Research And Development And Option Agreement

Exhibit 10.8


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


[West Pharmaceutical Services LOGO]


WEST PHARMACEUTICAL SERVICES, INC.


And its wholly owned subsidiary


WEST PHARMACEUTICAL SERVICES DRUG DELIVERY
& CLINICAL RESEARCH CENTRE LTD.


and


INNOVATIVE DRUG DELIVERY SYSTEMS, INC.


RESEARCH AND DEVELOPMENT AND OPTION
AGREEMENT


(Nasal Fentanyl)


Dated October 24, 2000


RESEARCH AND DEVELOPMENT AND OPTION AGREEMENT


THIS IS A RESEARCH AND DEVELOPMENT AND OPTION AGREEMENT (the "Agreement"), dated as of October 24, 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


West (directly and through its subsidiaries, including West/Nottingham) is engaged in, among other things, the research and development of delivering pharmaceutical compounds using its patented and proprietary drug-delivery technology. West/Nottingham is the owner of the entire right, title and interest in certain issued letters patent and pending patent applications relating to the use of chitosan for the transmucosal delivery of pharmaceutical compounds, including the delivery of morphine via the nasal mucosa. West, West/Nottingham and IDDS have entered into a License Agreement as of August 25, 2000 (the "License Agreement") under which West and West/Nottingham have granted IDDS an exclusive worldwide license to make, use and sell products including fentanyl covered by such patents for the treatment of pain in humans and animals.


IDDS desires that the West Group to perform certain work for the development of a product for administering fentanyl via the nasal mucosa, and to itself 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 fentanyl 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 fentanyl,
including all continuations, continuations-in-part,
divisionals, reissues and reexaminations thereof.


1.12. "Licensed Product" means fentanyl 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.


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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.


1.14. "NLPT Securities" means equity securities of IDDS or an
Affiliate 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.


1.20. Successful Completion" means, with respect to a Phase I
clinical study, results that would be considered commercially
reasonable grounds for deciding to immediately proceed with
further Phase II or Phase III clinical studies.


2. Development Activities.


2.1. Conduct of Development Program; Condition to Commencement of
Work.


2.1.1. Each Party will undertake development of the Licensed
Product in accordance with a written Development
Program agreed to by the West Group, on the one hand,
and IDDS, on the other hand, as set forth in Exhibit
A hereto. The Development Program may be modified
only by written agreement of the Parties. Each Party
will make every reasonable effort to complete its
responsibilities under the Development Program within
the timetables set out therein but if some cause
beyond the reasonable control or foresight of such
Party shall interrupt the progress of the Development
Program then the other Parties shall allow a
reasonable additional period of time to complete the
Development Program.


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2.1.2. IDDS need not commence development work on a Licensed
Product containing fentanyl and chitosan until the
FDA allows (by way of a pre-Phase III meeting or
otherwise) the commencement of Phase III clinical
studies with respect to a product containing opioid
alkaloid morphine and/or a salt thereof and chitosan.


2.2. Project Team.


2.2.1. Promptly following the Effective Date, the Parties
shall form a Project Team, which shall be chaired by
a representative of IDDS and include representatives
of West and West/Nottingham. The Project Team shall
initially consist of those Persons listed on Schedule
A hereto.


2.2.2. The purpose of the Project Team shall be to manage
the Development Program. The Project Team shall meet
monthly. Meetings may be held either in person or by
tele-conference or video-conference. The West Group
or IDDS, as applicable, shall prepare and circulate
written progress summaries of the Development Program
for the Project Team prior to each meeting, in such
form, content and detail as reasonably required by
the Project Team.


2.3. Payments for Development Work.


2.3.1. IDDS shall pay to West the costs of the Development
Program work performed by or for West in the amounts
and according to the timetable as set forth in
Exhibit A. The Parties acknowledge that such cost may
vary by up to 10%, and West may revise any such
amount up or down by up to 10% by showing reasonable
justification therefor.


2.3.2. IDDS shall have the right to select alternative
suppliers should West be unable to provide
competitive cost bids on any or all subprojects
listed in Exhibit A.


2.3.3. IDDS shall have the right to select alternative
suppliers should West be unable complete any
subprojects listed in Exhibit A within a reasonable
projected timeframe.


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2.3.4. Payment Schedule. IDDS shall pay to West the costs
and fees for the subprojects listed in Exhibit A as
follows:


(a) 40% of the total subproject cost upon order
to commence;


(b) 30% of the total subproject cost invoiced
monthly in evenly divided amounts over the
duration of the subproject; and


(c) 30% of the total subproject cost upon
completion of the subproject.


(d) Other than payments due upon order, payments
shall be due upon invoicing.


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


2.4.1. IDDS shall perform the work set forth in and in
accordance with the Development Program.


2.4.2. Diligently perform all activities necessary or
appropriate to obtain and maintain in full force and
effect Regulatory Agency approval in the U.S. and
each Major Market Country for the marketing of the
Licensed Product in the Field of Use; provided, that
IDDS shall not be 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.


2.4.3. 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, and


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