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                                                                   EXHIBIT 10.20

April 17, 2001


VIA TELECOPY (949) 788-6706


NeoTherapeutics, Inc.
157 Technology Drive
Irvine, CA  92618
Attention:  Chief Financial Officer


Gentlemen:

This letter evidences a binding agreement among NeoTherapeutics, Inc. (the
"Company"), Montrose Investments Ltd. ("Montrose"), HBK Master Fund L.P.
("Master Fund") and Strong River Investments, Inc. ("Strong River"), as follows:

1.   Montrose and Strong River (the "Purchasers") hereby agree to purchase
     securities from the Company for a total purchase price of $24 million, as
     follows:

     a.   Within two business days after the date of this letter, the Purchasers
          will purchase an aggregate of $6.0 million of the Company's common
          stock, $.001 par value per share (the "Common Stock"), at a purchase
          price of $5.10 per share under the Company's currently effective shelf
          registration statement.

     b.   The Purchasers will purchaser convertible debentures (the "New
          Debentures") and fixed-price warrants (the "New Warrants") from the
          Company in two tranches, the first having an aggregate purchase price
          of $10 million and the second having an aggregate purchase price of $8
          million, as described in Exhibit A.

     c.   In lieu of a commitment fee, the Company hereby agrees to pay each
          Purchaser $500,000 if the first tranche of the New Debentures and New
          Warrants is not issued at the Initial Closing as contemplated in
          Exhibit A within 30 days after the date of this letter. If the first
          tranche of the New Debentures and New Warrants is so issued at the
          Initial Closing, but the second tranche of New Debentures and New
          Warrants is not issued at the Second Closing as contemplated in
          Exhibit A within seven months after the date of this letter agreement,
          then the Company will pay each Purchaser $400,000. Notwithstanding the
          foregoing, the Company will not be required to make payments under
          this paragraph if the Purchasers fail to negotiate the operative
          documents in good faith or fail to perform their obligations under the
          operative documents.

     d.   The Company hereby grants a right of first refusal to the Purchasers
          on the terms set forth in Exhibit B.


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2.   Either Montrose or Master Fund is the holder of certain warrants to
     purchase Common Stock, as specified in Exhibit C (the "HBK Closing
     Warrants"). Strong River is the holder of certain warrants to purchase
     Common Stock, as specified in Exhibit D (the "Strong River Closing
     Warrants" and, together with the HBK Closing Warrants, the "Closing
     Warrants"). In addition, each of Montrose and Strong River is the holder of
     a Class B Warrant, dated as of April 6, 2000, to purchase up to a total of
     2,000,000 shares of Common Stock (for each Warrant) on the terms set forth
     therein (the "Callable Warrants"). The holder of each Closing Warrant and
     each Callable Warrant is referred to herein as the "Holder."

     a.   Notwithstanding any contrary provisions of any Closing Warrant, the
          Holder of a Closing Warrant will not be entitled to exercise such
          Closing Warrant until December 31, 2002.

     b.   Notwithstanding any contrary provisions of any Callable Warrant, the
          Holder of a Callable Warrant will not be entitled to exercise such
          Callable Warrant pursuant to Section 3(b)(i) thereof until December
          31, 2002; provided that the Holder may exercise such Callable Warrant
          in response to a Call Notice, with respect to the number of Warrant
          Shares subject to such Call Notice, from the time of delivery of such
          Call Notice until the Call Expiration Time applicable thereto (as such
          capitalized terms are defined in the Callable Warrant).

     c.   Notwithstanding the foregoing, the restrictions on exercise of the
          Closing Warrants and the Callable Warrant set forth in the two
          preceding paragraphs will terminate as follows:

          i.   65 days after notice from the Holder to the Company, referencing
               this letter, requesting that such restrictions on exercise be
               waived with respect to all or a specified portion of such Closing
               Warrant or Callable Warrant; and

          ii.  one business day prior to the occurrence of any events specified
               in clause (1) through (3) of Section 8(b) of the Callable Warrant
               or clause (i) through (v) of Section 8(d) of the Callable
               Warrant, it being understood that the intention of this paragraph
               is to allow the Holders to exercise such warrants and participate
               in (or otherwise take action with respect to) such event as a
               holder of the Common Stock issuable upon such exercise, and the
               Company will take any actions necessary to facilitate such
               exercise and participation.

