10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

þ	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended December 31, 2005
OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from           to

Commission file number: 000-50447

Pharmion Corporation

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)	84-1521333 (I.R.S. Employer Identification No.)
2525 28th Street, Suite 200, Boulder, Colorado (Address of principal executive offices)	80301 (Zip Code)

720-564-9100

(Registrant’s telephone number, including area code)

None

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

None

Securities registered pursuant to Section 12(g) of the Act:

Title of Each Class

Common Stock, $.001 par value per share

     Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o         No þ

     Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes o         No þ

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ         No o

     Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    o

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.    Large accelerated filer    o         Accelerated filer    þ         Non-accelerated filer    o

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes    o         No þ

     As of June 30, 2005, the aggregate market value of the registrant’s voting and non-voting common equity held by non-affiliates of the registrant was $628,659,909 based on the closing sale price of our common stock as reported on the National Association of Securities Dealers Automated Quotation System National Market System.

     Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.

Class	Outstanding at March 14, 2006
Common Stock, $.001 par value per share	31,921,740 shares

DOCUMENTS INCORPORATED BY REFERENCE

Document	Parts Into Which Incorporated
Proxy Statement for the Annual Meeting of Stockholders to be held June 8, 2006 (Proxy Statement)	Part III

TABLE OF CONTENTS

		Page
PART I
Item 1.	Business		1
Item 1A.	Risk Factors		24
Item 1B.	Unresolved Staff Comments		35
Item 2.	Properties		35
Item 3.	Legal Proceedings		35
Item 4.	Submission of Matters to a Vote of Security Holders		36
PART II
Item 5.	Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		37
Item 6.	Selected Financial Data		38
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		40
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk		51
Item 8.	Financial Statements and Supplementary Data		51
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		51
Item 9A.	Controls and Procedures		51
Item 9B.	Other Information		54
PART III
Item 10.	Directors and Executive Officers of the Registrant		54
Item 11.	Executive Compensation		54
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		54
Item 13.	Certain Relationships and Related Transactions		54
Item 14.	Principal Accountant Fees and Services		54
PART IV
Item 15.	Exhibits and Financial Statement Schedules		55
Manufacturing and Service Contract
Co-Development and License Agreement
Supply Agreement
2000 Stock Incentive Plan
Consent of Independent Registered Public Accounting Firm
Section 302 Certification for President and CEO
Section 302 Certification for CFO
Section 906 Certification for President and CEO and CFO

PART I

      Unless the context requires otherwise, references in this report to “Pharmion,” the “Company,” “we,” “us,” and “our” refer to Pharmion Corporation.

      All statements, trend analysis and other information contained in this Form 10-K and the information incorporated by reference which are not historical in nature are forward-looking statements within the meaning of the Private-Securities Litigation Reform Act of 1995. These forward-looking statements include, without limitation, discussion relative to markets for our products and trends in revenue, gross margins and anticipated expense levels, as well as other statements including words such as “anticipate,” “believe,” “plan,” “estimate,” “expect” and “intend” and other similar expressions. All statements regarding our expected financial position and operating results, business strategy, financing plans, forecast trends relating to our industry are forward-looking statements. These forward-looking statements are subject to business and economic risks and uncertainties, and our actual results of operations may differ materially from those contained in the forward-looking statements. Although we may elect to update forward-looking statements in the future, we specifically disclaim any obligation to do so, even if our estimates change, and readers should not rely on those forward-looking statements as representing our views as of any date subsequent to the date of this annual report.

Item 1. Business.

Overview

      We are a global pharmaceutical company focused on acquiring, developing and commercializing innovative products for the treatment of hematology and oncology patients. We have established our own regulatory, development and sales and marketing organizations covering the U.S., Europe and Australia. We have also developed a distributor network to cover the hematology and oncology markets in 22 additional countries throughout Europe, the Middle East and Asia. To date, we have acquired the rights to six products. With our combination of regulatory, development and commercial capabilities, we intend to continue to build a balanced portfolio of approved and pipeline products targeting the hematology and oncology markets. We had total net sales of $221.2 million in 2005, $130.2 million in 2004 and $25.5 million in 2003.

      Our current product portfolio consists of the following six products:

      Vidaza^® (azacitidine for injectable suspension) — We obtained worldwide commercialization rights to Vidaza from Pharmacia & Upjohn Company, now part of Pfizer, Inc., in June 2001. In 2004, we received full approval from the U.S. Food and Drug Administration, or FDA, for the treatment for Myelodysplastic Syndromes, or MDS. Vidaza is the first approved treatment for MDS, and the first of a new class of drugs known as demethylating agents to be approved. We launched Vidaza for commercial sale in the U.S. in July 2004 and we are seeking approval to market Vidaza in Europe. We currently have an ongoing Phase III clinical trial in MDS patients examining the effect of Vidaza on the survival of 354 high risk MDS patients as compared to treatment with best supportive care with or without a chemotherapy agent. Initial data from this study is expected to be available in late 2006 or early 2007. Pending the outcome of the trial, we intend to use initial data generated in the study as the basis of a submission of a Marketing Authorization Application (MAA) to the European Agency for the Evaluation of Medicinal Products (EMEA) in 2007. In 2005, net sales of Vidaza were $125.6 million, which represented approximately 57% of our total net sales for 2005, compared to $47.1 million in 2004 (6 months only), or approximately 36% of total net sales for 2004.

      Thalidomide Pharmion 50mg^tm (thalidomide) — We obtained commercialization rights to thalidomide from Celgene Corporation for all countries outside of North America and certain Asian markets. Thalidomide has become a standard of care for the treatment of relapsed and refractory multiple myeloma, a cancer of the plasma cells in the bone marrow and there is a growing body of data that demonstrates its benefit as a first-line treatment of this disease. We began selling thalidomide in Europe on a compassionate use or named patient basis under a risk management program in the third quarter of 2003 while we seek full regulatory approval for this drug in Europe and several additional countries. Thalidomide Pharmion 50mg has been approved as a treatment for relapsed and refractory multiple myeloma in Australia, New Zealand, Turkey and Israel.

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Although thalidomide has become a standard of care for the treatment of relapsed and refractory multiple myeloma, these regulatory approvals represent the first, and to date, only, regulatory approvals for this indication. Pending further data review, we expect that results from the pivotal Phase III clinical trial in multiple myeloma trial that we announced in January 2006 will form the basis of an MAA submission to the EMEA for thalidomide in the first-line treatment of multiple myeloma by early 2007. In 2005, net sales of thalidomide were $79.4 million, which represented approximately 36% of our total net sales for 2005, compared to $65.3 million in 2004, or approximately 50% of total net sales for 2004, and $15.6 million in 2003, or approximately 61% of total net sales for 2003.

      Satraplatin — In December 2005, we obtained commercialization rights to satraplatin from GPC Biotech AG for Europe, Turkey, the Middle East, Australia and New Zealand. Satraplatin is the only oral platinum-based compound in advanced clinical development. Satraplatin has shown promising safety and efficacy as demonstrated by improvement in progression-free survival in a randomized study of first-line treatment of patients with hormone-refractory prostate cancer (HRPC) and is currently the subject of a Phase III registrational trial as second-line chemotherapy treatment for patients with HRPC. If the results of this pivotal Phase III trial are positive, we expect data from the trial to form the basis of a MAA in Europe that we expect to submit to the EMEA in early 2007. We are exploring, in collaboration with GPC Biotech, the efficacy of satraplatin for other indications.

      MGCD0103 — In January 2006, we obtained commercialization rights from MethylGene Inc. for MethylGene’s histone deacetylase (HDAC) inhibitors in North America, Europe, Middle East and certain other markets, including MGCD0103, MethylGene’s lead HDAC inhibitor, as well as MethylGene’s pipeline of second-generation HDAC inhibitor compounds for oncology indications. As a single agent therapy, MGCD0103 has completed one Phase I clinical trial with daily dosing in solid tumors and a second Phase I clinical trial is underway in solid tumors. Two Phase I clinical trials are ongoing in hematological cancers. A Phase I/ II combination trial with our DNA methylation inhibitor Vidaza was initiated in November 2005 and enrollment is under way at major cancer centers in the United States. Additional combination Phase I/ II and monotherapy Phase II trials are expected to begin in 2006.

      Our licensing agreement with MethylGene for their oncology HDAC inhibitor program represents our growing commitment to the development of drugs for the epigenetic control of cancer. Both Vidaza, a demethylating agent and MGCD0103, an HDAC inhibitor, demonstrate specific effects on the regulation of gene expression. DNA methylation and histone deacetylation are two of more studied epigenetic regulators of gene expression. Vidaza has been shown to reverse the effects of DNA hypermethylation with subsequent gene re-expression and, likewise, MGCD0103 has been shown, in pre-clinical tests, to reverse the effects of inappropriate deacetylation resulting in gene expression reactivation. In contrast with cytotoxic cancer therapies that kill both normal and cancer cells, epigenetic cancer therapies may enable the reactivation of silenced genes and, thereby, re-establish the cancer cell’s natural mechanisms to control abnormal growth.

      Innohep (tinzaparin) — Innohep is a low molecular weight heparin approved in the U.S. for the treatment of deep vein thrombosis, or DVT, which occurs when a blood clot develops in the deep veins of the legs. We obtained the U.S. rights to this product from LEO Pharma A/ S, which markets Innohep in Europe and several additional countries. We re-launched Innohep as a treatment for DVT in cancer patients in the fourth quarter of 2002, and used this drug to establish our U.S. sales and marketing organization.

      Refludan (lepirudin) — Refludan is an anti-thrombin agent approved in the U.S., Europe and several additional countries for the treatment of heparin-induced thrombocytopenia, or HIT, an allergic, adverse immune response to heparin, resulting in an absence of sufficient cell platelets to enable blood clotting. We obtained rights to this product in all countries outside of the U.S. and Canada from Schering AG. We began selling Refludan in Europe and Australia in the third quarter of 2002, and used this drug to establish our European and Australian sales and marketing organizations. We have no ongoing clinical development program for this drug.

      We were incorporated in Delaware in August 1999 and commenced operations in January 2000. Our principal executive offices are located at 2525 28th Street, Boulder, Colorado 80301, and our telephone number is (720) 564-9100. Our website is located at www.pharmion.com. The reference to our website does

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not constitute incorporation by reference of the information contained on our website into this annual report on Form 10-K.

      Our periodic and current reports, and all amendments to those reports, are available free of charge, on our website at www.pharmion.com, as soon as reasonably practicable after we have electronically filed them with, or furnished them to, the Securities and Exchange Commission.

Our Strategy

      We believe that there are significant opportunities available for a multinational pharmaceutical company with a focus on the hematology and oncology markets. Our strategy for taking advantage of these opportunities includes the following key elements:

      Focusing on the hematology and oncology markets. We focus on the hematology and oncology markets for several reasons. The hematology and oncology markets are characterized by a number of disorders with high rates of recurrence and a limited response from current therapies or treatments, many of which include severe side effects. New hematology and oncology product candidates addressing unmet medical needs or providing a superior safety profile are frequently the subject of expedited regulatory reviews and, if effective, can experience rapid adoption rates. While the overall global hematology and oncology markets are substantial, many drugs directed at hematology and oncology patients treat relatively small patient populations or subsets of patients with a specific cancer type. There is a large number of emerging biotechnology companies doing research in hematology and oncology, many of which do not have the global commercial and regulatory capabilities that we have. We believe we can be a regional or global partner for these companies, particularly for compounds that target smaller patient populations. Also, because large, multinational pharmaceutical companies are increasingly seeking products with very large revenue potential, they often do not devote resources to develop drugs they discover with the potential to treat these patient populations, presenting us the opportunity to acquire, develop and market these drugs. There are approximately 11,000 hematologists and oncologists practicing in each of the U.S. and Europe. In addition, a small number of opinion leaders significantly influence the types of drugs prescribed by this group of physicians. We believe that we can effectively reach the hematology and oncology markets with a relatively small sales organization focused on these physicians and opinion leaders.

      Expanding and leveraging our global sales and marketing capabilities. We believe that our U.S., European and Australian sales and marketing organizations, combined with our distributor network in other countries, distinguish us from other pharmaceutical companies of our size. In each of these markets, we have developed a highly-trained sales force that targets the hematology and oncology communities in conjunction with medical science liaisons focused on advocate development, educational forums, clinical development strategies and clinical data publications. By managing the global sales and marketing of our products on our own and with our partners, we believe we can provide uniform marketing programs and consistent product positioning and labeling. In addition, we seek consistent pricing across these markets to maximize the commercial potential of our products.

      Leveraging our global regulatory expertise. We have assembled a team of highly experienced regulatory professionals with multinational expertise in obtaining regulatory approvals for new drugs and maintaining compliance with the regulations governing the sales, marketing and distribution of pharmaceutical products. While some early stage biotechnology and pharmaceutical companies have developed regulatory capabilities in the country in which they are located, we have built an organization with multinational regulatory expertise. We believe our regulatory experience enables us to devise time and cost-efficient strategies to obtain regulatory approvals for new drugs, and to choose the regulatory pathway that allows us to get a product to market as quickly as possible. We can use our resources efficiently to generate a regulatory submission that can be used in multiple jurisdictions. Our global regulatory expertise is an essential element of effectively evaluating and developing late-stage product candidates. We believe that this provides us with a competitive advantage in attracting biotechnology and pharmaceutical companies with products in development that they want to out-license.

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      Acquiring attractive development stage products. We intend to continue to acquire or in-license rights to development-stage products to more fully exploit our regulatory, sales and marketing capabilities and build our product pipeline. To date, we have licensed rights to six products, including three currently approved products, two late-stage development products, including thalidomide which is approved in certain jurisdictions outside the E.U., and one product in earlier stage development. We believe this product mix gives us significant near and intermediate term growth opportunities. Pending data from three Phase III clinical trials studies for three different products, we plan to submit three MAA’s to the EMEA in the next 12 to 15 months. Further, we believe certain of our products have the potential to work synergistically with each other. For example, Vidaza and MGCD0103 represent therapies that target two of the more studied epigenetic regulators of gene expression.

Our Products

      Our product portfolio is focused on addressing unmet needs in the hematology and oncology markets. We believe these markets present us with significant commercial opportunities. The primary products in our current portfolio include the following compounds.

Product	Disease/Indication	Phase of Development	Licensor	Licensed Territory
Vidaza® (azacitidine for injectable suspension)	Myelodysplastic Syndromes (MDS), Hematological malignancies, and Solid tumors	Approved for MDS in the U.S., South Korea and Switzerland. Ongoing MDS Phase III/IV survival study with initial data expected late 2006 or early 2007. Pending initial data from the Phase III/IV study, European marketing submission expected to be filed in early 2007. Oral formulation in development. Several ongoing Phase I and II single agent and combination studies in MDS, other hematological malignancies and solid tumors.	Pfizer, Inc.	Global rights
Thalidomide Pharmion 50mgtm (thalidomide)	Relapsed and refractory multiple myeloma, newly- diagnosed multiple myeloma	Approved in Australia, New Zealand, Turkey and Israel. Compassionate use and named patient sales ongoing in Europe. Phase III study in relapsed and refractory multiple myeloma currently enrolling patients. Data from Phase III first-line myeloma study being compiled and reviewed. European marketing submission expected to be filed by early 2007.	Celgene Corporation	All countries outside North America, Japan and China (except Hong Kong)

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Product	Disease/Indication	Phase of Development	Licensor	Licensed Territory
Satraplatin	2nd Line Hormone Refractory Prostate Cancer (HRPC)	Phase III trial in HRPC fully enrolled. Data expected Q4 2006. Pending data, European submission expected Q1 2007 Several Phase I and II single agent and combination studies ongoing in multiple cancers.	GPC Biotech AG	Europe, Turkey, Middle East and Australia and New Zealand
MGCD0103	Hematological Malignancies Solid Tumors	Several Phase I and Phase I/II single agent and combination studies ongoing in hematological and solid tumors.	MethylGene Inc.	U.S., Canada, Europe, Middle East, Turkey, Australia, New Zealand and Thailand

Vidaza

      In June 2001, we entered into an agreement with Pharmacia & Upjohn Company, now part of Pfizer, Inc., to obtain the exclusive worldwide manufacturing, marketing and distribution rights to azacitidine, which we market under the trademark “Vidaza^®.” In May 2004, we received full approval from the FDA to market Vidaza in the U.S. for the treatment of all subtypes of MDS. Vidaza was the first drug approved for the treatment of MDS and is still the only drug approved for all subtypes of the disease. It is also the first of a new class of drugs known as demethylating agents to be approved. The subtypes of MDS are: refractory anemia (RA), refractory anemia with ringed sideroblasts (RARS) (if accompanied by neutropenia or thrombocytopenia or requiring transfusions), refractory anemia with excess blasts (RAEB), refractory anemia with excess blasts in transformation (RAEB-T) and chronic myelomonocytic leukemia (CMML).

      We launched Vidaza for commercial sale in the U.S. in July 2004. We have assembled a field-based commercial organization in the U.S. of approximately 100 employees, including sales representatives, medical science liaisons, payor relation specialists, nurse educators, national account managers, and field-based management. In addition, we have developed medical education programs geared to hematologists and oncologists, as well as presentations at key industry conferences in support of Vidaza. Vidaza has been granted orphan product designation by the FDA that entitles the drug to market exclusivity for MDS in the U.S. through May 2011. In 2005, net sales of Vidaza were $125.6 million, compared to $47.1 million in 2004 (6 months only).

      In September 2004 the EMEA accepted for review our Marketing Authorization Application, or MAA, for Vidaza for the treatment of MDS. In November 2005, we announced that the European regulatory authorities will require additional data in order to gain marketing approval for Vidaza in Europe and that we had withdrawn our marketing application. We intend to use data from the ongoing Vidaza survival trial discussed below to submit a new marketing authorization application. We began named patient and compassionate use sales of Vidaza in the fourth quarter of 2005 in the E.U. pending a marketing authorization for Vidaza in the EU. The EMEA granted Vidaza Orphan Product Designation, which, if an MAA for Vidaza is approved, and the criteria for orphan drug designation continue to be met, entitles the drug to ten years of market exclusivity from the date of the MAA’s approval for the MDS indication in the EU. During this period the EMEA would be prohibited, except in very limited circumstances, from approving another formulation of Vidaza for the treatment of MDS.

      Azacitidine, a pyrimidine nucleoside analog, was originally developed by Upjohn Corporation as a cytotoxic agent, which is an agent that indiscriminately kills actively multiplying cells. Azacitidine was studied at high doses as a treatment for various malignancies, including acute myelogenous leukemia, or AML. A New Drug Application, or NDA, was submitted by Upjohn in 1982 for the treatment of AML, but was

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deemed not approvable by the FDA. Researchers at the National Cancer Institute, or NCI, The Mount Sinai Medical Center and other institutions continued to study azacitidine and determined that it could be used effectively at much lower doses than originally studied by Upjohn, thereby reducing the side effects experienced in the earlier clinical studies. The results of subsequent clinical studies suggest that azacitidine is an effective treatment for MDS.

      The recognition that azacitidine could be effective at lower doses was based on the discovery that azacitidine acts not only as a cytotoxic agent, but also through an additional mechanism of action. Azacitidine is a member of a class of drugs in development known as “hypomethylating” or “demethylating” agents. Methylation of DNA is a major mechanism regulating gene expression.

      Researchers have determined that an increase in specific methylation of DNA results in blockage of the activity of genes that regulate cell division and differentiation, known as “suppressor genes.” With suppressor genes blocked, cell division becomes unregulated, causing cancer. In studies, researchers have demonstrated that azacitidine can reverse the methylation of DNA, leading to re-expression of suppressor genes and a resulting differentiation and maturation of the cancer cells back to normal.

      MDS occurs when blood cells remain in an immature, or “blast,” stage within the bone marrow and never develop into mature cells capable of performing their necessary functions. More than 80% of MDS cases occur in persons aged 60-80. According to the American Cancer Society, or ACS, the exact number of cases of MDS in the U.S. is unknown, as there is no registry tracking this information; however, most estimates are between 10,000 and 30,000 new cases each year. According to the ACS, these numbers appear to be increasing each year. Currently, we estimate there are approximately 40,000 MDS patients throughout the U.S. with similar incidence and prevalence rates in the E.U. According to the ACS, survival rates range from six months to six years for the different types of MDS. MDS can result in death from bleeding and infection in the majority of patients, while transformation to AML occurs in up to 40% of patients. Following transformation to AML, these patients have an exceptionally poor prognosis. MDS may occur without any identifiable cause, may be related to chemotherapy or radiation therapy being administered to treat other diseases, or may result from exposure to petrochemicals, benzene or rubber. Prior to the availability of Vidaza, patients generally received best supportive care, which typically consisted of a combination of transfusions, antibiotics and growth factors, such as erythropoietin and granulocyte colony stimulating factor. In addition, best supportive care treatment options included low-dose chemotherapies, if clinicians felt that their patients could tolerate the side effects and, for patients under 60 years of age, bone marrow transplants.

      Vidaza’s recommended starting dose is 75 mg/ m2 delivered subcutaneously, daily for seven consecutive days, every four weeks. It is recommended that patients be treated for a minimum of four cycles; however, complete or partial response may require more than four cycles. Treatment may be continued as long as the patient continues to benefit. Patients should be monitored for hematologic response and renal toxicities, and dosage delay or reduction may be necessary.

