FORM 10-Q
                                
               SECURITIES AND EXCHANGE COMMISSION
                      Washington, DC  20549
                                
     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                 SECURITIES EXCHANGE ACT OF 1934
                                
          For the quarterly period ended June 30, 1998
                                
                 Commission File Number 0-23666


                          TRIPOS, INC.
     (Exact Name of Registrant as Specified in its Charter)
                                
        Utah                             43-1454986
(State or Other Jurisdiction of         (I.R.S. Employer
Incorporation or Organization)          Identification No.)


                     1699 South Hanley Road
                    St. Louis, Missouri 63144
      (Address of Principal Executive Offices and Zip Code)
                                
                                
                         (314) 647-1099
      (Registrant's Telephone Number, Including Area Code)
                                
                                

Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirement for the past 90 days.

Yes  X              No

Number of shares outstanding of the issuer's Common Stock, par
value $.01 per share, as of June 30, 1998: 3,214,401 shares.


                                
                                
                        TABLE OF CONTENTS
                                
                                
                                
PART I  FINANCIAL INFORMATION, Item 1.  Financial         Page
Statements (Unaudited)

  Consolidated Balance Sheets at
    June 30, 1998 and December 31, 1997                    3

  Consolidated Statements of Operations
    for Three Months Ended June 30, 1998 and June 30, 1997
    and Six Months Ended June 30, 1998 and June 30, 1997   4

  Consolidated Statements of Cash Flows for Six Months
    Ended June 30, 1998 and June 30, 1997                  5

  Notes to Consolidated Financial Statements               6



PART I  FINANCIAL INFORMATION,  Item 2. Management's
Discussion and Analysis of Financial Condition and
Results of Operations                                      8



PART II  OTHER INFORMATION                                12

SIGNATURES                                                14

EXHIBITS - Exhibit 10.13, Settlement Agreement
         - Exhibit 27, Financial Data Schedule
                                
                                
                                
                             PART I
                      FINANCIAL INFORMATION
                                
Item 1.  Financial Statements.

                   CONSOLIDATED BALANCE SHEETS
                         (In thousands)
                            (Unaudited)
                                         June 30,     Dec 31,
                                             1998        1997
                           ASSETS
         Current Assets:                                
 Cash and cash equivalents               $  6,080    $  5,277
 Investments                                1,146       1,647
 Accounts receivable                        7,598      10,247
 Inventory                                  1,539         415
 Prepaid expenses                             872         520
 Deferred income taxes                        145         137
    Total current assets                 $ 17,380    $ 18,243
                                                        
Notes receivable-trade                      2,218       1,703
Notes receivable-other                        827         791
Property and equipment, less                                 
 accumulated depreciation                   6,844       5,995
Capitalized development costs, net          1,294       3,412
Goodwill, net of amortization               1,167       1,171
Other, net                                  1,259       1,295
                                                        
 Total assets                            $ 30,989    $ 32,610
                                                        
            LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:                                    
 Accounts payable                        $  1,087   $   1,390
 Current portion of long-term debt            270         178
 Accrued expenses                             826       3,216
 Deferred revenue                           5,863       4,695
    Total current liabilities            $  8,046    $  9,479
                                                        
 Long-term debt                             3,460       3,367
 Deferred income taxes                        599         855
                                                             
Shareholders' equity:                                        
 Common stock                                  32          32
 Additional paid-in capital                17,642      17,343
 Accumulated earnings                         938       1,198
 Accumulated other                                           
  comprehensive income                        272         336
    Total shareholders' equity             18,884      18,909
                                                             
 Total liabilities and                                       
   shareholders' equity                  $ 30,989    $ 32,610

See accompanying notes.
                                                                 
                                                                 
Item 1.  Financial Statements (continued)

                   CONSOLIDATED STATEMENTS OF OPERATIONS
                   (In thousands, except per share data)
                                (Unaudited)

                            Three Months Ended      Six Months Ended
                           June 30,   June 30,     June 30,   June 30,
                             1998       1997         1998       1997
Net sales:                                                   
 Software licenses           $ 2,262    $ 1,853      $ 4,248    $ 3,921
 Support                       1,929      1,783        3,823      3,529
 Accelerated discovery
      services                   514      1,448        1,704      3,795
 Hardware                        824      1,267        1,938      1,898
Total net sales                5,529      6,351       11,713     13,143
                                                                       
Operating costs and expenses:
   Cost of sales                 980      2,375        3,148      4,699
   Sales and marketing         2,434      2,114        4,768      4,610
   Research and development    1,445        856        2,797      1,751
   General and administrative    991        491        1,862      1,452
Total costs and expenses       5,850      5,836       12,575     12,512
                                                                       
Income from operations          (321)       515         (862)       631
                                                                       
Other income, net                386        112          455        266
                                                                       
Income before income taxes        65        627         (407)       897
                                                                       
Income tax expense                24        240         (146)       342
                                                                       
Net income                      $ 41    $   387       $ (261)   $   555
                                                                       
Basic earnings (loss)
      per share              $  0.01    $  0.13      $ (0.08)   $  0.18
Diluted earnings (loss)                                                
      per share              $  0.01    $  0.11      $ (0.08)   $  0.16
Diluted weighted average                                               
   number of shares            3,510      3,466        3,185      3,474

See accompanying notes.



Item 1.  Financial Statements (continued)

              CONSOLIDATED STATEMENTS OF CASH FLOWS
                         (In Thousands)
                           (Unaudited)
                                                Six Months Ended
                                               June 30,   June 30,
                                                 1998       1997
 Operating activities:                                       
  Net income (loss)                            $ (261)    $   555
  Adjustments to reconcile net income                              
  (loss) to net cash provided by
  operating activities:
     Depreciation of property and equipment       335         318
     Amortization of capitalized development
       costs and goodwill                       2,189       1,461
     Deferred income taxes                       (264)        169
   Change in operating assets and liabilities:
     Accounts receivable                        2,603       2,816
     Notes receivable-trade                      (510)     (1,674)
     Prepaid expenses and other assets         (1,300)         79
     Accounts payable and accrued expenses     (2,939)     (1,461)
     Deferred revenue                           1,178         806
 Net cash provided by operating activities      1,031       3,069
                                                              
 Investing activities:                                             
    Net purchases, sales, and 
      maturities of investments                   501         221
    Notes receivable-other                        (36)          0
    Purchases of property and equipment        (1,096)       (431)
    Capitalized development costs                  (2)     (1,758)
    Other                                         (34)       (293)
 Net cash (used in) investing activities         (667)     (2,261)
                                                                   
 Financing activities:                                             
    Proceeds from stock issuance                                   
      pursuant to stock plans                     300         449
    Net issuance of  long-term debt               146           0
 Net cash provided by financing activities        446         449
                                                                   
 Effect of foreign exchange rate changes
    on cash and cash equivalents                   (7)       (231)
                                                                   
 Net increase in cash and cash equivalents        803       1,026
                                                                   
 Cash and cash equivalents at
    beginning of period                         5,277       5,393
 Cash and cash equivalents at
    end of periods                            $ 6,080     $ 6,419

See accompanying notes.



