SCIOS INC.


                                September 8, 1998



Mr. Richard B. Brewer
115 Ericson Road
Hillsborough, CA  94010

Dear Dick:

                  On behalf of the Board of Directors and the senior  management
of Scios,  Inc.  ("Scios" or the "Company"),  I am very pleased to extend to you
our offer to lead our Company as President  and Chief  Executive  Officer.  This
letter sets forth the terms of your employment by Scios,  with your first day of
employment being September 9, 1998.

1.       Position, Duties and Responsibilities
         -------------------------------------

a. You shall be the  President  and Chief  Executive  Officer of the Company and
shall in such capacity  report directly to the Company's Board of Directors (the
"Board").  Your duties and responsibilities will be determined from time to time
by the Board,  and will be consistent  with your position as President and Chief
Executive Officer.

b. You shall be appointed to the Board of Directors and serve on such Committees
of the Board as elected or appointed by the Board.

c. During the period of employment  hereunder and except for illness or vacation
periods,  you shall devote your full business time, ability and attention to the
business of the Company, and shall not engage in or perform duties for any other
person which  interfere  with the  performance of your duties  hereunder.  It is
possible that you may wish to hold board of director  positions on outside civic
organizations,  and that  reasonable time will be made available to fulfill your
duties in that  regard as long as those  activities  do not  interfere  with the
performance of your duties hereunder.  Any outside commercial board of directors
positions will be subject to written approval by the Board, which approval shall
not be unreasonably withheld.

d. You agree to sign the Company's standard  proprietary  information  agreement
for employees.

2.       Salary and Bonus Compensation
         -----------------------------

a. Base Salary.  As  compensation  for your services  hereunder,  including your
services as a member of the Board,  you shall  receive a base salary of $400,000
per annum,  provided that in view of the limited amount of time you will be able
to devote to the Company's  business this month,  your base salary for September
1998 will be $3,000.  This base salary may be  increased  annually by the Board,
consistent with your performance and the Company's policy regarding increases in
officer compensation established from time to time by the Board.

b. Bonus  Compensation.  You may, in  addition,  at the Board's  discretion,  be
awarded incentive compensation, in the form of a cash bonus for each fiscal year
during  your  employment  based  upon  performance.  If the  targeted  level  of
performance is satisfied,  and you are employed at year end,  unless  employment
has been terminated for Good Reason or Without Cause as defined below,  the cash
bonus  amount will be equal to fifty  percent  (50%) of your base salary for the
year in which you  satisfied  the bonus  criteria;  with a maximum  bonus of one
hundred percent (100%) of base salary if your performance  substantially exceeds
the targeted level.  Performance  for bonus purposes will be measured  against a
set of criteria or  milestones to be approved by the Board of Directors no later
than  December  31 of  the preceding  year.  For calendar year 1998,  your bonus
                                 EXHIBIT 10.38
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is guaranteed at a minimum of $50,000.  For  calendar year  1999,  your bonus is
guaranteed  at a minimum of at least  $200,000;  for  calendar  year 2000,  your
minimum bonus will be $100,000.  There is no  guaranteed  minimum level of bonus
compensation thereafter.

3.       Benefits
         --------

                  Standard  Benefits.  To  the  extent  eligible,  you  will  be
entitled to  participate  in such other benefit  programs as are generally  made
available to other members of senior management.

4.       Expense Reimbursement
         ---------------------

                  The Company shall reimburse you for certain expenses under the
standard  executive benefits program of the Company.  Additionally,  the Company
will reimburse you in accordance  with the Company's  reimbursement  policies in
effect from time to time for all  reasonable  and  customary  business  expenses
incurred  during  your  employment,  provided  that you  furnish to the  Company
reasonably adequate records and documentary evidence of such expense.