      We have ongoing a comparative Phase III/ IV clinical trial that is further examining the effect of Vidaza as a treatment of MDS based on survival and other secondary end points. The aim of this randomized, open label study is to compare the effect of Vidaza plus best supportive care against conventional care regimens plus best supportive care on survival in high-risk MDS patients. There are three comparative conventional care treatments in the comparator arm of the study: best supportive care only; low dose cytarabine plus best supportive care; and standard chemotherapy plus best supportive care. This design takes into account the actual “conventional care” used to treat MDS patients in each country targeted for trial participation. The study will recruit 354 patients and will be one of the largest studies to date in this disease. We expect to complete enrollment of this study in mid-2006 and we intend to conduct an initial analysis of data from this study as early as late 2006. Pending a positive outcome of this initial data, we expect to submit an MAA for Vidaza as a treatment of high risk MDS to European regulatory authorities in early 2007.

      The primary objective of this Phase III/ IV study is to measure survival benefit in these MDS patients. This study will also assess several other relevant endpoints, such as time to transformation to AML, time to relapse after complete remission or partial remission, disease progression, hematological status (peripheral

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blood counts, need for platelet and red blood cell transfusions and hematological response), episodes of infections requiring intravenous antibiotics and safety parameters.

      We have also initiated a study that is investigating the use of Vidaza with alternative dosing schedules. The alternative dosing study consists of three arms of forty patients each. The first arm examines 75 mg/ m2 of Vidaza in a schedule of five days on, two days off, two days on; the second arm examines 50 mg/ m2 of Vidaza in a schedule of five days on, two days off, five days on; and the third arm examines 75mg/ m2 of Vidaza in a schedule of five days on. The study is also designed to provide important data on the long-term maintenance use of Vidaza.

      In addition, we are exploring Vidaza’s potential to be effective in treating other cancers associated with hypermethylation. A large number of ongoing Phase II studies examining the use of Vidaza as a single agent or in combination with other cancer therapies have been initiated by us and independent clinical investigators. Cancers targeted by these studies include AML and other hematological cancers as well as certain solid tumors. Initial data from many of these studies is expected in 2006, the outcome of which will drive the next phase of our clinical development efforts.

      Finally, we are also working to improve the Vidaza’s formulation. These efforts are focused on improving administration and manufacturing efficiencies, and, as a result of these activities, potentially enhancing our intellectual property. We have also initiated exploratory work to identify the feasibility of developing an oral formulation of Vidaza which, if successfully developed, may represent a more convenient dosing schedule for patients.

Thalidomide

      In November 2001, we obtained exclusive marketing and distribution rights to Celgene Corporation’s formulation of thalidomide, Thalomid^®, in all countries outside of North America, Japan, China, Taiwan and Korea. Under the agreements with Celgene, we also obtained an exclusive license in our territory to utilize Celgene’s current and future thalidomide-related patents, including its patented System for Thalidomide Education and Prescribing Safety, or S.T.E.P.S.^tm program, and its current and future thalidomide-related dossiers, including clinical and pharmaceutical formulation data.

      In December 2004, we amended our license and supply agreements with Celgene and its subsidiary Celgene U.K. Manufacturing (CUK). Under the modified agreements we made a one-time payment of $77 million in return for a substantial reduction in our product supply price and royalty obligations to Celgene and CUK. In addition, for an additional one-time payment to Celgene of $3 million, we added Hong Kong, Korea and Taiwan to our sales territories and eliminated a right held by Celgene to terminate our license to market the product if regulatory approval of thalidomide in Europe had not occurred by November 2006.

      In the second quarter of 2003, we began selling thalidomide on a compassionate use and named patient basis in Europe while we actively seek marketing authorizations for this drug in Europe and several additional countries. Thalidomide Pharmion 50mg has been approved as a treatment for relapsed and refractory multiple myeloma and erythema nodosum leprosum (ENL) in Australia, New Zealand, Turkey and Israel. These approvals are the only regulatory approvals of thalidomide for multiple myeloma in the world. Despite the lack of any formal regulatory approval for thalidomide in Europe, thalidomide has become a widely used therapy for the treatment of multiple myeloma and certain other forms of cancer. In 2005, our net sales of thalidomide were $79.4 million compared to $65.3 million in 2004.

      Pharmion Risk Management Program — In connection with the commencement of compassionate use sales, we implemented the Pharmion Risk Management Program (PRMP) in 2003. Given thalidomide’s history and risk, the development of the PRMP was a critical element to our planned commercialization of thalidomide and enrollment is obligatory for all patients receiving the drug. Shortly after our acquisition of the thalidomide rights from Celgene in 2001, we began to develop the PRMP consistent with Celgene’s

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S.T.E.P.S. This process included the development of software and educational materials in over 20 languages for use by physicians, pharmacists and patients throughout Europe and our other markets.

      The PRMP is an integral component of our commercialization of, and pursuit of marketing approvals for, thalidomide throughout Europe and our other markets. The PRMP requires adherence to strict guidelines both prior to and during the course of thalidomide therapy, including comprehensive physician, pharmacist and patient registration and education, emphasizing, among other things, the need for adequate contraception in patients taking thalidomide and pregnancy tests for female patients of child-bearing potential. Under the PRMP, automatic prescription refills are prohibited, and prescriptions may not exceed four weeks dosing. The PRMP also permits authorization of each prescription only upon confirmation of compliance with the PRMP guidelines.

      History of Thalidomide — Thalidomide was developed in the late 1950s as an oral, non-barbiturate sedative and was prescribed throughout Europe for use as a sleep aid and for the treatment of morning sickness in pregnancy. Shortly thereafter, use of thalidomide was found to be associated with severe birth defects and it was virtually withdrawn from the worldwide market, without ever receiving approval in the U.S. In 1964, thalidomide was discovered to be effective in the treatment of ENL, which is an inflammatory complication of leprosy. As a result, thalidomide has remained in use as a treatment for ENL. In the 1990s, it was further discovered to act as an anti-angiogenic agent, which is an agent that prevents the formation of new blood vessels. Since many types of tumors are associated with the formation of new blood vessels, physicians began to explore thalidomide’s use as a treatment to prevent the growth of tumor-associated blood vessels on the theory that this would result in starvation of the tumor.

      In 1998, Celgene’s Thalomid was approved in the U.S. for the treatment of acute cutaneous manifestations of moderate to severe ENL and as maintenance therapy for prevention and suppression of cutaneous manifestation recurrences. Thalomid was the first drug approved by the FDA under a special “restricted distribution for safety regulation.” In connection with FDA approval, given the known propensity of thalidomide for causing birth defects, Celgene developed its patented S.T.E.P.S. program, which is a comprehensive compliance and risk management program designed to support the safe and appropriate use of Thalomid by ensuring that women of child-bearing potential do not come into contact with Thalomid. While the treatment of ENL is the only currently approved indication for thalidomide in the U.S., the drug is used primarily in the treatment of multiple myeloma and other forms of cancer.

      Multiple myeloma is the second most common hematological cancer after non-Hodgkin’s lymphoma. It is a cancer of the plasma cells in the bone marrow, which is characterized by lytic bone lesions or the production of elevated levels of M-protein, an abnormal monoclonal antibody, in the blood or urine of patients. The symptoms of multiple myeloma include painful bone deterioration, bone marrow failure (anemia, leukopenia and thrombocytopenia), plasma cell leukemia, infections, kidney damage or failure and hyperviscosity of the blood. Although the median age of onset of multiple myeloma is 65 to 70 years of age, according to the Multiple Myeloma Research Foundation, recent statistics indicate both increasing incidence and earlier age of onset. The incidence of multiple myeloma in most western industrialized countries is approximately four in every 100,000 persons. We estimate that there are approximately 65,000 multiple myeloma patients in the E.U., with approximately 21,000 new cases annually, and 4,000 to 5,000 multiple myeloma patients in Australia, with approximately 800 new cases annually. While current treatment regimens provide some therapeutic benefit, multiple myeloma patients continue to have high rates of relapse and suffer high mortality rates.

      Thalidomide is currently being evaluated as a potential therapy for all stages of multiple myeloma. Several leading investigators at cancer research centers have published data on the response rate, the median effective dose and the average duration of response for multiple myeloma patients treated with thalidomide in clinical trials.

      Regulatory Status — In 2002, we submitted marketing authorization applications to the EMEA and the Therapeutic Goods Administration, or the TGA, in Australia and to regulatory authorities in New Zealand,

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South Africa, Saudi Arabia, Turkey, Israel, Thailand and the Philippines seeking approval for thalidomide as a treatment for relapsed and refractory multiple myeloma and for erythema nodosum leprosum, or ENL. Thalidomide Pharmion 50mg has been approved in Australia, New Zealand, Turkey and Israel for these indications. Although thalidomide has become a standard of care for the treatment of relapsed/ refractory multiple myeloma, these regulatory approvals represent the first, and to date only, regulatory approvals for this indication. In May 2004, we withdrew our multiple myeloma applications with the EMEA, but intend to resubmit our application with additional clinical data from ongoing studies in first — line (that is, previously untreated) treatment or relapsed/ refractory multiple myeloma patients. This action was based on the EMEA’s stated view that additional clinical data would be required before it can reach an opinion on whether or not Thalidomide Pharmion 50mg should be approved as a treatment for multiple myeloma.

      We expect the additional data needed to resubmit an MAA to the EMEA will come from a pivotal Phase III study in the first-line treatment of multiple myeloma patients sponsored by Celgene. In January 2006, Celgene announced that based upon an analysis of its multi-centered, randomized, placebo-controlled Phase III clinical trial (MM-003) studying the combination of thalidomide plus dexamethasone versus dexamethasone alone as induction therapy for previously untreated multiple myeloma patients, the Independent Data Monitoring Committee, or IDMC, determined that the trial had met the pre-specified p<0.0015 value for stopping the trial. The IDMC determined that patients in the trial demonstrated a time to disease progression — the primary endpoint of this Phase III trial — of 75.7 weeks versus 27.9 weeks (p=0.000065), and progression-free survival of 55.7 weeks versus 24.3 weeks (p=0.0003) in patients receiving thalidomide plus dexamethasone compared to patients receiving dexamethasone alone. A total of 270 patients were randomized to receive thalidomide plus dexamethasone, or placebo plus dexamethasone, in this multi-centered clinical trial. Pending further review and analysis, we intend to submit this data to the EMEA in support of an indication for Thalidomide Pharmion 50mg as a treatment for newly diagnosed multiple myeloma in early 2007.

      In addition, we have initiated a Phase III study examining thalidomide as a treatment for relapsed/ refractory multiple myeloma. This four-arm, 470 patient trial compares three different doses of thalidomide to a standard high dose dexamethasone therapy, with a primary endpoint of time to disease progression. This trial design was based on a scientific advice procedure with the EMEA completed in 2005. We anticipate this trial will be completed by the end of 2007, and if successful, data from this trial would form the basis of a marketing authorization application for relapsed/ refractory multiple myeloma that we intend to submit in 2008.

      We will continue to sell thalidomide on a named patient or compassionate use basis in Europe while we pursue a marketing authorization for the drug. We were granted orphan drug designation for thalidomide in Europe by the EMEA for the multiple myeloma indication, which, if the marketing authorization application is approved and the criteria for orphan drug designation continue to be met, would provide a ten year period of exclusivity from the date of the marketing authorization application’s approval. During this period the EMEA would be prohibited, except in very limited circumstances, from approving another formulation of thalidomide for treatment of relapsed and refractory multiple myeloma. We were also granted orphan drug designation for thalidomide in Australia, as well as data exclusivity, which provides similar protection for a five-year period from the date of approval.

Satraplatin

      In December 2005, we entered into a co-development and license agreement with GPC Biotech AG for the right to market, sell and distribute satraplatin in Europe, Turkey, the Middle East, Australia and New Zealand. Satraplatin, an investigational drug, is a member of the platinum family of compounds. Over the past two decades, platinum-based drugs have become a critical part of modern chemotherapy treatments and are used to treat a wide variety of cancers. Unlike the platinum drugs currently on the market, all of which require intravenous administration, satraplatin is an orally bioavailable compound and is given as capsules that

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patients can take at home. An oral platinum drug could offer key advantages, including ease of administration and patient convenience, in a variety of applications.

      Satraplatin in Hormone Refractory Prostate Cancer (HRPC) — Satraplatin has shown promising safety and efficacy as demonstrated by significant improvement in progression-free survival (PFS) in a randomized study of first-line treatment of patients with HRPC and is currently the subject of a Phase III registrational trial as second-line chemotherapy treatment for patients with HRPC. The Phase III registrational clinical trial — called SPARC (satraplatin and prednisone against refractory cancer) — was initiated in the fall of 2003 to evaluate satraplatin plus prednisone as a second-line chemotherapy treatment for HRPC. The SPARC trial is a global, double-blinded, randomized, placebo-controlled trial. The endpoints of the trial are PFS, as well as overall survival and time to pain progression. In December 2005, the target enrollment of 912 patients was reached in the SPARC trial, making this one of the fastest-accruing Phase III trials for a chemotherapy treatment ever conducted in prostate cancer.

      The SPARC trial is modeled on an earlier randomized, multicenter study conducted by the European Organization for Research and Treatment of Cancer (EORTC) that evaluated satraplatin plus prednisone as first-line chemotherapy for HRPC. Fifty patients were randomized to evaluate the use of satraplatin plus prednisone versus prednisone alone for use as a first-line chemotherapy treatment in HRPC. The study showed that treatment with satraplatin significantly lengthened PFS in patients that received satraplatin as compared with patients in the control arm. The median PFS was 5.2 months for satraplatin compared to 2.5 months for the control arm. Additionally, at six months, 41% of patients treated in the satraplatin arm were progression-free compared to 22% of patients in the control arm. A greater than 50% decline in prostate-specific antigen was experienced by 33% of patients in the satraplatin arm versus 9% of patients in the control arm. The median overall survival time was 15 months for patients treated in the satraplatin arm versus 12 months for patients in the control arm, although this result did not satisfy the criteria for statistical significance. To date, satraplatin is the only platinum compound that has demonstrated efficacy in a randomized trial in HRPC.

      Based on the completion of a scientific advice procedure with the EMEA, we intend to use final PFS data from the SPARC trial plus available overall survival data as the basis for the submission of an MAA for satraplatin for the treatment of second-line HRPC to the EMEA. The final analysis of PFS data from the SPARC trial is expected to be completed in the second half of 2006 and, pending positive outcome of the trial, we expect to file the MAA in Europe in early 2007.

      Prostate cancer is the most common cancer among men in the U.S. and Europe. An estimated 232,000 men in the U.S. were diagnosed with the disease during 2005. With more than 30,000 deaths estimated in 2005 in the U.S., prostate cancer is second only to lung cancer as a leading cause of cancer-related death in men. The number of patients with this disease is expected to increase with the aging of the population. Early-stage, localized prostate cancer is usually treated with surgery and/or radiation therapy. Patients who relapse with advanced disease are then treated with hormone therapy. Although most patients initially respond well to hormone therapy, the cancer cells eventually become hormone resistant — or refractory — and the disease again progresses. Important advancements have been made in recent years in treating HRPC. In particular, for the first time, trials with Taxotere^® (docetaxel) showed that chemotherapy can prolong the survival of patients with HRPC. Taxotere was approved in both the U.S. and Europe in 2004 as a chemotherapy treatment for HRPC. However, at this stage of the disease, there is no cure. All patients will eventually progress and, once they do, average survival is approximately one year. Thus, there is a growing unmet medical need for new, effective treatments for patients in whom initial chemotherapy has failed.

      Satraplatin in Other Tumors — Satraplatin has been studied in a wide range of tumors, and Phase II clinical trials have been completed in HRPC, ovarian cancer and small cell lung cancer. In other trials, satraplatin appeared to augment the antitumor effects of radiation therapy, a clinical application in which satraplatin’s oral bioavailability could be particularly advantageous. A Phase I/ II clinical trial evaluating this combination in patients with non-small lung cancer has been initiated. Several other Phase I and Phase II clinical trials evaluating satraplatin in combination with other therapies and in various cancers are underway or

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planned, including studies with Taxol in non-small cell lung cancer, with Taxotere in solid tumors, and as mono therapy in breast cancer.

      We are also planning to initiate a study evaluating Vidaza in combination with satraplatin in solid tumors. We believe that preclinical and early clinical data indicates that Vidaza may resensitize platinum resistant cells to platinum compounds and we plan to initiate clinical trials exploring the potential for this combination.

MGCD0103

      In January 2006, we entered into a license and collaboration agreement with MethylGene Inc. for the research, development and commercialization of MethylGene’s histone deacetylase (HDAC) inhibitors for the treatment of cancer in North America, Europe, the Middle East, Turkey, Australia, New Zealand and Thailand, including MGCD0103, MethylGene’s lead HDAC inhibitor, as well as MethylGene’s pipeline of second generation HDAC inhibitor compounds for oncology indications.

      MGCD0103 is an oral, isotype-selective, small molecule inhibitor of histone deacetylase. HDAC is a family of eleven enzymes, or isoforms, that act as a master regulator of many diseases including cancer. One key differentiating feature of MethylGene’s HDAC inhibitors is that they are selective for specific isoforms while many other HDAC inhibitors currently in clinical development are “broad-spectrum inhibitors,” meaning that they target most or all of the HDAC isoforms. We believe targeted and selective inhibition of cancer-related HDAC isoforms may lead to more effective and less toxic cancer therapies in contrast to non-specific or broad-spectrum inhibition of HDAC isoforms.

      MGCD0103 has completed one Phase I trial as a single agent in solid tumors as a daily oral dose, with a second trial ongoing in solid tumors as an intermittent three times per week, oral dose. In addition, MGCD0103 is in two Phase I trials in hematological cancers as a three times and two times per week oral dose. MGCD0103 entered its first Phase I/ II combination trial with Vidaza in high-risk MDS and AML patients. We plan to enroll up to 50 patients in this trial. An additional Phase I/ II combination trial is expected to be initiated, with one or two Phase II monotherapy trials. Current clinical trials are being conducted at leading cancer centers in the United States and Canada.

      About Histone Deacetylation — Histones are protein complexes around which DNA is wrapped. Histones play an important role in gene regulation since histone arrangement has an impact on the accessibility of DNA for transcription. Histones and DNA together are called chromatin. Histone acetylation exposes DNA so that gene expression can occur. Conversely, histone deacetylation leads to dense packing of chromatin and gene silencing. These processes are regulated in enzyme families called histone acetylases and histone deacetylases. In many cancerous tissues, through the activity of DNA methylation and histone deacetylation, tumor suppressor genes are silenced and not expressed. As a result, cell division becomes unregulated, causing cancer. Using HDAC inhibitors, such as MGCD0103, the effect of HDACs may be blocked and tumor suppressor genes re-expressed to inhibit cancer progression. MethylGene’s research and observations suggest that only a subset of the known HDAC isoforms may be involved in cancer progression.

      DNA Methylation and Histone Deacetylation — Epigenetic Regulators of Gene Expression — DNA methylation and histone deacetylation are two of the more studied epigenetic regulators of gene expression. Epigenetics refers to changes in the regulation of gene expression. Epigenetic changes can silence gene expression and, unlike DNA mutations, may be reversed by targeting the enzymes involved in these changes. Researchers have observed the silencing of key cell cycle control genes and tumor suppressor genes through these two mechanisms of epigenetic regulation in hematological malignancies and in solid tumors. Vidaza has been shown to reverse the effects of DNA hypermethylation with subsequent gene re-expression and, likewise, MGCD0103 has been shown, in pre-clinical tests, to reverse the effects of inappropriate deacetylation resulting in gene expression reactivation. In contrast with cytotoxic cancer therapies that kill both normal and cancer cells, epigenetic cancer therapies may enable the reactivation of silenced genes and, thereby, re-establish the cancer cell’s natural mechanisms to control abnormal growth.

      Recent scientific evidence suggests that HDAC and DNA methyltransferase inhibitors as single agents may be new approaches for cancer therapy. In addition, the combination of HDAC and DNA methyltransfer-

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ase inhibitors may act synergistically to reverse gene silencing and induce apoptosis (programmed cell death) in various cancers. Through our collaboration with MethylGene, we will explore the potential of combining MethylGene’s HDAC inhibitors with Vidaza as a cancer treatment and evaluate the use of MethylGene’s HDAC inhibitors in combination with other chemotherapeutic agents.

Sales, Marketing and Distribution

      We have established sales and marketing organizations in the U.S., Europe and Australia. In the U.S., our field based organization consists of approximately 100 professionals, including clinical account specialists, medical science liaisons, payor relations specialists, national accounts managers, nurse educators, and field based management. Each member of our field based staff has significant experience in pharmaceutical and oncology products sales and marketing. They target hematologists and oncologists who prescribe high volumes of cancer therapies. The concentration of high volume prescribers allows us to promote Vidaza and Innohep with a relatively small, dedicated sales and marketing organization. The field based organization is also supported by a medical education team that focuses on the development, presentation and distribution of scientific and clinical information regarding our products and the diseases they treat.

      In Europe, we employ a general manager in each of the U.K., France, Germany, Spain and Italy, and a general manager for the Nordic countries. These general managers are responsible for all commercial activities in each of their home countries, and may also have responsibility for commercial activities in smaller nearby countries. Each of our subsidiaries employs, in addition to the general manager, a trained physician, regulatory specialists if required by local law, sales representatives, PRMP experts and administrative support staff. In general, we only employ nationals in each of our local subsidiaries. All marketing activities are centrally directed from our U.K. office to ensure consistency across regional markets. In addition, clinical development, regulatory affairs and information technology functions are centrally managed from our U.K. office. In this manner, we seek to develop globally consistent programs but ensure that they are implemented according to local practices. Our Australian sales and marketing organizational structure is consistent with our European structure. Information regarding geographic areas is included in the notes to our consolidated financial statements included elsewhere in this report.

      In addition to our own sales organizations, we have access to the hematology and oncology markets in 22 additional countries through relationships with our distributors. Pursuant to the agreements governing our relationships with our distributors, we are prohibited from selling or marketing our products on our own behalf in a country covered by one of these agreements until the applicable agreement expires.

      The chart below identifies the countries which are served directly by our sales organizations and those which we access using our third-party distribution network.

