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Exhibit 10.53
  
  July 11,
    2006
    CONFIDENTIAL          
    The salary in this position is $300,000.00 on an annualized
    basis, or approximately $11,538.46 bi-weekly, subject to
    standard deductions and withholdings.
    Subject to approval by the Board of Directors, you will receive
    an option to purchase 75,000 shares of the Companys
    common stock (Option) at a price per share equal to
    the market closing price of the Companys common stock on
    the last date prior to your first day of employment. This Option
    will have a vesting commencement date of your first day of
    employment with the Company. One quarter (1/4) of the granted
    shares vest one year after the vesting commencement date and
    1/48th of
    the shares vest monthly thereafter over the next three years
    (fourth anniversary of the vesting commencement date). The offer
    of these Options is conditioned upon your acceptance of our
    offer of employment and subject to the terms and requirements of
    the Companys 2005 Equity Incentive Plan (the
    Incentive Plan) and the Companys form of stock
    option agreement. You are also eligible to participate in the
    SGX 2005 Employee Stock Purchase Plan.
    Included in the compensation package is a benefits plan that
    offers medical, dental, vision, life insurance, Accidental Death
    and Dismemberment (AD&D) insurance, long-term disability,
    short-term disability insurance; and a 401(k) plan. For
    full-time employees, vacation accrues on a pay period basis at
    the annual rate of 120 hours (three weeks). The vacation
    accrual increases by one day after each anniversary with the
    Company, up to a maximum of 20 days per year. The Company
    also provides employees with five days of sick time per year. In
    addition to our vacation policy as noted above, the company is
    closed over the week between Christmas and New Year.
    You are also eligible to participate in the Companys cash
    bonus program. In your position, you are eligible to earn a cash
    bonus of up to 30% of your base salary based upon corporate and
    individual goal achievement.
    You will receive a one-time conditional sign on bonus in the
    amount of $100,000. This bonus is subject to federal, state and
    payroll tax withholdings and will be paid to you in January
    2007, provided you are still employed by the company at said
    time. If you leave the company prior to completing one year of
    service, you will be required to repay the full amount of this
    bonus at that time.       SGX
    Pharmaceuticals,
    Inc.  www.sgxpharma.com
 Corporate
    Headquarters  10505 Roselle
    Street  San Diego, CA
    92121  858.558.4850  858.558.4859
    fax
 SGX
    Beamline  Argonne National Laboratory, Bldg.
    438A  9700 S. Cass
    Avenue  Argonne, IL
    60439  630.252.0820  630.252.0835
    fax




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gross-up Items 1-4 gross-up paragraphs 1-4
    
    Reasonable costs associated with the transportation for you and
    your family (including pets) with your final move trip to
    San Diego.
    Household goods move to include packing, shipping, partial
    unpack, 2 cars, insurance of goods during shipment and third
    party services.
    SGX has contracted with Relocation Coordinates, Inc. to
    coordinate your move with a variety of relocation assistance
    including finding a moving company, interim housing, a real
    estate agent and general information about the San Diego
    area. If you use a real estate agent associated with Relocation
    Coordinates for the sale
    and/or
    purchase of a home, you can receive 25% of 1% of the purchase
    price towards your closing costs. If the realtor is used on both
    the sale and purchase, you would receive the benefit on each
    transaction.
    Miscellaneous Expense Allowance: SGX realizes you will incur
    incidental moving costs during the relocation. To assist you
    with these incidental expenses, SGX will provide you with a
    moving allowance of $8,000. This moving allowance is subject to
    required federal, state, and payroll withholdings and will be
    paid with the first paycheck you receive from SGX.
    If you are required to report to work prior to finding a new
    permanent residence, you are eligible for Temporary Housing up
    to a maximum of 90 days.
    If you are required to report to work prior to finding a new
    permanent residence, you are eligible for temporary storage of
    household goods up to a maximum of 90 days.




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Rule 13d-3
          
    Signing a copy of our Employment, Confidential Information and
    Invention Assignment Agreement, this is attached for your
    information.




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
    Conforming to the Immigration Reform and Control Act of 1986.
    Please bring with you, on your start date, the original of one
    of the documents noted in List A on the I-9 form attached or one
    document from List B and one document from List C. If you do not
    have the originals of any of these documents, please call Human
    Resources immediately. Please do not complete or sign the I-9
    until you begin employment. You will need to provide sufficient
    documentation to show proof of eligibility for employment in the
    United States.
    Receiving satisfactory results from your background check and
    drug screening, as well as any other pre-employment testing that
    may be required due to the specific nature of the industry
    and/or your
    position.          This offer is valid until the end of business
    on July 21, 2006.




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
    Copy of Offer Letter
    I-9
    Employment, Confidential Information And Invention Assignment
    Agreement
    Consumer Report Disclosure and Authorization
    Background check release form
    Forensic Drug Testing Custody and Control Form
    Quest Diagnostic location sheet
    Summaries: Your rights under the Fair Employment Credit
    Reporting Act and California Civil Code 1786.22     I have read and accept the terms and conditions of employment
    as described in this offer letter and will start my employment
    on 14 August, 2006.
    /s/ Terence Anthony Rugg