Item 1.  Financial Statements (continued)
                                
                                
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           (Unaudited)


(1)  Summary of significant accounting policies

     (a) Organization

      Tripos,  Inc.  (the  "Company") delivers science,  tools  and
analysis   services   that   advance  customers'   creativity   and
productivity  in  pharmaceutical, agrochemical,  biotechnology  and
related research industries worldwide.  The Company is also a value-
added reseller of third party hardware products required to operate
its  software  products.  A substantial portion  of  the  Company's
business  is conducted with pharmaceutical companies, however,  the
Company is not economically dependent on any customer on an ongoing
basis.

     (b) Basis of Presentation

      The  accompanying unaudited consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles   for  interim  financial  information  and   with   the
instructions  to  Form  10-Q  and Article  10  of  Regulation  S-X.
Accordingly,  they  do  not  include all  of  the  information  and
footnotes required by generally accepted accounting principles  for
complete  financial statements.  In the opinion of management,  all
normal  recurring adjustments necessary for a fair presentation  of
such  financial  statements have been included.  Operating  results
for  the  three- and six-month periods ended June 30, 1998 are  not
necessarily indicative of the results that may be expected for  the
year ended December 31, 1998.


(2) Income taxes

     The provision for income taxes is computed using the liability
method.   The  primary difference between financial  statement  and
taxable  income results primarily from the use of different methods
of  computing  capitalized development costs, accrued vacation  and
customer deposits.


(3) Recent Pronouncements

      As  of  January 1, 1998, the Company adopted AICPA SOP  97-2,
"Software   Revenue   Recognition",   which   was   effective   for
transactions  that the Company entered into in 1998.   Prior  years
were not restated.

      For annual financial reporting beginning January 1, 1998  and
for  interim  reporting for years beginning January  1,  1999,  the
Company  will  adopt the FASB's Financial Accounting Standards  No.
131,  "Disclosures  about  Segments of an  Enterprise  and  Related
Information"  ("FAS 131").  FAS 131 superseded FASB  Statement  No.
14,  "Financial  Reporting of Segments of a  Business  Enterprise".
FAS  131  establishes  standards for the way that  public  business
enterprises report information about operating segments  in  annual
financial  statements  and requires that those  enterprises  report
selected  information about operating segments in interim financial
reports.    FAS   131  also  establishes  standards   for   related
disclosures  about  products and services,  geographic  areas,  and
major  customers.  The adoption of FAS 131 will not affect  results
of  operations  or financial position, but will require  additional
enterprise-wide disclosures.

      In June 1998, the Financial Accounting Standards Board issued
Statement  No.  133,  "Accounting for  Derivative  Instruments  and
Hedging Activities" ("FAS 133"), which is required to be adopted in
years  beginning  after  June  15, 1999.   FAS  133  permits  early
adoption  as  of  the  beginning of any fiscal  quarter  after  its
issuance.  The Company expects to adopt the new Statement effective
January 1, 2000.  FAS 133 will require the Company to recognize all
derivatives  on the balance sheet at fair value.  The  Company  has
not  yet determined what the effect FAS 133 will be on the earnings
and financial position of the Company.


(4) Comprehensive Income

      As  of  January  1, 1998, the Company adopted Statement  130,
"Reporting  Comprehensive Income".  Statement 130  establishes  new
rules for the reporting and display of comprehensive income and its
components, however, the adoption of this Statement had  no  impact
on the Company's net income or shareholders' equity.  Statement 130
requires  foreign currency translation adjustments, which prior  to
adoption  were reported separately in shareholders'  equity  to  be
included  in  other  comprehensive income.   Prior  year  financial
statements have been reclassified to conform to the requirements of
Statement 130.

      The  components of comprehensive income, net of related  tax,
for  the three- and six-month periods ended June 30, 1998 and  1997
are as follows:
                               Three Months Ended   Six Months Ended
                                June 30,  June 30,   June 30, June 30,
                                  1998     1997       1998     1997
  Net income (loss)             $    41    $ 387     $(261)    $ 555
  Foreign currency                                             
  translation adjustments          (144)      11       (64)     (158)
  Comprehensive income (loss)   $  (103)   $ 398     $(325)    $ 397

      The components of accumulated other comprehensive income, net
of  related  tax,  at June 30, 1998 and December 31,  1997  are  as
follows:
                                                   1998     1997
  Foreign currency translation adjustments        $ 272    $ 336
                                                   
  Accumulated other comprehensive income          $ 272    $ 336


(5) Earnings Per Share

The  following  table  sets forth the computation  of  basic  and
diluted  earnings per share for the quarters ended June 30,  1998
and 1997.

(In thousands, except per share data) 
                              Three Months Ended   Six Months Ended    
                               June 30, June 30,   June 30,  June 30,
                                1998     1997       1998      1997
Numerator:                                                
  Numerator for basic and                                         
  diluted earnings (loss)
  per share                            $ 41    $ 387     $ (261)    $ 555

Denominator:                                                       
  Denominator for basic                                           
  earnings (loss) per share-
  weighted average shares             3,193    3,068      3,185     3,049

  Effect of dilutive securities:
    Employee stock options              317      398          0       425

  Denominator for diluted                                         
  earnings (loss) per share-
  adjusted weighted average
  shares and assumed conversions      3,510    3,466      3,185     3,474

Basic earnings (loss) per share      $ 0.01   $ 0.13     $(0.08)   $ 0.18
Diluted earnings (loss) per share    $ 0.01   $ 0.11     $(0.08)   $ 0.16

The  diluted per share denominator for the six-month period ended
June  30,  1998  excludes incremental shares of  302  related  to
employee stock options because of their anti-dilutive effect as a
result of the Company's net loss for the period.


Item 2.  Management's Discussion and Analysis of Financial
Condition and Results of Operations

Overview

     Tripos,  Inc.  is  a  leader in providing discovery  services,
informatics  and  products for compound research  to  life  science
organizations worldwide.
     