Direct Sales Countries

Australia
Belgium
Denmark
Finland
France Germany
Ireland
Italy
Luxembourg
Netherlands
Norway Portugal
Spain
Sweden
U.K.
U.S.

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Distribution Countries

Austria
Egypt
Greece
Hong Kong
Israel
Jordan
Kuwait Lebanon
Malaysia
Malta
New Zealand
Oman
Philippines
Saudi Arabia
Singapore South Africa
South Korea
Switzerland
Taiwan
Thailand
Turkey
United Arab Emirates

      By working closely with key opinion leaders, physicians and association leaders, our sales and marketing professionals are able to create science-based marketing materials of interest to our customers. In addition, our product acquisition strategy has been designed to maximize the success of our sales and marketing efforts by focusing on the acquisition of products and product candidates that make a clinical difference to patients in markets responsive to key opinion leaders. We intend to seek new countries in which to promote our products and we will continue the expansion of our sales and marketing organization as product growth or product acquisitions.

      In the U.S., we sell to pharmaceutical wholesalers, who in turn distribute product to physicians, retail pharmacies, hospitals, and other institutional customers. In Europe and Australia, we sell directly to retail and hospital pharmacies. Sales into countries where we have partnered with third party distributors are made directly to our partners. Our largest three wholesale customers in the U.S., U.S. Oncology Supply, Cardinal Health and McKesson Corporation generated 17%, 15% and 14%, respectively, of our total consolidated net sales for the year ended December 31, 2005.

Regulatory and Medical Affairs

      Our regulatory affairs group is comprised of professionals with experience from both large pharmaceutical companies and biotechnology companies. The difference between an attractive drug candidate and one which is not economically viable for development often hinges on our assessment of the time and expense required to get the drug approved and sold in a particular jurisdiction. Determining the optimal regulatory pathway for commercialization is an integral part of our product candidate selection. We believe that our combination of country-specific regulatory expertise and our focus on the hematology and oncology markets provide a significant advantage as we seek to acquire additional product candidates through in-license or, if necessary and appropriate, through company acquisition, and move our future product pipeline candidates forward through the approval process.

Principal Collaborations and License Agreements

      Celgene and CUK Agreements: In 2001, we licensed rights relating to the use of thalidomide from Celgene and separately entered into an exclusive supply agreement for thalidomide with CUK, a company located in the U.K. that was subsequently acquired by Celgene in 2004. Under the agreements, as amended, we obtained the right to market thalidomide in all countries other than the United States, Canada, Mexico, Japan and all provinces of China (except Hong Kong). More specifically, under agreements with Celgene, as amended, we obtained the rights in these territories to Celgene’s formulation of thalidomide, Thalomid, exclusive licenses or sublicenses for the intellectual property owned or licensed by Celgene relating to thalidomide, as well as all existing and future clinical data relating to thalidomide developed by Celgene, and an exclusive license to employ Celgene’s patented and proprietary S.T.E.P.S. program as our PRMP in connection with the distribution of thalidomide in these territories. Under agreements with CUK, as amended, CUK is our exclusive supplier of thalidomide formulations that we sell in certain territories licensed to us by Celgene. We pay (i) Celgene a royalty/license fee of 8% on our net sales of thalidomide under the terms of the license agreements, and (ii) CUK product supply payments equal to 15.5% of our net sales of thalidomide under the terms of the product supply agreement. In connection with our ongoing relationship with Celgene, and to further the clinical development of thalidomide, particularly in multiple myeloma, we have also agreed to fund certain amounts incurred by Celgene for the conduct of thalidomide clinical trials. Through

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December 31, 2005, we have funded $10.7 million of these costs and have agreed to fund an additional $5.3 million of Celgene’s costs for these studies incurred between January 1, 2006 and December 31, 2007, payable in quarterly installments through the end of 2007. The agreements with Celgene and CUK each have a ten-year term running from the date of receipt of our first regulatory approval for thalidomide in the United Kingdom.

      Pfizer Agreement: We licensed worldwide exclusive rights to Vidaza from Pharmacia & Upjohn Company, now a part of Pfizer, Inc., in June 2001. Under the terms of our agreement, we are obligated to pay Pfizer a royalty of 8% to 20% on net sales of Vidaza. The license from Pfizer has a term extending for the longer of the last to expire of valid patent claims in any given country or ten years from our first commercial sale of the product in a particular country.

      GPC Biotech Agreement — In December 2005, we entered into a co-development and license agreement for the development and commercialization of satraplatin. Under the terms of the agreement, we obtained exclusive commercialization rights for satraplatin in Europe, Turkey, the Middle East, Australia and New Zealand, while GPC Biotech retained rights to the North American market and all other territories. We made an up front payment of $37.1 million to GPC Biotech, including an $21.2 million reimbursement for satraplatin clinical development costs and $15.9 million for funding of ongoing and certain future clinical development to be conducted jointly by us and GPC Biotech. The companies will pursue a joint development plan to evaluate development activities for satraplatin in a variety of tumor types and will share global development costs, for which we have made an additional commitment of $22.2 million, in addition to the $37.1 million in initial payments. We could also pay GPC Biotech $30.5 million based on the achievement of certain regulatory filing and approval milestones, and $15 million for each subsequent EMEA approval for certain additional indications up to a maximum of $75 million for such approvals. GPC Biotech will also receive royalties on sales of satraplatin in our territories at rates of 26% to 30% on annual net sales up to $500 million, and 34% on annual net sales over $500 million. Finally, we will pay GPC Biotech sales milestones totaling up to $105 million, based on the achievement of significant annual sales levels in our territories.

      We are required to use commercially reasonable efforts to develop and commercialize satraplatin in our territory. Our agreement with GPC Biotech expires on a country-by-country basis upon the expiration of patents covering satraplatin or available market exclusivity for satraplatin in a particular country or, if later, the entry of a significant generic competitor in that country. Upon expiration, we will retain a non-exclusive, fully-paid, royalty-free license to continue the commercialization of satraplatin in our territories. In addition, either party may terminate the agreement prior to expiration under certain circumstances, including a material breach of the agreement by the other party.

      MethylGene Agreement — In January 2006, we entered into an exclusive license and collaboration agreement for the research, development and commercialization of MethylGene Inc.’s HDAC inhibitors, including MGCD0103, for oncology indications in North America, Europe, the Middle East and certain other markets. Under the terms of the agreement, we made up front payments to MethylGene totaling $25 million, including a $5 million equity investment in MethylGene common shares. As of January 30, 2006, our capital investment represented a 7.8% ownership in MethylGene.

      Our milestone payments to MethylGene for MGCD0103 could reach $145 million, based on the achievement of significant development, regulatory and sales goals. Furthermore, we may be required to pay up to $100 million for each additional HDAC inhibitor, also based on the achievement of significant development, regulatory and sales milestones. In addition, we will make research support payments of up to $2 million to support a team of eight MethylGene scientists for one year who will be dedicated to identifying second-generation clinical HDAC inhibitor candidates.

      MethylGene will initially fund 40% of the preclinical and clinical development for MGCD0103 (and any additional second generation compounds) required to obtain marketing approval in North America while we will fund 60% of such costs. MethylGene will receive royalties on net sales in North America ranging from 13% to 21% based upon the level of annual sales achieved in North America and the length of time development costs are funded by MethylGene. MethylGene will have an option, at its sole discretion, as long

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as it continues to fund development, to co-promote approved products and, in lieu of receiving royalties, to share the resulting net profits equally with Pharmion. If MethylGene exercises its right, at its sole discretion, to discontinue development funding, we will be responsible for 100% of development costs incurred thereafter. In all other licensed territories, which include Europe, the Middle East, Turkey, Australia, New Zealand, South Africa and certain countries in Southeast Asia, we are responsible for development and commercialization costs and MethylGene will receive a royalty on net sales in those markets at a rate of 10% to 13% based on annual net sales.

      Both parties to the agreement are required to use commercially reasonable and diligent efforts to conduct the research, development and commercialization responsibilities allocated to each party under the agreement. Our agreement with MethylGene expires upon the expiration of patents covering all HDAC inhibitor candidates being developed by the parties or, if earlier, all research, development and commercialization activities under the agreement cease. In addition, either party may terminate the agreement prior to expiration under certain circumstances, including a material breach of the agreement by the other party.

Manufacturing

      We currently use, and expect to continue to be dependent upon, contract manufacturers to manufacture each of our products. Although we are in the process of qualifying a second source manufacturer for the fill and finishing process for Vidaza, we do not currently have operational alternative manufacturing sources for any of our products. Our contract manufacturers and distributors are subject to extensive governmental regulation. Regulatory authorities in our markets require that drugs be manufactured, packaged and labeled in conformity with current Good Manufacturing Practices, or cGMPs. We have established a quality control and quality assurance program, including a set of standard operating procedures and specifications, designed to ensure that our products are manufactured in accordance with cGMPs, and other applicable domestic and foreign regulations.

      Thalidomide: We obtain our two formulations of thalidomide from two different suppliers. Thalidomide Pharmion 50mg is formulated, encapsulated and packaged for us by CUK, of Great Britain in a facility that is in compliance with the regulatory standards of each of the countries where we sell and expect to sell the product. Under the terms of our agreement with CUK we purchase from CUK all of our requirements of the product. Pricing is subject to an annual audit and, if appropriate, an adjustment based upon the fully allocated cost of manufacture. This agreement terminates upon the tenth anniversary of the date upon which we receive regulatory approval for thalidomide in the U.K.

      Thalidomide Laphal is formulated, encapsulated and packaged for us by Laphal Industrie, an unaffiliated company, in a facility that is in compliance with the regulatory standards of each of the countries where we sell and expect to sell the product. Pricing is subject to an annual adjustment based upon a formula that accounts for increases in the cost of manufacture. In addition, in the event that prior to the expiration of the agreement we decide to discontinue ordering Thalidomide Laphal from Laphal Industrie, we are obligated to provide twelve months advance notice and pay €300,000 (approximately $354,000 as of December 31, 2005). If our notice to discontinue ordering Thalidomide Laphal is not timely, the fee may increase to as much as €500,000 (approximately $590,000 as of December 31, 2005). This agreement terminates in March 2013.

      Vidaza. Under the terms of our supply agreements, Ash Stevens, Inc. provides us with supplies of azacitidine drug substance, the active ingredient in Vidaza, and Ben Venue Laboratories, Inc. formulates and fills the product into vials and labels the finished product for us. Both Ash Stevens and Ben Venue operate facilities that are in compliance with the regulatory standards of each of the countries in which we sell or expect to sell the product. Under the terms of our agreement with Ash Stevens, we are obligated to purchase all of our requirements for azacitidine from Ash Stevens and Ash Stevens is required to manufacture azacitidine exclusively for us. This agreement expires in 2011. Under the terms of our agreement with Ben Venue Laboratories, Inc., we are required to purchase up to 65% of our annual requirements for finished Vidaza product from Ben Venue. This agreement expires in 2010. Under each of these agreements, the prices our suppliers charge us for products may increase or decrease annually based upon the percentage change in the Producer Price Index for pharmaceutical preparations. In addition, we have entered into an agreement

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with a back-up manufacturer for finished and labeled Vidaza product, and we are also working with a number of partners in our reformulation efforts.

      Satraplatin. We have entered into a supply agreement with GPC Biotech AG under which we have agreed to purchase all of our requirements for satraplatin from GPC Biotech, and GPC Biotech has agreed to manufacture and supply our requirements for the product and to maintain certain inventories of satraplatin on our behalf. The supply price for the product under this agreement is set at 110% of GPC Biotech’s fully allocated cost of manufacturing the product. This agreement will terminate upon the termination of our Co-Development and License Agreement with GPC Biotech.

Raw Materials

      Raw materials and supplies are normally available in quantities adequate to meet the needs of our business.

Government Regulation

      Regulation by governmental authorities in the U.S. and other countries is a significant factor in the manufacture and marketing of our products and in ongoing research and product development activities. All of our products require regulatory approval by governmental agencies prior to commercialization. In particular, our products are subject to rigorous preclinical and clinical testing and other approval requirements by the FDA and similar regulatory authorities in other countries. Various statutes and regulations also govern or influence the manufacturing, safety, reporting, labeling, storage, record keeping and marketing of our products. The lengthy process of seeking these approvals, and the subsequent compliance with applicable statutes and regulations, require the expenditure of substantial resources. Any failure by us to obtain, or any delay in obtaining, regulatory approvals could harm our business.

      The regulatory requirements relating to the manufacturing, testing and marketing of our products may change from time to time. For example, at present, member states in the E.U. are in the process of incorporating into their domestic laws the provisions contained in the E.U. Directive on the implementation of good clinical practice in the conduct of clinical trials. The Directive imposes more onerous requirements in relation to certain aspects of clinical trial conduct than are currently in place in many member states. This may impact our ability to conduct clinical trials and the ability of independent investigators to conduct their own research with support from us.

Product Approval

      The clinical development, manufacturing and marketing of our products are subject to regulation by various authorities in the U.S., the E.U. and other countries, including, in the U.S., the FDA, and, in the E.U., the EMEA. The Federal Food, Drug, and Cosmetic Act and the Public Health Service Act in the U.S. and numerous directives, regulations, local laws and guidelines in the E.U. govern the testing, manufacture, safety, efficacy, labeling, storage, record keeping, approval, advertising and promotion of our products. Product development and approval within these regulatory frameworks takes a number of years and involves the expenditure of substantial resources.

      Regulatory approval will be required in all the major markets in which we, or our licensors, seek to test our products in development. At a minimum, such approval requires the evaluation of data relating to the quality, safety and efficacy of a product for its proposed use. The specific types of data required and the regulations relating to this data will differ depending on the territory, the drug involved, the proposed indication and the stage of development.

      In general, new chemical entities are tested in animals until adequate proof of safety is established. Clinical trials for new products are typically conducted in three sequential phases that may overlap. In Phase I, the initial introduction of the pharmaceutical into healthy human volunteers, the emphasis is on testing for safety (adverse effects), dosage tolerance, metabolism, distribution, excretion and clinical pharmacology. Phase II involves studies in a limited patient population to determine the initial efficacy of the pharmaceutical

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for specific targeted indications, to determine dosage tolerance and optimal dosage and to identify possible adverse side effects and safety risks. Once a compound shows evidence of effectiveness and is found to have an acceptable safety profile in Phase II evaluations, Phase III trials are undertaken to more fully evaluate clinical outcomes.

      In the U.S., specific preclinical data and chemical data, as described above, needs to be submitted to the FDA as part of an Investigational New Drug application, or IND, which, unless the FDA objects, will become effective 30 days following receipt by the FDA. Phase I studies in human volunteers may commence only after the application becomes effective. Prior regulatory approval for human healthy volunteer studies is also required in member states of the E.U. Currently, in each member state of the E.U., following successful completion of Phase I studies, data is submitted in summarized format to the applicable regulatory authority in the member state in respect of applications for the conduct of later Phase II studies. The regulatory authorities in the E.U. typically have between one and three months in which to raise any objections to the proposed study, and they often have the right to extend this review period at their discretion. In the U.S., following completion of Phase I studies, further submissions to regulatory authorities are necessary in relation to Phase II and III studies to update the existing IND. Authorities may require additional data before allowing the studies to commence and could demand that the studies be discontinued at any time if there are significant safety issues. In addition to the regulatory review, a study involving human subjects has to be approved by an independent body. The exact composition and responsibilities of this body will differ from country to country. In the U.S., for example, each study will be conducted under the auspices of an independent Institutional Review Board at the institution at which the study is conducted. This board considers among other things, the design of the study, ethical factors, the safety of the human subjects and the possible liability risk for the institution. Equivalent rules apply in each member state of the E.U. where one or more independent ethics committees, which typically operate similarly to an Institutional Review Board, will review the ethics of conducting the proposed research. Other authorities around the rest of the world have slightly differing requirements involving both the execution of clinical trials and the import/export of pharmaceutical products. It is our responsibility to ensure we conduct our business in accordance with the regulations of each relevant territory.

      Information generated in this process is susceptible to varying interpretations that could delay, limit or prevent regulatory approval at any stage of the approval process. The failure to demonstrate adequately the quality, safety and efficacy of a therapeutic drug under development would delay or prevent regulatory approval of the product. There can be no assurance that if clinical trials are completed, either we or our collaborative partners will submit applications for required authorizations to manufacture and/or market potential products (including a marketing authorization application, NDA or abbreviated NDA) or that any such application will be reviewed and approved by the appropriate regulatory authorities in a timely manner, if at all.

      In order to gain marketing approval we must submit a dossier to the relevant authority for review, which is known in the U.S. as an NDA and in the E.U. as an MAA. The format is usually specific and laid out by each authority, although in general it will include information on the quality of the chemistry, manufacturing and pharmaceutical aspects of the product as well as the non-clinical and clinical data. The FDA undertakes the review for the U.S. In the E.U. there is, for many products, a choice of two different authorization routes: centralized and decentralized. Under the centralized route one marketing authorization is granted for the entire E.U., while under the decentralized route a series of national marketing authorizations are granted. In the centralized system the application will be reviewed by members of the Committee for Medicinal Products for Human Use, or the CHMP, on behalf of the EMEA. The EMEA will, based upon the review of the CHMP, provide an opinion to the European Commission on the safety, quality and efficacy of the product. The decision to grant or refuse an authorization is made by the European Commission. In circumstances where use of the centralized route is not mandatory, we can choose to use the decentralized route, in which case the application will be reviewed by one member state’s regulatory agency. If the regulatory agency grants the authorization, other member states’ regulatory authorities are asked to “mutually recognize” the authorization granted by the first member state’s regulatory agency. Approval can take several months to several years, or be denied. The approval process can be affected by a number of factors. Additional studies or

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clinical trials may be requested during the review and may delay marketing approval and involve unbudgeted costs. The regulatory authorities may conduct an inspection of relevant facilities, and review manufacturing procedures, operating systems and personnel qualifications. In addition to obtaining approval for each product, in many cases each drug manufacturing facility must be approved. Further inspections may occur over the life of the product. An inspection of the clinical investigation sites by a competent authority may be required as part of the regulatory approval procedure. As a condition of marketing approval, the regulatory agency may require post-marketing surveillance to monitor for adverse effects, or other additional studies as deemed appropriate. After approval for the initial indication, further clinical studies are usually necessary to gain approval for any additional indications. The terms of any approval, including labeling content, may be more restrictive than expected and could affect the marketability of a product.

      In many markets outside of the U.S., regulations exist that permit patients to gain access to unlicensed pharmaceuticals, particularly for severely ill patients where other treatment options are limited or non-existent. Generally, the supply of pharmaceuticals under these circumstances is termed “compassionate use” or “named patient” supply. In the E.U., each member state has developed its own system under an E.U. directive that permits the exemption from traditional pharmaceutical regulation of “medicinal products supplied in response to a bona fide unsolicited order, formulated in accordance with specifications of an authorized health care professional and for use by his individual patients on his direct personal responsibility.” Essentially, two systems operate among E.U. member states: approval can be given for “cohort” supply, meaning more than one patient can be supplied in accordance with an agreed treatment protocol; or, alternatively, as is the case in the majority of E.U. member states, supply is provided on an individual patient basis. Some countries, such as France, have developed other systems, where an ATU involves a thorough review and approval by the regulator of a regulatory data package. In France, the company then receives an approval to supply. All E.U. member states require assurance of the quality of the product, which is usually achieved by provision of good manufacturing practice, or GMP, certification. In the majority of markets, the prescribing physician is responsible for the use for the product and in some countries the physician in conjunction with the pharmacist must request approval from the regulator to use the unlicensed pharmaceutical. Outside of the E.U., many countries have developed named patient systems similar to those prevalent in Europe.

      The U.S., the E.U. and Australia may grant orphan drug designation to drugs intended to treat a “rare disease or condition,” which, in the U.S., is generally a disease or condition that affects no more than 75 in 100,000 persons or fewer than 200,000 individuals. In the E.U., orphan drug designation can be granted if: the disease affects no more than 50 in 100,000 persons in the E.U. or the drug is intended for a life-threatening, seriously debilitating or serious and chronic condition; without incentive it is unlikely that the drug would generate sufficient return to justify the necessary investment; and no satisfactory method of treatment for the condition exists or, if it does, the new drug will provide a significant benefit to those affected by the condition. In Australia, orphan drug designation can be granted to drugs intended to treat a disease that affects no more than 11 in 100,000 persons or fewer than 2,000 individuals. If a product that has an orphan drug designation subsequently receives the first regulatory approval for the indication for which it has such designation, the product is entitled to orphan exclusivity, meaning that the applicable regulatory authority may not approve any other applications to market the same drug for the same indication, except in certain very limited circumstances, for a period of seven years in the U.S., ten years in the E.U. and five years in Australia. Orphan drug designation does not prevent competitors from developing or marketing different drugs for an indication. Orphan drug designation must be requested before submitting an NDA or MAA. After orphan drug designation is granted, the identity of the therapeutic agent and its potential orphan use are publicly disclosed. Orphan drug designation does not convey an advantage in, or shorten the duration of, the review and approval process.

      Holders of an approved NDA are required to report certain adverse reactions and production problems, if any, to the FDA, and to comply with certain requirements concerning advertising and promotional labeling for their products. Also, quality control and manufacturing procedures must continue to conform to cGMP after approval, and the FDA periodically inspects manufacturing facilities to assess compliance with cGMP. Accordingly, manufacturers must continue to expend time, money, and effort in the area of production and

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quality control to maintain compliance with cGMP and other aspects of regulatory compliance. We continue to rely upon third-party manufacturers to produce our products. We cannot be sure that those manufacturers will remain in compliance with applicable regulations or that future FDA inspections will not identify compliance issues at the facilities of our contract manufacturers that may disrupt production or distribution, or require substantial resources to correct.

