<PAGE>

Certain confidential information contained in this document, marked by brackets,
has been omitted and filed separately with the Securities and Exchange
Commission pursuant to rule 406 of the Securities Act of 1933, as amended.

                                                                    Exhibit 10.8
                         SCREENING SERVICES AGREEMENT

     This Screening Services Agreement (the "Agreement") is made as of the 20th
day of December, 1996 ("Effective Date"), by and between Terrapin Technologies,
Inc., a Delaware corporation ("Terrapin") and Sanwa Kagaku Kenkyusho Co., Ltd.,
a Japanese corporation ("Sanwa").

                                    Recitals

     Whereas, Terrapin possesses a library of compounds ("Terrapin Library") and
is able to determine the affinity of each compound in relation to Terrapin's
reference proteins employed in Terrapin's proprietary TRAPTM technology ("TRAP
Technology"); and

     Whereas, Sanwa has certain biological targets ("Sanwa Targets") that it
desires Terrapin to evaluate using its TRAPTM Technology; and

     Whereas, Terrapin desires to apply the TRAP Technology and Terrapin Library
to the Sanwa Targets in order to identify and evaluate compounds that may lead
to candidates for pharmaceutical development;

     Now, Therefore, in consideration of the foregoing premises and the
covenants set forth below, the parties hereby agree as follows:

1.   Screening Activity.

     1.1  Sanwa's Targets.'  From time to time during the term of this
Agreement, Sanwa may notify Terrapin of a Sanwa Target which Sanwa wishes to use
in screening ("Selected Target") compounds provided by Terrapin; provided,
however, Sanwa may not submit more than [ * ] Sanwa Targets per year, unless
Terrapin agrees otherwise upon consultation with Sanwa.

     1.2  Screening.

          (a)   Within [ * ] of receipt of a notice from Sanwa in accordance
with Subsection 1.1, subject to Subsection 1.3 below, Terrapin shall, based upon
its knowledge of the Terrapin Library and using the TRAPTM Technology, select
and provide to Sanwa [ * ] compounds ("Initial Compounds") from the Terrapin
Library that Terrapin believes, in its sole discretion, represent maximum
chemical compound diversity in the Terrapin

                                       1.
<PAGE>

Library. Sanwa shall screen each Initial Compound for selected activity in
relation to the Selected Target and provide Terrapin the data resulting
therefrom ("Initial Results").

          (b)   Promptly after receipt of the Initial Results Terrapin shall,
based upon the Initial Results and using the TRAP Technology or any other search
technology available to Terrapin, select and provide to Sanwa [ * ] compounds
("Secondary Compounds") from the Terrapin Library that Terrapin believes, in its
sole discretion, will exhibit the greatest likelihood of activity in relation to
the Selected Target.  Sanwa shall screen each Secondary Compound for selected
activity in relation to the Selected Target and provide Terrapin the data
resulting therefrom ("Secondary Results").

          (c)   If [ * ] that further screening activity is necessary, then
based upon the Initial Results and Secondary Results and using the TRAPTM
Technology or any other search technology available to Terrapin, Terrapin shall
select and provide to Sanwa [ * ] compounds ("Tertiary Compounds") from the
Terrapin Library that Terrapin believes, in its sole discretion, will exhibit
the greatest likelihood of additional assay activity in relation to the Selected
Target. Sanwa will screen each Tertiary Compound for selected activity in
relation to the Selected Target and provide Terrapin the data resulting
therefrom ("Tertiary Results").

     1.3  Excluded Targets.  Notwithstanding anything herein to the contrary
Terrapin shall not be obligated to perform any of the services described in
subsection 1.2 with respect to any Sanwa Targets that Terrapin determines are
identical to or in conflict with targets included in any research collaboration
between Terrapin and a third party corporate entity or any other Targets which
Terrapin is already actively pursuing, prior to receipt of a notice pursuant to
Subsection 1.1 identifying such Sanwa Compound ("Excluded Targets").  Terrapin
shall notify Sanwa if a Sanwa Target is an Excluded Target promptly after
receipt of Sanwa's' notice under Subsection 1.1 relating thereto.