     The  Company's  quarterly  operating  results  can  vary  sig-
nificantly  depending upon such factors as the capital  expenditure
budgets  of its customers, lengthy sales cycles, customer selection
of  compounds from our chemical compound library, market acceptance
of  new  products and enhanced versions of existing  products,  the
timing  of  new  product  introductions by the  Company  and  other
vendors,  changes  in  pricing policies by the  Company  and  other
vendors,   and   changes  in  general  economic   and   competitive
conditions.   In addition, a substantial portion of  the  Company's
revenues  for each quarter are attributable to a limited number  of
orders  and  tends to be realized towards the end of each  quarter.
Thus,  even short delays or deferrals of sales near the  end  of  a
quarter  can  cause  quarterly results to fluctuate  substantially.
The Company typically experiences greater gross margins on software
licenses, consulting, and compound sales than on sales of hardware.
The  Company's  profitability depends in part on  the  mix  of  its
revenue components and not necessarily on total revenues.

      The Company provides software licenses that are activated and
remain active based on the date and time of the computer where  the
software resides.  The Company relies on the hardware suppliers  to
address  any  and  all  Year 2000 issues  and  provide  letters  of
compliance  to  the  Company.   The total  cost  that  the  Company
estimates will be spent to remediate its Year 2000 issues will  not
be  material  and  should not affect future  financial  results  of
operations,  liquidity or capital resources.   At  this  time,  the
Company  fully expects to be Year 2000 compliant, however, it  will
remain  dependent  on  its hardware suppliers  to  make  Year  2000
compliant equipment available to its customers.

     Except for the historical information and statements contained
in  Management's Discussion and Analysis of Financial Condition and
Results of Operations ("MD&A"), the matters and items contained  in
this  document,  including  MD&A, contain  certain  forward-looking
statements  that  involve uncertainties and risks.   The  Company's
future results could differ materially from those discussed in this
document.   Factors  that  could  cause  a  contribution  to   such
differences, include, but are not limited to, those presented above
and  in  the  Company's Form 10-K for the year ended  December  31,
1997.

Results of Operations

      Net  sales  for the second quarter of 1998 were $5.5  million
compared  with $6.4 million for the second quarter  of  1997.   The
overall  decrease  in net sales for the quarter was  attributed  to
decreases  in  accelerated discovery services  and  hardware  sales
being  partially  offset  by  increases  in  software  license  and
software support sales.  Net sales for the first six months of 1998
were $11.7 million compared to $13.1 million for the same period in
1997.   Increases  were  achieved in  software  licenses,  software
support  and hardware while sales of accelerated discovery services
decreased in the six- month period.

      For  the  three months ended June 30, 1998, software  license
sales increased 22.1% to $2.3 million. For the first six months  of
1998,  software  license  sales  increased  8.3%  to  $4.2  million
compared  to the same period for 1997.  The increases  are  due  to
strong U.S. software license business and the addition of worldwide
software  consulting  revenues.  Support revenues  for  the  second
quarter  of  1998  increased 8.2% from the  same  period  in  1997.
Support  sales  increased 8.3% to $3.8 million  for  the  six-month
period  ending June 30, 1998.  Support revenue increased due  to  a
larger  installed base of customers from software license sales  in
recent   years.   Accelerated  discovery  services  ("ADS")   sales
decreased 64.5% to $0.5 million in the second quarter of  1998  and
55.1%  to  $1.7  million  for  the  six-months  year-to-date.   The
decrease  in  ADS  revenue  is due to production  issues  discussed
below.  Hardware sales decreased by 35.0% to $0.8 million  for  the
second quarter 1998 in comparison to the same period in 1997.   For
the first six months of 1998, hardware sales increased 2.1% to $1.9
million compared to 1997.  The decrease from the prior year for the
quarter  is due to a large hardware order in the prior year period.
Sales  to existing customers represent 80.5% of total revenues  for
the six-month period.

     In  1997,  in response to a market demand for highly  purified
compounds,  Tripos  and  MDS Panlabs invested  in  state-of-the-art
equipment  for  the  further  analysis  and  purification  of   the
Optiverse  compound library.  The companies experienced  delays  in
the  purification process which resulted in a shortage of  enhanced
Optiverse compounds available for sale for the three- and six-month
periods  ending  June  30, 1998.  In the second  quarter  of  1998,
Tripos   introduced  its  new  LeadQuestT  library  of   compounds.
LeadQuest  will include compounds from other third-party  suppliers
that meet the Company's quality and diversity thresholds as well as
newly  designed compounds manufactured at Tripos Receptor Research.
The  Company  has also experienced delays, estimated  to  be  three
months,  in  the  design  and  construction  of  its  new  physical
laboratory  facilities in England.  The timing of the  availability
of  LeadQuest  compounds and the enhanced Optiverse  compounds  may
have a material impact on revenues and earnings for 1998.
     
On  March 30, 1998, the Company restructured its agreement with MDS
Panlabs to co-develop and market the OptiverseT library of chemical
compounds.  Under the terms of the new agreement, MDS Panlabs would
begin  to  market the Optiverse library.  After June 30, 1998,  MDS
Panlabs  assumes  sole  marketing and distribution  rights  to  the
Optiverse  compounds.   As  a  result  of  this  shift   in   their
relationship, MDS Panlabs agreed to make fixed payments  to  Tripos
and  royalties on future sales of Optiverse.  Tripos has recognized
revenues  for its sales of Optiverse compounds up to June 30th  and
will  recognize  royalties from future sales of  Optiverse  by  MDS
Panlabs in the periods in which they occur.  For the three- and six-
month  periods ending June 30, 1998, Tripos has accounted  for  the
payments from MDS Panlabs through a reduction of Cost of Sales  for
royalty  amounts previously payable to MDS Panlabs that  have  been
waived and through Other Income for the first of six fixed payments
for the rights to the Optiverse library.  The parties will continue
to  collaborate  on research contracts involving  compound  designs
from Tripos and synthesis at MDS Panlabs.

      Net  sales for the Company's activities outside North America
represented  approximately 44.6% for the first six months  of  1998
compared to 46.1% for the same period in 1997.  Net sales in Europe
decreased  1.3% for the first six months of 1998 compared  to  1997
and  accounted for 36.0% and 32.5% of net sales for the  six  month
periods  in 1998 and 1997, respectively.  European sales  increased
15.8% for the second quarter of 1998 compared to 1997 and accounted
for  42.6% of net sales, up from 32.0% in the same period of  1997.
Net sales in the Pacific Rim, principally Japan, decreased 43.6% in
1998  compared  to the first six months of 1997 and  accounted  for
8.6%  and 13.7% of net sales for the respective periods.   For  the
second  quarter, sales in the Pacific Rim declined 51.4%  from  the
prior year and represented 8.4% and 15.1% of net sales in 1998  and
1997,  respectively.  The difficult business  climate  in  Asia  is
primarily  responsible  for the decline in  period  sales  for  the
region,  however, the Company's customer base in  the  Pacific  Rim
remains strong.