      For both currently marketed and future products, failure to comply with applicable regulatory requirements after obtaining regulatory approval can, among other things, result in the suspension of regulatory approval, as well as possible civil and criminal sanctions. Renewals in Europe may require additional data, which may result in a license being withdrawn. In the U.S. and the E.U., regulators have the authority to revoke, suspend or withdraw approvals of previously approved products, to prevent companies and individuals from participating in the drug-approval process, to request recalls, to seize violative products and to obtain injunctions to close manufacturing plants not operating in conformity with regulatory requirements and to stop shipments of violative products. In addition, changes in regulation could harm our financial condition and results of operation.

Product Regulation

      We are also subject to various federal and state laws pertaining to health care “fraud and abuse,” including anti-kickback laws and false claims laws. Anti-kickback laws make it illegal for a prescription drug manufacturer to solicit, offer, receive, or pay any remuneration in exchange for, or to induce, the referral of business, including the purchase or prescription of a particular drug. False claims laws prohibit anyone from knowingly and willingly presenting, or causing to be presented for payment to third party payers (including Medicare and Medicaid) claims for reimbursed drugs or services that are false or fraudulent, claims for items or services not provided as claimed, or claims for medically unnecessary items or services.

      As a drug marketer, we participate in the Medicaid rebate program established by the Omnibus Budget Reconciliation Act of 1990, and under amendments of that law that became effective in 1993. Participation in this program includes requirements such as extending comparable discounts under the Public Health Service, or PHS, pharmaceutical pricing program. Under the Medicaid rebate program, we pay a rebate for each unit of our product reimbursed by Medicaid. The amount of the rebate for each product is set by law as a minimum 15.1% of the average manufacturer price, or AMP, of that product, or if it is greater, the difference between AMP and the best price available from us to any customer. The rebate amount also includes an inflation adjustment if AMP increases faster than inflation. The PHS pricing program extends discounts comparable to the Medicaid rebate to a variety of community health clinics and other entities that receive health services grants from the PHS, as well as hospitals that serve a disproportionate share of poor Medicare and Medicaid beneficiaries. The rebate amount is recomputed each quarter based on our current average manufacturer price and best price for each of our products and reported to the Centers for Medicare and Medicaid Services, or CMS.

      As a result of the Veterans Health Care Act of 1992, federal law requires that product prices for purchases by the Veterans Administration, the Department of Defense, Coast Guard, and the PHS (including the Indian Health Service) be discounted by a minimum of 24% off the AMP to non-federal customers, the non-federal average manufacturer price, or non-FAMP. Our computation and report of non-FAMP is used in establishing the price, and the accuracy of the reported non-FAMP may be audited by the government under applicable federal procurement laws.

      In addition, the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 together with rulemaking by CMS, changed the methodology for Medicare reimbursement of pharmaceutical products administered in physician offices and hospital outpatient facilities, including Vidaza and Innohep. Under the new regulations, reimbursements are now the average selling price, or ASP, of a product plus 6%, rather than a specified discount from the average wholesale price, or AWP, as was the case under prior regulations. The ASP-based reimbursement regime has generally reduced the reimbursement physicians receive under Medicare for most office-administered injectable drugs, including Vidaza and Innohep.

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      Under the laws of the U.S., the member states of the E.U. and other countries, we and the institutions where we sponsor research are subject to certain obligations to ensure the protection of personal information of human subjects participating in our clinical trials. We have instituted procedures that we believe will enable us to comply with these requirements and the contractual requirements of our data sources. The laws and regulations in this area are evolving and further regulation, if adopted, could affect the timing and the cost of future clinical development activities.

      We are subject to the U.S. Foreign Corrupt Practices Act that prohibits corporations and individuals from engaging in certain activities to obtain or retain business or to influence a person working in an official capacity. Under this act, it is illegal to pay, offer to pay, or authorize the payment of anything of value to any foreign government official, government staff member, political party, or political candidate in an attempt to obtain or retain business or to otherwise influence a person working in an official capacity.

Pricing Controls

      Before a pharmaceutical product may be marketed and sold in certain foreign countries the proposed pricing for the product must be approved. The requirements governing product pricing vary widely from country to country and can be implemented disparately at the national level.

      The E.U. generally provides options for its member states to control the prices of medicinal products for human use. A member state may approve a specific price for the medicinal product or it may instead adopt a system of direct or indirect controls on the profitability of the company placing the medicinal product on the market. For example, the regulation of prices of pharmaceuticals in the U. K. is generally designed to provide controls on the overall profits that pharmaceutical companies may derive from their sales to the U.K. National Health Service. The U.K. system is generally based on profitability targets or limits for individual companies that are normally assessed as a return on capital employed by the company in servicing the National Health Service market, comparing capital employed and profits.

      In comparison, Italy generally establishes prices for pharmaceuticals based on a price monitoring system. The reference price is the European average price calculated on the basis of the prices in four reference markets: France, Spain, Germany and the U.K. Italy typically establishes the price of medicines belonging to the same therapeutic class on the lowest price for a medicine belonging to that category. Spain generally establishes the selling price for new pharmaceuticals based on the prime cost, plus a profit margin within a range established each year by the Spanish Commission for Economic Affairs. Promotional and advertising costs are limited.

      There can be no assurance that any country that has price controls or reimbursement limitations for pharmaceuticals will allow favorable reimbursement and pricing arrangements for our products. In addition, in the U.S. there have been, and we expect that there will continue to be, a number of federal and state proposals to implement governmental pricing control.

Third Party Reimbursement

      In the U.S., E.U. and elsewhere, sales of therapeutic and other pharmaceutical products are dependent in part on the availability of reimbursement to the consumer from third party payers, such as government and private insurance plans. Third party payers are increasingly challenging the prices charged for medical products and services. The E.U. generally provides options for its member states to restrict the range of medicinal products for which their national health insurance systems provide reimbursement. Member states in the E.U. can opt to have a “positive” or a “negative” list. A positive list is a listing of all medicinal products covered under the national health insurance system, whereas a negative list designates which medicinal products are excluded from coverage. In the E.U., the U.K. and Spain use a negative list approach, while France uses a positive list approach. In some countries, in addition to positive and negative lists, products may be subject to a clinical and cost effectiveness review by a health technology assessment body. A negative determination by such a body in relation to one of our products could affect the prescribing of the product. For example, in the U.K., the National Institute for Clinical Excellence, or the NICE, provides guidance to the National Health Service on whether a particular drug is clinically effective and cost effective. Although

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presented as “guidance,” doctors are expected to take the guidance into account when choosing a drug to prescribe. In addition, health authorities may not make funding available for drugs not given a positive recommendation by the NICE. There is a risk that a negative determination by the NICE will mean fewer prescriptions. Although the NICE will consider drugs with orphan status, there is a degree of tension in the application by the NICE of the standard cost assessment for orphan drugs, which are often priced more highly to compensate for the limited market. It is unclear whether the NICE will adopt a more relaxed approach toward the assessment of orphan drugs. We cannot assure you that any of our products will be considered cost effective and that reimbursement to the consumer will be available or will be sufficient to allow us to sell our products on a competitive and profitable basis.

      Our present and future business has been and will continue to be subject to various other laws and regulations.

Patents and Proprietary Rights

      Our success will depend in part on our ability to protect our existing products and the products we acquire or license by obtaining and maintaining a strong proprietary position both in the U.S. and in other countries. To develop and maintain such a position, we intend to continue relying upon a combination of orphan drug status, trade secrets, know-how, continuing technological innovations and licensing opportunities. In addition, we intend to seek patent protection whenever available for any products or product candidates, in particular in conjunction with our formulation and manufacturing process development activities, and related technology we acquire in the future.

      Composition of matter patent protection for Vidaza, thalidomide, Refludan and Innohep has expired or was not pursued. We have exclusive rights to two issued patents and several pending European patent applications that relate to uses of thalidomide. Patent protection for uses of thalidomide expires in February 2014. We own, or co-own with Ash Stevens, Inc., three patent families and have exclusive rights to one additional patent family relating to the production or formulation of Vidaza, of which two patents have issued in the United States and we have received notice of allowance from the U.S. Patent and Trademark Office that a third patent will be issued. These patents will expire in 2023. We have exclusive rights to a family of patents and patent applications relating to the production of Refludan with protection until November 2016.

      We have recently licensed from GPC Biotech AG exclusive rights to issued patents and related pending patent applications in the E.U. and certain other international markets for satraplatin. Issued patents covering compositions of matter and certain methods of use of satraplatin expire in January 2009. In addition, we have recently licensed from MethylGene exclusive rights to patents issued in the United States and related pending patent applications in the E.U. and certain other international markets for MGCD0103. The basic patent covering the composition of matter for MGCD0103 expires in September 2022. Under both of these licenses, our licensing partners are responsible for prosecuting and maintaining these patents and patent applications, and we are required to reimburse them for expenses they incur in connection with the prosecution and maintenance of the patents or patent applications in our territories.

      The patent positions of pharmaceutical firms like us are generally uncertain and involve complex legal, scientific and factual questions. In addition, the coverage claimed in a patent application can be significantly reduced before the patent is issued. Consequently, we do not know whether any of the products or product candidates we acquire or license will result in the issuance of patents or, if any patents are issued, whether they will provide significant proprietary protection or will be challenged, circumvented or invalidated. Because unissued patent applications filed in the U.S. prior to November 29, 2000 and patent applications filed within the last 18 months are maintained in secrecy, and since publication of discoveries in the scientific or patent literature often lags behind actual discoveries, we cannot be certain of the priority of inventions covered by pending patent applications. Moreover, we may have to participate in interference proceedings declared by the U.S. Patent and Trademark Office or a foreign patent office to determine priority of invention, or in opposition proceedings in a foreign patent office, either of which could result in substantial cost to us, even if the eventual outcome is favorable to us. There can be no assurance that the patents, if issued, would be held valid by a

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court of competent jurisdiction. An adverse outcome could subject us to significant liabilities to third parties, require disputed rights to be licensed from third parties or require us to cease using such technology.

      In the absence of or to supplement patent protection for our existing products and any products or product candidates we should acquire in the future, we have sought and intend to continue seeking orphan drug status whenever it is available. To date, we have been granted orphan drug status in the U.S. for Vidaza for the MDS indication, in the E.U. for Vidaza for the MDS indication and for Thalidomide Pharmion 50mg for the indications multiple myeloma and ENL and in Australia for Vidaza for the MDS indication and for Thalidomide Pharmion 50mg for multiple myeloma and ENL indications. If a product which has an orphan drug designation subsequently receives the first regulatory approval for the indication for which it has such designation, the product is entitled to orphan exclusivity, meaning that the applicable regulatory authority may not approve any other applications to market the same drug for the same indication, except in certain very limited circumstances, for a period of seven years in the U.S. and ten years in the E.U. Orphan drug designation does not prevent competitors from developing or marketing different drugs for an indication. See “Government Regulation” for a more detailed description of orphan drug status.

      Additionally, we will rely on Supplementary Protection Certificates and data exclusivity available in the E.U. to extend our period of market exclusivity for satraplatin in the E.U beyond the expiration date of the basic satraplatin patent. A Supplementary Protection Certificate, if granted, would extend the protection provided by the existing satraplatin patent for five years, that is, until January 2014. Data exclusivity in the E.U. provides a period of up to ten years from the date a product is granted marketing approval in the E.U., during which the regulatory authorities are not permitted to cross-refer to the data submitted by the original applicant for approval when reviewing an application from a generic manufacturer of the same approved product. Unlike orphan drug exclusivity, data exclusivity does not prevent a generic manufacturer from filing for regulatory approval of the same or similar drug, even in the same indication for which that drug was previously approved in the E.U., based upon data generated independently by that manufacturer.

      We also rely on trade secret protection for our confidential and proprietary information. No assurance can be given that others will not independently develop substantially equivalent proprietary information and techniques or otherwise gain access to our trade secrets or disclose such technology, or that we can meaningfully protect our trade secrets. However, we believe that the substantial costs and resources required to develop technological innovations, such as the PRMP, will help us to protect the competitive advantage of our products.

      It is our policy to require our employees, consultants, outside scientific collaborators, sponsored researchers and other advisors to execute confidentiality agreements upon the commencement of employment or consulting relationships with us. These agreements provide that all confidential information developed or made known to the individual during the course of the individual’s relationship with us is to be kept confidential and not disclosed to third parties except in specific circumstances. In the case of employees, the agreements provide that all inventions conceived by the individual shall be our exclusive property. There can be no assurance, however, that these agreements will provide meaningful protection or adequate remedies for our trade secrets in the event of unauthorized use or disclosure of such information.

Competition

      The development and commercialization of new drugs is competitive and we will face competition from major pharmaceutical companies, specialty pharmaceutical companies and biotechnology companies worldwide. Our competitors may develop or market products or other novel technologies that are more effective, safer or less costly than any that have been or are being developed by us, or may obtain regulatory approval for their products more rapidly than we may obtain approval for ours.

      The acquisition or licensing of pharmaceutical products is also very competitive, and a number of more established companies, which have acknowledged strategies to license or acquire products, may have competitive advantages as may other emerging companies taking similar or different approaches to product acquisitions. In addition, a number of established research-based pharmaceutical and biotechnology companies may acquire products in late stages of development to augment their internal product lines. These

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established companies may have a competitive advantage over us due to their size, cash flows and institutional experience.

      Many of our competitors will have substantially greater financial, technical and human resources than we have. Additional mergers and acquisitions in the pharmaceutical industry may result in even more resources being concentrated in our competitors. Competition may increase further as a result of advances made in the commercial applicability of technologies and greater availability of capital for investment in these fields. Our success will be based in part on our ability to build and actively manage a portfolio of drugs that addresses unmet medical needs and create value in patient therapy.

      Vidaza. We believe that the primary potential future competition for Vidaza will be Dacogen^tm from Supergen Inc., with marketing rights held by MGI Pharma, Inc., which like Vidaza, is a demethylating agent, and Thalomid^® and Revlimid, each from Celgene. Dacogen is currently in development and/or under review for regulatory approval by the FDA and EMEA. Revlimid was approved in the U.S. for a subset of low-risk MDS patients in December 2005. In addition to these products, there are additional products in clinical development for the treatment of MDS and the enrollment of patients in clinical trials for these products may reduce the number of patients that will receive Vidaza treatment. We also face competition for Vidaza from traditional therapies for the treatment of MDS, including the use of blood transfusions and growth factors.

      Thalidomide Pharmion 50mg. We believe that the primary competitors for Thalidomide Pharmion 50mg are Velcade^tm from Millennium Pharmaceuticals Inc., a proteasome inhibitor, and potentially Revlimid^® from Celgene, a small molecule compound that affects multiple cellular pathways and is currently being evaluated for a wide range of hematological cancers, including relapsed and refractory multiple myeloma and MDS. In addition, in certain of our markets, we face competition from other suppliers of generic or unlicensed forms of thalidomide, including compounding of thalidomide by pharmacists.

      Satraplatin — Competition for satraplatin may include other drugs either marketed or being developed for prostate cancer, as well as other platinum-based compounds and other chemotherapy drugs for other cancers. In the prostate cancer market, currently approved drugs include Emcyt^® from Pfizer, Inc., Novantrone^® from (osi) pharmaceuticals, Inc. and Serono S.A., Quadramet^® from Schering AG and CYTOGEN Corporation, Metastron^® from Amersham Health and Medi-Physics, Inc. and Taxotere^® from Sanofi-Aventis S.A.. In addition to these drugs, there are other agents in development for both advanced HRPC and earlier stages of prostate cancer, which may compete with satraplatin. Examples of such drugs are atrasentan from Abbott Laboratories, calcitriol from Novacea Inc., Provenge^® from Dendreon Corporation, and ixabepilone from Bristol-Myers Squibb Company. There are currently three marketed platinum-based drugs in the United States and in Europe. These are cisplatin, carboplatin and oxaliplatin. All three agents are administered intravenously and are not indicated for the treatment of prostate cancer. Another platinum-based drug, which is not currently on the market, is NX 473 (from NeoRx Corporation). NX 473 is administered intravenously and has shown activity for HRPC in a Phase II clinical trial. We are aware that other companies may be developing orally bioavailable, platinum-based compounds. We are not aware, however, of any other orally bioavailable, platinum-based compounds that are approved or are in Phase III clinical trials. Satraplatin could also be developed for the treatment of other cancers, either as a single agent or in combination with radiation therapy or other drugs. In these other clinical settings, it will also face competition from a variety of other anticancer drugs.

      We are aware that other companies may be developing orally bioavailable platinum-based compounds. We are not aware, however, of any other orally bioavailable platinum-based compounds that are approved or are in Phase III clinical trials. Satraplatin could also be developed for the treatment of other cancers, either as a single agent or in combination with radiation therapy or other drugs. In these other clinical settings, it will also face competition from a variety of other anticancer drugs.

      MGCD0103 — We believe the development of HDAC inhibitors to be very competitive. We are currently aware of 10 HDAC inhibitors currently in clinical development, with approximately 18 additional compounds in preclinical development. These compounds are being studied in a variety in cancers, including both solid tumors and hematological malignancies. Several of these compounds are in a more advanced stage

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of development than MGCD0103. We believe the compound in the most advanced stage of development to be Merck’s vorinostat (SAHA), which is the subject of several ongoing Phase II and Phase III clinical trials.

Clinical, Development and Regulatory Expense

      In the years ended December 31, 2005, 2004 and 2003, we incurred clinical, development and regulatory expense of $42.9 million, $28.4 million, and $24.6 million, respectively.

Employees

      As of March 9, 2006, we had 328 employees, consisting of 120 in regulatory affairs and clinical development, 153 in sales and marketing and 55 in general and administrative. We believe that our relations with our employees are good and we have no history of work stoppages.

      In February 2006, Judith A. Hemberger notified our Board of Directors of her intention to resign her positions as Executive Vice President, Chief Operating Officer and member of the Board of Directors of the company, effective April 1, 2006.

Item 1A. Risk Factors.

      In addition to other information included in this report, the following factors should be considered in evaluating our business and future prospects.

Risks Related to Our Business

We have a history of net losses, and may not maintain profitability in the future.

      Except for our most recent fiscal year, we have incurred annual net losses since our inception. As of December 31, 2005, we had an accumulated deficit of $135.8 million. Although we achieved profitability for our 2005 fiscal year, we expect to further increase our expenditures to:

•  commercialize our marketed products;

•  support our development efforts associated with completing clinical trials and seeking regulatory approvals of our products, including development expenses associated with our recently-acquired product candidates, satraplatin and MGCD0103;

•  satisfy our obligations to make milestone payments under the existing license agreements for our product candidates; and

•  acquire additional product candidates or companies.

      Accordingly, we do not expect to maintain profitability during our 2006 fiscal year and we are unsure as to when we will again achieve profitability for any substantial period of time. If we fail to achieve profitability within the time frame expected by investors or securities analysts, the market price of our common stock may decline.

Our existing commercial business is largely dependent on the success of Vidaza.

      Sales of Vidaza account for a significant portion of our total product sales. For the fiscal year ended December 31, 2005, Vidaza net sales represented 57% of our total net sales. Vidaza sales have not increased significantly over the past several calendar quarters. In addition, Vidaza will face increased competition from Revlimid^tm, which was recently approved for marketing by the FDA as a treatment for a subset of low-risk MDS patients, and we may face competition from new therapeutics for treating MDS under development by our competitors that are currently being considered for approval by the FDA. The commercial success of Vidaza and future growth in Vidaza sales will depend, among other things, upon:

•  continued acceptance by regulators, physicians, patients and other key decision-makers as a safe, superior therapeutic as compared to currently existing or future treatments for MDS;

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•  the success of our current survival clinical trial for Vidaza in MDS;

•  our ability to achieve a marketing authorization for Vidaza in Europe and in other countries; and

•  our ability to expand the indications for which we can market Vidaza.

      As a consequence, we cannot make assurances that Vidaza will gain increased market acceptance from members of the medical community or that the acceptance of Vidaza we have observed thus far will be maintained. Even if Vidaza does gain increased market acceptance, we may not be able to maintain that market acceptance over time if these new products are introduced and are more favorably received than Vidaza or render Vidaza obsolete.

      Regulatory authorities in our markets subject approved products and manufacturers of approved products to continual regulatory review. Previously unknown problems, such as unacceptable toxicities or side effects, may only be discovered after a product has been approved and used in an increasing number of patients. If this occurs, regulatory authorities may impose labeling restrictions on the product that could affect its commercial viability or could require withdrawal of the product from the market. Accordingly, there is a risk that we will discover such previously unknown problems associated with the use of Vidaza in patients, which could limit sales growth or cause sales of Vidaza to decline.

We may not receive regulatory approvals for our product candidates, including thalidomide, satraplatin or, outside of the United States, for Vidaza, or approvals may be delayed.

      Our ability to fully commercialize thalidomide and satraplatin is subject to regulatory approval by governmental authorities in Europe and our other markets, and our ability to commercialize Vidaza outside the U.S. is subject to regulatory approval by governmental authorities in Europe and elsewhere. The regulatory review and approval process to obtain marketing approval, even for a drug that is approved in other jurisdictions, takes many years and requires the expenditure of substantial resources. This process can vary substantially based on the type, complexity, novelty and indication of the product candidate involved. Changes in the regulatory approval policy during the development period, changes in or the enactment of additional statutes or regulations, or changes in regulatory review for each submitted product application may cause delays in the approval or rejection of an application. The regulatory authorities have substantial discretion in the approval process and may refuse to accept any application or may decide that data is insufficient for approval and require additional pre-clinical, clinical or other studies. In addition, varying interpretations of the data obtained from pre-clinical and clinical testing by regulatory authorities could delay, limit or prevent regulatory approval of a product candidate.

