to CTI
            detailing the time spent and reasonable expenses that were
            pre-approved in writing by CTI or otherwise specified in Appendix A
            and incurred in conducting its activities in the preceding calendar
            month, and CTI shall pay the amount due within 30 days of receipt of
            such invoice.

      (c)   SKYEPHARMA shall be solely responsible for all other costs incurred
            by SKYEPHARMA in the performance of its obligations hereunder,
            including, without limitation, travelling cost, and costs of
            components, Auxiliary Materials and other consumable supplies
            ordered by SKYEPHARMA during any period following the Effective
            Date, unless and to the extent that CTI expressly agrees in writing
            to Reimburse SKYEPHARMA for such costs.

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5.2   Additional Activities. In the event that SKYEPHARMA performs other and/or
      additional activities that are not set forth in this Agreement or in
      Appendix A hereto, and the parties mutually agree in writing that CRITICAL
      THERAPEUTICS shall pay for such other and/or additional activities in
      accordance with this Agreement, additional consideration for all such
      activities shall be payable by CRITICAL THERAPEUTICS to SKYEPHARMA and
      shall be calculated on the basis of [**] spent therefor plus reasonable
      out-of-pocket expenses that are pre-approved in writing by CRITICAL
      THERAPEUTICS incurred thereby; provided, however, that in the event such
      additional activities are required to be conducted due to reasons
      attributable to SKYEPHARMA's breach of this Agreement, or the negligence
      or willful misconduct of SKYEPHARMA, its Affiliates or any of their
      respective employees, contractors or agents, SKYEPHARMA shall perform such
      additional activities at its sole cost and expense.

6.    PRODUCTION OF BIO-BATCHES, VALIDATION AND STABILITY TESTING

6.1   Supply of Active Ingredient. The Parties agree that the provisions Section
      3.2 regarding supply of Active Ingredient from CRITICAL THERAPEUTICS to
      SKYEPHARMA shall apply also for the quantities of Active Ingredient
      required for the activities under this Article 6.

6.2   Delivery of NDA Batches. Subject to any changes in the time-schedule set
      forth in Appendix A or mutually agreed upon changes thereto, SKYEPHARMA
      shall deliver to CRITICAL THERAPEUTICS the NDA Batches as set forth in
      Task 15 of the Gantt Chart in Appendix A hereto (not to be used for
      Stability Testing by SKYEPHARMA) ex works SKYEPHARMA SAS' manufacturing
      facility in Saint Quentin-Fallavier, France (Incoterms 1990), or such
      other SKYEPHARMA Affiliate's manufacturing facility mutually agreed upon
      by the Parties, in bulk and packaged in suitable plastic drums as mutually
      agreed by the Parties, all in accordance with the time schedule contained
      in Appendix A.

6.3   Stability Testing. Promptly after manufacturing of each batch of
      Non-Commercial Supplies hereunder, SKYEPHARMA shall perform such Stability
      Testing meeting the requirements of cGMP, Applicable Laws, ICH Guidelines
      and Registration of Product by the Regulatory Authorities in any of the
      Territories.

6.4   Data. SKYEPHARMA shall provide CRITICAL THERAPEUTICS with copies of any
      data obtained from the Stability Testing as set forth in Task 19 of the
      Gantt chart in Appendix A hereto to be conducted pursuant to Appendix A
      within sixty (60) days after the completion of each such test and
      SKYEPHARMA further agrees to accept any inspection from any Regulatory
      Authority of any country of the Territory and to respond appropriately to
      their questions or requests.

7.    INTELLECTUAL PROPERTY

7.1   Ownership. All materials (including the Active Ingredient and the
      Formulation), information, know-how and products supplied by or on behalf
      of CRITICAL THERAPEUTICS to SKYEPHARMA in connection with this Agreement,
      as well as all Product produced by or on behalf of SKYEPHARMA hereunder
      shall be and remain the sole property of CRITICAL THERAPEUTICS. SKYEPHARMA
      shall, at its expense, store all Active Ingredient and Product (i) in an
      appropriate warehouse

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      under suitable conditions preventing deterioration, damage and theft of
      any such Active Ingredient and Product until delivered to CRITICAL
      THERAPEUTICS or any party designated by CRITICAL THERAPEUTICS, and (ii) in
      compliance with the Specifications, all Applicable Laws and the Quality
      Agreement (if any). SKYEPHARMA shall maintain appropriate and adequate
      insurance coverage against such deterioration, damage or theft risk at
      CRITICAL THERAPEUTICS's cost (to the extent only as coverage above the
      existing insurance cover of SKYEPHARMA is required due to inclusion of
      Active Ingredient and/or Product and then only as pre-approved in writing
      by CTI).

