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                                                                    EXHIBIT 10.1
                            STOCK PURCHASE AGREEMENT

Axys Pharmaceuticals, Inc.
180 Kimball Way
South San Francisco, CA 94080

Ladies & Gentlemen:

        The undersigned, _________________________________(the "Investor"),
hereby confirms its agreement with you as follows:

1. This Stock Purchase Agreement (the "Agreement") is made as of _______ __,
2000 between Axys Pharmaceuticals, Inc., a Delaware corporation (the "Company"),
and the Investor.

2. The Company has authorized the sale and issuance of up to ________ shares
(the "Shares") of common stock of the Company, $0.001 par value per share (the
"Common Stock"), subject to adjustment by the Company's Board of Directors, to
certain investors in a private placement (the "Offering").

3. The Company and the Investor agree that the Investor will purchase from the
Company and the Company will issue and sell to the Investor ___________ Shares,
for a purchase price of $_______ per share, or an aggregate purchase price of
$_______________, pursuant to the Terms and Conditions for Purchase of Shares
attached hereto as Annex I and incorporated herein by reference as if fully set
forth herein. Unless otherwise requested by the Investor, certificates
representing the Shares purchased by the Investor will be registered in the
Investor's name and address as set forth below.

4. The Investor represents that, except as set forth below, (a) it has had no
position, office or other material relationship within the past three years with
the Company or persons known to it to be affiliates of the Company, (b) neither
it, nor any group of which it is a member or to which it is related,
beneficially owns (including the right to acquire or vote) any securities of the
Company and (c) it has no direct or indirect affiliation or association with any
NASD member as of the date hereof. Exceptions:

--------------------------------------------------------------------------------

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                 (If no exceptions, write "none." If left blank,
                     response will be deemed to be "none.")

        Please confirm that the foregoing correctly sets forth the agreement
between us by signing in the space provided below for that purpose. By executing
this Agreement, you acknowledge that the Company may use the information in
paragraph 4 above and the name and address information below in preparation of
the Registration Statement (as defined in Annex 1).

AGREED AND ACCEPTED:
Axys Pharmaceuticals, Inc.             "INVESTOR"


                                       By:
----------------------------------
By:
Title:                                 Print Name:
                                                  ------------------------------
                                       Title:
                                             -----------------------------------
                                       Address:
                                               ---------------------------------

                                       Tax ID No.:
                                                  ------------------------------
                                       Contact name:
                                                    ----------------------------
                                       Telephone:
                                                 -------------------------------

                                       Name in which shares should registered
                                       (if different):
                                                      --------------------------

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                                     ANNEX I

                   TERMS AND CONDITIONS FOR PURCHASE OF SHARES


        1. Authorization and Sale of the Shares. Subject to the terms and
conditions of this Agreement, the Company has authorized the sale of up to
________ Shares. The Company reserves the right to increase or decrease this
number.

        2. Agreement to Sell and Purchase the Shares; Subscription Date.

               2.1 At the Closing (as defined in Section 3), the Company will
sell to the Investor, and the Investor will purchase from the Company, upon the
terms and conditions hereinafter set forth, the number of Shares set forth on
the signature page hereto at the purchase price set forth on such signature
page.

               2.2 The Company may enter into this same form of Stock Purchase
Agreement with certain other investors (the "Other Investors") and expects to
complete sales of Shares to them. (The Investor and the Other Investors are
hereinafter sometimes collectively referred to as the "Investors," and this
Agreement and the Stock Purchase Agreements executed by the Other Investors are
hereinafter sometimes collectively referred to as the "Agreements.") The Company
may accept executed Agreements from Investors for the purchase of Shares
commencing upon the date on which the Company provides the Investors with the
proposed purchase price per Share and concluding upon the date (the
"Subscription Date") on which the Company has (i) executed Agreements with
Investors for the purchase of at least _______ Shares, and (ii) notified the
Investors in writing that it is no longer accepting Agreements from Investors
for the purchase of Shares. The Company may not enter into any Agreements after
the Subscription Date.

        3. Delivery of the Shares at Closing. The completion of the purchase and
sale of the Shares (the "Closing") shall occur (the "Closing Date") on ________
__, 2000, at the offices of the Company's counsel. At the Closing, the Company
shall deliver to the Investor one or more stock certificates representing the
number of Shares set forth on the signature page hereto, each such certificate
to be registered in the name of the Investor or, if so indicated on the
signature page hereto, in the name of a nominee designated by the Investor.

        The Company's obligation to issue the Shares to the Investor shall be
subject to the following conditions, any one or more of which may be waived by
the Company: (a) receipt by the Company of a certified or official bank check or
wire transfer of funds in the full amount of the purchase price for the Shares
being purchased hereunder as set forth on the signature page hereto; (b)
completion of the purchases and sales under the Agreements with the Other
Investors; and (c) the accuracy of the representations and warranties made by
the Investors and the fulfillment of those undertakings of the Investors to be
fulfilled prior to the Closing.

