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                                                                  EXHIBIT 10.278

October 1, 2004

Eric S. Groves, M.D., Ph.D.
Vice-President, Project Management
Ligand Pharmaceuticals Incorporated
10275 Science Center Drive

San Diego, CA 92121

Dear Eric:

          The purpose of this letter agreement is to document the terms of the
severance package to which you will be entitled should your employment with
Ligand Pharmaceuticals Incorporated (the "Company") terminate under certain
specified circumstances.

          Part One of this letter agreement sets forth certain definitional
provisions to be in effect for purposes of determining your benefit
entitlements. Part Two specifies the terms and conditions upon which you may
become entitled to receive severance benefits. Severance benefits accrue under
this letter agreement in the event your employment with the Company were to be
terminated involuntarily in connection with certain changes in control of the
Company. Part Three concludes this letter agreement with a series of general
terms and conditions applicable to your severance benefits.

                             PART ONE -- DEFINITIONS

          Definitions. For purposes of this letter agreement, including in
particular the application of the special benefit limitations of Part Three, the
following definitions will be in effect:

     1.   Average Compensation means your average W-2 wages from the Company for
          the five (5) calendar years completed immediately prior to the
          calendar year in which the Change in Control is effected. Any W-2
          wages for a partial year of employment will be annualized, in
          accordance with the frequency with which such wages are paid during
          such partial year, before inclusion within your Average Compensation.

     2.   Board means the Company's Board of Directors.
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Eric S. Groves, M.D., Ph.D.
October 1, 2004
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     3.   Change in Control means any of the following events:

               (i) a merger or consolidation in which the Company is not the
          surviving entity, except for a transaction the principal purpose of
          which is to change the state in which the Company is incorporated,

               (ii) the sale, transfer or other disposition of all or
          substantially all of the assets of the Company other than in the
          ordinary course of business,

               (iii) any reverse merger in which the Company ceases to exist as
          an independent corporation and becomes the subsidiary of another
          corporation, except where there is an insubstantial change in the de
          facto voting control of the Company (e.g. the creation of a holding
          company),

               (iv) any Hostile Take-Over,

               (v) the acquisition by any person (or related group of persons),
          whether by tender or exchange offer made directly to the Company's
          stockholders, private purchases from one or more of the Company's
          stockholders, open market purchases or any other transaction, of
          beneficial ownership of securities possessing more than thirty percent
          (30%) of the total combined voting power of the Company's outstanding
          securities,

               (vi) the acquisition by any person (or related group of persons),
          whether by tender or exchange offer made directly to the Company's
          stockholders, private purchases from one or more of the Company's
          stockholders, open market purchases or any other transaction, of
          additional securities of the Company which increase the total holdings
          of such person (or group) to a level of securities possessing more
          than fifty percent (50%) of the total combined voting power of the
          Company's outstanding securities, or

               (vii) the acquisition by any person (or related group of
          persons), whether by tender or exchange offer made directly to the
          Company's stockholders, private purchases from one or more of the
          Company's stockholders, open market purchases or any other
          transaction, of securities of the Company possessing sufficient voting
          power in the aggregate to elect an absolute majority of the members of
          the Board (rounded up to the nearest whole number).
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Eric S. Groves, M.D., Ph.D.
October 1, 2004
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     4.   COBRA means the continuation-of-coverage provisions of the
          Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.

     5.   Code means the Internal Revenue Code of 1986, as amended.

     6.   Common Stock means the Company's common stock, par value $0.001 per
          share.

     7.   Equity Incentive Plans means any of the following equity incentive
          plans of the Company: 1992 Stock Option/Stock Issuance Plan, the 2002
          Stock Incentive Plan, and the Restricted Stock Purchase Plan, together
          with any amendments or successors to such plans.

     8.   Equity Parachute Payment means, with respect to any Option (whether
          Acquisition-Accelerated or Severance-Accelerated) or unvested Stock
          Issuance, the portion deemed to be a parachute payment under Code
          Section 280G and the Treasury Regulations issued thereunder. Such
          Equity Parachute Payment shall be calculated in accordance with the
          valuation provisions established under Code Section 280G and the
          applicable Treasury Regulations and will include an appropriate dollar
          adjustment to reflect the lapse of your obligation to remain in the
          Company's employ as a condition to your vesting in the accelerated
          portion of such Option or Stock Issuance.

     9.   ERISA means the Employee Retirement Income Security Act of 1974, as
          amended.

     10.  Health Care Coverage means the health care benefits provided by the
          Company to you and your eligible dependents for which you are eligible
          to continue coverage under the provisions of COBRA.

