Re: Employment Terms

Exhibit 10.22

September 12, 2005

Michael Ostrach

Re: Employment Terms

Dear Michael,

This letter confirms that Threshold Pharmaceuticals, Inc. (the “Company”) has offered you the position of Chief Operating Officer and General Counsel beginning on September 12, 2005 on the following terms:

You will report to Harold E. Selick, our Chief Executive Officer and work at our facility located at 1300 Seaport Blvd., 5^th Floor, Redwood City, CA 94063. Of course, the Company may change your position, duties and work location from time to time as it deems necessary.

Your compensation will be $25,000 per month, less payroll deductions and all required withholdings. You will be paid semi-monthly and will be eligible for standard Company benefits as outlined on the attached Employee Benefits Program summary as well as a performance-based annual bonus of up to 30% of your annual salary. The Company may modify compensation and benefits from time to time as it deems necessary.

Subject to the approval of the Company’s Board of Directors, you will be awarded a stock option grant to purchase 250,000 shares of the Company’s Common Stock subject to a four year vesting schedule as follows: (a) the first 25% of this grant shall vest at your first anniversary of your starting date with the Company and (b) thereafter an additional 1/48th of the grant shall vest on each subsequent monthly anniversary of your starting date. [The exercise price of your stock option will be equal to the fair market value of the Company’s Common Stock on the date your option is approved by the Board of Directors.] As a Company employee, you will be expected to abide by Company rules and regulations, sign and comply