        The Investor's obligation to purchase the Shares shall be subject to the
following conditions, any one or more of which may be waived by the Investor:
(a) Investors shall have executed Agreements for the purchase of at least
_______ Shares, (b) the representations and warranties of the Company set forth
herein shall be true and correct as of the Closing Date in all material respects
and (c) the Investor shall have received such documents as such Investor shall
reasonably have requested, including, a standard opinion of Company Counsel as
to the matters set forth in Section 4.2 and as to exemption from the
registration requirements of the Securities Act of 1933, as amended, of the sale
of the Shares.

        4. Representations, Warranties and Covenants of the Company. The Company
hereby represents and warrants to, and covenants with, the Investor, as follows:

               4.1 Organization. The Company is duly organized and validly
existing in good standing under the laws of the jurisdiction of its
organization. Each of the Company and its Subsidiaries (as defined in Rule 405
under the Securities Act of 1933, as amended (the "Securities Act")) has full
power and authority to own, operate and occupy its properties and to conduct its
business as presently conducted and as described in the confidential offering
memorandum, dated February 11, 2000 distributed in connection with the sale of
the Shares (including the documents incorporated by reference therein, the
"Placement Memorandum") and is registered or qualified to do business and in
good standing in each jurisdiction in which it owns or leases property or
transacts business and where the failure to be so qualified would have a
material adverse effect upon the business, financial

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condition, properties or operations of the Company and its Subsidiaries,
considered as one enterprise, and no proceeding has been instituted in any such
jurisdiction, revoking, limiting or curtailing, or seeking to revoke, limit or
curtail, such power and authority or qualification.

               4.2 Due Authorization and Valid Issuance. The Company has all
requisite power and authority to execute, deliver and perform its obligations
under the Agreements, and the Agreements have been duly authorized and validly
executed and delivered by the Company and constitute legal, valid and binding
agreements of the Company enforceable against the Company in accordance with
their terms, except as rights to indemnity and contribution may be limited by
state or federal securities laws or the public policy underlying such laws,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' and contracting
parties' rights generally and except as enforceability may be subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law). The Shares being purchased by the Investor
hereunder will, upon issuance pursuant to the terms hereof, be duly authorized,
validly issued, fully-paid and nonassessable.

               4.3 Non-Contravention. The execution and delivery of the
Agreements, the issuance and sale of the Shares to be sold by the Company under
the Agreements, the fulfillment of the terms of the Agreements and the
consummation of the transactions contemplated thereby will not (A) conflict with
or constitute a violation of, or default (with the passage of time or otherwise)
under, (i) any material bond, debenture, note or other evidence of indebtedness,
lease, contract, indenture, mortgage, deed of trust, loan agreement, joint
venture or other agreement or instrument to which the Company or any Subsidiary
is a party or by which it or any of its Subsidiaries or their respective
properties are bound, which individually, or in the aggregate, would have a
material adverse effect upon the business or financial condition of the Company
and its Subsidiaries, considered as one enterprise, (ii) the charter, by-laws or
other organizational documents of the Company or any Subsidiary, or (iii) any
law, administrative regulation, ordinance or order of any court or governmental
agency, arbitration panel or authority applicable to the Company or any
Subsidiary or their respective properties, or (B) result in the creation or
imposition of any lien, encumbrance, claim, security interest or restriction
whatsoever upon any of the material properties or assets of the Company or any
Subsidiary or an acceleration of indebtedness pursuant to any obligation,
agreement or condition contained in any material bond, debenture, note or any
other evidence of indebtedness or any material indenture, mortgage, deed of
trust or any other agreement or instrument to which the Company or any
Subsidiary is a party or by which any of them is bound or to which any of the
property or assets of the Company or any Subsidiary is subject, which
individually, or in the aggregate, would have a material adverse effect upon the
business or financial condition of the Company and its Subsidiaries, considered
as one enterprise. No consent, approval, authorization or other order of, or
registration, qualification or filing with, any regulatory body, administrative
agency, or other governmental body in the United States or any other person is
required for the execution and delivery of the Agreements and the valid issuance
and sale of the Shares to be sold pursuant to the Agreements, other than such as
have been made or obtained, and except for any post-closing securities filings
or notifications required to be made under federal or state securities laws.

               4.4 Capitalization. The capitalization of the Company as of
September 30, 1999 is as set forth in the Placement Memorandum (excluding
unvested options and treasury shares). The Company has not issued any capital
stock since that date other than pursuant to (i) employee benefit plans
disclosed in the Placement Memorandum, or (ii) outstanding warrants or options
disclosed in the Placement Memorandum. The Shares to be sold pursuant to the
Agreements have been duly authorized, and when issued and paid for in accordance
with the terms of the Agreements will be duly and validly issued, fully paid and
nonassessable. The outstanding shares of capital stock of the Company have been
duly and validly issued and are fully paid and nonassessable, have been issued
in compliance with all federal and state securities laws, and were not issued in
violation of any preemptive rights or similar rights to subscribe for or
purchase securities. Except as set forth in or contemplated by the Placement
Memorandum and except for certain registration rights, certain rights of first
refusal and certain time-limited prohibitions on sales without the consent of a
third party applicable to one Subsidiary (PPGx, Inc.), there are no outstanding
rights (including, without limitation, preemptive rights), warrants or options
to acquire, or instruments convertible into or exchangeable for, any unissued
shares of capital stock or other equity interest in the Company or any
Subsidiary, or any contract, commitment, agreement, understanding or arrangement
of any kind to which the Company is a party or of which the Company has
knowledge and relating to the issuance or sale of any capital stock of the
Company or any Subsidiary, any such convertible or exchangeable securities or
any such rights, warrants or options. Without limiting the foregoing, no
preemptive right, co-sale right, right of first refusal, registration right, or
other similar right exists with respect to the Shares or the issuance and sale
thereof. No further approval or authorization of any stockholder, the Board of
Directors of the Company or others is required for the issuance and sale of the
Shares. The Company owns the entire equity interest in each of its Subsidiaries,
free and clear of any pledge, lien, security interest, encumbrance, claim or
equitable interest, other than as described in the Placement Memorandum. Except
as disclosed in

