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                                               Under 17 C.F.R. Sections 200.80,
                                               200.83 and 230.406.


                                                                   EXHIBIT 10.37

                          FIRST AMENDMENT TO AGREEMENT

        THIS FIRST AMENDMENT (the "First Amendment") to the Agreement by and
between N.V. ORGANON, Molenstraat 110, P.O. Box 20, 5340 BH Oss, the Netherlands
(hereinafter referred to as "Organon"), and SIGNAL PHARMACEUTICALS, INC., 5555
Oberlin Drive, San Diego, California 92121, USA (hereinafter referred to as
"Signal"), dated as of July 30, 1996 (the "Agreement") is entered into as of
March 17, 1998 (the "First Amendment Date"). Capitalized terms used but not
otherwise defined in this First Amendment shall have the meanings given such
terms in the Agreement.

                                    RECITALS

        WHEREAS, Organon and Signal entered into the Agreement to collaborate in
the discovery and development of new assays for the targets selected as provided
in the Agreement; and

        WHEREAS, Organon and Signal wish to amend the Agreement in the manner
set forth in this First Amendment and otherwise to provide for certain
agreements by the parties as set forth herein.

                                    AGREEMENT

        NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth, the parties hereto agree as follows:

1. AMENDMENT AND RESTATEMENT OF SECTION 3. The first and second paragraphs of
Section 3 of the Agreement are hereby amended and restated in their entirety as
follows:

        "3.    TARGET RESEARCH.

               The Target Research shall commence upon the Effective Date and
        shall continue for three years thereafter, extendible for up to two
        additional years under substantially the same FTE funding and other
        terms as are set forth herein, with mutual consent. If the milestone
        described in Exhibit B is not met within 9 months after the First
        Amendment Date, Organon at its sole discretion may forthwith terminate
        the Target Research by written notice effective as of the first
        anniversary of the Effective Date. If the milestone described in Exhibit
        C is not met within 12 months after the First Amendment Date, Organon at
        its sole discretion may terminate the Target Research effective as of
        the end of the 18th month following the First Amendment Date. For
        purposes of this Agreement, the "Research Term" shall be the period from
        the Effective Date until the Target Research expires or is terminated
        pursuant to this Article 3. Under the Target Research


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        Signal shall use reasonable efforts to deliver up to [***] Research
        Assays to Organon.

               If Organon elects to terminate the Target Research (a) as of the
        first anniversary of the First Amendment Date as provided above or (b)
        prior to receiving the First Research Assay from Signal and paying the
        first milestone under Section 3.2.1(a), whichever is earlier, then this
        Agreement and all licenses granted hereunder shall terminate, except
        that the provisions listed in Section 9.3(b) shall survive. Otherwise,
        this Agreement shall survive termination or expiration of the Target
        Research."

2. AMENDMENT AND RESTATEMENT OF SECTION 3.4. Section 3.4 of the Agreement is
hereby amended and restated in its entirety as follows:

        "3.4.  LICENSES AND OPTION RIGHTS

                      3.4.1. Subject to the terms and conditions of this
        Agreement, Signal hereby grants to Organon a worldwide, non-exclusive
        license, during the Research Term only, under the Signal Technology
        within the Target Research Field to conduct research in accordance with
        the Research Plan.

                      3.4.2. Subject to the terms and conditions of this
        Agreement, Signal hereby grants to Organon a worldwide, exclusive
        (except as to Signal) license to use any cell lines which are developed
        in the conduct of the Target Research (whether solely by Signal or
        jointly by the parties) for Organon's internal research purposes during
        the term of this Agreement. Notwithstanding any other provision of this
        Agreement, Organon shall not have the right to sublicense the rights
        granted under this Section 3.4.2 to any third party without the prior
        written consent of Signal, which consent may be given or withheld in
        Signal's sole discretion; provided, however, that Organon may, without
        Signal's prior written consent, sublicense such rights to an Affiliate
        of Organon that is controlled by Organon. The parties hereby acknowledge
        that Signal retains the right to use the cell lines licensed hereunder
        for any purpose.

                      3.4.3. Subject to the terms of this Agreement, Signal
        hereby grants to Organon a worldwide, exclusive license, for the period
        following the end of the Research Term until this Agreement expires or
        is terminated, to use the Signal Compounds and under the Research Assay
        Patents, Gene/gen product Patents and Compound Patents to research,
        develop, make, have made, use and sell Organon Products; provided,
        however, that any compound from any source that is useful for the [***]
        shall be specifically excluded from


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        the scope of the foregoing license. If, however, a compound has been
        selected in the Target Research Field that potentially is [***], the
        parties shall negotiate in good faith, together with any of Signal's
        licensee(s) in such field, a possible extension of the foregoing license
        with regard to such compound.

                      3.4.4. Subject to the terms of this Agreement, Signal
        hereby grants to Organon a worldwide, non-exclusive license, for the
        period following the end of the Research Term until this Agreement
        expires or is terminated, to use the Signal Technology and Signal
        Technology Patents for any purpose in the Target Research Field.

                      3.4.5. Except as set forth in Section 3.4.2 above, Organon
        shall have the right to grant sublicenses under its exclusive license
        rights, with the prior written consent of Signal, not to be unreasonably
        withheld; provided that such consent shall not be required for
        sublicenses to Organon's Affiliates."

 3. AMENDMENT AND RESTATEMENT OF RESEARCH PLAN. The Research Plan is hereby
 amended and restated in its entirety as attached hereto.

 4. AMENDMENT AND RESTATEMENT OF EXHIBIT B. Exhibit B of the Agreement is hereby
 amended and restated in its entirety as attached hereto.

 5. FULL FORCE AND EFFECT. Except as specifically amended by this First
 Amendment, the terms and conditions of the Agreement shall remain in full force
 and effect.

 6. GOVERNING LAW. This First Amendment shall be governed by and construed in
 accordance with the laws of the State of Delaware.

 7. COUNTERPARTS. This First Amendment may be executed in two or more
 counterparts, each of which shall be deemed an original, but all of which
 together shall constitute one and the same instrument.


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        IN WITNESS WHEREOF, the parties have executed this First Amendment on
the day and year first written above.


N.V. ORGANON                                       SIGNAL PHARMACEUTICALS, INC.


By:    [SIG]                                       By:   [SIG]
   --------------------------                         --------------------------

Title: Managing Director R&D                       Title:  E.V.P.
      -----------------------                            -----------------------

By:   [SIG]
   --------------------------

Title:  Director Research
      -----------------------
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ORGANON-SIGNAL                                                RESEARCH OUTLINE

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ORGANON-SIGNAL                                                  RESEARCH OUTLINE
                                  CONFIDENTIAL
================================================================================
                                                                       EXHIBIT B

                                 Project Goals


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