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                                                                  EXHIBIT 10.123

                           COMPOUND PURCHASE AGREEMENT

      THIS COMPOUND PURCHASE AGREEMENT (the "Agreement") is made and entered
into effective as of April 28, 2000 (the "Effective Date"), by and between AXYS
ADVANCED TECHNOLOGIES, INC., a Delaware corporation ("AAT"), and AXYS
PHARMACEUTICALS, INC., a Delaware corporation ("Axys"). AAT and Axys may be
referred to herein individually as a "Party" or, collectively, as the "Parties."

                                    RECITALS

      A.    AAT owns certain assets, technology, and intellectual property
relating to combinatorial chemistry and the synthesis of diverse chemistry
libraries using combinatorial techniques.

      B.    Axys desires to purchase from AAT quantities of certain compounds
synthesized by AAT using its combinatorial chemistry technology pursuant to its
obligations under existing contracts for use solely in Axys' drug discovery,
development and commercialization programs (but subject to the Limitation).

      C.    AAT is willing, pursuant to the following terms and conditions, to
synthesize and sell to Axys such compounds and the related protocols.

      NOW, THEREFORE, the Parties agree as follows:

1.    DEFINITIONS

The following capitalized terms shall have the meanings ascribed to such terms
in the following definitions when used in this Agreement.

      1.1   "AAT CONTRACTS" means the agreements set forth in Schedule 1.1
attached hereto.

      1.2   "AAT KNOW-HOW" means Information that is Controlled by AAT during
this Agreement and relates (a) to the Protocols or the Structural Databases, or
(b) otherwise to the structure or use of the Compounds or to making Compounds or
Derivatives, and is disclosed by AAT hereunder.

      1.3   "AAT PATENTS" means, with respect to a particular Compound or AAT
Know-How, all patents and patent applications Controlled by AAT that claim any
invention relating to such Compound or the manufacture or use thereof or to such
AAT Know-How, but provided that such inventions were made prior to the date such
Compound or AAT Know-How (as applicable) was disclosed to Axys.

      1.4   "AAT TECHNOLOGY" means the AAT Know-How and/or AAT Patents, or any
part or aspect thereof.


The Registrant has requested that portions of this exhibit be granted
confidential treatment.
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      1.5   "AFFILIATE" means, with respect to a particular Party, another
corporation, partnership or similar entity that controls, is controlled by or is
under common control with such Party, but in any case, only for the duration of
the period that such other corporation, partnership or similar entity controls,
is controlled by or is under common control with such Party. For the purposes of
the definition in this Section 1.3, the word "control" (including, with
correlative meaning, the terms "controlled by" or "under the common control
with") means the ownership of at least fifty percent (50%) of the voting stock
(or voting or membership interest, if not a corporation) of such entity. For the
purposes of clarification, it is the parties intent that if a corporation,
partnership or similar entity ceases to control, be controlled by or be under
common control with a particular Party, such entity shall, at the time such
control relationship ceases, cease to have any rights under this Agreement,
including, without limitation, any license rights granted pursuant to this
Agreement. Notwithstanding the foregoing, Axys and AAT shall be deemed not to be
Affiliates of each other.

      1.6   "ASSIGNMENT AGREEMENT" means the Technology Assignment and License
Agreement of even date herewith between Axys and AAT.

      1.7   "COLLABORATION EXCEPTION" has the same meaning as defined in the
Assignment Agreement.

      1.8   "COMBINATORIAL CHEMISTRY LIBRARY" means the aggregate of all the
physical samples of the Compounds in the Libraries provided to Axys hereunder.

      1.9   "COMPOUND" means any individual chemical compound, a physical sample
of which AAT provides to Axys under the terms of Article 2 of this Agreement.

      1.10  "COMPOUND INFORMATION" means, for the purposes of this Agreement,
any confidential or proprietary Information of AAT (or of another person which
has been entrusted to AAT) disclosed by AAT to Axys (pursuant to this
Agreement), including, without limitation, (a) the Protocols, (b) the AAT
Know-How, (c) the Structural Database and (d) any other Information of AAT (or
of another person which has been entrusted to AAT) relating to the Combinatorial
Chemistry Library that may be provided by AAT to Axys hereunder; provided, that
for the purposes of this Agreement, any Information which first becomes known to
or entrusted to AAT after the Effective Date shall not constitute Compound
Information unless it specifically pertains to the structure, manufacture or
activity of specific compounds within the Combinatorial Chemistry Library.

      1.11  "CONTROLLED" means, with respect to any material, Information or
intellectual property right, that AAT owns or has a license to such Information
or intellectual property right with the right to license such Information or
intellectual property right as provided herein without violating any agreement
with a third party.

      1.12  "DELIVERABLES" means the Combinatorial Chemistry Library, the
Libraries therein, the Compounds therein, the Protocols and Structural Databases
relating to such Libraries, and any other Compound Information (including
Compound Information which AAT may deliver to Axys specifically pertaining to
the structure or structure activity of such specific Compounds).