      Cost of sales  for the quarter ending June 30, 1998 decreased
58.7%  to $1.0 million and decreased 33.0% to $3.1 million for  the
six-month  period in 1998.  The decrease in the second quarter  was
due to the lower hardware and ADS compound sales along with certain
recoveries  of costs related to the restructuring of the  agreement
with  MDS/Panlabs.  The decrease in year-to-date cost of sales  for
1998  compared  to  1997 relates to the lower  compound  sales  and
recoveries  mentioned above.  Cost of sales as  a  percent  of  net
sales  was 17.7% and 26.9% for the three- and six-month periods  in
1998,  and 37.4% and 35.8% for the three- and six-month periods  in
1997, respectively.

     Gross profit  margin percentage for the second quarter of 1998
increased to 82.3% from 62.6% in 1997.  For the first six months of
1998,  gross  margin percentage was increased to 73.1% compared  to
64.2% for the same period in 1997.  The increase for the quarter is
attributable to the restructuring recoveries and to a change in the
sales  mix  in  that  lower  margin revenue  sources,  specifically
hardware   and  chemical  compound  sales,  represented   a   lower
percentage of total net sales in 1998 compared to 1997.

      Sales and marketing  expenses increased 15.1% to $2.4 million
for the three-month period in 1998 and 3.4% to $4.8 million for the
six-month  period  ending  June  30,  1998.   Sales  and  marketing
expenses as a percentage of net sales were 44.0% and 40.7% for  the
three- and six-month periods in 1998 as compared to 33.3% and 35.1%
for the same periods  in 1997.  The increases  in the percentage of 
net sales for the three- and six-month periods of 1998 are primarily
due  to the  hiring of staff  for previously open positions and the 
decreases in sales for the periods.

     Research and development  costs, including the costs that were
capitalized, were $1.4 million and $1.7 million for the three-month
periods in 1998 and 1997, $2.8 million and $3.7 million for the six-
month periods, respectively and represented 26.1%, 26.2%, 23.9% and
27.6%  of  net  sales.  These decreases reflect  a  change  in  the
treatment of compound related costs after the restructuring of  the
agreement   with  MDS/Panlabs.   Due  to  the  specifics   of   the
relationship with MDS/Panlabs, compound costs were capitalized  and
amortized.   However,  compounds produced by the  Company  are  now
reflected  in  inventory  on  a  unit  cost  basis.   The   Company
anticipates that its overall spending for new product research will
remain  relatively  constant as a percentage of  net  sales  as  it
continues  to invest in the software, consulting, diverse  compound
libraries  and contract research markets.  Research and development
expenses,  net of capitalized development costs, represented  26.1%
and  13.5%  of net sales for the three-month periods  in  1998  and
1997,  and  23.9% and 13.3% of net sales for the six-month  periods
ending  June  30,  1998  and 1997, respectively.   These  increases
reflect  the  Company's  investment in  sponsoring  drug  discovery
research  with  the  Cruciform Group at the University  College  of
London and at Arena Pharmaceuticals, Inc.

      General  and  administrative    expenses  increased  to  $1.0
million for the second quarter of 1998 compared to $0.5 million  in
1997,  and represent 17.9% and 7.7% of net sales for the respective
periods.   For  the  six-month period, G &  A  expenses  were  $1.9
million  and  $1.5  million  in 1998 and  1997,  respectively,  and
represent  15.9%  and 11.0% of net sales in the six-month  periods.
The  increases  in G&A expense for 1998 relate to the  addition  of
expenses related to Tripos Receptor Research Ltd.

     Other income  increased from income of $112,000 for the second
quarter in 1997 to income of $386,000 for the comparable period  in
1998.   For the first six months of 1998, other income was $455,000
compared to income of $266,000 in 1997.  This change was due to the
addition  of  interest expense from the financing of the  Company's
headquarters  acquisition which was offset by net  rental  revenues
from  the building's tenants and receipt of the first of six  fixed
payments for the rights to the Optiverse library from MDS/Panlabs.

      Income tax (benefit)  was $(146,000) for the six-month period
in  1998 which represents an effective tax rate of 36% compared  to
tax  expense of $342,000 and 38% for the same period in  1997.  The
Company's effective tax rate for the six months ended June 30, 1998
reflects a decrease to approximate the expected effective tax  rate
for the year ending December 31, 1998.

Liquidity, Capital Resources and Capital Commitments

      For  the  six-month  period ending June 30,  1998,  net  cash
provided by operations was $1.0 million as a result of decreases in
accounts  receivable  of  $2.6 million, accounts  payable  of  $2.9
million  and  a  net loss of $0.3 million along with  increases  in
depreciation,  amortization,  notes receivable,  deferred  revenue,
prepaid expenses and inventory of $0.3 million, $2.2 million,  $0.5
million, $1.1 million and $1.3 million, respectively. $1.5  million
of  amortization is attributable to the costs of manufacturing  the
OptiverseTM compound library.  Increased trade notes receivable  of
$0.5  million represent the long-term portion of revenue  generated
from  the  Company's  sales of extended  access  contracts  to  its
software  technologies.   For the same period  in  1997,  net  cash
provided by operations was $3.1 million as a result of decreases in
accounts  receivable of $2.8 million and accounts payable  of  $1.5
million   along   with  increases  in  net  income,   depreciation,
amortization,  notes  receivable  and  deferred  revenue  of   $0.6
million, $0.3 million, $1.5 million, $1.7 million and $0.8 million,
respectively.

      Investments  of  $1.1  million  in  property  and  equipment,
primarily at Tripos Receptor Research, were partially offset  by  a
decrease in marketable securities of $0.5 million resulting in cash
used  in investing activities of approximately $0.7 million in  the
first  six  months  of  1998.  Capitalized development  costs  were
negligible  for  the first six months of 1998 as  the  Company  now
expenses software development as incurred due to the shorter amount
of  time  required  to bring new products to market  and  uses  the
inventory  accounting  method for the new  LeadQuestTM  library  of
compounds.  In the prior year, costs of designing and producing the
OptiverseTM   compounds  were  capitalized  along   with   software
development.

      The  Company  believes that current working capital  of  $9.3
million,  together  with  continued cash from  operations  and  the
Company's access to lines of credit, will be adequate to fund short-
term  liquidity requirements including investments in research  and
development,  capital  purchases to expand the  facilities  of  its
subsidiary,   Tripos  Receptor  Research  Ltd.,   and   any   other
commitments in the upcoming year.



                             PART II
                        OTHER INFORMATION
                                
Item 1.   Legal Proceedings

     The Company is not a party to any material litigation and is
     not aware of any threatened material litigation.

