GUARANTY

Exhibit 10.16

GUARANTY

THIS GUARANTY (“Guaranty”), dated as of September 5, 2007, is made by BioDelivery Sciences International, Inc., a Delaware corporation (“Guarantor”), in favor of QLT USA, Inc., a Delaware corporation (“Lender”).

WITNESSETH:

WHEREAS, Arius Two, Inc., a Delaware corporation and wholly-owned subsidiary of Guarantor (hereinafter referred to as the “Company” or “Borrower”), has promised to pay Lender $4,000,000 in accordance with the terms of the Intellectual Property Assignment Agreement dated September 5, 2007 between the Company and Lender (the “Transfer Agreement”) and the Secured Promissory Note dated September 5, 2007, executed by the Company in favor of Lender (the “Note” and together with the Transfer Agreement and the other Collateral Documents, the “Loan Documents”) in connection with the Transfer Agreement;

WHEREAS, in order to induce Lender to enter into the Transfer Agreement and extend credit to the Company, Guarantor has agreed to guarantee the indebtedness and other obligations of the Company to Lender; and

WHEREAS, Guarantor owns 100% of the outstanding stock of the Company and as such will derive direct and indirect economic benefits from the Transfer Agreement and the extension of credit to the Company;

NOW, THEREFORE, in consideration of the premises and the covenants hereinafter contained, and to induce Lender to enter into, and extend credit under, the Transfer Agreement, it is agreed as follows:

1. DEFINITIONS .

Capitalized terms used herein shall have the meanings assigned to them in the Transfer Agreement, unless otherwise defined herein.

“Collateral” shall have the meaning set forth in the Security Agreement.

“Collateral Documents” shall have the meaning set forth in the Security Agreement.

“Taxes” means any present and future taxes, levies, imposts, duties, fees, assessments, charges, deductions or withholdings and all liabilities with respect thereto, excluding income and franchise taxes (and any equivalents thereof) imposed on Guarantor.

References herein to this “Guaranty” shall mean this Guaranty, including all amendments, modifications and supplements and any annexes, exhibits and schedules to any of the foregoing, and shall refer to this Guaranty as the same may be in effect at the time such reference becomes operative.

2. THE GUARANTY .

2.1 Guaranty of Obligations of Borrower . Guarantor hereby unconditionally guarantees to Lender, and its respective successors, endorsees, transferees and assigns, the prompt payment (whether at stated maturity, by acceleration or otherwise) and performance of the obligations of Borrower to Lender under the Loan Documents (hereinafter the “ Obligations ”). Guarantor agrees that this Guaranty is a guaranty of payment and performance and not of collection, and that its obligations under this Guaranty shall be primary, absolute and unconditional, irrespective of, and unaffected by:

(a) the genuineness, validity, regularity, enforceability or any future amendment of, or change in this Guaranty, any other Loan Document or any other agreement, document or instrument to which any Person is a party thereto and/or Guarantor is or may become a party;

(b) the absence of any action to enforce this Guaranty or any other Loan Document or the waiver or consent by Lender with respect to any of the provisions thereof;

(c) the existence, value or condition of, or failure to perfect Lender’s lien against, any Collateral for the Obligations or any action, or the absence of any action, by Lender in respect thereof (including, without limitation, the release of any such security);

(d) the insolvency of Borrower; or

(e) any other action or circumstances which might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor other than payment and performance in full of the Obligations,

it being agreed by Guarantor that its obligations under this Guaranty shall not be discharged until the Obligations are paid in full (the “Termination Date”). Guarantor shall be regarded, and shall be in the same position, as Borrower with respect to the Obligations. Guarantor agrees that any notice or directive given at any time to Lender which is inconsistent with the waiver in the immediately preceding sentence shall be null and void and may be ignored by Lender, and, in addition, may not be pleaded or introduced as evidence in any litigation relating to this Guaranty for the reason that such pleading or introduction would be at variance with the written terms of this Guaranty, unless Lender has specifically agreed otherwise in writing. It is agreed among Guarantor and Lender that the foregoing waivers are of the essence of the transaction contemplated by the Loan Documents and that, but for this Guaranty and such waivers, Lender would decline to enter into the Loan Documents.