2.  Information Provided By Terrapin to Sanwa.

     2.1  Categorization and List of Active Compounds.  Each Secondary and
Tertiary Compound shall be classified as an "Active Compound" if it exhibits
activity with respect to the Selected Target at concentrations [ * ].  Promptly
after receipt of the Tertiary Results, or the Secondary Results if no Tertiary
Compounds are screened, Terrapin shall provide Sanwa a list of Active Compounds
based upon the Initial, Secondary and Tertiary Results with respect to each
Selected Target, together with the two dimensional representation of the
chemical structure thereof.

3.   Payment.

     3.1  [ * ] Certain Replacement Compounds.  [ * ] shall be [ * ] for the
services and activities performed by the other in accordance with this
Agreement; provided,

[*] = Certain confidential information contained in this document, marked by
      brackets, has been omitted and filed separately with the Securities and
      Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as
      amended.

                                       2.
<PAGE>

however, that if in the course of Terrapin using the TRAPTM Technology on
Sanwa's behalf, it becomes necessary to replace rare, expensive compounds in the
Terrapin Library because such compounds have become depleted due to such
activity hereunder, Sanwa shall reimburse Terrapin for the cost of replacing
such depleted compounds. In that event, Terrapin shall consult with Sanwa
regarding such payment. In any event, prior to providing Sanwa with such
compounds, Terrapin shall inform Sanwa of the costs of such compounds in
writing.

     3.2  Additional Services.  If during the term of this Agreement Sanwa
requests and Terrapin agrees to perform services in addition to those described
in Sections 1 and 2 above, including but not limited to medicinal chemistry or
development of in vitro or cell-based or animal assays, Sanwa shall pay Terrapin
for such additional services an amount [ * ]  In any event, prior to providing
Sanwa with such compounds, Terrapin shall inform Sanwa of the lists of such
compounds in writing.

4.   Ownership of Property.

     4.1  Joint Inventions.  Any inventions or discoveries (whether patentable
or not) (the "Joint Inventions") pertaining to, and all information concerning
Active Compounds, resulting directly from the activities of either party
pursuant to Sections 1 and 2, will be jointly owned by Terrapin and Sanwa.
Terrapin shall have the right and the obligation to file, prosecute and maintain
all patent applications and patents for Joint Inventions and shall pay all costs
and fees incurred with relation to the filing, prosecution and maintenance of
such applications and patents.  Terrapin shall confer with Sanwa on the content
of all filings with the United States Patent and Trademark Office (and the
foreign equivalent) and shall provide Sanwa with the opportunity to review the
prosecution strategy and the content of such filings prior to their submission
to such authorities.

     4.2  Sanwa will have the exclusive rights to exploit the Joint Inventions
and information concerning Active Compounds in the Sanwa Territory.  For
purposes of this Section, "Sanwa Territory" shall mean Japan, Korea, Taiwan, and
the People's Republic of China.

     4.3  Terrapin will have exclusive rights to exploit the Joint Inventions
and information concerning Active Compounds in North America and South America.

     4.4  Sanwa and Terrapin will [ * ] revenues from the exploitation of the
Joint Inventions and information concerning Active Compounds in the rest of the
world, will consult with one another prior to entering into any agreement
theretofore and will take appropriate measures to assure such sharing in each
case.

[*] = Certain confidential information contained in this document, marked by
      brackets, has been omitted and filed separately with the Securities and
      Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as
      amended.
                                       3.
<PAGE>

5.   Representations and Warranties.  Each party represents and warrants to the
other that:

     5.1  It will exercise due care in performing its obligations under the
Agreement.

     5.2  All documentation and other information conveyed by one Party to
another hereunder or in connection herewith, was, at the time it was conveyed or
provided, accurate and complete in light of the purposes for which it was
intended.