5.       Long-Term Incentive Compensation
         --------------------------------

                  As of  September  9, 1998,  you shall  receive  the  following
grants in accordance with the terms of the Company's 1992 Equity Incentive Plan,
as amended in 1998.

a. Stock Option.  You will receive an initial grant of Stock Options for 200,000
shares of the  Company's  common stock  exercisable  at fair market value on the
date of grant  and  having a term of ten  years.  You shall  vest in the  option
shares  25% on your  first day of  employment  and in the  balance of the option
shares in three successive equal annual installments on your anniversary date so
long as you remain in continuous service with the Company.

                  On May 3,  1999,  you will  receive  a  second  grant of Stock
Options for 200,000 shares of the Company's common stock exercisable at the fair
market  value on the date of grant and having a term of ten years.  This  option
grant will vest 25% on the date of grant and the balance of the option shares in
three annual  installments on the next three anniversaries of that grant date so
long as you remain in continuous service with the Company.

b. Restricted  Share Units.  You shall be granted  Restricted Share Units in the
amount of 100,000  shares.  The  Restricted  Share  Units shall vest 50% at your
one-year  anniversary and 50% on your two-year anniversary so long as you remain
in continuous service with the Company.

c. Incentive  Stock Options.  You shall be granted the right to purchase  75,000
shares of the  Company's  common  stock  under an  "incentive  stock  option" as
permitted by Section 422 of the Internal  Revenue  Code.  The option's  exercise
price will be the stock's  fair market  value on the grant date,  and the option
will become vested and  exercisable  20% on your first day of employment and the
balance of the option shares in four successive equal annual installments on the
anniversary date, so long as you remain in continuous service with the Company.

d. Annual Awards.  You will be eligible to  participate in the Company's  annual
awards to  executives of long-term  incentive  compensation,  presently  awarded
under the 1992 Equity  Incentive Plan, in the form of stock options,  based upon
performance as determined by the Board's Compensation Committee.

e. Cashless Exercise. Your stock options will entitle you to a cashless exercise
feature.

6.       Term of Employment
         ------------------

                  Your  employment  with the  Company  is not for any  specified
period of time.  As a result,  either you or the Company  are free to  terminate
your employment  relationship at any time for any reason,  with or without cause
by giving written notice of such termination.
<PAGE>

7.       Change of Control
         -----------------

                  All of your  options,  restricted  shares and share units will
become fully exercisable (vested) immediately upon an acquisition of the Company
by merger, sale of all or substantially all of the Company's assets, or purchase
of 50% or  more  of the  Company's  assets,  or  purchase  of 50% or more of the
Company's  stock,  or any other  reorganization  resulting in a change of 50% or
more in the ownership of the Company's stock (any such action  hereinafter to be
referred to as a "Change of Control") (whether or not such Change of Control was
caused or could have been prevented by acts of the Company),  and whether or not
you shall have voted for such Change of Control as a director or  shareholder or
consented thereto expressly or in writing.

8.       Effect of Termination
         ---------------------

                  If Scios  terminates your  employment  "Without  Cause",  then
Scios will continue  your base salary  (based on your base salary  prevailing at
the time of termination)  for 12 months from the date of the termination of your
employment  (hereinafter  referred to as the "Severance Period").  Additionally,
you will  receive an annual  bonus equal to your  previous  year's  bonus or the
guaranteed  bonus,  if any,  for  the  Severance  Period  or any  part  thereof,
whichever is less,  at the time bonuses are normally  paid to  executives of the
Company.  Further,  you will be given two years of additional service vesting on
your unvested  stock options and  restricted  stock,  and will be allowed twelve
months from the date of the  termination  of your  employment  to  exercise  the
vested stock options.  If you elect to continue your health  insurance  coverage
pursuant to COBRA,  then Scios will  reimburse you for such payments  during the
Severance Period.

                  If you are  terminated  for  "Cause" or you resign at any time
(other than for "Good Reason" as defined below), then you would only be paid all
salary and benefits through the date of termination of your employment.

                  The  severance  pay  described  herein  will be in lieu of any
entitlement  you may have to  notice  of  termination,  pay in lieu of notice of
termination,  or any other severance  payment from any other source or severance
program. All other employee benefits will end at the time of termination of your
employment  according to terms of the applicable  plans regardless of the reason
for the  termination,  provided,  however,  that  Scios will pay to you the full
value  of all  unused,  accrued  vacation  time  in a lump  sum on the  date  of
termination.

