SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF
THE SECURITIES EXCHANGE ACT OF 1934

Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]

Check the appropriate box:

[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12

MICROCIDE PHARMACEUTICALS, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
----------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[x] No fee required.

[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.

[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

1) Title of each class of securities to which transaction
applies:

2) Aggregate number of securities to which transaction applies:

3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):

4) Proposed maximum aggregate value of transaction:

5) Total fee paid:

[ ] Fee paid previously with preliminary materials.

[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.

1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
2

LOGO

April 14, 1997

Dear Shareholders:

It is my pleasure to invite you to the Annual Meeting of Stockholders of
Microcide Pharmaceuticals, Inc. to be held on Tuesday, May 13, 1997 at 10 a.m.
at Microcide's offices located at 850 Maude Avenue, Mountain View, California.
The Notice of the Annual Meeting and the Proxy Statement accompanying this
letter describe the business to be conducted at the meeting.

I hope you will be able to join us. If you are unable to attend this year's
meeting, you can ensure your representation by completing the enclosed Proxy and
returning it to us promptly.

Thank you for your interest and participation in the affairs of Microcide
Pharmaceuticals.

Sincerely,

LOGO

James E. Rurka
President and Chief Executive Officer

MICROCIDE PHARMACEUTICALS, INC.
850 MAUDE AVENUE - MOUNTAIN VIEW - CALIFORNIA 94043 - (415) 428-1550 - FAX (415)
428-3550
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MICROCIDE PHARMACEUTICALS, INC.

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD ON MAY 13, 1997

TO THE STOCKHOLDERS:

NOTICE IS HEREBY GIVEN that the 1997 Annual Meeting of Stockholders of
Microcide Pharmaceuticals, Inc., a Delaware corporation (the "Company"), will be
held on Tuesday, May 13, 1997 at 10:00 a.m. local time, at the Company's offices
located at 850 Maude Avenue, Mountain View, California 94043 for the following
purposes:

1. To elect three Class I directors for a term of three years to expire at
the Company's 2000 Annual Meeting of Stockholders.

2. To approve an amendment to the Company's 1996 Director Option Plan (the
"Director Plan") to increase the initial option grant to directors of
the Company from 12,000 to 16,000 shares.

3. To increase the number of shares of Common Stock reserved for issuance
under the Company's 1993 Amended Incentive Stock Plan from 1,380,000 to
1,880,000 shares.

4. To ratify the appointment of Ernst & Young LLP as independent auditors
for the fiscal year ending December 31, 1997.

5. To transact such other business as may properly come before the meeting
or any adjournment thereof.

These items of business are more fully described in the Proxy Statement
accompanying this notice.

Only stockholders of record at the close of business on March 31, 1997 are
entitled to notice of and to vote at the meeting.

All stockholders are cordially invited to attend the meeting in person.
However, to assure your representation at the meeting, you are urged to sign and
return the enclosed Proxy as promptly as possible in the postage-prepaid
envelope enclosed for that purpose. Any stockholder attending the meeting may
vote in person even if the stockholder has returned a proxy.

By order of the Board of Directors

LOGO
Michael J. O'Donnell
Secretary

Mountain View, California
April 14, 1997

IMPORTANT: WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE AND
PROMPTLY RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED.
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MICROCIDE PHARMACEUTICALS, INC.

PROXY STATEMENT FOR 1997
ANNUAL MEETING OF STOCKHOLDERS

INFORMATION CONCERNING SOLICITATION AND VOTING

GENERAL

The enclosed Proxy is solicited on behalf of the Board of Directors of
Microcide Pharmaceuticals, Inc., a Delaware corporation (the "Company"), for use
at the Annual Meeting of Stockholders to be held on Tuesday, May 13, 1997, at
10:00 a.m. local time, or at any adjournment thereof, for the purposes set forth
in this Proxy Statement and in the accompanying Notice of Annual Meeting of
Stockholders. The Annual Meeting will be held at the Company's offices located
at 850 Maude Avenue, Mountain View, California 94043. The Company's telephone
number at that address is (415) 428-1550.

The Company reincorporated in the State of Delaware in February 1996. In
this Proxy Statement, the "Company" shall refer to the Company and, as
applicable, to its predecessor, Microcide Pharmaceuticals, Inc., a California
corporation.

These proxy solicitation materials were mailed on or about April 14, 1997
to all stockholders entitled to vote at the meeting.

RECORD DATE AND SHARE OWNERSHIP

Stockholders of record at the close of business on March 31, 1997 are
entitled to notice of the meeting and to vote at the meeting. At the record
date, 10,781,531 shares of the Company's Common Stock were issued and
outstanding and held of record by approximately 136 stockholders.

SOLICITATION OF PROXIES

This solicitation of proxies is made by the Company, and all related costs
will be borne by the Company. In addition, the Company may reimburse brokerage
firms and other persons representing beneficial owners of shares for their
expenses in forwarding solicitation material to such beneficial owners. Original
solicitation of proxies by mail may be supplemented by telephone, telegraph, or
personal solicitations by directors, officers, or employees of the Company. No
additional compensation will be paid for any such services.

REVOCABILITY OF PROXIES

Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Secretary of the
Company a written notice of revocation, or a duly executed proxy bearing a later
date, or by attending the meeting and voting in person.

VOTING PROCEDURE

Each stockholder is entitled to one vote for each share held. In the
election of directors, each stockholder will be entitled to vote for three
nominees, and the three nominees with the greatest number of votes will be
elected. On all other matters, each share has one vote.

DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS

Proposals of stockholders of the Company that are intended to be presented
by such stockholders at the Company's 1998 Annual Meeting of Stockholders must
have been received by the Company no later than December 14, 1997 in order that
they may be considered for inclusion in the proxy statement and form of proxy
relating to that meeting.
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STOCK OWNERSHIP OF CERTAIN STOCKHOLDERS AND MANAGEMENT

The following table sets forth certain information known to the Company
with respect to beneficial ownership of the Company's Common Stock as of March
31, 1997 by (i) each stockholder known by the Company to be the beneficial owner
of more than 5% of the Company's Common Stock, (ii) each director, (iii) the
Company's Chief Executive Officer and each of the other executive officers of
the Company whose total salary and bonus for fiscal year 1996 exceeded $100,000
(together, the "Named Officers") and (iv) all executive officers and directors
as a group.

FIVE PERCENT STOCKHOLDERS,
DIRECTORS AND EXECUTIVE OFFICERS NUMBER PERCENT
--------------------------------------------------------- --------- -------

Entities Affiliated with Institutional Venture
Partners(1)............................................ 1,600,034 14.8%
3000 Sand Hill Road
Menlo Park, CA 94025
Entities Affiliated with Kleiner Perkins Caufield &
Byers(2)............................................... 951,191 8.8%
2750 Sand Hill Road
Menlo Park, CA 94025
Johnson & Johnson Development Corporation................ 571,429 5.3%
1 Johnson & Johnson Plaza
New Brunswick, NJ 08933
Pfizer Inc............................................... 571,429 5.3%
Eastern Point Road
Groton, CT 06340
Entities Affiliated with Atlas Ventures(3)............... 533,333 4.9%
222 Berkeley Street
Boston, MA 02116
New Enterprise Associates VI............................. 533,333 4.9%
1119 St. Paul Street
Baltimore, MD 21202
Abingworth Bioventures(4)................................ 293,170 2.7%
Abingworth Management Limited
26 St. James's Street
London SW1A 1HA
United Kingdom
David Schnell, M.D.(5)................................... 936,879 8.7%
Kleiner Perkins Caufield & Byers
2750 Sand Hill Road
Menlo Park, CA 94025
Joseph S. Lacob(6)....................................... 914,312 8.5%
Kleiner Perkins Caufield & Byers
2750 Sand Hill Road
Menlo Park, CA 94025
L. James Strand, M.D.(1)................................. 1,600,034 14.8%
Institutional Venture Partners
3000 Sand Hill Road, Bldg. 2, Ste. 290
Menlo Park, CA 94025
Hugh Y. Rienhoff, Jr., M.D.(4)........................... 293,170 2.7%
Abingworth Management Limited
26 St. James's Street
London SW1A 1HA
United Kingdom
Keith A. Bostian, Ph.D.(7)............................... 299,500 2.8%
James E. Rurka(8)........................................ 216,400 2.0%
John P. Walker........................................... 20,000 *
Matthew J. Hogan(9)...................................... 18,250 *
All directors and executive officers as a group (8
persons)(10)........................................... 3,398,545 31.5%

- ---------------
* Less than 1%

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(1) L. James Strand, M.D., a director of the Company, is a General Partner of
Institutional Venture Management V. Includes 1,553,666 shares held by
Institutional Venture Partners V, L.P., 26,368 shares held by Institutional
Ventures Management V, L.P., 8,000 shares held by the L. James & Laura
Strand Trust of which Dr. Strand is a trustee, and 12,000 shares issuable
to Dr. Strand pursuant to options exercisable within 60 days of March 31,
1997.