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the Placement Memorandum, there are no stockholders agreements, voting
agreements or other similar agreements with respect to the Common Stock to which
the Company is a party or, to the knowledge of the Company, between or among any
of the Company's stockholders.

               4.5 Legal Proceedings. There is no material legal or governmental
proceeding pending or, to the knowledge of the Company, threatened to which the
Company or any Subsidiary is or may be a party or of which the business or
property of the Company or any Subsidiary is subject that is not disclosed in
the Placement Memorandum.

               4.6 No Violations. Neither the Company nor any Subsidiary is in
violation of its charter, bylaws, or other organizational document, or in
violation of any law, administrative regulation, ordinance or order of any court
or governmental agency, arbitration panel or authority applicable to the Company
or any Subsidiary, which violation, individually or in the aggregate, would be
reasonably likely to have a material adverse effect on the business or financial
condition of the Company and its Subsidiaries, considered as one enterprise, or
is in default (and there exists no condition which, with the passage of time or
otherwise, would constitute a default) in any material respect in the
performance of any bond, debenture, note or any other evidence of indebtedness
in any indenture, mortgage, deed of trust or any other material agreement or
instrument to which the Company or any Subsidiary is a party or by which the
Company or any Subsidiary is bound or by which the properties of the Company or
any Subsidiary are bound, which would be reasonably likely to have a material
adverse effect upon the business or financial condition of the Company and its
Subsidiaries, considered as one enterprise.

               4.7 Governmental Permits, Etc. With the exception of the matters
which are dealt with separately in Section 4.1, 4.12, 4.13, and 4.14, each of
the Company and its Subsidiaries has all necessary franchises, licenses,
certificates and other authorizations from any foreign, federal, state or local
government or governmental agency, department, or body that are currently
necessary for the operation of the business of the Company and its Subsidiaries
as currently conducted and as described in the Placement Memorandum except where
the failure to currently possess could not reasonably be expected to have a
material adverse effect upon the business or financial condition of the Company
and its Subsidiaries, considered as one enterprise.

               4.8 Intellectual Property. Except as specifically disclosed under
"Risk Factors" in the Placement Memorandum (i) each of the Company and its
Subsidiaries owns or possesses sufficient rights to use all material patents,
patent rights, trademarks, copyrights, licenses, inventions, trade secrets,
trade names and know-how (collectively, "Intellectual Property") described or
referred to in the Placement Memorandum as owned or possessed by it or that are
necessary for the conduct of its business as now conducted or, to the Company's
knowledge, as proposed to be conducted as described in the Placement Memorandum
except where the failure to currently own or possess would not have a material
adverse effect on the condition (financial or otherwise), earnings, operations,
business or business prospects of the Company and its Subsidiaries considered as
one enterprise, (ii) neither the Company nor any of its Subsidiaries has
received any notice of, or has any knowledge of, any infringement of asserted
rights of a third party with respect to any Intellectual Property that,
individually or in the aggregate, would have a material adverse effect on the
financial condition or business of the Company and its Subsidiaries considered
as one enterprise and (iii) neither the Company nor any of its Subsidiaries has
received any notice of any infringement of rights of a third party with respect
to any Intellectual Property that, individually or in the aggregate, would have
a material adverse effect upon the business or financial condition of the
Company and its Subsidiaries, considered as one enterprise.

               4.9 Financial Statements. The financial statements of the Company
and the related notes contained in the Placement Memorandum present fairly, in
accordance with generally accepted accounting principles, the financial position
of the Company and its Subsidiaries as of the dates indicated, and the results
of its operations and cash flows for the periods therein specified. Such
financial statements (including the related notes) have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods therein specified, except as disclosed in the
Placement Memorandum. The other financial information contained in the Placement
Memorandum has been prepared on a basis consistent with the financial statements
of the Company.

               4.10 No Material Adverse Change. Except as disclosed in the
Placement Memorandum, since September 30, 1999, there has not been (i) any
material adverse change in the financial condition or earnings of the Company
and its Subsidiaries considered as one enterprise nor has any material adverse
event occurred to the Company or its Subsidiaries, (ii) any material adverse
event affecting the Company, (iii) any obligation, direct or contingent, that is
material to the Company and its Subsidiaries considered as one enterprise,
incurred by the Company, except obligations incurred in the ordinary course of
business, (iv) any dividend or distribution of any kind declared, paid or made
on the capital stock of the Company or, in the case

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of any of its Subsidiaries, payable to any party other than the Company, or (v)
any loss or damage (whether or not insured) to the physical property of the
Company or any of its Subsidiaries which has been sustained which has a material
adverse effect on the condition (financial or otherwise), earnings, operations,
business or business prospects of the Company and its Subsidiaries considered as
one enterprise.

