EXHIBIT 10.28

                       MPSS TECHNOLOGY SERVICES AGREEMENT



         THIS MPSS TECHNOLOGY  SERVICES  AGREEMENT (the "Agreement") is made and
entered into as of October 23, 1996 (the "Effective Date") by LYNX THERAPEUTICS,
INC.,  a  Delaware  corporation  ("Lynx"),   and  BASF   AKTIENGESELLSCHAFT,   a
corporation organized under the laws of Germany ("BASF").

                                    RECITALS

         WHEREAS,  Lynx  owns  certain  inventions,   methods  and  intellectual
property relating to a novel technique for determining cDNA sequence information
from a sample; and

         WHEREAS,  Lynx  is  commercializing  such  techniques  for  use  in the
analysis of cDNA libraries for research and commercial purposes; and

         WHEREAS,  BASF  desires  to secure  access to Lynx's  library  analysis
capabilities  and  services  on the terms set forth  herein  and is  willing  to
provide financial support for Lynx's development work;

         NOW  THEREFORE,  in  consideration  of the  foregoing  premises and the
covenants and promises contained in this Agreement,  the parties hereto agree as
follows:

1.       DEFINITIONS

         Capitalized  terms  use in  this  Agreement  shall  have  the  meanings
ascribed to them in the following  sections of this Article 1, unless  otherwise
defined in this Agreement.

         1.1 "Affiliate" means a corporation, partnership, entity, person, firm,
company, or joint venture that controls, is controlled by or is under the common
control with the referenced  Party. For the purposes of this definition the word
"control" (including, with correlative meaning, the terms "controlled by" or "is
under the common control with") means the power to direct or cause the direction
of the management and policies of such entity, or the ownership of a least fifty
percent (50%) of the voting stock of such entity;  provided,  however,  that, if
the applicable law of the  jurisdiction of organization of such entity prohibits
ownership by a Party of fifty percent (50%) or more,  then "control"  shall mean
the  ownership  of the  maximum  percentage  of the voting  stock of such entity
allowed by such applicable law.

         1.2  "Massively  Parallel  Signature  Sequencing"  or "MPSS"  means the
parallel  acquisition  of at  least  [REDACT]  contiguous  bases  (a  "Signature
Sequence")  from each of at least [REDACT]  templates  sampled from a given cell
culture or tissue cDNA library.

CONFIDENTIAL TREATMENT REQUESTED

<PAGE>


         1.3  "Milestone"  means  the  achievement  by  Lynx  of  the  technical
parameters  with  respect  to MPSS  performance  that are set forth in Exhibit A
hereto.

         1.4 "MPSS Library  Analysis"  means a report  containing  each [REDACT]
base  sequence  and its  abundance  within the  [REDACT] or more cDNA  templates
extracted from a given sample.

2.       LYNX MPSS SERVICES

         2.1 Access Fee. In consideration  of Lynx's  commitment to provide BASF
with the  services  hereinafter  described,  BASF agrees to pay to Lynx five and
one-half  million  U.S.  dollars  ($5,500,000)  within  thirty  (30) days of the
Effective Date (the "Initial  Payment").  BASF shall pay Lynx an additional five
and one-half  million U.S.  dollars  ($5,500,000)  within thirty (30) days after
Lynx  notifies  BASF that the Milestone has been achieved and provides BASF with
the data demonstrating  achievement of such milestone (the "Milestone Payment").
The  obligations  of BASF to make such  additional  payment  and any  subsequent
payments  under this  Agreement  shall  only come into  effect if the patent due
diligence of BASF does not reveal by January 15, 1997 that Lynx could be blocked
from  performing  MPSS Library  Analyses in the United  States.  If such payment
obligations  do not come into effect due to the  foregoing,  then this Agreement
shall terminate on January 15, 1997.

         2.2 Initial  Subscription  Period.  Within  thirty (30) days after BASF
delivers to Lynx the Milestone  Payment  required  under Section 2.1, BASF shall
make a payment to Lynx of four million U.S.  dollars  ($4,000,000) in respect of
MPSS  analysis  services  to be  provided  during  the first  half of an initial
subscription period (the "First Subscription Payment"). On the first anniversary
of the  commencement  of the  initial  subscription  period,  BASF shall make an
additional payment to Lynx of four million U.S. dollars  ($4,000,000) in respect
of  the  MPSS  analysis  services  to  be  performed   hereunder.   The  initial
subscription period shall commence on the date the First Subscription Payment is
due, and shall terminate on the date that is twenty-four  (24) months after such
date. During such initial subscription period, BASF shall be entitled to receive
from Lynx,  without  further  charge,  MPSS Library  Analyses for up to [REDACT]
separate cDNA library samples  delivered to Lynx by BASF during such period.  In
addition,  during the same period,  BASF shall be entitled to order from Lynx up
to [REDACT]  additional  MPSS  Library  Analyses,  for which BASF shall pay Lynx
[REDACT]  per  additional  MPSS Library  Analysis.  If at the end of the initial
subscription  period,  BASF submits for MPSS  analysis  less than  [REDACT] cDNA
library  samples,  BASF may  submit the  balance,  but in any case not more than
[REDACT],  for analysis during the following 24 months [REDACT] (the "Carry Over
Period").