(2) Joseph S. Lacob, Chairman of the Board of the Company, is a General Partner
of Kleiner Perkins Caufield & Byers. David Schnell, M.D., a Director of the
Company, is a Venture Limited Partner of Kleiner Perkins Caufield & Byers
VI Associates, which is the General Partner of Kleiner Perkins Caufield &
Byers VI ("KPCB VI") and Kleiner Perkins Caufield & Byers VI Founders Fund
("KPCBFF"). Includes 727,987 shares held by KPCB VI, 172,013 shares held by
KPCBFF, 14,312 shares held by Mr. Lacob, and 36,879 shares held by Dr.
Schnell.

(3) Includes 200,000 shares held by Atlas Venture Europe Fund BV and 333,333
shares held by Atlas Venture Fund II.

(4) Hugh Y. Rienhoff, Jr., M.D., a Director of the Company, is a Director of
Abingworth Management Limited. Abingworth Bioventures is an entity solely
owned and controlled by Abingworth Management Limited.

(5) Includes 727,987 shares held by KPCB VI, 172,013 shares held by KPCBFF, and
36,879 shares held by Dr. Schnell.

(6) Includes 727,987 shares held by KPCB VI, 172,013 shares held by KPCBFF, and
14,312 shares held by Mr. Lacob.

(7) Includes 264,000 shares held by Dr. Bostian, 16,000 shares held by Arthur
Weil as Trustee for Dr. Bostian's children with respect to which Dr.
Bostian disclaims beneficial ownership, 2,000 shares held by Dr. Bostian as
Custodian for Dr. Bostian's children, and 17,500 shares issuable to Dr.
Bostian pursuant to options exercisable within 60 days of March 31, 1997.

(8) Includes 150,650 shares held by Mr. Rurka and 65,750 shares issuable to Mr.
Rurka pursuant to options exercisable within 60 days of March 31, 1997.

(9) Includes 5,750 shares held by Mr. Hogan and 12,500 shares issuable to Mr.
Hogan pursuant to options exercisable within 60 days of March 31, 1997.

(10) Includes 107,750 shares issuable pursuant to options exercisable within 60
days of March 31, 1997.

LEGAL PROCEEDINGS

The Company is not a party to any legal proceeding.

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7

PROPOSAL ONE

ELECTION OF DIRECTORS

NOMINEES

The Company's Restated Certificate of Incorporation and Bylaws provide for
a Board of Directors that is divided into three classes. The directors in Class
I hold office until the 1997 Annual Meeting of Stockholders, the directors in
Class II hold office until the 1998 Annual Meeting of Stockholders, and the
directors of Class III hold office until the 1999 Annual Meeting of Stockholders
(or, in each case, until their successors are duly elected and qualified or
their earlier resignation, removal from office or death), and, after each such
election, the directors in each such case will then serve in succeeding terms of
three years and until their successors are duly elected and qualified.

The Company currently has seven directors, with three directors in Class I,
two directors in Class II, and two directors in Class III. The terms of office
of the Class I directors, Joseph S. Lacob, David Schnell, M.D. and L. James
Strand, M.D. expire at the 1997 Annual Meeting of Stockholders. The terms of
office of Class II directors John P. Walker and Hugh Y. Rienhoff, Jr., M.D.
expire at the Company's 1998 Annual Meeting of Stockholders. The terms of office
of the Class III directors James E. Rurka and Keith A. Bostian, Ph.D. expire at
the 1999 Annual Meeting of Stockholders. In addition, there currently exists one
vacancy on the Company's Board of Directors, for a Class II director, created by
the resignation of director Jon S. Saxe. Mr. Saxe did not resign from the
Company's Board of Directors due to any disagreement with the Company on any
matter relating to the Company's operations, policies or practices. Pursuant to
Section 223 of Delaware General Corporation Law, this vacancy may be filled by
the vote of the majority of directors serving on the Company's Board of
Directors. If a director is appointed by the Board of Directors to fill this
vacancy prior to the 1998 Annual Meeting of Stockholders, such director will be
classified as a Class II director and such director's term of office will expire
at the 1998 Annual Meeting of Stockholders. If such vacancy is not filled by the
Board of Directors prior to the 1998 Annual Meeting of Stockholders, a new
director to fill such vacancy will be elected by the stockholders at such
meeting.

Three Class I directors are to be elected at the 1997 Annual Meeting of
Stockholders. Unless otherwise instructed, the proxy holders will vote the
proxies received by them for the Company's nominees named below. In the event
that any nominee of the Company is unable or declines to serve as a director at
the time of the Annual Meeting of Stockholders, the proxies will be voted for
any nominee who shall be designated by the present Board of Directors to fill
the vacancy. It is not expected that any nominee will be unable or will decline
to serve as a director. In the event that additional persons are nominated for
election as directors, the proxy holders intend to vote all proxies received by
them in such a manner as will assure the election of as many of the nominees
listed below as possible, and in such event the specific nominees to be voted
for will be determined by the proxy holders.

The nominees, and certain information about them as of December 31, 1996,
are set forth below:

DIRECTOR
NAME OF DIRECTOR AGE COMPANY POSITIONS SINCE
- -------------------------- --- ----------------------------------- --------

Joseph S. Lacob (1) 41 Chairman of the Board of Directors 1992
David Schnell, M.D.(2) 36 Director 1992
L. James Strand, M.D.(2) 55 Director 1993

- ---------------

(1) Member of Audit Committee.

(2) Member of Compensation Committee.

Joseph S. Lacob, Chairman of the Board, has served as a Director of the
Company since December 1992. Mr. Lacob, a Partner with Kleiner Perkins Caufield
& Byers since May 1987, has participated in investments in over 30 new life
science companies. He is Chairman of the Board of CellPro, Inc. and he is a
Director of Pharmacyclics, Inc., Heartport and several other life science
companies. Mr. Lacob has served as General

4
8

Manager for FHP International, as a management consultant with Booz, Allen &
Hamilton and as a Marketing Manager at Cetus Corporation. Mr. Lacob received a
B.S. in Biochemistry from University of California, Irvine, a M.P.H. from
University of California, Los Angeles and a M.B.A. from Stanford University
Graduate School of Business.

David Schnell, M.D., has served as a Director of the Company since December
1992 and is a Founder of the Company. He has been a Partner at Kleiner Perkins
Caufield & Byers since January 1994 where he leads the firm's investments in
health care services and information systems. From 1987 to December 1993, he was
a marketing and business development executive at Sandoz Pharmaceuticals
Corporation. From January 1992 to December 1993, he managed Sandoz' venture
capital activities and with Avalon Medical Partners founded the Company. Dr.
Schnell is the founding President of Healtheon Corporation and serves on the
Board of Directors of Neurocrine Biosciences and several privately-held
companies. Dr. Schnell received a B.S. in Biological Sciences and an A.M. in
Health Services Research from Stanford University and a M.D. from Harvard
University.

L. James Strand, M.D., became a Director of the Company in January 1993.
Dr. Strand joined Institutional Venture Partners as a Consultant in 1987, was
named a Venture Partner of Institutional Venture Partners in 1993 and a General
Partner of Institutional Venture Management V in 1994. Prior to joining IVP full
time, Dr. Strand was President of Advanced Marketing Decisions, a biomedical
marketing and product development consulting company. Previously, he was Vice
President of Medical Affairs and Director of Marketing Planning at Syntex
Laboratories, Medical Director and Chairman of the Product Assessment Committee
at Alza and CEO and Director of both DDI Pharmaceuticals and Laserscope. He is
currently a Director of Accordant Health Services, Aviron and Prograft. He was
Assistant Professor of Medicine at University of Texas Southwestern Medical
School in Dallas. Dr. Strand holds a B.S., M.A. and M.D. from University of
California, San Francisco and a M.B.A. from Santa Clara University.

