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                                                                   EXHIBIT 10.59

                            TAX INDEMNITY AGREEMENT

        This TAX INDEMNITY AGREEMENT, dated as of February 9, 2004 (this
"Agreement"), is entered into by and between Gary Lyons ("Indemnitor") and
Neurocrine Biosciences, Inc., a Delaware corporation ("Neurocrine").

                                    RECITALS

        WHEREAS, Indemnitor previously transferred options to purchase shares of
Neurocrine common stock granted under the Neurocrine Biosciences 1992 Incentive
Stock Plan (the "Options") to GEL, LLC, and in reliance on professional advice
received at the time of such exercise, Neurocrine has not withheld any sums, or
paid any amounts, for any federal, state, or local taxing authorities
(hereinafter collectively "Taxing Authorities") in connection with such
transfers or upon exercise of such Options by GEL, LLC;

        WHEREAS, Indemnitor and Neurocrine agree that it was implicit that
Indemnitor would bear responsibility for any adverse tax consequences suffered
by Neurocrine in connection with the transfer of the Options or the exercise of
the Options by GEL, LLC, and Indemnitor and Neurocrine are entering into this
Agreement to formalize Indemnitor's implicit promise to indemnify Neurocrine if
Neurocrine becomes obligated to pay taxes (other than Neurocrine's share of
employment taxes to the extent not greater than the amount Neurocrine would have
paid at the time had it treated the issuance and/or exercise of the Options as
taxable compensation), interest and/or penalties (including penalties on
Neurocrine's share of employment taxes) as a result of its not withholding sums
for, or paying any amounts to, any Taxing Authorities in connection with such
transfers and option exercises;

        WHEREAS, Neurocrine is agreeing not to take certain actions with respect
to employment taxes that it may otherwise have taken.

                                    AGREEMENT

        NOW, THEREFORE, in consideration of the foregoing recitals and the
covenants, promises and representations set forth in this Agreement, and for
other good and valuable consideration, the parties agree as follows:

1. Indemnitor Responsible for Taxes and Related Amounts. Indemnitor and
Neurocrine agree that Indemnitor is responsible for the payment of (a) all
income taxes, (b) the employee's share of Social Security and Medicare taxes
under the Federal Insurance Contributions Act ("FICA"), (c) any penalties
assessed against Neurocrine by reason of nonpayment of unemployment taxes under
the Federal Unemployment Tax Act ("FUTA"), and (d) the employee's share of all
employment taxes and withholdings under applicable state laws (including state
disability insurance) that have been incurred or may ever be incurred in each of
(a) through (c) above in so far as such amount are payable respect to the
transfer or the exercise


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of the Options, as well as for certain interest, penalties, and other amounts as
defined in Section 2, below that are related to such taxes.

        2. Indemnity. Indemnitor agrees to indemnify and reimburse Neurocrine
and hold it harmless from (a) taxes, interest and penalties, that Neurocrine may
be required to pay, or in fact pays in accordance with Section 4 below, any
Taxing Authority because Neurocrine has not withheld and paid to the Taxing
Authorities personal income taxes of the Indemnitor or Indemnitor's share of
FICA taxes or (b) interest and penalties that Neurocrine or its subsidiaries may
be required to pay by reason of Neurocrine's nonpayment of FUTA taxes with
respect to the transfer of the Options by Indemnitor to GEL, LLC, and/or the
exercise of the Options by GEL, LLC, or any other transferee; and (c) any
interest, penalties, other additions to tax, or other charges that Neurocrine,
or its subsidiaries may be required to pay, or in fact pays in accordance with
Section 4 below, to any Taxing Authorities because Neurocrine has not paid to
the Taxing Authorities the employer's share of FICA taxes or unemployment taxes
under the Federal Unemployment Tax Act (other than the FUTA tax otherwise
payable by Neurocrine) with respect to the transfer of the Options by Indemnitor
to GEL, LLC, and/or the exercise of the Options by GEL, LLC, or any other
transferee. Subject to Section 4 below, Indemnitor shall immediately pay to
Neurocrine, upon its request, any amounts Indemnitor is required to pay
Neurocrine pursuant to this Section 2. Indemnitor's obligation to indemnify
shall exist regardless of whether Neurocrine is required to pay the
aforementioned taxes, penalties or interest because a Taxing Authority contends
that Neurocrine was legally required to withhold or pay such amounts or whether
Neurocrine is required to pay such taxes, interest or penalties because of
Indemnitor's non-payment or underpayment of such taxes, interest or penalties.