(f) Notwithstanding any provision to the contrary contained herein, in the Transfer Agreement or in any other of the Loan Documents, to the extent the obligations of Guarantor hereunder, or liens or security interests granted by Guarantor to secure its obligations hereunder shall be adjudicated (or would, but for the existence of this provision be adjudicated) to be invalid or unenforceable for any reason (including, without limitation, because of Section 548 of Chapter 11 of the Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent

Conveyance Act or similar statute or common law), then the obligations of Guarantor under this Guaranty and the right to recover proceeds from the enforcement of liens or security interests granted by Guarantor shall be limited to the maximum amount that is permissible under applicable law (whether federal or state and including, without limitation, the Bankruptcy Code).

2.2 Demand by Lender . In addition to the terms of the Guaranty set forth in Section 2.1 hereof, and in no manner imposing any limitation on such terms, it is expressly understood and agreed that, if, at any time, the outstanding principal amount of the Obligations under the Transfer Agreement and the Note (including all accrued interest thereon) is declared to be immediately due and payable, then Guarantor shall, upon notice of such acceleration, without further demand, pay to Lender the entire outstanding Obligations due and owing to Lender. Payment by Guarantor shall be made to Lender in immediately available funds to an account, designated by Lender or at the address set forth herein for the giving of notice to Lender or at any other address that may be specified in writing from time to time by Lender, and shall be credited and applied to the Obligations.

2.3 Enforcement of Guaranty . In no event shall Lender have any obligation (although it is entitled, at its option) to proceed against Borrower or any Collateral pledged to secure Obligations before seeking satisfaction from the Guarantor, and Lender may proceed, prior or subsequent to, or simultaneously with, the enforcement of Lender’s rights hereunder, to exercise any right or remedy which they may have against any Collateral, as a result of any lien it may have as security for all or any portion of the Obligations.

2.4 Waiver . In addition to the waivers contained in Section 2.1 hereof, Guarantor waives and agrees that it shall not at any time insist upon, plead or in any manner whatever claim or take the benefit or advantage of, any appraisal, valuation, stay, extension, marshaling of assets or redemption laws, or exemption, whether now or at any time hereafter in force, which may delay, prevent or otherwise affect the performance by Guarantor of its obligations under, or the enforcement by Lender of, this Guaranty. Guarantor hereby waives diligence, presentment and demand (whether for non-payment or protest or of acceptance, maturity, extension of time, change in nature or form of the obligations, acceptance of further security, release of further security, composition or agreement arrived at as to the amount of, or the terms of, the obligations, notice of adverse change in Borrower’s financial condition or any other fact which might increase the risk to Guarantor) with respect to any of the obligations or all other demands whatsoever and waives the benefit of all provisions of law which are in conflict with the terms of this Guaranty. Guarantor represents, warrants and agrees that, as of the date of this Guaranty, its obligations under this Guaranty are not subject to any offsets or defenses against Lender or Borrower of any kind. Guarantor further agrees that its obligations under this Guaranty shall not be subject to any counterclaims, offsets or defenses against Lender or against Borrower of any kind which may arise in the future.

2.5 Benefit of Guaranty . The provisions of this Guaranty are for the benefit of Lender and its respective successors, transferees, endorsees and assigns, and nothing herein contained shall impair, as between Borrower and Lender, the obligations of Borrower under the Loan Documents. In the event all or any part of the Obligations are transferred, endorsed or

assigned by Lender to any Person or Persons, any reference to “Lender” herein shall be deemed to refer equally to such Person or Persons.

2.6 Modification of Obligations, Etc . Guarantor hereby acknowledges and agrees that Lender may, subject to the terms of the Transfer Agreement, Note, and other Collateral Documents, at any time or from time to time, with or without the consent of, or notice to, Guarantor:

(a) change or extend the manner, place or terms of payment of, or renew or alter all or any portion of, the Obligations;

(b) take any action under or in respect of the Loan Documents in the exercise of any remedy, power or privilege contained therein or available to it at law, equity or otherwise, or waive or refrain from exercising any such remedies, powers or privileges;

(c) amend or modify, in any man