      In July 2005, we announced the completion of the scientific advice procedure with the EMEA regarding the clinical data needed to support a marketing authorization for thalidomide in relapsed/ refractory multiple myeloma. Based on this scientific advice, we initiated a four arm randomized study of 400-500 patients in this indication in February 2006. We expect to complete the study in 2007. In January 2006, we announced that, pending further data review and communication with the European regulatory authorities, we expect that the results of a pivotal Phase III multiple myeloma trial conducted by Celgene Corporation will form the basis of a new MAA for thalidomide in the treatment of first-line treatment of multiple myeloma in Europe. Just before our announcement, Celgene announced that the study met the pre-specified interim endpoint for efficacy and would be stopped. We cannot assure you that the results of this trial or our ongoing clinical trials for thalidomide will support our applications for these regulatory approvals.

      In November 2005, we withdrew our previously filed MAA with the EMEA for Vidaza, based on the EMEA’s stated view that additional clinical data would be required before it can reach an opinion on whether or not Vidaza should be approved as a treatment of MDS. We have previously initiated a clinical study of 354 high-risk MDS patients with overall survival as the primary endpoint of the study, which we expect to complete in 2007. If the results of this study are positive, we intend to submit a new MAA for Vidaza with the EMEA based on data from this study.

      In addition, we have recently acquired marketing rights to satraplatin in Europe and certain other countries from GPC Biotech AG. Satraplatin is the subject of an ongoing Phase III clinical trial as a second-

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line chemotherapy treatment for patients with HRPC. Based on data from this trial, we expect to file an MAA in Europe in 2007.

      We cannot assure you that the results of these studies for Vidaza or satraplatin will be positive or, even if either study is positive, that the EMEA will accept the results of the studies as the basis for a marketing approval.

      The timing of our submissions, the outcome of reviews by the applicable regulatory authorities in each relevant market, and the initiation and completion of clinical trials are subject to uncertainty, change and unforeseen delays. Moreover, favorable results in later stage clinical trials do not ensure regulatory approval to commercialize a product. Some companies that have believed their products performed satisfactorily in clinical trials have nonetheless failed to obtain regulatory approval of their products. We will not be able to market thalidomide, Vidaza or satraplatin in any country where the drug is not approved, and if thalidomide, Vidaza or satraplatin is not approved for sale in a market where we have acquired rights to the product, we will only be able to sell it in such market, if at all, on a compassionate use or named patient basis, which will limit sales.

Thalidomide’s history of causing birth defects may prevent it from becoming commercially successful.

      At the time thalidomide first came on the market in the late 1950’s and into the early 1960’s, it was not known that the drug could cause birth defects in babies born to women who had taken the drug while pregnant. Although no proper census was ever taken, it has been estimated that there were between 10,000 and 20,000 babies born with birth defects as a result of thalidomide. The majority of these births were in the U.K. and Germany, two of our largest target markets for sales of thalidomide. As a result, thalidomide’s historical reputation in our target markets may delay or prevent regulatory approval in Europe or may present a substantial barrier to its market acceptance. Thalidomide’s potential for causing severe birth defects and its negative historical reputation may limit the extent of its market acceptance among both doctors and patients, despite the efficacy that it has been proven to have in patients afflicted with a number of different diseases. In addition, any report of a birth defect attributed to the current use of thalidomide could result in a material decrease in our sales of thalidomide, and may result in the forced withdrawal of thalidomide from the market.

If the third party manufacturers upon whom we rely fail to produce our products in the volumes that we require on a timely basis, or to comply with stringent regulations applicable to pharmaceutical drug manufacturers, we may face delays in the commercialization of, or be unable to meet demand for, our products and may lose potential revenues.

      We do not manufacture any of our products and we do not plan to develop any capacity to do so. We have contracted with third-party manufacturers to manufacture each of our products. The manufacture of pharmaceutical products requires significant expertise and capital investment, including the development of advanced manufacturing techniques and process controls. Manufacturers of pharmaceutical products often encounter difficulties in production, especially in scaling up initial production. These problems include difficulties with production costs and yields, quality control and assurance and shortages of qualified personnel, as well as compliance with strictly enforced federal, state and foreign regulations. Our third-party manufacturers may not perform as agreed or may terminate their agreements with us.

      Regulatory authorities in our markets require that drugs be manufactured, packaged and labeled in conformity with cGMP regulations and guidelines. In addition, before any product batch produced by our manufacturers can be shipped, it must conform to release specifications pre-approved by regulators for the content of the pharmaceutical product. The manufacturing process for Vidaza is very complex. There is a risk that our manufacturers will not comply with all applicable regulatory standards, and may not be able to manufacture Vidaza on a commercial scale that conforms on a consistent basis to our release specifications approved by the FDA.

      To date, we have relied on sole sources for the manufacture of our products and, although we are in the process of qualifying a second-source manufacturer for the fill and finishing processes for Vidaza, we do not have operational alternate manufacturing facilities in place at this time. The number of third-party

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manufacturers with the expertise, required regulatory approvals and facilities to manufacture bulk drug substance on a commercial scale is extremely limited, and it would take a significant amount of time to arrange for alternative manufacturers. If we need to change to other commercial manufacturers, the FDA and comparable foreign regulators must approve these manufacturers’ facilities and processes prior to our use, which would require new testing and compliance inspections, and the new manufacturers would have to be educated in or independently develop the processes necessary for the production of our products.

      Any of these factors could cause us to delay or suspend clinical trials, regulatory submissions, required approvals or commercialization of our products or product candidates, entail higher costs and result in our being unable to effectively commercialize our products. Furthermore, if our third-party manufacturers fail to deliver the required commercial quantities of bulk drug substance or finished product on a timely basis and at commercially reasonable prices, and we are unable to promptly find one or more replacement manufacturers capable of production at a substantially equivalent cost, in substantially equivalent volume and on a timely basis, we would likely be unable to meet demand for our products and we would lose potential revenues. Moreover, failure of our third party manufacturers to comply with applicable regulations could result in sanctions being imposed on us, including fines, injunctions, civil penalties, suspension or withdrawal of approvals, license revocation, seizures or recalls of product candidates or products, operating restrictions and criminal prosecutions, any of which could significantly and adversely affect supplies of Vidaza and our other products.

Fluctuations in our operating results could affect the price of our common stock.

      Our operating results may vary significantly from period to period due to many factors, including the amount and timing of sales of our products, underlying demand and wholesaler buying patters for Vidaza, the availability and timely delivery of a sufficient supply of our products, the timing and amount of operating expenses, particularly for development activities, announcements regarding clinical trial results and product introductions by us or our competitors, the availability and timing of third-party reimbursement and the timing of regulatory submissions and approvals. If our operating results do not match the expectations of securities analysts and investors as a result of these and other factors, the trading price of our common stock will likely decrease.

Our effective tax rate has, and likely will continue to, vary significantly from period to period. Increases in our effective tax rate would have a negative effect on our results of operations.

      Our effective tax rate has varied significantly since our inception. This is largely due to the fact that we are subject to income taxes in a number of jurisdictions. The tax provision for each country is based on pre-tax earnings or losses in each specific country, and tax losses in one country cannot be used to offset taxable income in other countries. As a result, our consolidated effective tax rate has historically been far in excess of U.S. statutory tax rates. We expect this trend will continue for the foreseeable future

      Since our inception, we have had minimal or no provision for U.S. income taxes due to incurring losses in the U.S. or, in the case of 2005, utilizing tax net operating loss carryforwards to offset taxable income in the U.S. As of December 31, 2005 we had approximately $131 million in U.S. federal and foreign tax loss carryforwards, including approximately $35 million in U.S. loss carryforwards and $86 million in Swiss tax loss carryforwards. U.S. net operating loss carryforwards are subject to “change of ownership” limitations under Sections 382 of the Internal Revenue Code and may also be subject to various other limitations on the amounts utilized. A change in ownership last occurred in 2001, but that change had minimal impact on the availability of net operating loss carryforwards as the majority of the losses were incurred subsequent to the change in ownership. We anticipate that a second change in ownership may occur in 2006. If so, the amount of net operating loss carryforwards available in 2006 and in subsequent years may be reduced significantly. If we maintain profitability in the U.S., the reduction in the availability of net operating loss carryforwards may result in an increase in U.S. income tax expense and our overall effective tax rate. This in turn would result in a reduction in our net income and net income per share beginning with the quarter of implementation.

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If we breach any of the agreements under which we license commercialization rights to products or technology from others, we could lose license rights that are important to our business.

      We license commercialization rights to products and technology that are important to our business, and we expect to enter into similar licenses in the future. For instance, we acquired rights to certain intellectual property and technology for Vidaza, thalidomide, satraplatin and MGCD0103 through exclusive licensing arrangements with third parties. Under these licenses we are subject to commercialization and development, sublicensing, royalty, milestone payments, insurance and other obligations. If we fail to comply with any of these requirements, or otherwise breach these license agreements, the licensor may have the right to terminate the license in whole or to terminate the exclusive nature of the license. Loss of any of these licenses or the exclusivity rights provided therein could harm our financial condition and operating results.

We face substantial competition, which may result in others commercializing competing products before or more successfully than we do.

      Our industry is highly competitive. Our success will depend on our ability to acquire, develop and commercialize products and our ability to establish and maintain markets for our products. Potential competitors in North America, Europe and elsewhere include major pharmaceutical companies, specialized pharmaceutical companies and biotechnology firms, universities and other research institutions. Many of our competitors have substantially greater research and development capabilities and experience, and greater manufacturing, marketing and financial resources, than we do. Accordingly, our competitors may develop or license products or other novel technologies that are more effective, safer or less costly than our existing products or products that are being developed by us, or may obtain regulatory approval for products before we do. Clinical development by others may render our products or product candidates noncompetitive.

      Other pharmaceutical companies may develop generic versions of our products that are not subject to patent protection or otherwise subject to orphan drug exclusivity or other proprietary rights. In particular, because we have only limited patent protection for thalidomide, we face substantial competition from generic versions of thalidomide throughout Europe and other territories in which we sell thalidomide without orphan drug exclusivity. Governmental and other pressures to reduce pharmaceutical costs may result in physicians writing prescriptions for these generic products. Increased competition from the sale of competing generic pharmaceutical products could cause a material decrease in sales of our products.

      The primary competition and potential competition for our products currently are:

•  Vidaza: Thalomid^® and Revlimid^tm, each from Celgene, and Dacogen^tm from Supergen Inc., with marketing rights held by MGI Pharma, Inc., which like Vidaza, is a demethylating agent;

•  Thalidomide: Velcade^tm from Millennium Pharmaceuticals Inc., and Revlimid^tm from Celgene Corporation, in addition to competing sales of other versions of thalidomide described above;

•  Satraplatin: Emcyt^® from Pfizer Inc.; Novantrone^® from (osi) pharmaceuticals/ Serono, Inc.; Quadramet^® from Schering AG/Cytogen Corporation; Metastron^® from Amersham Health/ Medi-Physics, Inc.; and Taxotere^® from Sanofi Aventis SA, as approved drugs. There are other agents in development for prostate cancer, including pemetrexel from Eli Lilly and Company; calcitriol from Novacea, Inc.; Provenge^® from Dendreon Corporation; ixabepilone from Bristol-Myers Squibb Co.; Avastin from Genentech Inc.; Velcade^® from Millenium Pharmaceuticals Inc./ Johnson & Johnson Pharmaceutical Research & Development LLC; and Nexavar^® from Onyx Pharmaceuticals, Inc./ Bayer Pharmaceuticals Corporation;

•  Innohep: Lovenox^®, from Sanofi-Aventis; Fragmin^®, from Pfizer Inc.; and Arixtra, from GlaxoSmithKline plc; and

•  Refludan: Argatroban, from GlaxoSmithKline.

      Dacogen is currently under review for regulatory approval by the FDA and Revlimid was recently approved by the FDA as a treatment for certain low risk MDS patients and is currently under review for regulatory approval by the EMEA. In addition to these products, there are additional products in clinical

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development for the treatment of MDS and the enrollment of patients in clinical trials for these products may reduce the number of patients that will receive Vidaza treatment. We also face competition for Vidaza from traditional therapies for the treatment of MDS, including the use of blood transfusions and growth factors.

      In addition, MGCD0103, a histone deacetylase (HDAC) inhibitor recently licensed by us from MethylGene Inc., is in a very early stage of development and we do not anticipate completing clinical trials for several years. However, several other HDAC inhibitors are in more advanced clinical trials, including SAHA from Merck & Co., Inc., and may reach the market before MGCD0103. If this occurs, the market potential for MGCD0103 may be significantly reduced.

The timing of customer purchases and the resulting product shipments have a significant impact on the amount of product sales that we recognize in a particular period.

      The majority of our sales of Vidaza in the United States are made to independent pharmaceutical wholesalers, including specialty oncology distributors, which, in turn, resell the product to an end user customer (normally a clinic, hospital, alternative healthcare facility or an independent pharmacy). Inventory in the distribution channel consists of inventory held by these wholesalers. Our product sales in a particular period are impacted by increases or decreases in the distribution channel inventory levels. We cannot significantly control or influence the purchasing patterns or buying behavior of independent wholesalers or end users. Although our wholesaler customers typically buy product from us only as necessary to satisfy projected end user demand, we cannot predict future wholesalers buying practices. For example, wholesalers may engage in speculative purchases of product in excess of the current market demand in anticipation of future price increases. Accordingly, purchases by any given customer, during any given period, may be above or below actual patient demand of any of our products during the same period, resulting in fluctuations in product inventory in the distribution channel. If distribution channel inventory levels substantially exceed end user demand, we could experience reduced revenue from sales in subsequent periods due to a reduction in end user demand.

      Furthermore, our customer base is highly concentrated. Net sales generated from our largest three wholesale customers in the U.S. totaled approximately 45% of our total consolidated net sales for the year ended December 31, 2005. If any of these customers becomes insolvent or disputes payment of the amount it owes us, it would adversely affect our results of operations and financial condition.

Our failure to successfully acquire, in-license, develop and market additional product candidates or approved products would impair our ability to grow and could affect the price of our common stock.

      As part of our growth strategy, we intend to acquire, in-license, develop and market additional products and product candidates. Because we neither have, nor currently intend to establish, internal research capabilities, we are dependent upon pharmaceutical and biotechnology companies and other researchers to sell or license products to us. The success of this strategy depends upon our ability to identify, select and acquire the right pharmaceutical product candidates and products.

      Any product candidate we license or acquire may require additional development efforts prior to commercial sale, including extensive clinical testing and approval by the FDA and applicable foreign regulatory authorities. All product candidates are prone to the risks of failure inherent in pharmaceutical product development, including the possibility that the product candidate will not be shown to be sufficiently safe and effective for approval by regulatory authorities. Even where we are successful in gaining approval for product candidates we acquire, we cannot assure you that those products will be manufactured or produced economically, successfully commercialized or widely accepted in the marketplace. In addition, we will be required to integrate any acquired products into our existing operations, including satraplatin and MGCD0103, products that we have only recently acquired. Managing the development of a new product entails numerous financial and operational risks, including difficulties in attracting qualified employees to develop the products.

      Proposing, negotiating and implementing an economically viable acquisition and licenses is a lengthy and complex process. Other companies, including those with substantially greater financial, marketing and sales resources, may compete with us for the acquisition of product candidates and approved products. We may not

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be able to acquire the rights to additional product candidates and approved products on terms that we find acceptable, or at all.

We may not be able to obtain sufficient product liability insurance on commercially reasonable terms or with adequate coverage for thalidomide.

      Historically, the vast majority of product liability insurers have been unwilling to write any product liability coverage for thalidomide. Although we currently have product liability coverage for thalidomide that we believe is appropriate, if our sales of this product grow in the future, our current coverage may be insufficient. We may be unable to obtain additional coverage on commercially reasonable terms if required, or our coverage may be inadequate to protect us in the event claims are asserted against us. In addition, we might be unable to renew our existing level of coverage if there were a report of a birth defect attributable to the current use of thalidomide, whether or not sold by us.

Failure to achieve our sales targets or raise additional funds in the future may require us to delay, reduce the scope of, or eliminate one or more of our planned activities.

      We will need to generate greater sales to maintain profitability on an annual basis. The product development, including clinical trials, manufacturing development and regulatory approvals of Vidaza, thalidomide, satraplatin and MGCD0103, and the acquisition and development of additional product candidates by us will require a commitment of substantial funds. Our future capital requirements are dependent upon many factors and may be significantly greater than we expect.

      We believe, based on our current operating plan, including anticipated sales of our products, that our cash, cash equivalents and short-term investments will be sufficient to fund our operations through at least the next twelve months. If our existing resources are insufficient to satisfy our liquidity requirements due to slower than anticipated sales of our products or otherwise, or if we acquire additional products or product candidates, we may need to sell additional equity or debt securities. If we are unable to obtain this additional financing, we may be required to delay, reduce the scope of, or eliminate one or more of our planned development, commercialization or expansion activities, which could harm our financial condition and operating results.

We may not be able to manage our business effectively if we are unable to attract and retain key personnel.

      Our industry has experienced a high rate of turnover of management personnel in recent years. We are highly dependent on our senior management team, whose services are critical to the successful implementation of our business strategies. Each of our senior executives have entered into an employment agreement with us for a term that runs until the agreement is otherwise terminated by us or them. These employment agreements provide that the executive cannot compete with us for a period of one year after his or her employment with us is terminated. If we lose the services of our senior management or other key employees, our ability to successfully implement our business strategy could be seriously harmed. We do not maintain key person life insurance on any of the members of our senior management. Replacing key employees may be difficult and may take an extended period of time because of the limited number of individuals in our industry with the breadth of skills and experience required to develop, gain regulatory approval of and commercialize products successfully. Competition to hire from this limited pool is intense, and we may be unable to hire, train, retain or motivate these additional key personnel.

We have limited patent protection for our current products, and we may not be able to obtain, maintain and protect proprietary rights necessary for the development and commercialization of our products or product candidates.

      Our commercial success will depend in part on obtaining and maintaining a strong proprietary position for our products both in the U.S., Europe and elsewhere. We currently own or have exclusive rights to issued patents and pending patent applications covering thalidomide from Celgene Corporation, Vidaza, from Pfizer, Inc., satraplatin from GPC Biotech AG and MGCD0103 from MethylGene Inc. We have limited patent

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protection for Vidaza, currently consisting of two issued patents covering certain polymorphic forms of Vidaza drug substance and methods of isolating a crystalline form of Vidaza drug substance. In addition, in May 2004 the FDA awarded orphan drug exclusivity to Vidaza for the treatment of MDS patients, which lasts for seven years from the date granted. Given the limited patent protection for Vidaza, we must still rely in large part on orphan drug exclusivity to protect and enhance our competitive position in the U.S., and we will rely on orphan drug designation and data exclusivity available in the E.U., if and when Vidaza is approved for marketing in Europe. However, orphan drug exclusivity does not prohibit competitors from developing or marketing different drugs for an indication or from independently developing generic versions of Vidaza for different indications. In addition, while we are selling thalidomide on a compassionate use and named patient basis, we do not have orphan drug exclusivity and we must rely on our use patent protection to prevent competitors from selling thalidomide in our markets until we are granted a marketing authorization. Finally, the primary European patents we have licensed for satraplatin expire in 2009 and, therefore, we will be relying on supplementary protection certificates to extend patent protection and on data exclusivity available in the E.U. if and when we achieve marketing approval for this product.

      We also rely on protection derived from trade secrets, process patents, know-how and technological innovation. To maintain the confidentiality of trade secrets and proprietary information, we generally seek to enter into confidentiality agreements with our employees, consultants and collaborators upon the commencement of a relationship with us. However, we may not obtain these agreements in all circumstances. In addition, adequate remedies may not exist in the event of unauthorized use or disclosure of this information. The loss or exposure of our trade secrets, know-how and other proprietary information could harm our operating results, financial condition and future growth prospects. Furthermore, others may have developed, or may develop in the future, substantially similar or superior know-how and technology.

      We intend to seek patent protection whenever it is available for any products or product candidates we acquire in the future. However, any patent applications for future products or pending applications for our existing products may not issue as patents, and any patent issued on such products may be challenged, invalidated, held unenforceable or circumvented. Furthermore, the claims in patents that do ultimately issue on those patent applications may not be sufficiently broad to prevent third parties from commercializing competing products. In addition, the laws of various foreign countries in which we compete may not protect the intellectual property on which we may rely to the same extent as do the laws of the U.S. If we fail to obtain adequate patent protection for our products, our ability to compete could be impaired.

We may undertake acquisitions in the future and any difficulties from integrating such acquisitions could damage our ability to attain or maintain profitability.

      We may acquire additional businesses, products or product candidates that complement or augment our existing business. To date, our only experience in acquiring and integrating a business involved our acquisition of Laphal in March 2003. Integrating any newly acquired business or product could be expensive and time-consuming. We may not be able to integrate any acquired business or product successfully or operate any acquired business profitably. Moreover, if we acquire additional businesses or products we will incur significant acquisition costs and operating expenses, which could harm our financial condition and operating results. In addition, we may need to raise additional funds through public or private debt or equity financing to make acquisitions, which may result in dilution for stockholders and the incurrence of indebtedness.

Changes to financial accounting standards may affect our results of operations and cause us to change our business practices.