6.   Confidential Information.

     6.1  Confidentiality.  Except to the extent expressly authorized by this
Agreement or otherwise agreed in writing by the Parties, the Parties agree that,
for the term of this Agreement and for [ * ] after its expiration or
termination, the receiving Party shall keep confidential and shall not publish
or otherwise disclose and shall not use for any purpose other than as provided
for in this Agreement any Confidential Information, hereinafter defined,
furnished to it by the other Party pursuant to this Agreement unless the
receiving Party can demonstrate by competent written proof that such
Confidential Information:

          (a)   was already known to the receiving Party, other than under an
obligation of confidentiality, at the time of disclosure by the other Party;

          (b)   was generally available to the public or otherwise part of the
public domain at the time of its disclosure to the receiving Party;

          (c)   became generally available to the public or otherwise part of
the public domain after its disclosure and other than through any act or
omission of the receiving Party in breach of such Agreements;

          (d)   was disclosed to the receiving Party, other than under an
obligation of confidentiality to a third party, by a third party who had no
obligation to the disclosing Party not to disclose such information to others;
or

          (e)   was independently discovered or developed by the receiving Party
without the use of Confidential Information belonging to the disclosing Party.

     6.2  Authorized Disclosure.  Each Party may disclose Confidential
Information belonging to the other Party to the extent such disclosure is
reasonably necessary in the following instances:

          (a)   filing or prosecuting patents relating to Clinical Candidates or
Licensed Products;

[*] = Certain confidential information contained in this document, marked by
      brackets, has been omitted and filed separately with the Securities and
      Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as
      amended.

                                       4.
<PAGE>

          (b)   regulatory filings;

          (c)   prosecuting or defending litigation;

          (d)   complying with applicable governmental regulations;

          (e)   conducting preclinical or clinical trials of Clinical
Candidates;

          (f)   disclosure to Affiliates, sublicensees, employees, consultants,
or agents each of whom prior to disclosure must be bound by similar obligations
of confidentiality and non-use at least equivalent in scope to those set forth
in this Section 6; and,
          (g)   disclosure to investment bankers; provided, however, that no
such disclosure shall be made of Sanwa Confidential Information without its
written consent, which consent shall not be unreasonably withheld.

Notwithstanding the foregoing, in the event a Party is required to make a
disclosure of the other Party's Confidential Information pursuant to this
Section 6.2 it will, except where impracticable, give reasonable advance notice
to the other Party of such disclosure and use best efforts to secure
confidential treatment of such information.  In any event, the Parties agree to
take all reasonable action to avoid disclosure of Confidential Information
hereunder.

     6.3  Confidential Information.  Confidential Information shall mean any and
all knowledge, know-how, screening results, compound structures, practices,
processes, or other information received by one party to this Agreement from the
other party to this Agreement pursuant to this Agreement.

7.   Term; Termination.

     7.1  Term.  This Agreement shall become effective as of the date first
hereinabove written and unless earlier terminated as hereinafter provided, shall
continue in force for a period of three (3) years after the same. This Agreement
may be extended from time to time by mutual agreement of the parties hereto.

     7.2  Termination for Default.  In the event that either party to this
Agreement shall be in default of any of its material obligations hereunder and
shall fail to remedy such default within [ * ] after receipt of written notice
thereof, the party not in default shall have the option of terminating this
Agreement by giving written notice thereof, notwithstanding anything to the
contrary contained in this Agreement.

[*] = Certain confidential information contained in this document, marked by
      brackets, has been omitted and filed separately with the Securities and
      Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as
      amended.

                                       5.
<PAGE>

8.   Accrued Rights; Surviving Obligations.

     8.1  Termination of this Agreement shall not affect any accrued rights of
either Party.  The terms of Sections 4 and 6 of this Agreement shall survive
termination of this Agreement.  Except to the extent necessary to allow the
Parties to exploit their respective rights pursuant to Section 4, promptly after
termination of this Agreement each Party shall return or dispose of any know-how
of the other in accordance with the instructions of the other, including without
limitation any compounds, assays or other biological or chemical materials.

