LETTER AGREEMENT

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                                                                    EXHIBIT 10.1

                          [LEXICON GENETICS LETTERHEAD]

                                 March 28, 2005

VIA FEDERAL EXPRESS

Dr. C. Thomas Caskey

Five Post Oak Park

4400 Post Oak Parkway, Suite 1400

Houston, Texas 77027

Dear Tom:

         We are pleased to invite you to become a consultant to Lexicon Genetics

Incorporated (which, together with its subsidiaries and affiliates, is referred

to as the "Company" or "Lexicon") relating to Lexicon's interactions with

federal and state government representatives and agencies regarding

opportunities for grants, collaborations and other contracts. The purpose of

this letter agreement (this "Agreement") is to set forth our mutual

understanding of the terms and conditions under which you would provide

consulting services, as set forth below.

         1. Consulting Services. As a consultant to Lexicon, you will provide

such consulting and advisory services as may be requested by Arthur T. Sands,

M.D., Ph.D., the Company's President and Chief Executive Officer, relating to

Lexicon's interactions with federal and state government representatives and

agencies regarding opportunities for grants, collaborations and other contracts.

You will devote up to 24 days annually (approximately two days a month on

average) to providing such services to the Company under this Agreement, on a

schedule and at times reasonably agreed upon by you and Dr. Sands.

         2. Compensation. As full consideration for your services as a

consultant to the Company and your obligations under this Agreement, you will

receive fees of $75,000 per year, payable in 12 monthly installments. In

addition, you will be reimbursed for your reasonable, ordinary and necessary

travel expenses incurred by you at the Company's prior request in connection

with your performance of your services under this Agreement.

         3. Confidential Information.

                  (a) In the course of your service as a consultant to the

         Company, you may learn or be exposed, orally, visually, electronically

         or in writing, to inventions, discoveries, improvements, materials,

         data, technology, processes, formulas, know-how, trade secrets, ideas

         and other information which we consider proprietary or confidential

         ("Confidential Information"). You agree to hold any Confidential

         Information disclosed to you by the Company or learned by you from the

         Company in conjunction with your services under this Agreement in

         strict confidence and to take all reasonable precautions to protect

         such Confidential Information, not to disclose any such Confidential

         Information to any third party, and to use such Confidential

         Information only in furtherance of your services under this Agreement;

         provided that your nondisclosure obligation shall not apply to the

         extent such C