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                                                               EXHIBIT 10.54

                          NEXSTAR PHARMACEUTICALS, INC.
                              2860 WILDERNESS PLACE
                             BOULDER, COLORADO 80301



August 18, 1998


Mr. Patrick J. Mahaffy
NeXstar Pharmaceuticals, Inc.
2860 Wilderness Way
Boulder, Colorado 80301

Re:      SEPARATION AGREEMENT

Dear Patrick:

This letter shall constitute the separation agreement (the "Agreement") between
you and NeXstar Pharmaceuticals, Inc. (the "Company"). Upon your execution of
this Agreement, this Agreement shall replace and supersede in its entirety all
of the provisions and terms of your May 1992 letter agreement with the Company
regarding your employment and any other employment agreement that you now may
have with the Company and any termination or severance pay plan or arrangement
of the Company.

1.   Your resignation as the Chief Executive Officer of the Company, as a member
     of its Board of Directors and as an officer or director of any of the
     Company's subsidiaries will be effective as of the close of business on
     August 19, 1998 (the "Effective Date").

2.   For a period commencing on the Effective Date and ending on May 21, 1999
     (the "Consulting Period"), you will provide consulting services to the
     Company as requested by the Company's Board of Directors or its executive
     officers, which consulting services will be comprised of advice concerning
     or performing work related to matters on which you worked while serving as
     an executive officer of NeXstar ("Consulting Services"). Such services may,
     among other tasks, include your continued involvement with Proligo, L.L.C.,
     the Company's joint venture with SKW-Trostberg AG, NIGU Chemie GmbH or
     their affiliates (the "Proligo Joint Venture"), negotiations regarding a
     possible joint venture in the field of diagnostics and negotiations
     regarding the acquisition of the U.S. marketing rights to AmBisome. You
     will be permitted to provide such services from your home or from such
     office as you may establish for yourself, and you will make yourself
     available to provide such services at such reasonable times as the Company
     may request; PROVIDED,

                                       

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Patrick J. Mahaffy
August 18, 1998
Page 2

     that the Company will cooperate with you in the event that you have 
     conflicts in connection with your other work-related or personal 
     obligations, and PROVIDED, FURTHER, that unless otherwise mutually agreed, 
     you will not be expected to render more services than an average of 
     10 hours per month during the Consultation Period.

3.   As severance payments and in consideration of the Consulting Services, the
     Company will pay you salary continuation payments at the rate of $25,000
     per month for a period of twenty-four (24) consecutive months commencing on
     August 20, 1998 (the "Salary Continuation Period"). During the first
     eighteen (18) months of the Salary Continuation Period, the Company will
     have no right to reduce such monthly payments to you to reflect a set-off
     of any amounts earned by you from other employment during such period .
     However, in the event you are employed on a full-time basis by any entity
     during the last six months of the Salary Continuation Period, you will
     report to the Company the amounts received by you as compensation in such
     employment with respect to such six month period (whether or not paid
     during that period), and the Company will have the right to reduce the
     monthly payments made to you during such six month period by the amount of
     the compensation paid to you in your new employment. All payments made to
     you during the Salary Continuation Period will, of course, be subject to
     appropriate withholding by the Company for federal, state and local payroll
     taxes and income tax withholding.

4.   The Company will continue during the Salary Continuation Period to provide
     you and your family with medical benefits substantially similar to the
     medical benefits provided to you immediately prior to the Effective Time
     (provided that you continue to make the same employee contributions with
     respect to such benefits as you had immediately prior to the Effective
     Time); PROVIDED, HOWEVER, that the Company will not be required to continue
     such coverage in the event you accept employment with any other entity and
     such other entity offers you the opportunity to receive medical benefits
     for you and your family on terms substantially similar to the medical
     benefits provided to you by the Company.

5.   During the Salary Continuation Period, the Company will also continue to
     pay the premiums on the $500,000 term life insurance policy which it has
     purchased for the benefit of your estate. At the end of the Salary
     Continuation Period, to the extent permitted by the terms of such policy,
     the Company will give you the right to elect to have such policy assigned
     to you so that you may, at your own expense, continue such policy in
     effect.

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Patrick J. Mahaffy
August 18, 1998
Page 3

6.   All of the stock options that have been awarded to you under the Company's
     stock option plans will fully vest as of the Effective Date and you will be
     entitled to exercise such options during the Consulting Period and, in
     accordance with the terms of such plans and the agreements reflecting such
     options, during a ninety (90) day period following the completion of the
     Consulting Period, or such longer period, if any, as is then available to
     you under the terms of the Company's stock option plans.

