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                                                                   EXHIBIT 10.16



                  SECOND AMENDMENT TO NOTE DATED JUNE 14, 1994

This Second Amendment (the "Second Amendment") to the Promissory Note (the
"Note") dated June 14, 1994, as amended on May 14, 1998 (the "First Amendment"),
executed by Alan J. Lewis ("Maker") in favor of Signal Pharmaceuticals, Inc.
(the "Company") in the amount of $250,000.000, a copy of which is attached
hereto as Exhibit A, is made as of October 27, 1999. Capitalized terms used but
not otherwise defined in this Second Amendment shall have the meanings given
such terms in the Note.

The Maker hereby agrees that, effective as of the date hereof, the Note shall be
amended as follows:

1.      The second paragraph of the Note is hereby amended to read in its
        entirety as follows:

               "Beginning on (i) a date eight (8) years from the date of this
               note (the "Repayment Commencement Date") or (ii) the date Maker's
               employment with the Company is terminated for any reason
               whatsoever, interest shall accrue, during each calendar month or
               any portion thereof for which this note remains outstanding, at
               the per annum rate equal to 7.52% (the minimum rate of interest
               required, as of the execution date of this note, to avoid the
               imputation or imposition of interest under the Internal Revenue
               Code).
               Accrued interest shall be compounded annually."

2.      The fourth paragraph of the Note (formerly the fifth paragraph prior to
        the First Amendment) is hereby amended to read in its entirety as
        follows:

               "The entire unpaid principal, together with accrued interest,
               shall be amortized over the five (5) years following the
               Repayment Commencement Date, with monthly payments commencing
               July 14, 2002."

Except as specifically amended by this Second Amendment, the terms and
conditions of the First Amendment and Note shall remain in full force and
effect.



                                       /s/ ALAN J. LEWIS
                                       -----------------------------------------
                                       ALAN J. LEWIS, MAKER

Agreed to and accepted this 27th day of October, 1999:

SIGNAL PHARMACEUTICALS, INC.



By: /s/ BRADLEY B. GORDON
    ----------------------------------------------
    Bradley B. Gordon
    Chief Financial Officer and Corporate Secretary

EXHIBIT A - First Amendment and Note Secured by Security Agreement dated June
14, 1994



                   FIRST AMENDMENT TO NOTE DATED JUNE 14, 1994

This First Amendment (the "First Amendment") to the Promissory Note (the "Note")
dated June 14, 1994 executed by Alan J. Lewis ("Maker") in favor of Signal
Pharmaceuticals, Inc. (the "Company") in the amount of $250,000.000, a copy of
which is attached hereto as Exhibit A, is made as of May 14, 1998. Capitalized
terms used but not otherwise defined in this First Amendment shall have the
meanings given such terms in the Note.

The Maker hereby agrees that, effective as of the date hereof, the Note shall be
amended as follows:

1.      The fourth paragraph of the Note is hereby deleted in its entirety.

2.      The fifth paragraph of the Note is hereby amended to read in its
        entirety as follows:

        "The entire unpaid principal, together with accrued interest, shall be
        amortized over the five (5) years following the Repayment Commencement
        Date, with monthly payments commencing July 14, 1999."

Except as specifically amended by this First Amendment, the terms and conditions
of the Note shall remain in full force and effect.



                                            /s/ ALAN J. LEWIS
                                            ------------------------------------
                                            ALAN J. LEWIS, MAKER


Agreed to and accepted this 14th day of May, 1998:

SIGNAL PHARMACEUTICALS, INC.



By: /s/ BRADLEY B. GORDON
   ---------------------------------------
    Bradley B. Gordon
    Chief Financial Officer and Corporate Secretary


EXHIBIT A - Note Secured by Security Agreement dated June 14, 1994

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                       NOTE SECURED BY SECURITY AGREEMENT



$250,000.00                                                        June 14, 1994
                                                           San Diego, California



        FOR VALUE RECEIVED, the undersigned Maker promises to pay to Signal
Pharmaceuticals, Inc. (the "Company"), at its principal offices at 5555 Oberlin
Drive, San Diego, California 92121 or order the principal sum of Two Hundred
Fifty Thousand dollars ($ 250,000.00), together with accrued interest on the
unpaid principal balance.

