**Exhibit10.1**

*Portions of this Exhibit were omitted and filedseparately with the Secretary of the Commission pursuant to an application forconfidential treatment filed with the Commission pursuant to Rule 24b-2 underthe Securities Exchange Act of 1934.  Suchomissions are designated as **.*

 

Execution Copy

**AMENDMENT NO. 2**

This Amendment No. 2 (this “Amendment No. 2”) to theCollaboration and License Agreements effective as of July 9, 2003 between (i)Pharmacopeia Drug Discovery, Inc. (f/k/a Pharmacopeia, Inc.) and ScheringCorporation and (ii) Pharmacopeia Drug Discovery, Inc. and Schering-Plough Ltd.(collectively, as each has been amended by Amendment No. 1 dated July 27, 2006,the “2003 Agreements”), is effective as of September 22nd 2006 (the “AmendmentNo. 2 Effective Date”).  By agreement ofthe Parties, as of the Amendment No. 2 Effective Date, this Amendment No. 2amends the 2003 Agreements as follows:

1.             All capitalized termsnot defined in this Amendment No. 2 shall have the meanings given to them inthe 2003 Agreements.

2.             The Parties agreethat as of the Amendment No. 2 Effective Date, and notwithstanding anything inthe 2003 Agreements to the contrary:

(a)                                  Theterm of the Collaboration is extended and shall continue until April 7, 2007,on which date it shall terminate.

(b)                                 Forthe period from October 8, 2006 until April 7, 2007, Pharmacopeia shall provideten (10) chemistry FTEs for the performance of the Collaboration.  During such period, each of Schering and SPLshall pay to Pharmacopeia research funding for the Collaboration at a rate of **Dollars ($**) ** (an aggregate ** Dollars ($**) **).  All such FTEs shall be dedicated to work fulltime on the Collaboration.

(c)                                  TheFTEs that Pharmacopeia provides under Section 2(b) above shall work on OptimizationPrograms designated by the Collaboration Committee.  For the avoidance of doubt, such FTEs shallnot be required to work on Screening Programs.

(d)                                 Paymentsby each of Schering and SPL under Section 2(b) above shall be made inaccordance with Section 5.2.3 of the Agreements. 

3.             The Parties agreethat the last sentence of Section 2.2.4 of the Agreements shall not apply toany Optimization Programs based upon Lead Compounds that are Schering Compounds(“Extension Programs”) that Pharmacopeia works on during the period set forthin Section 2(b) above.  For the avoidanceof doubt, the Parties agree that with respect to any Agreement Compoundsresulting from such Extension Programs, Pharmacopeia shall be entitled toreceive milestone payments under Section 5.4.1(a) of the Agreements and royaltypayments under Section 5.5 of the Agreements.

4.             The Parties agree thatfrom October 8, 2006 until April 7, 2007, senior management representatives ofeach Party (from Pharmacopeia the Chief Scientific Officer, or equivalent; fromSchering and SPL the global head of chemistry, or equivalent) and each Party’sprimary project managers shall convene a monthly meeting or teleconference, todiscuss overall

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performance under the Agreements in order to ensureeffective communication among the Parties.

5.             The remaining termsof the 2003 Agreements, except to the extent modified by the terms of thisAmendment No. 2, shall remain in full force and effect.

IN WITNESS WHEREOF, the parties hereto have causedthis Amendment No. 2 to be duly executed by their authorized representativesand delivered in triplicate originals on the Amendment No. 2 Effective Date.
| SCHERING CORPORATION   | PHARMACOPEIA  DRUG DISCOVERY,  INC. (F/K/A PHARMACOPEIA, INC.) |
|------------------------|----------------------------------------------------------------|
|                   |                                                           |
| By:                    | /s/ Michael  DuBois                                            |   |   |
| Name: Michael  DuBois  | By:                                                            | /s/ Brian M.  Posner |   |
| Title: Vice  President | Name: Brian M.  Posner                                         |
|                   | Title: Executive  Vice President,                              |
|                   | Chief Financial  Officer and Treasurer                         |
|                   |                                                           |
| SCHERING-PLOUGH,  LTD. |                                                           |
|                   |                                                           |
|                   |                                                           |
| By:                    | /s/ Michael  DuBois                                            |   |   |
| Name: Michael  DuBois  |                                                           |
| Title: Vice  President |                                                           |

 

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