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[LETTERHEAD]



January 16, 1996


Michael J. Green
43 Meadow Run Drive
Skillman, NJ 08558

Dear Mike,

I'm pleased to offer you the position of Vice President, Chemistry at 
Houghten Pharmaceuticals. In this position you'll report directly to me and 
work in close coordination with Richard Houghten in his responsibilities as 
Chief Technical Officer of HPI and President of the Torrey Pines Institute 
for Molecular Studies. You will be responsible for all activities relating to 
HPI combinatorial and medicinal chemistry, for the transition of resources 
and personnel from TPIMS to HPI, for consultation and involvement in HPI's 
internal discovery programs and for partnership and financing activities as 
they relate to your areas of responsibility. You will be a company officer, 
you will work closely with Richard, Ron, Barney, Terry, myself and the Board 
of Directors and participate in all key company strategic decisions.

As a compensation package, we are offering you a starting salary of $165,000 
and 65,000 Incentive Stock Options. The HPI stock options are exercisable at 
$0.70 per share and vest over a four year period in three month increments. 
You will be eligible for annual salary reviews and additional stock option 
grants over time at the discretion of the Board of Directors and its 
Compensation Committee. In addition to your base compensation, you will be 
eligible for a bonus compensation award up to 30% of your salary contingent 
upon the completion of corporate partnership(s) involving aspects of HPI's 
molecular diversity technologies. The exact amount will be based on such 
factors as value, quality and technical capabilities of the partner, the 
extent to which HPI has access to those technical capabilities, the scope of 
the agreement, size of guaranteed vs. milestone driven payments and other 
factors that we can determine jointly.

In addition to your base salary, you will be eligible to participate in the 
Company's employee benefit plans that include medical, prescription-drug, 
dental, long-term disability and life insurance, and 401(k) retirement 
savings and flexible spending accounts. You will begin to accrue vacation at 
a rate of three weeks per year with an additional day for each year of 
service. To facilitate your relocation to San Diego, the Company will 
reimburse you for all your moving expenses including real estate fees, moving 
expenses, temporary housing, transportation to and from San Diego and house 
hunting visits (of course, within policy limits).


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MICHAEL GREEN EMPLOYMENT OFFER
JANUARY 16, 1996
PAGE #2

Upon your decision to join HPI, you will be required to sign a 
Confidentiality Agreement and any and all other documents reasonably required 
by the Company to protect its proprietary trade secrets from disclosure and 
to prevent the unauthorized use by the Company of any proprietary trade 
secrets of other parties or entities.

According to California law, your employment with the Company is "at will". 
Both you and the Company have the right to terminate your employment at any 
time for any reason whatsoever. If any disputes, claims or causes of action 
arise out of this agreement or your employment relationship with HPI, we 
require that it be submitted to binding arbitration before the American 
Arbitration Association according to the rules and procedures established by 
the organization.

I'd like to reiterate that the entire management team at HPI is excited about 
the prospect of working with you. We believe you'll make a tremendous 
contribution to HPI, and we all feel that we will really enjoy working with 
you.

As you are aware, we have a number of critical decisions in front of us. I'd 
like to do whatever I can over the next several days to facilitate a quick 
but informed decision on your part. Please do not hesitate to contact me 
either at work (619-455-2545) or home (619-454-8118) should you have any 
questions.

Sincerely yours,

/s/ Robert S. Whitehead

Robert S. Whitehead
President & Chief Executive Officer


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MICHAEL GREEN EMPLOYMENT OFFER
JANUARY 16, 1996
PAGE #3


                            ACKNOWLEDGMENT

If this letter accurately reflects your understanding of this employment 
relationship and our entire agreement, please sign this letter and return it 
to me as soon as possible.


/s/  Michael J. Green                     1/19/96
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EMPLOYEE                                  DATE