        Beginning on (i) a date five (5) years from the date of this note (the
"Repayment Commencement Date") or (ii) the date Maker's employment with the
Company is terminated for any reason whatsoever, interest shall accrue, during
each calendar month or any portion thereof for which this note remains
outstanding, at the per annum rate equal to 7.52% (the minimum rate of interest
required, as of the execution date of this note, to avoid the imputation or
imposition of interest under the Internal Revenue Code). Accrued interest shall
be compounded annually.

        The proceeds of the loan evidenced by this note shall be applied solely
to the purchase of Maker's principal residence in Rancho Santa Fe, California.

        If, at any time, the Company consummates an Initial Public Offering (an
"IPO"), all unpaid principal and accrued interest shall become payable in one
lump sum sixty (60) days after shares of the Company's Common Stock sufficient
to pay such principal and interest may be sold by Maker in the public market
without restriction imposed by the Company, the Company's underwriters or
federal or state securities laws; provided, however, that failure to make such
payment shall not be deemed a default under this note until a date one year and
one day after the closing of an IPO.

        Subject to the foregoing paragraph, in the event that the Company shall
not have closed an IPO on or before the Repayment Commencement Date, then the
entire unpaid principal, together with accrued interest, shall become payable
and shall be amortized over the period of five (5) years following the Repayment
Commencement Date.

        Payment shall be made in lawful tender of the United States and shall be
credited first to the accrued interest then due and payable and the remainder
applied to principal. Prepayment of principal, together with accrued interest,
may be made at any time without penalty.


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        The entire unpaid principal sum of this note, together with accrued and
unpaid interest to date, shall at the election of the holder of this note become
immediately due and payable upon one or more of the following events:

        1.     the death of the Maker;

        2.     six (6) months after any termination of the employment of the
Maker with the Company for any reason whatsoever;

        3.     the disposition of all or substantially all of the assets or
fifty percent (50%) or more of the outstanding voting stock of the Company by
means of sale, merger, reorganization or liquidation; or

        4.     the insolvency of the Maker, the commission of any act of
bankruptcy by the Maker, the execution by the Maker of a general assignment for
the benefit of creditors, the filing by or against the Maker of any petition in
bankruptcy or any petition for relief under the provisions of the federal
bankruptcy act or any other state or federal law for the relief of debtors and
the continuation of such petition without dismissal for a period of fifteen (15)
days or more, or the appointment of a receiver or trustee to take possession of
the property or assets of the Maker.

        The benefits of the interest arrangements under this note are not
transferable by Maker and are conditioned on the future performance of
substantial services by the Maker.

        For purposes of applying the provisions of this note, the Maker shall be
considered to remain in the employ of the Company for so long as the Maker
renders services as a full-time employee of the Company or one or more of its
50%-or-more owned (directly or indirectly) subsidiaries.

        The Maker certifies that he reasonably expects to be entitled to and
will itemize deductions for Federal income tax purposes for each year the note
is outstanding.

        Payment of this note is secured by a Security Agreement executed on this
date by the Maker, but the Maker shall remain personally liable for payment of
this note and assets of the Maker, other than the collateral under the Security
Agreement, may be applied to the satisfaction of the Maker's obligations
hereunder, it being understood by the Maker that no action shall be taken
against Maker personally until the Company has used its best efforts to collect
on this note or to obtain satisfaction of Maker's obligations hereunder pursuant
to the Security Agreement. If action is instituted to collect this note, the
Maker promises to pay all costs and expenses, including reasonable attorneys'
fees, incurred in connection with such action.



                                       2.

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        The Maker hereby waives notice of default, presentment or demand for
payment, protest or notice of nonpayment or dishonor and all other notices or
demands relative to this instrument.

        This note shall be construed in accordance with the laws of the State of
California.



                                        /s/  ALAN J. LEWIS, MAKER
                                        ----------------------------------------
                                        Alan J. Lewis, Maker












                                       3.