3.   Each Callable Warrant is hereby amended as follows:

     a.   The reference to $5.00 in Section 3(a)(iii)(i) of each Callable
          Warrant is hereby amended to refer instead to $2.00.

     b.   The first sentence of Section 3(c) of each Callable Warrant is hereby
          amended by adding the following language to the end of such sentence:
          ";provided that if the average of the Per Share Market Values (as
          defined in Exhibit A) for the five Trading Days immediately preceding
          the Delivery Date of a Call Notice is less than $5.00, then the
          Exercise Price applicable to an exercise following such Call Notice
          shall equal the lower of (i) $33.75 (subject to equitable adjustment
          for stock splits, reverse splits, combinations and other similar
          events) and (ii) 95% of the Per Share Market Value on the Trading Day
          immediately following such Delivery Date."

4.   Each Purchaser is the holder of an Adjustable Warrant, dated as of
     September 29, 2000 (the "Adjustable Warrants"). On or around March 16,
     2001, each Purchaser exercised its Adjustable


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     Warrant with respect to the Second Vesting Date thereunder to purchase
     420,487 shares of Common Stock (840,974 share in the aggregate, referred to
     as the "Second Vesting Date Shares"). The Company has not yet issued
     certificates evidencing the Second Vesting Date Shares. The Adjustable
     Warrants are hereby amended as necessary to cause the number of Second
     Vesting Date Shares to be increased to an aggregate of 900,000 shares
     (450,000 shares for Montrose and 450,000 shares for Strong River), and the
     Company agrees to issue and deliver certificates evidencing such Second
     Vesting Date Shares promptly after the date hereof.

5.   Pursuant to the Registration Rights Agreement, dated as of September 29,
     2000, among the Company and the Purchaser (the "Registration Rights
     Agreement"), the Company is required to file an additional Registration
     Statement covering the resale by the Purchasers of the Second Vesting Date
     Shares. For purposes of determining the Company's obligations and the
     Purchaser's rights in connection with such additional Registration
     Statement (including the determination of whether an "Event" has occurred
     under Section 2(e) of the Registration Rights Agreement), the "Filing Date"
     applicable to such additional Registration Statement will be seven days
     after the Company files its Annual Report on Form 10-K for the year ended
     December 31, 2000, and the "Effectiveness Date" applicable to such
     additional Registration Statement will be June 1, 2001. Accordingly, if
     such additional Registration Statement is not filed by such Filing Date or
     declared effective by such Effectiveness Date, an "Event" will be deemed to
     have occurred on such date pursuant to Section 2(e) of the Registration
     Rights Agreement, and the Company will pay any resulting Registration Delay
     Payments in accordance with such Section; provided that the amount of any
     monthly Registration Delay Payment so required shall equal 2% of the Deemed
     Market Value of the Second Vesting Date Shares, rather than 2% of the
     entire purchase price paid by such Holder. For such purposes, the "Deemed
     Market value" of the Second Vesting Date Shares for each Purchaser shall
     equal the number of Second Vesting Date Shares issued (or issuable) to such
     Purchaser times the greater of (a) the Per Share Market Value (as defined
     in the Adjustable Warrants) on the applicable Event Date or (b) the Per
     Share Market Value on the Trading Date prior to the date of payment.

6.   Montrose, Master Fund and Strong River (the "Purchaser Parties") hereby
     fully and unconditionally release and forever discharge the Company and its
     employees, officers, directors, agents, successors and assigns from any and
     all claims that any Purchaser Party may have or claim to have against such
     persons arising out of or resulting from any breach of an agreement between
     or among any Purchaser Party and the Company (an "Existing Agreement"),
     which breach is known by such Purchaser Party to have occurred prior to the
     date hereof. The Company hereby fully and unconditionally releases and
     forever discharges each Purchaser Party and their investment managers and
     Brighton Capital, Ltd. and their respective employees, officers, directors,
     agents, successors and assignees from any and all claims that the Company
     may have or claim to have against such persons arising out of or resulting
     from any breach of an Existing Agreement which breach is known by the
     Company to have occurred prior to the date hereof.

