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                                                                   Exhibit 10.27

                    AGREEMENT AND INSTRUCTIONS TO STAKEHOLDER

         In consideration of the mutual promises and covenants contained herein,
and for other valuable consideration, receipt of which is hereby acknowledged,
Cadus Pharmaceutical Corporation, a Delaware corporation (hereinafter referred
to as "Cadus"), SIBIA Neurosciences, Inc., a Delaware corporation (hereinafter
referred to as "SIBIA"), and Security Trust Company, a California corporation
(hereinafter referred to as "Stakeholder") make the following agreement entitled
Agreement And Instructions To Stakeholder (hereinafter referred to as the
"Agreement and Instructions") relating to the property to be held by the
Stakeholder under this Agreement and Instructions. In connection with this
Agreement and Instructions, Cadus and SIBIA have also entered into a Security
Agreement and Cadus has executed UCC-1 financing statements pursuant thereto.
         
         This Agreement and Instructions is entered into pursuant to the Order
issued by the United States District Court for the Southern District of
California (hereinafter referred to as "the District Court") dated March 10,
1999, conditionally granting Cadus' motion for an alternate security, staying
the enforcement of the District Court's Judgment dated March 10, 1999, in SIBIA
Neurosciences, Inc. v. Cadus Pharmaceutical Corporation, Case No. 961231 IEG
POR. (hereinafter referred to as the Judgment).

         1. (a) Concurrently with the execution of this Agreement and
Instructions, Cadus shall irrevocably transfer to Stakeholder the sum of
Eighteen Million Five Hundred Thousand Dollars ($18,500,000.00) to be held in
trust pursuant to the terms of this Agreement and Instructions (hereinafter
referred to as "the initial sum").

                  (b) The parties agree that the amount of prejudgment interest
from December 31, 1998, to the entry of Judgment on March 10, 1999, is One
Hundred Fifty-Eight Thousand, Two Hundred Twenty-Seven Dollars and Forty Cents
($158,227.40), and that the clerk of the court shall determine the amount of
trial costs pursuant to an application to tax the bill of costs and
disbursements, to be filed by SIBIA with the District Court. In the event
prejudgment interest and trial costs (as set forth in an order granting SIBIA
trial costs) exceed Four Hundred Fifty Thousand Dollars ($450,000.00), Cadus
shall irrevocably transfer to Stakeholder, within 10 days of entry of


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such order, an amount equal to the excess to be held in trust. This amount shall
be in addition to the initial sum.

         2. The funds irrevocably transferred pursuant to paragraph 1 shall be
held by Stakeholder as trustee in trust as a fund and shall be distributed by
Stakeholder within two business days in accordance with:

                  (a) Instructions in writing by Cadus and SIBIA; or

                  (b) A final disposition of the case entitled SIBIA
Neurosciences, Inc. v. Cadus Pharmaceutical Corporation, Case No. 96 1231 IEG
(POR), currently pending before the United States District Court for the
Southern District of California (hereinafter referred to as "the Action"),
confirming the full amount of the jury damage award of Eighteen Million Dollars
($18,000,000.00), after exhaustion of all appellate rights; or

                  (c) An Order issued by the United States District Court for
the Southern District of California upon remand of the Action in the event the
United States Court of Appeals for the Federal Circuit (the "Federal Circuit")
or the United States Supreme Court do not affirm the full amount of the jury
damage award of Eighteen Million Dollars ($18,000,000.00).

         3. Cadus, SIBIA and Stakeholder agree that the District Court shall
retain jurisdiction over the Action for the purpose of: (a) resolving any
dispute between Cadus and SIBIA regarding the proper distribution of the funds
following the judgment rendered by the Federal Circuit or the United States
Supreme Court pursuant to paragraph 2; (b) appointing a new Stakeholder pursuant
to paragraph 16; and (c) otherwise enforcing the terms of this Agreement and
Instructions. Cadus, SIBIA and Stakeholder further agree that any action
required to enforce this Agreement and Instructions, including any action
against Stakeholder, shall be brought in the District Court, and Stakeholder
specifically consents to jurisdiction and venue of such action in the District
Court.