Item 2.   Changes in Securities

     None

Item 3.   Defaults upon Senior Securities

     None

Item 4.   Submission of Matters to a Vote of Security Holders

     Three matters were submitted to a vote of the shareholders
     of the Company at its Annual Meeting of Shareholders on May
     7, 1998:
          
       (a)  The following directors were elected to serve for the
          ensuing year or until the earlier of death, resignation or
          removal.  Votes cast were as follows:
          
                                 Votes            Votes
                                 "For"      "Withhold Authority"
            Ralph S. Lobdell   2,459,766            208,509
            Alfred Alberts     2,459,566            208,709
            Stewart Carrell    2,459,766            208,509
            John P. McAlister  2,459,766            208,509
            Gary Meredith      2,458,603            209,672
            Ferid Murad        2,459,766            208,509
       
       (b)  To amend the 1994 Stock Option plan to increase the number
          of shares reserved thereunder from 1,100,000 to 1,280,000.  The
          voting results approving this matter were: "For" 1,073,481,
          "Against" 448,795, and "Abstain" 18,303.
       
       (c)  To amend the 1994 Employee Stock Purchase Plan to increase
          the number of shares reserved thereunder from 150,000 to 350,000.
          The matter was approved by the shareholders by the following
          tally of votes:  "For" 784,483, "Against" 735,174, and "Abstain"
         20,922.

Item 5.   Other Information

          Under Section 2.13 of Article II of the Company's
     Bylaws, any shareholder proposal submitted with respect to
     Tripos, Inc.'s 1999 Annual Meeting of Shareholders, which
     proposal is submitted outside the requirements of Rule 14a-8
     under the Securities Exchange Act of 1934, will be
     considered untimely if notice thereof is received by the
     Company before February 6, 1999 or after March 8, 1999.

Item 6.   Exhibits and Reports on Form 8-K

          (a)  List of Exhibits

               10.13     Settlement Agreement between Tripos,
                         Inc. and Panlabs, Inc.
               27        Financial Data Schedule

          (b)  No reports on Form 8-K were required to be filed
          during the period from March 31, 1998 to June 30, 1998.




                          TRIPOS, INC.
                           SIGNATURES
                                
     Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.

                              TRIPOS, INC.

Date:     August 5, 1998      /s/ John P. McAlister
                              John P. McAlister
                              President and
                              Chief Executive Officer

Date:     August 5, 1998      /s/ Colleen A. Martin
                              Colleen A. Martin
                              Chief Financial Officer, Secretary



Exhibit 10.13

                      SETTLEMENT AGREEMENT
                                
     THIS  SETTLEMENT AGREEMENT ("Agreement") is made as of March
30,  1998,  (the  "Effective Date") by and  between  (i)  PANLABS
INCORPORATED,  a Washington corporation with its principal  place
of   business  at  11804  North  Creek  Parkway  South,  Bothell,
Washington 98011-8805 ("Panlabs"), and (ii) TRIPOS, INC., a  Utah
corporation  with its principal place of business at  1699  South
Hanley  Road,  Suite 303, St. Louis, Missouri  63144  ("Tripos"),
who, intending to be legally bound, hereby agree as follows:

1.   INTRODUCTION
     1.1      The  parties  entered into that  certain  Strategic
Alliance   Business   Teaming   Agreement,   including    Project
Description  #1  thereunder, dated June 30,  1995  (the  "Teaming
Agreement").
     1.2    Certain controversies have arisen between the parties
concerning  their  respective rights and  obligations  under  the
Teaming Agreement.
     1.3     The parties now wish to resolve the controversies between
them in accordance with the terms of this Settlement Agreement.
     
2.   TEAMING AGREEMENT TERMINATION
     2.1  Effect of Termination.  The parties acknowledge and agree
that the Teaming Agreement has been terminated in its entirety as
of  the  Effective Date hereof.  The parties further  acknowledge
and agree that, notwithstanding the provisions of Section 8.1  of
the  Teaming  Agreement, no provision of the  Teaming  Agreement,
including without limitation any provision of Project Description
#1,  shall  survive such termination.  All rights and obligations
of  the  parties  to one another in connection with  the  Teaming
Agreement shall be exclusively as set forth in this Agreement.
     2.2   Settlement of Customer Claims.  Each party ("Indemnitor")
will  indemnify  the  other  party  ("Indemnitee")  and  hold  it
harmless  from  and  against  all  claims,  damages,  losses  and
expenses, including court costs and reasonable fees and  expenses
of  attorneys, expert witnesses and other professionals,  arising
out  of  or  resulting  from, and will  defend  the  other  party
against:
     (a)   any action by a third party that is based on any claim
that  any  services  performed by the  Indemnitor  or  under  the
Teaming Agreement, or their results, infringe a patent, copyright
or  other  proprietary right or violate a trade  secret  of  such
third  party; provided, however, that for purposes  of  a  patent
infringement claim, unless such claim rests definitely and solely
on  the  technology of, or the services performed by, one of  the
parties  or  the  party  who owned any infringing  technology  or
performed  any  infringing  services  knew  that  the  same   was
infringing at the time of use or performance, the Indemnitor  and
the  Indemnitee shall be jointly responsible for the  defense  of
the claim and shall bear all resulting liability in proportion to
the respective revenues realized by them from the transaction  in
connection with which the claim arose; and
     (b)  any action by a third party that is based on
          (i)any  unauthorized warranty given by  the  Indemnitor
             for  services performed under the Teaming Agreement,
             or
          (ii)     the  results of any services performed by  the
             Indemnitor  under  the Teaming Agreement,  including
             any   action   based  on  a  claim  that   Optiverse
             materials fail to meet quality requirements, or
          (iii)    any  failure  by  the  Indemnitor  to  provide
             services  under  the  Teaming  Agreement,   or   the
             results  of  such  services, in  accordance  with  a
             contract entered into between the Indemnitor  and/or
             the Indemnitee and such third party.
The indemnification obligations set forth in this Section 2.2 are
conditioned  on  (i)  the Indemnitor being notified  promptly  in
writing  of any indemnifiable claim and all prior claims relating
to such action and being given all available relevant information
and   reasonable  assistance  in  connection  with  defense   and
settlement  efforts, and (ii) the Indemnitor having sole  control
of  the defense and settlement efforts for such claim, other than
for patent matters as set forth in Section 2.2(a).
     2.3   Final  Accounting.  The parties acknowledge that  they
are  in  agreement  regarding (a) the  number  of  shipments  and
quantity of Optiverse Materials shipped between November 1,  1997
and   the   Effective  Date,  (b)  the  allocation  of   revenues
attributable to the Optiverse Materials which have been collected
between  November  1,  1997  and the Effective  Date,  (c)  other
accounting  issues,  and  (d) existing  inventories,  as  of  the
Effective Date, of Optiverse Materials and raw materials obtained
for  purposes  of synthesizing Optiverse Materials.   A  detailed
listing  of all items and calculation of the net credit to  which
the parties agree pursuant to this Section 2.3 is attached hereto
as Schedule A.

