Development Milestone And Option Agreement

Exhibit 10.6


[WEST PHARMACEUTICAL SERVICES LOGO]


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


WEST PHARMACEUTICAL SERVICES, INC.


And its wholly owned subsidiary


WEST PHARMACEUTICAL SERVICES DRUG DELIVERY
& CLINICAL RESEARCH CENTRE LTD.


And


INNOVATIVE DRUG DELIVERY SYSTEMS, INC.


--------------------------------------------------


DEVELOPMENT MILESTONE AND OPTION AGREEMENT


(Nasal Morphine)


--------------------------------------------------


Dated September 22, 2000


DEVELOPMENT MILESTONE AND OPTION AGREEMENT


THIS IS A DEVELOPMENT MILESTONE AND OPTION AGREEMENT (the "Agreement"), dated as of September 22, 2000 (the "Effective Date"), among West Pharmaceutical Services, Inc., a Pennsylvania corporation, ("West") with offices at 101 Gordon Drive, Lionville, PA, 19341, its wholly owned subsidiary West Pharmaceutical Services Drug Delivery & Clinical Research Centre Ltd., a corporation organized under the laws of England and Wales, ("West/Nottingham") with offices at Albert Einstein Centre, Nottingham Science & Technology Park, University Boulevard, Nottingham, NG7 2TN, United Kingdom (West and West/Nottingham collectively being referred to herein as the "West Group"); and Innovative Drug Delivery Systems, Inc., a Delaware corporation, ("IDDS") with offices located at 787 Seventh Avenue, New York, New York 10019.


Background


The West Group has completed pre-clinical development work for the development of a product for administering morphine via the nasal mucosa using its patented and proprietary delivery technology. The Parties have entered into a License Agreement as of August 25, 2000 (the "License Agreement") under which West and West/Nottingham have granted IDDS exclusive worldwide rights to exploit such technology to make, use and sell certain Identified Products, including morphine, for the treatment of pain in humans and animals.


IDDS desires to conduct further development work and to pay West certain milestone payments with respect thereto, and also desires to grant West an option to manufacture commercial quantities of the developed products, all on the terms and conditions set forth herein.


Agreement


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


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


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


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


1.3. "Development Program" means the program of work for the
development of the Licensed Product, including milestones to
be achieved, cost estimates, relevant time schedules, etc.,
attached hereto as "Exhibit A" and as modified from time to
time by written agreement of the Parties.


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


1.5. "Fair Market Value" means, with respect to NLPT Securities,
the average closing bid price as quoted by the Exchange for
the 20-Business Day period that commences on the 10th Business
Day immediately preceding the date of the event that triggers
the milestone payment and ends on the 10th Business Day
immediately following such date. As used herein, a "Business
Day" is a day on which banks and the Exchange are open for the
transaction of business in New York City.


1.6. "Field of Use" means the delivery of opium alkaloid morphine
and/or a salt thereof via the nasal mucosa to humans or
animals for the treatment of pain.


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


1.8. "IND" means an Investigational New Drug Application.


1.9. "Launch" means commencement of commercial sale of the Licensed
Product following receipt of all necessary Regulatory Agency
approvals


1.10. "Launch Date" means the date of the first such commercial sale
following the Launch.


1.11. "Licensed Patents" means the letters patent and letters patent
that may issue from patent applications listed in Schedule 1
of the License Agreement which relate to nasal morphine,
including all continuations, continuations-in-part,
divisionals, reissues and reexaminations thereof


1.12. "Licensed Product" means opium alkaloid morphine and/or a salt
thereof combined with chitosan or a chitosan derivative or
salt for administration to humans and animals via the nasal
mucosa and which is covered by one or more claims of the
Licensed Patents.


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


-2-


1.14. "NLPT Securities" means equity securities of IDDS or an
Affiliate of IDDS that are listed on any of the New York Stock
Exchange, NASDAQ National Market System, NASDAQ Small-Cap
Market or American Stock Exchange (each, an "Exchange") and
that meet the continuing listing requirements of such Exchange
at the time the securities are issued.


1.15. "NDA" means a New Drug Application in the U.S., or the
analogous process as defined in applicable laws and
regulations by which application is made with the appropriate
Regulatory Agency of a given country for approval to market a
drug in that country.


1.16. "Party" means a party to this Agreement.


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


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


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


2. Development Activities.


2.1. IDDS's Development and Commercialization Obligations. IDDS
shall, at its cost and expense, conduct the following
activities:


2.1.1. Perform the work set forth in and in accordance with
the Development Program in cooperation with West;


2.1.2. Diligently perform all activities necessary or
appropriate to obtain and maintain in full force and
effect Regulatory Agency approval in the U.S. and,
following U.S. approval, each Major Market Country
for the marketing of the Licensed Product in the
Field of Use; provided, that IDDS shall not We
required to pursue such Regulatory Agency approvals
in multiple Major Market Countries simultaneously and
IDDS may pursue such Regulatory Agency approvals in
such order as it decides consistent with a
commercially reasonable regulatory strategy;


-3-


2.1.3. At the earliest possible time, consistent with sound
scientific and business principles, file applications
for, and use its best commercial efforts to pursue
Regulatory Agency approval to sell, the Licensed
Product in each Major Market Country and, either
directly or through sublicensees under the License
Agreement, in other countries where a reasonable
market opportunity exists;


2.1.4. Use all reasonable commercial efforts to Launch the
Licensed Product within 90 days after receiving all
necessary approvals in each such country; and


2.1.5. Maintain in full force and effect one or more
policies of insurance providing continuous coverage
of all of its development activities (including
without limitation insurance covering clinical
trials) hereunder in such amounts and against such
risks as is customary by companies engaged in the
same or similar business and similarly located, and
shall, upon West's request, furnish evidence
reasonably satisfactory to West of such insurance.
IDDS shall use its best efforts to ensure that such
policies shall, at a minimum, provide for:


(a) no less than $*** professional clinical trial
insurance coverage, including products and
complete operations coverage; and


(b) no less than 30 days advance notice to West
from the insurer or broker of any change or
cancellation of such coverage.


2.2. West's Obligations.


2.2.1. West shall, at its cost and expense, reasonably
cooperate with IDDS and provide IDDS with such
...