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                                                                    Exhibit 10.1


                              SEPARATION AGREEMENT


October 14, 2002

Alessandro ("Alex") D. Sette, Ph.D.
5551 Linda Rosa Avenue
La Jolla, CA 92037

Dear Alex:

This letter sets forth the substance of the separation agreement (the
"Agreement") which Epimmune Inc. (the "Company") is offering to you to aid in
your employment transition.

        1.     SEPARATION. Your last day of work with the Company and your
employment termination date will be October 31, 2002 (the "Separation Date").
From now until the Separation Date, you will continue to be employed by the
Company in your current position and at your current base salary. As a condition
of this Agreement, you will be expected to continue to work your regular
schedule during this period (provided, however, that the Company agrees that
commencing October 1, 2002, you may devote time and energy to the establishment
of your laboratory at the La Jolla Institute for Allergy and Immunology (the
"Institute") and that on or before October 1, 2002, and from time to time
thereafter, you will file NIH grant applications in association with the
Institute. You also agree to assist the Company with the integration and
transition of your current duties and responsibilities in a reasonable and
orderly manner.

        2.     SUBCONTRACTING. In exchange for the promises and covenants set
forth herein, you and the Company agree that the Company shall subcontract or
otherwise engage your services to perform work for the Company on Contract
Number N01-AI-95362 between the Company and the National Institute of Health, as
modified ("NIH Contract"), and Agreement No. P373671 between the Company and the
University of Wisconsin, as modified ("Wisconsin Contract"), provided that
consent to such subcontracting or engagement is obtained from the National
Institute of Health and/or the University of Wisconsin, if necessary. The terms
of such subcontracting or engagement shall be negotiated in good faith by you
and the Company. It is hereby expressly acknowledged, however, that the
consideration to be paid to you related to the NIH contract shall in no event
exceed the consideration received by the Company under the NIH contract, and the
consideration to be paid to you related to the Wisconsin subcontract shall in no
event exceed the consideration received by the Company under the Wisconsin
subcontract.

        3.     ACCRUED SALARY AND PAID TIME OFF. On the Separation Date, the
Company will pay you all accrued salary, and all accrued and unused vacation
earned through the Separation Date, subject to standard payroll deductions and
withholdings. You are entitled to these payments regardless of whether or not
you sign this Agreement.


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        4.     HEALTH INSURANCE. To the extent provided by the federal COBRA law
or, if applicable, state insurance laws, and by the Company's current group
health insurance policies, you will be eligible to continue your group health
insurance benefits at your own expense. Later, you may be able to convert to an
individual policy through the provider of the Company's health insurance, if you
wish.

        5.     STOCK OPTIONS. Your Company stock options ("Options") will cease
to vest on the Separation Date. All terms, conditions, and limitations
applicable to your Options will remain in full force and effect pursuant to the
applicable stock option agreements between you and the Company and the
applicable stock option plan documents, and any other documents applicable to
the Options.

        6.     OTHER COMPENSATION OR BENEFITS. You acknowledge that, except as
expressly provided in this Agreement, you will not receive any additional
compensation, severance or benefits after the Separation Date.

        7.     EXPENSE REIMBURSEMENTS. You agree that, within ten (10) days of
the Separation Date, you will submit your final documented expense reimbursement
statement reflecting all business expenses you incurred through the Separation
Date, if any, for which you seek reimbursement. The Company will reimburse you
for these expenses pursuant to its regular business practice.

        8.     RETURN OF COMPANY PROPERTY. By the Separation Date, you agree to
return to the Company all Company documents (and all copies thereof) and other
Company property that you have had in your possession at any time, including,
but not limited to, Company files, notes, drawings, records, business plans and
forecasts, financial information, specifications, computer-recorded information,
tangible property (including, but not limited to, computers), credit cards,
entry cards, identification badges and keys; and, any materials of any kind that
contain or embody any proprietary or confidential information of the Company
(and all reproductions thereof). Notwithstanding the foregoing, the Company as
part of this Agreement shall provide you with a breeding pair of HLA A2
transgenic mice, a breeding pair of HLA A3 transgenic mice and a breeding pair
of HLA B7 transgenic mice (collectively, the "Mice"). The Mice shall be subject
to the Material Transfer Agreement attached hereto as Exhibit A.