     11.  Hostile Take-Over means either of the following events:

               (i) the acquisition by any person (or related group of persons)
          whether by tender or exchange offer made directly to the Company's
          stockholders, private purchases from one or more of the Company's
          stockholders, open market purchases or any other transaction, of
          beneficial ownership of securities possessing more than thirty percent
          (30%) of the total combined voting power of the Company's outstanding
          securities pursuant to a tender offer made directly to the Company's
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Eric S. Groves, M.D., Ph.D.
October 1, 2004
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          stockholders which the Board does not recommend such stockholders to
          accept, or

               (ii) a change in the composition of the Board over a period of
          thirty-six (36) consecutive months or less such that a majority of the
          Board members (rounded up to the next whole number) ceases, by reason
          of one or more contested elections for Board membership, to be
          comprised of individuals who either (a) have been Board members
          continuously since the beginning of such period or (b) have been
          elected or nominated for election as Board members during such period
          by at least a majority of the Board members described in clause (a)
          who were still in office at the time such election or nomination was
          approved by the Board.

     12.  Involuntary Termination means the termination of your employment with
          the Company:

               (i) upon your involuntary discharge or dismissal, or

               (ii) upon your resignation in connection with any of the
          following changes to the terms and conditions of your employment: (A)
          a change in your position with the Company which materially reduces
          your level of responsibility, (B) a greater than ten percent (10%)
          reduction in your level of compensation (including base salary, fringe
          benefits and participation in non-discretionary bonus programs under
          which awards are payable pursuant to objective financial or
          performance standards, but excluding equity compensation) or (C) a
          relocation of your principal place of employment by more than fifty
          (50) miles.

                    The following guidelines shall determine whether one or more
          reductions in compensation should be taken into account for purposes
          of clause (ii)(B):

                    (a) Any reduction in compensation which occurs in connection
               with an across-the-board reduction in the level of compensation
               payable to the Company's executive officers or senior management
               shall not constitute grounds for a clause (ii)(B) resignation,
               unless implemented within eighteen (18) months after a Change in
               Control.

                    (b) In the event of a Hostile Take-Over, the greater than
               ten percent (10%) standard of clause (ii)(B) shall be reduced to
               zero percent (0%) so that any reduction in the level of your
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Eric S. Groves, M.D., Ph.D.
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               compensation shall constitute grounds for a clause (ii)(B)
               resignation.

                    In no event shall an Involuntary Termination be deemed to
          occur should your employment terminate by reason of death or permanent
          disability.

     13.  Option means any option granted to you under any of the Equity
          Incentive Plans which is outstanding at the time of your Involuntary
          Termination or any earlier Change in Control. Your outstanding options
          are to be divided into two separate categories as follows:

               (i) Acquisition-Accelerated Options: any outstanding Option (or
          installment thereof) which accelerates upon a Change in Control in
          accordance with the automatic acceleration provisions of the Equity
          Incentive Plans.

               (ii) Severance-Accelerated Options: any outstanding Option (or
          installment thereof) which is not an Acquisition-Accelerated Option
          but which accelerates upon your Involuntary Termination, whether or
          not in connection with a Change in Control, as part of your severance
          benefits under this letter agreement.

     14.  Other Parachute Payments mean any payments in the nature of
          compensation to which you may become entitled under this letter
          agreement (other than the Equity Parachute Payment) or any other
          arrangement with the Company, to the extent such payments qualify as
          parachute payments within the meaning of Code Section 280G(b)(2) and
          the Treasury Regulations issued thereunder or would so qualify if the
          aggregate present value of such payments exceeded the amount specified
          in Code Section 280G(b)(2)(ii).

     15.  Stock Issuance means the issuance of unvested shares of Common Stock
          under the Company's Restricted Stock Plan or any other Equity
          Incentive Plan.

     16.  Termination for Cause means an Involuntary Termination or resignation
          of your employment with the Company by reason of your conviction of
          any felony or other criminal act, your commission of any act of fraud
          or embezzlement, your unauthorized use or disclosure of confidential
          or proprietary information or trade secrets of the Company or its
          subsidiaries, or any other intentional misconduct on your part which
          adversely affects the business or affairs of the Company in a material
          manner.
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Eric S. Groves, M.D., Ph.D.
October 1, 2004
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                  PART TWO -- INVOLUNTARY TERMINATION BENEFITS

          You will be entitled to receive the severance benefits specified below
should there occur an Involuntary Termination of your employment during the term
of this letter agreement effected in connection with a Change in Control, other
than a Termination for Cause. However, in the absence of a Hostile Take-Over,
these benefits will continue to be paid you only for so long as you remain
available for any consulting services required of you under Part Two, Paragraph
4 and abide by the restrictive covenants set forth in Part Two, Paragraph 5.