        3. Indemnitor to Provide Notice of Tax Directive. If any Taxing
Authority notifies Indemnitor that it has reached a conclusion regarding the
appropriate tax treatment of the transfer of Options to GEL, LLC, or exercise of
Options by GEL, LLC, and indicates as part of such notice that Neurocrine was
required to withhold any sums for, or pay any amounts to, such Taxing Authority
in connection with any such transfer or exercise, Indemnitor shall promptly
advise Neurocrine of such notice and provide to Neurocrine copies of any written
correspondence relating to Neurocrine's obligations.

        4. Neurocrine's Obligations.

        (a) Neurocrine agrees that, prior to a determination by any court of
competent jurisdiction that Neurocrine should have withheld and/or paid any of
the taxes, interest, or penalties described in Sections 1 and 2 above, it will
not (except as otherwise contemplated by this Agreement) withhold any sums for,
or pay any amounts to, any Taxing Authority or otherwise demand payment from
Indemnitor for any amounts payable by such Indemnitor pursuant to Section 2
above unless Indemnitor requests that Neurocrine withhold or pay such amounts,
or consents to Neurocrine's taking such action; provided, however, that
Neurocrine may withhold and/or pay any such amounts to any Taxing Authority that
claims such payments are owed unless Indemnitor pays Neurocrine's out-of-pocket
costs and expenses, including reasonable attorneys' fees, incurred in connection
with contesting any such claim, to the extent provided in Section 4(b) below. In
this regard, Indemnitor shall not be responsible for



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reimbursing any out-of-pocket costs or expenses of Neurocrine if Neurocrine
determines, pursuant to the fifth sentence of this Section 4, to make a payment
to a Taxing Authority rather than oppose such claim. (If Neurocrine initially
opposes such a claim by a Taxing Authority but then decides to make a payment,
Indemnitor shall be responsible for Neurocrine's out-of-pocket costs and
expenses incurred in connection with the opposition, but not after a
determination has been made to make the payment.) Indemnitor agrees to pay any
amounts that are subject to this Agreement immediately upon the earlier of (i) a
determination by any court that Neurocrine should have withheld and/or paid any
of the taxes, interest, or penalties subject to Section 2, (ii) Indemnitor's
requesting that Neurocrine withhold or pay such amounts or Indemnitor's
consenting to Neurocrine's taking such action, and (iii) as requested by
Neurocrine pursuant to the following sentence. Notwithstanding anything herein
to the contrary, the parties understand and agree that (a) at no time will
Neurocrine be required to advance any sums to, or extend any credit on behalf
of, Indemnitor, and (b) to the extent that (1) an actual demand for payment has
been made to Neurocrine by a Taxing Authority, (2) a decision to withhold or
otherwise make payment to such Taxing Authority on behalf of Neurocrine has been
made by the Board of Directors of Neurocrine based on its determination of the
best interests of the stockholders of Neurocrine; and (3) prior to making such a
decision, there has been notice to the Indemnitor and an opportunity for
Indemnitor and his or her counsel to make a presentation to the Board regarding
such matters, Neurocrine shall have the right to immediately demand payment from
the Indemnitor, and the Indemnitor shall have the obligation to immediately pay
the amount so demanded (and upon receipt by Neurocrine that portion of such
amounts representing taxes, interest and penalties shall be remitted to such
Taxing Authority), and further, Neurocrine also shall have the right, but not
the obligation, to pay any amounts demanded by any Taxing Authority directly and
to obtain immediate reimbursement from the Indemnitor, plus interest.