7.2   License. SKYEPHARMA hereby grants to CRITICAL THERAPEUTICS a
      non-exclusive, worldwide, fully paid-up and irrevocable right and license,
      with the right to sublicense, under the patents, copyrights, trade secrets
      and other intellectual and industrial property rights Controlled by
      SKYEPHARMA and its Affiliates, to develop, have developed, make, have
      made, use, have used, import, have imported, offer to sell, sell, have
      sold and otherwise exploit the Manufacturing Process and all other
      information, materials and data generated by SKYEPHARMA in the course of
      its performance of its obligations under this Agreement.

8.    TERM AND TERMINATION

8.1   Term. This Agreement shall enter into force upon the Effective Date and
      shall remain in force and effect until, and expire upon, the fulfillment
      or completion of all activities, payments and other obligations hereunder
      of either Party, respectively, unless earlier terminated by either Party
      in accordance with Section 8.2 below. In the event of expiration of this
      Agreement pursuant to this Section 8.1, or termination of this Agreement
      pursuant to Section 8.2, the Parties agree that Articles,7, 9, 10, 11, 12,
      13, 14, 15, 16 and 17 hereof shall survive such expiration or termination.

8.2   Termination. Notwithstanding anything contained in Section 8.1 above, and
      except as otherwise explicitly provided in this Agreement, this Agreement
      may be terminated at any time by giving written notice to that effect, as
      follows:

      (a)   by either Party after due consultation with the other Party, and
            with the consent of such other Party, such consent not to be
            unreasonably withheld if (i) any results achieved during the
            Stability Testing reasonably require the termination of the
            Technology Transfer Program, or (ii) if other technical, medical or
            scientific problems with respect to Formulation and/or Product
            encountered reasonably require the termination of the Technology
            Transfer Program, or (iii) if all applicable Regulatory Authorities
            finally reject Registration of Product or impose conditions on such
            Registration which would render the Product commercially,
            technically or scientifically not viable; or

      (b)   by either Party, if the other Party is in material default or in
            material breach of a term or provision hereof and such default or
            breach continues and, if curable, is not cured or remedied within
            thirty (30) days upon the other Party's written request to cure or
            remedy such default or breach; or

      (c)   by either Party, if the other Party becomes insolvent or goes into
            liquidation, voluntarily or otherwise, other than for the sole
            purpose of reorganization, or goes into bankruptcy or makes an
            assignment for the benefit of creditors, or in

                                                                              10
<PAGE>
SKYEPHARMA AG / CRITICAL THERAPEUTICS INC

            the event of a receiver being appointed of the other Party's
            property or parts thereof; or

      (d)   by either Party in the event of a Change of Control of the other
            Party; or

      (e)   by CTI, without cause, upon one hundred and twenty (120) days prior
            written notice to SKYEPHARMA.

9.    EFFECTS OF TERMINATION

9.1   No Compensation. In the event of the termination of this Agreement by
      either Party in accordance with Section 8.2 above, no compensation or
      indemnity shall be payable to or may be claimed by either Party from the
      other Party as a result of such expiration or termination. Notwithstanding
      the preceding sentence, termination of this Agreement by either Party in
      accordance with Section 8.2 above or otherwise shall not relieve the
      Parties of any obligation accruing prior to the effective date of such
      termination.

9.2   Termination of Limited License. In the event of any expiration or
      termination of this Agreement, the License granted under Section 2.3 above
      shall terminate and the rights granted to SKYEPHARMA under the License
      shall revert to CRITICAL THERAPEUTICS. SKYEPHARMA shall forthwith (i)
      cease to perform any activities hereunder, and (ii) return to CRITICAL
      THERAPEUTICS (or any other party designated by CRITICAL THERAPEUTICS) and
      at CRITICAL THERAPEUTICS's cost any and all Active Ingredient, all
      Confidential Information of CTI and all manufactured Formulation and
      Product not yet delivered.

9.3   No Prejudice. Except as otherwise explicitly provided in this Agreement or
      in the Manufacturing Agreement, nothing contained in Section 9.2 above
      shall in any way limit, and shall be without any prejudice to, any other
      rights or remedies which may be available to either Party.