               4.11 Disclosure. The information contained in the Placement
Memorandum as of the date hereof and as of the Closing Date, did not and shall
not contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.

               4.12 NASDAQ Compliance. The Company's Common Stock is registered
pursuant to Section 12(g) of the Exchange Act and is listed on The Nasdaq Stock
Market, Inc. National Market (the "Nasdaq National Market"), and the Company has
taken no action designed to, or likely to have the effect of, terminating the
registration of the Common Stock under the Exchange Act or de-listing the Common
Stock from the Nasdaq National Market, nor has the Company received any
notification that the Securities and Exchange Commission (the "SEC") or the
National Association of Securities Dealers, Inc. ("NASD") is contemplating
terminating such registration or listing.

               4.13 Reporting Status. The Company has filed in a timely manner
all documents that the Company was required to file under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") during the 12 months
preceding the date of this Agreement. The following documents complied in all
material respects with the SEC's requirements as of their respective filing
dates, and the information contained therein as of the date thereof did not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein in
light of the circumstances under where they were made not misleading:

                        (a) Annual Report on Form 10-K for the year ended
                        December 31, 1998, filed with the SEC on March 31, 1999;

                        (b) Definitive Proxy Statement filed with the SEC on
                        April 23, 1999 in connection with the 1999 Annual
                        Meeting of Stockholders;

                        (c) Quarterly Reports on Form 10-Q filed with the SEC on
                        May 17, 1999, August 14, 1999 and November 16, 1999; and

                        (d) All other documents, if any, filed by the Company
                        with the SEC since the date of the Placement Memorandum
                        pursuant to the reporting requirements of the Exchange
                        Act.

               4.14 Listing. The Company shall comply with all requirements of
the National Association of Securities Dealers, Inc. with respect to the
issuance of the Shares and the listing thereof on the Nasdaq National Market.

               4.15 No Manipulation of Stock. The Company has not taken and will
not, in violation of applicable law, take, any action designed to or that might
reasonably be expected to cause or result in stabilization or manipulation of
the price of the Common Stock to facilitate the sale or resale of the Shares.

        5. Representations, Warranties and Covenants of the Investor.

               5.1 The Investor represents and warrants to, and covenants with,
the Company that: (i) the Investor is an "accredited investor" as defined in
Regulation D under the Securities Act and the Investor is also knowledgeable,
sophisticated and experienced in making, and is qualified to make decisions with
respect to investments in shares presenting an investment decision like that
involved in the purchase of the Shares, including investments in securities
issued by the Company and investments in comparable companies, and has
requested, received, reviewed and considered all information it deemed relevant
in making an informed decision to purchase the Shares; (ii) the Investor is
acquiring the number of Shares set forth on the signature page hereto in the
ordinary course of its business and for its own account for investment only and
with no present intention of distributing any of such Shares or any arrangement
or understanding with any other persons regarding the distribution of such
Shares; (iii) the Investor will not, directly or indirectly, offer, sell,
pledge, transfer or otherwise dispose of (or solicit any offers to

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buy, purchase or otherwise acquire or take a pledge of) any of the Shares except
in compliance with the Securities Act, applicable state securities laws and the
respective rules and regulations promulgated thereunder; (iv) the Investor has
answered all questions on the signature page hereto for use in preparation of
the Registration Statement and the answers thereto are true and correct as of
the date hereof and will be true and correct as of the Closing Date; (v) the
Investor will notify the Company immediately of any change in any of such
information until such time as the Investor has sold all of its Shares or until
the Company is no longer required to keep the Registration Statement effective;
and (vi) the Investor has, in connection with its decision to purchase the
number of Shares set forth on the signature page hereto, relied only upon the
Placement Memorandum and the representations and warranties of the Company
contained herein. Investor understands that its acquisition of the Shares has
not been registered under the Securities Act or registered or qualified under
any state securities law in reliance on specific exemptions therefrom, which
exemptions may depend upon, among other things, the bona fide nature of the
Investor's investment intent as expressed herein. Investor has completed or
caused to be completed and delivered to the Company the Investor Questionnaire
attached as Exhibit B to the Placement Memorandum, which questionnaire is true
and correct in all material respects.

               5.2 The Investor acknowledges, represents and agrees that no
action has been or will be taken in any jurisdiction outside the United States
by the Company that would permit an offering of the Shares, or possession or
distribution of offering materials in connection with the issue of the Shares,
in any jurisdiction outside the United States where legal action by the Company
for that purpose is required. Each Investor outside the United States will
comply with all applicable laws and regulations in each foreign jurisdiction in
which it purchases, offers, sells or delivers Shares or has in its possession or
distributes any offering material, in all cases at its own expense.

               5.3 The Investor hereby covenants with the Company not to make
any sale of the Shares without complying with the provisions of this Agreement
and without causing the prospectus delivery requirement under the Securities Act
to be satisfied, and the Investor acknowledges that the certificates evidencing
the Shares will be imprinted with a legend that prohibits their transfer except
in accordance therewith. The Investor acknowledges that there may occasionally
be times when the Company determines that it must suspend the use of the
Prospectus forming a part of the Registration Statement, as set forth in Section
7.2(c).