        (b) This Agreement is one of several Tax Indemnity Agreements in similar
form entered into between Neurocrine and employees of Neurocrine arising from
similar transactions. Indemnitor shall be responsible for only his or her pro
rata share of the out-of-pocket costs and expenses reimburseable under Section
4(a), which initially is deemed to be 48.32%. Such percentage limitation shall
not apply to amounts payable by Neurocrine to Taxing Authorities and otherwise
due by Indemnitor under this Agreement. In the event one or more of the other
individuals who signed Tax Indemnity Agreements in similar form is no longer
contesting claims made by Taxing Authorities, but Neurocrine continues to
contest claims made by Taxing Authorities at the request of Indemnitor,
Indemnitor's share of Neurocrine's out-of-pocket costs and expenses shall be
increased to his or her then-current pro rata share as among all such
individuals who continue to contest such claims.

        5. Security for Indemnitor's Obligations. In the event Indemnitor's
employment with Neurocrine shall terminate, at Neurocrine's request, Indemnitor
and Neurocrine will enter into a mutually acceptable arrangement for security of
Indemnitor's obligations hereunder in an amount sufficient to cover Indemnitor's
reasonable potential liability under this Agreement.

        6. Miscellaneous.


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               (a) Modification and Amendment. This Agreement may not be
altered, amended, modified, or otherwise changed in any way except by a written
instrument signed by each party.

               (b) Headings. The headings and titles of the provisions of this
Agreement are inserted for convenience only and shall not affect the
construction or interpretation of any provision.

               (c) Cumulative Remedies. The right of any party to be indemnified
pursuant to this Agreement shall be cumulative and in addition to every other
right, power or remedy available to such party, whether available at law, in
equity or otherwise. Indemnitor's obligations hereunder may not be reduced by
set-off.

               (d) Governing Law; Arbitration; Waiver of Jury Trial.

                        (i) This Agreement shall be governed and construed in
                accordance with the laws of the State of California, without
                regard to the laws that might be applicable under conflicts of
                laws principles.

                        (ii) All disputes, controversies or claims between
                Indemnitor and Neurocrine arising, directly or indirectly, out
                of or relating to this Agreement shall be resolved by final,
                binding arbitration conducted by a single arbitrator in
                accordance with the Rules of the American Arbitration
                Association as then in effect, except as provided herein. Unless
                the parties otherwise agree, any arbitration shall be held in
                San Diego County, California. The parties shall be entitled to
                discovery sufficient to adequately arbitrate the claims and
                defenses, including access to essential documents and witnesses,
                as determined by the arbitrator. Costs and fees of the
                arbitrator shall be borne by the non-prevailing party. The award
                of the arbitrator, which may include equitable relief, shall be
                final and not subject to appeal, and judgment may be entered
                upon it in accordance with the applicable law in any court
                having jurisdiction thereof. Any demand for arbitration shall be
                in writing and must be made within a reasonable time after the
                claim, dispute or other matter in question has arisen. In no
                event shall the demand for arbitration be made after the date
                that institution of legal or equitable proceedings based upon
                such claim dispute or other matter would be barred by the
                applicable statue of limitations. In no event shall this clause
                (ii) of Section 6(d) be deemed to preclude a party hereto from
                instituting legal action seeking relief in the nature of a
                restraining order, an injunction or the like in order to protect
                his, her or its rights pending the outcome of an arbitration
                hereunder and, if any party hereto shall resort to legal action
                for such types of relief pending the outcome of any such
                arbitration proceeding or prior to the initiation thereof, such
                party shall not be deemed to have waived its rights to cause
                such matter or any other matter to be referred to arbitration
                pursuant to this Section 6(d).