                  As used in this Section,  a termination for "Cause" shall mean
a termination  for any of the  following  reasons:  (i) engaging in  intentional
misconduct which would tend to discredit Scios or your position as President and
Chief Executive Officer;  (ii) being convicted of a felony;  (iii) committing an
act of fraud against Scios or the willful material  misappropriation of property
belonging to Scios; (iv) materially  breaching this agreement or any proprietary
information  agreement between you and Scios or (v) willfully  disregarding your
duties  despite  adequate  warnings from the Board.  Scios will provide  written
notice of the reason for termination in the case of any termination for "Cause."
A termination for any other reason shall be a termination "Without Cause."

9.       Termination for Good Reason. If you terminate your employment  with the
Company for Good Reason (as hereinafter  defined),  you shall be entitled to the
benefits  applicable to  termination  Without Cause as set forth in Paragraph 8.
For  the  purposes  of this  Agreement,  "Good  Reason"  shall  mean  any of the
following:  (i)  relocation of the Company's  executive  offices more than forty
miles from the current  location,  without your  concurrence;  (ii) any material
breach by the Company of any  provision of this  Agreement;  or (iii) a material
change  in  the  principal  line  of  business  of  the  Company,  without  your
concurrence.

10.      Arbitration
         -----------

                  We each agree that any and all disputes between us which arise
out of your employment,  the termination of your employment,  or under the terms
of this agreement shall be resolved through final and binding arbitration.  This
shall include,  without  limitation,  disputes  relating to this agreement,  any
disputes regarding your employment by Scios or the termination  thereof,  claims
for breach of contract or breach of the covenant of good faith and fair dealing,
and any claims of  discrimination  or other claims  under any federal,  state or
local law or regulation now in existence or  hereinafter  enacted and as amended
from time to time  concerning  in any way the  subject of your  employment  with
Scios or its  termination.  The only claims not covered by this  section are the
following:  (i) claims for benefits under the unemployment insurance or worker's

<PAGE>

compensation  laws and (ii) claims  concerning  the  validity,  infringement  or
enforceability of any trade secret,  patent right,  copyright,  trademark or any
other  intellectual  property  held or  sought by Scios,  or which  Scios  could
otherwise  seek; in each of these instances such disputes or claims shall not be
subject to arbitration, but rather, will be resolved pursuant to applicable law.
Binding  arbitration  will be  conducted  in the San  Francisco  Bay  Area.  The
arbitration  will be conducted in accordance  with the rules and  regulations of
the  American  Arbitration  Association.  The  prevailing  party,  as defined in
California  statutory law,  shall be awarded its  attorneys'  fees and costs and
arbitration  related expenses from the non-prevailing  party. You understand and
agree that  arbitration  shall be instead of any civil litigation that each side
waives its right to a jury trial,  and that the  arbitrator's  decision shall be
final and binding to the fullest extent  permitted by law and enforceable by any
court having jurisdiction thereof.

11. Miscellaneous.  This Agreement and the rights and obligations of the parties
shall be governed by California law. Neither party may assign this Agreement. In
the event that either  party  believes  that the other party has  breached  this
Agreement in any way, the party  claiming such breach shall give written  notice
and thirty day  opportunity  to cure such  breach,  in the event such  breach is
curable.  The Company is simultaneously  executing for your benefit the attached
Indemnification Agreement.

                  If you have any questions about this offer, please contact me.
If you find this offer  acceptable,  please sign and date this letter  below and
return it to me.

                                                          Sincerely,

                                                          SCIOS INC.

                                                          /s/ Myron Du Bain

                                                          Myron Du Bain
                          Chairman of Search Committee

Attachments (Proprietary Information and Invention Agreement and Indemnification
Agreement)


I agree to the terms and conditions of this offer.


Date:      9/8/98                             /s/ Richard B. Brewer
                                              Richard B. Brewer

<PAGE>