3.   OWNERSHIP RIGHTS in VENTURE PROPERTY
     3.1   Joint  Ownership.  The following property  created  by
either  party  individually,  or  by  the  parties  jointly,   in
performance  of  the  parties'  obligations  under  the   Teaming
Agreement (the "Venture Property") shall be jointly owned by  the
parties until Tripos has realized the Agreed Amount in accordance
with Article 5 below, and until such time, the payment and credit
obligations set forth in said Article 5 shall apply in connection
with any sale or other disposition of any Venture Property:
     (a)   all  diverse library compound designs which have  been
synthesized and identified by Panlabs, whether in the  possession
of Tripos or Panlabs;
     (b)   all existing inventory of Optiverse Materials, whether
in the possession of Tripos or Panlabs;
     (c)  the Optiverse library database; and
     (d)  all biological data that was developed for purposes  of
marketing  Optiverse Materials, the expenses for  development  of
which   were   reimbursed  out  of  revenues  from   transactions
concerning Optiverse Materials.
     3.2   Transfer to Panlabs.  On the date on which Tripos  has
realized  the  Agreed Amount, Tripos shall transfer  all  of  its
rights,   title  and  interest  in  any  then-remaining   Venture
Property, and shall execute any documents reasonably requested by
Panlabs  to  evidence such transfer.  After  such  date,  Panlabs
shall  have  the exclusive right to sell the Optiverse  Materials
worldwide without further royalty obligation to Tripos.
     3.3  Conditional Tripos Marketing Rights.  In the event that
Panlabs reports no revenues from Optiverse Materials during,  and
makes  no  payment to Tripos in accordance with Section 5.3  for,
any two consecutive calendar quarters prior to the expiration  of
Phase  2  as  identified  in  Section  4.2  below,  Tripos  shall
thereupon  have  the  exclusive right  to  market  the  remaining
Optiverse   Materials  worldwide  and  shall  credit  twenty-five
percent  (25%)  of  all  revenues received  therefrom  by  Tripos
against the Agreed Amount in accordance with Section 5.4.
     3.4   The OPTIVERSE Trademark.  During Phase 1 as identified
in  Section  4.1 below, each party shall be entitled to  use  the
OPTIVERSE trademark solely in connection with, and solely for the
purpose  of,  identifying and marketing the Optiverse  Materials.
Upon  the expiration of Phase 1, Tripos shall transfer and assign
to  Panlabs  (via written assignment upon Panlabs "request")  all
right,  title and interest in and to the OPTIVERSE trademark  and
associated goodwill, after which assignment Tripos shall have  no
further right to use the OPTIVERSE trademark in any form,  except
as   allowed  under  this  Section.   Said  assignment  shall  be
predicated  upon  Panlabs' agreement that it  shall  not  use  or
attempt to register the OPTIVERSE mark for any purpose or product
other  than  the  identification and marketing of  the  OPTIVERSE
Materials,  as  defined in this Agreement.  Following  assignment
from  Tripos, Panlabs shall have the right to pursue registration
and  enforcement  of  the mark in connection with  the  OPTIVERSE
Materials,  and  Tripos shall cooperate in the execution  of  any
documents   necessary   to   enable  Panlabs   to   pursue   such
registration.  Panlabs shall also have the right to  license  the
use  and/or  transfer  ownership of the mark  to  third  parties,
provided  that such third-party licensees shall be bound  by  the
same  restrictions of use of the mark as bind Panlabs under  this
Section.  In the event that the exclusive marketing rights to the
OPTIVERSE  Materials  shall  revert to  Tripos  by  operation  of
Section  3.3  of  this Agreement, Panlabs shall  assign  back  to
Tripos  all  right, title and interest in and  to  the  mark  and
associated goodwill, including any trademark filings initiated by
Panlabs.

4.   DISPOSITION OF OPTIVERSE MATERIALS
     The Optiverse Materials shall be disposed of in three phases
as follows:
     4.1   Phase 1.  During the period beginning on the Effective
Date  and expiring on June 30, 1998, which period shall be  known
as  "Phase  1",  each  party may market the  Optiverse  Materials
worldwide,  subject  to  the payment and credit  obligations  set
forth in Sections 5.3 and 5.4.
     4.2   Phase 2.  During the period beginning on July 1,  1998
and  expiring on the date on which Tripos has realized the Agreed
Amount in accordance with Article 5 below, which period shall  be
known  as  "Phase  2",  Panlabs shall have  the  exclusive  right
(except  as  otherwise provided in Section  3.3  and  as  may  be
mutually   agreed  by  the  parties  in  connection  with   their
cooperative  pursuit of any joint research contracts)  to  market
the   Optiverse  Materials  worldwide,  subject  to  the  payment
obligations  set  forth in Article 5.  The terms and  conditions,
including  revenue  allocations,  which  are  applicable  to  any
mutually agreed upon joint research contracts shall be separately
specified in writing for each such contract.
     4.3   Phase  3.   During the period after  the  transfer  by
Tripos to Panlabs of all of Tripos' rights, title and interest in
any  then-remaining Optiverse Materials, Panlabs shall  have  the
exclusive  right to market the Optiverse Materials worldwide  and
Tripos  shall  have no rights hereunder to market  any  Optiverse
Materials.
     4.4.       Use  by the Parties.  Prior to Phase  3,  neither
party  shall use any Optiverse Materials without paying its share
of  the  standard  charge,  except that  Panlabs  may  transport,
process,  repackage  and otherwise prepare or  enhance  OPTIVERSE
Materials  for third-party sale.  In addition, Panlabs  shall  be
permitted  to  utilize  jointly owned  diverse  library  compound
designs   without   charge  for  the  purpose  of   manufacturing
additional  quantities  of  OPTIVERSE  Materials  as  needed  for
product  line  maintenance.  For use of  Optiverse  Materials  by
Tripos,  payment of its share of the standard charge  shall  mean
crediting  to  Panlabs in accordance with Section 5.4  an  amount
equal  to  the amount which would have been credited  to  Panlabs
thereunder if Tripos had marketed the same Optiverse Materials to
a  third  party.   For  use of Optiverse  Materials  by  Panlabs,
payment of its share of the standard charge shall mean payment to
Tripos  in accordance with Section 5.4 of an amount equal to  the
amount  which  would  have been payable to Tripos  thereunder  if
Panlabs had marketed the Optiverse Materials to a third party.