10.   WARRANTY, INDEMNITY AND INSURANCE

10.1  Warranty. SKYEPHARMA represents and warrants to CTI that it shall perform
      all of its obligations under this Agreement in a professional and
      workmanlike manner, in strict compliance with all Applicable Laws, and in
      compliance with all applicable industry standards. SKYEPHARMA shall use
      only equipment, facilities and personnel suitable for the performance of
      its obligations hereunder.

10.2  Disclaimer. SKYEPHARMA does not assume any liability or give any
      representation or warranty, whether express or implied, for the
      completeness or accuracy of the Manufacturing Instructions provide by
      CRITICAL THERAPEUTICS to SKYEPHARMA.

10.3  Limitation of Liability. In no event shall SKYEPHARMA or CTI be held
      liable for any indirect, incidental, punitive or consequential damage or
      loss of profit or enterprise value whatsoever, however caused and under
      any theory of liability whether based in contract, warranty, tort
      (including without limitation, negligence), strict liability, statutory or
      otherwise, arising out of or in connection with this agreement even if the
      other party has been advised of the possibility of such damages.

                                                                              11
<PAGE>
SKYEPHARMA AG / CRITICAL THERAPEUTICS INC

10.4  Product Liability. SKYEPHARMA shall have no liability, including, without
      limitation, product liability, with respect to the use of any and all
      Formulation and/or Product delivered by SKYEPHARMA hereunder and the
      Active Ingredient contained in any such Formulation, and Product, except
      to the extent that any such damages or any loss resulting therefrom arises
      from the breach of this Agreement, negligence or willful misconduct by or
      of SKYEPHARMA, its Affiliates or any of its or their respective agents,
      contractors or employees.

10.5  CTI Indemnity. CRITICAL THERAPEUTICS shall defend, indemnify and hold
      SKYEPHARMA, its Affiliates and their respective officers, directors,
      shareholders, agents and employees (collectively the "SKYEPHARMA
      INDEMNIFIABLE PERSONS") harmless from and against any and all losses,
      liabilities, damages and expenses (including attorney's fees and cost)
      that any SKYEPHARMA Indemnifiable Person suffers as a result of any claim,
      demand, action or other proceeding by any third party arising from or
      relating to the use or application of any Formulation or Product and/or
      the Active Ingredient in accordance with this Agreement, except to the
      extent that any such losses, liabilities, damages and expenses arise from
      SKYEPHARMA's breach of this Agreement, or the negligence or willful
      misconduct of any SKYEPHARMA Indemnifiable Person.

10.6  CTI Insurance. CRITICAL THERAPEUTICS shall maintain, during the term of
      this Agreement and for a period of not less than two (2) years after its
      expiration or termination for whatever reason, comprehensive general
      liability insurance, including product liability insurance (which shall
      include but not be limited to cover with respect to its indemnification
      obligation contained in Section 10.5 above), in such amounts and cover as
      are customary and appropriate based upon standards prevailing in the
      industry at the time. Such insurance shall name SKYEPHARMA as a
      co-insured.

10.7  SKYEPHARMA Indemnity. SKYEPHARMA shall defend, indemnify and hold CRITICAL
      THERAPEUTICS, its Affiliates and their respective officers, directors,
      shareholders, agents and employees (collectively the "CTI INDEMNIFIABLE
      PERSONS") harmless from and against any and all losses, liabilities,
      damages and expenses (including attorney's fees and cost) that any CTI
      Indemnifiable Person suffers as a result of any claim, demand, action or
      other proceeding by any third party arising from or relating to the
      manufacturing, marketing, distribution or sale of the Formulation or
      Product and/or the Active Ingredient, except to the extent that any such
      losses, liabilities, damages and expenses arise from CTI's breach of this
      Agreement, or the negligence or willful misconduct by or of any CTI
      Indemnifiable Person.

10.8  SKYEPHARMA Insurance. SKYEPHARMA shall maintain, during the term of this
      Agreement and for a period of not less than two (2) years after its
      expiration or termination for what so ever reason, comprehensive general
      liability insurance, including product liability insurance, with respect
      to and covering its indemnification obligation contained in Section 10.7
      above, written on an occurrence basis with a combined single limit for
      bodily injury and property damage of not less than US$2,000,000.