9.   Governing Law; Dispute Resolution

     9.1  Governing Law.  This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of California, (i) without giving
effect to any choice or conflict of law provision or rule that would cause the
application of the laws of any jurisdiction other than the State of California,
and (ii) except that the rights of the parties to resolve by arbitration any
dispute arising between them regarding the subject matter of this Agreement
shall not be governed by the California arbitration act or international
arbitration act  (Cal. Code of Civ. Proc. (S) 1280 et seq.and 1297.11 et seq.)
but rather by the United States Arbitration Act (9 U.S.C. (S)(S) 1-14, 201-208).

     9.2  Dispute Resolution.  In the event of any controversy or claim arising
out of, relating to or in connection with any provision of this Agreement, the
Parties shall try to settle their differences amicably and in good faith between
themselves first, by referring the disputed matter to the respective heads of
research of each Party and, if not resolved by the research heads, by referring
the disputed matter to the respective Chief Executive Officers of each Party.
In the event such executives are unable to resolve such dispute within such
thirty (30) day period, either Party may invoke the provisions of Section 9.3.

     9.3  Arbitration.  Upon failure to resolve any controversy or claim arising
out of, relating to or in connection with any provision of this Agreement using
the dispute resolution procedure described in Section 9.2, such controversy or
claim shall be finally settled by arbitration.  Arbitration shall be held in
Honolulu, Hawaii in the English language and conducted accordance with the
Commercial Arbitration Rules of the American Arbitration Association.  The
decision of such arbitration shall be conclusive and binding upon both Parties.
If a Party commences any action or proceeding against the other Party to enforce
this Agreement or any rights related thereto, the prevailing Party in such
action shall be entitled to recover from the other Party the reasonable
attorneys' fees and other reasonable costs and expenses incurred by that
prevailing Party in connection with such action or proceeding and in connection
with enforcing any judgment, award or order thereby obtained.

[*] = Certain confidential information contained in this document, marked by
      brackets, has been omitted and filed separately with the Securities and
      Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as
      amended.

                                       6.
<PAGE>

10.  Miscellaneous.

     10.1 Notices.  All notices required or permitted to be given under this
Agreement shall be in writing and shall be mailed by registered or certified
mail, postage prepaid, addressed to the signatory to whom such notice is
required or permitted to be given and transmitted by facsimile to the number
indicated below.  All notices shall be deemed to have been given when mailed, as
evidenced by the postmark at the point of mailing, or transmitted by facsimile.

     All notices to Sanwa shall be addressed as follows:

     Sanwa Kagaku Kenkyusho Co., Ltd.
     35 Higashi Sotobori-cho
     Higashi-ku Nagoya, 461
     Japan
     Attention:  President
     Fax:  011-81-52-9571067

     With a copy to:

     Graham & James, L.L.P.
     One Maritime Plaza
     San Francisco, California 94111
     U.S.A.
     Attention:  Michael R. Moyle, Esq.
     Facsimile:  (415) 391-2493

     All notices to Terrapin shall be addressed as follows:

     Terrapin Technologies, Inc.
     750 Gateway Boulevard
     South San Francisco, California 94080
     U.S.A.
     Attention:  President
     Fax: (415) 244-9388

[*] = Certain confidential information contained in this document, marked by
      brackets, has been omitted and filed separately with the Securities and
      Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as
      amended.

                                       7.
<PAGE>

     with a copy to:

     Cooley Godward LLP
     Five Palo Alto Square
     3000 El Camino Real
     Palo Alto, California  94306
     Attention:  Brian C. Cunningham, Esq.
     Fax:  (415) 857 0663

     Any Party may, by written notice to the other, designate a new addressee,
address or facsimile number to which notices to the Party giving the notice
shall thereafter be mailed or faxed.

     10.2  Force Majeure.  No Party shall be liable for any delay or failure of
performance to the extent such delay or failure is caused by circumstances
beyond its reasonable control and that by the exercise of due diligence it is
unable to prevent, provided that the Party claiming excuse uses its best efforts
to overcome the same.

     10.3  Entirety Of Agreement.  This Agreement embodies the entire, final and
complete agreement and understanding between the Parties and replaces and
supersedes all prior discussions and agreements between them with respect to its
subject matter except as expressly stated herein.  No modification or waiver of
any terms or conditions hereof shall be effective unless made in writing and
signed by a duly authorized officer of each Party.

     10.4  Non-Waiver.  The failure of a Party in any one or more instances to
insist upon strict performance of any of the terms and conditions of this
Agreement shall not constitute a waiver or relinquishment, to any extent, of the
right to assert or rely upon any such terms or conditions on any future
occasion.

     10.5  Disclaimer Of Agency.  Neither Party is, or will be deemed to be, the
legal representative or agent of the other, nor shall either Party have the
right or authority to assume, create, or incur any third party liability or
obligation of any kind, express or implied, against or in the name of or on
behalf of another except as expressly set forth in this Agreement.

     10.6  Severability.  If a court of competent jurisdiction declares any
provision of this Agreement invalid or unenforceable, or if any government or
other agency having jurisdiction over either Terrapin or Sanwa deems any
provision to be contrary to any laws, then that provision shall be severed and
the remainder of the Agreement shall continue in full force and effect.  To the
extent possible, the Parties shall revise such invalidated provision in a manner
that will render such provision valid without impairing the Parties' original
interest.

[*] = Certain confidential information contained in this document, marked by
      brackets, has been omitted and filed separately with the Securities and
      Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as
      amended.

                                       8.
<PAGE>

     10.7  Affiliates; Assignment.  Except as otherwise provided in this Section
10.7, neither Party may assign its rights or obligations under this Agreement
without the prior written consent of the other Party, such consent not to be
unreasonably withheld, except that a Party may assign its rights or obligations
to a third party in connection with the merger, consolidation, reorganization or
acquisition of stock or assets affecting substantially all of the assets or
actual voting control of the assigning Party.  This Agreement shall be binding
upon the successors and permitted assigns of the Parties. Any attempted
delegation or assignment not in accordance with this Section 10.7 shall be of no
force or effect.

     10.8  Headings.  The headings contained in this Agreement have been added
for convenience only and shall not be construed as limiting.

     10.9  Limitation Of Liability.  No Party shall be liable to another for
indirect, incidental, consequential or special damages, including but not
limited to lost profits, arising from or relating to any breach of this
Agreement, regardless of any notice of the possibility of such damages.  Nothing
in this Section is intended to limit or restrict the indemnification rights or
obligations of any Party.

     10.10  Counterparts.  This Agreement may be executed in one or more
counterparts, each of which shall be an original and all of which shall
constitute together the same document.

     10.11  English Language.  This Agreement has been prepared in the English
language and shall be construed in the English language.

     In Witness Whereof, the parties have by duly authorized persons, executed
this Agreement, as of the date first above written.

Sanwa Kagaku Kenkyusho Co., Ltd.                 Terrapin Technologies, Inc.

By: /s/ Keiji Tanimoto                           By: /s/ Clifford Orent
   -------------------                              -------------------

Title: President and                             Title: President and
       -------------                                    -------------
       Chief Executive Officer                          Chief Executive Officer
       -----------------------                          -----------------------

Date:  December 26, 1996                         Date:  December 26, 1996


[ * ] = Certain confidential information contained in this document, marked by
brackets,  has been omitted and filed separately with the Securities and
Exchange Commission pursuant to rule 406 of the Securities Act of 1933, as
amended.

[*] = Certain confidential information contained in this document, marked by
      brackets, has been omitted and filed separately with the Securities and
      Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as
      amended.

                                       9.
<PAGE>

                FIRST AMENDMENT TO SCREENING SERVICES AGREEMENT

     This First Amendment to Screening Services Agreement (this "First
Amendment") is made and dated September 24, 1997, by and between Sanwa Kagaku
Kenkyusho Co., Ltd., a Japanese corporation ("Sanwa") and Terrapin Technologies,
Inc., a Delaware corporation (`Terrapin").

                                R E C I T A L S
                                ---------------

     A.  The Parties are parties to that Screening Services Agreement dated as
of December 20, 1996 (the `TRAP Agreement").

     B.  The Parties are entering into a Series I Stock Purchase Agreement of
even date herewith (the `Stock Purchase Agreement") in connection with which, as
one of the conditions to Sanwa consummating the transactions contemplated by the
Stock Purchase Agreement, the parties have agreed to execute and deliver this
First Amendment.

     NOW, THEREFORE, in consideration of the above recitals and for other good
and valuable consideration, the adequacy and receipt of which are hereby
acknowledged, the parties hereby agree as follows:

                               A G R E E M E N T
                               -----------------

1.   Amendments.  The TRAP Agreement is hereby amended as follows:
     ----------
     (a)  Section 1.1 of the TRAP Agreement shall be revised in its entirety to
read as follows:

          1.1   Sanwa's Targets. From time to time during the term of this
                Agreement, Sanwa may notify Terrapin of a Sanwa Target which
                Sanwa wishes to use in screening (`Selected Target") compounds
                provided by Terrapin; provided, however, Sanwa may not submit
                more than [ * ] Sanwa targets during the term of this Agreement
                as set forth in Section 7.1 hereof.

     (b)  In the third line of Section 7.1, the words "three (3) years" shall be
revised to "six (6) years."

     (c)  Section 10.7 of the TRAP Agreement shall be revised in its entirety to
read as follows:

          10.7    Assignment.

          10.7.1  General.  Except as otherwise provided in Section 10.7.2 or
          10.7.3, neither party may assign its rights or obligations under this
          Agreement

[ * ] = Certain confidential information contained in this document, marked by
brackets,  has been omitted and filed separately with the Securities and
Exchange Commission pursuant to rule 406 of the Securities Act of 1933, as
amended.

[*] = Certain confidential information contained in this document, marked by
      brackets, has been omitted and filed separately with the Securities and
      Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as
      amended.

                                       1.
<PAGE>

          without the prior written consent of the other party. This Agreement
          shall be binding upon the permitted successors and permitted assigns
          of the Parties. Any attempted delegation or assignment not in
          accordance with this Section 10.7 shall be of no force and effect.

          10.7.2  Permitted Assignment by Sanwa.  Sanwa may assign its rights or
          obligations under this Agreement to a third party in connection with
          the merger, consolidation, reorganization or acquisition of stock or
          assets affecting substantially all of the assets or actual voting
          control of Sanwa.

          10.7.3  Permitted Assignment by Terrapin.  Upon the written consent of
          Sanwa, such consent not to be unreasonably withheld or delayed,
          Terrapin may assign its rights or obligations under this Agreement to
          a third party in connection with the merger, consolidation,
          reorganization or acquisition of stock or assets affecting
          substantially all of the assets or actual voting control of Terrapin.
          Sanwa may only withhold its consent under the preceding sentence if
          (a) such third party is [ * ] according to the terms of this Agreement
          or (b) such third party is [ * ]

     2.   Defined Terms; Incorporation. Unless otherwise expressly provided
          ----------------------------
herein, defined terms used in this First Amendment shall have the same meaning
as set forth in the TRAP Agreement, and all terms herein shall be incorporated
into the TRAP Agreement. From and after the effective date of this First
Amendment, all reference to the "TRAP Agreement" in all other documents
delivered in connection with the TRAP Agreement shall refer to the TRAP
Agreement, as amended hereby.