7.   The obligations of each Purchaser hereunder is several and not joint with
     the obligations of any other Purchaser hereunder, and neither Purchaser
     shall be responsible in any way for the performance of the obligations of
     any other Purchaser hereunder. Nothing contained herein or in any other
     agreement or document delivered at any closing, and no action taken by any
     Purchaser pursuant hereto or thereto, shall be deemed to constitute the
     Purchasers as a partnership, an association, a joint venture or any other
     kind of entity, or create a presumption that the Purchasers are in any way
     acting in concert with respect to such obligations or the transactions
     contemplated by this letter agreement.


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8.   This letter agreement shall be governed by and construed and enforced in
     accordance with the internal laws of the State of New York, without regard
     to the principles of conflicts of law thereof.

9.   This letter may be executed in two or more counterparts, all of which when
     taken together shall be considered one and the same agreement. A signature
     delivered by facsimile transmission shall create a valid and binding
     obligation of the party executing (or on whose behalf such signature is
     executed) with the same force and effect as if such facsimile signature
     page were an original thereof.

Please sign this letter in the space provided below to indicate your agreement
to the foregoing. Except as set forth in this letter, the Closing Warrants, the
Callable Warrant and all other Existing Agreements remain in full force and
effect in accordance with their respective terms.

MONTROSE INVESTMENTS LTD.
By:  HBK Investments, L.P.,
     Investment Manager


By:
       ---------------------------------
Name:
       ---------------------------------
Title:
       ---------------------------------


HBK MASTER FUND, L.P.
By:  HBK Investments, L.P.,
     Investment Manager


By:
       ---------------------------------
Name:
       ---------------------------------
Title:
       ---------------------------------


STRONG RIVER INVESTMENTS, INC.


By:
       ---------------------------------
Name:
       ---------------------------------
Title:
       ---------------------------------


Agreed and accepted:

NEOTHERAPEUTICS, INC..


By:
       ---------------------------------
Name:
       ---------------------------------
Title:
       ---------------------------------


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                                                                       EXHIBIT A

                         NEW DEBENTURES AND NEW WARRANTS


Proceeds:                     $18 million, payable $10 million at an initial
                              closing, which will occur as soon as practicable
                              after the date of this letter agreement and in any
                              event within 30 days (the "Initial Closing"), and
                              $8 million at a subsequent closing, which will
                              occur at the option of either the Company or a
                              Purchaser six months after the Initial Closing
                              (the "Second Closing").

Documentation:                To the extent applicable and except as expressly
                              provided in this term sheet, (a) the Purchase
                              Agreement governing the sale of the New Debentures
                              and the New Warrants will be substantially similar
                              the Securities Purchase Agreement among the
                              Company and the Purchasers dated April 6, 2000
                              (the "April 2000 Agreement"); (b) the New
                              Debentures and the New Warrants will be
                              substantially similar to the Debentures and the
                              Class A Warrants issued pursuant to the April 2000
                              Agreement, except that the New Warrants will
                              exclude the provisions related to additional
                              shares vesting in connection with the Class B
                              Warrants; and (c) the Company's and the
                              Purchaser's obligations with respect to the Second
                              Closing (including the conditions to the Second
                              Closing) will be governed by a letter agreement
                              substantially similar to the letter agreement
                              among the Company and the Purchasers dated April
                              6, 2000 (the "April 2000 Letter Agreement").

New Debentures:               $18 million in aggregate original principal amount
                              ($10 million at the Initial Closing and $8 million
                              at the Second Closing) of 5% convertible
                              debentures of the Company maturing on the fifty
                              anniversary of issuance.

Initial Conversion Price:     120% of the average Per Share Market Value over
                              the five Trading Days preceding the date of
                              issuance. Subsequent Conversion Price: Beginning
                              90 days after issuance, the Conversion Price will
                              equal the lesser of (a) the Initial Conversion
                              Price or (b) 101% of the average of the ten lowest
                              Per Share Market Values during the 30 Trading Days
                              immediately preceding the conversion date. (The
                              Conversion Price will not vary depending on
                              whether the Company or the Purchasers cause the
                              Second Closing to occur).

