September 10, 2003

Michael P. Duffy

Senior Vice President and Secretary

Point Therapeutics, Inc.

125 Summer Street

Boston, MA 02110

Engagement Agreement

Dear Mr. Duffy:

Reference is made to our recent discussions relating to a proposed private placement under Rule 506 of Regulation D of the Securities Act of 1933, as Amended (the Act) of securities of Point Therapeutics, Inc. (the Company) as hereinafter described. Based upon our discussions and representations which you have made to us describing the Company and its principals, the present and proposed business activities of the Company and the Companys operations and financial condition, Paramount Capital, Inc. (Paramount) hereby confirms in principle its interest in assisting the Company on a best efforts basis in connection with the private placement offering (the Offering) of the Companys securities upon the following basic terms and conditions:

1. The Company will offer to sell to persons who qualify as accredited investors as defined in Rule 501 of Regulation D promulgated under the Act up to 100 Units (the Maximum Offering), subject to the Companys right, in its sole discretion, to accept up to an additional 10 Units (the Over-allotment). Each Unit shall consist of (a) a number of shares of common stock of the Company, par value $0.01 per share (the Common Stock), determined by dividing $100,000 (the Unit Price) by the average of the closing sale price of the Common Stock as reported on the OTC Bulletin Board for the five Trading Days (as defined below) immediately preceding the closing of the Offering (the Per Share Price), (b) five year warrants (the Warrants) to purchase a number of shares of Common Stock equal to 50% of the Common Stock in a Unit at an exercise price equal to 133% of the Per Share Price. In no event shall the Per Share Price be greater than $2.00. A Trading Day shall mean any day on which shares of the Companys Common Stock are sold on the OTCBB. In the event that the average closing price for any 20 consecutive trading days is at least $5.00 (the Redemption Price), the Company shall be entitled to redeem the Warrants, or any of them, at a per Warrant redemption price of $0.01, by 30 business days written notice to the holder.

2. An escrow agent shall be designated by Paramount and the Company to hold subscriptions for the benefit of customers pending the closing of the Offering (the Closing), which is intended to occur on or before September 16, 2003, subject to extension by the Company for up to an additional 30 days (the date of any such closing is hereinafter referred to as the Closing Date).

3. (a) The Company will, as soon as practicable, but not later than 60 days after the Closing Date (the Outside Filing Date), (a) file a registration statement (the

Registration Statement) with respect to (i) the resale of the shares of Common Stock sold in the Offering, (ii) the resale of the shares of Common Stock issuable upon exercise of the Warrants sold in the Offering and (iii) the shares of Common Stock issuable upon exercise of Paramount Warrants (as defined below) with the Securities and Exchange Commission (the SEC) and use its best efforts to have such Registration Statement declared effective by the SEC prior to the date that is 90 days after the date on which the Registration Statement is filed (the Outside Effective Date) and (b) cause such Registration Statement to remain effective until such date as the holders of the securities have completed the distribution described in the Registration Statement or at such time that such shares are no longer, by reason of Rule 144(k) under the Act, required to be registered for the sale thereof by such holders.

(b) If the Registration Statement is not filed by the Filing Date, then the Company shall pay to the investors pro rata based on the amount of each such investors investment in cash an amount equal to 1% of the total gross proceeds received in the Offering for each week or fraction thereof that the Registration Statement remains unfiled.

(c) The Company shall bear registration expenses of the Registration Statement, including fees and expenses of a special counsel or other advisors to investors, not to exceed $10,000.

4. Pending the earlier of (a) completion or termination of the Offering, and (b) September 16, 2003, the Company agrees that it will not, directly or indirectly, through any officer, director, agent or otherwise, initiate, solicit, encourage, negotiate or discuss with any third party (including by way of furnishing non-public information concerning the Company or its businesses, assets or properties), or take any other action to facilitate any inquiries with respect to the making of, any proposal that constitutes or may reasonably be expected to lead to a possible private placement of its securities other than in connection with any corporate partnership. In addition, pending completion or termination of the Offering, the Company agrees that it will not dispose of any assets of the Company (including, without limitation, creating, suffering to exist or permitting the imposition of any liens) other than inventory in the ordinary course of business.

5. The Company shall obtain from its officers and directors, an agreement that, for a period of time commencing upon the date hereof and continuing until the Closing Date, they will not sell, assign or transfer any of their shares of the Companys securities without Paramounts prior written consent. Following the Closing Date, the Companys officers and directors will not sell more than five percent (5%) of their respective holdings until the earlier of (a) the date on which the SEC declares the Registration Statement effective and (b) 180 days from the Closing of the Offering, whichever is earlier.

6. Upon the Closing of each Investment (as defined below) in the Offering or during the 12 month period following the Closing or earlier termination of the Offering, the Company shall pay to Paramount cash commissions equal to seven percent (7%) of the aggregate value of such investment (the Cash Commissions) and three percent (3%) of the proceeds received by the Company upon the exercise of the Warrants if exercised within 12 months from the Closing, provided, however, that Paramount shall not receive the commissions described in

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