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      1.13  "DERIVATIVE" means a compound (other than a Compound) made by Axys
based upon the use of (a) Compound Information or (b) any Compound, or (c)
structure-activity Information relating to Compounds.

      1.14  "INFORMATION" means information and data of any type and in any
tangible or intangible form, including without limitation inventions, practices,
methods, techniques, specifications, formulations, formulae, knowledge,
know-how, skill, experience, test data, analytical and quality control data,
stability data, results of studies and patent and other legal information or
descriptions.

      1.15  "LIBRARY" means a collection of different compounds synthesized by
AAT (or its predecessor Axys) pursuant to the obligations under one or more of
the AAT Contracts, which 'compounds are related to each other by a common
Scaffold and the specific synthetic techniques that AAT used to make such group
of compounds.

      1.16  "LIMITATION" has the same meaning as in the Assignment Agreement.

      1.17  "MAKEUP PAYMENTS" means any and all payments made under Section
3.2(a), (b) and (c).

      1.18  "PROTOCOL" means a detailed set of combinatorial chemistry synthetic
methods and standard operating procedures designed to be used for synthesizing a
Library, in the form customarily prepared by AAT for its business.

      1.19  "SCAFFOLD" means the chemical substructure common to a set of
Compounds that are synthesized using a particular Protocol.

      1.20  "STRUCTURAL DATABASE" means a complete structural database for all
the Compounds in a particular Library, as delivered on CD/ROM as SD files, or
otherwise, in the form customarily prepared by AAT for its business.

 2.   SALE AND TRANSFER OF COMPOUND LIBRARIES

      2.1   NOTICE AND ELECTION TO PURCHASE COMPOUND LIBRARIES. With respect to
any Library that AAT first delivers to an AAT customer (or licensee) after the
Effective Date pursuant to its obligations under one or more AAT Contracts, AAT
shall give Axys written notice of the availability hereunder of such Library for
purchase by Axys (a "Notice of Availability") within thirty (30) days of AAT
first delivering to its customer such Library. Any such Notice of Availability
shall include the full description of the chemical structure of each compound in
such Library. Axys may elect, at any time before the later of April 30, 2003 or
six (6) months after the applicable Notice of Availability is received, to
purchase a six (6) micromole quantity of each (but not fewer than each) of the
compounds in such Library, together with the Protocols for such Library and the
Structural Database for such Library, pursuant to the purchase and delivery
terms of this Agreement, by providing AAT written notice of such election (a
"Purchase Election"). Each Purchase Election is irrevocable. In addition to the
foregoing rights, with any Notice of Availability delivered by AAT as provided
above, AAT may, at its discretion, offer to Axys that Axys purchase, in lieu of
the Library covered by such Notice of Availability, a different library of
compounds produced by AAT outside the scope of


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this Agreement. Any such offer shall also be deemed a "Notice of Availability"
regarding the compounds in such library for which AAT shall have the right to
elect to purchase such compounds by making a Purchase Election as provided
above. As to any such library of compounds for which Axys makes such Purchase
Election, such library shall be deemed to be a "Library" and such compounds
shall be deemed to be "Compounds" for all purposes hereunder.

      2.2   DELIVERY OF DELIVERABLES. Upon receiving from Axys a Purchase
Election with respect to a particular Library, AAT shall commence the delivery
to Axys of all the Compounds in such Library, and the Structural Database for
such Library and all Protocols relating to such Compounds (which are provided
for use subject to the licenses granted by AAT herein). The Compounds shall be
delivered in 96 well plates with an 88 well array format with approximately six
(6) micromoles of each Compound present in the shipment, or any other format
agreed to by the Parties. AAT shall complete the delivery of such Library and
other Deliverables to Axys within thirty (30) days of receipt of such Purchase
Election. Risk of loss for and title to the Compounds provided by AAT to Axys
under this Agreement shall pass from AAT to Axys upon delivery to a common
carrier F.O.B. AAT's factory. Each respective Library delivered to Axys
hereunder shall comply with the specifications set forth in the governing
specifications schedule of the applicable AAT Contract. AAT shall deliver a
certificate of analysis with each Library specifying the results of analysis to
show conformance with the specifications set forth in such governing
specifications schedule.

