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                                                                   EXHIBIT 10.51

                               [SIGNAL LETTERHEAD]

May 18, 1998

Dear Doug:

Signal Pharmaceuticals, Inc. ("Signal" or the "Company") is pleased to formally
offer you the position of Vice President Corporate Development. The effective
date of your employment will be Monday, June 8 (your "Start Date"), although it
is understood that you shall have the option of working from your home in
Pennsylvania until Monday, June 29.

The terms of this offer of employment are as follows:

Position:                       Vice President, Corporate Development

Reporting to:                   Mr. Carl F. Bobkoski, Executive Vice President

Base Salary:                    $7,292 semi-monthly (175,000 per year), less all
                                required withholding for taxes, social security
                                and other deductions, to be increased annually
                                in accordance with the standard practice of the
                                Company.

House Purchase Loan:            The Company will provide you with a $60,000
                                interest free, subordinated, secured loan to be
                                used for the purchase of a new principal
                                residence, to be funded upon closing on a house
                                in San Diego County, secured by your Signal
                                common stock. 1/3 of the loan will be forgiven
                                upon the second anniversary of your Start Date
                                at the Company, 1/3 upon the third such
                                anniversary, and 1/3 upon the fourth such
                                anniversary. Should your employment be
                                terminated, for any reason, prior to the fourth
                                anniversary of your Start Date, you will have
                                one year from such date of termination to repay
                                the remaining balance to the Company, including
                                interest accrued on such at a rate of 8% per
                                year.

Performance Bonus:              You will receive a performance bonus of
                                up to 20% of your annual salary based upon
                                performance against measurable, mutually agreed
                                upon goals set according to the Company's
                                standard practice. Individual goals will be
                                assigned specific percent weighting.

Relocation:                     Reimbursed moving expenses will include
                                reasonable and customary closing costs for the
                                sale of your house, including realtors' fees,
                                reasonable and customary costs for the purchase
                                of a new home, including origination fees or
                                points, reasonable legal fees, surveys and
                                inspections, and the cost of recording the deed


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                                or mortgage; payment for movement of household
                                goods (and two cars), including packing,
                                unpacking, insurance, and up to three months of
                                storage, if necessary, and subsequent movement
                                to a final destination; economy air fares for
                                you and your immediate family from Yardley,
                                Pennsylvania, and two "house hunting" visits for
                                you and your immediate family; and up to four
                                months' payment of temporary accommodations and
                                car rental not to exceed $3,000 per month. In
                                addition, Signal will reimburse you for up to
                                four trips home to Yardley, Pennsylvania from
                                San Diego or until such time as your family has
                                relocated to the San Diego Area. All expenses
                                will be documented and paid either directly to
                                the vendor or reimbursed to you by normal means.
                                The Company will follow federal, state and local
                                tax regulations with regards to reporting
                                reimbursements associated with the move and will
                                "gross up" the compensation element of directly
                                paid or reimbursed relocation expenses. The
                                Company will pay all applicable taxes related to
                                the compensation element of these relocation
                                reimbursables (which will include the payment of
                                such taxes themselves). Notwithstanding the
                                above, Signal will reimburse a maximum of
                                $60,000 for such moving expenses.

Stock Option Grants:            The Company will grant you an option 1) to
                                purchase 225,000 shares of the Company's Common
                                Stock. The exercise price of the option will be
                                $0.50 per share.

                                One fourth (25%) of the shares will vest on the
                                first day of your thirteenth month of
                                employment. The remaining shares will vest in
                                equal installments over a three year period
                                until all shares are vested. In the event of a
                                change in control of the Company, all
                                outstanding unvested options will become
                                immediately vested.

Benefits:                       You will receive the Company's standard family
                                medical and dental benefits and other benefits
                                enjoyed by officers of the Company, as such may
                                be in effect from time to time, including
                                vacation, 401k, etc.

At-will employment:             (a) Your employment with the Company is for an
                                indefinite term. In other words, the employment
                                relationship is "at will," and either you or
                                Signal has the right to terminate that
                                employment relationship at any time. Signal
                                requires a baseline blood draw from all new
                                employees. This will be done on your first day
                                of employment at Signal (or as soon as
                                practicable thereafter). These vials will be
                                stored offsite to protect your privacy. No
                                testing will be done to the sample unless
                                required by legal proceedings.

                                You will be asked to sign an Employee's
                                Proprietary Information


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                                and Inventions Agreement. In addition, you will
                                be expected to abide by the Company rules and
                                regulations as described in the Company
                                handbook.

                                The employment terms in this letter supersede
                                any other agreements or promises made to you. As
                                required by law, this offer is subject to
                                satisfactory proof of your right to work in the
                                United States.

                                (b) If your employment with the Company
                                terminates as a result of mutual agreement or
                                the Company terminates your employment for any
                                reason, you will receive a severance payment and
                                Benefits from the Company in an amount equal to
                                six (6) months of your then annual salary.

We have greatly enjoyed our meetings with you and look forward to your joining
the Signal team. We feel that your experience and enthusiasm can make a
substantial contribution to the success of Signal.

Sincerely,

/s/ Bradley B. Gordon
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Bradley B. Gordon
Vice President Finance, CFO

AGREED TO AND ACCEPTED BY:

/s/ Douglas E. Richards                        5/18/98
-----------------------------------------      --------
Douglas E. Richards                            Date


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