     1.   Severance Payments. You will receive severance payments from the
          Company for a period of twelve (12) months following your Involuntary
          Termination in an aggregate amount equal to the sum of (A) one (1)
          times the annual rate of base salary in effect for you at the time of
          your Involuntary Termination or at the time of the relevant Change in
          Control, whichever is higher plus (B) one (1) times the average of the
          bonuses (excluding any signing bonus) paid to you for services
          rendered in the two (2) fiscal years immediately preceding the fiscal
          year of your Involuntary Termination (annualized if paid for a partial
          fiscal year). If a bonus is paid to you for only one of those years,
          then the bonus amount under Clause (B) will be equal to one (1) times
          such bonus amount. The aggregate severance payments shall be paid to
          you in equal installments over the twelve-month period in accordance
          with the Company's normal payroll practices and subject to all
          applicable withholding taxes. The severance payments will immediately
          terminate if and only if (i) you should cease to remain available for
          the consulting services required of you under Section 4, or (ii) you
          fail to abide by the restrictive covenants set forth in Section 5 .
          However, in the event your Involuntary Termination occurs in
          connection with a Hostile Take-Over, your severance payments will be
          paid to you in the form of a single lump sum amount within thirty (30)
          days after such Involuntary Termination, and the provisions of
          Sections 4 and 5 of this Part Two will not apply.

     2.   Health Care Coverage. The Company will, at its expense, make any COBRA
          payments for you and your eligible dependents in order to continue
          your Health Care Coverage until the earlier of (i) twelve (12) months
          after the effective date of your Involuntary Termination (other than a
          Termination for Cause) or (ii) the first date that you are covered
          under another employer's (or, in the event of rehire, the Company's)
          health benefit program which provides substantially the same level of
          benefits without exclusion for pre-existing medical conditions. Such
          payments will be in lieu of any other continued health care coverage
          to
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Eric S. Groves, M.D., Ph.D.
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          which you or your dependents would otherwise be entitled pursuant to
          the requirements of Code Section 4980B by reason of your termination
          of employment.

     3.   Option Acceleration and Lapse of Restrictions. Each of your
          outstanding Options under the Equity Incentive Plans will (to the
          extent not then otherwise exercisable) automatically accelerate so
          that each such Option will become immediately exercisable for the
          total number of shares of Common Stock at the time subject to that
          Option. Each such accelerated Option, together with all of your other
          vested Options, will remain exercisable for a period of twelve (12)
          months following your Involuntary Termination until the end of the
          specified ten (10)-year option term. Such Option(s) may be exercised
          for any or all of the option shares in accordance with the exercise
          provisions of the option agreement evidencing the grant. In addition,
          all restrictions applicable to the Stock Issuances you hold (to the
          extent those restrictions have not previously lapsed in accordance
          with the terms of the issuance agreements) will automatically lapse
          upon your Involuntary Termination (except a Termination for Cause).

     4.   Consulting Services. Unless your Involuntary Termination occurs in
          connection with a Hostile Take-Over, you will make yourself available
          to perform consulting services reasonably requested of you during the
          twelve (12)-month period following your Involuntary Termination. You
          will be compensated at an hourly rate to be agreed upon by you and the
          Company at the time such consulting services are to be rendered, and
          you will be reimbursed for all reasonable out-of-pocket expenses
          incurred in rendering such services upon your submission of
          appropriate documentation for those expenses.

     5.   Restrictive Covenants. For the one hundred twenty (120)-day period
          following your Involuntary Termination:

               (i) You will not directly or indirectly, whether for your own
          account or as an employee, director, consultant or advisor, provide
          services to any business enterprise which is at the time in
          competition with any of the Company's then existing or formally
          planned product lines and which is located geographically in an area
          where the Company maintains substantial business activities, unless
          you obtain the prior written consent of the Board of Directors.

               (ii) You will not directly or indirectly encourage or solicit any
          individual to leave the Company's employ for any reason or interfere
          in any other manner with the employment relationships at the time
          existing between the Company and its current or prospective employees.
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Eric S. Groves, M.D., Ph.D.
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               (iii) You will not induce or attempt to induce any customer,
          supplier, distributor, licensee or other business relation of the
          Company to cease doing business with the Company or in any way
          interfere with the existing business relationship between any such
          customer, supplier, distributor, licensee or other business relation
          and the Company.