11.   CONFIDENTIALITY

                                                                              12
<PAGE>
SKYEPHARMA AG / CRITICAL THERAPEUTICS INC

11.1  Confidential Information. SKYEPHARMA has disclosed to CRITICAL
      THERAPEUTICS prior to the Effective Date, and will during the term of this
      Agreement disclose to CRITICAL THERAPEUTICS, know-how and other
      proprietary, non-public information relating inter alia to formulation,
      scaling-up and manufacturing of pharmaceutical products. Likewise,
      CRITICAL THERAPEUTICS has disclosed to SKYEPHARMA prior to the Effective
      Date, and will during the term of this Agreement disclose to SKYEPHARMA,
      know-how and other proprietary, non-public information relating inter alia
      to the Active Ingredient and the manufacturing of products containing
      same, including the Manufacturing Instructions. All such confidential and
      proprietary information disclosed by either Party to the other Party is
      hereinafter referred to as the "CONFIDENTIAL INFORMATION". For purposes of
      this Agreement, the Active Ingredient, the Formulation, the Manufacturing
      Instructions, the Manufacturing Process, and all Records, data, and other
      information relating to any of the foregoing that are generated by
      SKYEPHARMA in the performance of its obligations hereunder shall be deemed
      to be the sole Confidential Information of CTI.

11.2  Duties. Either Party shall maintain in confidence all Confidential
      Information disclosed to it by the other Party and shall not use, disclose
      or grant or permit the use of the other Party's Confidential Information
      except on a need-to-know basis to its Affiliate(s) and their respective
      directors, officers, employees, agents, consultants, clinical
      investigators or other permitted contractors, to the extent such
      disclosure is reasonably necessary in connection with the activities of
      either Party and expressly authorized by this Agreement. To the extent
      that disclosure is authorized by this Agreement, prior to disclosure,
      either Party shall obtain agreement in writing of any such person to hold
      in confidence and not make use of the other Party's Confidential
      Information for any purpose other than authorized by this Agreement.
      Either Party shall notify the other Party promptly upon the discovery of
      the unauthorized use or disclosure of any such other Party's Confidential
      Information.

11.3  Limitations. The obligations of confidentiality and non-use contained in
      Section 11.2 above shall not apply to the extent that (a) the receiving
      Party (i) is required to disclose the other Party's information by law,
      regulation or order of a governmental agency or a court of competent
      jurisdiction, or (ii) is required to disclose the other Party's
      information to any Regulatory Authority for purposes of obtaining
      Registrations, provided in each case that such receiving Party shall give
      the other Party written notice thereof and sufficient opportunity to
      object to any disclosure or to request confidential treatment thereof, or
      (b) the receiving Party can demonstrate that (i) the disclosed information
      was public knowledge at the time of such disclosure to it, or thereafter
      became public knowledge, other than as a result of actions of such
      receiving Party, its directors, officers and employees in violation
      hereof; or (ii) the disclosed information was right-fully known by the
      receiving Party (as shown by its written records) prior to the date of
      disclosure to it by the other Party; or (iii) the disclosed information
      was developed by the receiving Party independently of any use of the other
      Party's Confidential Information as shown by its written records; or (iv)
      the disclosed information was legally provided to the receiving Party by a
      third party without any obligations of confidentiality to the other Party.

11.4  Term. The confidentiality obligations under this Article 11 shall be
      effective during the term of this Agreement and for a period of ten (10)
      years after the expiration or earlier termination hereof. Either Party
      shall be entitled to injunctive remedies and relief against the other
      Party and any third parties for any breach or threatened breach

                                                                              13
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SKYEPHARMA AG / CRITICAL THERAPEUTICS INC

      of the confidentiality obligations under this Article 11 with respect to
      such Party's Confidential Information.

12.   MISCELLANEOUS PROVISIONS

12.1  Entire Agreement. The terms, covenants, conditions and provisions
      contained in this Agreement, including the Appendices referred to herein,
      constitute the total and complete agreement of the Parties regarding the
      subject matter hereof and supersede all prior understandings and
      agreements hereto made, and there are no other representations,
      understandings or agreements relating to the subject matter hereof. Except
      as otherwise explicitly provided in this Agreement, the provisions of this
      Agreement may not be waived, altered, amended or repealed in whole or in
      part except by the written consent of both of the Parties to this
      Agreement.