      We prepare our financial statements to conform with generally accepted accounting principles, or GAAP, in the United States. These accounting principles are subject to interpretation by the American Institute of Certified Public Accountants, the Financial Accounting Standards Board, or FASB, the SEC and various bodies formed to promulgate and interpret appropriate accounting policies. A change in those accounting principles or interpretations could have a significant effect on our reported financial results and may affect our reporting of transactions completed before a change is announced or adopted. Changes to those rules or the questioning of current practices may adversely affect our reported financial results or the way we conduct our

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business. For example, accounting policies affecting certain aspects of our business, including rules relating to employee stock option grants, have recently been revised. In December 2004, the FASB issued a revision of SFAS No. 123, “Accounting for Stock-Based Compensation,” which amends SFAS No. 123 to require the recognition of employee stock options as compensation based on their fair value at the time of grant (with limited exceptions). As a result of these new rules, on January 1, 2006 we changed our accounting policies and will thereafter record an expense for our stock-based compensation plans based on the estimated fair value of options granted, which will result in additional accounting charges as described in Management’s Discussion and Analysis of Financial Condition and Results of Operations — Recently Issued Accounting Standards.

Our business is subject to economic, political, regulatory and other risks associated with international sales and operations.

      Since we sell our products in Europe, Australia and many additional countries, our business is subject to risks associated with conducting business internationally. We anticipate that sales from international operations will continue to represent a substantial portion of our total sales. In addition, a number of our suppliers are located outside the United States. Accordingly, our future results could be harmed by a variety of factors, including:

•  difficulties in compliance with foreign laws and regulations;

•  changes in foreign regulations and customs;

•  changes in foreign currency exchange rates and currency controls;

•  changes in a specific country’s or region’s political or economic environment;

•  trade protection measures, import or export licensing requirements or other restrictive actions by the U.S. or foreign governments;

•  negative consequences from changes in tax laws;

•  difficulties associated with staffing and managing foreign operations;

•  longer accounts receivable cycles in some countries; and

•  differing labor regulations.

Risks Related to Our Industry

Our ability to generate sales from our products will depend on reimbursement and drug pricing policies and regulations.

      Our ability to achieve acceptable levels of reimbursement for drug treatments by governmental authorities, private health insurers and other organizations will have an effect on our ability to successfully commercialize, and attract collaborative partners to invest in the development of, product candidates. The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 together with rulemaking by the Centers for Medicare and Medicaid Services, or CMS, changed the methodology for Medicare reimbursement of pharmaceutical products administered in physician offices and hospital outpatient facilities, including Vidaza and Innohep. Under these regulations, reimbursements are the average selling price, or ASP, of a product plus 6%, rather than a specified discount from the average wholesale price, or AWP, as was the case under prior regulations. The ASP-based reimbursement regime generally reduced the reimbursement physicians receive under Medicare for most office-administered injectable drugs, including Vidaza and Innohep. The changes made to date have not yet resulted in an adverse affect on reimbursement for our products, however we cannot predict the impact, if any, that future reimbursement policies will adversely affect product use by physicians, thereby reducing our sales for these products.

      In other countries, particularly the countries of the European Union, the pricing of prescription pharmaceuticals and the level of reimbursement are subject to strict governmental control. We cannot be sure that reimbursement in the U.S., Europe or elsewhere will be available for any products we may develop or, if

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already available, will not be decreased or eliminated in the future. If reimbursement is not available or is available only at limited levels, we may not be able to successfully commercialize our products, and may not be able to obtain a satisfactory financial return on our products.

      Third-party payers increasingly are challenging prices charged for medical products and services. Also, the trend toward managed health care in the U.S. and the changes in health insurance programs, as well as legislative proposals to reform health care or reduce government insurance programs, may result in lower prices for pharmaceutical products, including any products that may be offered by us. Cost-cutting measures that health care providers are instituting, and the effect of any health care reform, could harm our ability to sell any products that are successfully developed by us and approved by regulators. Moreover, we are unable to predict what additional legislation or regulation, if any, relating to the health care industry or third-party coverage and reimbursement may be enacted in the future or what effect this legislation or regulation would have on our business. In the event that governmental authorities enact legislation or adopt regulations that affect third-party coverage and reimbursement, demand for our products may be reduced thereby harming our sales and profitability.

If product liability lawsuits are brought against us, we may incur substantial liabilities.

      The clinical testing and commercialization of pharmaceutical products involves significant exposure to product liability claims. If losses from such claims exceed our liability insurance coverage, we may incur substantial liabilities. Whether or not we were ultimately successful in product liability litigation, such litigation could consume substantial amounts of our financial and managerial resources, and might result in adverse publicity, all of which would impair our business. We may not be able to maintain our clinical trial insurance or product liability insurance at an acceptable cost, if at all, and this insurance may not provide adequate coverage against potential claims or losses. If we are required to pay a product liability claim, we may not have sufficient financial resources to complete development or commercialization of any of our product candidates and our business and results of operations will be harmed.

If our promotional activities fail to comply with the regulations and guidelines of the various relevant regulatory agencies, we may be subject to warnings or enforcement action that could harm our business.

      Physicians may prescribe drugs for uses that are not described in the product’s labeling for uses that differ from those tested in clinical studies and approved by the FDA or similar regulatory authorities in other countries. These “off-label” uses are common across medical specialties and may constitute the best treatment for many patients in varied circumstances. Regulatory authorities generally do not regulate the behavior of physicians in their choice of treatments. Regulatory authorities do, however, restrict communications on the subject of off-label use. Companies cannot actively promote approved drugs for off-label uses, but in some countries outside of the E.U., including the U.S., they may disseminate to physicians articles published in peer-reviewed journals, like “The New England Journal of Medicine” and “The Lancet,” that discuss off-label uses of approved products. To the extent allowed, we may disseminate peer-reviewed articles on our products to our physician customers. We believe our promotional activities are currently in compliance with the regulations and guidelines of the various regulatory authorities. If, however, our promotional activities fail to comply with these regulations or guidelines, we may be subject to warnings from, or enforcement action by, these authorities. Furthermore, if the discussion of off-label use in peer-reviewed journals or the dissemination of these articles is prohibited, it may harm demand for our products.

We are subject to numerous complex regulatory requirements and failure to comply with these regulations, or the cost of compliance with these regulations, may harm our business.

      The testing, development and manufacturing of our products are subject to regulation by numerous governmental authorities in the U.S., Europe and elsewhere. These regulations govern or affect the testing, manufacture, safety, labeling, storage, record-keeping, approval, advertising and promotion of our products and product candidates, as well as safe working conditions and the experimental use of animals. Noncompliance with any applicable regulatory requirements can result in refusal of the government to approve products for marketing, criminal prosecution and fines, recall or seizure of products, total or partial suspension of

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production, prohibitions or limitations on the commercial sale of products or refusal to allow us to enter into supply contracts. Regulatory authorities typically have the authority to withdraw approvals that have been previously granted.

      The regulatory requirements relating to the manufacturing, testing, and marketing of our products may change from time to time. For example, at present, member states in the E.U. are in the process of incorporating into their domestic laws the provisions contained in the E.U. Directive on the implementation of good clinical practice in the conduct of clinical trials. The Directive imposes more onerous requirements in relation to certain aspects of the conduct of clinical trials than are currently in place in many member states. This may impact our ability to conduct clinical trials and the ability of independent investigators to conduct their own research with support from us.

Risks Related to Our Common Stock

Our certificate of incorporation, our bylaws, Delaware law and our employment agreements with members of our senior management contain provisions that could discourage, delay or prevent a change in control or management of Pharmion.

      Our amended and restated certificate of incorporation, bylaws, Delaware law and our employment agreements with members of senior management contain provisions which could delay or prevent a third party from acquiring shares of our common stock or replacing members of our board of directors, each of which certificate of incorporation provisions can only be amended or repealed upon the consent of 80% of our outstanding shares. Our amended and restated certificate of incorporation allows our board of directors to issue up to 10,000,000 shares of preferred stock. The board can determine the price, rights, preferences and privileges of those shares without any further vote or action by the stockholders. As a result, our board of directors could make it difficult for a third party to acquire a majority of our outstanding voting stock, for example by adopting a stockholders’ rights plan.

      Our amended and restated certificate of incorporation also provides that the members of the board are divided into three classes. Each year the terms of approximately one-third of the directors will expire. Our bylaws do not permit our stockholders to call a special meeting of stockholders. Under the bylaws, only our Chief Executive Officer, Chairman of the Board or a majority of the board of directors are able to call special meetings. The staggering of directors’ terms of office and the limitation on the ability of stockholders to call a special meeting may make it difficult for stockholders to remove or replace the board of directors should they desire to do so. Since management is appointed by the board of directors, any inability to effect a change in the board may result in the entrenchment of management. The bylaws also require that stockholders give advance notice to our Secretary of any nominations for director or other business to be brought by stockholders at any stockholders’ meeting. These provisions may delay or prevent changes of control or management, either by third parties or by stockholders seeking to change control or management.

      We are also subject to the anti-takeover provisions of Section 203 of the Delaware General Corporation Law. Under these provisions, if anyone becomes an “interested stockholder,” we may not enter into a “business combination” with that person for three years without special approval, which could discourage a third party from making a takeover offer and could delay or prevent a change of control. For purposes of Section 203, “interested stockholder” means, generally, someone owning 15% or more of our outstanding voting stock or an affiliate of ours that owned 15% or more of our outstanding voting stock during the past three years, subject to certain exceptions as described in Section 203.

      The employment agreements with members of our senior management provide that certain benefits will be payable to the executives in the event we undergo a change in control and the termination of the executive’s employment within two years after such change in control for any reason other than for cause, disability, death, normal retirement or early retirement.

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Our stock price has been and may continue to be volatile and your investment in our common stock could suffer a decline in value

      Our common stock has been and in the future may be subject to substantial price volatility. During the period January 1, 2005 to December 31, 2005, the closing price of our common stock ranged from a high of $44.55 per share to a low of $16.49 per share.

      Some specific factors that could have a significant effect on our common stock market price include:

•  actual or anticipated fluctuations in our operating results;

•  our announcements or our competitors’ announcements of clinical trial results or regulatory approval of new products;

•  changes in our growth rates or our competitors’ growth rates;

•  the timing or results of regulatory submissions or actions with respect to our products;

•  public concern as to the safety of our products;

•  changes in health care, drug pricing or reimbursement policies in a country where we sell our products;

•  our inability to raise additional capital;

•  our ability to grow through successful product acquisitions and in-licensing agreements;

•  conditions of the pharmaceutical industry or in the financial markets or economic conditions in general; and

•  changes in stock market analyst recommendations regarding our common stock, other comparable companies or the pharmaceutical industry generally.

Item 1B. Unresolved Staff Comments.

      None.

Item 2. Properties.

      We lease approximately 29,000 square feet of space in our headquarters in Boulder, Colorado under a lease that expires in 2008. We also lease approximately 26,000 square feet of office space in Windsor in the United Kingdom. That lease expires in 2010 and has a renewal option for an additional five years. We also lease clinical development, sales and marketing, and support offices in other parts of the U.S. and abroad. We have no laboratory, research or manufacturing facilities. We believe that our current facilities are adequate for our needs for the foreseeable future and that, should it be needed, suitable additional space will be available to accommodate expansion of our operations on commercially reasonable terms.

Item 3. Legal Proceedings.

      On March 30, 2005 we filed suit against Casso Pharmaceuticals for infringement of European Patent EP 0 688 211, in connection with Casso’s sales of thalidomide for the treatment of angiogenesis-mediated disorders, including multiple myeloma, in Greece. Similarly, on April 11, 2005 we filed suit under the same patent against IPC-Nordic in Denmark for selling the same thalidomide product for the same disorders.

      We are the exclusive sub-licensee under EP 0 688 211 throughout Europe, pursuant to an agreement with Celgene Corporation. Celgene is the worldwide exclusive licensee under this patent pursuant to an agreement with the patentee, Children’s Medical Center Corporation. Celgene and Children’s Medical Center Corporation are co-plaintiffs to the proceedings in Greece, while Pharmion is the sole plaintiff in Denmark. We are seeking injunctive relief that prevents the defendants from making any further sales of thalidomide for the treatment of angiogenesis-mediated disorders, including multiple myeloma, in Greece and Denmark respec-

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tively, and damages against the defendants. We do not expect decisions on the merits to be rendered in the various proceedings until late 2006 at the earliest.

      No material developments to these matters have occurred during the fourth quarter of the fiscal year ended December 31, 2005.

Item 4. Submission of Matters to a Vote of Security Holders.

      No matters were submitted to a vote of our security holders through solicitation of proxies or otherwise during the fourth quarter of the fiscal year ended December 31, 2005.

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PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Market Information and Holders

      Our common stock is traded on the NASDAQ National Market under the symbol “PHRM.” Trading of our common stock commenced on November 6, 2003, following completion of our initial public offering. The following table sets forth, for the periods indicated, the high and low sales prices for our common stock as reported by the NASDAQ National Market:

	High		Low
Year Ended December 31, 2004
First Quarter	$	24.70	$	14.72
Second Quarter	$	49.79	$	20.60
Third Quarter	$	58.49	$	40.37
Fourth Quarter	$	53.35	$	41.48
Year Ended December 31, 2005
First Quarter	$	44.55	$	28.75
Second Quarter	$	29.35	$	18.68
Third Quarter	$	30.12	$	21.05
Fourth Quarter	$	22.45	$	16.49

      On March 14, 2006, the last reported sale price of our common stock on the NASDAQ National Market was $17.56 per share.

      American Stock Transfer and Trust Company is the transfer agent and registrar for our common stock. As of the close of business on March 14, 2006, we had approximately 76 holders of record of our common stock.

Dividends

      We have never paid any cash dividends on our capital stock and do not intend to pay any such dividends in the foreseeable future.

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Securities Authorized for Issuance Under Equity Compensation Plans

Equity Compensation Plan Information

As of December 31, 2005

					Number of Securities
					Remaining Available for
	Number of Securities		Weighted-Average		Future Issuance Under
	to be Issued upon		Exercise Price of		Equity Compensation
	Exercise of		Outstanding Options		Plans (Excluding
	Outstanding Options,		Warrants and		Securities Reflected in
	Warrants and Rights		Rights		Column (a))
Plan Category	(a)		(b)		(c)
Equity compensation plans approved by security holders(1)(2)		3,386,858	$	20.60		1,706,633
Equity compensation plans not approved by security holders		—		—		—
Total		3,386,858	$	20.60		1,706,633

(1)

As of December 31, 2005, 5,258,000 shares were reserved for issuance under our 2000 Stock Incentive Plan (the “2000 Plan”). This number is subject to an automatic yearly increase pursuant to an evergreen formula. Each year, on the date of our annual meeting of stockholders, the amount of shares reserved for issuance under the 2000 Plan will be increased by 500,000 shares, unless our board of directors determines that a smaller increase or no increase is necessary. In June 2005, in addition to the 500,000 share evergreen increase, shareholders approved an amendment to the 2000 Plan to increase the number of shares reserved for issuance by 1,500,000 for a total increase of 2,000,000 in 2005.

(2)

As of December 31, 2005, 575,000 shares were reserved for issuance under our 2001 Non-Employee Director Stock Option Plan (the “2001 Plan”). This number is subject to an automatic yearly increase pursuant to an evergreen formula. Each year, on the date of our annual meeting of stockholders, the amount of shares reserved for issuance under the 2001 Plan will be increased by 50,000 shares, unless our board of directors determines that a smaller increase or no increase is necessary. In June 2005, in addition to the 50,000 share evergreen increase, shareholders approved an amendment to the 2001 Plan to increase the number of shares reserved for issuance by 100,000 for a total increase of 150,000 in 2005.

Recent Sales of Unregistered Securities

      None.

Purchases of Equity Securities by the Registrant and Affiliated Purchasers.

      None.

Item 6. Selected Financial Data.

      In the table below, we provide you with our selected consolidated financial data which should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes appearing elsewhere in this annual report. We have prepared this information using our audited consolidated financial statements for the years ended December 31, 2005, 2004, 2003, 2002 and 2001. The pro forma net loss attributable to common stockholders per common share and shares used in computing pro forma net loss attributable to common stockholders per common shares reflect the conversion of all outstanding shares of our redeemable convertible preferred stock as of January 1, 2001 or the date of issuance, if later. The net loss per share data and pro forma net loss per

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share data do not include the effect of any options or warrants outstanding as they would be anti-dilutive. For further discussion of earnings per share, please see note 2 to our consolidated financial statements.

		Years Ended December 31,
		2005		2004			2003(1)(2)			2002			2001
		(In thousands, except share and per share data)
Consolidated Statements of Operations Data:
Net sales		$	221,244	$	130,171		$	25,539		$	4,735		$	—
Operating expenses:
	Cost of sales, inclusive of
	royalties, exclusive of product
	rights amortization		59,800		43,635			11,462			1,575			—
	Clinical, development and regulatory		42,944		28,392			24,616			15,049			6,009
	Acquired in process research		21,243		—			—			—			—
	Selling, general and administrative		83,323		66,848			36,109			23,437			8,322
	Product rights amortization		9,345		3,395			1,972			375			—
Total operating expenses			216,655		142,270			74,159			40,436			14,331
Income (loss) from operations			4,589		(12,099	)		(48,620	)		(35,701	)		(14,331	)
Other income (expense) net			6,474		2,415			(154	)		1,109			621
Income (loss) before taxes			11,063		(9,684	)		(48,774	)		(34,592	)		(13,710	)
Income tax expense			8,794		7,853			1,285			105			—
Net income (loss)			2,269		(17,537	)		(50,059	)		(34,697	)		(13,710	)
Accretion to redemption value of redeemable convertible preferred stock			—		—			(10,091	)		(8,576	)		(2,458	)
Net income (loss) attributable to common stockholders		$	2,269	$	(17,537	)	$	(60,150	)	$	(43,273	)	$	(16,168	)
Net income (loss) attributable to common stockholders per common share:
	Basic	$	0.07	$	(0.63	)	$	(14.70	)	$	(57.58	)	$	(23.99	)
	Diluted	$	0.07	$	(0.63	)	$	(14.70	)	$	(57.58	)	$	(23.99	)
Shares used in computing net income (loss) attributable to common stockholders per common share:
	Basic		31,836,783		27,933,202			4,093,067			751,525			673,822
	Diluted		32,875,516		27,933,202			4,093,067			751,525			673,822
Pro forma net loss attributable to common stockholders per common share, assuming conversion of preferred stock, basic and diluted (unaudited)			N/A		N/A		$	(2.66	)	$	(2.47	)	$	(2.26	)
Shares used in computing pro forma net loss attributable to common stockholders per common share, assuming conversion of preferred stock basic and diluted			N/A		N/A			18,791,015			14,072,707			6,060,284

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	As of December 31,
	2005			2004			2003(1)(2)			2002			2001
	(In thousands)
Consolidated Balance Sheet:
Cash, cash equivalents and short-term investments	$	243,406		$	245,543		$	88,542		$	62,604		$	68,444
Working capital		226,620			233,366			86,539			60,891			66,568
Total assets		432,630			411,230			145,473			80,847			70,278
Convertible notes		—			—			13,374			—			—
Other long-term liabilities		3,738			3,824			8,144			190			—
Redeemable convertible preferred stock		—			—			—			135,987			87,790
Accumulated deficit		(135,827	)		(138,096	)		(120,559	)		(62,950	)		(19,697	)
Total stockholders’ equity (deficit)		346,624			351,953			104,914			(62,216	)		(19,783	)

(1)	We acquired Laphal Developpement S.A. on March 25, 2003 and its operations are included in our results since that date.
(2)	In November 2003 we completed our initial public offering, which resulted in $76.2 million of net proceeds through the issuance of 6,000,000 shares of common stock. Concurrent with effective date of the initial public offering, all outstanding shares of our redeemable convertible preferred stock were converted into 17,030,956 shares of our common stock.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

      The following discussion should be read in conjunction with the financial statements and the related notes that appear elsewhere in this document.

Overview

      We are a global pharmaceutical company focused on acquiring, developing and commercializing innovative products for the treatment of hematology and oncology patients. We have established our own regulatory, development and sales and marketing organizations covering the U.S., Europe and Australia. We have also developed a distributor network to cover the hematology and oncology markets in numerous additional countries throughout Europe, the Middle East and Asia. To date, we have acquired the rights to six products, including four that are currently marketed or sold on a compassionate use or named patient basis, and two products that are in varying stages of development.

      In May 2004, Vidaza^® was approved for marketing in the U.S. and we commenced sales of the product in July 2004. Pending positive data from an ongoing Phase III/IV study expected to be available at the end of 2006, we plan to file for marketing approval in the European Union (E.U.) in early 2007. Until Vidaza is approved, we intend to sell Vidaza on a compassionate use and named patient basis throughout the major markets in the E.U. We have filed in Europe for approval to market Vidaza in certain international markets and these submissions are under review by the respective regulatory authorities. Thalidomide Pharmion 50mg^tm is being sold by us on a compassionate use or named patient basis in Europe and other international markets while we pursue marketing authorization in those markets. Pending our positive review of data from a Phase III study, we also expect to submit for marketing approval in the E.U. in early 2007. In addition, we sell Innohep^® in the U.S. and Refludan^® in Europe and other international markets.

      In December 2005, we entered into a co-development and license agreement with GPC Biotech for satraplatin, the only oral platinum-based compound in advanced clinical trials. Under the terms of the agreement, we obtained exclusive commercialization rights for Europe, Turkey, the Middle East, Australia and New Zealand. Enrollment in a Phase III study examining satraplatin as a treatment for hormone refractory prostate cancer was completed in the fourth quarter of 2005. Data from this study is expected in the second half of 2006 and if positive, we expect to submit for marketing approval in the E.U. in early 2007.

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      Subsequent to December 31, 2005, we entered into a license and collaboration agreement with MethylGene for the research, development and commercialization of MethylGene’s histone deacetylase (HDAC) inhibitors in North America, Europe, the Middle East and certain other international markets, including MGCD0103, MethylGene’s lead HDAC inhibitor, which is currently in several Phase I and Phase II clinical trials.

      With our combination of regulatory, development and commercial capabilities, we intend to continue to build a balanced portfolio of approved and pipeline products targeting the hematology and oncology markets. We had total sales of $221.2 million, $130.2 million and $25.5 million in 2005, 2004 and 2003, respectively.

Critical Accounting Policies

Revenue Recognition

      We sell our products to wholesale distributors and, for certain products, directly to hospitals and clinics. Revenue from product sales is recognized when ownership of the product is transferred to our customer, the sales price is fixed and determinable, and collectibility is reasonably assured. Within the U.S. and certain foreign countries revenue is recognized upon shipment (freight on board shipping point) since title to the product passes and our customers have assumed the risks and rewards of ownership. In certain other foreign countries, it is common practice that ownership transfers upon receipt of product and, accordingly, in these circumstances revenue is recognized upon delivery (freight on board destination) when title to the product effectively transfers.

      We record allowances for product returns, chargebacks, rebates and prompt pay discounts at the time of sale, and report revenue net of such amounts. In determining allowances for product returns, chargebacks and rebates, we must make significant judgments and estimates. For example, in determining these amounts, we estimate end-customer demand, buying patterns by end-customers and group purchasing organizations from wholesalers and the levels of inventory held by wholesalers. Making these determinations involves estimating whether trends in past buying patterns will predict future product sales.

      The nature of our allowances requiring accounting estimates, and the specific considerations we use in estimating their amounts, are as follows:

      • Product returns. Our customers have the right to return any unopened product during the 18-month period beginning 6 months prior to the labeled expiration date and ending 12 months past the labeled expiration date. As a result, in calculating the allowance for product returns, we must estimate the likelihood that product sold to wholesalers might remain in their inventory or in end-customers’ inventories to within 6 months of expiration and analyze the likelihood that such product will be returned within 12 months after expiration.

      To estimate the likelihood of product remaining in our wholesalers’ inventory, we rely on information from our wholesalers regarding their inventory levels, measured end-customer demand as reported by third party sources, and on internal sales data. We believe the information from our wholesalers and third party sources is a reliable indicator of trends, but we are unable to verify the accuracy of such data independently. We also consider our wholesalers’ past buying patterns, estimated remaining shelf life of product previously shipped and the expiration dates of product currently being shipped.

      Since we do not have the ability to track a specific returned product back to its period of sale, our product returns allowance is primarily based on estimates of future product returns over the period during which customers have a right of return, which is in turn based in part on estimates of the remaining shelf live of our products when sold to customers. Future product returns are estimated primarily based on historical sales and return rates.

      For the years ended December 31, 2005 and 2004, $0.1 million and $0.2 million of product was returned to us, representing approximately 0.04% and 0.15% of net sales revenue, respectively. The allowance for returns was $0.6 million at both December 31, 2005 and 2004. Due to the small amount of returned product during 2005 and 2004, fluctuations between our estimates and actual product returned were minimal.

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However, a 10% change in the provision for product returns for the years ended December 31, 2005 and 2004 would have had an approximate $0.1 million effect on our reported net sales for both years.

      • Chargebacks and rebates. Although we sell our products in the U.S. primarily to wholesale distributors, we typically enter into agreements with certain governmental health insurance providers, hospitals, clinics, and physicians, either directly or through group purchasing organizations acting on behalf of their members, to allow purchase of our products at a discounted price and/or to receive a volume-based rebate. We provide a credit to the wholesaler, or a chargeback, representing the difference between the wholesaler’s acquisition list price and the discounted price. Rebates are paid directly to the end-customer, group purchasing organization or government insurer.

      As a result of these contracts, at the time of product shipment we must estimate the likelihood that product sold to wholesalers might be ultimately sold to a contracting entity or group purchasing organization. For certain end-customers, we must also estimate the contracting entity’s or group purchasing organization’s volume of purchases.

      We estimate our chargeback allowance based on our estimate of the inventory levels of our products in the wholesaler distribution channel that remain subject to chargebacks, and specific contractual and historical chargeback rates. We estimate our Medicaid rebate and commercial contractual rebate accruals based on estimates of usage by rebate-eligible customers, estimates of the level of inventory of our products in the distribution channel that remain potentially subject to those rebates, and terms of our contractual and regulatory obligations.

      At December 31, 2005 and 2004, our allowance for chargebacks and rebates was $2.6 million and $2.7 million, respectively. During 2005 and 2004, our estimates, compared with actual chargebacks and rebates processed, fluctuated by as much as 6%. A 6% change in the provision for chargebacks and rebates for the years ended December 31, 2005 and 2004 would have had an approximate $0.9 million and $0.5 million effect on our reported net sales for those years, respectively.

      • Prompt pay discounts. As incentive to expedite cash flow, we offer some customers a prompt pay discount whereby if they pay their accounts within 30 days of product shipment, they may take a 2% discount. As a result, we must estimate the likelihood that our customers will take the discount at the time of product shipment. In estimating our allowance for prompt pay discounts, we rely on past history of our customers’ payment patterns to determine the likelihood that future prompt pay discounts will be taken and for those customers that historically take advantage of the prompt pay discount, we increase our allowance accordingly

      At December 31, 2005 and 2004, our allowance for prompt pay discounts was $0.5 million and $0.3 million, respectively. Fluctuations between our estimates and actual discounts taken were minimal in 2005 and 2004, approximating 5%, as most of our customers take advantage of the prompt pay discount. A 5% change in our provision for prompt pay discounts for the years ended December 31, 2005 and 2004 would have had an approximate $0.2 million and $0.1 million effect on our reported net sales for those years, respectively.

      We have adjusted our allowances for product returns, chargebacks and rebates and prompt pay discounts in the past based on our actual experience, and we will likely be required to make adjustments to these allowances in the future. We continually monitor our allowances and make adjustments when we believe our actual experience may differ from our estimates.

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      The following table provides a summary of activity with respect to our allowances for the years ended December 31, 2005 and 2004 (amounts in thousands):

	Product			Chargebacks			Prompt Pay
	Returns			and Rebates			Discounts
Balance at December 31, 2003	$	84		$	634		$	14
Current year provision		673			8,130			1,310
Actual credits or payments issued		(162	)		(6,087	)		(1,009	)
Balance at December 31, 2004		595			2,677			315
Current year provision		94			14,182			3,097
Actual credits or payments issued		(77	)		(14,273	)		(2,957	)
Balance at December 31, 2005	$	612		$	2,586		$	455

Inventories

      Inventories are stated at the lower of cost or market, cost being determined under the first-in, first-out method. We periodically review inventories and items considered outdated or obsolete are reduced to their estimated net realizable value. We estimate reserves for excess and obsolete inventories based on inventory levels on hand, future purchase commitments, product expiration dates and current and forecasted product demand. If an estimate of future product demand suggests that inventory levels are excessive, then inventories are reduced to their estimated net realizable value. For the years ended December 31, 2005, 2004 and 2003, we recorded a provision to reduce the estimated net realizable value of obsolete and short-dated inventory by $0.6 million, $1.4 million, and $1.8 million, respectively.

Long-Lived Assets

      Our long-lived assets consist primarily of product rights and property and equipment. In accordance with Statement of Financial Accounting Standards (SFAS) No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, we evaluate our ability to recover the carrying value of long-lived assets used in our business, considering changes in the business environment or other facts and circumstances that suggest their value may be impaired. If this evaluation indicates the carrying value will not be recoverable, based on the undiscounted expected future cash flows estimated to be generated by these assets, we reduce the carrying amount to the estimated fair value. The process of calculating the expected future cash flows involves estimating future events and trends such as sales, cost of sales, operating expenses and income taxes. The actual results of any of these factors could be materially different than what we estimate. The net book value of our product rights and property and equipment was $110.7 million and $112.8 million at December 31, 2005 and 2004, respectively.

Goodwill

      In association with a business acquisition in 2003 and related milestone payments that were made in 2004 and 2005, goodwill was created. In accordance with SFAS No. 142, “Goodwill and Other Intangible Assets,” we do not amortize goodwill. SFAS No. 142 requires us to perform an impairment review of goodwill at least annually. If it is determined that the value of goodwill is impaired, we will record the impairment charge in the statement of operations in the period it is discovered. The process of reviewing for impairment of goodwill is similar to that of long-lived assets in that expected future cash flows are calculated using estimated future events and trends such as sales, cost of sales, operating expenses and income taxes. The actual results of any of these factors could be materially different than what we estimate. The net book value of our goodwill was $12.9 million and $9.4 million at December 31, 2005 and 2004, respectively.

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Acquired In-Process Research

      In December 2005, we entered into a co-development and licensing agreement with GPC Biotech whereby we acquired commercialization rights to a drug development candidate called satraplatin in Europe, the Middle East, Turkey, Australia and New Zealand. Satraplatin is in Phase III development for the treatment of hormone refractory prostate cancer. Under terms of the license agreement, we made an up front payment to GPC Biotech of $37.1 million, which included $21.2 million for reimbursement for past satraplatin development costs incurred by GPC Biotech. This portion of the up front payment was immediately expensed as acquired in-process research as satraplatin has not yet achieved regulatory approval for marketing and, absent obtaining such approval, has no alternative future use.

Recently Issued Accounting Standards

Accounting for Stock-Based Compensation

      In December 2004, the Financial Accounting Standards Board issued SFAS No. 123 (revised 2004), Share-Based Payment, which is a revision of SFAS No. 123, Accounting for Stock-Based Compensation. SFAS No. 123(R) supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees, and amends SFAS No. 95, Statement of Cash Flows. Generally, the approach in SFAS No. 123(R) is similar to the approach described in SFAS No. 123. However, SFAS No. 123(R) requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on the grant-date fair value of the award.

      As permitted by SFAS No. 123, we currently account for share-based payments to employees using the intrinsic value provisions of APB No. 25 and, as such, generally recognized no compensation costs for employee stock options. Accordingly, the adoption of SFAS No. 123(R)’s fair value method is expected to impact our results of operations. The impact of the adoption of SFAS No. 123(R) cannot be quantified at this time because it will depend on levels of share-based payments granted in the future. However, had we adopted SFAS No. 123(R) in prior periods, the impact would have approximated the impact of SFAS No. 123 as described in the disclosure of pro forma net income and earning per share in Note 2, Summary of Significant Accounting Policies — Accounting for Stock-Based Compensation, of Notes to Consolidated Financial Statements, except for the acceleration of $15.8 million of expense reflected in the year ended December 31, 2005. SFAS No. 123(R) also requires the benefits of tax deductions in excess of recognized compensation cost to be reported as a financing cash flow.

      We are required to adopt the standard as of January 1, 2006. SFAS No. 123(R) permits public companies to adopt its requirements using one of two methods:

•  A “modified prospective” method in which compensation cost is recognized beginning with the effective date (a) based on the requirements of SFAS No. 123(R) for all share-based payments granted after the effective date and (b) based on the requirements of SFAS No. 123 for all rewards granted to employees prior to the effective date of SFAS No. 123(R) that remain unvested on the effective date; or

•  A “modified retrospective” method which includes the requirements of the modified prospective method described above, but also permits entities to restate based on the amounts previously recognized under SFAS No. 123 for purposes of pro forma disclosures either (a) all prior periods or (b) prior interim periods of the year of adoption.

      At this time, we expect to use the modified prospective method. We are also considering the implementation guidance for SFAS No. 123(R) issued by the SEC in Staff Accounting Bulletin No. 107 in the adoption of SFAS No. 123(R).

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Results of Operations

Comparison of Years Ended December 31, 2005, 2004 and 2003

      Net Sales. Net sales for the years ended December 31, 2005, 2004 and 2003 were as follows.

	2005			2004			2003
	(In thousands)
Net sales — U.S.	$	130,886		$	55,642		$	3,751
Net sales — Europe and other countries	$	90,358		$	74,529		$	21,788
Total net sales	$	221,244		$	130,171		$	25,539
Increase from prior year	$	91,073		$	104,632		$	20,804
% Change from prior year		70.0	%		409.7	%		439.4	%

      The increase in net sales for the year ended December 31, 2005 as compared to 2004 is the result of having a whole year of Vidaza sales in 2005 versus one half of a year in 2004 due to the commercial launch of Vidaza in the U.S. on July 1, 2004. Net sales of Vidaza were $125.6 million in 2005 as compared with $47.1 million in 2004. Additionally, Europe and other international markets experienced continued growth in compassionate use and named patient sales of thalidomide resulting in 2005 net sales of $79.4 million versus $65.3 million in 2004. The factors impacting thalidomide sales vary from country to country, however, the largest impact on the increased sales was the result of expansion into new markets and increase in demand. These growth drivers have been partially offset by the strengthening of the U.S. dollar against the euro and British pound sterling during 2005 as well as by a decline in sales in one country due to the implementation of new regulations that limit the reimbursement of drugs sold without marketing authorization, such as thalidomide. Furthermore, while both Vidaza and thalidomide sales have increased in 2005 versus 2004, sales levels have flattened on a sequential quarterly basis during 2005.

      The increase in sales for the year ended December 31, 2004 as compared to 2003 was due primarily to the launch of Vidaza in the U.S. on July 1, 2004 as well as growth in compassionate use and named patient sales of thalidomide in Europe and other international markets. Vidaza sales for 2004 totaled $47.1 million. Thalidomide sales totaled $65.3 million in 2004, compared to $15.6 million in 2003. We began selling thalidomide on a compassionate use or named patient basis in France and Belgium in April 2003. In July 2003, we began selling thalidomide in additional countries in Europe and other international markets. The growth in thalidomide sales experienced in 2004 was due both to increased volume of product sold as well as an increase in the average selling price of thalidomide in certain markets.

      Reductions from gross to net sales, which include product returns, chargebacks, rebates and prompt pay discounts totaled $17.4 million, $10.1 million and $2.4 million for the years ended, December 31, 2005, 2004 and 2003, respectively. The $7.3 million increase in 2005 over 2004 and the $7.7 million increase in 2004 over 2003 is attributed primarily to the launch of Vidaza in 2004 and the increased gross revenue that was derived from it. Although the dollar amount of reductions to gross revenues increased in 2005 and 2004, the reduction as a percentage of gross sales decreased from 8.6% in 2003 to 7.2% in 2004 and 7.3% in 2005. This decrease is due to the launch of Vidaza as well as increased sales of thalidomide, as these products have fewer chargeback and rebate agreements than our other products.

      Cost of sales. Cost of sales includes the cost of product sold, royalties due on the sales of our products and the distribution and logistics costs related to selling our products. However, product rights amortization is excluded from cost of sales and included with operating expenses. Cost of sales for the years ended December 31, 2005, 2004 and 2003 were as follows.

	2005			2004			2003
	(In thousands)
Cost of sales	$	59,800		$	43,635		$	11,462
Increase from prior year	$	16,165		$	32,173		$	9,887
% Change from prior year		37.0	%		280.7	%		627.7	%
As a % of net sales		27.0	%		33.5	%		44.9	%

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      Cost of sales increased in 2005 as compared with 2004 due to the increase in net sales for 2005. However, cost of sales as a percentage of net sales decreased from 33.5% in 2004 to 27.0% in 2005 due to two factors. First, we had a full year of Vidaza sales in 2005 compared to half of a year in 2004. Vidaza is one of our higher gross margin products with cost of sales as a percent of net sales of approximately 26%. Second, the renegotiation of our thalidomide license and product supply agreements in December 2004 reduced the overall royalty and product supply costs for thalidomide. This reduced the cost of net sales as a percent of net sales from 34% in 2004 to 25% in 2005.

      The increase in cost of sales in 2004 as compared to 2003 was attributable to the increase in net sales for 2004. The decrease in cost of sales as a percentage of net sales experienced in 2004 as compared to 2003 was largely due to charges totaling $2.1 million recorded in 2003 relating to obsolete Refludan product inventory. These charges increased cost of sales as a percentage of net sales by approximately 8 percentage points. The launch of Vidaza in 2004 also improved the overall gross margin as compared to 2003, reducing 2004 cost of sales as a percentage of net sales by approximately 4 percentage points as the Vidaza gross margin was higher than that of our other products on a combined basis.

      Clinical, development and regulatory expenses. Clinical, development and regulatory expenses generally consist of regulatory, clinical and manufacturing development, and medical and safety monitoring costs for both products in development as well as products being sold. Clinical, development and regulatory expenses for the years ended December 31, 2005, 2004 and 2003 were as follows.

	2005			2004			2003
	(In thousands)
Clinical, development and regulatory expenses	$	42,944		$	28,392		$	24,616
Increase from prior year	$	14,552		$	3,776		$	9,567
% Change from prior year		51.3	%		15.3	%		63.6	%

      The increase in clinical, development and regulatory expenses for the year ended December 31, 2005 over 2004 is due primarily to $6.1 million of increased spending on clinical study costs related to ongoing survival and alternative dosing studies for Vidaza, $4.0 million on further development studies for thalidomide and $0.5 million for other products. Additionally, employee related costs, including compensation, travel, recruiting and relocation expenses, increased by $1.9 million due to increased staffing levels to support regulatory, clinical development and medical and safety monitoring activities for Vidaza and thalidomide. The remaining increase of $2.1 million is due to costs related to the development of an oral formulation of Vidaza and the establishment of an alternate production facility in Europe.

      Clinical, development and regulatory expenses for the year ended December 31, 2004 increased by $3.8 million over 2003. This increase was due primarily to a $3.0 million increase in medical safety and monitoring costs associated with the selling of our products, including expanded staffing to support the growth in sales of thalidomide as well as the U.S. launch of Vidaza. Clinical and regulatory expenses increased by $2.1 million in 2004 as compared to 2003. This increase was primarily related to a $2.3 million increase in personnel related costs as we expanded staffing to support the regulatory and clinical development activities of thalidomide and Vidaza, including the pursuit of European marketing authorization approvals for those products. In addition we incurred a net cost of $1.1 million in 2004 for the settlement of a patent infringement suit filed by us against Lipomed, AG. These increases in clinical and regulatory expenses were partially offset by $1.3 million decline in clinical development expenses for Vidaza and thalidomide in 2004, due primarily to the completion of clinical data analysis in 2003 to support the submission of the Vidaza new drug approval application filed with the FDA in the fourth quarter of 2003. Finally, manufacturing development expenses declined by $1.3 million in 2004 due to the completion in 2003 of Vidaza manufacturing development activities required for the submission of the New Drug Application for Vidaza.

      Due to the significant risks and uncertainties inherent in the clinical development and regulatory approval processes, the cost to complete projects in development is not reasonably estimable. Results from clinical trials may not be favorable. Further, data from clinical trials is subject to varying interpretation, and may be deemed insufficient by the regulatory bodies reviewing applications for marketing approvals. As such, clinical

46

development and regulatory programs are subject to risks and changes that may significantly impact cost projections and timelines. The licensing of commercial rights to satraplatin and to MethylGene’s HDAC inhibitors in December 2005 and January 2006, respectively, will have a significant impact on our clinical, development and regulatory expenses for 2006. Pursuant to these license agreements, we are required to fund a significant percentage of the development expenses for these products. Combined with increased development activities for Vidaza and thalidomide, we expect our clinical, development and regulatory expenses for 2006 will increase by approximately 80% over the 2005 amount.

      Acquired in-process research. In December 2005, we entered into a co-development and licensing agreement with GPC Biotech AG whereby we acquired commercialization rights to a drug development candidate called satraplatin in Europe, the Middle East, Turkey, Australia and New Zealand. Satraplatin is in Phase III development for the treatment of hormone refractory prostate cancer. Under terms of the license agreement, we made an up front payment to GPC Biotech of $37.1 million in early January 2006, which included $21.2 million for reimbursement for past satraplatin development costs incurred by GPC Biotech. This portion of the up front payment was immediately expensed as acquired in-process research as satraplatin has not yet achieved regulatory approval for marketing and, absent obtaining such approval, has no alternative future use. No such expenses were incurred in 2004 or 2003. We will, however, record a similar charge of approximately $20 million in the first quarter of 2006 in connection with the up front payments made to MethylGene in connection with the acquisition of rights to their HDAC inhibitors.

      Selling, general and administrative expenses. Selling expenses include salaries and benefits for sales and marketing personnel, advertising and promotional programs, professional education programs and facility costs for our sales offices located throughout Europe, and in Thailand and Australia. General and administrative expenses include personnel related costs for corporate staff, outside legal, tax and auditing services, corporate facilities and insurance costs. Selling, general and administrative expenses for the years ended December 31, 2005, 2004 and 2003 were as follows.

	2005			2004			2003
	(In thousands)
Selling, general and administrative expenses	$	83,323		$	66,848		$	36,108
Increase from prior year	$	16,475		$	30,740		$	12,672
% Change from prior year		24.6	%		85.1	%		54.1	%

      Selling, general and administrative expenses have continued to increase significantly over the three year period ended December 31, 2005 due to the establishment and expansion of our commercial organizations in the U.S., Europe, and Australia to support the selling of our products in those markets. Our general and administrative functions also expanded over this period to support the growth of our business and the additional requirements of becoming a publicly held company.

      Sales and marketing expenses totaled $59.1 million for 2005, an increase of $12.3 million over 2004. This increase is primarily the result of continued expansion related to our commercial operations and the associated sales and marketing activities due to having one full year of Vidaza sales in the U.S. for 2005, as it was launched on July 1, 2004, and for continued growth of thalidomide sales in our international markets. Field sales and sales management expenses in the U.S. increased by $3.2 million in 2005 due to having an expanded sales force for the entire year of 2005. European and international field sales and sales management expenses increased by $4.4 million in 2005 due to increased selling activities to support the increased sales growth of thalidomide. Most of the international markets were similar to the U.S. in that expansion of staff and related expenses occurred during 2004, creating a partial years worth of expenses compared to a full year of those ongoing expenses in 2005. Marketing expenses increased by $4.7 million in 2005, due almost entirely to the U.S. having a full year of marketing activities for Vidaza sales versus half a year in 2004.

