Document:

August 23, 1999

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 in the event your employment with
the Company were to be terminated involuntarily whether in connection with
certain changes in control of the Company or otherwise. Part Three concludes
this 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:

          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.

<PAGE>

Eric S. Groves, M.D., Ph.D.
August 23, 1999
Page 2

          BOARD means the Company's Board of Directors.

          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,

          (iii) any reverse merger in which the Company ceases to exist as an
     independent corporation and becomes the subsidiary of another corporation,

          (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).

<PAGE>

Eric S. Groves, M.D., Ph.D.
August 23, 1999
Page 3

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

          COMMON STOCK means the Company's common stock, par value $0.001 per
share.

          EQUITY INCENTIVE PLANS mean any of the following equity incentive
plans of the Company: 1992 Stock Option/Stock Issuance Plan, as amended;
Restricted Stock Purchase Plan, as amended; and 1988 Stock Option Plan, as
amended.

          HEALTH CARE COVERAGE means the continued health care coverage to which
you and your eligible dependents may become entitled under this agreement upon
the Involuntary Termination of your employment other than Termination for Cause.

          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 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.

<PAGE>

Eric S. Groves, M.D., Ph.D.
August 23, 1999
Page 4

          INVOLUNTARY TERMINATION means the termination of your employment with
the Company:

          (i) involuntarily upon your discharge or dismissal, or

          (ii) voluntarily 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) 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):

          - 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.

          - 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 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.

          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:

          - ACQUISITION-ACCELERATED OPTIONS: any outstanding Option (or
     installment thereof) which accelerates upon a Change in Control in

<PAGE>

Eric S. Groves, M.D., Ph.D.
August 23, 1999
Page 5

     accordance with the automatic acceleration provisions of the Equity
     Incentive Plans.

          - 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 agreement.

          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.

          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).

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

          TERMINATION FOR CAUSE means an Involuntary Termination 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 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.

<PAGE>

Eric S. Groves, M.D., Ph.D.
August 23, 1999
Page 6

                  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 an Involuntary Termination which constitutes 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 plus (B) one (1) times the average of the bonuses paid to you for
services rendered in the two (2) fiscal years immediately preceding the fiscal
year of your Involuntary Termination. 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 in the event you should
cease to remain available for the consulting services required of you under
Paragraph 4 or in the event you fail to abide by the restrictive covenants set
forth in Paragraph 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 Paragraphs 4 and 5 will not
apply.

          2. HEALTH CARE COVERAGE. The Company will, at its expense, provide you
and your eligible dependents with continued health care coverage under the
Company's medical/dental plan until the EARLIER of (i) twelve (12) months after
the effective date of your Involuntary Termination or (ii) the first date that
you are covered under another employer's health benefit program which provides
substantially the same level of benefits without exclusion for pre-existing
medical conditions. Such coverage will be in lieu of any other continued health
care

<PAGE>

Eric S. Groves, M.D., Ph.D.
August 23, 1999
Page 7

coverage to 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 and 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.

          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

<PAGE>

Eric S. Groves, M.D., Ph.D.
August 23, 1999
Page 8

     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.

          (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 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 shall be applicable in the
event your Involuntary Termination occurs in connection with a Hostile
Take-Over.

          6. BENEFIT REDUCTION. In the event of a Change in Control, the
following limitations shall become applicable:

          a. 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.

          b. 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:

<PAGE>

Eric S. Groves, M.D., Ph.D.
August 23, 1999
Page 9

          - In the event temporary, proposed or final Treasury Regulations in
effect at the time under Code Section 280G specifically address the status of
such benefits or the method for their valuation, the characterization afforded
to such benefits by the Regulations, together with the methods prescribed for
their valuation, shall be controlling.

          - In the event such Regulations do not address the status of the
benefits in dispute, the matter shall be submitted for resolution to independent
counsel mutually acceptable to you and the Company ("Independent Counsel"). 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 through the obtainment of 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.

          - 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.b. have been
resolved in accordance herewith. However, any portion of such severance payment
which would not otherwise exceed the benefit limitation of Paragraph 6.a. even
if all amounts in dispute under this Paragraph 6.b. were to be resolved against
you will be paid to you in accordance with the applicable provisions of this
letter agreement.

          c. 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).

          d. INTERPRETATION. The provisions of this Paragraph 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.

<PAGE>

Eric S. Groves, M.D., Ph.D.
August 23, 1999
Page 10

                     PART THREE -- MISCELLANEOUS PROVISIONS

          1. TERMINATION FOR CAUSE. Should your Involuntary 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, and no benefits will be payable to you under Part Two or
Part Three of 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.

<PAGE>

Eric S. Groves, M.D., Ph.D.
August 23, 1999
Page 11

          5. MISCELLANEOUS. The provisions of this letter agreement will be
construed and interpreted under the laws of the State of California. This
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 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 a 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
adjudicated by the court, 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 deemed
invalid, illegal or unenforceable in any jurisdiction by reason of the scope,
extent or duration of 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 agreement or any monetary claim
arising from or relating to this agreement will be submitted to 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 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.

<PAGE>

Eric S. Groves, M.D., Ph.D.
August 23, 1999
Page 12

          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
(collectively, "Proprietary Information") is and will remain the sole and
exclusive property of the Company. In connection with such Proprietary
Information, you agree as follows:

          (i) You will not, during your employment with the Company or at any
     time thereafter, disclose to any third party or directly or indirectly make
     use of any such Proprietary Information other than in connection with, and
     in furtherance of, the Company's business and affairs.

          (ii) You agree that you will use all files, letters, memoranda,
     reports, records, data or other written, reproduced or other tangible
     manifestations of the Proprietary Information, whether created by you or
     others, to which you have access during your employment with the Company,
     only in the performance of your duties with the Company. You will return
     all such materials (whether written, printed or otherwise reproduced or
     recorded) to the Company immediately upon the termination of your
     employment with the Company or upon any earlier request by the Company,
     without retaining any copies, notes or excerpts thereof.

          (iii) Your obligations under this Paragraph 9 will continue in effect
     after the termination of your employment with the Company, whatever the
     reason or reasons for such termination, and the Company will have the right
     to communicate with any future or prospective employer concerning your
     continuing obligations under this Paragraph 9.

          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.

Very truly yours,

LIGAND PHARMACEUTICALS INCORPORATED

/s/DAVID E. ROBINSON

David E. Robinson
Chairman, President and CEO

DER:bjo

<PAGE>

Eric S. Groves, M.D., Ph.D.
August 23, 1999
Page 13

agree\severance.esg

ACCEPTED BY AND AGREED TO

Signature:/s/ERIC S. GROVES
          -------------------------

Dated:    November 5, 1999
          -------------------------December 9, 1999

Mr. Philip A. Duffy
Vice President, Technical Operations
LIGAND PHARMACEUTICALS INCORPORATED
10275 Science Center Drive
San Diego, CA  92121

Dear Phil:

          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 in the event your employment with
the Company were to be terminated involuntarily whether in connection with
certain changes in control of the Company or otherwise. Part Three concludes
this 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:

          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.

<PAGE>

Mr. Philip A. Duffy
December 9, 1999
Page 2

          BOARD means the Company's Board of Directors.

          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,

          (iii) any reverse merger in which the Company ceases to exist as an
     independent corporation and becomes the subsidiary of another corporation,

          (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).

<PAGE>

Mr. Philip A. Duffy
December 9, 1999
Page 3

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

          COMMON STOCK means the Company's common stock, par value $0.001 per
share.

          EQUITY INCENTIVE PLANS mean any of the following equity incentive
plans of the Company: 1992 Stock Option/Stock Issuance Plan, as amended;
Restricted Stock Purchase Plan, as amended; and 1988 Stock Option Plan, as
amended.

          HEALTH CARE COVERAGE means the continued health care coverage to which
you and your eligible dependents may become entitled under this agreement upon
the Involuntary Termination of your employment other than Termination for Cause.

          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 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.

<PAGE>

Mr. Philip A. Duffy
December 9, 1999
Page 4

          INVOLUNTARY TERMINATION means the termination of your employment with
the Company:

          (i) involuntarily upon your discharge or dismissal, or

          (ii) voluntarily 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) 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):

          - 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.

          - 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 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.

          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:

          - ACQUISITION-ACCELERATED OPTIONS: any outstanding Option (or
     installment thereof) which accelerates upon a Change in Control in

<PAGE>

Mr. Philip A. Duffy
December 9, 1999
Page 5

     accordance with the automatic acceleration provisions of the Equity
     Incentive Plans.

          - 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 agreement.

          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.

          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).

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

          TERMINATION FOR CAUSE means an Involuntary Termination 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 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.

<PAGE>

Mr. Philip A. Duffy
December 9, 1999
Page 6

                  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 an Involuntary Termination which constitutes 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 plus (B) one (1) times the average of the bonuses paid to you for
services rendered in the two (2) fiscal years immediately preceding the fiscal
year of your Involuntary Termination. 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 in the event you should
cease to remain available for the consulting services required of you under
Paragraph 4 or in the event you fail to abide by the restrictive covenants set
forth in Paragraph 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 Paragraphs 4 and 5 will not
apply.

          2. HEALTH CARE COVERAGE. The Company will, at its expense, provide you
and your eligible dependents with continued health care coverage under the
Company's medical/dental plan until the EARLIER of (i) ------- twelve (12)
months after the effective date of your Involuntary Termination or (ii) the
first date that you are covered under another employer's health benefit program
which provides substantially the same level of benefits without exclusion for
pre-existing medical conditions. Such coverage will be in lieu of any other
continued health care

<PAGE>

Mr. Philip A. Duffy
December 9, 1999
Page 7

coverage to 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 and 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.

          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

<PAGE>

Mr. Philip A. Duffy
December 9, 1999
Page 8

     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.

          (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 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 shall be applicable in the
event your Involuntary Termination occurs in connection with a Hostile
Take-Over.

          6. BENEFIT REDUCTION. In the event of a Change in Control, the
following limitations shall become applicable:

          a. 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

<PAGE>

Mr. Philip A. Duffy
December 9, 1999
Page 9

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.

          b. 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:

          - In the event temporary, proposed or final Treasury Regulations in
effect at the time under Code Section 280G specifically address the status of
such benefits or the method for their valuation, the characterization afforded
to such benefits by the Regulations, together with the methods prescribed for
their valuation, shall be controlling.

          - In the event such Regulations do not address the status of the
benefits in dispute, the matter shall be submitted for resolution to independent
counsel mutually acceptable to you and the Company ("Independent Counsel"). 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 through the obtainment of 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.

          - 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.b. have been
resolved in accordance herewith. However, any portion of such severance payment
which would not otherwise exceed the benefit limitation of Paragraph 6.a. even
if all amounts in dispute under this Paragraph 6.b. were to be resolved

<PAGE>

Mr. Philip A. Duffy
December 9, 1999
Page 10

against you will be paid to you in accordance with the applicable provisions of
this letter agreement.

          c. 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).

          d. INTERPRETATION. The provisions of this Paragraph 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 Involuntary 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, and no benefits will be payable to you under Part Two or
Part Three of 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

<PAGE>

Mr. Philip A. Duffy
December 9, 1999
Page 11

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 the laws of the State of California. This
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 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 a 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
adjudicated by the court, 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 deemed
invalid, illegal or unenforceable in any jurisdiction by reason of the scope,
extent or duration of 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 agreement or any monetary

<PAGE>

Mr. Philip A. Duffy
December 9, 1999
Page 12

claim arising from or relating to this agreement will be submitted to 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 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
(collectively, "Proprietary Information") is and will remain the sole and
exclusive property of the Company. In connection with such Proprietary
Information, you agree as follows:

          (i) You will not, during your employment with the Company or at any
     time thereafter, disclose to any third party or directly or indirectly make
     use of any such Proprietary Information other than in connection with, and
     in furtherance of, the Company's business and affairs.

          (ii) You agree that you will use all files, letters, memoranda,
     reports, records, data or other written, reproduced or other tangible
     manifestations of the Proprietary Information, whether created by you or
     others, to which you have access during your employment with the Company,
     only in the performance of your duties with the Company. You will return
     all such materials (whether written, printed or otherwise reproduced or
     recorded) to the Company immediately upon the termination of your
     employment with the Company or upon any earlier request by the Company,
     without retaining any copies, notes or excerpts thereof.

          (iii) Your obligations under this Paragraph 9 will continue in effect
     after the termination of your employment with the Company, whatever the
     reason or reasons for such termination, and the Company will

<PAGE>

Mr. Philip A. Duffy
December 9, 1999
Page 13

     have the right to communicate with any future or prospective employer
     concerning your continuing obligations under this Paragraph 9.

          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.

Very truly yours,

LIGAND PHARMACEUTICALS INCORPORATED

/s/DAVID E. ROBINSON

David E. Robinson
Chairman, President and CEO

DER:bjo
agree\severance.pad

ACCEPTED BY AND AGREED TO

Signature:/s/PHILIP A. DUFFY
          -------------------------
          Philip A. Duffy

Dated:    February 27, 2000
          -------------------------

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