12.2  Assignment. Other than to an Affiliate of either Party that is approved in
      advance in writing by the other Party, this Agreement may not be assigned
      or otherwise transferred, nor may any right or obligation hereunder be
      assigned or transferred by either Party without the prior written consent
      of the other Party; provided, however, that CTI shall be entitled to
      assign its rights under this Agreement to an Affiliate or in connection
      with the sale of all or substantially all of the business and assets of
      CTI to which the subject matter of this Agreement pertains. Any permitted
      assignee shall assume all obligations of its assignor under this Agreement
      or under the respective rights or obligations actually assigned.

12.3  Notices. Any consent, notice or report required or permitted to be given
      or made under this Agreement by one Party to the other shall be in English
      and in writing, delivered personally or by international courier service
      or by facsimile (promptly confirmed by personal delivery or international
      courier service) addressed to the other Party at its address indicated
      below, or to such other address as shall have been notified in writing to
      the sending Party by the receiving Party from time to time, and shall take
      effect upon receipt by the addressee.

      IF TO CTI:                        CRITICAL THERAPEUTICS INC

                                        675 Massachusetts Ave, 14th Floor
                                        Cambridge, MA02139
                                        att.: ______
                                        Fax No: ++__ _ ___ __ __

      IF TO SKYEPHARMA:                 SKYEPHARMA
                                        ZA de Chesnes Ouest
                                        55, rue du Montmurier
                                        38291 St Quentin Fallavier Cedex, France
                                        att.: Philippe Begue
                                        Fax No: ++33 4 74 95 21 65

12.4  Independent Contractors. It is expressly agreed that the Parties shall be
      independent contractors and that the relationship between the Parties
      shall not constitute a partnership, joint venture or agency. Neither Party
      shall have the authority to make any statements, representations or
      commitments of any kind, or to take any action, which shall be binding on
      the other Party, without the prior written consent of the other Party to
      do so.

                                                                              14
<PAGE>
SKYEPHARMA AG / CRITICAL THERAPEUTICS INC

12.5  Severability. Each Party hereby acknowledges that it does not intend to
      violate any public policy, statutory or common laws, rules, regulations,
      treaty or decision of any government agency or executive body thereof of
      any country or community or association of countries. Should one or more
      provisions of this Agreement be or become invalid, the Parties hereto
      shall substitute, by mutual consent, valid provisions for such invalid
      provisions which valid provisions in their economic effect are
      sufficiently similar to the invalid provisions that it can be reasonably
      assumed that the Parties would have entered into this Agreement with such
      valid provisions.

12.6  Force Majeure. Neither Party hereto shall be held liable or responsible to
      the other Party nor be deemed to have defaulted under or breached this
      Agreement for failure or delay in fulfilling or performing any term of
      this Agreement when such failure or delay is caused by or results from
      causes beyond the reasonable control of the affected Party 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 the other Party hereto;
      provided that such Party shall use its reasonable endeavours to overcome
      the force majeure event and resume its proper performance of its
      obligations under this Agreement.

12.7  Interest. In the event any undisputed amount due and payable under this
      Agreement is not paid by the due date, then the Party owing such amount
      shall pay to the other Party, without being requested, interest on the
      total outstanding amount at the rate equal to the London Interbank Offered
      Rate ("LIBOR"), as published by the Financial Times on the date that such
      payment falls due, increased by three percent (3%), in United States
      Dollars and adjusted on the first day of every calendar quarter.

12.8  Headings. The titles and headings used in this Agreement are intended for
      convenience only and shall not in any way affect the meaning or
      construction of any provision of this Agreement.

12.9  Waiver. The waiver by either Party hereto of any right hereunder or the
      failure to perform or of a breach by the 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.

13.   DISPUTE RESOLUTION AND ARBITRATION

13.1  In the event of any dispute arising between the Parties concerning this
      Agreement, either party may demand that the dispute be resolved by the
      parties' chief executive officers by notifying the other in writing. Such
      notice will set out the nature of the dispute and the party's position.
      The other party will within five (5) Business Days, submit a statement to
      the other setting out its position in relation to the dispute (the
      "Response"). The negotiations shall take place within ten (10) Business
      Days of the Response being served. If a dispute cannot be resolved within
      ten (10) Business Days of commencement of negotiations or the second party
      fails to serve a Response either party may instigate arbitration in
      accordance with Section 13.2.