          You acknowledge that monetary damages may not be sufficient to
          compensate the Company for any economic loss which may be incurred by
          reason of your breach of the foregoing restrictive covenants.
          Accordingly, in the event of any such breach, the Company shall, in
          addition to the cessation of the severance benefits provided you under
          this letter agreement and any remedies available to the Company at
          law, be entitled to obtain equitable relief in the form of an
          injunction precluding you from continuing to engage in such breach.

          None of the foregoing restrictive covenants in this section 5 shall be
          applicable in the event your Involuntary Termination occurs in
          connection with a Hostile Take-Over.

     6.   Benefit Reduction.

               (i) Benefit Reduction. If the Change in Control does not
          constitute a Hostile Take-Over, first the dollar amount of your
          severance payment under Paragraph 1 will be reduced to the extent
          necessary to assure that the present value of those benefits will not,
          when added to the present value of your Equity Parachute Payment and
          your Other Parachute Payments, exceed 2.99 times your Average
          Compensation. In the event of a Hostile Take-Over, no reduction will
          be made to your severance payment (or any other benefit to which you
          become entitled hereunder), unless necessary to provide you with the
          maximum after-tax benefit available, after taking into account any
          parachute excise tax which might otherwise be payable by you under
          Code Section 4999 and any analogous State income tax provision.

               (ii) Resolution of Disputes. In the event there is any
          disagreement between you and the Company as to whether one or more
          benefits to which you become entitled (whether under this letter
          agreement or otherwise) in connection with a Change in Control
          constitute Equity Parachute Payments or Other Parachute Payments, such
          dispute is to be resolved as follows:

                    A. The matter shall be submitted for resolution to
          independent counsel mutually acceptable to you and the Company
          ("Independent Counsel").
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Eric S. Groves, M.D., Ph.D.
October 1, 2004
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          The resolution reached by Independent Counsel shall be final and
          controlling. However, should the Independent Counsel determine that
          the status of the benefits in dispute can be resolved by obtaining a
          private letter ruling from the Internal Revenue Service, a formal and
          proper request for such ruling shall be prepared and submitted by
          Independent Counsel, and the determination made by the Internal
          Revenue Service in the issued ruling shall be controlling. All
          expenses incurred in connection with the retention of Independent
          Counsel and (if applicable) the preparation and submission of the
          ruling request shall be paid by the Company.

                    B. The present value of each Equity Parachute Payment and
          each of the Other Parachute Payments (including your severance payment
          and Health Care Coverage) shall be determined in accordance with the
          provisions of Code Section 280G(d)(4) and the Treasury Regulations
          issued thereunder.

          The full amount of your severance benefit under Paragraph 1 shall not
          be paid to you until any amounts in dispute under this Paragraph 6(ii)
          have been resolved in accordance herewith. However, any portion of
          such severance payment which would not otherwise exceed the benefit
          limitation of Paragraph 6(i) even if all amounts in dispute under this
          Paragraph 6(ii) were to be resolved against you will be paid to you in
          accordance with the applicable provisions of this letter agreement.

               (iii) Overriding Limitation. You will in all events be entitled
          to receive the full amount of your severance payment under Paragraph
          1, to the extent those benefits, when added to the present value of
          your Equity Parachute Payment and your Other Parachute Payments
          (excluding such severance payment), will nevertheless qualify as
          reasonable compensation within the standards established under Code
          Section 280G(b)(4).

               (iv) Interpretation. The provisions of this Section 6 shall in
          all events be interpreted in such manner as will avoid the imposition
          of excise taxes under Code Section 4999, and the disallowance of
          deductions under Code Section 280G(a), with respect to your severance
          benefits under this letter agreement.

                     PART THREE -- MISCELLANEOUS PROVISIONS

     1.   Termination for Cause. Should your termination constitute a
          Termination for Cause, then the Company shall only be required to pay
          you (i) any unpaid compensation earned for services previously
          rendered through the date of such termination and (ii) any accrued but
          unpaid vacation benefits or sick days, (iii)
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Eric S. Groves, M.D., Ph.D.
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          any reimbursements then owed to you by the Company and no benefits
          will be payable to you under this letter agreement.

     2.   Term of Agreement. The provisions of this letter agreement will
          continue in effect for a period of five (5) years from the date
          hereof.