               5.4 The Investor further represents and warrants to, and
covenants with, the Company that (i) the Investor has full right, power,
authority and capacity to enter into this Agreement and to consummate the
transactions contemplated hereby and has taken all necessary action to authorize
the execution, delivery and performance of this Agreement, and (ii) this
Agreement constitutes a valid and binding obligation of the Investor enforceable
against the Investor in accordance with its terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' and contracting parties' rights generally and
except as enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law) and except as the indemnification agreements of the Investors
herein may be legally unenforceable.

               5.5 Investor will not use any of the restricted Shares acquired
pursuant to this Agreement to cover any short position in the Common Stock of
the Company if doing so would be in violation of applicable securities laws.

               5.6 The Investor understands that nothing in the Placement
Memorandum, this Agreement or any other materials presented to the Investor in
connection with the purchase and sale of the Shares constitutes legal, tax or
investment advice. The Investor has consulted such legal, tax and investment
advisors as it, in its sole discretion, has deemed necessary or appropriate in
connection with its purchase of Shares.

        6. Survival of Representations, Warranties and Agreements.
Notwithstanding any investigation made by any party to this Agreement, all
covenants, agreements, representations and warranties made by the Company and
the Investor herein shall survive the execution of this Agreement, the delivery
to the Investor of the Shares being purchased and the payment therefor.

        7. Registration of the Shares; Compliance with the Securities Act.

               7.1 Registration Procedures and Other Matters. The Company shall:

                      (a) subject to receipt of necessary information from the
Investors after prompt request from the Company to the Investors to provide such
information, use its best efforts to prepare and file with the SEC, within 10
days after

<PAGE>   7
the Closing Date, a registration statement (the "Registration Statement") to
enable the resale of the Shares by the Investors from time to time through the
automated quotation system of the Nasdaq National Market or in
privately-negotiated transactions;

                      (b) use its reasonable best efforts, subject to receipt of
necessary information from the Investors after prompt request from the Company
to the Investors to provide such information, to cause the Registration
Statement to become effective within 30 days after the Registration Statement is
filed by the Company, such efforts to include, without limiting the generality
of the foregoing, preparing and filing with the SEC on or prior to the filing of
the Registration Statement, but in any case, within ten (10) days of the Closing
Date any financial statements that are required to be filed prior to the
effectiveness of such Registration Statement;

                      (c) use its reasonable efforts to prepare and file with
the SEC such amendments and supplements to the Registration Statement and the
Prospectus used in connection therewith as may be necessary to keep the
Registration Statement current and effective for a period not exceeding, with
respect to each Investor's Shares purchased hereunder, the earlier of (i) the
second anniversary of the Closing Date, (ii) the date on which the Investor may
sell all Shares then held by the Investor without restriction by the volume
limitations of Rule 144(e) of the Securities Act, or (iii) such time as all
Shares purchased by such Investor in this Offering have been sold pursuant to a
registration statement.

                      (d) furnish to the Investor with respect to the Shares
registered under the Registration Statement such number of copies of the
Registration Statement, Prospectuses and Preliminary Prospectuses in conformity
with the requirements of the Securities Act and such other documents as the
Investor may reasonably request, in order to facilitate the public sale or other
disposition of all or any of the Shares by the Investor; provided, however, that
the obligation of the Company to deliver copies of Prospectuses or Preliminary
Prospectuses to the Investor shall be subject to the receipt by the Company of
reasonable assurances from the Investor that the Investor will comply with the
applicable provisions of the Securities Act and of such other securities or blue
sky laws as may be applicable in connection with any use of such Prospectuses or
Preliminary Prospectuses;

                      (e) file documents required of the Company for normal blue
sky clearance in states specified in writing by the Investor; provided, however,
that the Company shall not be required to qualify to do business or consent to
service of process in any jurisdiction in which it is not now so qualified or
has not so consented;

                      (f) bear all expenses in connection with the procedures in
paragraph (a) through (f) of this Section 7.1 and the registration of the Shares
pursuant to the Registration Statement; and

                      (g) advise the Investor, promptly after it shall receive
notice or obtain knowledge of the issuance of any stop order by the SEC delaying
or suspending the effectiveness of the Registration Statement or of the
initiation or threat of any proceeding for that purpose; and it will promptly
use its reasonable efforts to prevent the issuance of any stop order or to
obtain its withdrawal at the earliest possible moment if such stop order should
be issued.

        The Company understands that the Investor disclaims being an
underwriter, but the Investor being deemed an underwriter by the SEC shall not
relieve the Company of any obligations it has hereunder; provided, however that
if the Company receives notification from the SEC that the Investor is deemed an
underwriter, then the period by which the Company is obligated to submit an
acceleration request to the SEC shall be extended to the earlier of (i) the 90th
day after such SEC notification, or (ii) 120 days after the initial filing of
the Registration Statement with the SEC.

               7.2 Transfer of Shares After Registration; Suspension.

                      (a) The Investor agrees that it will not effect any
disposition of the Shares or its right to purchase the Shares that would
constitute a sale within the meaning of the Securities Act except as
contemplated in the Registration Statement referred to in Section 7.1 and as
described below or as otherwise permitted by law, and that it will promptly
notify the Company of any changes in the information set forth in the
Registration Statement regarding the Investor or its plan of distribution.

                      (b) Except in the event that paragraph (c) below applies,
the Company shall (i) if deemed necessary by the Company, prepare and file from
time to time with the SEC a post-effective amendment to the Registration

<PAGE>   8
Statement or a supplement to the related Prospectus or a supplement or amendment
to any document incorporated therein by reference or file any other required
document so that such Registration Statement will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
so that, as thereafter delivered to purchasers of the Shares being sold
thereunder, such Prospectus will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading; (ii) provide the Investor copies of any documents
filed pursuant to Section 7.2(b)(i); and (iii) inform each Investor that the
Company has complied with its obligations in Section 7.2(b)(i) (or that, if the
Company has filed a post-effective amendment to the Registration Statement which
has not yet been declared effective, the Company will notify the Investor to
that effect, will use its reasonable efforts to secure the effectiveness of such
post-effective amendment as promptly as possible and will promptly notify the
Investor pursuant to Section 7.2(b)(i) hereof when the amendment has become
effective).

                      (c) Subject to paragraph (d) below, in the event (i) of
any request by the SEC or any other federal or state governmental authority
during the period of effectiveness of the Registration Statement for amendments
or supplements to a Registration Statement or related Prospectus or for
additional information; (ii) of the issuance by the SEC or any other federal or
state governmental authority of any stop order suspending the effectiveness of a
Registration Statement or the initiation of any proceedings for that purpose; or
(iii) of the receipt by the Company of any notification with respect to the
suspension of the qualification or exemption from qualification of any of the
Shares for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose; or (iv) of any event or circumstance which, upon
the advice of its counsel, necessitates the making of any changes in the
Registration Statement or Prospectus, or any document incorporated or deemed to
be incorporated therein by reference, so that, in the case of the Registration
Statement, it will not contain any untrue statement of a material fact or any
omission to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, and that in the case of the
Prospectus, it will not contain any untrue statement of a material fact or any
omission to state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading; then the Company shall, deliver a certificate in
writing to the Investor (the "Suspension Notice") to the effect of the foregoing
and, upon receipt of such Suspension Notice, the Investor will refrain from
selling any Shares pursuant to the Registration Statement (a "Suspension") until
the Investor's receipt of copies of a supplemented or amended Prospectus
prepared and filed by the Company, or until it is advised in writing by the
Company that the current Prospectus may be used, and has received copies of any
additional or supplemental filings that are incorporated or deemed incorporated
by reference in any such Prospectus. In the event of any Suspension, the Company
will use its reasonable efforts to cause the use of the Prospectus so suspended
to be resumed as soon as reasonably practicable within 20 business days after
the delivery of a Suspension Notice to the Investor. In addition to and without
limiting any other remedies (including, without limitation, at law or at equity)
available to the Investor, the Investor shall be entitled to specific
performance in the event that the Company fails to comply with the provisions of
this Section 7.2(c).

                      (d) Notwithstanding the foregoing paragraphs of this
Section 7.2, the Investor shall not be prohibited from selling Shares under the
Registration Statement as a result of Suspensions on more than two occasions of
not more than 30 days each in any twelve month period, unless, in the good faith
judgment of the Company's Board of Directors, upon advice of counsel, the sale
of Shares under the Registration Statement in reliance on this paragraph 7.2(e)
would be reasonably likely to cause a violation of the Securities Act or the
Exchange Act and result in liability to the Company directly or under Section
7.3.

                      (e) Provided that a Suspension is not then in effect the
Investor may sell Shares under the Registration Statement, provided that it
arranges for delivery of a current Prospectus to the transferee of such Shares.
Upon receipt of a request therefor, the Company has agreed to provide an
adequate number of current Prospectuses to the Investor and to supply copies to
any other parties requiring such Prospectuses in order for the Investor to
effect sales thereunder.

                      (f) In the event of a sale of Shares by the Investor
pursuant to the Registration Statement, the Investor must also deliver to the
Company's transfer agent, with a copy to the Company, a Certificate of
Subsequent Sale substantially in the form attached hereto as Exhibit A, so that
the Shares may be properly transferred.

               7.3 Indemnification.  For the purpose of this Section 7.3:

               (i) the term "Selling Stockholder" shall include the Investor and
any affiliate of such Investor;


<PAGE>   9
               (ii) the term "Registration Statement" shall include any final
Prospectus, exhibit, supplement or amendment included in or relating to the
Registration Statement referred to in Section 7.1; and

               (iii) the term "untrue statement" shall include any untrue
statement or alleged untrue statement, or any omission or alleged omission to
state in the Registration Statement a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.