13.2  Any dispute arising out of or in connection with this Agreement (including
      any question regarding its existence, validity or termination), which is
      not resolved pursuant to Section 13.1 shall be referred to and finally (in
      the absence of substantial

                                                                              15
<PAGE>
SKYEPHARMA AG / CRITICAL THERAPEUTICS INC

      irregularity) resolved by arbitration under the London Court of
      International Arbitration ("LCIA") Rules which are deemed to be
      incorporated by reference into this Section 13.2 and the following shall
      apply:

      (a)   the number of arbitrators in all disputes shall be three, one to be
            appointed by each of the Parties and the third arbitrator (who shall
            be the chairman of the arbitral proceedings) being appointed
            according to the LCIA Rules;

      (b)   the seat or legal place of arbitration shall be London; however, the
            location of arbitral proceedings may vary as the Parties agree from
            time to time;

      (c)   the Parties shall cooperate in good faith to expedite (to the
            maximum extent practicable) the conduct of any arbitral proceedings
            commenced under this Agreement;

      (d)   any award shall be final and binding on the Parties and shall be the
            exclusive remedy between the Parties regarding any claims,
            counterclaims, issues, disputes or accountings presented to the
            arbitral tribunal;

      (e)   the language to be used in the arbitral proceedings shall be
            English.

13.3  Notwithstanding anything contained in this Article 13, either Party may
      seek preliminary or injunctive measures or relief in any competent court
      having jurisdiction, including a temporary restraining order, preliminary
      injunction or other interim equitable relief concerning a dispute, either
      prior to or during the arbitration, if necessary to protect the interests
      of such party.

14.   APPLICABLE LAW

      The Parties hereto agree that this Agreement, all transactions executed
      hereunder and all relationships between the Parties in connection
      therewith shall be construed under and be governed by the laws of England
      and Wales without reference to the principles of conflict of laws thereof,
      and shall not be governed by the United Nations Convention on Contracts
      for the International Sale of Goods (the Vienna Convention of April 11,
      1980).

15.   THIRD PARTY RIGHTS

      This Agreement does not create any right enforceable by any person who is
      not a party, whether pursuant to the Contracts (Rights of Third Parties)
      Act 1999 or otherwise, except that:

      (a)   the rights under Sections 10.5 and 10.7 may be enforced by the
            parties referred to in those Sections subject to and in accordance
            with the terms of this Agreement and the Contracts (Rights of Third
            Parties) Act 1999; and

      (b)   a person who is the permitted successor to or assignee of the rights
            of a party is deemed to be a party to this Agreement and the rights
            of such successor or assignee shall, subject to and upon any
            succession or assignment permitted by this Agreement, be regulated
            by the terms of this Agreement.

                                                                              16
<PAGE>
SKYEPHARMA AG / CRITICAL THERAPEUTICS INC

      Notwithstanding that any term of this Agreement may be or become
      enforceable by a person who is not a party to it, the terms of this
      Agreement or any of them may be varied, amended or modified or this
      Agreement may be suspended, cancelled or terminated by agreement in
      writing between the parties or this Agreement may be rescinded, (in each
      case) without the consent of any such third party.

                                                                              17
<PAGE>
SKYEPHARMA AG / CRITICAL THERAPEUTICS INC

IN WITNESS WHEREOF, the Parties have executed this Agreement on the dates shown
below, effective as of the Effective Date.

Muttenz 7.5.04
___________________________                  JAGOTEC AG
(Place and Date)
                                 /s/ Francesco Patalano    /s/ Tessa Chapman
                                 _______________________   _____________________
                                 by:  Francesco Patalano   by:  Tessa Chapman
                                 its: Director             its: Director

Lexington 7/5/04
___________________________                   CRITICAL THERAPEUTICS INC
(Place and Date)
                                 /s/ Frank Thomas          /s/ Trevor Phillips
                                 _______________________   _____________________
                                 by:  Frank Thomas         by:  Trevor Phillips
                                 its: CFO                  its: COO

                                                                              18

<PAGE>
SKYEPHARMA AG / CRITICAL THERAPEUTICS INC                  DEVELOPMENT AGREEMENT
--------------------------------------------------------------------------------
                                   APPENDIX A

                                      [**]

                                                                              19<PAGE>
                                                                   EXHIBIT 10.26

March 30, 2004

Frank Thomas
12867 Wendover Drive
Plymouth, MI 48170

Dear Frank:

It is my pleasure to offer you the position of Chief Financial Officer at
Critical Therapeutics, Inc. (the "Company"). As you know, I am excited about the
contributions that I expect you will make to the success of the Company.
Accordingly, if you accept this offer, I would like us to agree that you could
start at Critical Therapeutics, Inc. on or before April 26, 2004 (the "Start
Date").