INCUMBENT DIRECTORS WHOSE TERMS OF OFFICE CONTINUE AFTER THE 1997 ANNUAL MEETING

The names and certain other information about the Directors whose terms of
office continue after the 1997 Annual Meeting are set forth below:

DIRECTOR
NAME OF DIRECTOR AGE COMPANY POSITIONS SINCE
- ---------------------------- --- ------------------------------------------------ --------

James E. Rurka 51 President, Chief Executive Officer and Director 1994
Keith A. Bostian, Ph.D. 45 Chief Operating Officer and Director 1992
Hugh Y. Rienhoff, Jr., M.D. 44 Director 1994
John P. Walker 48 Director 1995

Mr. Rurka's and Dr. Bostian's backgrounds are summarized under "Executive
Officers" below.

Hugh Y. Rienhoff, Jr., M.D., became a Director of the Company in July 1994.
Dr. Rienhoff is a Director at Abingworth Management Limited, where his focus is
on biotechnology and healthcare information systems. Prior to joining
Abingworth, Dr. Rienhoff was a Partner at New Enterprise Associates. Prior to
joining New Enterprise Associates in July 1992, Dr. Rienhoff was a member of the
faculty in the Department of Molecular Biology and Genetics at The Johns Hopkins
University School of Medicine from July 1989 through June 1992. Dr. Rienhoff
trained in internal medicine and human genetics at Johns Hopkins Hospital, and
received a B.A. in English and Biology at Williams College and a M.D. from The
Johns Hopkins University.

John P. Walker became a Director of the Company in December 1995. He has
been President, Chief Executive Officer and a Director of Arris Pharmaceutical
Corporation since February 1993. From September 1991 to January 1993 he was a
General Partner of Alpha Venture Partners. From June 1986 to January 1991, Mr.
Walker was Chairman, President and Chief Executive Officer of Vitaphore
Corporation, a company which was acquired in April 1990 by Union Carbide
Chemicals and Plastics Company Inc. Following that acquisition, Mr. Walker
served as the latter company's Vice President, Biomaterials Systems from January
1991 to September 1991. From 1971 to 1985, Mr. Walker was employed by American
Hospital Supply Corporation in a variety of general management, sales, and
marketing positions, most recently serving

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as President of the American Hospital Company. Mr. Walker received a B.A. from
State University of New York at Buffalo and conducted graduate studies at
Northwestern University for Management. He serves as a director of one private
company.

BOARD MEETINGS AND COMMITTEES

The Board of Directors held seven meetings and took action by written
consent five times during fiscal 1996. Mr. Saxe attended five of the seven Board
Meetings. Each other incumbent director attended at least 75% of the meetings of
the Board of Directors during fiscal 1996.

The Board of Directors has two standing committees: the Compensation
Committee and the Audit Committee. The Board of Directors has no nominating
committee or any other committee performing a similar function.

Directors David Schnell, M.D., L. James Strand, M.D. and John P. Walker
serve on the Compensation Committee, which sets guidelines for hiring, salaries
and incentive compensation for employees of the Company other than executive
officers, and makes recommendations to the Board of Directors with regard to
salaries and incentive compensation for executive officers of the Company. Mr.
Rurka, President and Chief Executive Officer of the Company, participates in all
discussions and decisions regarding salaries and incentive compensation for all
employees and consultants of the Company, except that Mr. Rurka is excluded from
discussions regarding his own salary and incentive compensation. The
Compensation Committee held one meeting during fiscal 1996. Each Compensation
Committee member attended the committee meeting.

Directors Joseph S. Lacob and Hugh Y. Rienhoff, Jr., M.D. serve on the
Audit Committee, which reviews the results and scope of the audit and other
services provided by the Company's independent auditors. The Audit Committee
held one meeting during fiscal 1996. Mr. Lacob and Dr. Rienhoff each attended
the committee meeting.

COMPENSATION OF DIRECTORS

Non-employee directors of the Company are entitled to participate in the
Company's 1996 Director Option Plan. Each individual who becomes a non-employee
Board member for the first time on or after the date of adoption of the plan
(February 1996) will automatically be granted an option to purchase 16,000
shares of Common Stock on the date of his or her election or appointment to the
Board of Directors, provided such individual was not immediately prior to such
time employed by the Company. Such options are exercisable at a price equal to
the fair market value of the Company's Common Stock on the date the option is
granted, and the right to exercise the shares subject to the option vests over a
four-year period. Thereafter, at each annual stockholders' meeting beginning
with this 1997 Annual Meeting, each non-employee director with at least six
months of service on the Board of Directors will automatically be granted an
option to purchase 4,000 shares of Common Stock. Such options are exercisable at
a price equal to the fair market value of the Company's Common Stock on the date
the option is granted, and the right to exercise the shares subject to the
option vests over a one-year period. See "Proposal No. 2: Amendment of 1996
Director Option Plan."

Directors otherwise have received no fees for services provided in that
capacity but have been reimbursed for out-of-pocket expenses in connection with
attendance at Board of Directors meetings. Beginning in May 1997, the Company
will pay each non-employee director $1,000 for each Board of Directors meeting
which such director attends in person and $500 for each committee meeting which
such committee member attends in person. Directors will receive no compensation
for meetings attended by telephone or for actions taken by written consent.

VOTE REQUIRED

The three nominees receiving the highest number of affirmative votes of the
shares present or represented by proxy and entitled to vote will be elected as
directors. Votes withheld from any director are counted for purposes of
determining the presence or absence of a quorum, but have no legal effect under
Delaware law.

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10

While there is no definitive statutory or case law authority in Delaware as to
the proper treatment of abstentions and broker non-votes in the election of
directors, the Company believes that both abstentions and broker non-votes
should be counted for purposes of whether a quorum is present at the Annual
Meeting. In the absence of precedent to the contrary, the Company intends to
treat abstentions and broker non-votes with respect to the election of directors
in this manner.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS
VOTE "FOR" THE ELECTION OF THE NOMINEES

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EXECUTIVE COMPENSATION

EXECUTIVE OFFICERS

The executive officers of the Company and certain information about them as
of December 31, 1996 are listed below:

NAME OF NOMINEE AGE COMPANY POSITIONS
- ------------------------ ---- -----------------------------------------

James E. Rurka 51 President, Chief Executive Officer and
Director
Keith A. Bostian, Ph.D. 45 Chief Operating Officer and Director
Matthew J. Hogan 36 Chief Financial Officer

James E. Rurka, President, Chief Executive Officer and a Director, joined
the Company in February 1994. From August 1983 to December 1993 he was with
Cetus Corporation and Chiron Corporation where he was most recently President of
the Cetus Oncology Division. Prior to joining Cetus Corporation, Mr. Rurka held
several group marketing and product management positions at Bristol Laboratories
and Schering Laboratories. Mr. Rurka holds a B.A. in English with a minor in
Business from Seton Hall University, and he attended Seton Hall University
Graduate School of Business.

Keith A. Bostian, Ph.D., Chief Operating Officer and a Director, was a
founder of the Company in December 1992. From June 1987 through December 1992 he
was employed at Merck Research Laboratories, where he was Executive Director of
Microbiology and Molecular Genetics. Dr. Bostian was an Assistant and Adjunct
Associate Professor of Biology in the Division of Biology at Brown University
from 1982 to 1990 and was elected to the American Academy of Microbiology in
1993. Dr. Bostian received a B.A. in Biology and Chemistry from Augustana
College and a Ph.D. in Biochemistry from Queen Mary College, University of
London.

Matthew J. Hogan, Chief Financial Officer, joined the Company in May 1996.
Prior to joining the Company, he held various positions since 1986 in the
investment banking group at Merrill Lynch & Co., most recently as a Director
focusing on the biotechnology/pharmaceutical sector. Mr. Hogan holds a B.A. in
Economics from Dartmouth College and a M.B.A. from the Amos Tuck School of
Business Administration.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

In January 1993, Institutional Venture Partners transferred to L. James
Strand, M.D., a Director of the Company, and a General Partner of Institutional
Venture Partners, 8,000 shares of Series A Preferred Stock of the Company in
consideration of Dr. Strand's assistance on behalf of the Company. The Series A
Preferred Stock converted into Common Stock in connection with the Company's
initial public offering in May 1996.