5.   PAYMENTS AND CREDITS
     Regardless  of any amounts paid pursuant to Section  2.3  of
this  Agreement, Panlabs hereby agrees to pay Tripos up  to  XXXX
Dollars  ($XXXX)  (XXXX  Dollars being the  "Agreed  Amount"  for
purposes of this Agreement) as consideration for Tripos' transfer
to  Panlabs,  in accordance with Section 3.2, of all  of  Tripos'
rights,  title and interest in any remaining Venture Property  as
of the expiration of Phase 2, as follows:
     5.1   Initial  Payment.  Upon execution of  this  Agreement,
Panlabs shall authorize the release to Tripos of all funds in the
escrow account established by Tripos to receive and hold Panlabs'
share  of  the  proceeds  derived from  marketing  the  Optiverse
Materials  to   (customer name)  and the   (customer  name)   and
shall  take all steps which may be necessary to enable Tripos  to
receive  such funds and shall further authorize Tripos to  retain
all  such  proceeds which Tripos may subsequently collect.   Such
funds  shall be non-refundable by Tripos, and Tripos shall credit
XXXX  Dollars ($XXXX), as and to the extent that Tripos  collects
applicable proceeds, against the Agreed Amount.
     5.2   Subsequent Lump-Sum Payments.  Panlabs shall remit  to
Tripos  an  aggregate amount of XXXX Dollars ($XXXX) in  six  (6)
equal  installments  of  XXXX Dollars  ($XXXX)  on  each  of  the
following dates: June 30, 1998, September 30, 1998, December  31,
1998, March 31, 1999, June 30, 1999 and September 30, 1999.  Such
payments  shall  be non-refundable by Tripos, and  upon  receipt,
Tripos  shall  credit  one hundred percent (100%)  of  each  such
payment against the Agreed Amount.  Any payment which is past due
shall  bear  interest  at a rate of eighteen  percent  (18%)  per
annum.
     5.3   Payments  Due  on  Transactions  Concerning  Optiverse
Materials.   Panlabs shall pay Tripos XX percent (XX%)  of  Total
Revenues  received by Panlabs from marketing Optiverse  Materials
during Phase 1 and Phase 2.  Not later than twenty-five (25) days
after  the end of each calendar quarter, Panlabs shall submit  to
Tripos  a  written report of all Panlabs transactions  concerning
Optiverse  Materials during the such quarter and  Total  Revenues
received  by  Panlabs therefrom and shall remit payments  due  in
accordance  with  this  Section 5.3.   Tripos  shall  credit  one
hundred  percent  (100%)  of  such payments  against  the  Agreed
Amount.
     5.4   Credits  for Transactions Initiated  by  Tripos.   Not
later than twenty-five (25) days after the end of Phase 1, Tripos
shall   submit  to  Panlabs  a  written  report  of  all   Tripos
transactions concerning Optiverse Materials during such  calendar
quarter  and  all  revenues received  by  Tripos  therefrom.   XX
percent (XX%) of the revenues identified in each report shall  be
credited against the Agreed Amount as of the date of such report.
     5.5   Buyout.   At  any time after Tripos has  received  all
proceeds  derived  from  marketing  the  Optiverse  Materials  to
(customer  name)   and    (customer name)    in  accordance  with
Section  5.1 and prior to December 31, 1999, Panlabs  shall  have
the  right to accelerate receipt of Phase 3 marketing rights  and
cause the transfer to Panlabs of all of Tripos' rights, title and
interest in the Optiverse Materials by making a lump-sum  payment
to  Tripos  equal  to  the  portion of  the  Agreed  Amount  then
remaining unpaid discounted by 8.5% compounded monthly.
     5.6   Total Revenues.  For purposes hereof, "Total Revenues"
shall  mean all amounts received from any source by Panlabs,  its
affiliates  or  assigns  for the sale,  transfer,  use  or  other
disposition of any Optiverse Materials.

6.   GUARANTEE
     6.1  MDS Guarantee.  In order to induce Tripos to enter into
this  Settlement  Agreement with Panlabs, MDS  Inc.,  a  Canadian
corporation with offices at 100 International Boulevard,  Toronto
M9W 6J6 CANADA ("MDS"), hereby assumes, subject to the limitation
set   forth  in  Section  6.2  below,  responsibility   for   and
guarantees, the timely payment by Panlabs of all amounts due  and
payable by Panlabs to Tripos in accordance with Sections 5.1, 5.2
and  5.3.   The  foregoing  payment obligations  of  Panlabs  are
hereinafter referred to as the "Guaranteed Obligations".  In  the
event   that   Panlabs  shall  fail  to  perform  any  Guaranteed
Obligation within the time such performance is due, Tripos  shall
promptly  notify  both  Panlabs and MDS  of  the  amount  of  the
Guaranteed  Obligation that is past due, and  MDS  shall,  within
three  (3)  business  days after receipt of  such  notice,  remit
payment  of such amount to Tripos.  Tripos shall not be required,
prior to any such notice to MDS, to pursue or exhaust any of  its
rights or remedies against Panlabs with respect to performance of
any  Guaranteed  Obligation  other than  providing  Panlabs  with
notice  of  default.   MDS  hereby  waives  presentment,  demand,
protest and notice of dishonor, nonpayment or other default  with
respect   to   any  Guaranteed  Obligations  and  promptness   in
commencing  suit against Panlabs and/or in giving notice  to,  or
making any demand hereunder on, MDS.  It is understood and agreed
that  this  Guarantee shall remain in effect notwithstanding  any
assignment  or  delegation by Panlabs of any of  its  obligations
under  the  Settlement  Agreement or any  change  in  control  of
Panlabs,  and  that none of the terms of this  Guarantee  may  be
waived, altered, modified or amended except in writing signed  by
Tripos and MDS.
     6.2   Ratification by MDS Board.  Until such time  that  the
terms  of  this  agreement have been ratified  by  the  Board  of
Directors  of  MDS, Inc., the total liability to  Tripos  of  MDS
under this article shall not exceed XXXX (XXXX) Canadian Dollars.
     6.3   Additional  Financial Assurance.  To  demonstrate  its
financial ability to discharge its obligations pursuant  to  this
Agreement,  Panlabs  shall,  not  later  than  April  17,   1998,
establish an irrevocable, confirmed letter of credit drawn  on  a
US   bank  reasonably  acceptable  to  Tripos  and  confirmed  by
NationsBank  of  St. Louis, in the amount of  XXXX  (US)  dollars
($XXXX), payable to Tripos upon presentment of this Agreement and
an  affidavit  by an officer of Tripos that the required  payment
has  not  been  made.   Continuation of  such  letter  of  credit
facility  shall not be required following receipt  by  Tripos  of
certification by MDS, Inc. that the terms of this Agreement  have
been  ratified by its Board of Directors and that the  limitation
provided in Section 6.2 is no longer in effect.
     