      2.3   USE OF DELIVERABLES BY AXYS. Axys covenants that it will not use,
and will not allow anyone else to use, the Deliverables, except as expressly
permitted by this Section 2.3. Axys and its Affiliates shall have the right to
use, within the scope of the Limitation and not otherwise, the Deliverables.
Axys and its Affiliates shall be permitted to disclose and sublicense use of the
Deliverables only (a) to one or more Collaboration partners of Axys or its
Affiliate solely for the performance of work within the Collaboration Exception
and not otherwise, and (b) to third party contractors for the performance of
work, within the scope of the Limitation and not otherwise on Axys' or its
Affiliate's behalf, in either case as part of Axys' or its Affiliate's internal
research and/or development work in the area of drug discovery, development and
commercialization (or within the scope of the Collaboration Exception) and
subject to appropriate written non-disclosure and limitation-of-use agreements.
Further, Axys or its Affiliate or permitted sublicensee may license, use, offer
for sale, sell, manufacture, have manufactured and otherwise market and
commercialize (a) any pharmaceutical or diagnostic products containing a
particular active Compound or Derivative, or (b) any such Compound or Derivative
in bulk material for use in manufacturing such pharmaceutical products. Axys,
its Affiliates and permitted third party sublicensees (as provided above in this
Section) may use the Information generated by the permitted uses of the
Deliverables for any purpose, subject only to the Non-Competition and
Non-Disclosure Agreement. Axys shall use reasonable efforts to cause the
compliance of each of its Affiliates and of its and their directors, officers,
employees, agents, consultants, contractors and collaborators with all such
restrictions regarding the Deliverables transferred or disclosed to such person.

      2.4   AXYS' RIGHT TO DERIVATIVES. Axys and its Affiliates shall have a
worldwide, royalty-free, irrevocable (except for uncured material breach by
Axys), non-exclusive right under the AAT Technology to synthesize and use
Derivatives within the scope of the Limitation and not otherwise, sublicenseable
and transferable to the same extent as described in Section 2.3 and


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not otherwise. Axys agrees, for itself and its Affiliates, not to synthesize or
use Derivatives except within the scope of the Limitation and not to sublicense
or transfer Derivatives except to the same extent described in Section 2.3.

      2.5   USE OF DELIVERABLES BY AAT. This Agreement shall not in any way
limit AAT's rights to use, disclose, license, transfer or sell to anyone the
Deliverables.

      2.6   RESUPPLY OF LIBRARY. Upon written request to AAT by Axys, AAT will
resupply any particular Library or Libraries (to the extent available in AAT
then-existing inventory) by supplying Axys all (but not less than all) the same
Compounds in the requested Library or Libraries, in the same format and same
quantities (or such lesser amounts as are available from AAT) as provided under
Section 2.2, and subject to the payments as set forth in Section 5.2.

      2.7   RESYNTHESIS AND SUPPLY OF COMPOUNDS. Upon written request to AAT by
Axys, AAT will negotiate in good faith with Axys the terms and conditions under
which AAT would resynthesize and supply to Axys any particular Compound(s).

      2.8   EXCEPTION. Notwithstanding any contrary term or provision of this
Agreement, it is understood and agreed that Axys shall have the right to use the
Deliverables and any Derivatives for the specific purposes of and for performing
its obligations under, and subject to the terms of, that certain agreement
between Axys and Cytovia, Inc., dated March 15, 2000.

3.    TAKE OR PAY OBLIGATIONS

      3.1   ANNUAL MINIMUMS.

            (a) Axys agrees to provide, on or before April 30, 2001, Purchase
Elections carrying an aggregate purchase price of no less than the First Year
Requirement (as defined below).

            (b) Axys separately agrees to provide, after April 30, 2001 and on
or before April 30, 2002, Purchase Elections carrying an aggregate purchase
price of no less than the Second Year Requirement (as defined below).

            (c) Axys separately agrees to provide, after April 30, 2002 and on
or before April 30, 2003, Purchase Elections carrying an aggregate purchase
price of no less than the difference of (i) the Total Price, minus (ii) the sum
of (A) the aggregate purchase price under all Purchase Elections delivered
before April 30, 2003, plus (B) the sum of any and all Makeup Payments.

            (d) The "First Year Requirement" is the lesser of (i) the product of
(A) the total number of Compounds in all Libraries for which a Notice of
Availability was delivered on or before April 1, 2001, times (B)         **
        , or (ii)         **        . The "Second Year Requirement" is the
lesser of (i) the product of (A) the total number of Compounds in all Libraries
for which a Notice of Availability was delivered after April 1, 2001 and on or
before April 1, 2002, times (B)         **        , or (ii)         **        .
The "Total Price" is the lesser of (A) product of (i) the total number of
Compounds in all libraries for which a Notice of Availability was delivered on
or before April 1, 2003, times (ii)         **        , and (B)         **     .


* Confidential treatment has been requested by the Registrant.


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      3.2   MAKEUP PAYMENTS.

            (a) If Axys fails to meet the minimums of Section 3.1(a), it shall
pay AAT before June 30, 2001 the excess of the First Year Requirement over the
aggregate purchase price in the Purchase Elections delivered on or before April
30, 2001.

            (b) If Axys fails to meet the minimums of Section 3.1(b), it shall
pay AAT before June 30, 2002 the excess of the Second Year Requirement over the
aggregate purchase price in the Purchase Elections delivered after April 30,
2001 and on or before April 30, 2002.

            (c) If Axys fails to meet the minimums of Section 3.1(c), it shall
pay AAT before June 30, 2003 the excess of the Total Price over the sum of (i)
the aggregate purchase price under all Purchase Elections delivered on or before
April 30, 2003, plus (ii) the sum of any and all payments made under Section
3.2(a) and (b).