         2.3 Renewal of  Subscription.  BASF may, at its option and upon 30 days
prior written notice, elect to extend its subscription on the terms set forth in
Section  2.2 above for  additional  subsequent  one year  periods,  by making in
respect of each renewal period a payment to Lynx of [REDACT] prior to expiration
of the then  current  subscription  period.

CONFIDENTIAL TREATMENT REQUESTED

                                       2.
<PAGE>


Each renewal shall be subject to increases  annually to reflect increases in the
U.S.  Producer Price Index--All  Urban Producers  during the prior  subscription
period.  This Agreement shall expire at the end of the last subscription  period
paid for by BASF as provided  for in  Sections  2.2 and 2.3, if BASF fails to so
renew its subscription  for MPSS services for the subsequent  period as provided
in this Section 2.3.

         2.4 Informatics.  The parties  acknowledge that Lynx intends to develop
software to facilitate the analysis of data secured from MPSS Library  Analyses.
Lynx agrees that BASF may at its election obtain for its own use during the term
of this Agreement object copies of such software [REDACT].

         2.5 Ownership of Technology.  Subject to 2.7 below,  BASF  acknowledges
and  agrees  that  any  and  all  inventions   (patentable   or   unpatentable),
information,  know-how,  techniques,  methods,  materials  or  other  technology
developed, discovered or made by Lynx during the development work shall be owned
entirely by Lynx and shall be  disclosed  to BASF only to the extent Lynx elects
to do so. Lynx shall own and have the sole and exclusive  right to prosecute and
maintain all patents and patent applications covering any such technology.

         2.6 Access to Lynx Reference Data Base.  Lynx will build and maintain a
reference  data base  containing  MPSS  information  and data  derived from MPSS
analyses of a variety of reference tissue and cell types.  Lynx agrees that BASF
shall  have  access to this  reference  data base in order to  enable  BASF,  by
comparing  the results of MPSS Library  Analyses with data  generated  from MPSS
Library Analyses of pertinent  reference samples, to minimize the work that BASF
may need to do to validate data  obtained from its samples.  Lynx agrees to make
this  reference  data base  available  to BASF as it is built during the term of
this Agreement [REDACT] to BASF.

         2.7 BASF Intellectual Property.  BASF shall own the entire right, title
and interest in and to the cDNA libraries that it sends to Lynx for analysis and
the results of the MPSS  Library  Analyses of such  libraries  prepared for BASF
pursuant to this  Agreement.  Lynx agrees that it shall treat the  identity  and
nature  of such  cDNA  libraries  delivered  to Lynx by BASF  hereunder  and the
results of the related MPSS Library Analyses as the  "Confidential  Information"
of BASF  pursuant  to  Article  3  hereof.  Nevertheless,  BASF  agrees  to give
appropriate  credit to Lynx in any  scientific  publication of its research that
relies on such results.

3.       CONFIDENTIALITY

         3.1 Confidentiality.  All knowledge,  know-how, practices, processes or
other  information  (hereinafter  referred  to  as  "Confidential  Information")
disclosed  by one  party to the  other  (the  "Receiving  Party")  and  which is
designated in writing as Confidential  Information or, if disclosed  orally,  is
reduced to writing  within  thirty (30) days of  disclosure

CONFIDENTIAL TREATMENT REQUESTED

                                       3.
<PAGE>


and designated as Confidential Information,  shall be received and maintained by
such party in strict  confidence  and shall not be disclosed to any third party.
The Receiving Party shall not use said Confidential  Information for any purpose
other than those purposes  specified in this Agreement.  The Receiving Party may
disclose  Confidential  Information  for  the  purposes  of  this  Agreement  to
Affiliates,  employees  or  consultants  who are  obliged  to  comply  with this
confidentiality  provision.  This Section 3.1 shall survive for a period of five
(5) years from  expiration or termination of this Agreement.  The  nondisclosure
obligations  of this  Section  3.1 shall not apply to  Confidential  Information
which the  Receiving  Party can  establish by  competent  evidence (i) is in the
public domain prior or subsequent to disclosure  without breach by the Receiving
Party, (ii) was in the Receiving  Party's  possession at the time of disclosure,
(iii) is received by Receiving Party from a third party who has the lawful right
to disclose it or (iv) is disclosed as required by law or regulation or with the
written consent of the other party.