Prior to his appointment as a Director of the Company, pursuant to a letter
agreement dated August 2, 1993, as revised and superseded by letter agreements
dated August 30, 1993 and September 20, 1993, which terminated in July 1995, Jon
S. Saxe, a director of the Company from October 1993 to March 1997, agreed to
provide consulting services to the Company on business development issues in
exchange for $1,333 per consulting day in cash and 267 shares of Common Stock of
the Company per consulting day. Mr. Saxe received $3,048 and 1,000 shares of
Common Stock in 1993, $12,609 in 1994 and $15,422 and 5,040 shares of Common
Stock in 1995 for consulting services rendered to the Company. Mr. Saxe resigned
from the Company's Board of Directors in March 1997.

The Company believes that all of the transactions set forth above were made
on terms no less favorable to the Company than could have been obtained from
unaffiliated third parties. All future transactions, including loans, between
the Company and its officers, directors, principal stockholders and their
affiliates will be approved by a majority of the Board of Directors, including a
majority of the independent and disinterested outside directors and will
continue to be on terms no less favorable to the Company than could be obtained
from unaffiliated third parties.

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12

COMPENSATION TABLES

SUMMARY COMPENSATION TABLE. The following table sets forth the compensation
paid by the Company to the Chief Executive Officer and each of the other
executive officers of the Company whose total salary and bonus for fiscal year
1996 exceeded $100,000 (collectively the "Named Officers").

ANNUAL COMPENSATION
----------------------------------- LONG-TERM
FISCAL OTHER ANNUAL COMPENSATION ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(1) COMPENSATION OPTIONS/SARS COMPENSATION(2)
- ---------------------------------- ------ -------- --------- ------------ -------------- ---------------

James E. Rurka, President 1995 $254,166 $ 50,000 $ 35,721(3) 60,000(4) $ 723
and Chief Executive Officer 1996 260,000 91,000 13,465(5) 75,000(6) 758
Keith A. Bostian, Ph.D., 1995 244,391 50,000 70,433(7) -- 5,118
Chief Operating Officer 1996 250,000 75,000 -- 40,000(8) 5,642
Matthew J. Hogan,
Chief Financial Officer(9) 1996 92,115 37,500 9,242(10) 50,000(11) 238

- ---------------

(1) Represents bonuses earned by the Named Officer based upon his performance
in the year noted but paid in the subsequent year.

(2) Represents amounts paid by the Company on behalf of the officer for term
life insurance policies (the proceeds of which are payable to the officer's
beneficiaries).

(3) Represents the portion of a forgivable loan for moving, housing and other
expenses incurred by Mr. Rurka in connection with relocating to the
Company's geographic region attributed to 1995 compensation.

(4) Pursuant to the Company's 1993 Amended Incentive Stock Plan, an option to
purchase 60,000 shares of Common Stock at a price of $0.375 per share was
granted to Mr. Rurka in December 1995. As of December 31, 1996, such option
was vested with respect to 42,500 shares of Common Stock. Such option
vested at the rate of 1/4th of the shares on the first anniversary of Mr.
Rurka's date of hire and vests on a monthly basis over the subsequent three
years.

(5) Represents the portion of a forgivable loan for moving, housing and other
expenses incurred by Mr. Rurka in connection with relocating to the
Company's geographic region attributed to 1996 compensation.

(6) Pursuant to the Company's 1993 Amended Incentive Stock Plan, an option to
purchase 75,000 shares of Common Stock at a price of $2.50 per share was
granted to Mr. Rurka in March 1996. As of December 31, 1996, such option
was vested with respect to 14,063 shares of Common Stock. Such option vests
on a monthly basis over a four-year period after the date of grant subject
to the Company's achievement of certain milestones in 1996; such milestones
were achieved.

(7) Represents reimbursement for taxes incurred by Dr. Bostian as a result of
the payment by the Company in 1994 of $100,908 of moving, housing and other
expenses incurred by Dr. Bostian in connection with relocating to the
Company's geographic region.

(8) Pursuant to the Company's 1993 Amended Incentive Stock Plan, an option to
purchase 40,000 shares of Common Stock at a price of $2.50 per share was
granted to Dr. Bostian in March 1996. As of December 31, 1996, such option
was vested with respect to 7,500 shares of Common Stock. Such option vests
on a monthly basis over a four-year period after the date of grant subject
to the Company's achievement of certain milestones in 1996; such milestones
were achieved.

(9 Mr. Hogan joined the Company in May 1996.

(10) Represents reimbursement of expenses incurred by Mr. Hogan in connection
with relocating to the Company's geographic region attributed to 1996
compensation.

(11) Pursuant to the Company's 1993 Amended Incentive Stock Plan, an option to
purchase 50,000 shares of Common Stock at a price of $10.25 per share was
granted to Mr. Hogan in May 1996. Such option vests at the rate of 1/4 of
the shares on the first anniversary of the date of grant of the option and
vests on a monthly basis over the subsequent three years.

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EMPLOYMENT CONTRACTS. In February 1994, the Company entered into an
employment agreement with James E. Rurka, President and Chief Executive Officer
and a Director of the Company, for a three-year term. Pursuant to such
agreement, Mr. Rurka receives an annual base salary of $260,000. Mr. Rurka's
salary will be increased in 1997. Also pursuant to such agreement, Mr. Rurka
purchased 140,000 shares of Common Stock at $0.25 per share, as to which shares
the Company has a right of repurchase which lapses over a four-year period
subject to Mr. Rurka's continued employment with the Company, and was provided
an option to purchase an additional 60,000 shares of Common Stock based on Mr.
Rurka's having met certain bonus objectives. In addition, the Company provided
Mr. Rurka, pursuant to the agreement, a forgivable loan to cover certain
relocation expenses.

In December 1992, the Company entered into an employment agreement with
Keith A. Bostian, Ph.D., Chief Operating Officer and a Director, for a
three-year term which provides for a minimum annual salary of $150,000 subject
to annual review and increase by mutual agreement, in addition to a guaranteed
annual bonus of $79,000. Also pursuant to such agreement, Dr. Bostian purchased
256,000 shares of Common Stock at a purchase price of $0.005 per share subject
to vesting over a four-year period at the rate of 1/48th of such shares each
month based upon continued employment. The Company subsequently agreed with Dr.
Bostian to modify his compensation to an annual salary of $250,000, with no
guaranteed bonus, and with such salary to be increased in 1997. The Company's
employment agreement with Dr. Bostian was automatically renewed for an
additional term of one year on January 11, 1996 and provides for further
automatic renewal for successive terms of one year each unless either party
gives notice of cancellation 90 days prior to such renewal.

The Company currently has no other compensatory plan or arrangement with
any of the Named Officers where the amounts to be paid exceed $100,000 and which
are activated upon resignation, termination or retirement of any such executive
officer upon a change in control of the Company.

STOCK OPTION INFORMATION

OPTION GRANTS IN LAST FISCAL YEAR. The following table sets forth certain
information concerning grants of stock options to each of the Named Officers
during the fiscal year ended December 31, 1996. The table also sets forth
hypothetical gains or "option spreads" for the options at the end of their
respective ten-year terms. These gains are based on the assumed rates of annual
compound stock price appreciation of 5% and 10% from the date the option was
granted over the full option term. Actual gains, if any, on option exercises are
dependent on the future performance of the Company's Common Stock and overall
market conditions.

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OPTION GRANTS IN LAST FISCAL YEAR

POTENTIAL REALIZABLE
% OF TOTAL VALUE AT ASSUMED
OPTIONS ANNUAL RATE OF STOCK
GRANTED TO PRICE APPRECIATION
EMPLOYEES EXERCISE FOR OPTIONS TERM(2)
OPTIONS IN FISCAL PRICE EXPIRATION ---------------------
NAME GRANTED(1) YEAR PER SHARE DATE 5% 10%
- -------------------------------- ---------- ---------- --------- --------- -------- --------

James E. Rurka, President,
Chief Executive Officer
and Director.................. 75,000 19.0% $ 2.50 03/07/06 $117,918 $298,827
Keith A. Bostian, Ph.D.,
Chief Operating Officer
and Director.................. 40,000 10.1% 2.50 03/07/06 62,889 159,374
Matthew J. Hogan, Chief
Financial Officer............. 50,000 12.7% 10.25 05/06/06 322,308 816,793

- ---------------

(1) The options referenced in the foregoing table are intended to be incentive
stock options to the extent permitted by applicable law. The Company's 1993
Amended Incentive Stock Plan (the "Incentive Plan") also provides for the
grant of non-qualified stock options. Incentive stock options may be granted
under the Incentive Plan at an exercise price no less than fair market value
on the date of grant. For so long as the Company's Common Stock is listed on
the Nasdaq National Market, the fair market value is the closing sale price
for the Common Stock. Non-qualified options may be granted at an exercise
price of no less than 85% of fair market value on the date of grant. Options
generally become exercisable as to 25% of the shares subject to the option
one year after the date of grant, and as to the remainder in equal monthly
installments over the succeeding 36 months. Options generally terminate on
the earlier of thirty days after termination of the optionee's employment by
or services to the Company, or ten years after grant.