     3.   General Creditor Status. The benefits to which you may become entitled
          under this letter agreement (except those attributable to your Options
          or Stock Issuances) will be paid, when due, from the general assets of
          the Company. Your right (or the right of the executors or
          administrators of your estate) to receive any such payments will at
          all times be that of a general creditor of the Company and will have
          no priority over the claims of other general creditors of the Company.

     4.   Death. Should you die before receipt of all benefits to which you
          become entitled under this letter agreement, then the payment of such
          benefits will be made, on the due date or dates hereunder had you
          survived, to the executors or administrators of your estate. Should
          you die before you exercise your Severance-Accelerated Options (if
          any) or any other of your outstanding vested Options, then each such
          Option may be exercised, during the applicable exercise period in
          effect hereunder for those options at the time of your death, by the
          executors or administrators of your estate or by person to whom the
          Option is transferred pursuant to your will or in accordance with the
          laws of inheritance.

     5.   Miscellaneous. The provisions of this letter agreement will be
          construed and interpreted under ERISA. To the extent ERISA is
          inapplicable, then the laws of the State of California shall control,
          without regard to that state's choice of law provisions. This letter
          agreement incorporates the entire agreement between you and the
          Company relating to the subject of severance benefits and supersedes
          all prior agreements and understandings with respect to such subject
          matter. This letter agreement may only be amended by written
          instrument signed by you and another duly-authorized officer of the
          Company. If any provision of this letter agreement as applied to any
          party or to any circumstance should be adjudged by an arbitrator or
          court of competent jurisdiction to be void or unenforceable for any
          reason, the invalidity of that provision shall in no way affect (to
          the maximum extent permissible by law) the application of such
          provision under circumstances different from those so adjudicated, the
          application of any other provision of this letter agreement, or the
          enforceability or invalidity of this letter agreement as a whole.
          Should any provision of this letter agreement become or be determined
          to be invalid, illegal or unenforceable in any jurisdiction by reason
          of the scope, extent or duration of
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Eric S. Groves, M.D., Ph.D.
October 1, 2004
Page 11


          its coverage, then such provision shall be deemed amended to the
          extent necessary to conform to applicable law so as to be valid and
          enforceable or, if such provision cannot be so amended without
          materially altering the intention of the parties, then such provision
          shall be stricken and the remainder of this letter agreement shall
          continue in full force and effect.

     6.   Remedies. All rights and remedies provided pursuant to this letter
          agreement or by law will be cumulative, and no such right or remedy
          will be exclusive of any other. A party may pursue any one or more
          rights or remedies hereunder or may seek damages or specific
          performance in the event of another party's breach hereunder or may
          pursue any other remedy by law or equity, whether or not stated in
          this letter agreement.

     7.   Arbitration. Any controversy which may arise between you and the
          Company with respect to the construction, interpretation or
          application of any of the terms, provisions or conditions of this
          letter agreement or any monetary claim arising from or relating to
          this letter agreement will be submitted to and exclusively decided by
          final and binding arbitration in San Diego, California in accordance
          with the rules of the American Arbitration Association then in effect.

     8.   No Employment or Service Contract. Nothing in this letter agreement
          shall confer upon you any right to continue in the employment of the
          Company for any period of specific duration or interfere with or
          otherwise restrict in any way the rights of the Company or you, which
          rights are hereby expressly reserved by each, to terminate your
          employment at any time for any reason whatsoever, with or without
          cause.

     9.   Proprietary Information. You hereby acknowledge that the Company may,
          from time to time during your employment with the Company, disclose to
          you confidential information pertaining to the Company's business and
          affairs. All information and data, whether or not in writing, of a
          private or confidential nature concerning the business or financial
          affairs of the Company is and will remain subject to a separate
          Proprietary Information and Inventions Agreement (or the like) between
          you and the Company.

               Please indicate your acceptance of the foregoing provisions of
this severance agreement by signing the enclosed copy of this letter agreement
and returning it to the Company.
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Eric S. Groves, M.D., Ph.D.
October 1, 2004
Page 12


Very truly yours,

LIGAND PHARMACEUTICALS INCORPORATED


/S/ DAVID E. ROBINSON
--------------------------------------
David E. Robinson
Chairman, President and CEO

DER:bjo
severance groves 2004-10-01.doc


ACCEPTED BY AND AGREED TO


Signature: /S/ ERIC S. GROVES
           ---------------------------
Dated: 11/5/04