         4. Stakeholder shall invest the funds held by it pursuant to this
Agreement and Instructions in the following investments: the Goldman Sachs
Financial Square Government Fund, treasury bills or investment grade securities
that are direct obligations of the United States of America. The parties
anticipate that it will likely take between 12 to 16 months to obtain the
judgment of the Federal Circuit referred to in paragraph 2 of this Agreement and
Instructions, and the investment of funds hereunder shall take that timing into
consideration so that investments will mature and funds will be available for
distribution within a reasonable time (within 30 to 60 days)


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after the judgment has been rendered. All funds held by Stakeholder under this
Agreement and Instructions shall be segregated from any other funds and other
property of Stakeholder and Stakeholder shall utilize a bank or banks and/or
brokerage companies (collectively "Banks") which have been approved in writing
by Cadus and approved in writing by SIBIA, which approval by Cadus and SIBIA
shall be in the respective sole discretion of the Chief Executive Officer of
SIBIA and the Chief Executive Officer of Cadus. Such funds shall be held in
accounts located only in New York or California at such Banks. Such Banks may
not be changed without written approval of the parties. Interest earned on such
funds while held by Stakeholder shall be reinvested and held as provided in
paragraph 2. Stakeholder shall provide monthly statements to the parties on the
status of the accounts.

         5. Upon Cadus' irrevocably transferring to Stakeholder the funds to be
held in trust pursuant to paragraph 1(a) of this Agreement and Instructions,
that portion of the Agreement and Instructions shall constitute an executed
contract and will no longer be executory in nature.

         6. Upon Cadus' irrevocably transferring to the Stakeholder the funds to
be held in trust pursuant to paragraph 1(b) of this Agreement and Instructions,
that portion of the Agreement and Instructions shall constitute an executed
contract and will no longer be executory in nature.

         7. Cadus and SIBIA agree that in the event any of the funds held in
trust pursuant to this Agreement and Instructions are removed from the control
of Stakeholder for any reason (other than pursuant to paragraphs 2, 16 or 17
herein), or if Cadus does not irrevocably transfer the funds as required by
paragraph 1 herein, the stay of enforcement of the Judgment as ordered by the
District Court shall be dissolved immediately and without need for any further
order of the District Court.

         8. Cadus and SIBIA agree that in the event Cadus files for bankruptcy
protection under the United States Bankruptcy Code, Cadus agrees that SIBIA
shall be entitled to immediate relief from any stay under the Bankruptcy Code to
the extent necessary to request that this Agreement and Instructions be carried
out in full force and effect.

         9. Cadus and SIBIA agree that in the event that Cadus files for
bankruptcy protection under the United States Bankruptcy Code and any of the
funds are removed from the control of the Stakeholder for any reason (other than
pursuant to paragraphs 2, 16 or 17 herein) or are not irrevocably transferred by
Cadus as required by paragraph 1 herein: (a) SIBIA shall be entitled to
immediate relief from any stay under the Bankruptcy Code, (b) SIBIA shall be
entitled, at any time,


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to make a motion to the Bankruptcy Court to seek relief from any automatic stay
under the United States Bankruptcy Code, for the purpose of enforcing the
Judgment or the part of the Judgment as to which the Federal Circuit or the
United States Supreme Court affirms, and (c) Cadus shall not oppose any such
motion on any ground and shall support any such motion by SIBIA.

         10. Cadus and SIBIA agree that SIBIA shall be entitled, at any time
after Cadus files for bankruptcy protection under the United States Bankruptcy
Code, to make a motion to the Bankruptcy Court to seek relief from any automatic
stay under the United States Bankruptcy Code to pursue, obtain entry of, and
enforce, including where appropriate enforcement of paragraph 2(b) herein, the
Judgment or part of the Judgment as to which the Federal Circuit or the United
States Supreme Court affirms. Cadus shall not oppose any such motion and shall
support any such motion, except Cadus shall retain the right to seek enforcement
of this Agreement and Instructions by opposition to such motion, provided,
however, that Cadus' right hereunder shall be subject to the provisions of
paragraphs 7, 8 and 9, which shall take precedence.

         11. Cadus hereby waives any right that it may have to seek and agrees
not to seek injunctive relief under any law, including but not limited to 11
U.S.C. ss. 105, to prohibit or enjoin SIBIA from pursuing, obtaining entry of
and enforcing the Judgment or the part of the Judgment as to which the Federal
Circuit or the United States Supreme Court affirms, including where appropriate
enforcement of paragraph 2(b) of this Agreement and Instructions.
Notwithstanding the foregoing, Cadus shall have the right to seek and obtain a
stay of the enforcement of the Judgment while appealing the Judgment to the
Federal Circuit or the United States Supreme Court and to seek injunctive relief
to enforce its rights under paragraphs 2 and 4 of this Agreement and
Instructions. Cadus' right hereunder shall be subject to the provisions of
paragraphs 7, 8 and 9, which shall take precedence.

         12. Stakeholder shall be paid for its services as a stakeholder the sum
of Two Thousand Five Hundred Dollars ($2,500.00) per year, which sum shall be
paid by Cadus. In addition, Cadus shall be liable for reimbursing the expenses
of Stakeholder for any direct out-of-pocket expenses it shall incur in the
performance of its duties as a stakeholder herein.

         13. In performing any of its services under this Agreement and
Instructions, Stakeholder shall not incur any liability to anyone for damages,
loss or expenses, except for damages, loss or expenses resulting from its
willful misconduct or gross negligence. Stakeholder agrees that it shall


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be deemed to have been grossly negligent if it distributes funds in a manner
that is inconsistent with the terms of this Agreement and Instructions. However,
if SIBIA incurs any loss that is caused by the conduct of Stakeholder in
performing its services hereunder, Cadus shall indemnify SIBIA for such loss
within thirty (30) days of a written demand for indemnification.

         14. Unless it has knowledge to the contrary, Stakeholder may act in
reliance upon any writing or instrument or signature which it, in good faith,
believes to be genuine. Stakeholder may assume the validity and accuracy of any
statement or assertion contained in such a writing or instrument and may assume
that any person purporting to give any writing, notice, advice or instruction in
connection with the provisions hereof has been duly authorized to do so.

         15. Stakeholder shall have no claim against the irrevocably transferred
funds or other property, and relinquishes any right or claim it may have against
the foregoing. Stakeholder hereby irrevocably and unconditionally waives and
agrees not to exercise any rights now or hereafter granted under any agreement
with Cadus or SIBIA under applicable law or otherwise to set off and/or to
appropriate and apply all or any portion of the funds or other property held in
or transferred hereunder on account of any indebtedness, liabilities or other
obligations owed to Stakeholder (other than liabilities owed to Stakeholder
under this Agreement and Instructions).

         16. Stakeholder may resign upon 30 days prior written notice to the
parties to this Agreement and Instructions. If a successor stakeholder is not
appointed by Cadus and SIBIA within a 30-day period following such written
notice, Stakeholder may petition the United States District Court for the
Southern District of California to name a successor.

         17. Cadus and SIBIA may, by mutual agreement, at any time and from time
to time, terminate Stakeholder's responsibilities and substitute a new
stakeholder hereunder. Within five days after notification from Cadus and SIBIA,
in writing, that a new stakeholder has been substituted for it, Stakeholder
shall, after paying any costs of Stakeholder incurred in maintaining and
operating the trust held hereunder and reimbursable under this Agreement and
Instructions, transfer over to the new stakeholder all of the funds and other
property held hereunder.

         18. Cadus agrees to pay 50% of the legal fees incurred by SIBIA after
March 10, 1999, in negotiating the terms of this Agreement and Instructions.
SIBIA shall provide Cadus with copies of the bills, recording attorney time
spent in the negotiation of the terms of this Agreement and Instructions. Cadus
shall pay its 50% share of these fees directly to SIBIA.


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         19. This Agreement and Instructions may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

         20. The terms of this Agreement and Instructions shall be binding on
and shall inure to the benefit of the successors, transferees, representatives
and assignees of the parties.

                              CADUS PHARMACEUTICAL CORPORATION

                              By: /s/ James Rielly
                                  --------------------------------------
                              Its: Vice President of Finance
                                   Treasurer and Secretary


                              SIBIA NEUROSCIENCES, INC.

                              By: ______________________________________

                              Its: _____________________________________



                              SECURITY TRUST COMPANY

                              By: /s/ [illegible]
                                  --------------------------------------
                              Its: President


                              By: /s/ Carl F. Weidner, Jr.
                                  --------------------------------------
                              Its: Trust Officer and
                                   Asst. Corporate Secretary


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