            (d) Axys shall not be entitled to delivery of any Compounds or
Protocols or to any other consideration, in respect of the Makeup Payments,
except for the application in the formula in Section 3.2(c). Any payments made
to AAT pursuant to this Section 3.2 shall be the sole and exclusive remedy of
AAT for any failure of Axys to meet the requirements in Section 3.1.

4.    LICENSE AND LIMITATIONS

      4.1   LIMITED COMMERCIAL LICENSE. Subject to the terms of this Agreement
(including Section 2.3), AAT hereby grants Axys a limited, non-exclusive,
worldwide, perpetual (subject to termination under Article 9) license under the
AAT Technology for Axys and its Affiliates and permitted sublicensees to use,
practice and commercially exploit the AAT Technology within the scope of the
Limitation, and to use, import, offer for sale, sell and manufacture (a) any
pharmaceutical or diagnostic products containing a particular active Compound or
Derivative, or (b) any such Compound or Derivative in bulk material for use in
manufacturing such pharmaceutical or diagnostic products.

      4.2   LIMITATIONS. This Agreement shall not in any way limit AAT's rights
to use all its Deliverables, technology, Information and intellectual property
rights for its own purposes and to sell, license or disclose such Deliverables,
technology, Information and intellectual property rights to third parties
without restriction. This Agreement shall not in any way limit Axys' rights to
use for its own purposes and to sell, license or disclose to third parties
without restriction any compound that is discovered or synthesized by Axys or
its Affiliates completely independent of any activity permitted under this
Agreement and without use of or reliance on any Compound Information or other
Deliverables; however, certain such limits may be imposed under a
Non-Competition and Non-Disclosure Agreement between Axys and Discovery Partners
International, Inc.

5.    PAYMENT

      5.1   PAYMENT FOR COMPOUNDS. Axys shall pay AAT a purchase price for the
Compounds in a Library, and the Structural Database and Protocols for such
Library, delivered hereunder equal to         **         per Compound that AAT
delivers to Axys in compliance


* Confidential treatment has been requested by the Registrant.


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with the obligations of Section 2.2 of this Agreement. Axys shall make such
payment within thirty (30) days of receipt of an applicable invoice after
completion of shipment of the applicable Library and related Structural Database
and Protocols by AAT, subject to Axys' right to inspect each shipment and reject
non-conforming Deliverables within such thirty (30) day period. Any Deliverables
not rejected within such thirty (30) day period shall be deemed to have been
accepted.

      5.2   PAYMENT FOR COMPOUND RESUPPLY. Axys shall pay AAT a purchase price
for the resupply to Axys, under Section 2.6, of requested Compounds equal to
        **        per micromole of such Compounds that AAT delivers to Axys
under Section 2.6. Axys shall make such payment within thirty (30) days of
completion of shipment of the applicable Compounds; subject to Axys' right to
inspect each shipment and reject non-conforming Deliverables within such thirty
(30) day period. Any Deliverables not rejected within such thirty (30) day
period shall be deemed to have been accepted.

      5.3   BANK ACCOUNT. A11 payments payable by Axys to AAT under this
Agreement shall be made by wire transfer remittance to the bank account
designated by AAT.

      5.4   RELATED COSTS. Axys shall be responsible for payment of all shipping
or other transportation charges and insurance costs and any sales, transfer,
excise, export or other tax and of any customs tax or duties assessed on the
sale or transfer of such Compounds under the terms of this Agreement, but
excluding taxes based upon net income of AAT.

6.    INTELLECTUAL PROPERTY MATTERS

      6.1   OWNERSHIP. The sale to Axys of the Compounds hereunder does not
involve the sale or transfer of AAT intellectual property rights (if any)
relating thereto and relating to the other Deliverables, which AAT retains,
subject to a nonexclusive license right as expressly contemplated under Section
2.3 and Section 4.1. AAT shall own the entire right, title and interest in and
to any inventions and Information, and all intellectual property rights therein,
developed solely by employees or agents of AAT or its Affiliates in the course
of this Agreement. Axys shall own the entire right, title and interest in and to
any inventions and Information, and all intellectual property rights therein,
developed solely by employees or agents of Axys or its Affiliates in the course
of this Agreement.

      6.2   LIMITATION ON PATENT APPLICATIONS. If Axys or its Affiliate or
permitted sublicensee has both data indicative of efficacy of a particular
Compound or Derivative and a reasonable belief that it will develop and
commercialize such particular Compound or Derivative, Axys or its Affiliate or
permitted sublicensee may file and prosecute a patent application that
specifically claims the composition of matter and/or method of use of such
particular Compound. Except as provided in the preceding sentence, Axys agrees
(for Axys and its Affiliates) to use its good faith efforts to avoid filing or
prosecuting any patent applications that (a) specifically or generically claim
the composition of matter of any particular Compound and/or the method of use of
any Compound; provided that the foregoing shall not apply with respect to any
Compound having the same chemical structure as a chemical compound that is
discovered by Axys or its Affiliates completely independent of any activity
permitted under this Agreement and without use of or reliance on any Compound
Information or other Deliverables

* Confidential treatment has been requested by the Registrant.