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                        (iii) EACH PARTY IRREVOCABLY WAIVES ITS RIGHTS TO A JURY
                TRIAL OF ANY DISPUTE, CLAIM OR CAUSE OF ACTION RELATED TO OR
                ARISING OUT OF THIS AGREEMENT. THE SCOPE OF THIS WAIVER IS
                INTENDED TO INCLUDE ANY AND ALL DISPUTES, CLAIMS OR CAUSES OF
                ACTION, INCLUDING WITHOUT LIMITATION, CONTRACT CLAIMS, TORT
                CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND
                STATUTORY CLAIMS. EACH SUCH PARTY FURTHER WARRANTS AND
                REPRESENTS THAT IT HAS HAD THE OPPORTUNITY TO HAVE LEGAL COUNSEL
                REVIEW THIS WAIVER.

               (e) Severability. If any provision of this Agreement is found or
held to be invalid or unenforceable by any tribunal of competent jurisdiction,
then the meaning of such provision will be construed, to the extent feasible, so
as to render the provision enforceable, and if no feasible interpretation would
save such provision, it will be severed from the remainder of this Agreement.
The remainder of this Agreement will remain in full force and effect.

               (f) Counterparts. To facilitate execution, this Agreement may be
executed in as many counterparts as may be required. It shall not be necessary
that the signatures on behalf of all parties appear on each counterpart of this
Agreement. All counterparts of this Agreement shall collectively constitute a
single agreement. Signatures to this Agreement may be transmitted by facsimile
and such signatures shall be deemed to be originals.

               (g) Assignment. The Indemnitor may not assign this Agreement
without the prior written consent of the other parties, and any such prohibited
assignment shall be void. Subject to the foregoing, this Agreement shall be
binding upon and inure to the benefit of the respective legal representatives,
successors, assigns, heirs, and devisees of the parties.

               (h) Legal Fees. If any party to this Agreement brings an action
in arbitration or a court of competent jurisdiction to enforce its rights under
this Agreement, the prevailing party shall be entitled to recover its costs and
expenses, including without limitation reasonable attorneys' fees, incurred in
connection with such action.

               (i) Time is of the Essence. Time is of the essence with respect
to every provision of this Agreement.

               (j) Construction. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by all parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement. The use of the word "including" shall not be
deemed to be limited and shall be read as "including but not limited to." The
fundamental premise of this Agreement is that in all events Neurocrine shall
incur no obligation or expense in connection with the items identified in
Section 2, above, and further that this Agreement shall be interpreted
consistently with that intent.



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               (k) Entire Agreement; No Inconsistent Agreements. This Agreement,
together with any exhibits hereto, contains the entire agreement between the
parties and supersedes any prior written or oral agreement between said parties
concerning the subject matter contained herein. There are no representations,
agreements, arrangements or understandings, oral or written, between or among
the parties relating to the subject matter contained in this Agreement, which
are not fully expressed herein. The parties also agree that Indemnitor's
obligations and responsibilities under this Agreement shall not be limited or
subject to indemnity or insurance by Neurocrine through any other agreement or
policy relating to the Indemnitor, including any general indemnity agreements or
any insurance policy Neurocrine may have.

               (l) Further Assurances. Each party hereby agrees to promptly sign
any additional instruments or documents which are necessary or appropriate to
carry out the purpose of this Agreement.


                            {Signature Page Follows}



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        The parties have entered into this Agreement as of the date first set
forth above.

                                      NEUROCRINE BIOSCIENCES, INC.

                                      By: /s/ Margaret Valeur-Jensen
                                          --------------------------------------
                                      Name:
                                      Its:

                                      Address:
                                      10555 Science Center Drive
                                      San Diego, California 92121
                                      Telephone: (858) 658-7600
                                      Fax:

                                      /s/ Gary Lyons
                                      ------------------------------------------
                                      GARY LYONS

                                      Address:


                                      Telephone:
                                      Fax: