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                                                                Exhibit No. 10.3

                               SEVERANCE AGREEMENT

     THIS SEVERANCE AGREEMENT (this "Agreement"), dated as of May 1, 2002, is
made by and between NANOGEN, INC., a Delaware corporation (hereinafter the
"Company"), and David McDonald (hereinafter "Executive").

                                    RECITALS

     WHEREAS, the Company and Executive wish to set forth in this Agreement the
terms and conditions under which Executive's employment may be terminated by the
Company;

     WHEREAS, the Company agreed in the Offer Letter of Employment, from the
Company to Executive, dated April 1, 2002 (the "Offer Letter"), to provide for
certain severance payments to be made to Executive upon the Company's
termination of the Executive's employment;

     NOW, THEREFORE, the Company and Executive, in consideration of the mutual
promises set forth herein, agree as follows:

                                    AGREEMENT

     1.   BY DEATH. Executive's employment shall terminate automatically upon
the death of Executive. In such event, the Company shall pay to Executive's
beneficiaries or his estate, as the case may be, any accrued base salary, any
bonus compensation to the extent earned, any vested deferred compensation (other
than pension plan or profit-sharing plan benefits which will be paid in
accordance with the applicable plan), any benefits under any plans of the
Company in which Executive is a participant to the full extent of Executive's
rights under such plans, any accrued vacation pay and any appropriate business
expenses incurred by Executive in connection with his duties hereunder, all to
the date of termination (collectively "Accrued Compensation"), but no other
compensation or reimbursement of any kind, including, without limitation,
severance compensation, and thereafter, the Company's obligations hereunder
shall terminate.

     2.   BY DISABILITY. If Executive is prevented from properly performing his
duties to the Company as described in the Offer Letter hereunder by reason of
any physical or mental incapacity for a period of more than 90 days in the
aggregate in any 365-day period, then, to the extent permitted by law, the
Company may terminate the employment on the 90th day of such incapacity. In such
event, the Company shall pay to Executive all Accrued Compensation, and shall
continue to pay to Executive the base salary until such time (but not more than
90 days following termination), as Executive shall become entitled to receive
disability insurance payments under the disability insurance policy maintained
by the Company, which disability policy shall provide for full payment of
Executive's base salary during the period of disability, but no other
compensation or reimbursement of any kind, including without limitation,
severance

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compensation, and thereafter the Company's obligations hereunder shall
terminate. Nothing in this Section shall affect Executive's rights under any
disability plan in which he is a participant.

     3.   BY COMPANY FOR CAUSE. The Company may terminate Executive's employment
for Cause (as defined below) without liability at any time with or without
advance notice to Executive. The Company shall pay Executive all Accrued
Compensation, but no other compensation or reimbursement of any kind, including
without limitation, severance compensation, and thereafter the Company's
obligations hereunder shall terminate. Termination shall be for "Cause" in the
event of the occurrence of any of the following: (a) any intentional action or
intentional failure to act by Executive which was performed in bad faith and to
the material detriment of the Company; (b) Executive intentionally refuses or
intentionally fails to act in accordance with any lawful and proper direction or
order of the Board; (c) Executive willfully and habitually neglects the duties
of employment; or (d) Executive is convicted of a felony crime involving moral
turpitude, provided that in the event that any of the foregoing events is
capable of being cured, the Company shall provide written notice to Executive
describing the nature of such event and Executive shall thereafter have five (5)
business days to cure such event.

     4.   AT WILL. At any time, the Company may terminate Executive's employment
without liability other than as set forth below, for any reason not specified in
Section 3 above, by giving thirty (30) days advance written notice to Executive.
If the Company elects to terminate Executive pursuant to this Section 4, the
Company shall pay to Executive all Accrued Compensation and shall continue to
pay to Executive as provided herein Executive's base salary for six (6) months
from the date of such termination as severance compensation. Upon payment of the
severance benefits described herein, all obligations of the Company (or its
successor) shall terminate.

     5.   EXECUTIVE'S OBLIGATIONS. During the period when such severance
compensation is being paid to Executive pursuant to Section 4 above, Executive
shall not (i) engage, directly or indirectly, in any other business activity
that is competitive with, or that places him in a competing position to that of
the Company or any affiliated company (provided that Executive may own less than
two percent (2%) of the outstanding securities of any publicly traded
corporation), or (ii) hire, solicit, or attempt to hire on behalf of himself or
any other party any employee or exclusive consultant of the Company. The
obligations of Executive described in this Section 5 are in addition to any
other obligations that Executive may have to the Company as described in other
agreements or arrangements, including but not limited to, the Proprietary
Inventions Agreement, dated April 29, 2002.

     6.   GOVERNING LAW. The validity, interpretation, construction and
performance of this Agreement and the rights of the parties thereunder shall be
interpreted and enforced under California law without reference to principles of
conflicts of laws. The parties expressly agree that inasmuch as the Company's
headquarters and principal place of business are located in California, it is
appropriate that California law govern this Agreement.

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     7.   ASSIGNMENT; SUCCESSORS; BINDING AGREEMENT.

     (a)  Executive may not assign, pledge or encumber his interest in this
Agreement or any part thereof.

     (b)  The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company, operation of law or by agreement in form
and substance reasonably satisfactory to Executive, to assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.

     (c)  This Agreement shall inure to the benefit of and be enforceable by
Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributee, devisees and legatees. If Executive should die
while any amount is at such time payable to him hereunder, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the terms of
this Agreement to Executive's devisee, legates or other designee or, if there be
no such designee, to his estate.

     8.   NO WAIVER OF BREACH. The waiver by any party of the breach of any
provision of this Agreement shall not be deemed to be a waiver of any subsequent
breach.

     9.   NOTICE. For the purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by certified or
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth below or to such other address as either party
may have furnished to the other in writing in accordance herewith, except that
notice of change of address shall be effective only upon receipt.

     To the Company:   Nanogen, Inc.
                       10398 Pacific Center Court
                       San Diego, CA 92121
                       Attn: Chief Executive Officer

     To Executive:     David McDonald
                       c/o Nanogen, Inc.
                       10398 Pacific Center Court
                       San Diego, CA 92121

     10.  MODIFICATION; WAIVER; ENTIRE AGREEMENT. No provisions of this
Agreement may be modified, waived or discharged unless such waiver, modification
or discharge is agreed to in writing signed by Executive and such officer as may
be specifically designated by the Board of the Company. No waiver by either
party hereto at any time of any breach by the other party of, or compliance
with, any condition or

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provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or any
prior or subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not expressly set forth in this Agreement.

     11.  VALIDITY. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.

     12.  CONTROLLING DOCUMENT. This Agreement, and the Offer Letter supersedes
any and all prior agreements between the Company and Executive relating to the
matters herein, but does not supersede any other agreements between Company and
Executive executed hereafter, including but not limited to, any stock option
agreements entered into pursuant to the Company's 1997 Stock Incentive Plan and
the Nanogen Employees' Handbook and Policies, except as expressly provided
herein. In case of conflict between any of the terms and conditions of this
Agreement and the documents herein referred to, the terms and conditions of this
Agreement shall control.

     13.  EXECUTIVE ACKNOWLEDGMENT. Executive acknowledges (a) that he has
consulted with or has had the opportunity to consult with independent counsel of
his own choice concerning this Agreement, and has been advised to do so by the
Company, and (b) that he has read and understands the Agreement, is fully aware
of its legal effect, and has entered into it freely based on his own judgment.

     14.  REMEDIES.

     (a)  INJUNCTIVE RELIEF. The parties agree that the services to be rendered
by Executive hereunder are of a unique nature and that in the event of any
breach or threatened breach of any of the covenants contained herein, the damage
or imminent damage to the value and the goodwill of the Company's business will
be irreparable and extremely difficult to estimate, making any remedy at law or
in damages inadequate. Accordingly, the parties agree that the Company shall be
entitled to injunctive relief against Executive in the event of any breach or
threatened breach of any such provisions by Executive, in addition to any other
relief (including damages) available to the Company under this Agreement or
under law.

     (b)  EXCLUSIVE. Both parties agree that the remedy specified in Section 14
(a) above is not exclusive of any other remedy for the breach by Executive of
the terms hereof.

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     15.  COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which taken together shall constitute one and the same
Agreement.

     Executed by the parties as of the day and year first above written.

                                            NANOGEN, INC.


                                            By: /s/ Dr. V. Randy White
                                                --------------------------------
                                                    Dr. V. Randy White
                                                    Chief Executive Officer

                                            EXECUTIVE:


                                            By: /s/ David McDonald
                                                --------------------------------
                                                    David McDonald