4.       TERM AND TERMINATION

         4.1 Term. This Agreement shall expire two years from the Effective Date
if the Milestone  has not been  achieved as of such date.  If such  milestone is
achieved before such date, this Agreement shall expire at the end of the initial
subscription period or the Carry Over Period both as provided for in Section 2.2
or, if the  subscription  period is renewed under Section 2.3, at the end of the
last subscription period to be paid for by BASF under Section 2.3.

         4.2 Termination for Material Breach. Each party shall have the right to
terminate this Agreement,  in addition to pursuing any remedies  available under
law or in equity,  upon sixty (60) days written notice to the other party if the
other party is in material breach of this Agreement.  Such termination shall not
be  effective  if the other party cures such  breach  within  sixty (60) days of
receiving written notice of breach; thirty (30) days where the alleged breach is
failure to pay money when due.

         4.3 Effect of Termination; Survival. Upon any expiration or termination
of this  Agreement,  BASF will pay to Lynx all amounts  that have been earned by
Lynx through the expiration or termination  date. Lynx will return any remaining
samples  provided by BASF,  supply BASF with any MPSS  Library  Analyses of BASF
samples  generated prior to the expiration or termination date, and, in the case
of  termination,  shall  return to BASF any  advance  payment to the extent such
advance payment was intended to serve as payment for services  subsequent to the
termination  date.  Section  3.1  shall  survive  for five (5)  years  following
expiration or termination  with respect to  Confidential  Information  disclosed
prior to expiration or termination.

                                       4.
<PAGE>


5.       REPRESENTATIONS AND WARRANTIES

         5.1  Lynx.  Lynx  hereby  represents  and  warrants  that  it has  full
corporate power and authority to enter into this Agreement,  that this Agreement
has been duly and validly  executed and delivered by it and constitutes a legal,
valid and binding obligation of Lynx,  enforceable in accordance with its terms.
Lynx  represents  and  warrants  that the "Initial  Payment"  made to Lynx under
Section 2.1 above shall be used to further develop, refine, and improve the MPSS
and related technologies, capabilities, and methods.

         5.2  BASF.  BASF  hereby  represents  and  warrants  that  it has  full
corporate power and authority to enter into this Agreement,  that this Agreement
has been duly and validly  executed and delivered by it and constitutes a legal,
valid and binding obligation of BASF, enforceable in accordance with its terms.

         5.3 Disclaimer.  All materials,  technology and  information  exchanged
between the parties or used in performing this Agreement is provided "as is" and
the party  providing or using such  technology  expressly  disclaims any and all
warranties of any kind,  express or implied,  including  without  limitation the
WARRANTIES  OF  DESIGN,  MERCHANTABILITY,  FITNESS  FOR  A  PARTICULAR  PURPOSE,
noninfringement of the intellectual  property rights of third parties or arising
from a course of dealing,  usage or trade  practices,  in all cases with respect
thereto.

6.       MISCELLANEOUS

         6.1  Assignment.  This  Agreement  may not be assigned by either  party
without the prior written consent of the other party, which consent shall not be
unreasonably  withheld,  provided,  however,  that either  party may assign this
Agreement  without such consent to any  Affiliate or to any  successor by way of
merger,  acquisition  or sale or transfer of  substantially  all of its business
assets to which this Agreement relates, in a manner such that the assignee shall
assume and be  responsible  for the  performance  and  observance of all of such
party's duties and  obligations  hereunder.  This Agreement will be binding upon
and inure to the benefit of all permitted  successors and assigns of the parties
hereunder,  and the heirs and personal representatives of the individual parties
hereunder. The name of each party appearing herein will be deemed to include the
names of such party's  successors  and assigns to the extent  necessary to carry
out the intent of this Agreement.

         6.2  Amendment.  No  amendment,   modification  or  supplement  of  any
provision of the Agreement will be valid or effective unless made in writing and
signed by a duly authorized representative of each party.

         6.3 Waiver.  No  provision  of the  Agreement  (unless  such  provision
otherwise  provides) will be waived by any act, omission or knowledge of a party
or its agents or 

                                       5.
<PAGE>

employees  except by an instrument in writing  expressly  waiving such provision
and signed by a duly authorized representative or representatives of the waiving
party.

         6.4  Headings.  The  headings  for each  article  and  section  in this
Agreement  have been inserted for the  convenience of reference only and are not
intended  to limit or expand on the  meaning of the  language  contained  in the
particular article or section.

