##### 



EXHIBIT 10.42
 Execution Version
 NOVARTIS PHARMA AG
 AND
 SGX PHARMACEUTICALS, INC.
 STOCK PURCHASE AGREEMENT




---



##### 



TABLE OF CONTENTS
 Page1.
    
    Purchase and Sale of Common Stock
    
    
    11.1
    
    
    Sale of the Common Stock
    
    
    12.
    
    Closing Date; Deliveries
    
    
    12.1
    
    
    Closing Date
    
    
    12.2
    
    
    Deliveries
    
    
    12.3
    
    
    Further Assurances
    
    
    13.
    
    Representations and Warranties of the Company
    
    
    23.1
    
    
    Organization, Good Standing and Qualification
    
    
    23.2
    
    
    Capitalization and Voting Rights
    
    
    23.3
    
    
    Subsidiaries
    
    
    33.4
    
    
    Authorization
    
    
    33.5
    
    
    No Conflict
    
    
    33.6
    
    
    Valid Issuance of Common Stock
    
    
    43.7
    
    
    Liabilities
    
    
    43.8
    
    
    Governmental Consents
    
    
    43.9
    
    
    Litigation
    
    
    43.10
    
    
    Employees and Consultants
    
    
    53.11
    
    
    Proprietary Rights.
    
    
    53.12
    
    
    Agreements; Action
    
    
    63.13
    
    
    Registration Rights
    
    
    73.14
    
    
    Title to Property and Assets
    
    
    73.15
    
    
    Financial Statements and SEC Filings
    
    
    73.16
    
    
    Disclosure Controls and Procedures
    
    
    83.17
    
    
    Accounting Controls
    
    
    83.18
    
    
    Employee Benefit Plans
    
    
    83.19
    
    
    Tax Returns, Payments and Elections
    
    
    83.20
    
    
    Insurance
    
    
    93.21
    
    
    Labor Agreements and Actions
    
    
    93.22
    
    
    Real Property Holding Corporation
    
    
    93.23
3.24
    
    
    Investment Company
Offering
    
    
    9
93.25
    
    
    Environmental Matters
    
    
    103.26
    
    
    Securities Laws
    
    
    103.27
    
    
    Licenses and Other Rights; Compliance with Laws
    
    
    113.28
    
    
    Broker or Finders
    
    
    113.29
    
    
    Market Listing
    
    
    113.30
    
    
    Related Party Transactions
    
    
    11
 i




---



##### 



Page3.31
    
    
    No Material Adverse Effect
    
    
    114.
    
    Representations and Warranties of the Investor
    
    
    114.1
    
    
    Authorization, Governmental Consents and Compliance with Other Instruments
    
    
    114.2
    
    
    Purchase Entirely for Own Account
    
    
    124.3
    
    
    Disclosure of Information
    
    
    124.4
    
    
    Investment Experience and Accredited Investor Status
    
    
    124.5
    
    
    No Governmental Review
    
    
    124.6
    
    
    Residency
    
    
    124.7
    
    
    Foreign Investors
    
    
    124.8
    
    
    No Short Sales
    
    
    134.9
    
    
    Restricted Securities
    
    
    134.10
    
    
    Legends
    
    
    135.
    
    Conditions to Closing of Investor
    
    
    135.1
    
    
    Representations and Warranties Correct
    
    
    145.2
    
    
    Covenants
    
    
    145.3
    
    
    Compliance Certificate
    
    
    145.4
    
    
    Certification of Resolutions and Officers
    
    
    145.5
    
    
    Organizational Documents
    
    
    145.6
    
    
    Good Standing Certificate
    
    
    145.7
    
    
    Cross Receipt
    
    
    145.8
    
    
    Other Agreements
    
    
    155.9
    
    
    Proceedings and Documents
    
    
    155.10
    
    
    Continued Market Listing
    
    
    155.11
    
    
    Registration Rights Consent
    
    
    156.
    
    Conditions to Closing of the Company
    
    
    156.1
    
    
    Representations and Warranties Correct
    
    
    156.2
    
    
    Cross Receipt
    
    
    156.3
    
    
    Other Agreements
    
    
    156.4
    
    
    Lock-Up Agreement
    
    
    157.
    
    Mutual Conditions to Closing
    
    
    157.1
    
    
    Qualifications
    
    
    167.2
    
    
    Absence of Litigation
    
    
    168.
    
    Additional Covenants and Agreements
    
    
    168.1
    
    
    Share Legend Removal
    
    
    168.2
    
    
    Use of Proceeds
    
    
    168.3
    
    
    Standstill Agreement
    
    
    168.4
    
    
    Termination of Standstill
    
    
    17
 ii




---



##### 



Page8.5
    
    
    Share Ownership
    
    
    189.
    
    Miscellaneous
    
    
    189.1
    
    
    Termination
    
    
    189.2
    
    
    Effect of Termination
    
    
    189.3
    
    
    Survival of Warranties
    
    
    189.4
    
    
    Attorneys Fees
    
    
    199.5
    
    
    Remedies
    
    
    199.6
    
    
    Successors and Assigns
    
    
    199.7
    
    
    Entire Agreement
    
    
    199.8
    
    
    Governing Law and Consent to Jurisdiction
    
    
    199.9
    
    
    Counterparts
    
    
    199.10
    
    
    Titles and Subtitles
    
    
    209.11
    
    
    Nouns and Pronouns
    
    
    209.12
    
    
    Notices
    
    
    209.13
    
    
    Finders Fee
    
    
    219.14
    
    
    Expenses
    
    
    219.15
    
    
    Amendments and Waivers
    
    
    219.16
    
    
    Severability
    
    
    219.17
    
    
    Confidentiality and Publicity
    
    
    219.18
    
    
    Definitions
    
    
    22Annex A  Disclosure ScheduleExhibit A  Cross ReceiptExhibit B  Investor Rights Agreement AmendmentExhibit C  Lock-Up Agreement
 iii




---



##### 



STOCK PURCHASE AGREEMENT
 THIS STOCK PURCHASE AGREEMENT Agreement th Novartis Investor Company
  1. Purchase and Sale of Common Stock
 1.1 Sale of the Common Stock.
 Shares Common Stock Purchase Price
 Share Price
 2. Closing Date; Deliveries
 2.1 Closing Date. Closing nd Closing Date
 2.2 Deliveries.
 Deliveries by the Company .
 Deliveries by the Investor .
 2.3 Further Assurances.




---



##### 



3. Representations and Warranties of the Company Disclosure Schedule Registration Statement
 3.1 Organization, Good Standing and Qualification. Material Adverse Effect Certificate of Incorporation
 3.2 Capitalization and Voting Rights.
  Preferred Stock Preferred Stock
 Common Stock
  2




---



##### 



3.3 Subsidiaries.
 3.4 Authorization.
 3.5 No Conflict.
 Governmental Authority
 3




---



##### 



3.6 Valid Issuance of Common Stock.
 3.7 Liabilities. GAAP
 3.8 Governmental Consents.
 3.9 Litigation.
 4




---



##### 



3.10 Employees and Consultants.
   3.11 Proprietary Rights.
 Proprietary Rights Company Rights
  5




---



##### 



Material IP Contracts
 3.12 Agreements; Action.
    Obligations
 6
        3.13 Registration Rights. Securities Act
 3.14 Title to Property and Assets.
 3.15 Financial Statements and SEC Filings.
 Audited Financial Statements Interim Financial Statements 2005 Unaudited Financial Statements Financial
Statements 7
        Company SEC Documents
 3.16 Disclosure Controls and Procedures.
 3.17 Accounting Controls.
 3.18 Employee Benefit Plans. ERISA
 3.19 Tax Returns, Payments and Elections .
 8




---



##### 



3.20 Insurance.
 3.21 Labor Agreements and Actions.
 3.22 Real Property Holding Corporation.
 3.23 Investment Company. Investment Company Act
 3.24 Offering.
 9




---



##### 



3.25 Environmental Matters.
 Environmental Law
 Release Property Hazardous Materials
   3.26 Securities Laws. Securities Exchange Act Securities Laws
 10




---



##### 



3.27 Licenses and Other Rights; Compliance with Laws.
 3.28 Broker or Finders.
 3.29 Market Listing.
 3.30 Related Party Transactions.
 3.31 No Material Adverse Effect.
 4. Representations and Warranties of the Investor
 4.1 Authorization, Governmental Consents and Compliance with Other Instruments.
 11




---



##### 



4.2 Purchase Entirely for Own Account.
 4.3 Disclosure of Information.
 4.4 Investment Experience and Accredited Investor Status.
 4.5 No Governmental Review.
 4.6 Residency.
 4.7 Foreign Investors.
 12




---



##### 



4.8 No Short Sales.
 4.9 Restricted Securities.
 4.10 Legends.
 THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED IN
THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH
ACT OR AN EXEMPTION FROM SUCH REGISTRATION AS PROVIDED FOR IN SUCH ACT.
  5. Conditions to Closing of Investor
 13




---



##### 



5.1 Representations and Warranties Correct.
 5.2 Covenants.
 5.3 Compliance Certificate.
 5.4 Certification of Resolutions and Officers.
 5.5 Organizational Documents.
 5.6 Good Standing Certificate.
 5.7 Cross Receipt.
 14




---



##### 



Exhibit A
 5.8 Other Agreements.
 5.9 Proceedings and Documents
 5.10 Continued Market Listing.
 5.11 Registration Rights Consent.
 6. Conditions to Closing of the Company
 6.1 Representations and Warranties Correct.
 6.2 Cross Receipt. Exhibit A
 6.3 Other Agreements.
 6.4 Lock-Up Agreement. Exhibit C
 7. Mutual Conditions to Closing
 15




---



##### 



7.1 Qualifications.
 7.2 Absence of Litigation.
 8. Additional Covenants and Agreements
 8.1 Share Legend Removal.
 8.2 Use of Proceeds.
 8.3 Standstill Agreement.
 Board Company Equity
Security
 16




---



##### 



8.4 Termination of Standstill.
 17




---



##### 



8.5 Share Ownership.
 9. Miscellaneous
 9.1 Termination.
    9.2 Effect of Termination.
 9.3 Survival of Warranties.
 18




---



##### 



9.4 Attorneys Fees
 9.5 Remedies.
 9.6 Successors and Assigns. provided however
 9.7 Entire Agreement.
 9.8 Governing Law and Consent to Jurisdiction.
 9.9 Counterparts.
 19




---



##### 



9.10 Titles and Subtitles.
 9.11 Nouns and Pronouns.
 9.12 Notices.
  
  llp
  
  
 20




---



##### 



9.13 Finders Fee.
 9.14 Expenses.
 9.15 Amendments and Waivers.
 9.16 Severability.
 9.17 Confidentiality and Publicity.
  21




---



##### 



9.18 Definitions.
 2005 Unaudited Financial Statements
 Affiliate
 22




---



##### 



Audited Financial Statements
 Board
 Certificate of Incorporation
 Closing Date
 Closing
 Code
 Common Stock
 Company
 Company Equity Security
 Company Rights
 Company SEC Documents
 Disclosure Schedule
 Encumbrance(s)
 Environmental Law
 ERISA
 Financial Statements
 GAAP
 Governmental Authority
 Hazardous Materials
 Interim Financial Statements
 Investment Company Act
 23




---



##### 



Investor
 Investor Rights Agreement
 Investor Rights Agreement Amendment Exhibit B
 License and Collaboration Agreement
 Material Adverse Effect
 Material IP Contracts
 Novartis
 Obligations
 Person
 Preferred Stock
 Property
 Proprietary Rights
 Purchase Price
 Registration Statement
 Release
 SEC
 Securities Act
 Securities Exchange Act
 24




---



##### 



Securities Laws
 Shares
 Share Price
 Subsidiary
 25




---



##### 



NOVARTIS PHARMA AGBy:
Name:
    
    /s/ Joseph E. Mamie

Joseph E. MamieTitle:
    
    Head Operational TreasuryBy:
    
    /s/ Dr. Matthias S. RungeName:
    
    Dr. Matthias S. RungeTitle:
    
    Head Legal Pharma Ophthalmics & Oncology
Region EuropeSGX PHARMACEUTICALS, INC.By:
    
    /s/ Michael GreyName:
    
    Michael GreyTitle:
    
    President and Chief Executive Officer




---



##### 



Annex A
 Disclosure Schedule
 (Delivered herewith)




---



##### 



Exhibit A
 Cross Receipt
   CROSS-RECEIPT
 Purchase Agreement Company Novartis
  Shares
 Purchase
Price Share Price




---



##### 



SGX PHARMACEUTICALS, INC.By:
Name:
    
    /s/ Michael Grey

Michael GreyTitle:
    
    President and Chief Executive OfficerNOVARTIS PHARMA AGBy:
    
    /s/ Joseph E. MamieName:
    
    Joseph E. MamieTitle:
    
    Head Operational TreasuryBy:
    
    /s/ Dr. Matthias S. RungeName:
    
    Dr. Matthias S. RungeTitle:
    
    Head Legal Pharma Ophthalmics &
Oncology Region Europe




---



##### 



Exhibit B
 Investor Rights Agreement Amendment




---



##### 



Exhibit C
 Lock-Up Agreement  LOCK-UP AGREEMENT
  
   ,




---



##### 



bona fide provided however
 provided however




---



##### 








---



##### 



Very truly yours,NOVARTIS PHARMA AGBy:
Name:
    
    /s/ Joseph E. Mamie

Joseph E. MamieTitle:
    
    Head Operational TreasuryBy:
    
    /s/ Dr. Matthias S. RungeName:
    
    Dr. Matthias S. RungeTitle:
    
    Head Legal Pharma Ophthalmics &
Oncology Region Europe