7.   In recognition of your successful efforts at having brought to fruition the
     Proligo Joint Venture, the Company will pay you, in one lump sum (less
     applicable withholding, if any), the amount of $150,000; such payment to be
     made on or before August 21, 1998.

8.   The Company will separately reimburse you for all reasonable and necessary
     out-of-pocket expenses which you incur in the course of performing the
     consulting services contemplated by this Agreement upon submission by you
     to the Company of invoices or receipts reflecting such expenses, PROVIDED
     that such expenses are in accordance with the Company's reimbursement
     policies for its employees generally.

9.   As part of the consideration for this Agreement, you agree that during the
     Consulting Period and for a period of one year thereafter, you will not
     interfere with, disrupt or attempt to disrupt the relationship (contractual
     or otherwise) between the Company and any of its customers, suppliers,
     lessors, lessees, employees, board members, consultants, research partners,
     creditors or investors. You further agree that during such period you will
     not (a) participate in the business (whether as an officer, director, owner
     (except for a beneficial ownership interest of less than 1%), employee,
     partner, consultant, advisor or other direct or indirect participant) of
     The Liposome Company, Sequus Pharmaceuticals or Aronex Pharmaceuticals,
     Inc., or of any entity engaged in the field of aptamer research or in the
     marketing or sales of aptamer based products. You acknowledge and agree
     that the provisions of this paragraph are necessary, among other reasons,
     for the protection of the Company's trade secrets. You further acknowledge
     and agree that the remedy at law available to the Company for breach of any
     of your obligations under this paragraph 9 would be inadequate, and that
     damages flowing from such a breach may not readily be susceptible to being
     measured in monetary terms. Accordingly, you acknowledge, consent and agree
     that, in addition to any other rights or remedies which the Company may
     have at law, in equity or under this Agreement, upon adequate proof of your
     violation of any provision of this paragraph, the Company shall be

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Patrick J. Mahaffy
August 18, 1998
Page 4

     entitled to immediate injunctive relief and may obtain a temporary order 
     restraining any threatened or further breach, without the necessity of 
     proof of actual damage. You acknowledge and agree that the covenants set 
     forth in this paragraph are reasonable and valid in geographical and 
     temporal scope and in all other respects. If any of such covenants or 
     other provisions of this Agreement are found to be invalid or unenforceable
     by a final determination of a court of competent jurisdiction (i) the 
     remaining terms and provisions hereof shall be unimpaired and (ii) the 
     invalid or unenforceable term or provision shall be deemed replaced by a 
     term or provision that is valid and enforceable and that comes closest to 
     expressing the intention of the invalid or unenforceable term or provision.

10.  You acknowledge that you continue to be obligated under the confidentiality
     agreements which you have previously executed with the Company and you
     confirm that you will maintain in confidence and not make use of
     information concerning the Company's business and affairs of any nature
     that is not otherwise a matter of public record.

11.  On your own behalf and on behalf of your heirs and assigns, you hereby
     release and discharge the Company, its subsidiaries, stockholders,
     directors, officers, employees and agents (collectively referred to as the
     "NeXstar Released Parties"), of and from, and covenant not to sue or assert
     against the NeXstar Released Parties, for any purpose, all claims, causes
     of action, damages, losses, liabilities and demands whatsoever including
     but not limited to any claim arising from or related to or attributable to
     your employment with the Company and the termination of such employment.
     This release includes, but is not limited to, all matters which may arise
     at common law or under federal law, state law or local laws. You understand
     and express acknowledge that this release of claims extends to all claims
     of every nature and kind, known and unknown, suspect or unsuspected,
     presently existing or which may arise in the future caused by or resulting
     from or attributable to any act or omission of the NeXstar Released Parties
     occurring prior to the date of this Agreement. Notwithstanding the
     foregoing, by giving the release contained in this paragraph you do not
     relinquish your right to enforce the provisions of this Agreement or your
     right to indemnification for acts occurring or liabilities arising on or
     prior to the Effective Date or for acts taken in good faith on behalf of
     the Company during the Consulting Period, including any right for
     reimbursement of expenses (including, without limitation, attorneys fees
     and costs) from the Company under charter provisions, by laws or insurance
     arrangements or under applicable law with respect to any claim asserted

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Patrick J. Mahaffy
August 18, 1998
Page 5

     against you in your capacity as an officer or director of the Company or
     any of its subsidiaries, or as a consultant to the Company.