     3.   Counterparts: Facsimile. This First Amendment may be executed in
          -----------------------
counterparts and by facsimile.



[ * ] = Certain confidential information contained in this document, marked by
brackets,  has been omitted and filed separately with the Securities and
Exchange Commission pursuant to rule 406 of the Securities Act of 1933, as
amended.

[*] = Certain confidential information contained in this document, marked by
      brackets, has been omitted and filed separately with the Securities and
      Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as
      amended.

                                       2.
<PAGE>

     IN WITNESS WHEREOF, the Parties have executed this First Amendment
effective as of the date first set forth above.

TERRAPIN TECHNOLOGIES, INC.                   SANWA KAGAKU KENKYUSHO CO., LTD

/s/ Clifford Orent                           /s/ Keiji Tanimoto
--------------------------------             --------------------------------
By: Clifford Orent                           By: Keiji Tanimoto
Its: Chairman                                Its: President
     and Chief Executive Officer                  and Chief Executive Officer

[ * ] = Certain confidential information contained in this document, marked by
brackets,  has been omitted and filed separately with the Securities and
Exchange Commission pursuant to rule 406 of the Securities Act of 1933, as
amended.

[*] = Certain confidential information contained in this document, marked by
      brackets, has been omitted and filed separately with the Securities and
      Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as
      amended.

                                      3.
<PAGE>

                              SECOND AMENDMENT TO
                          SCREENING SERVICES AGREEMENT

This Second Amendment to Screening Services Agreement (this "Second Amendment")
is made and dated October 29, 1998, (the "Second Amendment Effective Date"), by
and between Sanwa Kagaku Kenkyusho Co., Ltd., a Japanese corporation ("Sanwa")
and Telik, Inc. (formerly Terrapin Technologies, Inc.), a Delaware corporation
("Telik").

                                    RECITALS
                                    --------

A.      Sanwa and Telik are parties to that Screening Services Agreement dated
as of December 20, 1996 as amended by that First Amendment to Screening Services
Agreement (the "TRAP Agreement").

B.      Sanwa and Telik are entering into a Series J Preferred Stock Purchase
Agreement of even date herewith (the "Stock Purchase Agreement") in connection
with which, as one of the conditions to Sanwa consummating the transactions
contemplated by the Stock Purchase Agreement, the parties have agreed to execute
and deliver this Second Amendment.

NOW, THEREFORE, in consideration of the above recitals and for other good and
valuable consideration, the adequacy and receipt of which are hereby
acknowledged, the parties hereby agree as follows:

                                   AGREEMENT
                                   ---------

1.   Amendments.  The TRAP Agreement is hereby amended as follows:
     ----------

     (a)  Each reference in the TRAP Agreement to "Terrapin Technologies, Inc."
is amended and replaced by "Telik, Inc." Each reference in the TRAP Agreement to
"Terrapin" is amended and replaced by "Telik."

     (b)  A new Section 1.4 is hereby added to the TRAP Agreement as follows:

          1.4   Lead Optimization

          Telik shall diligently undertake a maximum of [ * ] Lead Optimization
          Projects (as defined below) simultaneously at any given time, each
          with respect to a Family of Compounds (as defined below) as Sanwa
          shall select taking into account the scientific advice of the "RMC,"
          as such term is defined in the Collaboration Agreement between Telik
          and Sanwa dated December 20, 1996, as amended ("Collaboration
          Agreement"), by providing written notice to Telik.  For a period of
          two years, commencing on the date of written notice from Sanwa
          identifying the Family of Compounds for a Lead Optimization Project,

[ * ] = Certain confidential information contained in this document, marked by
brackets,  has been omitted and filed separately with the Securities and
Exchange Commission pursuant to rule 406 of the Securities Act of 1933, as
amended.