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or (b) describes in the specifications, but does not claim, a particular
Compound; provided, that if such description is reasonably necessary to support
the claimed invention, then such description may be included in the
specification.

      6.3   LIMITED CROSS-LICENSE. Axys hereby grants to AAT a non-exclusive,
worldwide, perpetual (subject to termination by Axys under Section 9.2),
royalty-free license, with right to sublicense, under current and future issued
patents owned by Axys or its Affiliates and filed pursuant to Section 6.2, that
specifically or generically claim a Compound, but excluding from the foregoing
license: (i) any Axys patent claiming an invention comprising a Compound that is
discovered by Axys or its Affiliates completely independent of any activity
permitted under this Agreement and without use of or reliance on any AAT
Technology or other Compound Information or other Deliverables, and (ii) (for
the duration of such program as an actively pursued program) any license right
to use or sell, for any purpose other than screening or creating derivatives,
any Compound that Axys or its Affiliate or permitted sublicensee is actively
pursuing as a drug or other product with activity (such as a pesticide), such
active pursuit being demonstrated by an active and ongoing program of research
and development or marketing for which funds and personnel have been allocated.

      6.4   ENFORCEMENT OF PATENTS. If Axys becomes aware of any actions of a
third party that it considers infringing upon any AAT Patent, it shall use
reasonable efforts to notify AAT and provide all evidence of such infringement
that is reasonably available. AAT shall have the sole and exclusive right, at
its own expense, to attempt to terminate such infringement by commercially
appropriate steps, including suit, but shall have no obligation to Axys to do
so. Any amounts recovered by AAT, whether by settlement or judgment, shall be
retained by AAT.

      6.5   THIRD PARTY PATENT ALLEGATIONS. If any warning letter or other
notice of infringement is received by a Party, or action, suit or proceeding is
brought against a Party alleging infringement of a patent right of any third
party in the manufacture, use or sale of a Deliverable or Derivative or use or
practice of the Compound Information or any AAT Patents, the Parties shall
promptly discuss and decide the best way to respond.

7.    CONFIDENTIALITY

      7.1   CONFIDENTIALITY OBLIGATIONS. Axys agrees that the Compound
Information shall be subject to the provisions of Article 6 of the Assignment
Agreement.

      7.2   PUBLICATIONS. Subject to the terms of Section 7.1, Axys may publish
Information discovered or developed in its research, development or
commercialization activities derived from use of any Compounds or Deliverables
without the consent of or notice to AAT.

8.    INDEMNIFICATION

      8.1   INDEMNIFICATION BY AXYS. Axys shall indemnify, defend and hold AAT
and its agents, employees, officers and directors (the "AAT Indemnitees")
harmless from and against any and all liability, damage, loss, cost or expense
(including reasonable attorneys' fees) arising out of third party claims or
suits related to (a) Axys' or its Affiliate's negligence, willful misconduct or
breach of this Agreement; or (b) the manufacture, use or sale of Compounds by
Axys or anyone acting under color of authority from Axys, or the manufacture,
use or sale, by


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Axys or anyone acting under color of authority from Axys, of Derivatives, except
to the extent such claims or suits result from negligence or willful misconduct
of or breach of this Agreement by any of the AAT lndemnitees. Upon the assertion
of any such claim or suit, the AAT Indemnitees shall promptly notify Axys
thereof, and Axys shall appoint counsel reasonably acceptable to the AAT
Indemnitees to represent the AAT Indemnitees with respect to any claim or suit
for which indemnification is sought, provided that Axys shall have sole control
over the defense and settlement of such claim or suit.

      8.2   INDEMNIFICATION BY AAT. AAT shall indemnify, defend and hold Axys
and its agents, employees, officers and directors (the "Axys Indemnitees")
harmless from and against any and all liability, damage, loss, cost or expense
(including reasonable attorney's fees) arising out of third party claims or
suits related to (a) AAT's or its Affiliates' negligence, willful misconduct or
breach of this Agreement, (b) the manufacture, use or sale to third parties by
AAT or anyone acting under color of authority granted after the Effective Date
by AAT, (provided such party is not Axys) of Compounds or products containing
such Compounds or any compound based upon or derived therefrom, or (c) personal
or property damage arising directly from the manufacturing of the Compounds by
AAT, except to the extent that such claims or suits result from negligence or
willful misconduct of or breach of this Agreement by any of the Axys
Indemnitees. Upon the assertion of any such claim or suit, the Axys Indemnitees
shall promptly notify AAT thereof, and AAT shall appoint counsel reasonably
acceptable to the Axys Indemnitees to represent the Axys Indemnitees with
respect to any claim or suit for which indemnification is sought, provided that
AAT shall have sole control over the defense and settlement of such claim or
suit. Axys may nevertheless retain co-counsel at its own expense.

      8.3   SETTLEMENT. No settlement of any claim or suit covered by this
Article 8 may be effected by the indemnifying party without the consent of an
indemnified party unless the indemnified party is not required to provide any
consideration with respect thereto.

9.    TERMINATION AND EXPIRATION

      9.1   TERM. This Agreement shall commence upon the Effective Date and,
unless earlier terminated as provided herein, shall expire on December 31, 2003.

      9.2   TERMINATION UPON MATERIAL BREACH.

            (a) Failure by a Party to comply with any of its material
obligations contained herein shall entitle the Party not in default to give to
the Party in default notice specifying the nature of the default, requiring it
to make good or otherwise cure such default, and stating its intention to
terminate if such default is not cured. If such default is not cured within
ninety (90) days after the date of such notice (or, if such default cannot be
cured within such ninety (90) day period, if the Party in default does not
commence and diligently continue actions to cure such default), the Party not in
default shall be entitled, without prejudice to any of its other rights
conferred on it by this Agreement, and in addition to any other remedies
available to it by law or in equity, to terminate this Agreement.

            (b) The right of a Party to terminate this Agreement, as provided
above, shall not be affected in any way by its waiver or failure to take action
with respect to any prior default.


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A Party may waive its right to terminate this Agreement with respect to a
particular default, provided that any such waiver shall not constitute a waiver
of, and such Party shall retain all rights to pursue, any and all other remedies
it may have at law or in equity of such default by the other Party.

      9.3   CONSEQUENCES OF TERMINATION.

            (a) Upon termination of this Agreement by Axys pursuant to Section
9.2 for the uncured material breach of AAT, then without prejudice to any other
remedy of Axys, (i) Section 9.4 shall apply; and (ii) all obligations and rights
of AAT to provide additional Compounds and to receive future Makeup Payments
shall terminate.

            (b) Upon termination of this Agreement by AAT pursuant to Section
9.2 for the uncured material breach of Axys, then without prejudice to any other
remedy of AAT (i) all rights granted to Axys under this Agreement, except for
those referred to in the sections set forth in Section 9.4, shall terminate;
(ii) with respect to any physical sample of a Compound delivered by AAT but not
paid for by Axys within thirty (30) days of delivery, Axys shall return all
existing physical samples of such Compounds and Axys may not further use such
Compounds and the related Deliverables; (iii) all obligations of AAT to provide
additional Compounds and the related Deliverables shall terminate; and (iv) Axys
shall promptly return to AAT or destroy all originals, manifestations, analyses,
descriptions, reflections and copies of Compound Information, but excluding from
the foregoing any such Compound Information specifically relating to Compounds
(and their related Protocols and Structural Information) for which Axys has
completed payment as required herein.

      9.4   ACCRUED RIGHTS; SURVIVING OBLIGATIONS.

            (a) Termination or expiration of this Agreement for any reason shall
be without prejudice to any rights which shall have accrued to the benefit of a
Party prior to such termination or expiration. Such termination or expiration
shall not relieve a Party from obligations which are expressly indicated to
survive termination or expiration of this Agreement.

            (b) Without limiting the foregoing, Articles l, 6, 7, 8 and 9 of
this Agreement shall survive the expiration or termination of this Agreement
indefinitely.

            (c) In addition to those sections set forth in subsection (b),
Sections 2.3, 2.4, and 4.1 shall survive indefinitely the termination or
expiration of this Agreement, subject to compliance by Axys, its Affiliates and
any permitted sublicensees with all limitations set forth in such Sections and
the rest of this Agreement.

10.   MISCELLANEOUS PROVISIONS

      10.1  RELATIONSHIP OF THE PARTIES. Nothing in this Agreement is intended
or shall be deemed to constitute a joint venture, partnership, agency or
employer-employee relationship between the Parties. Neither Party shall incur or
purport to incur any debts or make or purport to make any commitments for the
other.


                                       10

<PAGE>   11

      10.2  ASSIGNMENTS. Except as expressly provided herein, neither this
Agreement nor any interest hereunder shall be assignable, nor any other
obligation delegable, by a Party without the prior written consent of the other;
provided, however, that a Party may assign this Agreement to any successor in
interest by way of merger, acquisition or sale of all or substantially all of
its assets in a manner such that the assignee shall be liable and responsible
for the performance and observance of all such Party's duties and obligations
hereunder. This Agreement shall be binding upon the successors and permitted
assigns of the Parties. Any assignment not in accordance with this Section 10.2
shall be void.

      10.3  DISCLAIMER OF WARRANTIES. EXCEPT FOR THE WARRANTIES SET FORTH IN
SECTION 10.4, THE PARTIES DO NOT BY VIRTUE OF THIS AGREEMENT GRANT, AND HEREBY
EXPRESSLY DISCLAIM THAT BY VIRTUE OF THIS AGREEMENT THEY GRANT, ALL WARRANTIES,
EXPRESS, STATUTORY OR IMPLIED, INCLUDING WITHOUT LIMITATION, WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR NON-INFRINGEMENT OF THIRD
PARTY RIGHTS.