(2) The 5% and 10% assumed annualized rates of compound stock price appreciation
are based on the exercise prices shown in the table, are mandated by the
rules of the Securities and Exchange Commission, and do not represent the
Company's estimate or a projection by the Company of future Common Stock
prices.

AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
VALUES. The following table sets forth certain information concerning the number
of options exercised by the Named Officers during the fiscal year ended December
31, 1996, and the number of shares covered by both exercisable and unexercisable
stock options held by the Named Officers as of December 31, 1996. Also reported
are values for "in-the-money" options that represent the positive spread between
the respective exercise prices of outstanding options and the fair market value
of the Company's Common Stock as of December 31, 1996 ($10.00 per share).

AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES

NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES DECEMBER 31, 1996 DECEMBER 31, 1996
ACQUIRED ON VALUE ---------------------------- ----------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------- ----------- -------- ----------- ------------- ----------- -------------

James E. Rurka............ 0 $0 56,563 78,437 $ 514,535 $ 625,465
Keith A. Bostian, Ph.D.... 0 0 14,375 35,625 122,422 273,828
Matthew J. Hogan.......... 0 0 0 50,000 0 0

REPORT OF THE COMPENSATION COMMITTEE

The Compensation Committee (the "Committee") of the Board of Directors
reviews and recommends to the Board of Directors for approval the Company's
executive compensation policies. The Committee during 1996 consisted of
directors David Schnell, M.D., L. James Strand, M.D., and John P. Walker. The
following is the report of the Committee describing the compensation policies
and rationales applicable to the

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Company's executive officers with regard to the compensation payable to such
executive officers for the fiscal year ended December 31, 1996.

Compensation Philosophy

The goal of the Company's compensation policies is to align executive
compensation with business objectives and corporate performance, and to attract
and retain executives who contribute to the long-term success and value of the
Company. Compensation for the Company's executive officers consists of a base
salary and potential cash bonus, as well as potential incentive compensation
through stock options and stock ownership. Although in 1996 the Company had no
formal incentive bonus program, the Company has historically paid cash bonuses
to executive officers as set forth below. The Company plans to implement a
formal incentive cash bonus plan for 1997. The Committee considers the total
current and potential long-term compensation of each executive officer in
establishing each element of compensation.

Base Salary

The base salary component is designed to compensate executive officers
competitively at levels necessary to attract and retain qualified executives in
the pharmaceutical and biotechnology industry. The base salary for each officer
is set on the basis of personal performance, the salary levels in effect for
comparable positions within the Company's principal competitors, and internal
comparability considerations. As a general matter, the base salary for each
executive officer is initially established through negotiation at the time the
officer is hired, taking into account such officer's qualifications, experience,
prior salary, and competitive salary information. Year-to-year adjustments to
each executive officer's base salary are based upon personal performance for the
year and changes in the general level of base salaries of persons in comparable
positions within the industry.

Incentive Bonuses

Although the Company had no formal incentive bonus plan in 1996, the
executive officers of the Company are eligible to receive incentive cash
compensation based upon achievement of individual and corporate goals. The
amounts of such cash bonuses for executive officers other than the Chief
Executive Officer are based upon the recommendation of the Chief Executive
Officer, subject to review and approval of the Compensation Committee and the
Board of Directors. The amount of any cash bonus for the Chief Executive Officer
is determined by the Compensation Committee subject to the review and approval
of the Board of Directors. The Company plans to implement a formal incentive
bonus plan in 1997.

Long-Term Incentives

The Committee provides the Company's executive officers with long-term
incentive compensation through grants of stock options under the Company's 1993
Amended Incentive Stock Plan and the opportunity to purchase stock under the
1996 Employee Stock Purchase Plan (the "Purchase Plan"). The Committee believes
that stock options provide the Company's executive officers with the opportunity
to purchase and maintain an equity interest in the Company and to share in the
appreciation of the value of the Company's Common Stock. The Committee believes
that stock options directly motivate an executive to maximize long-term
stockholder value. The options also utilize vesting periods (generally four
years) that encourage key executives to continue in the employ of the Company.
All options granted to executive officers to date have been granted at the fair
market value of the Company's Common Stock on the date of grant. The Committee
considers the grant of each option subjectively, considering factors such as the
individual performance of the executive officer and the past and anticipated
future contribution of the executive officer to the attainment of the Company's
long-term strategic performance goals. Long-term incentives granted in prior
years are also taken into consideration.

The Company established the Purchase Plan both to encourage employees to
continue in the employ of the Company and to motivate employees through
ownership interest in the Company. Under the Purchase Plan, employees may
purchase Common Stock through payroll deductions in semi-annual offerings at a
price

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equal to the lower of 85% of the closing price on the applicable offering
commencement date or 85% of the closing price on the applicable offering
termination date. The Company has reserved 120,000 shares of Common Stock for
issuance to employees.

Chief Executive Officer Compensation

The compensation of the Chief Executive Officer is reviewed annually on the
same basis as discussed above for all executive officers. In 1996, James E.
Rurka received a base salary of $260,000. Mr. Rurka's salary was determined on
the basis of negotiations between the Board of Directors and Mr. Rurka with due
regard for his qualifications, experience, prior salary, and competitive salary
information. Mr. Rurka's base salary for 1996 was established in part by
comparing the base salaries of Chief Executive Officers at other biotechnology
and pharmaceutical companies of similar size. Mr. Rurka received a $50,000 bonus
in 1996 based upon his performance during 1995 and received a $91,000 bonus in
1997 based upon his performance during 1996. As with other executive officers,
Mr. Rurka's total compensation was based on the Company's accomplishments and
the Chief Executive Officer's contribution thereto, including the collaborations
with Ortho Pharmaceutical Corporation and the R.W. Johnson Pharmaceutical
Research Institute (Johnson & Johnson companies), Daiichi Pharmaceutical Co.,
Ltd., and Pfizer Inc, and the Company's initial public offering.

SECTION 162(M)

The Board has considered the potential future effects of Section 162(m) of
the Internal Revenue Code on the compensation paid to the Company's executive
officers. Section 162(m) disallows a tax deduction for any publicly-held
corporation for individual compensation exceeding $1.0 million in any taxable
year for any of the executive officers named in the Proxy Statement, unless
compensation is performance-based. The Company has adopted a policy that, where
reasonably practicable, the Company will seek to qualify the variable
compensation paid to its executive officers for an exemption from the
deductibility limitations of Section 162(m).

In approving the amount and form of compensation for the Company's
executive officers, the Committee will continue to consider all elements of the
cost to the Company of providing such compensation, including the potential
impact of Section 162(m).

Respectfully submitted by:
COMPENSATION COMMITTEE

David Schnell, M.D., Chairman
L. James Strand, M.D.
John P. Walker

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

During 1996, the Compensation Committee consisted of David Schnell, M.D.,
L. James Strand, M.D. and John P. Walker. No member of the Compensation
Committee, as constituted during 1996, was a former or current officer or
employee of the Company.

COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than ten percent of a registered class of
the Company's equity securities, to file reports of ownership on Form 3 and
changes in ownership on Form 4 or Form 5 with the SEC. Such officers, directors
and 10% stockholders are also required by SEC rules to furnish the Company with
copies of all Section 16(a) forms they file.

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Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons, the Company believes
that, during the fiscal year ended December 31, 1996, all Section 16(a) filing
requirements applicable to its officers, directors and 10% stockholders were
complied with, except that (i) Mr. Hogan's initial Form 3 due in May 1996 was
filed on July 9, 1996, and (ii) no Forms 4 were filed for Mr. Rurka, Mr. Hogan
and Dr. Bostian with respect to purchases of shares in the Company's May 1996
initial public offering, and such purchases were subsequently reported on Forms
5.