         6.5 Force  Majeure.  Any delays in  performance by any party under this
Agreement  shall  not be  considered  a breach of this  Agreement  if and to the
extent  caused  by  occurrences  beyond  the  reasonable  control  of the  party
affected,  including  but not  limited to acts of God,  embargoes,  governmental
restrictions,  strikes or other concerted acts of workers, failure of suppliers,
fire, flood, explosion,  earthquake,  riots, wars, civil disorder,  rebellion or
sabotage. The party suffering such occurrence shall immediately notify the other
party and any time for  performance  hereunder  shall be  extended by the actual
time of delay caused by the occurrence.

         6.6 Notices.  Any notices given pursuant to this Agreement  shall be in
writing and sent to the address below by one day delivery  service or by express
mail or facsimile (receipt  confirmed) and shall be deemed to have been properly
served to the addressee only upon receipt of such written communication. Notices
shall be delivered to the  respective  parties as  indicated  below,  or at such
other locations as such parties specify by like notice:

If to Lynx:

                  Lynx Therapeutics, Inc.
                  3832 Bay Center Place
                  Hayward, California  94545
                  Attn:  President



If to BASF:

                  BASF Aktiengesellschaft
                  Central Patent Department, Building C6
                  67056 Ludwigshafen, Germany
                  Attn:  Dr. Andreas Bieberbach

         6.7 Severability.  Whenever  possible,  each provision of the Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any  provision  of this  Agreement  is held to be  prohibited  by or
invalid under  applicable  law, such provision  will be ineffective  only to the
extent of such prohibition or invalidity,  without invalidating the remainder of
this Agreement.

                                       6.
<PAGE>

         6.8 Entire  Agreement of the Parties.  This Agreement  constitutes  and
contains the complete,  final and exclusive  understanding  and agreement of the
parties with respect to the subject matter hereof and cancels and supersedes any
and all  prior  negotiations,  correspondence,  understandings  and  agreements,
whether  oral or  written,  between the parties  respecting  the subject  matter
hereof.

         6.9 Governing Law. This Agreement shall be governed by and construed in
accordance  with the laws of the State of  California  as applied  to  contracts
entered into and to be performed in California,  without  reference to conflicts
of laws.  Each party hereby  consents to the  jurisdiction  of the courts of the
State of California and the Federal District Court for the Northern  District of
California for resolution of any disputes that arise hereunder.

         6.10  Withholding.  If required to do so by  applicable  law,  BASF may
withhold and pay over to the relevant tax authority any  withholding  tax due in
respect of  payments to Lynx  hereunder.  In the event any such  withholding  is
required,  the parties will  cooperate in preparing  and  delivering to such tax
authority  any  documentation  that may be  reasonably  necessary  to secure the
release  of such  withheld  monies  to  Lynx or to  enable  Lynx to  obtain  the
appropriate refund or credit in respect thereof.

         6.11  Counterparts.  This  Agreement  may be  executed in any number of
counterparts,  each of which  shall be an  original,  but all of which  together
shall constitute one instrument.

         IN  WITNESS  WHEREOF,  the  parties  hereto  have  duly  executed  this
Agreement as of the date first written above.

LYNX THERAPEUTICS, INC.                     BASF AKTIENGESELLSCHAFT



By:      /s/ Sam Eletr                      By:      /s/ H.J Quadbeck-Seeger
    --------------------------------              -----------------------------
         SAM ELETR, PH.D.

Title:                                      Title:
      ------------------------------              ------------------------------
         CHAIRMAN OF THE BOARD


                                       7.
<PAGE>


                                    EXHIBIT A

                                    MILESTONE

         The achievement of the Milestone will be demonstrated as follows:

         1. The  parties  will  jointly  select a cell  system  or cell  culture
suitable for this demonstration experiment.

         2. One portion of the cell culture  will be  "induced"  using an agreed
upon inducer, such as a [REDACT], for a specified period, such as [REDACT].

         3. Lynx will take [REDACT]  samples from the  "uninduced"  and [REDACT]
from the  "induced"  system or culture,  following  its internal  protocols  for
sampling.

         4. Lynx will extract the cDNA  contained  in each of the [REDACT]  such
samples, using its internal protocols for cDNA extraction.

         5. The cDNA extracted from each of the [REDACT] samples will be divided
into [REDACT] parts,  and a separate MPSS Library  Analysis will be conducted on
all of the resulting cDNA samples.

         6. If the data  generated  from all  [REDACT]  analyses  of each of the
[REDACT]  cultures  are  within the set  (induced  or  uninduced)  substantially
identical, but yet between the sets substantially different,  then the Milestone
has been achieved.

CONFIDENTIAL TREATMENT REQUESTED

                                       8.