      10.4  REPRESENTATIONS AND WARRANTIES. Each Party represents and warrants
to the other Party that, as of the date of this Agreement:

                  (i) such Party is duly organized and validly existing under
the laws of the state of its incorporation and has full corporate power and
authority to enter into this Agreement and to carry out the provisions hereof;

                  (ii) such Party has taken all corporate action necessary to
authorize the execution and delivery of this Agreement and the performance of
its obligations under this Agreement; and

                  (iii) this Agreement is a legal and valid obligation of such
Party, binding upon such Party and enforceable against such Party in accordance
with the terms of this Agreement, except as such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, arrangement, moratorium or
other similar laws affecting creditors' rights, and subject to general equity
principles and to limitations on availability of equitable relief, including
specific performance. All consents, approvals and authorizations from all
governmental authorities or other third parties required to be obtained by such
Party in connection with this Agreement have been obtained.

In addition, Axys represents and warrants to AAT that, as of the date of this
Agreement and as of each other day during the term of this Agreement, Axys has
obtained and shall have obtained written confidentiality agreements from each of
its employees who have access to the Compound Information, whether in the form
of general confidentiality agreements from the employees obtained at the time of
commencement of such employees' employment by Axys or otherwise, which
agreements obligate such persons to maintain as confidential all confidential
information obtained by Axys in confidence from a third party.

      10.5  FURTHER ACTIONS. Each Party agrees to execute, acknowledge and
deliver such further instruments and to do all such other acts as may be
necessary or appropriate in order to carry out the purposes and intent of this
Agreement.


                                       11

<PAGE>   12

      10.6  FORCE MAJEURE. The failure of a Party to perform any obligation
under this Agreement by reason of acts of God, acts of governments, riots, wars,
strikes, accidents or deficiencies in materials or transportation or other
similar causes beyond its control for the duration thereof and for thirty (30)
days thereafter shall not be deemed to be a breach of this Agreement.

      10.7  NO TRADEMARK RIGHTS. No right, express or implied, is granted by
this Agreement to a Party to use in any manner the name or any other trade name
or trademark or servicemark of the other Party.

      10.8  ENTIRE AGREEMENT OF THE PARTIES; AMENDMENTS. This Agreement
constitutes and contains the entire understanding and agreement of the Parties
respecting the subject matter hereof and cancels and supersedes any and all
prior negotiations, correspondence, understandings and agreements between the
Parties, whether oral or written, regarding such subject matter. No waiver,
modification or amendment of any provision of this Agreement shall be valid or
effective unless made in writing after the Effective Date and signed by a duly
authorized officer of each Party. Further, nothing in this Agreement is intended
to, or shall be construed to, limit the rights granted by AAT to Axys or by Axys
to AAT in the Assignment Agreement; nor limit the effect of any non-competition
and non-disclosure agreement which Axys and any acquirer of AAT enter into.

      10.9  CAPTIONS. The captions and headings to this Agreement are for
convenience only, and are to be of no force or effect in construing or
interpreting any of the provisions of this Agreement.

      10.10 GOVERNING LAW, CONSENT TO JURISDICTION AND FORUM SELECTION. This
Agreement shall be governed by and construed in accordance with the laws of the
State of California applicable to contracts executed and performed in such
State, without giving effect to conflicts of laws principles. The parties hereto
agree that all actions or proceedings arising in connection with this Agreement
(as to proceedings initiated by Axys) shall be initiated and tried exclusively
in the State and Federal courts located in the County of San Diego, State of
California. The parties hereto agree that all actions or proceedings arising in
connection with this Agreement (as to proceedings initiated by AAT) shall be
initiated and tried exclusively in the State and Federal courts located in the
County of San Francisco, State of California. The aforementioned choice of venue
is intended by the parties to be mandatory and not permissive in nature, thereby
precluding the possibility of litigation between the parties with respect to or
arising out of this Agreement in any jurisdiction other than that specified in
this Section 10.10. Each party hereby waives any right it may have to assert the
doctrine of forum non conveniens or similar doctrine or to object to venue with
respect to any proceeding brought in accordance with this paragraph, and
stipulates that the State and Federal courts located in the County of San Diego,
State of California (as to proceedings initiated by Axys) or in the County of
San Francisco, State of California (as to proceedings initiated by AAT) shall
have in personam jurisdiction and venue over each of them for the purposes of
litigating any dispute, controversy or proceeding arising out of or related to
this Agreement. Each party hereby authorizes and accepts service of process
sufficient for personal jurisdiction in any action against it as contemplated by
this Section 10.10 by registered or certified mail, return receipt requested,
postage prepaid, to its address for the giving of notices as set forth in this
Agreement, or in the


                                       12

<PAGE>   13

manner set forth in Section 10.11 of this Agreement for the giving of notice.
Any final judgment rendered against a party in any action or proceeding shall be
conclusive as to the subject of such final judgment and may be enforced in other
jurisdictions in any manner provided by law

      10.11 NOTICES AND DELIVERIES. All notices, requests and other
communications hereunder must be in writing and will be deemed to have been duly
given only if delivered personally or by facsimile transmission with answer back
confirmation or mailed (first class, postage prepaid) or by overnight courier to
the parties at the following addresses or facsimile numbers:

                  If to Axys, to:

                        Axys Pharmaceuticals, Inc.
                        180 Kimball Way
                        South San Francisco, CA 94080
                        Facsimile No.: (650) 829-1067
                        Attention: John Walker, Chairman and Chief Executive
                                   Officer

                  with copies to:

                        Cooley Godward LLP
                        Five Palo Alto Square
                        3000 El Camino Real
                        Palo Alto, CA 94306-2155
                        Facsimile No.: (650) 857-6663
                        Attention: Barclay James Kamb, Esq.

                  If to AAT, to:

                        Axys Advanced Technologies, Inc.
                        c/o Discovery Partners International, Inc.
                        9640 Towne Centre Drive
                        San Diego, CA 92121
                        Facsimile No.: (858) 455-8088
                        Attention: Riccardo Pigliucci, Chairman






                                       13

<PAGE>   14

                  with copies to:

                        Brobeck, Phleger & Harrison LLP
                        12390 El Camino Real
                        San Diego, CA 92130
                        Facsimile No.: (858) 720-2555
                        Attention: Hayden Trubitt, Esq.

      10.12 WAIVER. A waiver by either Party of any of the terms and conditions
of this Agreement in any instance shall not be deemed or construed to be a
waiver of such term or condition for the future, or of any subsequent breach
hereof. All rights, remedies, undertakings, obligations and agreements contained
in this Agreement shall be cumulative and none of them shall be in limitation of
any other remedy, right, undertaking, obligation or agreement of either Party.

      10.13 COMPLIANCE WITH LAW. Nothing in this Agreement shall be deemed to
permit Axys to export, reexport or otherwise transfer any Deliverable without
compliance with all applicable laws. Axys agrees not to export, reexport or
otherwise transfer any Deliverable without full compliance with all applicable
laws.

      10.14 SEVERABILITY. When possible, each provision of this 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.

      10.15 COUNTERPARTS. This Agreement may be executed in two counterparts,
each containing the signature of one Party. Each counterpart shall be deemed an
original, and both counterparts together shall constitute one and the same
agreement.



                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]





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<PAGE>   15

      IN WITNESS WHEREOF, the Parties have caused this Compound Purchase
Agreement to be executed by their respective duly authorized officers as of the
day and year first above written, each copy of which shall for all purposes be
deemed to be an original.

                                    AXYS PHARMACEUTICALS, C.

                                    By: /s/ WILLIAM J. NEWELL
                                       ------------------------------------

                                    Name: William J. Newell
                                         ----------------------------------
                                    Title: Senior Vice President
                                          ---------------------------------



                                    AXYS ADVANCED TECHNOLOGIES, INC.

                                    By: /s/ WILLIAM J. NEWELL
                                       ------------------------------------

                                    Name: William J. Newell
                                         ----------------------------------

                                    Title: Secretary
                                          ---------------------------------






                [SIGNATURE PAGE TO COMPOUND PURCHASE AGREEMENT]


                                       15

<PAGE>   16

                                  SCHEDULE 1.1

                                  AAT CONTRACTS

Research Agreement with Pharmacia & Upjohn dated February 29, 1996, as amended.

Combinatorial Chemistry Agreement with Warner-Lambert Company dated May 15,
1998.

Combinatorial Chemistry Agreement with Signal Pharmaceuticals, Inc. dated July
6, 1998.

Combinatorial Chemistry Agreement with Rhone-Poulenc Rorer dated December 22,
1998.

Combinatorial Chemistry Agreement with Protein Design Labs, Inc. dated December
28, 1998.

Combinatorial Chemistry Agreement with Novalon Pharmaceutical Corporation dated
June 28, 1999.

Combinatorial Chemistry Agreement with Daiichi Pharmaceutical Co., Ltd. dated
June 30, 1999.

Combinatorial Chemistry Agreement with Allergan, Inc. dated September 27, 1999.

Combinatorial Chemistry Agreement with Elitra Pharmaceuticals Inc., dated
September 30, 1999.

Combinatorial Chemistry Agreement with Novartis Institute for Functional
Genomics, Inc., dated December 8, 1999.

Combinatorial Chemistry Agreement with L'Oreal Group, dated December 20, 1999.

Combinatorial Chemistry Agreement with Monsanto, dated December 21, 1999.

Combinatorial Chemistry Agreement with Cephalon, Inc., dated December 21, 1999.

Combinatorial Chemistry Agreement with Bristol-Myers Squibb Company, dated
December 31, 1999.






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