Document:

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                                                                   EXHIBIT 10.17

                        Exelixis Pharmaceuticals, Inc.
                       One Kendall Square, Building 600
                        Cambridge, Massachusetts 02139

                                                              September 13, 1996

George Scangos, Ph.D.
1015 Whitwell Road
Hillsborough, CA 94010

Dear Dr. Scangos:

     This letter is to confirm our understanding with respect to your employment
by Exelixis Pharmaceuticals, Inc. (the "Company") (the terms and conditions
agreed to in this letter shall hereinafter be referred to as the "Agreement").
In consideration of the mutual promises and covenants contained in this
Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby mutually acknowledged, we have agreed as
follows:

     1.   Employment

          (a)  Position.  The Company will employ you, and you agree to be
employed by the Company, to serve as its President and Chief Executive Officer
and to perform such services and discharge such duties and responsibilities as
may be prescribed by the Board of Directors (the "Board") of the Company from
time to time. In addition, the Company will recommend to the shareholders of the
Company that you be elected as a Director of the Company during the term of this
Agreement. You shall devote your full time and best efforts to the performance
of the foregoing services.

          (b)  Relocation of the Company. At your initiative, the Company agrees
that it will relocate to the San Francisco Bay Area as soon as is reasonably
practicable, and in any case not later than six (6) months after the
Commencement Date. Prior to the relocation, you will render services at the
Company's office in Cambridge, Massachusetts, and the Company will pay for
weekly, round-trip coach class air fare between Boston and San Francisco, and
will reimburse you for reasonable living expenses while in Boston. It is agreed
that substantial travel may be involved in your activities for the Company.

     2.   Term of Employment.

          (a)  Term; Termination.  Your employment hereunder shall commence no
later than November, 1996 ("Commencement Date") and shall continue until October
31, 1998 (the "Initial Term"). The term of your employment shall renew
automatically for any number of renewal terms of one year's duration each,
unless either party to this Agreement provides written notice of its intention
not to renew the Agreement at least sixty (60) days prior to the then effective
expiration date. Notwithstanding the foregoing, your employment hereunder shall
be terminated upon the first to occur of the following:

               (i)  immediately upon your death; or

                                       1.
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               (ii) by the Company:

                    (A)  upon notice following your failure, due to illness,
accident or any other physical or mental incapacity, to perform the services
provided for hereunder for an aggregate of ninety (90) business days within any
twelve-month period during the term hereof;

                    (B)  upon notice for Cause, as defined herein, and as set
forth below;

                    (C)  subject to Section 3 hereof, without Cause, upon thirty
(30) days' prior written notice to you of its intent to terminate your
employment.

     The right of the Company to terminate your employment hereunder without
Cause, to which you hereby agree, shall be exercisable by written notice sent to
you by the Company.

     (b)  Definition of "Cause".  The Company may, immediately and unilaterally,
terminate your employment hereunder for Cause at any time upon ten (10) days'
advance written notice to you. Termination of your employment by the Company
shall constitute a termination for Cause if such termination is for one or more
of the following reasons: (i) your continuing failure to render services to the
Company in accordance with your assigned duties consistent with Section 1 of
this Agreement and such failure of performance continues for a period of more
than sixty (60) days after notice thereof has been provided to you by the Board
of Directors; (ii) your willful misconduct or gross negligence; (iii) you are
convicted of a felony, either in connection with the performance of your
obligations to the Company or which conviction materially adversely affects your
ability to perform such obligations or materially adversely affects the business
activities, reputation, goodwill or image of the Company; and, (iv) willful
disloyalty, deliberate dishonesty, material breach of fiduciary duty or material
breach of the terms of this Agreement.

     In making any determination under this Section, the Board shall act fairly
and in utmost good faith and shall give you an opportunity to appear and be
heard at a meeting of the Board or any committee thereof and present evidence on
your behalf.  For purposes of this Section, no act, or failure to act, on your
part shall be considered "willful" unless done, or admitted to be done, by you
in bad faith and without reasonable belief that such action or omission was in
the best interest of the Company.

     In the event you are terminated for Cause, you shall be entitled to no
severance or other termination benefits, or any other benefits (except for any
health insurance benefits required by applicable law).

     3.  Compensation.

          (a)  Salary.  The Company shall pay you as your base compensation for
your services and agreements hereunder during the Initial Term a base salary at
the rate of Three Hundred and Twenty-Five Thousand Dollars ($325,000) per year
(the "Base Salary"), payable at such intervals as may be agreed upon by the
Company and you, less any amounts required to be withheld under applicable law.
Such compensation will be reduced by any disability payments which you receive,
after taking into account the tax benefits (if any) of such payments.

                                       2.
<PAGE>

          (b)  Bonus. In addition to your Base Salary, you will be entitled to
bonuses as follows:

               (i)   You will receive a bonus of $100,000 on the Commencement
Date. You agree to have completed all transition work for Bayer by December 15,
1996

               (ii)  A bonus of at least $50,000 at each six-month anniversary
of the Commencement Date if you remain employed by the Company on that date.