                                      1.
<PAGE>

          Telik shall undertake, [ * ] such Lead Optimization Project. If Telik
          completes such Lead Optimization Project in less than two (2) years,
          or if Sanwa notifies Telik that, taking into account the scientific
          advice of the RMC, it wishes to substitute another Lead Optimization
          Project in place of a previously selected Lead Optimization Project,
          Telik shall undertake such new or substitute Lead Optimization Project
          as Sanwa may select, taking into account the scientific advice of the
          RMC, by providing written notice to Telik, until the expiration of the
          above two (2) year period [ * ] If Telik undertakes a [ * ] Lead
          Optimization Project as selected by Sanwa, or continues with the Lead
          Optimization Project after the expiration of the two (2) year period
          described above, both after taking into account the scientific advice
          of the RMC, Sanwa shall pay Telik [ * ], working through the RMC.
          Telik shall ensure [ * ] and to [ * ] that Telik shall undertake for
          Sanwa pursuant to this Section 1.4.

          For purposes of this Agreement, the term "Family of Compounds" shall
          mean Active Compounds that [ * ], and that can be starting candidates
          for Lead Optimization Projects.

          For purposes of this Agreement, "Lead Optimization Project" shall mean
          a series of studies which the RMC shall agree upon and which, by way
          of example, includes identification and selection of Advanced Lead
          Compounds as set forth in Phase 1 of the Research Plan (as defined in
          the Collaboration Agreement), and Selection of Clinical Candidates as
          set forth in Phase 2 of the Research Plan (as defined in the
          Collaboration Agreement), and encompasses all of the [ * ] that are
          required until one or more Active Compounds are discovered which Sanwa
          determines may be suitable for use in clinical studies.

  (c)     Section 3.2 is amended by adding the following words at the beginning
of that Section: "Except as provided in Section 1.4 in relation to Lead
Optimization Projects,".

  (d)     Section 4.3 is amended in its entirety to read as follows:

          Telik will have exclusive rights to exploit the Joint Inventions and
          information concerning Active Compounds in North America and South
          America ("Telik Territory").

  (e)     In the third line of Section 7.1 the words "six (6) years" shall be
revised to "ten (10) years."

2.  Further Discussions. The parties agree to meet in [ * ] or otherwise [ * ]
    -------------------
to discuss in good faith additional amendments to the TRAP Agreement relating to
sharing of data, collaborative development efforts, including coordination of
pre-clinical and clinical studies, joint development agreements with third
parties and such other matters as the parties may agree.

[ * ] = Certain confidential information contained in this document, marked by
brackets,  has been omitted and filed separately with the Securities and
Exchange Commission pursuant to rule 406 of the Securities Act of 1933, as
amended.


                                      2.
<PAGE>

3.   Defined Terms; Incorporation. Unless otherwise expressly provided herein,
     ----------------------------
defined terms used in this Second Amendment shall have the same meaning as set
forth in the TRAP Agreement, and all terms herein shall be incorporated into the
TRAP Agreement. From and after the Second Amendment Effective Date all reference
to the "TRAP Agreement" in all other documents delivered in connection with the
TRAP Agreement shall refer to the TRAP Agreement, as amended hereby.

4.   Counterparts: Facsimile. This Second Amendment may be executed in
     -----------------------
counterparts and by facsimile.

     IN WITNESS WHEREOF, the parties have executed this Second Amendment
effective as of the date first set forth above.

TELIK, INC.                      SANWA KAGAKU KENKYUSHO CO., LTD.



     /s/ Clifford Orent              /s/ Keiji Tanimoto
----------------------------     --------------------------------------------
By:  Clifford Orent              By: Keiji Tanimoto
Its: Chairman and                Its:  President and Chief Executive Officer
     Chief Executive Officer


[ * ] = Certain confidential information contained in this document, marked by
brackets,  has been omitted and filed separately with the Securities and
Exchange Commission pursuant to rule 406 of the Securities Act of 1933, as
amended.

                                      3.