                       (a) The Company agrees to indemnify and hold harmless
each Selling Stockholder from and against any losses, claims, damages or
liabilities to which such Selling Stockholder may become subject (under the
Securities Act or otherwise) insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) arise out of, or are
based upon (i) any untrue statement of a material fact contained in the
Registration Statement, or (ii) any failure by the Company to fulfill any
undertaking included in the Registration Statement, and the Company will
reimburse such Selling Stockholder for any reasonable legal or other expenses
reasonably incurred in investigating, defending or preparing to defend any such
action, proceeding or claim, or preparing to defend any such action, proceeding
or claim, provided, however, that the Company shall not be liable in any such
case to the extent that such loss, claim, damage or liability arises out of, or
is based upon, an untrue statement made in such Registration Statement in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of such Selling Stockholder specifically for use in
preparation of the Registration Statement or the failure of such Selling
Stockholder to comply with its covenants and agreements contained in Section 7.2
hereof respecting sale of the Shares or any statement or omission in any
Prospectus that is corrected in any subsequent Prospectus that was delivered to
the Investor prior to the pertinent sale or sales by the Investor. The Company
shall reimburse each Selling Stockholder for the amounts provided for herein on
demand as such expenses are incurred.

                       (b) The Investor agrees to indemnify and hold harmless
the Company (and each person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act, each officer of the Company who
signs the Registration Statement and each director of the Company) from and
against any losses, claims, damages or liabilities to which the Company (or any
such officer, director or controlling person) may become subject (under the
Securities Act or otherwise), insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) arise out of, or are
based upon, (i) any failure to comply with the covenants and agreements
contained in Section 7.2 hereof respecting sale of the Shares, or (ii) any
untrue statement of a material fact contained in the Registration Statement if
such untrue statement was made in reliance upon and in conformity with written
information furnished by or on behalf of the Investor specifically for use in
preparation of the Registration Statement, and the Investor will reimburse the
Company (or such officer, director or controlling person), as the case may be,
for any legal or other expenses reasonably incurred in investigating, defending
or preparing to defend any such action, proceeding or claim; provided that the
Investor's obligation to indemnify the Company shall be limited to the net
amount received by the Investor from the sale of the Shares.

                       (c) Promptly after receipt by any indemnified person of a
notice of a claim or the beginning of any action in respect of which indemnity
is to be sought against an indemnifying person pursuant to this Section 7.3,
such indemnified person shall notify the indemnifying person in writing of such
claim or of the commencement of such action, but the omission to so notify the
indemnifying party will not relieve it from any liability which it may have to
any indemnified party under this Section 7.3 (except to the extent that such
omission materially and adversely affects the indemnifying party's ability to
defend such action) or from any liability otherwise than under this Section 7.3.
Subject to the provisions hereinafter stated, in case any such action shall be
brought against an indemnified person, the indemnifying person shall be entitled
to participate therein, and, to the extent that it shall elect by written notice
delivered to the indemnified party promptly after receiving the aforesaid notice
from such indemnified party, shall be entitled to assume the defense thereof,
with counsel reasonably satisfactory to such indemnified person. After notice
from the indemnifying person to such indemnified person of its election to
assume the defense thereof, such indemnifying person shall not be liable to such
indemnified person for any legal expenses subsequently incurred by such
indemnified person in connection with the defense thereof, provided, however,
that if there exists or shall exist a conflict of interest that would make it
inappropriate, in the opinion of counsel to the indemnified person, for the same
counsel to represent both the indemnified person and such indemnifying person or
any affiliate or associate thereof, the indemnified person shall be entitled to
retain its own counsel at the expense of such indemnifying person; provided,
however, that no indemnifying person shall be responsible for the fees and
expenses of more than one separate counsel (together with appropriate local
counsel) for all indemnified parties. In no event shall any indemnifying person
be liable in respect of any amounts paid in settlement of any action unless the
indemnifying person shall have approved the terms of such settlement; provided
that such consent shall not be

<PAGE>   10
unreasonably withheld. No indemnifying person shall, without the prior written
consent of the indemnified person, effect any settlement of any pending or
threatened proceeding in respect of which any indemnified person is or could
have been a party and indemnification could have been sought hereunder by such
indemnified person, unless such settlement includes an unconditional release of
such indemnified person from all liability on claims that are the subject matter
of such proceeding.

                       (d) If the indemnification provided for in this Section
7.3 is unavailable to or insufficient to hold harmless an indemnified party
under subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to therein,
then each indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is appropriate
to reflect the relative fault of the Company on the one hand and the Investor,
as well as any other Selling Shareholders under such registration statement on
the other in connection with the statements or omissions or other matters which
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The relative
fault shall be determined by reference to, among other things, in the case of an
untrue statement, whether the untrue statement relates to information supplied
by the Company on the one hand or an Investor or other Selling Shareholder on
the other and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement. The Company and the
Investor agree that it would not be just and equitable if contribution pursuant
to this subsection (d) were determined by pro rata allocation (even if the
Investor and other Selling Shareholders were treated as one entity for such
purpose) or by any other method of allocation which does not take into account
the equitable considerations referred to above in this subsection (d). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to above
in this subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
subsection (d), the Investor shall not be required to contribute any amount in
excess of the amount by which the net amount received by the Investor from the
sale of the Shares to which such loss relates exceeds the amount of any damages
which such Investor has otherwise been required to pay by reason of such untrue
statement. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
Investor's obligations in this subsection to contribute shall be in proportion
to its Investor sale of Shares to which such loss relates and shall not be joint
with any other Selling Shareholders.