               (iii) An additional bonus of at least $75,000 at the twelve-month
anniversary of the Commencement Date and a bonus of at least $100,000 at each
twelve- month anniversary thereafter, in each case, if you remain employed by
the Company on that date and you and the Company achieve specified milestones
agreed upon in writing. Milestones for the first year will be agreed upon within
thirty days after the Commencement Date and for subsequent years within thirty
days after each twelve-month anniversary.

          (c)  Stock Options.  The Company will grant to you incentive stock
options as follows:

               (i)   Options to purchase up to One Million Five Hundred Thousand
(1,500,000) shares of the Company's Common Stock, at an exercise price of $.10
per share (which the Board of Directors has determined to be the fair market
value of the Company's Common Stock at the Commencement Date), such options to
vest quarterly over four (4) years at a rate of 93,750 shares per quarter.

               (ii)  Options to purchase at least Five Hundred Thousand
(500,000) shares of the Company's Common Stock, to be granted from time to time
upon achievement of mutually agreed upon milestones, exercisable at a purchase
price equal to the fair market value of the Company's Common Stock at the date
of grant, such options to vest quarterly over four years from the grant date.
Milestones will be determined on an annual basis, within sixty days after the
beginning of the Company's new fiscal year.

               (iii) The options granted pursuant to this Section 3(c) will be
evidenced by option agreements in the customary form under the Company's stock
option plan; provided, however, that each such option agreement will contain a
provision requiring automatic acceleration of the vesting of any unvested
portion of the option upon the occurrence of a merger or sale of greater than
50% of the assets of the Company.

          (d)  Termination without Cause.  In the event your employment shall be
terminated by the Company without Cause during the term of this Agreement, the
Company shall continue to pay you your Base Salary and bonus and provide you the
benefits described in Section 4(b) for a period equal to the lesser of: (i) six
(6) months subsequent to such termination or (ii) the period ending on the date
of commencement of employment with another employer, provided, however, that if
your annual salary with your new employer is less than your Base Salary under
this Agreement, the Company shall pay you the difference between your Base
Salary and the annual salary from your new employer for the balance of the six-
month period following the date of your termination by the Company. All payments
made under this Section 3(d) shall be made at the times and at the rate
specified in Section 3(a) hereof. Notwithstanding

                                       3.
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any termination of your employment, you shall continue to be bound by the
provisions of this Agreement (other than Section 1 hereof).

          (e)  Other Terminations. In the event your employment shall be
terminated by the Company with Cause, no further compensation or benefits of any
kind shall be payable to you hereunder; provided, however, that you shall
continue to be bound by the terms and conditions of this Agreement (other than
Section 1 hereof).

     4.   Benefits and Reimbursement of Expenses.

          (a)  Vacation and Holidays. You shall be entitled to four weeks of
vacation leave and holidays in each year at a time or times (either
consecutively or not consecutively) mutually agreeable to the Company and you,
in accordance with the Company's vacation and holiday policy in effect from time
to time.

          (b)  Employee Benefit Plans.  You shall also be entitled to
participate in any employee benefit plans which the Company provides or may
establish for the benefit of its executive employees generally (including,
without limitation, group life, medical, dental and other insurance, retirement,
pension, profit-sharing and similar plans), but only if and to the extent
provided in such employee benefit plans.

          (c)  Reimbursement of Expenses.  You shall be entitled to
reimbursement for all ordinary and reasonable out-of-pocket business expenses
which are reasonably incurred by you in furtherance of the Company's business in
accordance with reasonable policies adopted from time to time by the Company.

          (d)  Key Man Life Insurance.  The Company shall have the right to
maintain a "key man" life insurance policy on your life naming the Company as
beneficiary in the amount of Three Million Dollars ($3,000,000), for as long as
you are employed by the Company pursuant to this Agreement.

     5.   Prohibited Competition.

          (a)  Certain Acknowledgements and Agreements.

               (i)  We have discussed, and you recognize and acknowledge the
confidential and proprietary aspects of the business of the Company.

               (ii) You further acknowledge and agree that, during the course of
your performing services for the Company, the Company will furnish, disclose or
make available to you confidential and proprietary information related to the
Company's business and that the Company may provide you with unique and
specialized training. You also acknowledge that such confidential information
and such training have been developed and will be developed by the Company
through the expenditure by the Company of substantial time, effort and money and
that all such confidential information and training could be used by you to
compete with the Company.

                                       4.
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          (b)  Anti-Solicitation and Raiding Covenants.  During the period in
which you perform services for or at the request of the Company (the "Term") and
for a period of twelve (12) months following the expiration or termination of
the Term, whether such termination is voluntary or involuntary, you shall not,
without the prior written consent of the Company:

               (i)  either individually or on behalf of or through any third
party, interfere with, damage, impair or disrupt the Company's business or its
contractual relationships by soliciting, diverting or appropriating, or
attempting to solicit, divert or appropriate, any actual or prospective joint
venture or collaborative research partners, customers or patrons of the Company
(or of any present or future parent, subsidiary or affiliate of the Company); or

               (ii) either individually or on behalf of or through any third
party, interfere with, damage, impair or disrupt the Company's business or its
relationships with its employees or consultants, by directly or indirectly
soliciting, enticing or persuading, or attempting to solicit, entice or
persuade, any other employees of or consultants to the Company (or any present
or future parent, subsidiary or affiliate of the Company) to leave the services
of the Company (or any such parent, subsidiary or affiliate) for any reason.

          (c)  Reasonableness of Restrictions. You further recognize and
acknowledge that the types of restrictions to which you have agreed pursuant to
this Section 5 are narrow, reasonable legitimate and fair in light of the
Company's need to enter into joint ventures and collaborations, maintain a
stable work force and avoid unfair interferences with its contractual
relationships.

          (d)  Survival of Acknowledgements and Agreements.  Your
acknowledgements and agreements set forth in this Section 5 shall survive the
expiration or termination of this Agreement and the termination of your
employment with the Company for any reason.

     6.   Protected Information. Upon execution of this Agreement, you shall
execute and deliver a Confidentiality Agreement in the form attached hereto as
Annex A (the "Confidentiality Agreement").

     7.   Disclosure to Future Employers. You agree that you will provide, and
that the Company may similarly provide in its discretion, a copy of the
covenants contained in Section 5 of this Agreement and the covenants contained
in the Confidentiality Agreement to any business or enterprise which you may
directly, or indirectly, own, manage, operate, finance, join, control or in
which you participate in the ownership, management, operation, financing, or
control, or with which you may be connected as an officer, director, employee,
partner, principal, agent, representative, consultant or otherwise.

     8.   Records.  Upon termination of your relationship with the Company,
you shall deliver to the Company any property of the Company which may be in
your possession including products, materials, memoranda, notes, records,
reports, or other documents or photocopies of the same.

                                       5.
<PAGE>

     9.   No Conflicting Agreements.  You hereby represent and warrant that you
have no commitments or obligations inconsistent with this Agreement and you
hereby agree to indemnify and hold the Company harmless against loss, damage,
liability or expense arising from any claim based upon circumstances alleged to
be inconsistent with such representation and warranty.

     10.  General.

          (a)  Notices.  All notices, requests, consents and other
communications hereunder shall be in writing, shall be addressed to the
receiving party's address set forth below or to such other address as a party
may designate by notice hereunder, and shall be either (i) delivered by hand,
(ii) made by telex, telecopy or facsimile transmission, (iii) sent by overnight
courier, or (iv) sent by registered mail, return receipt requested, postage
prepaid.

     If to the Company:  Exelixis Pharmaceuticals, Inc.
                         One Kendall Square, Building 600
                         Cambridge, MA 02139
                         Attention:  Chief Operating Officer

With a copy to:          Jeffrey M. Wiesen, Esquire
                         Mintz, Levin, Cohn, Ferris Glovsky and Popeo, P.C.
                         One Financial Center
                         Boston, MA 02111

If to you:               George Scangos, Ph.D.
                         1015 Whitwell Road
                         Hillsborough, CA 94010

     All notices, requests, consents and other communications hereunder shall be
deemed to have been given either (i) if by hand, at the time of the delivery
thereof to the receiving party at the address of such party set forth above,
(ii) if made by telex, telecopy or facsimile transmission, at the time that
receipt thereof has been acknowledged by electronic confirmation or otherwise,
(iii) if sent by overnight courier, on the next business day following the day
such notice is delivered to the courier service, or (iv) if sent by registered
mail, on the fifth business day following the day such mailing is made.

          (b)  Entire Agreement.  This Agreement embodies the entire agreement
and understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior oral or written agreements and understandings
relating to the subject matter hereof. No statement, representation, warranty,
covenant or agreement of any kind not expressly set forth in this Agreement
shall affect, or be used to interpret, change or restrict, the express terms and
provisions of this Agreement.

          (c)  Modifications and Amendments.  The terms and provisions of this
Agreement may be modified or amended only by written agreement executed by the
parties hereto.

                                       6.
<PAGE>

          (d)  Waivers and Consents.  The terms and provisions of this Agreement
may be waived, or consent for the departure therefrom granted, only by written
document executed by the party entitled to the benefits of such terms or
provisions. No such waiver or consent shall be deemed to be or shall constitute
a waiver or consent with respect to any other terms or provisions of this
Agreement, whether or not similar. Each such waiver or consent shall be
effective only in the specific instance and for the purpose for which it was
given, and shall not constitute a continuing waiver or consent.

          (e)  Assignment.  The Company may assign its rights and obligations
hereunder to any person or entity who succeeds to all or substantially all of
the Company's business or that aspect of the Company's business in which you are
principally involved. Your rights and obligations under this Agreement may not
be assigned by you without the prior written consent of the Company.

          (f)  Benefit.  All statements, representations, warranties,
covenants and agreements in this Agreement shall be binding on the parties
hereto and shall inure to the benefit of the respective successors and permitted
assigns of each party hereto. Nothing in this Agreement shall be construed to
create any rights or obligations except among the parties hereto, and no person
or entity shall be regarded as a third-party beneficiary of this Agreement.

          (g)  Governing Law.  This Agreement and the rights and obligations
of the parties hereunder shall be construed in accordance with and governed by
the law of the State of California without giving effect to the conflict of law
principles thereof, notwithstanding any relocation of the Company to another
jurisdiction.

          (h)  Jurisdiction and Service of Process.  Any legal action or
proceeding with respect to this Agreement shall be brought in the courts of the
State of California or in the United States District Court located closest to
the headquarters of the Company in the State of California, unless otherwise
consented to by the non-initiating party to such legal action, which consent
shall not be unreasonably withheld. By execution and delivery of this Agreement,
each of the parties hereto accepts for itself and in respect of its property,
generally and unconditionally, the jurisdiction of the aforesaid courts. Each of
the parties hereto irrevocably consents to the service of process of any of the
aforementioned courts in any such action or proceeding by the mailing of copies
thereof by certified mail, postage prepaid, to the party at its address set
forth in Section 10(a) hereof.

          (i)  Severability.  The parties intend this Agreement to be enforced
as written. However, (i) if any portion or provision of this Agreement shall to
any extent be declared illegal or unenforceable by a duly authorized court
having jurisdiction, then the remainder of this Agreement, or the application of
such portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law; and (ii) if any provision, or part thereof, is
held to be unenforceable because of the duration of such provision or the
geographic area covered thereby, the Company and you agree that the court making
such determination shall have the power to reduce the duration and/or geographic
area of such provision, and/or to delete specific words and phrases ("blue-
pencilling"), and in its reduced or blue-pencilled form such provision shall
then be enforceable and shall be enforced.

                                       7.
<PAGE>

          (j)  Headings and Captions.  The headings and captions of the various
subdivisions of this Agreement are for convenience of reference only and shall
in no way modify, or affect the meaning or construction of any of the terms or
provisions hereof.

          (k)  Injunctive Relief. You hereby expressly acknowledge that any
breach or threatened breach of any of the terms and/or conditions set forth in
Section 5 of this Agreement may result in substantial, continuing and
irreparable injury to the Company. Therefore, you hereby agree that, in addition
to any other remedy that may be available to the Company, the Company may be
entitled to injunctive or other equitable relief by a court of appropriate
jurisdiction in the event of any breach or threatened breach of the terms of
Section 5 of this Agreement.

          (l)  No Waiver of Rights, Powers and Remedies. No failure or delay by
a party hereto in exercising any right, power or remedy under this Agreement,
and no course of dealing between the parties hereto, shall operate as a waiver
of any such right, power or remedy of the party. No single or partial exercise
of any right, power or remedy under this Agreement by a party hereto, nor any
abandonment or discontinuance of steps to enforce any such right, power or
remedy, shall preclude such party from any other or further exercise thereof or
the exercise of any other right, power or remedy hereunder. The election of any
remedy by a party hereto shall not constitute a waiver of the right of such
party to pursue other available remedies. No notice to or demand on a party not
expressly required under this Agreement shall entitle the party receiving such
notice or demand to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the party giving such
notice or demand to any other or further action in any circumstances without
such notice or demand.

          (m)  Expenses.  Should any party breach this Agreement, in addition to
all other remedies available at law or in equity, such party shall pay all of
any other party's costs and expenses resulting therefrom and/or incurred in
enforcing this Agreement, including legal fees and expenses.

          (n)  Counterparts.  This Agreement may be executed in one or more
counterparts, and by different parties hereto on separate counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.

     If the foregoing accurately sets forth our agreement, please so indicate by
signing and returning to us the enclosed copy of this letter.

                                        Very truly yours,

                                        Exelixis Pharmaceuticals, Inc.

                                        By: /s/ Jean-Francois Formela/KB
                                           -------------------------------------
Accepted and Approved:

/s/ George Scangos
----------------------------------
George Scangos, Ph.D.

                                       8.<PAGE>

                                                                   EXHIBIT 10.18

                        Exelixis Pharmaceuticals, Inc.
                       One Kendall Square, Building 600
                        Cambridge, Massachusetts 02139

April 14, 1997

Geoffrey Duyk, M.D., Ph.D.
354 Woodland Road
Chestnut Hill, MA 02167

Dear Geoff:

This letter is to confirm our understanding with respect to your employment by
Exelixis Pharmaceuticals, Inc. (the "Company") (the terms and conditions agreed
to in this letter shall hereinafter be referred to as the "Agreement").  In
consideration of the mutual promises and covenants contained in this Agreement,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby mutually acknowledged, we have agreed as follows:

     1.   Employment. The Company will employ you, and you agree to be employed
by the Company, to serve as the Chief Scientific Officer and Senior Vice
President of Research and Development, reporting to the Company's President and
Chief Executive Officer, and to perform such services and discharge such duties
and responsibilities as may be prescribed by the Board of Directors (the
"Board") of the company from time to time. The primary location at which you
shall perform such services shall be the Company's facility located in Oakland,
California. You shall devote your full time and best efforts in the performance
of the foregoing services. You will be entitled to attend meetings of the Board
as a non-voting observer. If the Company forms a management committee or similar
committee charged with overseeing the operations of the company, you will serve
on that committee.

     2.   Term of Employment.

          (a)  Term:  Termination. Your employment hereunder shall commence on
April 14, 1997 and shall continue until April 14, 1999 (the "Initial Term"). The
term of your employment shall renew automatically for any number of renewal
terms of one year's duration each, unless either party to this Agreement
provides written notice of its intention not to renew the Agreement at least
sixty (60) days prior to the then effective expiration date. The giving of a
notice of non-renewal by the Company as of the end of the Initial Term or any
subsequent renewal term will be treated as a termination by the Company without
Cause (as defined in Section 2(b) of this Agreement). Notwithstanding the
foregoing, your employment hereunder shall be terminated upon the first to occur
of the following:

               (i)  Immediately upon your death; or

               (ii) By the Company:

                    (A)  Upon notice following your failure, due to illness,
accident or any other physical or mental incapacity, to perform the services
provided for hereunder for
<PAGE>

ninety (90) consecutive business days or an aggregate of one hundred fifty (150)
business days within any one year period during the term hereof ("Disability");

                      (B)  Upon notice for Cause, as defined herein, and as set
forth below;

                      (C)  Without Cause, upon thirty (30) days' prior written
notice to you of its intent to terminate your employment; or

               (iii)  By you, upon notice to the Company, provided, that if you
do not give at least thirty (30) days' prior written notice of your intention to
terminate your employment hereunder, you will forfeit all prepaid benefits, any
accrued but unpaid incentive compensation and any stock options which have not
yet vested as of the date such notice is given.

     The right of the company to terminate your employment hereunder without
Cause, to which you hereby agree, shall be exercisable by written notice sent to
you by the Company.

          (b)  Definition of "Cause." The company may, immediately and
unilaterally, terminate your employment hereunder for Cause at any time upon ten
(10) days' advance written notice to you. Termination of your employment by the
Company shall constitute a termination for Cause if such termination is for one
or more of (i) your continuing material failure to perform your assigned duties
consistent with Section 1 of this Agreement, which failure of performance
continues for a period of more than sixty (60) days after notice thereof has
been provided to you by the Board of Directors, such notice to set forth in
reasonable detail the nature of such failure, (ii) your willful misconduct or
gross negligence, (iii) you are convicted of a felony, either in connection with
the performance of your obligations to the Company or which conviction
materially adversely affects the business activities, reputation, goodwill or
image of the Company, or (iv) willful disloyalty, deliberate dishonesty,
material uncured breach of fiduciary duty or material uncured breach of the
terms of this Agreement or the Confidentiality Agreement (as defined in Section
6 of this Agreement).

     In making any determination under this Section, the Board shall act fairly
and in utmost good faith and shall give you an opportunity to appear and be
heard at a meeting of the Board or any committee thereof and present evidence on
your behalf.  For purposes of this Section, no act, or failure to act, on your
part shall be considered "willful" unless done, or admitted to be done, by you
in bad faith and without reasonable belief that such action or omission was in
the best interest of the Company.

     3.   Compensation.

          (a)  Salary.  The Company shall pay you as the base compensation for
your services and agreements hereunder during the Initial Term a base salary at
the rate of Two Hundred and Fifty Thousand Dollars ($250,000) per year (the
"Base Salary"), payable at such intervals as may be agreed upon by the Company
and you, less any amounts required to be withheld under applicable law. Such
compensation will be reduced by any disability payments which you receive, after
taking into account the tax benefits (if any) of such payments. Your Base Salary
will be reviewed annually by the Company's Board of Directors.
<PAGE>

          (b)  Bonus.  In addition to your Base Salary, you may be entitled to
bonuses (including a cash component of up to 35% of your Base Salary as in
effect from time to time) as are determined from time to time by the Board in
its discretion, taking into account, among other factors, your performance and
the Company's performance.

          (c)  Stock Options.

               (i)   Contemporaneously with the execution of this Agreement,
subject to the approval of the Board, the Company will grant you a stock option
to purchase up to 900,000 shares of the common stock, par value $.001 per share,
of the Company (the "Option") pursuant to the Company's 1994 Employee, Director
and Consultant Stock Plan (the "Plan"). The exercise price for the shares
covered by the Option will be $0.10 per share. For so long as you remain
employed by the Company, the shares covered by the Option will vest as to 56,250
shares on the date that it is three months after the date of execution of this
Agreement and as to additional 56,250 shares at the end of each period of three
months thereafter until fully vested, provided that in the event of a Change of
Control of the Company (as hereinafter defined) while you remain employed by the
Company, all shares covered by the Option which have not previously vested will
become fully vested. For the purposes of this Agreement, a "Change of Control"
shall mean a consolidation or merger of the Company where the shareholders of
the Company immediately prior to such consolidation or merger would not,
immediately after such consolidation or merger, beneficially own, directly or
indirectly, shares representing in the aggregate more than 50% of the combined
voting power of all outstanding securities of the corporation issuing cash or
securities in the consolidation or merger (or of its ultimate parent
corporation, if any).

               (ii)  You may be eligible to receive additional stock options to
the Plan in such amounts and pursuant to vesting schedules as may be determined
from time to time by the Board in its discretion, taking into account, among
other factors, your performance and the Company's performance.

          (d)  Termination.

               (i)   In the event of the termination of your employment by the
Company without Cause (including by reason of the Company giving a notice of
non-renewal pursuant to Subsection 2(a)), the Company will continue to pay you
your Base Salary for a period after the date of such termination equal to the
lesser of (1) six (6) months and (2) the period until you obtain alternative
employment, payable as provided in Subsection 3(a). In addition, you will be
entitled to receive the amount of any declared but unpaid bonus as at the date
of such termination and the Company shall continue to make available to you such
fringe benefits as are required by law.

               (ii)  In the event of the termination of your employment by you
for any reason (including by reason of your giving a notice of non-renewal
pursuant to Subsection 2(a)), by the Company for Cause or as a result of your
death or Disability, you shall be entitled to no severance, termination
benefits, or other benefits, except that the Company shall continue to make
available to you such fringe benefits as are required by law, and shall pay to
you the pro rata amount of your Base Salary earned up to the date of said
termination, said payment to be
<PAGE>

made on the same date as said salary payment would have been made had there been
no termination.

     Notwithstanding any termination of your employment, you shall continue to
be bound by the provisions of this Agreement (other than Section 1 hereof).

          (e)  Loans.

               (i)  The Company agrees that upon the execution of this
Agreement, it will advance you the sum of $50,000 (the "Loan"). The Loan will be
evidenced by a Note and will bear interest at the lowest applicable federal
rate. Provided that you are employed by the Company on such anniversary dates,
one-third of the principal balance of the Loan will be forgiven by the Company
on each of the first, second and third anniversaries of the date of this
Agreement. In the event that you leave the employment of the Company prior to
the third anniversary of the date of this Agreement, any outstanding principal
and interest will be due on the date of such termination of employment.

               (ii) If reasonably necessary to assist you in purchasing a
primary residence in the San Francisco area, upon written request by you, the
Company agrees to loan you an amount of up to one million three hundred thousand
dollars ($1,300,000) for a period of up to ninety (90) days for such purpose
(the "Home Loan"). The Home Loan will bear interest at the lowest applicable
federal rate and will be secured by a pledge by you to the Company of registered
and freely tradable shares of the common stock of Millennium Pharmaceuticals,
Inc. ("Millennium") beneficially owned by you, provided that such a pledge does
not violate applicable securities law or any agreement between you and the
Millennium which would prevent or restrict such pledge or limit the Company's
ability to exercise its rights under such pledge.

     4.   Benefits and Reimbursement of Expenses.

          (a)  Vacation and Holidays.  You shall be entitled to three weeks of
paid vacation plus paid holidays in each year at a time or times (either
consecutively or not consecutively) mutually agreeable to the company and you,
in accordance with the Company's vacation and holiday policy in effect from time
to time.

          (b)  Employee Benefit Plans.  You shall also be entitled to
participate in the same manner as other executive employees of the Company in
any employee benefit plans which the Company provides or may establish for the
benefit of its executive employees generally (including, without limitation,
group life, medical, dental and other insurance, retirement, pension, 401k,
profit-sharing and similar plans). If available at normal commercially
reasonable cost, the Company will provide you (as part of a group policy or
otherwise) with disability insurance covering sixty percent (60%) of your Base
Salary.

          (c)  Reimbursement of Expenses.  You shall be entitled to
reimbursement for all ordinary and reasonable out-of-pocket business expenses
which are reasonably incurred by you in furtherance of the Company's business in
accordance with reasonable policies adopted from time to time by the Company.
<PAGE>

          (d)  Relocation Expenses.  The Company shall pay or reimburse you for
the following out-of-pocket costs relating to your relocation from Boston,
Massachusetts to the San Francisco area upon your reasonable substantiation of
an itemized account for such expenses paid or incurred by you: (i) temporary
living expenses for you in an amount not to exceed Three Hundred Dollars ($300)
per day for a reasonable length of time; (ii) household goods insurance when in
transit or storage, if required; (iii) packing and unpacking costs; (iv)
transportation of household goods; (v) storage and delivery of household goods
out of storage; (vi) an amount equal to one month of your initial Base Salary
for incidental expenses in connection with such relocation; (vii) your current
monthly mortgage payments (including any amounts for escrow of property taxes,
insurance, etc.) in respect of your current residence in Chestnut Hill,
Massachusetts for the period from July 1, 1997 to September 30, 1997 unless such
residence is sold prior to September 30, 1997; and (vii) reasonable closing
costs in connection with the sale of such residence.

     5.   Prohibited Solicitation.

          (a)  During the period in which you are employed by the Company and
for a period of one (1) year following the expiration or termination of your
employment, whether such termination is voluntary or involuntary, you agree that
you shall not, without the prior written consent of the Company either
individually or on behalf of or through any third party, directly or indirectly,
solicit, entice or persuade or attempt to solicit, entice or persuade any other
employees of or consultants to the Company or any present or future parent,
subsidiary or affiliate of the Company to leave the services of the Company or
any such parent, subsidiary or affiliate for any reason.

          (b)  Survival of Agreement. Your agreement set forth in this Section 5
shall survive the expiration or termination of this Agreement and the
termination of your employment with the Company for any reason.

     6.   Protected Information.  Upon execution of this Agreement, you agree to
execute and deliver a Confidentiality Agreement in the form attached hereto as
Exhibit 6 (the "Confidentiality Agreement").
_________

     7.   Disclosure to Future Employers. You agree that you will provide, and
that the Company may similarly provide in its discretion, a copy of the
covenants contained in Section 5 of this Agreement and the covenants contained
in the Confidentiality Agreement to any business or enterprise which you may
directly, or indirectly, own, manage, operate, finance, join, control or in
which you participate in the ownership, management, operation, financing, or
control, or with which you may be connected as an officer, director, employee,
partner, principal, agent, representative, consultant or otherwise. Except as
set forth in the preceding sentence, and except for disclosure to lenders or
prospective investors at their request, and except as required by law or
judicial process, the Company will keep the terms of this Agreement
confidential.

     8.   Records. Upon termination of your relationship with the Company, you
agree to deliver to the Company any property of the Company which may be in your
possession including products, materials, memoranda, notes, records, reports, or
other documents or photocopies of the same.
<PAGE>

     9.   Prior Agreements. You have previously provided to the Company copies
of all documents related to your past employment, including any such documents
relating to your confidentiality, non-competition or non-disclosure obligations
(the "Documents"). In the event that either (i) your ability to perform the
services for the Company contemplated by this Agreement is materially restricted
as a result of the enforcement by any court of competent jurisdiction or
arbitrator of any provision of the Documents, or (ii) the Company, in its sole
discretion, determines that your ability to perform the services for the Company
contemplated by this Agreement is materially restricted by the Documents, during
the period while your performance of services hereunder is so restricted, the
Company will be obligated only to pay you your Base Salary as set forth in
Subsection 3(a) and to provide you with the Employee Benefit Plans as set forth
in Subsection 4(b), provided that any options which you have been granted
pursuant to Subsection 3(c) shall continue to vest as set forth in the
respective option agreements.

     10.  General.

          (a)  Notices.  All notices, requests, consents and other
communications hereunder shall be in writing, shall be addressed to the
receiving party's address set forth below or to such other address as a party
may designate by notice hereunder and shall be either (i) delivered by hand,
(ii) made by telex, telecopy or facsimile transmission, (iii) sent by overnight
courier, or (iv) sent by registered mail, return receipt requested, postage
prepaid.

     If to the Company:  Exelixis Pharmaceuticals, Inc.
                         One Kendall Square, Building 600
                         Cambridge, MA 02139
                         Attention:  President

     With a copy to:     Jeffrey M. Wiesen, Esquire
                         Mintz, Levin, Cohn, Ferris
                         Glovsky and Popeo, PC
                         One Financial Center
                         Boston, MA 02111

     If to you:          Geoffrey Duyk, M.D., Ph.D.
                         354 Woodland Road
                         Chestnut Hill, MA 02167

     All notices, requests, consents and other communications hereunder shall be
deemed to have been given either (i) if by hand, at the time of the delivery
thereof to the receiving party at the address of such party set forth above,
(ii) if made by telex, telecopy or facsimile transmission, at the time that
receipt thereof has been acknowledged by electronic confirmation or otherwise,
(iii) if sent by overnight courier, on the next business day following the day
such notice is delivered to the courier service, or (iv) if sent by registered
mail, on the fifth business day following the day such mailing is made.

          (b)  Entire Agreement.  This Agreement embodies the entire agreement
and understanding between the parties hereto with respect to the subject matter
hereof and supersedes
<PAGE>

all prior oral or written agreements and understandings relating to the subject
matter hereof. No statement, representation, warranty, covenant or agreement of
any kind not expressly set forth in this Agreement shall affect, or be used to
interpret, change or restrict, the express terms and provisions of this
Agreement.

          (c)  Modifications and Amendments. The terms and provisions of this
Agreement may be modified or amended only by written agreement executed by the
parties hereto.

          (d)  Waivers and Consents. The terms and provisions of this Agreement
may be waived, or consent for the departure therefrom granted, only by written
document executed by the party entitled to the benefits of such terms or
provisions. No such waiver or consent shall be deemed to be or shall constitute
a waiver or consent with respect to any other terms or provisions of this
Agreement, whether or not similar. Each such waiver or consent shall be
effective only in the specific instance and for the purpose for which it was
given, and shall not constitute a continuing waiver or consent.

          (e)  Assignment.  The Company may assign its rights and obligations
hereunder to any person or entity who succeeds to all or substantially all of
the Company's business. Your rights and obligations under this Agreement may not
be assigned by you without the prior written consent of the Company.

          (f)  Benefit.  All statements, representations, warranties, covenants
and agreements in this Agreement shall be binding on the parties hereto and
shall inure to the benefit of the respective successors and permitted assigns of
each party hereto. Nothing in this Agreement shall be construed to create any
rights or obligations except among the parties hereto, and no person or entity
shall be regarded as a third-party beneficiary of this Agreement.

          (g)  Governing Law. This Agreement and the rights and obligations of
the parties hereunder shall be construed in accordance with and governed by the
law of the State of California, without giving effect to the conflict of law
principles thereof.

          (h)  Arbitration.  Except with respect to the provisions of Section 5
hereof, any controversy, dispute or claim arising out of or in connection with
this Agreement, or the breach, termination or validity hereof, shall be settled
by final and binding arbitration to be conducted by an arbitration tribunal
pursuant to the rules of the American Arbitration Association. The arbitration
tribunal shall consist of three arbitrators. The party initiating arbitration
shall nominate one arbitrator in the request for arbitration and the other party
shall nominate a second in the answer thereto within thirty (30) days of receipt
of the request. The two arbitrators so named will then jointly appoint the third
arbitrator. If the answering party fails to nominate its arbitrator within the
thirty (30) day period, or if the arbitrators named by the parties fail to agree
on the third arbitrator within sixty (60) days, the American Arbitration
Association shall make the necessary appointments of such arbitrator(s). The
decision or award of the arbitration tribunal (by a majority determination, or
if there is no majority, then by the determination of the third arbitrator, if
any) shall be final, and judgment upon such decision or award may be entered in
any competent court or application may be made to any competent court for
judicial acceptance of such decision or award and an order of enforcement.
<PAGE>

          (i)  Severability. The parties intend this Agreement to be enforced as
written. However, (i) if any portion or provision of this Agreement shall to any
extent be declared illegal or unenforceable by a duly authorized court having
jurisdiction, then the remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law and (ii) if any provision, or part thereof, is
held to be unenforceable because of the duration of such provision or the
geographic area covered thereby, the Company and you agree that the court making
such determination shall have the power to reduce the duration and/or geographic
area of such provision, and/or to delete specific words and phrases ("blue-
pencilling"), and in its reduced or blue-pencilled form such provision shall
then be enforceable and shall be enforced.

          (j)  Headings and Captions.  The headings and captions of the various
subdivisions of this Agreement are for convenience of reference only and shall
in no way modify, or affect the meaning or construction of any of the terms or
provisions hereof.

          (k)  Injunctive Relief.  You hereby expressly acknowledge that any
breach or threatened breach of any of the terms and/or conditions set forth in
Section 5 of this Agreement will result in substantial, continuing and
irreparable injury to the Company. Therefore, you hereby agree that, in addition
to an other remedy that may be available to the Company, the Company shall be
entitled to injunctive relief by a court of appropriate jurisdiction in the
event of any breach or threatened breach of the terms of Section 5 of this
Agreement.

          (l)  No Waiver of Rights, Powers and Remedies.  NO failure or delay by
a party hereto in exercising any right, power or remedy under this Agreement,
and no course of dealing between the parties hereto, shall operate as a waiver
of any such right, power or remedy of the party. No single or partial exercise
of any right, power or remedy under this Agreement by a party hereto, nor any
abandonment or discontinuance of steps to enforce any such right, power or
remedy, shall preclude such party from any other or further exercise thereof or
the exercise of any other right, power or remedy hereunder. The election of any
remedy by a party hereto shall not constitute a waiver of the right of such
party to pursue other available remedies. No notice to or demand on a party not
expressly required under this Agreement shall entitle the party receiving such
notice or demand to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the party giving such
notice or demand to any other or further action in any circumstances without
such notice or demand.

          (m)  Expenses.  Should any party breach this Agreement, in addition to
all other remedies available at law or in equity, such party shall pay all of
any other party's costs and expenses resulting therefrom and/or incurred in
enforcing this Agreement, including legal fees and expenses.

          (n)  Counterparts.  This Agreement may be executed in one or more
counterparts, and by different parties hereto on separate counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
<PAGE>

     If the foregoing accurately sets forth our agreement, please so indicate by
signing and returning to us the enclosed copy of this letter.

                              Very truly yours,

                              Exelixis Pharmaceuticals, Inc.

                              By: /s/ George Scangos
                                 -------------------------------------
                                    George Scangos, Ph.D.
                                    President and Chief Executive Officer

Accepted and Approved:

/s/ Geoffrey Duyk
------------------------------
Geoffrey Duyk

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