Floor Price:                  If the applicable Conversion Price is less than a
                              mutually agreeable floor price (the "Floor
                              Price"), the Company will have the option,
                              exercisable by providing at least 20 Trading Days
                              advance notice, to satisfy any conversion by
                              issuing shares as if the Conversion Price equaled
                              the Floor Price and paying the balance in cash
                              based on the average Per Share Market Value over
                              the five Trading Days preceding the conversion
                              date.


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Optional Redemption:          Upon 20 Trading Days notice, the Company may
                              redeem for cash all outstanding New Debentures at
                              a price equal to 106% of par plus accrued and
                              unpaid interest. The Purchasers may convert before
                              any such redemption becomes effective.

New Warrants:                 At each closing, the Purchaser will receive a 20%
                              warrant coverage (i.e., warrants to purchase a
                              number of shares of Common Stock equal to 20% of
                              the number of shares initially issuable upon
                              conversion of the New Debentures) at an exercise
                              price equal to 125% of the average Per Share
                              Market Value over the five Trading Days preceding
                              the date of issuance. The New Warrants will be
                              exercisable for five years following issuance.

Listing Approval:             The Company will insure that all Common Stock
                              underlying the New Debentures and the New Warrants
                              ("Underlying Shares") are approved for listing on
                              the Nasdaq National Market before the applicable
                              closing date, including by obtaining stockholder
                              approval, if required.

Registration Requirements:    The Company will file a Registration Statement
                              covering all Underlying Shares within 30 days
                              after the applicable closing date. The Company
                              will respond to all SEC comments within ten
                              calendar days of receipt and will use its best
                              efforts to cause each Registration Statement to
                              become effective within 90 days after the
                              applicable closing date. Liquidated damages equal
                              to 2% of the aggregate purchase price for each
                              tranche will be payable monthly following
                              specified "Events" under the Registration Rights
                              Agreement applicable to such tranche.

Per Share Market Value:       Closing bid price per share on the Nasdaq National
                              Market.

Legal Expenses:               Not to exceed $30,000, payable by the Company at
                              the Initial Closing.


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                                                                       EXHIBIT B

                             RIGHT OF FIRST REFUSAL


     The Company shall not, directly or indirectly, without the prior written
consent of the Purchasers (which shall not be unreasonably withheld), offer,
sell, grant any option to purchase, or otherwise dispose of (or announce any
offer, sale, grant or any option to purchase or other disposition) any of its or
its Affiliates' equity or equity-equivalent securities (a "Subsequent
Placement") for a period of one year after the date of this letter agreement,
except (a) the granting of options to employees or directors of the Company
under any stock option plan duly adopted by the Company, and the issuance of
shares upon exercise of such options, (b) the issuance of shares of Common Stock
upon exercise of currently outstanding options and warrants and upon conversion
of currently outstanding convertible securities of the Company if previously
disclosed in writing to the Purchasers, but not with respect to any amendment or
modification thereof, (c) shares of Common Stock issuable upon conversion of the
New Debentures and exercise of the New Warrants in accordance with the terms
thereof, and (d) shares of Common Stock issuable in connection with a Strategic
Transaction (as defined below), unless (i) the Company delivers to each
Purchaser a written notice (the "Subsequent Placement Notice") of its intention
to effect such Subsequent Placement, which Subsequent Placement Notice shall
describe in reasonable detail the proposed terms of such Subsequent Placement,
the amount of proceeds intended to be raised thereunder, the Person with whom
such Subsequent Placement shall be effected, and attached to which shall be a
term sheet or similar document relating thereto, and (ii) such Purchaser shall
not have notified the Company by 5:30 p.m. (New York City time) on the fifth
Trading Day after its receipt of the Subsequent Placement Notice of its
willingness to cause such Purchaser to provide (or to cause its sole designee to
provide), subject to completion of mutually acceptable documentation; financing
to the Company on the same terms set forth in the Subsequent Placement Notice.
If the Purchasers shall fail to notify the Company of their intention to enter
into such negotiations within such time period, the Company may effect the
Subsequent Placement upon the terms and to the Persons (or Affiliates of such
Persons) set forth in the Subsequent Placement Notice; provided, that the
Company shall provide the Purchasers with a second Subsequent Placement Notice,
and the Purchasers shall again have the right of first refusal set forth above,
if the Subsequent Placement subject to the initial Subsequent Placement Notice
shall not have been consummated for any reason substantially on the terms set
forth in such Subsequent Placement Notice within 30 Trading Days after the date
of the initial Subsequent Placement Notice shall not have been consummated for
any reason substantially on the terms set forth in such Subsequent Placement
Notice within 30 Trading Days after the date of the initial Subsequent Placement
Notice with the Person (or an Affiliate of such Person) identified in the
Subsequent Placement Notice. The rights of the Purchasers under this paragraph
shall apply to each Subsequent Placement contemplated by the Company or such
Subsidiary, regardless of any prior waivers or non-participation. For purposes
of this paragraph, a "Strategic Transaction" means a transaction or relationship
in which the Company issues shares of Common Stock to an entity which is, itself
or through its subsidiaries, an operating company in a business related to the
business of the Company and in which the Company receives material benefits in
addition to the investment of funds, but shall not include a transaction in
which the Company is issuing securities primarily for the purpose of raising
capital or to an entity whose primary business is investing in securities.