12.  The Company hereby releases and discharges you and your heirs and assigns
     (the Mahaffy Released Parties), of and from, and covenants not to sue or
     assert against the Mahaffy Released Parties, for any purpose, all claims,
     causes of action, damages, losses, liabilities and demands whatsoever which
     the Company ever had, now has, or in the future may have, for, upon or by
     reason of any actions undertaken by you in your capacity as an officer or
     director of the Company or of any of its subsidiaries in good faith and in
     a manner which you reasonably believed to be in, or not opposed to, the
     best interests of the Company.

13.  Upon the Effective Date, you will return to the Company all property in
     your possession belonging to the Company, including, but not limited to,
     such items as keys, security cards, equipment on loan, files, documents,
     computer hardware and software, computer disks and other accessories, and
     all other corporate property of the Company; PROVIDED, HOWEVER, that during
     the term of the Consulting Period: (i) you will continue to have the right
     to use the Company credit cards and telephone cards previously issued to
     you for reasonable and necessary business expenses incurred, as
     contemplated by Paragraph 8 above, in connection with the rendering of
     consulting services hereunder and (ii) you will continue to have access to
     the Company's voice messaging system to retrieve messages left for you, and
     in connection with such messaging, the Company will maintain in effect your
     direct-dial phone number during the Consulting Period. At the completion of
     the Consulting Period, you will promptly return to the Company any such
     credit cards and phone cards.

14.  In the event that you file or otherwise seek to obtain an award of
     unemployment insurance benefits, the Company will not contest or otherwise
     interfere with your application for such benefits. However, if the Company
     receives a request for job separation information from the Colorado
     Department of Labor and Employment or some other governmental entity, the
     Company may disclose the amount of severance payments paid pursuant to this
     Agreement.

15.  You expressly agree that you will not disparage or defame the Company and,
     correspondingly, the Company agrees that the members of its Management
     Committee, together with those individuals working with the Management
     Committee on the Company's behalf who have actual knowledge of this
     Agreement will be instructed not to disparage or defame you. Attached

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Patrick J. Mahaffy
August 18, 1998
Page 6

     hereto is the text of the press release that the Company will issue on
     August 19 describing your departure from the Company, which both you and
     the Company hereby acknowledge as acceptable.

16.  You and the Company both acknowledge that each party has been advised to
     consult with an attorney before signing this Agreement.

17.  You acknowledge that you have received value under this Agreement in excess
     of that to which you would otherwise be entitled under the policies and
     normal practices of the Company.

18.  This Agreement sets forth the entire agreement between the parties relating
     to your separation from the Company and it may not be modified or
     terminated except in a written instrument signed by both parties. This
     Agreement may be executed by facsimile signature and may be executed in
     several counterparts, each of which shall be deemed an original and all of
     which taken together will constitute a single instrument

19.  This Agreement will be governed by and construed in accordance with the
     laws of the state of Colorado. In the event that either party to this
     Agreement commences an action or proceeding to enforce the terms of this
     Agreement, the party substantially prevailing shall be entitled to
     reimbursement for his or its reasonable expenses incurred in such action or
     proceeding, including the payment of his or its attorney's fees, from the
     other party. The parties further agree that any action to enforce this
     Agreement shall be brought in the District Court of the 20th Judicial
     District, Boulder County, Colorado because that is where the Company is
     located and that is where you were last employed by the Company.

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Patrick J. Mahaffy
August 18, 1998
Page 7

Please acknowledge your understanding of and agreement to the provisions of this
Agreement by signing and dating the statement below.

Sincerely,
NeXstar Pharmaceuticals, Inc.



By ___________________________



MY SIGNATURE BELOW ACKNOWLEDGES THAT I HAVE READ THE ABOVE, UNDERSTAND WHAT I AM
SIGNING, AND AM ACTING OF MY OWN FREE WILL. I UNDERSTAND THAT IF ANY PROVISION
OF THIS AGREEMENT IS FOUND TO BE INVALID OR UNENFORCEABLE, IT WILL NOT AFFECT
THE VALIDITY OR ENFORCEABILITY OF ANY OTHER PROVISION. I UNDERSTAND THAT THIS
AGREEMENT AND ITS TERMS REPLACE IN ALL RESPECTS THE TERMS OF MY EMPLOYMENT
AGREEMENT, DATED MAY 1992, WITH THE COMPANY. I FURTHER AGREE THAT THIS AGREEMENT
WILL BE GOVERNED BY THE LAWS OF THE STATE OF COLORADO. THE COMPANY HAS ADVISED
ME TO CONSULT WITH AN ATTORNEY, AND I HAVE DONE SO, PRIOR TO SIGNING THIS
AGREEMENT.



SIGNATURE:                                  DATE
         ----------------------------             --------------------
          Patrick J. Mahaffy

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