Duties and Extent of Service

As Chief Financial Officer, you will have responsibility for performing those
duties as are customary for, and are consistent with, such position, as well as
those duties as I may from time to time designate. You will report to me. As you
know, your employment will be contingent upon your agreeing to abide by the
rules, regulations, instructions, personnel practices, and policies of the
Company and any changes therein that the Company may adopt from time to time,
and your execution of the Company's standard Nondisclosure, Developments, and
Non-Competition Agreement.

Compensation

In consideration of your employment with the Company, the Company will pay you a
base starting salary of $215,000 per year, payable in accordance with the
Company's standard payroll practices. You will also be eligible for a
performance based annual bonus in accordance with the Company's current bonus
policy.

You will be entitled to three weeks paid vacation annually. You will also be
entitled to participate in such employee benefit plans and fringe benefits as
may be offered or made available by the Company to its employees.

We will help with your relocation expenses as follows: realtor fees, temporary
accommodations for up to six months, family visits to house search as agreed
upon, shipment of your belongings, closing costs, travel costs to and from your
existing home for up to six months. Your relocation expense reimbursement will
be grossed up.

Stock Options

At the first meeting of the Company's Board of Directors following your Start
Date, it is my intention that the Company will grant to you a stock option (the
"Option") under the

<PAGE>

Company's 2003 Equity Incentive Plan (the "Plan) to purchase an aggregate of
800,000 shares (the "Option Shares") of the Company's common stock, $0.001 par
value per share (the "Common Stock"), at an exercise price equal to the fair
market value of the Common Stock, as determined by the Board of Directors of the
Company on the date of the grant of the Option (the "Grant Date"). This offer is
contingent upon approval by the Board of Directors of your option grant
specifically. Promptly after the Grant Date, the Company and you will execute
and deliver to each other the Company's then standard form of stock option
agreement, evidencing the Option and the terms thereof. As you know, the Option
shall be subject to, and governed by, the terms and provisions of the Plan and
your stock option agreement.

Fifteen percent of your options will vest immediately and the remainder will
vest according to our current 4 year vesting schedule.

Nondisclosure, Developments and Non-Competition

As you know, prior to commencing, and as a condition to your employment with the
Company, all employees, including myself, are required to agree to sign a copy
of the Company's standard Nondisclosure, Developments, and Non-Competition
Agreement. I will be asking you to sign this agreement after you have accepted
the terms of this offer below and prior to or on your Start Date.

No Conflicting Obligation and Obligations

By accepting this offer letter, you represent and warrant that the performance
by you of any or all of the terms of this letter agreement and the performance
by you of your duties as an employee of the Company do not and will not breach
or contravene (i) any agreement or contract (including, without limitation, any
employment or consulting agreement, any agreement not to compete or any
confidentiality or nondisclosure agreement) to which you are or may become a
party on or at an time after the Start Date or (ii) any obligation you may
otherwise have under applicable law to any former employer or to any person to
whom you have provided, provide or will provide consulting services. You
acknowledge that the employment relationship between the Company and you is
at-will, and that the Company and you are each free to sever the employment
relationship at any time and for whatever reason.

Severance

If you are asked to leave your position for any reason other than cause, you
will be eligible for a severance benefit of one year's salary.

I trust that you find the terms as stated above acceptable. If so, I want to
express my level of enthusiasm in bringing you on-board to this exciting new
venture. I know that we will build a team capable of moving our technology
through the research and development process and into the market place, creating
substantial value at the same time. Your involvement as a member of this team is
a critical component of this anticipated success.

<PAGE>

Please acknowledge your acceptance of this offer and the terms of this letter
agreement by signing below and returning a copy to me.

Sincerely,

/s/ Paul Rubin

Paul Rubin, M.D.
Chief Executive Officer

I hereby acknowledge that I have had a full and adequate opportunity to read,
understand and discuss the terms and conditions contained in this letter
agreement prior to signing hereunder.

Date this 19th day of April, 2004

/s/ Frank E. Thomas
________________________
Frank Thomas

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