        9.     PROPRIETARY INFORMATION OBLIGATIONS. Both during and after your
employment you will refrain from any unauthorized use or disclosure of the
Company's proprietary or confidential information or materials and acknowledge
your continuing obligations under your Proprietary Information and Inventions
Agreement not to use or disclose any confidential or proprietary information of
the Company, among other things. A copy of your Proprietary Information and
Inventions Agreement is attached hereto as Exhibit B.

        10.    CONFIDENTIALITY. The provisions of this Agreement will be held in
strictest confidence by you and the Company and will not be publicized or
disclosed in any manner whatsoever; provided, however, that: (a) you may
disclose this Agreement to your immediate


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family; (b) the parties may disclose this Agreement in confidence to their
respective attorneys, accountants, auditors, tax preparers, and financial
advisors; (c) the Company may disclose this Agreement as necessary to fulfill
standard or legally required corporate reporting or disclosure requirements; (d)
the parties may disclose this Agreement insofar as such disclosure may be
necessary to enforce its terms or as otherwise required by law; and (e) you may
disclose your obligations hereunder to any future and potential future
employers. In particular, and without limitation, you agree not to disclose the
terms of this Agreement to any current or former Company employee.

        11.    NONSOLICITATION. For two years from the date hereof, you shall
not directly or indirectly solicit or actively seek to hire or otherwise
contract for the services of any person who during such period is employed by
the Company, whether or not such person would commit any breach of his or her
contract of service in leaving such employment. Notwithstanding the foregoing,
this paragraph 11 and any nonsolicitation provisions contained in any other
agreement between you and the Company or its predecessor shall not apply to your
solicitation of John Sidney or Carla Oseroff.

        12.    NONDISPARAGEMENT. Both you and the Company agree not to disparage
the other party, and the other party's officers, directors, employees,
shareholders and agents, in any manner likely to be harmful to them or their
business, business reputation or personal reputation; provided that both you and
the Company will respond accurately and fully to any question, inquiry or
request for information when required by legal process.

        13.    RELEASE AND INDEMNIFICATION. In exchange for the consideration
offered under this Agreement to which you would not otherwise be entitled, you
agree to execute the Employee Agreement and Release attached hereto as Exhibit
C. Notwithstanding the Employee Agreement and Release, the Company agrees to
indemnify and defend you (a) for all acts within the scope of your employment as
defined by the California Labor Code, and (b) against all expenses, judgments,
fines, settlements and other amounts actually and reasonably incurred by you, to
the fullest extent allowable under Section 317 of the California Corporations
Code, if you are made a party or threatened to be made a party to any proceeding
by reason that you are or were an agent of the Company.

        14.    MISCELLANEOUS. This Agreement, including Exhibit A, Exhibit B,
and Exhibit C, constitutes the complete, final and exclusive embodiment of the
entire agreement between you and the Company with regard to this subject matter.
It is entered into without reliance on any promise or representation, written or
oral, other than those expressly contained herein, and it supersedes any other
such promises, warranties or representations. This Agreement may not be modified
or amended except in a writing signed by both you and a duly authorized officer
of the Company. This Agreement will bind the heirs, personal representatives,
successors and assigns of both you and the Company, and inure to the benefit of
both you and the Company, their heirs, successors and assigns. If any provision
of this Agreement is determined to be invalid or unenforceable, in whole or in
part, this determination will not affect any other provision of this Agreement
and the provision in question will be modified by the court so as to be rendered
enforceable. This Agreement will be deemed to have been entered into and will be
construed and enforced in accordance with


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the laws of the State of California as applied to contracts made and to be
performed entirely within California.

If this Agreement is acceptable to you, please sign below and on the attached
Employee Agreement and Release, which is part of this Agreement, and return the
originals of both to me.

Sincerely,

EPIMMUNE INC.

By: /s/ Robert J. De Vaere
    ----------------------------
    Robert J. De Vaere
    Vice President, Finance and
    Administration, and Chief
    Financial Officer


Exhibit A - Material Transfer Agreement
Exhibit B - Proprietary Information and Inventions Agreement
Exhibit C - Employee Agreement and Release

AGREED:

/s/ Alessandro D. Sette, Ph.D.
----------------------------------------
Alessandro ("Alex") D. Sette, Ph.D.





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                                    EXHIBIT A

                           MATERIAL TRANSFER AGREEMENT






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                                    EXHIBIT B

                PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT






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                                    EXHIBIT C

                        EMPLOYMENT AGREEMENT AND RELEASE

        I agree to the terms in the foregoing letter Agreement.

        Except as expressly noted in the foregoing letter Agreement or elsewhere
in this Employment Agreement and Release, I hereby release, acquit and forever
discharge the Company, its officers, directors, agents, servants, employees,
attorneys, shareholders, successors, assigns and affiliates, of and from any and
all claims, liabilities, demands, causes of action, costs, expenses, attorneys
fees, damages and obligations of every kind and nature, in law, equity, or
otherwise, known and unknown, suspected and unsuspected, disclosed and
undisclosed, arising out of or in any way related to agreements, events, acts or
conduct at any time prior to and including the execution date of this Agreement,
including but not limited to: all such claims and demands directly or indirectly
arising out of or in any way connected with my employment with the Company or
the termination of that employment; claims or demands related to salary,
bonuses, commissions, stock, stock options, or any other ownership interests in
the Company, vacation pay, fringe benefits, expense reimbursements, severance
pay, or any other form of compensation; claims pursuant to any federal, state or
local law, statute, or cause of action including, but not limited to, the
federal Civil Rights Act of 1964, as amended; the federal Americans with
Disabilities Act of 1990; the federal Age Discrimination in Employment Act of
1967, as amended ("ADEA"); the California Fair Employment and Housing Act, as
amended; tort law; contract law; wrongful discharge; discrimination; harassment;
fraud; defamation; emotional distress; and breach of the implied covenant of
good faith and fair dealing.

        I acknowledge that I am knowingly and voluntarily waiving and releasing
any rights I may have under the ADEA, as amended. I also acknowledge that the
consideration given for the waiver and release in the preceding paragraph hereof
is in addition to anything of value to which I was already entitled. I further
acknowledge that I have been advised by this writing, as required by the ADEA,
that: (a) my waiver and release do not apply to any rights or claims that may
arise after the execution date of this Agreement; (b) I have been advised hereby
that I have the right to consult with an attorney prior to executing this
Agreement; (c) I have twenty-one (21) days to consider this Agreement (although
I may choose to voluntarily execute this Agreement earlier); (d) I have seven
(7) days following the execution of this Agreement by the parties to revoke the
Agreement; and (e) this Agreement will not be effective until the date upon
which the revocation period has expired, which will be the eighth day after this
Agreement is executed by me, provided that the Company has also executed this
Agreement by that date ("Effective Date").

        I UNDERSTAND THAT, EXCEPT AS OTHERWISE PROVIDED BELOW OR IN THE
FOREGOING LETTER AGREEMENT, THIS AGREEMENT INCLUDES A RELEASE OF ALL KNOWN AND
UNKNOWN CLAIMS. In giving this release, which includes claims which may be
unknown to me at present, I acknowledge that I have read and understand Section
1542 of the California Civil Code which reads as follows: "A GENERAL RELEASE
DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST
IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST
HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR." I hereby expressly
waive and relinquish all rights and benefits


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under that section and any law of any jurisdiction of similar effect with
respect to my release of any unknown or unsuspected claims I may have against
the Company.

        My release of known and unknown claims as set forth above shall not
apply to any claims arising out of or related to (i) the Employee Retirement
Income Security Act, (ii) the indemnification obligations of the Company
pursuant to the foregoing letter agreement, including the Company's obligation
to indemnify and defend me with respect to any proceeding contemplated by
California Corporations Code Section 317, and with respect to any act within the
scope of my employment, as defined in the California Labor Code, or (iii) any
other indemnification obligation of the Company as my principal or employer,
including the Company's statutory indemnification obligations under Sections
2800 and 2802 of the California Labor Code.

                                      By:  /s/ Alessandro D. Sette, Ph.D.
                                         ---------------------------------------
                                           Alessandro ("Alex") D. Sette, Ph.D.

                                      Date:  October 14, 2002
                                           -------------------------------------



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