**Exhibit10.38**

*****Text Omitted and Filed Separately with the Securities andExchange Commission. Confidential Treatment RequestedUnder 17 C.F.R. Sections 200.80(b)(4) and 240.24b-2.**

 

 
| ALAN S. PAAU, Ph.D., MBA                                  |   | TELEPHONE: | 858.534.5815   |
|-----------------------------------------------------------|--------|------------|----------------|
|                                                      |   | FAX:       | 858.534.7345   |
|                                                      |   | E-MAIL:    | apaau@ucsd.edu |
| ASSISTANT VICE CHANCELLOR                                 |   |       |
| TECHNOLOGY TRANSFER & INTELLECTUAL PROPERTY  SERVICES |   |       |
| 9500 GILMAN DRIVE, MC - 0910                              |   |       |
| LA JOLLA, CA 92093-0910                                   |   |       |

 

October 11, 2006

Mr. Kent Snyder

President and Chief Executive Officer

Senomyx, Inc.

11099 North Torrey Pines Road

La Jolla, CA  92037

 
| Subject: | Letter Agreement                           |
|----------|--------------------------------------------|
| Cases:   | SD2001-F10 (OTT case no. 2001-510): [***]  |
|     | SD2004-B00 (OTT  case no. 2004-100): [***] |
|     |                                       |

Dear Mr. Snyder:

TheRegents of the University of California (“UNIVERSITY”), represented by its SanDiego campus Technology Transfer & Intellectual Property Services (9500Gilman Drive, La Jolla, CA 92093-0910) offers to  Senomyx, Inc. (“COMPANY”)  an exclusive opportunity to secure anexclusive license to the above-referenced inventions (“Inventions”) under theterms and conditions of the attached license agreement “2006 License Agreement.”

This offer shallbe deemed accepted by COMPANY by signature below , and shall terminate thesooner of (i) the date the Inventions are included in the 2006 LicenseAgreement, or (ii) [...***...] from the date of this Letter Agreement. This offershall be open for [...***...] from the date of this letter (“Term”) and may beextended, in writing, by mutual consent of UNIVERSITY and COMPANY.  This offer is further contingent onUNIVERSITY successfully obtaining from NIH and from HHMI the sole managementresponsibility of the Inventions.

TheLetter Agreement has the following terms and conditions:

1.                                       UNIVERSITYis a coassignee, along with the National Institutes of Health “NIH”, on UCSDcase 2001-F10.  Within a reasonable timefrom the date of execution of the necessary interinstitutional agreement todesignate UNIVERSITY as sole manager of the patent rights, UNIVERSITY willamend the 2006 License Agreement to include the patent rights directly arisingfrom this Invention.

2.                                       UNIVERSITYis a coassignee, along with the Howard Hughes Medical Institute “HHMI”, on UCSDcase 2004-B00.  Within a reasonable timefrom official, written notice from HHMI that case has been added to theexisting  interinstitutional agreement todesignate UNIVERSITY as sole manager of the patent rights, UNIVERSITY willamend the 2006 License Agreement to include the patent rights directly arisingfrom this Invention.

*****ConfidentialTreatment Requested**

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3.                                       COMPANYshall reimburse UNIVERSITY for [...***...]. COMPANY shall pay UNIVERSITY within [...***...]of the date on any invoice sent by UNIVERSITY to COMPANY for suchreimbursement.  Nonpayment or partialpayment of any such invoice shall be deemed to be a material breach of theLetter Agreement, subject to a cure period of [...***...].  UNIVERSITY will notify COMPANY of such breachand, if such breach has not been cured within [...***...] of such written notice,UNIVERSITY, at their option, may terminate the Letter Agreement by writtennotification to COMPANY.

4.                                       Uponaddition of each Invention to the 2006 License Agreement, the Letter Agreementshall terminate (for each Invention) on the date such license becomeseffective.

5.                                       COMPANYagrees that any information that either party shares with the other under thisLetter Agreement shall remain confidential.

6.                                       Ifthe Letter Agreement becomes terminated by reason of expiration of the Term orextension thereof, or, subject to the cure period in Section 3 above,nonpayment by COMPANY of any invoice for [...***...], then UNIVERSITY shall have nofurther obligation to COMPANY with respect to the Invention.
|        | Sincerely,                |   |
|--------|---------------------------|--------|
|   |                      |   |
|   | /s/ Alan Paau             |   |
|   |                      |   |
|   | Alan Paau, Ph.D., MBA     |   |
|   | Assistant Vice Chancellor |   |

 
| ACCEPTED:                                     |             |   |   |
|-----------------------------------------------|------------------|--------|--------|
|                                          |             |   |
| By:                                           | /s/ Kent Snyder  |   |   |
|                                          |             |   |
| Name: Kent  Snyder                            |             |   |
|                                          |             |   |
| Title: President  and Chief Executive Officer |             |   |
|                                          |             |   |
| Date:                                         | October 11, 2006 |   |   |
|                                               |                  |        |        |  |  |

* *

*Copy:     File*

*****ConfidentialTreatment Requested**

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** **

Exhibit A

2006 License Agreement

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