CORPORATE PERFORMANCE GRAPH

The following graph shows a comparison of cumulative total stockholder
return on the Company's Common Stock from the effective date of the Company's
initial public offering on May 14, 1996 through December 31, 1996 for the
Company, the Nasdaq National Market Index and the Nasdaq Pharmaceutical Index.
The Nasdaq Pharmaceutical Index represents all companies trading on the Nasdaq
National Market under the Standard Industrial Code for pharmaceutical companies,
including biotechnology companies. The graph is presented pursuant to SEC rules.
The Company believes that while total stockholder return can be an important
indicator of corporate performance, the stock prices of companies like Microcide
are subject to a number of market-related factors other than company
performance, such as competitive announcements, mergers and acquisitions in the
industry, the general state of the economy and the prices of biopharmaceutical
stocks.

COMPARISON OF CUMULATIVE TOTAL RETURN*
AMONG MICROCIDE PHARMACEUTICALS, INC., THE NASDAQ STOCK MARKET
INDEX AND THE NASDAQ PHARMACEUTICAL INDEX

MICROCIDE
MEASUREMENT PERIOD PHARMACEUTICALS, NASDAQ STOCK NASDAQ
(FISCAL YEAR COVERED) INC. MARKET PHARMACEUTICAL

MAY 14, 1996 100 100 100
DECEMBER 31, 1996 71 109 91

*Assumes $100 Invested On May 14, 1996.
Assumes Dividends Reinvested.
Fiscal Year Ending December 31, 1996.

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PROPOSAL TWO

AMENDMENT OF 1996 DIRECTOR OPTION PLAN

The Company's 1996 Director Option Plan (the "Director Plan") was adopted
by the Company's Board of Directors in February 1996 and by the stockholders of
the Company in April 1996. A total of 80,000 shares are reserved for issuance
under the Director Plan. Pursuant to the Director Plan as originally adopted,
each individual who becomes a non-employee Board member for the first time on or
after the date of adoption of the plan will automatically be granted an option
to purchase 12,000 shares of Common Stock (the "Initial Option") on the date of
his or her election or appointment to the Board of Directors, provided such
individual was not immediately prior to such time employed by the Company. Such
options are exercisable at a price equal to the fair market value of the
Company's Common Stock on the date the option is granted, and the right to
exercise the shares subject to the option vests over a three-year period.
Thereafter, at each annual stockholders' meeting beginning with this 1997 Annual
Meeting, each non-employee director with at least six months of service on the
Board of Directors will automatically be granted an option to purchase 4,000
shares of Common Stock. Such options are exercisable at a price equal to the
fair market value of the Company's Common Stock on the date the option is
granted, and the right to exercise the shares subject to the option vests over a
one-year period.

In February 1997, the Board of Directors approved an amendment to the
Director Plan with respect to the grant of Initial Options to provide that each
individual who becomes a non-employee Board member for the first time on or
after the date of amendment of the Director Plan will automatically be granted
an option to purchase 16,000 shares of Common Stock (an increase of 4,000 shares
for this one-time grant to new, non-employee directors) on the date of his or
her election or appointment to the Board of Directors, with the right to
exercise the shares subject to the option vesting over a four-year period,
rather than a three-year period. The Board believes that the proposed increase
in the number of shares subject to Initial Options is in the best interest of
the Company and its stockholders. The Board believes that the proposed amendment
will increase the Company's ability to attract and retain qualified directors of
the Company.

As of March 31, 1997 no directors of the Company had received Initial
Options under the Director Plan, and no nominees for director at this 1997
Annual Meeting will be eligible to receive an Initial Option.

SUMMARY OF THE 1996 DIRECTOR OPTION PLAN

The essential features of the Director Plan, as amended, are summarized
below. This summary does not purport to be complete and is subject to, and
qualified by, reference to all provisions of the Director Plan.

PURPOSES. The purposes of the Director Plan are to attract and retain the
best available personnel for service as outside directors of the Company, to
provide additional incentive to such non-employee directors and to encourage
their continued service on the Board.

ADMINISTRATION. The Director Plan is designed to be effective automatically
without requiring administration. However, to the extent administration is
necessary, it will be provided by the Board. The interpretation and construction
of any provision of the Director Plan by the Board shall be final and
conclusive. Members of the Board receive no additional compensation for their
services in connection with the administration of the Director Plan.

TERMS OF OPTIONS. The Director Plan provides for the grant of nonstatutory
stock options to non-employee directors of the Company. As of the date of this
proxy statement, five directors would have been eligible to receive option
grants under the Director Plan, if it had been in effect at that time. New
eligible directors will be granted an initial option (the "Initial Option") to
purchase 16,000 shares of Common Stock on the date such new director first
becomes a non-employee director after the effective date of the Director Plan,
provided such non-employee director was not immediately prior to such time an
employee director of the Company. Each eligible director shall be granted an
option (the "Subsequent Option") to purchase 4,000 additional shares of Common
Stock on the date of each annual meeting of the stockholders beginning on the
date of the 1997 Annual Meeting. Options granted under the Director Plan expire
10 years after the date of

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grant. Each option is evidenced by a stock option agreement between the Company
and the director to whom such option is granted. The terms of the options under
the Director Plan described above may not be amended more than once every six
months, except for amendments to comply with changes in applicable law.

RULE 16B-3. The Director Plan requires that options granted thereunder must
comply with the applicable provisions of Rule 16b-3 promulgated under the
Exchange Act or any successor thereto and shall contain such additional
conditions or restrictions as may be required thereunder from time to time to
qualify for the maximum exemption from Section 16 of the Exchange Act with
respect to the Director Plan transactions.

EXERCISE OF THE OPTIONS. The Initial Option shall become exercisable as to
1/8 of the shares subject to the option six months after the date of grant, and
as to 1/48 of the shares in equal monthly installments thereafter, so long as
the optionee remains a director. Each Subsequent Option shall become exercisable
as to 1/12 of the shares subject to the option in equal monthly installments
over one year, commencing on the date of grant of such option, so long as the
optionee remains a director. An option is exercised by giving written notice of
exercise to the Company, specifying the number of full shares of Common Stock to
be purchased and tendering payment of the purchase price to the Company. The
consideration to be paid for shares issued upon exercise of options granted
under the Directors Plan, including the method of payment, shall be determined
by the administrators and may consist entirely of (1) cash, (2) check, (3)
shares of Common Stock, (4) the delivery of a properly executed exercise notice
together with such other documentation as the Board and the broker, if
applicable, shall require to effect an exercise of the option and delivery to
the Company of the amount of sale or loan proceeds required to pay the exercise
price, or (5) any combination of the foregoing methods.

OPTION PRICE. The option price under the Director Plan is the fair market
value of the Company's Common Stock on the date of grant. The fair market value
of a share of Common Stock shall be the last reported sale price for such stock
(or the closing bid, if no sales were reported) as quoted on the Nasdaq National
Market (or the exchange with the greatest volume of trading in Common Stock) on
the date of grant. If the Common Stock of the Company is traded on Nasdaq (but
not on the Nasdaq National Market) or regularly quoted by a recognized
securities dealer, but selling prices are not reported, the fair market value of
a share of Common Stock of the Company shall be the mean between the bid and
asked prices for the Common Stock on the date of grant.

TERMINATION OF STATUS AS A DIRECTOR. The Director Plan provides that if the
optionee ceases to serve as a director of the Company, the optionee may, but
only within 3 months after the date he or she ceases to be a director, exercise
his or her option to the extent that the optionee was entitled to exercise it at
the date of such termination, provided that the option is exercised no later
than its expiration date.

DISABILITY. If an optionee's service as a director of the Company is
terminated as a result of his or her total and permanent disability, the
optionee may, but only within twelve months after the date of the optionee's
termination, exercise his or her option to the extent that the optionee was
entitled to exercise it at the date of such termination, provided that the
option is exercised no later than its expiration date.

DEATH. In the event of the death of an optionee, the option may be
exercised at any time within 12 months after death, but only to the extent that
the option would have been exercisable on the date of death, provided that the
option is exercised no later than its expiration date.

NONTRANSFERABILITY OF OPTIONS. An option is nontransferable by the
optionee, other than by will or the laws of descent and distribution, and is
exercisable during the optionee's lifetime only by the optionee.