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                                                                       EXHIBIT C

                              HBK CLOSING WARRANTS


1.   Warrant to purchase 26,250 shares of Common Stock at $12.98 per share (as
     adjusted pursuant to the terms thereof), dated January 29, 1999, issued in
     the name of HBK Master Fund L.P. ("Master Fund");

2.   Warrant to purchase 48,750 shares of Common Stock at $12.98 per share (as
     adjusted pursuant to the terms thereof), dated January 29, 1999, issued in
     the name of Master Fund;

3.   Closing Warrant to purchase 63,420 shares of Common Stock at $14.235 per
     share (as adjusted pursuant to the terms thereof), dated November 19, 1999,
     issued in the name of Master Fund;

4.   Warrant to purchase 52,000 shares of Common Stock at $21.00 per share (as
     adjusted pursuant to the terms thereof), dated February 25, 2000, issued in
     the name of Master Fund;

5.   Class A Warrant to purchase up to 157,500 shares of Common Stock at $19.672
     per share (as adjusted pursuant to the terms thereof), dated April 6, 2000,
     issued in the name of Montrose Investments Ltd. ("Montrose");

6.   Warrant to purchase up to 40,000 shares of Common Stock at $10.47 per share
     (as adjusted pursuant to the terms thereof), dated September 21, 2000,
     issued in the name of Montrose; and

7.   Closing Warrant to purchase 96,853 shares of Common Stock at $10.13 per
     share (as adjusted pursuant to the terms thereof), dated September 29,
     2000, issued in the name of Montrose.


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                                                                       EXHIBIT D

                          STRONG RIVER CLOSING WARRANTS


1.   Closing Warrant to purchase 63,420 shares of Common Stock at $14.235 per
     share (as adjusted pursuant to the terms thereof), dated November 19, 1999,
     issued in the name of Strong River;

2.   Warrant to purchase 52,000 shares of Common Stock at $21.00 per share (as
     adjusted pursuant to the terms thereof), dated February 25, 2000, issued in
     the name of Strong River;

3.   Class A Warrant to purchase up to 157,500 shares of Common Stock at $19.672
     per share (as adjusted pursuant to the terms thereof), dated April 6, 2000,
     issued in the name of Strong River;

4.   Warrant to purchase up to 40,000 shares of Common Stock at $10.47 per share
     (as adjusted pursuant to the terms thereof), dated September 21, 2000,
     issued in the name of Strong River; and

5.   Closing Warrant to purchase 96,853 shares of Common Stock at $10.13 per
     share (as adjusted pursuant to the terms thereof), dated September 29,
     2000, issued in the name of Strong River.


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