                       (e) The parties to this Agreement hereby acknowledge that
they are sophisticated business persons who were represented by counsel during
the negotiations regarding the provisions hereof including, without limitation,
the provisions of this Section 7.3, and are fully informed regarding said
provisions. They further acknowledge that the provisions of this Section 7.3
fairly allocate the risks in light of the ability of the parties to investigate
the Company and its business in order to assure that adequate disclosure is made
in the Registration Statement as required by the Act and the Exchange Act. The
parties are advised that federal or state public policy as interpreted by the
courts in certain jurisdictions may be contrary to certain of the provisions of
this Section 7.3, and the parties hereto hereby expressly waive and relinquish
any right or ability to assert such public policy as a defense to a claim under
this Section 7.3 and further agree not to attempt to assert any such defense.

               7.4 Termination of Conditions and Obligations. The conditions
precedent imposed by Section 5 or this Section 7 upon the transferability of the
Shares shall cease and terminate as to any particular number of the Shares when
such Shares shall have been effectively registered under the Securities Act and
sold or otherwise disposed of in accordance with the intended method of
disposition set forth in the Registration Statement covering such Shares or at
such time as an opinion of counsel satisfactory to the Company shall have been
rendered to the effect that such conditions are not necessary in order to comply
with the Securities Act.

               7.5 Information Available. So long as the Registration Statement
is effective covering the resale of Shares owned by the Investor, the Company
will furnish to the Investor:

                       (a) as soon as practicable after it is available, one
copy of (i) its Annual Report to Stockholders (which Annual Report shall contain
financial statements audited in accordance with generally accepted accounting
principles by a national firm of certified public accountants), (ii) its Annual
Report on Form 10-K and (iii) its Quarterly Reports on Form 10-Q (the foregoing,
in each case, excluding exhibits);



<PAGE>   11
                       (b) upon the request of the Investor, all exhibits
excluded by the parenthetical to subparagraph (a) of this Section 7.5 as filed
with the SEC and all other information that is made available to shareholders;
and

                       (c) upon the reasonable request of the Investor, an
adequate number of copies of the Prospectuses to supply to any other party
requiring such Prospectuses in order for the Investor to effect sales
thereunder; and the Company, upon the reasonable request of the Investor, will
meet with the Investor or a representative thereof at the Company's headquarters
to discuss all information relevant for disclosure in the Registration Statement
covering the Shares and will otherwise cooperate with any Investor conducting an
investigation for the purpose of reducing or eliminating such Investor's
exposure to liability under the Securities Act, including the reasonable
production of information at the Company's headquarters; provided, that the
Company shall not be required to disclose any confidential information to or
meet at its headquarters with any Investor until and unless the Investor shall
have entered into a confidentiality agreement in form and substance reasonably
satisfactory to the Company with the Company with respect thereto.

        8. Notices. All notices, requests, consents and other communications
hereunder shall be in writing, shall be mailed (A) if within domestic United
States by first-class registered or certified airmail, or nationally recognized
overnight express courier, postage prepaid, or by facsimile, or (B) if delivered
from outside the United States, by International Federal Express or facsimile,
and shall be deemed given (i) if delivered by first-class registered or
certified mail domestic, three business days after so mailed, (ii) if delivered
by nationally recognized overnight carrier, one business day after so mailed,
(iii) if delivered by International Federal Express, two business days after so
mailed, (iv) if delivered by facsimile, upon electronic confirmation of receipt
and shall be delivered as addressed as follows:

               (a)     if to the Company, to:

                             Axys Pharmaceuticals, Inc.
                             180 Kimball Way
                             South San Francisco, CA 94080
                             Attn:  William J. Newell
                             Fax:  (650) 829-1067

               (b)     with a copy to:

                             Cooley Godward LLP
                             5 Palo Alto Square
                             Palo Alto, CA 94306
                             Attn:  Alan C. Mendelson
                             Fax:  (650) 857-0663


               (c)    if to the Investor, at its address on the signature page
                      hereto, or at such other address or addresses as may have
                      been furnished to the Company in writing.

        9. Changes. This Agreement may not be modified or amended except
pursuant to an instrument in writing signed by the Company and the Investor.

        10. Headings. The headings of the various sections of this Agreement
have been inserted for convenience of reference only and shall not be deemed to
be part of this Agreement.

        11. Severability. In case any provision contained in this Agreement
should be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.

        12. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of Delaware, without giving
effect to the principles of conflicts of law.

<PAGE>   12
        13. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument, and shall become effective
when one or more counterparts have been signed by each party hereto and
delivered to the other parties.

        14. Rule 144. The Company covenants that it will file the reports
required to be filed by it under the Securities Act and the Exchange Act and the
rules and regulations adopted by the SEC thereunder (or, if the Company is not
required to file such reports, it will, upon the request of any Investor holding
Shares purchased hereunder made after the first anniversary of the Closing Date,
make publicly available such information as necessary to permit sales pursuant
to Rule 144 under the Securities Act), and it will take such further action as
any such Investor may reasonably request, all to the extent required from time
to time to enable such Investor to sell Shares purchased hereunder without
registration under the Securities Act within the limitation of the exemptions
provided by (a) Rule 144 under the Securities Act, as such Rule may be amended
from time to time, or (b) any similar rule or regulation hereafter adopted by
the SEC. Upon the request of the Investor, the Company will deliver to such
holder a written statement as to whether it has complied with such information
and requirements.