ADJUSTMENTS; DISSOLUTIONS; MERGERS AND ASSET SALES. In the event any
change, such as a stock split or dividend, is made in the Company's
capitalization which results in an increase or decrease in the number of
outstanding shares of Common Stock without receipt of consideration by the
Company, an appropriate adjustment shall be made in the number of shares under
the Director Plan and the price per share covered by each outstanding option. In
the event of the proposed dissolution or liquidation of the Company, all
outstanding options will terminate immediately prior to the consummation of such
proposed action. In the event of the merger of the Company with or into another
corporation or a proposed sale of all or substantially

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all of the assets of the Company, each outstanding option shall be assumed or
substituted by such successor corporation, or, if not so assumed, each such
option shall terminate.

AMENDMENT AND TERMINATION. The Board may amend, alter, suspend or
discontinue the Director Plan at any time, but any such action shall not
adversely affect any stock option then outstanding under the Director Plan
without the consent of the holder thereof. To the extent necessary and desirable
to comply with Rule 16b-3 (or any other applicable law or regulation), the
Company shall obtain stockholder approval of any amendment to the Director Plan
in such a manner and to such a degree as required. The Director Plan shall
terminate in February 2006. Any options outstanding under the Director Plan at
the time of its termination shall remain outstanding until they expire by their
terms.

CERTAIN FEDERAL INCOME TAX INFORMATION

Options granted under the Director Plan are nonstatutory options. An
optionee will not recognize any taxable income at the time of grant of a
nonstatutory option. However, upon its exercise, the optionee will recognize
ordinary income for tax purposes measured by the excess of the then fair market
value of the shares over the exercise price. Because the optionee is a director
of the Company and therefore subject to Section 16 of the Exchange Act, the date
of taxation (and the date of measurement of taxable ordinary income) may be
deferred unless the optionee files an election under Section 83(b) of the
Internal Revenue Code of 1986 (the "Code"). Upon resale of such shares by the
optionee, any difference between the sales price and the exercise price, to the
extent not recognized as ordinary income as provided above, will be treated as
capital gain or loss. The Company will be entitled to a tax deduction in the
amount and at the time that the optionee recognizes ordinary income with respect
to shares acquired upon exercise of an option.

The foregoing summary of the federal income tax consequences of Director
Plan transactions is based on federal income tax laws in effect on the date of
this Proxy Statement. This summary is not intended to be complete, and does not
describe foreign, state or local tax consequences.

VOTE REQUIRED

The affirmative vote of the holders of a majority of the shares of the
Company's Common Stock is required to approve the amendment of the Director
Plan.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS
VOTE "FOR" THE AMENDMENT OF THE 1996 DIRECTOR OPTION PLAN

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PROPOSAL THREE

AMENDMENT TO 1993 AMENDED INCENTIVE STOCK PLAN

GENERAL

In April 1993, the Board of Directors of the Company adopted the 1993
Amended Incentive Stock Plan (the "Stock Plan"), which was approved by the
stockholders in April 1994. Options granted under the Stock Plan may be either
"incentive stock options," as defined in Section 422 of the Code, or
nonstatutory stock options. See "Certain Federal Income Tax Information" below
for information concerning the tax treatment of both incentive stock options and
nonstatutory stock options. The Board of Directors and stockholders of the
Company have previously reserved for issuance 1,380,000 shares of Common Stock
under the Stock Plan. In March 1996, the Board of Directors approved an
amendment to the Stock Plan increasing to a total of 1,880,000 the shares of
Common Stock reserved for issuance under the Stock Plan, and making certain
other changes described below. As of March 1, 1997, options to purchase
approximately 839,387 shares were outstanding under the Stock Plan, a total of
314,868 shares had been issued upon the exercise of options granted under the
Stock Plan and approximately 225,745 shares remained available for future grant.

The stockholders are now being requested to consider and approve an
amendment to the Stock Plan to increase the number of shares of Common Stock
reserved for issuance thereunder to a new total of 1,880,000 shares.

SUMMARY OF STOCK PLAN

The essential features of the Stock Plan, as amended and restated, are
summarized below. This summary does not purport to be complete and is subject
to, and qualified by, reference to all provisions of the Stock Plan, as amended
and restated.

PURPOSES. The purposes of the Stock Plan are to attract and retain the best
available personnel for positions of substantial responsibility, to provide
additional incentive for employees and consultants of the Company and to promote
the success of the Company's business.

ADMINISTRATION. The Stock Plan may be administered by different bodies with
respect to optionees who are directors, officers who are not directors and
employees of the Company who are neither officers nor directors. With respect to
the grant of options to employees who are also officers and directors, subject
to Section 16 of the Exchange Act, the Stock Plan shall be administered by (i)
the Board of Directors of the Company provided that the Board may do so in
compliance with Rule 16b-3 promulgated under the Exchange Act, or (ii) a
committee designated by the Board and constituted in such a manner as to comply
with Rule 16b-3. With respect to grants to employees or consultants who are
neither officers nor directors of the Company, the Stock Plan shall be
administered by the Board or by a committee of the Board.

The administrators of the Stock Plan have full power to select, from among
the employees and consultants of the Company eligible for awards, the
individuals to whom awards will be granted, to make any combination of awards to
any participant and to determine the specific terms of each grant, subject to
the provisions of the Stock Plan. The interpretation and construction of any
provision of the Stock Plan by the administrators shall be final and conclusive.
Members of the Board receive no additional compensation for their services in
connection with the administration of the Stock Plan.

ELIGIBILITY. The Stock Plan provides that options may be granted to
employees (including officers and directors who are also employees) and
consultants to the Company. Incentive stock options may only be granted to
employees. The Board of Directors or its committee selects the individuals to
whom options will be granted and determines the number of shares to be
represented by each option as well as the terms thereof.

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STOCK OPTIONS. Each option granted under the Stock Plan is to be evidenced
by a written stock option agreement between the Company and the optionee and is
subject to the following additional terms and conditions:

(a) Exercise of the Option. The Board or its committee determines on
the date of grant when options become exercisable. An option is exercised
by giving written notice of exercise to the Company, specifying the number
of full shares of Common Stock to be purchased and tendering payment of the
purchase price to the Company. The acceptable methods of payment for shares
issued upon exercise of an option are set forth in the option agreement and
may consist of: (1) cash, (2) check, (3) promissory note, (4) shares of
Common Stock, (5) the delivery of a properly executed exercise notice
together with such other documentation as the Board and the broker, if
applicable, shall require to effect an exercise and delivery to the Company
of the amount of sale or loan proceeds required to pay the exercise price,
or (6) any combination of the foregoing methods.

(b) Exercise Price. The exercise price of options granted under the
Stock Plan is determined on the date of grant. In the event of the grant of
a nonstatutory option below the fair market value, the difference between
fair market value on the date of grant and the exercise price would be
treated as a compensation expense for accounting purposes and would
therefore affect the Company's earnings. In the case of options granted to
an employee who at the time of grant owns more than 10% of the voting power
of all classes of stock of the Company or any parent or subsidiary, the
exercise price must be at least 110% of the fair market value per share of
the Common Stock at the time of grant. The exercise price of incentive
stock options must be at least 100% of the fair market value per share at
the time of grant. For purposes of the Stock Plan, fair market value shall
be determined in the same way it is determined under the Director Plan. See
"Proposal Two -- Amendment of 1996 Director Option Plan -- Summary of the
1996 Director Option Plan -- Option Price."

(c) Termination. If the optionee's employment or consulting
relationship with the Company is terminated for any reason (other than
death or total and permanent disability), options may be exercised within
such period as is determined by the Board or its committee (generally 30
days but in any event no more than three months in the case of incentive
stock options) after such termination as to all or part of the shares as to
which the optionee was entitled to exercise at the date of such
termination, provided that the option is exercised no later than its
expiration date.

(d) Disability. If an optionee is unable to continue his or her
employment or consulting relationship with the Company as a result of total
and permanent disability, options may be exercised at any time within 12
months from the date of disability to the extent such options were
exercisable at the date of disability, provided that the option is
exercised no later than its expiration date.

(e) Death. If an optionee should die while serving as an employee or
consultant of the Company, options may be exercised at any time within 12
months after the date of death by the optionee's estate or a person who
acquired the right to exercise the option by bequest or inheritance, but
only to the extent that such options would have been exercisable by the
optionee at the date of death, provided that the option is exercised no
later than its expiration date.