7.   OWNERSHIP OF INDIVIDUAL PROPERTY
     7.1   Tripos Property.  The following intellectual  property
which  Tripos used in connection with the performance of services
under  the  Teaming Agreement shall remain the sole  property  of
Tripos, and Panlabs hereby acknowledges that Panlabs has obtained
no  interest in or to any such property:  (a) the virtual library
databases,   (b)  library  design  methods,  Tripos   proprietary
software,  know-how  and Tripos proprietary computational  design
and  analysis  tools,  (c)  biological information  on  compounds
developed  or  obtained by Tripos, and (d) fifty percent  of  the
existing  inventory  of raw materials obtained  for  purposes  of
synthesizing Optiverse Materials.
     7.2   Panlabs Property.  The following intellectual property
which Panlabs used in connection with the performance of services
under  the  Teaming Agreement shall remain the sole  property  of
Panlabs,  and Tripos hereby acknowledges that Tripos has obtained
no interest in or to any such property:  (a) methods, systems and
know-how   for  the  synthesis  and  purification   of   chemical
libraries,  production  and  storage  facilities  and  biological
information on library compounds developed by Panlabs (b) library
design  methods,  Panlabs  proprietary  software,  know-how   and
Panlabs  proprietary  computational  design  and  analysis  tools
developed  or obtained by Panlabs independent of any  proprietary
information  furnished by Tripos, and (c) fifty  percent  of  the
existing  inventory  of raw materials obtained  for  purposes  of
synthesizing diverse Optiverse Materials.

8.   DELIVERIES
     In  the number of business days after the Effective Date  as
noted,  Panlabs shall ship to Tripos, at Panlabs' expense:    (a)
within  forty-five business days, fifty percent (50%) of the  raw
materials in Panlabs' possession on the Effective Date which were
obtained   for  purposes  of  synthesizing  Optiverse  Materials,
provided however that Panlabs shall provide the written  list  of
such  inventory  within fifteen (15) business  days;  (b)  within
twenty  (20) business days, all diverse library compound  designs
which have not been synthesized by Panlabs; and (c) within twenty
(20)   business  days,  the  SYBYL  software  and  related   data
management  software that is proprietary to Tripos, with  written
certification signed by an officer of Panlabs that all copies  of
such  software have been purged from Panlabs' computers and  that
Panlabs has retained no copies in any form.

9.   RECORDKEEPING AND AUDITS
     Each  party shall maintain complete and accurate records  of
all  transactions concerning Optiverse Materials which  occur  at
any  time  on or after the Effective Date and prior to a transfer
of  rights in the Optiverse Materials in accordance with  Section
3.2  or  Section  3.3.   Each party shall have  the  right,  upon
reasonable  prior  written notice, through an independent  public
accounting  firm  reasonably acceptable to the  other  party,  to
examine  and copy the books, records and accounts of  such  other
party   relating   to  transactions  concerning   the   Optiverse
Materials,  for  the  purposes of verifying  such  other  party's
compliance with the terms and conditions of this Agreement.   All
information regarding an audited party's business received in any
such  examination shall be held in confidence.  The  expenses  of
such  audits  shall  be  borne by the auditing  party;  provided,
however, that the audited party shall be charged for the  expense
of  any  such  audit  that discloses a discrepancy  in  favor  of
auditing  party  which is greater than or equal to  five  percent
(5%) of Total Revenues reported in accordance with Section 5.3 or
Section  5.4.   In  addition, if Panlabs is  the  audited  party,
Panlabs shall promptly remit to Tripos all amounts due in respect
of  the  discrepancy, and if Tripos is the audited party,  Tripos
shall  promptly credit against the Agreed Amount all amounts  due
in respect of the discrepancy.

10.  PUBLICITY
     Each  party  acknowledges that the terms of this  Settlement
Agreement  are considered confidential by the other party.   With
the   exception  of  disclosures  required  by  law  and  routine
announcements, neither party nor any of its affiliates shall make
any  announcements or disclosures regarding the other party,  the
Teaming Agreement or this Settlement Agreement without the  prior
written  consent  of the other party.  In no event  shall  either
party  make or publish any announcements of any kind which  might
tend to disparage the public image or corporate reputation of the
other party.

11.  MUTUAL RELEASES
     11.1 By Tripos.  Tripos, on its own behalf and on behalf  of
its   principals,   agents,   officers,   directors,   employees,
representatives, affiliates, successors, assigns  and  attorneys,
hereby   releases   and  forever  discharges  Panlabs   and   its
principals,     agents,    officers,    directors,     employees,
representatives,  affiliates, successors, assigns  and  attorneys
(the  "Panlabs  Released Parties") from any and all  liabilities,
claims,  demands,  rights, damages, debts,  responsibilities  and
actions  which Tripos had, has or hereafter may have against  the
Panlabs Released Parties arising out of or in connection with the
Teaming  Agreement; provided, however, that this provision  shall
not be read to release any claims which may hereafter be asserted
against  any  Panlabs Released Party which arise  out  of  or  in
connection with this Agreement.
     11.2  By Panlabs.  Panlabs, on its own behalf and on  behalf
of   its  principals,  agents,  officers,  directors,  employees,
representatives, affiliates, successors, assigns  and  attorneys,
hereby releases and forever discharges Tripos and its principals,
agents,    officers,   directors,   employees,   representatives,
affiliates,  successors,  assigns  and  attorneys  (the   "Tripos
Released Parties") from any and all liabilities, claims, demands,
rights,  damages,  debts,  responsibilities  and  actions   which
Panlabs  had,  has  or  hereafter may  have  against  the  Tripos
Released Parties arising out of or in connection with the Teaming
Agreement;  provided, however, that this provision shall  not  be
read  to  release  any  claims which may  hereafter  be  asserted
against  any  Tripos  Released Party which arise  out  of  or  in
connection with this Agreement.

12.  MISCELLANEOUS
     The validity, construction and performance of this Agreement
shall  be  governed  by  and construed  in  accordance  with  the
substantive  law  of the State of Washington, without  regard  to
conflicts  of law provisions.  If any provision of this Agreement
or  the  application of any such provision shall  be  held  by  a
tribunal  of  competent jurisdiction to be contrary to  law,  the
remaining provisions of this Agreement shall remain in full force
and effect to the maximum extent permissible.  This Agreement, as
executed  by the parties, constitutes the complete and  exclusive
understanding  and agreement of the parties with respect  to  the
subject matter hereof and supersedes all prior understandings and
agreements, whether written or oral, with respect to such subject
matter.


13.  COUNTERPARTS
     This  Agreement may be signed in any number of counterparts,
each  of which shall be deemed to be an original and all of which
shall be deemed to constitute one and the same Agreement.

IN  WITNESS WHEREOF, the parties have signed this Agreement as of
the Effective Date.
PANLABS INCORPORATED               TRIPOS, INC.


By:                                By:
Title:                             Title:

MDS INC. (solely for purposes of Section 6)


By:
Title: