SETTLEMENT AGREEMENT
                                       AND
                          MUTUAL RELEASE OF ALL CLAIMS

         This Settlement Agreement and Mutual Release of All Claims
("Settlement Agreement") is entered into by and between Ligand
Pharmaceuticals Incorporated ("Ligand") and Pfizer Inc. ("Pfizer").

RECITALS:

         A. On May 1, 1991, Pfizer and Ligand entered into an agreement ("the
1991 Agreement"), pursuant to which they agreed to collaborate in the discovery
and development of new pharmaceuticals for the treatment of osteoporosis. On
October 1, 1993, Pfizer and Ligand entered into a Supplementary Agreement (the
"Supplementary Agreement") pursuant to which they agreed to terminate research
activities at Ligand in furtherance of the objectives of the collaboration.

       B. On or about May 2, 1991, Ligand and Pfizer entered into a Stock
Purchase Agreement (the "Stock Purchase Agreement") pursuant to which Pfizer
paid Ligand $7,500,000 and Ligand issued to Pfizer 3,000,000 shares of Ligand's
Series D preferred Stock, which shares were subsequently converted into
1,353,125 shares of Ligand common stock ("the subject
stock").


<PAGE>   2

         C. Pfizer has been engaged in the development of a compound known as
droloxifene as a potential drug for the treatment of osteoporosis and breast
cancer. The chemical structure of droloxifene is set forth in Exhibit A attached
to this Settlement Agreement. Pfizer has been engaged in the development of the
compound CP-336,156 as a potential drug for the treatment of osteoporosis. The
chemical structure of CP-336,156 is set forth in Exhibit B attached to this
Settlement Agreement.

         D. A dispute has arisen between Ligand and Pfizer concerning their
respective rights and obligations under the terms of the 1991 Agreement and the
Supplementary Agreement with respect to past and future milestone payments and
future royalty payments from Pfizer to Ligand in connection with Pfizer's
development of droloxifene. On December 21, 1994, Ligand filed an action against
Pfizer in the San Diego Superior Court entitled Ligand Pharmaceuticals
Incorporated, etc. v. Pfizer Inc., etc., et al., Case No. 683965 ("said legal
action"). Ligand's complaint in said legal action alleges, inter alia, that
Pfizer breached the 1991 Agreement and the Supplementary Agreement by failing to
make milestone payments to Ligand. It also seeks declaratory relief with respect
to a dispute between Pfizer and Ligand over Pfizer's future obligations to make
milestone and royalty payments to Ligand under the terms of the 1991 Agreement
and the Supplementary Agreement. Pfizer filed an answer in
said

                                      - 2 -
<PAGE>   3

legal action denying the material allegations of Ligand's complaint.

       E. In accordance with the provisions of this Settlement Agreement,
Ligand and Pfizer have reached a settlement and resolution of all disputes that
have arisen between them, including all disputes concerning the 1991 Agreement,
the Supplementary Agreement, all disputes arising from any of the facts set
forth in Recitals A-D above, and all disputes and issues raised during the
course of said legal action that could have been properly plead and tried in
state court. Ligand and Pfizer wish to restore their relationship to one of
respect and collegiality and to fix and establish in this Settlement Agreement
their respective rights and future obligations.

AGREEMENT:

         1.       Materiality

                  Pfizer and Ligand acknowledge and agree that each provision of
this Settlement Agreement is material to their respective decisions to settle
said legal action and all disputes that have arisen between them concerning the
1991 Agreement and the Supplementary Agreement. Pfizer and Ligand further
acknowledge and agree that neither of them would have entered into this
Settlement Agreement in the absence of any of its provisions.

                                      - 3 -
<PAGE>   4
         2.       Milestone Payments

                  2.1 The schedule of milestone payments set forth in Section
4.1 of the 1991 Agreement is, except as expressly modified by the provisions of
this Settlement Agreement, hereby incorporated into this
Settlement Agreement.

                  2.2 Pfizer shall be obligated to pay to Ligand and Ligand
shall have the right to receive from Pfizer, at most, one set of milestone
payments for CP-336,156 or droloxifene whichever, if any, reaches each milestone
first, for any and all indications for the treatment of disease in human beings
("indication"). Pfizer and Ligand acknowledge and agree that Ligand has already
received the first milestone payment (i.e., Satisfaction of Development
Criteria) of $100,000.

                  2.3 Within fifteen days of receipt of notice of the execution
of this Settlement Agreement by Ligand and its attorneys of
record in said legal action, which notice may be given by facsimile to Pfizer's
attorneys of record in said legal action at (714) 851-2351, Pfizer will pay to
Ligand the second milestone payment (i.e., Submission of IND) for
droloxifene in the amount of
$350,000.

                  2.4 On September 1, 1996, Pfizer will make payment to Ligand
in the sum of $900,000 as a credit against the third milestone payment (i.e.,
Initiation of Phase III Clinicals) for droloxifene, provided that on September
1, 1996, Pfizer is

                                      - 4 -
<PAGE>   5

continuing with clinical studies with droloxifene for treatment of osteoporosis
and has not previously given Ligand written notice of Pfizer's abandonment of
its development of droloxifene as a drug for the treatment of osteoporosis.
Subject to the provisions of Section 2.6 below, this payment
will be credited against future royalty payments for droloxifene or CP
336,156 for any indication if Pfizer gives written notice to Ligand after September
1, 1996, of its abandonment of development of droloxifene as a drug for
treatment of osteoporosis before the United States Food and Drug
Administration and all other equivalent foreign regulatory bodies prior to the approval
of a New Drug Application ("NDA") (or its foreign equivalent) for
droloxifene for the treatment of osteoporosis. For the purposes of this
Agreement, the phrase "equivalent foreign regulatory bodies" shall mean those
drug approval regulatory bodies located in the following countries: Japan, Canada,
Switzerland or any member of the European Union.

                  2.5 If Ligand has not already received the third milestone
payment (i.e., Initiation of Phase III Clinicals or its foreign equivalent)
pursuant to Section 2.6 below, Pfizer shall pay to Ligand $900,000 against the
third milestone payment (i.e., Initiation of Phase III Clinicals or its foreign
equivalent) if and when droloxifene enters Phase III (i.e., pivotal efficacy)
clinical trials for treatment of osteoporosis. This payment shall not be
refundable.

                                      - 5 -
<PAGE>   6
                  2.6 If droloxifene enters Phase III clinical trials for any
indication other than osteoporosis or breast cancer or if CP-
336,156 enters Phase III clinical trials for any indication, Ligand will
be paid the balance ($900,000) of the third milestone payment of $1.8 million
pursuant to Section 4.1 of the 1991 Agreement (i.e., Initiation of Phase III
Clinicals or its foreign equivalent) and Ligand shall no longer be
obligated to credit the $900,000 payment set forth in Section 2.4 above or, if
such $900,000 payment or any portion thereof has been credited as set forth in
Section 2.4, Pfizer shall reimburse Ligand for the amount of such credit. Consistent
with the provisions of Section 2.2 above, Pfizer and Ligand agree that if
Ligand has previously received either or both of the payments set forth in
Sections 2.4 and 2.5 above, such payments shall be credited against any obligation of
Pfizer to make the third milestone payment under the provisions of this
Section 2.6 such that in no event shall Ligand be entitled to receive more than
$1,800,000 for the third
milestone.

                  2.7 Ligand shall be eligible to receive and Pfizer shall be
obligated to pay the fourth (i.e., Submission of NDA or its foreign equivalent)
and fifth (i.e., Approval of NDA or its foreign equivalent ) milestone payments
in the event either CP-336,156 or droloxifene qualifies for these milestones
for any indication.

                                      - 6 -
<PAGE>   7
                  2.8 $2,500,000 of the milestone payments made by Pfizer to
Ligand, including the $100,000 milestone payment noted in Section 2.2 above,
shall be creditable by Pfizer against future royalties under Sections 3.1-3.4
below, provided that no credit under this Settlement Agreement may be used to
reduce the royalties owed in any quarter by more than
fifty percent (50%).

                  2.9 Pfizer's obligation to pay milestones to Ligand pursuant
to Sections 2.1 through 2.8 above may, consistent with the provisions of Section
5.2 below, be discharged, by the transfer of the subject stock or a portion of
it to Ligand.

         3.       Royalty Payments

                  3.1 Pfizer shall be obligated to pay Ligand a royalty of one
percent (1%) of Net Sales of droloxifene for treatment of breast cancer, which
obligation shall increase to three percent (3%) of Net Sales of droloxifene for
any and all indications if and when Pfizer makes sales of droloxifene for any
indication other than breast cancer.

                  3.2 Pfizer shall be obligated to pay Ligand a royalty of six
percent (6%) of Net Sales of CP-336,156 for any and all indications. In
addition, Pfizer shall be obligated to pay Ligand a royalty of six percent (6%)
of Net Sales (and any unearned milestones, if any) on any compound which exerts
its primary mechanism of action through the estrogen receptor and which was
screened or characterized by Ligand during the

                                      - 7 -
<PAGE>   8

collaboration under the 1991 Agreement, or was screened or characterized by
Pfizer using constructs, reagents or assays, provided to Pfizer by Ligand or
constructs, reagents or assays which are embraced by claims in issued patents,
or pending patent applications owned or licensed by Ligand, for any and all
indications. Pfizer's obligations to Ligand for compounds, other than CP-336,156
and droloxifene, will terminate if development of such compounds (i.e., issuance
of a Candidate Alert Notice or its equivalent) is not initiated within three
years of the effective date of this Settlement Agreement.

                  3.3 For the purposes of calculating and reporting on royalty
payments under Sections 3.1 and 3.2 above, Sections 1.3, 6.1, and 6.2 of the
1991 Agreement are hereby incorporated into this Settlement Agreement. Pfizer
will pay Ligand the royalty set forth in Section 3.1 above on Net Sales of
droloxifene on a country-by-country basis for a period of fifteen years from the
first sale of droloxifene in each country, or until the Occurrence of Generic
Competition with droloxifene in each country, whichever occurs first, provided,
however, in no instance will Pfizer pay royalties to Ligand on Net Sales of
droloxifene on a country-by-country basis under this Section 3.3 for a period of
less than twelve years from the first sale of droloxifene in each country. As
used herein, the phrase "Occurrence of Generic Competition" shall mean the first
business day of the calendar quarter following the provision of written notice
by Pfizer to Ligand of the grant of an ANDA (or its

                                      - 8 -
<PAGE>   9

equivalent) for droloxifene to a third party in a country by the appropriate
regulatory body or bodies of that country (e.g., the United States Food and Drug
Administration, the Canadian Pricing Board) empowered to grant such approval(s)
to the third party within that country, provided that the third party granted
such approval cannot be (i) Pfizer, including its subsidiaries, affiliates,
collaborators, licensees, licensors, and licensees of its licensors, or any
party receiving rights relating to droloxifene from Pfizer or (ii) a party that
obtains a compulsory license to droloxifene. Pfizer will pay Ligand the royalty
set forth in Section 3.2 above on Net Sales of CP-336,156 on a
country-by-country basis for a period of fifteen years from the date of first
sale in each country or until expiration of the last Pfizer patent on CP-336,156
in each country, whichever occurs first.

                  3.4 Pfizer's obligation to pay royalties to Ligand pursuant to
Sections 3.1 and 3.2 above may, consistent with the provisions of Section 5.2
below, be discharged by the transfer of the subject stock or a portion of it to
Ligand.

         4.       Warranties and Representations by Pfizer
        
                  Pfizer hereby warrants and represents as follows:

                  4.1 Pfizer presently has in development no successor
compounds to droloxifene or CP-336,156.  As set forth in this
warranty and representation, "successor compound" means any

                                      - 9 -
<PAGE>   10

compound that is derived from or whose synthesis was based upon the chemical
structures of either droloxifene or CP-336,156.

                  4.2 With the exception of CP-336,156 and droloxifene, Pfizer
has no compound in development for any indication that was screened or
characterized by Ligand during the collaboration under the 1991 Agreement or was
screened or characterized by Pfizer at any time using constructs, reagents, or
assays provided to Pfizer by Ligand or constructs, reagents or assays which are
embraced by claims in issued patents or pending patent applications owned or
licensed by Ligand. Pfizer has, with the exception of CP 336,156 and
droloxifene, no compounds in development that qualify for milestone or royalty
payments under the 1991 Agreement.

                  4.3 Pfizer has ceased using, has no intention of ever again
using, and will not in the future use any constructs, reagents, or assays that
were provided to Pfizer by Ligand at any time during the collaboration under the
1991 Agreement or that were otherwise obtained by Pfizer pursuant to the 1991
Agreement or the Supplementary Agreement or constructs, reagents or assays which
are embraced by claims in issued patents or pending patent applications owned or
licensed by Ligand.

                  4.4 As of the effective date of this Agreement, Pfizer has
made no decision to terminate development of droloxifene for osteoporosis or any
other indication, and droloxifene currently

                                     - 10 -
<PAGE>   11

is in, or Pfizer plans to initiate, Phase II or Phase II/III clinical trials for
droloxifene in osteoporosis. Nothing in this provision shall abrogate or
otherwise alter Pfizer's rights under paragraph 6 of this
Settlement Agreement.

         5.       Subject Stock

                  5.1 Except as set forth in this Settlement Agreement, Pfizer
shall not sell, transfer or otherwise dispose of the subject stock for a period
of seven years from the effective date of this Settlement Agreement.

                  5.2 At the option of either Pfizer or Ligand, the subject
stock may be used to satisfy any obligations of Pfizer to make payment of
milestones or royalties to Ligand pursuant to Sections 2.1 2.9 and 3.1-3.4
above. For purposes of calculating the amount of credit to be given to transfers
of the subject stock from Pfizer to Ligand under this provision, the subject
stock shall be valued at its closing selling price per share as of the effective
date of this Settlement Agreement as reported by the National Association of
Securities Dealers, Inc. through its Nasdaq system.

                  5.3 If Pfizer abandons development of droloxifene and
CP-336,156 for all indications for all countries, the provisions of Section 5.1
above shall, upon written notice of such abandonment from Pfizer to Ligand,
cease.

                                     - 11 -
<PAGE>   12

        6.       Pfizer's Control of Development of Droloxifene and CP-
                  336,156

                  Pfizer and Ligand agree that Pfizer will retain
absolute discretion and control regarding the development, regulatory filings,
promotion, marketing, selection of indications to pursue, protection of
intellectual property rights, and pursuit or abandonment of droloxifene and
CP-336,156.

         7.       Ligand's Right to Pursue CP-336,156 if Abandoned: Not
                  Droloxifene

                  7.1 Pfizer and Ligand agree that in the event Pfizer
abandons CP-336,156 for all indications for all countries, Ligand shall have the
right to develop and market CP-336,156 free of any control or restrictions by
Pfizer. Pfizer shall promptly give written notice to Ligand of its abandonment
of CP-336,156 in the event Pfizer determines not to pursue further development
of CP-336,156. Upon abandonment, Pfizer shall also grant Ligand a worldwide
exclusive royalty-free license to all patents and all patent applications
relating to CP-336,156, including the right to make, have made, use, offer for
sale, sell, and import CP-336,156, as well as the right to grant sublicenses,
and the right to prosecute pending patent applications and to enforce the
patents and prosecute infringers. Pfizer shall also provide to Ligand, free of
any confidentiality obligation and at Ligand's expense for copying charges and
postage, those technical materials (including regulatory approvals, if any and
if

                                     - 12 -
<PAGE>   13

remaining in force) which are reasonably necessary for
continuation of development of CP-336,156 by Ligand.

                  7.2 Pfizer and Ligand agree that, if Pfizer abandons
droloxifene, Ligand shall not acquire any rights in droloxifene.

        8.       Publicity Regarding Settlement and Development of
                 Droloxifene: News Release

                  8.1      Ligand and Pfizer agree that in characterizing or
describing the settlement and resolution of said legal action or the terms and
conditions of this Settlement Agreement, neither party will make any statements
that such party has been successful, attained a victory, or prevailed in said
legal action. Pfizer and Ligand acknowledge that this Settlement Agreement is
the product of a compromise and a desire by both parties to restore their
relationship to one of respect and collegiality and that neither of them has
attained a victory, prevailed, or succeeded in said legal action. Pfizer and
Ligand agree that Ligand may state that it performed work on droloxifene at
Pfizer's request, but may not state that it engaged in the joint drug
development of droloxifene with Pfizer or any other party.

                  8.2 Pfizer and Ligand shall, within five business days after
the effective date of this settlement agreement, issue a mutually agreed upon
joint press release in the form attached to this Settlement Agreement as Exhibit
C.

                                     - 13 -
<PAGE>   14

         9.       Periodic Reports by Pfizer

                  Pfizer shall make reports to Ligand two times per year, each
June 1 and December 1 setting forth the information specified in Exhibit D
attached to this Settlement Agreement. During the duration of this reporting
requirement, Pfizer shall be afforded a 15-day grace period for no more than two
reports.

         10.      Mutual Release of Claims

                  In consideration of the obligations, warranties and
representations of each of the parties to this Settlement Agreement, and
contingent upon each party's timely performance of them, Pfizer and Ligand each
hereby releases and forever discharges the other, and each of their
stockholders, predecessors, successors, affiliated corporations, subsidiary
corporations, parent corporations, agents, directors, officers, employees,
representatives, lawyers, and all persons acting by, through, under, or in
concert with them, or any of them, from any and all liability whatever,
including all claims, demands and causes of action, of every nature, including,
without limitation, any claims for breach of contract, declaratory relief,
misrepresentation, or any other form. of damage or theory of recovery whatever
arising from any of the facts and circumstances set forth in Recitals A-D above,
and further including, without limiting the generality of the foregoing, any
claims arising out of, based upon or relating to the 1991 Agreement, the
Supplementary Agreement, or said legal action, as well as any claims which could
have been properly plead and tried in state

                                     - 14 -
<PAGE>   15

court in said legal action. Pfizer and Ligand shall each bear their own
attorneys' fees and costs incurred in this action.

         Ligand and Pfizer each acknowledge that they have been advised by legal
counsel and are familiar with the provisions of California Civil Code Section
1542, which provides as follows:

                  "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
                  CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE
                  TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE
                  MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR."

         Pfizer and Ligand, and each of them, being aware of said Code section,
hereby expressly waive any rights they may have thereunder.

         11.      Dismissal with Prejudice

                  Ligand hereby authorizes and directs its attorneys of record
in said legal action, William F. Sullivan and Brobeck, Phleger & Harrison,
L.L.P., to execute a dismissal with prejudice of said legal action in the form
attached hereto as Exhibit E and direct their attorneys to file said dismissal
with the San Diego Superior Court within seven days after the effective date of
this settlement.

         12.      Confidentiality

                  Pfizer and Ligand hereby incorporate Section 8.1 of the
1991 Agreement for purposes of limiting the disclosure of

                                     - 15 -
<PAGE>   16

confidential information provided by either party to the other under the
provisions of this Settlement Agreement.

         13.      Governing Law

                  This Settlement Agreement shall be governed by and construed
in accordance with the laws of the State of New York.

         14.      Written Notices

                  All written notices, payments, and reports, except as
otherwise set forth in this Settlement Agreement, shall be deemed to be
effective when mailed, postage prepaid, by first class, registered or certified
mail to:

                  (if to Pfizer)

                  Pfizer Inc.
                  Attn:  President, Central Research 235
                  East 42nd Street
                  New York, NY 10017
                           Copy to: General Counsel
and
                  (if to Ligand)
                  Ligand Pharmaceuticals Incorporated
                  Attn:  General Counsel
                  9393 Town Center Drive, Suite 100
                  San Diego, CA 92121

or to such other person or by such other means to which the parties may from
time to time have agreed.

                                     - 16 -
<PAGE>   17

         15.      Successors and Assigns

                  The terms of this Settlement Agreement shall enure to the
benefit of and be binding upon the respective successors and assigns of each
party.

          16.      Entire Agreement: Integration
                            
                  The terms and conditions of this Settlement Agreement
constitute the entire agreement between Pfizer and Ligand and supersede all
previous negotiations or agreements, either oral or written, between the parties
with respect to the subject matter of this Settlement Agreement. The Stock
Purchase Agreement and Amended Registration Rights Agreement executed between
Ligand and Pfizer dated June 24, 1994 survive and are not affected by this
Settlement Agreement except as specifically provided herein. This Settlement
Agreement shall not be amended, supplemented or abrogated other than by a
written instrument signed by the authorized representative of each party.

         17.      No Waiver

                  The failure of either party to enforce at any time any of the
provisions of this Settlement Agreement, or any rights in respect of it, or to
exercise any election provided in it, shall in no way be considered to be a
waiver of such provisions, rights or elections, and shall in no way affect the
validity of this Settlement Agreement.

                                     - 17 -
<PAGE>   18

         18.      Compromise And Settlement

                  This Settlement Agreement is entered into
solely by way of compromise and settlement of said legal action and the
dispute between Ligand and Pfizer and is not and shall not be construed as an
admission of liability, responsibility or fault by either party.

         19.      Counterparts

                  This Settlement Agreement may be executed in one or more
counterparts by each party and their attorneys, each of which shall be deemed to
be an original and all of which taken together shall constitute one and the same
agreement.

         20.      Effective Date

                  The effective date of this Settlement Agreement shall be April
19, 1996.

         21.      Rights Through Affiliates

                  Pfizer and Ligand may execute their rights and fulfill their
obligations through their affiliates.

         22.      Headings

                  The headings used in this Settlement Agreement are inserted
for reference only and shall not be deemed to be a part of the text.

                                     - 18 -
<PAGE>   19

         23.      Assurances and Warranties

                  Ligand and Pfizer agree to execute, acknowledge and deliver
such further instruments, and to do such other acts, as may be reasonably
necessary in order to carry out the intent and purposes of this Settlement
Agreement. Each party warrants that it has the authority to enter into this
Settlement Agreement on the basis of the terms and conditions herein and that it
has not made any other agreement inconsistent with its obligations under this
Settlement Agreement.

         24.      Severability of Provisions

                  The invalidity or unenforceability of any provision of this
Settlement Agreement shall in no way affect the validity or

                                     - 19 -
<PAGE>   20

enforceability of any other provision of this Settlement Agreement.


Dated: April 20, 1996                           LIGAND PHARMACEUTICALS

INCORPORATED
                                                By:  David E. Robinson
                                                Its: President and CEO

APPROVED AS TO FORM AND CONTENT
THIS 20 DAY OF APRIL, 1996

BROBECK, PHLEGER & HARRISON, L.L.P.

By:      WILLIAM F. SULLIVAN
         ____________________________
         William F. Sullivan
         Attorneys for Ligand
         Pharmaceuticals Incorporated

Dated:   April 23, 1996                         PFIZER INC

                                                By: Steven Kany
                                                Its: Sr. Asst. General Counsel

APPROVED AS TO FORM AND CONTENT
THIS 22 DAY OF APRIL, 1996

PALMIERI, TYLER, WIENER,
WILHELM & WALDRON

By:      FRANK C. ROTHROCK
         ___________________________
         Frank C. Rothrock
         Attorneys for Pfizer Inc

                                     - 20 -
<PAGE>   21
         This Exhibit contains a diagram of the chemical structure of
droloxifene.

                                    EXHIBIT A
<PAGE>   22

*CONFIDENTIAL TREATMENT REQUESTED


                                    EXHIBIT B

                                       *
<PAGE>   23
                                    EXHIBIT C

                                  [INSERT DATE]

FOR IMMEDIATE RELEASE
CONTACT:          Brian McGlynn              Susan Atkins
                  Pfizer Inc                 Ligand Pharmaceuticals Inc.
                  (203) 441-5448             (619) 550- 7687

                        PFIZER AND LIGAND END LITIGATION
                                OVER DROLOXIFENE
                               
         SAN DIEGO - April [X], 1996 - Pfizer Inc (NYSE:PFE) and Ligand
Pharmaceuticals Inc. (NASDAQ/NMS:LGND) today announced that the two companies
settled a lawsuit for breach of contract filed by Ligand against Pfizer in
December 1994.

       In order to end the costs and avoid the risks inherent in litigation,
Ligand and Pfizer settled the lawsuit and reached agreement that Ligand will be
eligible to receive certain milestones and royalties in connection with
droloxifene. Droloxifene, licensed by Pfizer from Klinge Pharma Gmbh, is
currently in Phase III clinical trials for breast cancer and Phase II clinical
trials for osteoporosis. These payments are contingent upon the compound's
advancement toward regulatory approval and sales as a drug in breast cancer,
osteoporosis or other indications.

         "We are pleased to bring an end to this litigation and
restore a normal business relationship with Pfizer, Ligand's first collaborative partner," stated David E.
Robinson, Ligand President and Chief Executive Officer.  "We value our
relationship with Pfizer in the development and commercialization

                                       -1-
<PAGE>   24

of compounds for osteoporosis, one of the truly exciting growth
markets, as well as for other indications."

         Ligand and Pfizer entered into a collaboration in 1991 to
apply Ligand's intracellular receptor (IR) technology to the pursuit of drugs for the treatment of osteoporosis.
The collaboration research phase ended in 1993.

         Pfizer Inc is a diversified, research-based health care company with
global operations. The company reported sales of more than $10.02 billion for
1995.

         Ligand Pharmaceuticals Incorporated, founded in 1987, is a leader in
gene transcription technology, particularly IR technology and Signal Transducers
and Activators of Transcription (STATs). Ligand applies IR and STATs technology
to the discovery and development of small molecule drugs to enhance therapeutic
and safety profiles and to address major unmet patient needs in cancer, women's
health and skin diseases, as well as osteoporosis, cardiovascular and
inflammatory disease.

         This statement contains certain forward looking statements by Ligand
and Pfizer and actual results could differ materially from those described as a
result of factors, including, but not limited to, the following. There can be no
assurance that droloxifene, or any development candidate identified as a result
of the Pfizer-Ligand collaboration, will be successfully developed, that
regulatory approvals will be granted, or patient and physician acceptance of
these products will be achieved.

                                       -2-
<PAGE>   25
                                    EXHIBIT D

                             REPORTING REQUIREMENTS

        24.1 Reporting Requirement Objectives: The objectives of these
reporting requirements are to provide definitive guidelines by which Pfizer will
furnish Ligand with objective information regarding the development of
droloxifene, CP-336,156 and any compound for which development is initiated
under the terms of Section 3.2 of the Settlement Agreement (collectively
"subject compounds"). It is the intention of the parties to define these
guidelines with sufficient specificity such that the satisfaction of each
requirement can be objectively determined.

         24.2     Contents of Reports:  Each report will include the following:
        
                  (1)      Copies of the preclinical pharmacology and toxicology
summaries prepared for the IND and NDA for each of the subject compounds, when
complete and approved within Pfizer, if not previously provided.

                  (2)      Copy of the Investigator's Brochure for the
subject compounds, including any amendments, when available and
if not previously provided.

                  (3)      Copies of the Integrated Summary
of Efficacy and Integrated Summary of Safety prepared for the NDA for each
of the subject compounds, when complete and approved within Pfizer, if
not previously provided.

                  (4)      Any projected and actual initiation dates for
clinical trials for each subject compound for all indications.

                  (5)      Any projected and actual dates of completion of
clinical phases.

                  (6)      The projected and actual completion dates of each
trial.

                  (7)      Any projected and actual dates of NDA submissions for
each subject compound and any FDA response thereto.

                  (8)      Notification of, and a summary of the basic terms,
when Pfizer enters into any sub-licensing, co-marketing or co-promotion plans
with respect to the subject compounds.

                  (9)      Copies of any galley proofs within Pfizer's
possession of publications (preclinical and clinical) by Pfizer

                                       -1-
<PAGE>   26

or its investigators or Pfizer's third party collaborators/investigators
concerning the subject compounds.

                  (10)     Copies of materials presented to financial
analysts concerning the subject compounds.

         C.       Changes in Expected Dates:  Pfizer will notify Ligand
of any delays in the development of either subject compound as
outlined above and will summarize the cause(s) of such delay.

         D.       Responsibility for Preparation:  Michael R. Ostrander,
Ph.D., Associate Director of Regulatory Affairs at Pfizer Central
Research, or his successor, will have responsibility for providing Ligand with
these reports.

         E.       Reporting Deadlines:  The above reports will be
furnished to Ligand twice a year, on June 1 and December 1 of
each calendar year, subject to a maximum of two 15-day grace periods during
the duration of the reporting requirement.

         F.       Confidentiality:  Ligand will agree to maintain as
confidential any and all documents and information provided in these reports
that Pfizer designates in writing as confidential and will not disclose such
confidential information or documents to any third parties.  The foregoing
obligations shall not apply when and to the extent such documents and
information (hereinafter collectively, "Information") (1) was already in
Ligand's possession at the time of disclosure thereof, (2) was lawfully
available to the public prior to receipt of such Information by Ligand, (3)
through no act on the part of Ligand, thereafter becomes lawfully available to
the public, (4) is required to be disclosed by Ligand to a third party by law or
legal process, provided that, should Ligand be required to make such disclosure,
they will take all reasonable steps to inform Pfizer of such disclosure in
sufficient time for Pfizer to oppose such disclosure before it takes place, (5)
is received from a third party having no obligations of confidentiality to
Pfizer, (6) on written advice of reasonably acceptable independent outside
counsel (a copy of which is furnished to Pfizer) is reasonably required to be
disclosed by Ligand to the securities markets pursuant to section 10(b)(5) of
the Securities and Exchange Act of 1934 or the NASD Schedule "D", P. 1806(A),
provided, however, that the law firm of Brobeck, Phleger & Harrison LLP is
deemed by the parties to be acceptable outside counsel, (7) is required to be
disclosed to a third party evaluator of Ligand (e.g., investment banker,
analyst) provided, however, prior to making such a disclosure, Ligand will first
secure a confidentiality agreement with the third party evaluator substantially
incorporating the provisions of this paragraph, but only including exceptions
(1)-(5) herein, or (8) is approved by a disclosing Party for disclosure by the
receiving Party. The

                                       -2-
<PAGE>   27
obligations imposed in this paragraph will run during the time that royalty
payments are made to Ligand by Pfizer.

         G.       Expiration:  Pfizer's obligations under these reporting
requirements with respect to each of the subject compounds will
expire for a given indication upon NDA approval for that indication for each compound or, if and when, each such compound is abandoned.

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<PAGE>   28

Source: OneCLE Business Contracts.