(f) Term and Termination of Options. At the time an option is granted,
the Board or its committee determines the period within which the option
may be exercised. The proposed form of option agreement provides that
options granted under the Stock Plan expire 10 years from the date of
grant. In no event may the term of an incentive stock option be longer than
10 years. No option may be exercised by any person after the expiration of
its term. An option granted to an optionee who, at the time such option is
granted, owns more than 10% of the voting power of all classes of stock of
the Company, may not have a term of more than five years.

(g) Nontransferability of Options. An option is not transferable by
the optionee, other than by will or the laws of descent and distribution,
and is exercisable during the optionee's lifetime only by the optionee.

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(h) Other Provisions. The option agreement may contain such other
terms, provisions and conditions not inconsistent with the Stock Plan as
may be determined by the Board or its committee.

In the event of the proposed dissolution or liquidation of the Company, all
outstanding options will terminate immediately prior to the consummation of such
proposed action. However, the Board may, in its discretion, make provision for
accelerating the exercisability of shares subject to options under the Stock
Plan in the event of such a proposed dissolution or liquidation. In the event of
the merger of the Company with or into another corporation or a proposed sale of
all or substantially all of the assets of the Company, each outstanding option
shall be assumed or substituted by such successor corporation. However, if a
successor does not so assume or substitute, the option shall terminate and the
Company shall notify the participant 15 days prior to the closing of the merger.

AMENDMENT AND TERMINATION OF THE STOCK PLAN. The Board may amend the Stock
Plan at any time or from time to time or may terminate the Stock Plan without
approval of the stockholders; provided, however, that stockholder approval is
required for any amendment to the Stock Plan for which stockholder approval
would be required under applicable law, as in effect at the time. However, no
action by the Board of Directors or stockholders may alter or impair any option
previously granted under the Stock Plan. The Board may accelerate any option or
waive any condition or restriction pertaining to such option at any time. The
Board may also substitute new stock options for previously granted stock
options, including previously granted stock options having higher option prices,
and may reduce the exercise price of any option to the then current fair market
value, if the fair market value of the Common Stock covered by such option shall
have declined since the date the option was granted. In any event, the Stock
Plan shall terminate in April 2003. Any options outstanding under the Stock Plan
at the time of its termination shall remain outstanding until they expire by
their terms.

CERTAIN FEDERAL INCOME TAX INFORMATION

An optionee who is granted an incentive stock option will not recognize
taxable income either at the time of grant or exercise, although the exercise
may subject the optionee to the alternative minimum tax. Upon the sale or
exchange of the shares more than two years after grant of the option and one
year after exercise, any gain or loss will be treated as long-term capital gain
or loss. If these holding periods are not satisfied, the optionee will recognize
ordinary income at the time of sale or exchange equal to the difference between
the exercise price and the lower of (i) the fair market value of the shares at
the date of the option exercise, or (ii) the sale price of the shares. A
different rule for measuring ordinary income upon such a premature disposition
may apply if the optionee is subject to Section 16 of the Exchange Act. Any gain
or loss recognized on such a premature disposition of the shares in excess of
the amount treated as ordinary income will be characterized as long-term or
short-term capital gain or loss, depending on the holding period.

An optionee will not recognize any taxable income at the time he or she is
granted a nonstatutory option. However, upon its exercise, the optionee will
recognize taxable income generally measured as the excess of the then fair
market value of the shares purchased over the purchase price. Any taxable income
recognized in connection with an option exercise by an optionee who is also an
employee of the Company will be subject to tax withholding by the Company. Upon
resale of such shares by the optionee, any difference between the sales price
and the optionee's purchase price, to the extent not recognized as taxable
income as described above, will be treated as long-term or short-term capital
gain or loss, depending on the holding period.

The Company will be entitled to a tax deduction in the same amount as the
ordinary income recognized by an optionee with respect to shares acquired upon
exercise of an option.

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The foregoing summary of the federal income tax consequences of Stock Plan
transactions is based upon federal income tax laws in effect on the date of this
Proxy Statement. This summary does not purport to be complete, and does not
discuss foreign, state or local tax consequences.

VOTE REQUIRED

The affirmative vote of the holders of a majority of the shares of the
Company's Common Stock is required to approve the amendment of the Stock Plan.

THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" THE AMENDMENT OF THE 1993 AMENDED
INCENTIVE STOCK PLAN

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PROPOSAL FOUR

CONFIRMATION OF APPOINTMENT OF
INDEPENDENT AUDITORS

The Board of Directors has selected Ernst & Young LLP to audit the
financial statements of the Company for the year ending December 31, 1997, and
recommends that the stockholders confirm the selection. In the event of a
negative vote, the Board will reconsider its selection.

Ernst & Young LLP has audited the Company's financial statements since
1993. Representatives of Ernst & Young LLP are expected to be present at the
meeting, will have the opportunity to make a statement if they so desire, and
are expected to be available to respond to appropriate questions.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS
VOTE "FOR" THE CONFIRMATION OF THE APPOINTMENT OF
INDEPENDENT AUDITORS

OTHER MATTERS

The Company knows of no other matters to be submitted to the meeting. If
any other matters properly come before the meeting, it is the intention of the
persons named in the enclosed proxy card to vote the shares they represent as
the Board of Directors may recommend.

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THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

MICROCIDE PHARMACEUTICALS, INC.
1997 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 13, 1997

The undersigned stockholder of MICROCIDE PHARMACEUTICALS, INC., a
Delaware corporation, hereby acknowledges receipt of the Notice of Annual
Meeting of Stockholders and Proxy Statement, each dated April 14, 1997 and
hereby appoints James E. Rurka and Matthew J. Hogan, and each of them, proxies
and attorneys-in-fact, with full power to each of substitution, on behalf and in
the name of the undersigned, to represent the undersigned at the 1997 Annual
Meeting of Stockholders of MICROCIDE PHARMACEUTICALS, INC. to be held on May 13,
1997 at 10:00 a.m. local time, at the Company's offices located at 850 Maude
Avenue, Mountain View, California, 94043, and at any adjournment thereof, and to
vote all shares of Common Stock which the undersigned would be entitled to vote
if then and there personally present, on the matters set forth below:

1. ELECTION OF DIRECTORS:

[ ] FOR all nominees listed below [ ] WITHHOLD for all nominees
(except as indicated) listed below

IF YOU WISH TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE, STRIKE A LINE THROUGH THAT NOMINEE'S NAME IN THE LIST
BELOW:

Joseph S. Lacob, David Schnell, M.D., and L. James Strand,
M.D.

2. PROPOSAL TO AMEND THE 1996 DIRECTOR OPTION PLAN TO INCREASE
THE INITIAL OPTION GRANT TO DIRECTORS OF THE COMPANY FROM
12,000 TO 16,000 SHARES:
[ ] FOR [ ] AGAINST [ ] ABSTAIN

3. PROPOSAL TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK
RESERVED FOR ISSUANCE UNDER THE 1993 AMENDED INCENTIVE STOCK
PLAN FROM 1,380,000 TO 1,880,000 SHARES:
[ ] FOR [ ] AGAINST [ ] ABSTAIN

4. PROPOSAL TO RATIFY THE APPOINTMENT OF ERNST & YOUNG LLP AS
THE INDEPENDENT AUDITORS OF THE COMPANY FOR THE FISCAL PERIOD
ENDING DECEMBER 31, 1997:
[ ] FOR [ ] AGAINST [ ] ABSTAIN

and, in their discretion, upon such other matter or matters which may properly
come before the meeting or any adjournment thereof.

THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS INDICATED,
WILL BE VOTED FOR THE ELECTION OF DIRECTORS, FOR THE AMENDMENT TO THE 1996
DIRECTOR OPTION PLAN, FOR THE INCREASE IN THE NUMBER OF SHARES OF COMMON STOCK
RESERVED FOR ISSUANCE UNDER THE 1993 AMENDED INCENTIVE STOCK PLAN, FOR THE
RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS
AND AS SAID PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY PROPERLY COME
BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.

Dated: __________________, 1997 ______________________________
Signature

_______________________________
Signature

(This Proxy should be marked, dated and signed by the stockholder(s) exactly as
his or her name appears hereon, and returned promptly in the enclosed envelope.
Persons signing in a fiduciary capacity should so indicate. If shares are held
by joint tenants or as community property, both should sign.)