      Sales and marketing expenses totaled $46.8 million for the year ended December 31, 2004, an increase of $26.0 million over 2003. Generally, this increase was due to expansion of our commercial organization and sales and marketing activities in the U.S. and our European and other international markets to support the U.S. launch of Vidaza and the significant growth in thalidomide sales. Field sales and sales management

47

expenses in the U.S. increased by $10.7 million in 2004 due to the expansion of our sales organization to support the launch of Vidaza. We increased our U.S. field-based organization from approximately 30 employees to 75 employees during 2004. Other U.S. selling expenses also increased in connection with the Vidaza launch. European and international field sales and sales management expenses increased by $5.7 million in 2004. We began selling thalidomide in Europe on a compassionate use or named patient basis in mid-2003. The sales expense growth in 2004 reflects having these costs for a full year in 2004 as well as increased selling activities to support the sales growth of thalidomide. Marketing expenses increased by $9.6 million in 2004, due primarily to the U.S. launch of Vidaza and increased activities to support the sales growth of thalidomide. Product marketing costs increased by $7.5 million while non-product specific costs, such as personnel costs and travel, increased by $2.1 million.

      General and administrative expenses totaled $24.2 million for the year ended December 31, 2005, an increase of $4.2 million over 2004. The continued expansion of our corporate infrastructure to support the commercial growth of our company caused $2.4 million of the increase in expenses. Of the $2.4 million increase, $0.7 million was for human resources costs related to various professional fees and recruitment and relocation fees, $0.5 million was for increased legal staffing and costs associated with numerous business development projects, $0.4 million increase in stock registration and related fees, $0.3 million increase in directors and officers liability insurance premiums and a $0.5 million increase in facility costs due to a newly relocated and expanded international office. Additionally, the remaining $1.8 million of the $4.2 million increase relates to costs associated with the relocation of the new international office.

      General and administrative expenses totaled $20.0 million for the year ended December 31, 2004, an increase of $4.7 million over the prior year. This increase was primarily due to increased costs associated with becoming a public company with the completion of our initial public offering in November 2003. Professional fees, including legal, accounting, tax and Sarbanes-Oxley implementation consulting, increased by $2.5 million during 2004. Directors and officers liability insurance premiums increased by $0.6 million in 2004 and the establishment of our investor relations function increased 2004 expenses by $0.4 million. In addition, business development costs increased by $0.8 million in 2004 as we significantly increased our activities associated with identifying potential product licensing and acquisition candidates.

      Product rights amortization. Product rights amortization expense for the years ended December 31, 2005, 2004 and 2003 was as follows.

	2005			2004			2003
	(In thousands)
Product rights amortization	$	9,345		$	3,396		$	1,972
Increase from prior year	$	5,949		$	1,424		$	1,597
% Change from prior year		175.2	%		72.2	%		425.9	%

      The increase of $5.9 million in amortization expense in 2005 as compared to 2004 is primarily due to the restructuring of our thalidomide license and supply agreements in the fourth quarter of 2004, which increased the thalidomide product rights asset balance by $80 million.

      The increase in amortization expense in 2004 as compared to 2003 was due primarily to having a full year of amortization of product rights acquired through the purchase of Laphal Developpement in April 2003. In addition, the August 2003 renegotiation of the financial terms of the Refludan product rights resulted in an increase to the value of the capitalized product rights and increased the related amortization expense for all of 2004 compared to only 5 months of 2003.

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      Interest and other income (expense), net. Interest and other income (expense), net, for the years ended December 31, 2005, 2004 and 2003 was as follows.

	2005			2004			2003
	(In thousands)
Interest and other income (expense), net	$	6,474		$	2,415		$	(154	)
Increase (decrease) from prior year	$	4,059		$	2,569		$	(1,264	)
% Change from prior year		168.1	%		1,668.2	%		(113.9	)%

      The $4.1 million increase in interest and other income, (expense), in 2005 as compared to 2004 is due to the growth of interest income as a result of higher balances of cash, cash equivalents and short-term investments as well as improved investment returns resulting from higher interest rates. The higher cash, cash equivalents, and short-term investments balances were maintained for all of 2005 as compared with 2004 where the increased balance did not occur until a secondary equity offering was completed in July 2004.

      Interest and other income (expense), net, increased $2.6 million in 2004 as compared with 2003 due primarily to increased interest income from higher balances of cash, cash equivalents and short-term investments resulting from the equity offerings completed in November 2003 and July 2004. In addition, in March 2004 $14 million of 6% convertible notes, originally issued in April 2003, were converted into shares of our common stock, thereby eliminating the interest expense associated with those notes.

      Income tax expense. Income tax expense for the years ended December 31, 2005, 2004 and 2003 was as follows.

	2005			2004			2003
	(In thousands)
Income tax expense	$	8,794		$	7,853		$	1,285
Increase from prior year	$	941		$	6,568		$	1,180
% Change from prior year		12.0	%		511.1	%		1,123.8	%

      The provision for income taxes reflects management’s estimate of the effective tax rate expected to be applicable in each of our taxing jurisdictions.

      Income tax expense totaled $8.8 million for the year ended December 31, 2005 as compared to $7.9 million for the year ended December 31, 2004. The increase of $0.9 million in 2005 is attributable to an increase in taxable income in certain foreign countries as well as incurring alternative minimum tax in the U.S. as a result of being profitable for the first time. Alternative minimum tax was triggered as a result of utilizing approximately $29 million of net operating loss carry-forwards to offset taxable income.

      Income tax expense increased $6.6 million in 2004 as compared with 2003. Although we have pre-tax losses on a consolidated basis, certain of our foreign subsidiaries generate taxable income, and therefore incur income tax expense. The increase in income tax expense for 2004 as compared to 2003 was due primarily to an increase in taxable income in certain foreign countries.

Liquidity and Capital Resources

      We achieved profitability on a full year basis for the first time in 2005. As of December 31, 2005, we had an accumulated deficit of $135.8 million. Although we achieved profitability during 2005, our recent business development transactions will significantly increase our clinical, development and regulatory expenses. As a result, we expect we will once again incur net losses for 2006. To date, our operations have been funded primarily with proceeds from the sale of preferred and common stock and net sales of our products. Net proceeds from our preferred stock sales totaled $125.0 million and our public offerings of common stock completed in November 2003 and July 2004 resulted in combined net proceeds of $314.1 million. We began generating revenue from product sales in July 2002.

      Cash, cash equivalents and short-term investments decreased from $245.5 million at December 31, 2004 to $243.4 million at December 31, 2005. This $2.1 million decrease is primarily due to purchases of product

49

rights and business acquisition payments totaling $15.0 million, purchases of property and equipment of $5.2 million, debt repayment of $4.2 million and a $4.2 million decrease in translated foreign currencies due to the strengthening of the U.S. dollar, partially offset by $26.0 million in net cash provided by operations and $0.5 million received as proceeds for exercise of common stock options. Subsequent to December 31, 2005, we made cash payments totaling $62.1 million to partners in connection with the licensing of satraplatin and the MethylGene HDAC inhibitors.

      We expect that our cash on hand at December 31, 2005, along with cash generated from expected product sales, will be adequate to fund our operations for at least the next twelve months. However, we reexamine our cash requirements periodically in light of changes in our business. For example, in the event that we make additional product acquisitions, we may need to raise additional funds. Adequate funds, either from the financial markets or other sources may not be available when needed or on terms acceptable to us. Insufficient funds may cause us to delay, reduce the scope of, or eliminate one or more of our planned development, commercialization or expansion activities. Our future capital needs and the adequacy of our available funds will depend on many factors, including the effectiveness of our sales and marketing activities, the cost of clinical studies and other actions needed to obtain regulatory approval of our products in development, and the timing and cost of any product acquisitions.

Contractual Obligations

      Our contractual obligations as of December 31, 2005 are as follows:

Contractual Obligations	Total		2006		2007		2008		2009		2010		Thereafter
	(In thousands)
Clinical development funding	$	27,533	$	2,667	$	10,066	$	7,400	$	7,400	$	—	$	—
Operating leases		10,288		3,502		2,972		1,973		1,707		134		—
Inventory purchase commitments		8,745		8,745		—		—		—		—		—
Product royalty payments		4,024		4,024		—		—		—		—		—
Product acquisition payments		2,000		1,000		1,000		—		—		—		—
Long-term debt obligations		146		112		34		—		—		—		—
Total — fixed contractual obligations	$	52,736	$	20,050	$	14,072	$	9,373	$	9,107	$	134	$	—

      Clinical development funding. In December 2005, we entered into a co-development and licensing agreement for satraplatin with GPC Biotech. Pursuant to that agreement, we made an up front payment of $37.1 million to GPC Biotech in early January 2006. Of that amount, $21.2 million was allocated to acquired in-process research and charged to expenses in 2005. The remaining amount of $15.9 million represents a prepayment of future clinical development costs. The licensing agreement also stipulates we provide an additional $22.2 million for similar future development costs. This amount is reflected in the schedule above in equal annual amounts for 2007-2009.

      We previously entered into two agreements with Celgene to provide funding to support clinical development studies sponsored by Celgene studying thalidomide as a treatment for various types of cancers. Under these agreements, we paid Celgene $4.7 million in 2005 and will pay $2.7 million in each of 2006 and 2007.

      Operating leases. Our commitment for operating leases relates primarily to our corporate and sales offices located in the U.S., Europe, Thailand and Australia. These lease commitments expire on various dates through 2010.

      Inventory purchase commitments. The contractual summary above includes contractual obligations related to our product supply contracts. Under these contracts, we provide our suppliers with rolling 12-24 month supply forecasts, with the initial 3-6 month periods representing binding purchase commitments.

      Product royalty payments. Pursuant to our thalidomide product license agreements with Celgene, we are required to make additional quarterly payments to the extent that the royalty and license payments due

50

under those agreements do not meet certain minimums. These minimum royalty and license payment obligations expire the earlier of 2006 or the date we obtain regulatory approval to market thalidomide in the E.U. The amounts reflected in the summary above represent the minimum amounts due under these agreements. In addition, our Innohep license agreement with LEO Pharma requires annual minimum royalty payments through 2006.

      Product acquisition payments. We have future payment obligations associated with the June 2005 addition to thalidomide product rights. We paid $5.0 million in June 2005, with additional $1.0 million payments due in each of 2006 and 2007.

      Contingent product acquisition payments. The contractual summary above reflects only payment obligations for product and company acquisitions that are fixed and determinable. We also have contractual payment obligations, the amount and timing of which are contingent upon future events. In accordance with U.S. generally accepted accounting principles, contingent payment obligations are not recorded on our balance sheet until the amount due can be reasonably determined. Under the terms of the agreement with GPC Biotech, we will pay them up to an additional $30.5 million based on the achievement of certain regulatory filing and approval milestones, up to an additional $75 million for up to five subsequent E.U. approvals for additional indications and we will pay them sales milestones totaling up to $105 million, based on the achievement of significant annual sales levels in our territories. Similarly, under the agreement with MethylGene, our milestone payments for MGCD0103 could reach $145 million, based on the achievement of significant development, regulatory and sales goals, with the nearest milestone of $4 million to be paid upon enrollment of the first patient in a Phase II trial. Furthermore, up to $100 million for each additional HDAC inhibitor may be paid, also based on the achievement of significant development, regulatory and sales milestones. Also, under the agreements with Schering AG, payments totaling up to $7.5 million are due if milestones relating to revenue and gross margin targets for Refludan are achieved.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

      We currently invest our excess cash balances in short-term investment grade securities including money market accounts that are subject to interest rate risk. The amount of interest income we earn on these funds will decline with a decline in interest rates. However, due to the short-term nature of short-term investment grade securities and money market accounts, an immediate decline in interest rates would not have a material impact on our financial position, results of operations or cash flows.

      We are exposed to movements in foreign exchange rates against the U.S. dollar for inter-company trading transactions and the translation of net assets and earnings of non-U.S. subsidiaries. Our primary operating currencies are the U.S. dollar, British pound sterling, the euro, and Swiss francs. We have not undertaken any foreign currency hedges through the use of forward foreign exchange contracts or options. Foreign currency exposures have been managed solely through managing the currency denomination of our cash balances.

Item 8. Financial Statements and Supplementary Data.

      The financial statements required pursuant to this item are included in Item 15 of this report and are presented beginning on page F-1.

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

      None.

Item 9A. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures.

      We carried out an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer, or CEO, and Chief Financial Officer, or CFO, of the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15(d)-15(e) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, as of the end of the period covered by this report.

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Based on that evaluation, the CEO and CFO have concluded that our disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed by us in our periodic reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure. We have designed our disclosure controls and procedures in such a manner that they provide reasonable assurance that those controls and procedures will meet their objectives. It should be noted, however, that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and can therefore only provide reasonable, not absolute assurance that the design will succeed in achieving its stated goals.

Management’s Report on Internal Control Over Financial Reporting

      The management of the company is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15(d)-15(f) of the Exchange Act. Our internal control system was designed to provide reasonable assurance to our management and board of directors regarding the preparation and fair presentation of published financial statements. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

      Our management assessed the effectiveness of the company’s internal control over financial reporting as of December 31, 2005. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on this assessment management believes that, as of December 31, 2005, our internal control over financial reporting is effective based on those criteria.

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      Our management’s assessment of the effectiveness of our internal control over financial reporting as of December 31, 2005, has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report which is included in this Item 9A immediately below.

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of Pharmion Corporation:

      We have audited management’s assessment, included in the accompanying Management’s Report on Internal Control Over Financial Reporting, that Pharmion Corporation maintained effective internal control over financial reporting as of December 31, 2005, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Pharmion Corporation’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management’s assessment and an opinion on the effectiveness of the company’s internal control over financial reporting based on our audit.

      We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

      A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

      Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

      In our opinion, management’s assessment that Pharmion Corporation maintained effective internal control over financial reporting as of December 31, 2005, is fairly stated, in all material respects, based on the COSO criteria. Also, in our opinion, Pharmion Corporation maintained, in all material respects, effective internal control over financial reporting as of December 31, 2005, based on the COSO criteria.

      We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Pharmion Corporation as of December 31, 2005 and 2004, and the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2005 of Pharmion Corporation and our report dated March 16, 2006 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Denver, Colorado

March 16, 2006

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Item 9B. Other Information.

      None.

PART III

Item 10. Directors and Executive Officers of the Registrant.

      The information required by this Item concerning our directors is incorporated by reference from the information set forth in the section entitled “Section 16(a) Beneficial Ownership Reporting Compliance” in the Company’s definitive Proxy Statement for the 2006 Annual Meeting of Stockholders to be filed with the Commission within 120 days after the end of our fiscal year ended December 31, 2005 (the “Proxy Statement”). The information required by this Item concerning our executive officers is incorporated by reference from the information set forth in the section of the Proxy Statement entitled “Executive Officers, Directors and Key Employees.” The information required by this Item concerning our standing audit committee is incorporated by reference from the information set forth in the section of the Proxy Statement entitled “Committees of the Board of Directors and Meetings.”

      We have adopted a code of conduct and ethics that applies to all of our directors, officers and employees, including our chief executive officer and chief financial and accounting officers. The text of the code of conduct and ethics is available without charge, upon request, in writing to Investor Relations at Pharmion Corporation, 2525 28th Street, Boulder, CO 80301. Disclosure regarding any amendments to, or waivers from, provisions of the code of conduct and ethics that apply to our directors, principal executive and financial officers will be included in a Current Report on Form 8-K filed within four business days following the date of the amendment or waiver, unless web site posting of such amendments or waivers is then permitted by the rules of the SEC and the Nasdaq Stock Market, Inc.

      The information required by this Item concerning our equity compensation plan is set forth under Item 5 of this Annual Report on Form 10-K.

Item 11. Executive Compensation.

      The information required by this Item regarding executive compensation is incorporated by reference from the information to be set forth in the section of the Proxy Statement entitled “Executive Compensation.”

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

      The information required by this Item regarding security ownership of certain beneficial owners and management is incorporated by reference from the information to be set forth in the section of the Proxy Statement entitled “Security Ownership of Certain Beneficial Owners and Management.” The information required by this Item regarding our equity compensations plans is incorporated by reference from the information set forth in the section of the Proxy Statement entitled “Equity Compensation Plan Information.”

Item 13. Certain Relationships and Related Transactions.

      The information required by this Item regarding certain relationships and related transactions is incorporated by reference from the information to be set forth in the section of the Proxy Statement entitled “Certain Transactions.”

Item 14. Principal Accountant Fees and Services.

      The information required by this Item regarding principal accountant fees and services is incorporated by reference from the information to be set forth in the sections of the Proxy Statement entitled “Report of the Audit Committee,” “Ratification of Selection of Independent Auditors” and “Fees Paid to Ernst & Young.”

54

PART IV

Item 15. Exhibits and Financial Statement Schedules.

      (a) The following documents are being filed as part of this report:

      (1) Consolidated Financial Statements

Reference is made to the Index to Consolidated Financial Statements of Pharmion Corporation. appearing on page F-1 of this report.

      (2) Consolidated Financial Statement Schedules

The following consolidated financial statement schedule of the Company for each of the years ended December 31, 2005, 2004 and 2003, is filed as part of this Annual Report on Form 10-K and should be read in conjunction with the Consolidated Financial Statements, and the related notes thereto, of the Company.

	Page
	Number
Schedule II — Valuation and Qualifying Accounts		S-1

      (3) Exhibits

Exhibit
Number		Description of Document
	2.1(1)	Stock Purchase Agreement, dated March 7, 2003, by and among Pharmion France and the shareholders of Gophar S.A.S.
	3.1(1)	Amended and Restated Certificate of Incorporation.
	3.2(1)	Amended and Restated Bylaws.
	4.1(1)	Specimen Stock Certificate.
	4.2(1)	Amended and Restated Investors’ Rights Agreement, dated as of November 30, 2001, by and among the Registrant, the founders and the holders of the Registrant’s Preferred Stock.
	4.3(1)	Series C Omnibus Amendment Agreement, dated as of October 11, 2002 to Amended and Restated Investors’ Rights Agreement, dated as of November 30, 2001, by and among the Registrant, the founders and the holders of the Registrant’s Preferred Stock.
	4.4(1)	Amendment, dated as of April 8, 2003 to Amended and Restated Investors’ Rights Agreement, dated as of November 30, 2001, by and among the Registrant, the founders and the holders of the Registrant’s Preferred Stock.
	4.5(1)	Series B Preferred Stock Purchase Warrant, dated November 30, 2001, issued by the Registrant to Celgene Corporation.
	4.6(1)	Senior Convertible Promissory Note, dated April 8, 2003, issued by the Registrant to Celgene Corporation.
	4.7(1)	Common Stock Purchase Warrant, dated April 8, 2003, issued by the Registrant to Celgene Corporation.
	4.8(1)	Convertible Subordinated Promissory Note, dated April 11, 2003, issued by the Registrant to Penn Pharmaceuticals Holdings Limited.
	4.9(1)	Common Stock Purchase Warrant, dated April 11, 2003, issued by the Registrant to Penn Pharmaceuticals Holdings Limited.
	10.1(1)*	Amended and Restated 2001 Non-Employee Director Stock Option Plan.
	10.2(1)*	Amended and Restated 2000 Stock Incentive Plan.
	10.3(1)	Securities Purchase Agreement, dated as of April 8, 2003, by and between the Registrant and Celgene Corporation.
	10.4(1)	Securities Purchase Agreement, dated as of April 11, 2003, by and between the Registrant and Penn Pharmaceuticals Holdings Limited.

55

Exhibit
Number		Description of Document
	10.5(1)	Amended and Restated Distribution and License Agreement, dated as of November 16, 2001, by and between Pharmion GmbH and Penn T Limited.
	10.6(1)	Amendment No. 1, dated March 4, 2003, to Amended and Restated Distribution and License Agreement, dated as of November 16, 2001, by and between Pharmion GmbH and Penn T Limited.
	10.7(1)	Supplementary Agreement, dated June 18, 2003, to Amended and Restated Distribution and License Agreement, dated as of November 16, 2001, by and between Pharmion GmbH and Penn T Limited.
	10.8(1)	License Agreement, dated as of November 16, 2001, by and among the Registrant, Pharmion GmbH and Celgene Corporation.
	10.9(1)	Amendment No. 1, dated March 3, 2003, to License Agreement, dated as of November 16, 2001, by and among the Registrant, Pharmion GmbH and Celgene Corporation.
	10.10(1)	Letter Agreement, dated April 2, 2003, by and among the Registrant, Pharmion GmbH and Celgene Corporation regarding clinical funding.
	10.11(1)	Amendment No. 2, dated April 8, 2003, to License Agreement, dated as of November 16, 2001, by and among the Registrant, Pharmion GmbH and Celgene Corporation.
	10.12(1)	License and Distribution Agreement, dated as of June 21, 2002, by and between the Registrant and LEO Pharmaceutical Products Ltd. A/S.
	10.13(1)	License Agreement, dated as of June 7, 2001, by and between the Registrant, Pharmion GmbH and Pharmacia & Upjohn Company.
	10.8(1)	License Agreement, dated as of November 16, 2001, by and among the Registrant, Pharmion GmbH and Celgene Corporation.
	10.9(1)	Amendment No. 1, dated March 3, 2003, to License Agreement, dated as of November 16, 2001, by and among the Registrant, Pharmion GmbH and Celgene Corporation.
	10.10(1)	Letter Agreement, dated April 2, 2003, by and among the Registrant, Pharmion GmbH and Celgene Corporation regarding clinical funding.
	10.11(1)	Amendment No. 2, dated April 8, 2003, to License Agreement, dated as of November 16, 2001, by and among the Registrant, Pharmion GmbH and Celgene Corporation.
	10.12(1)	License and Distribution Agreement, dated as of June 21, 2002, by and between the Registrant and LEO Pharmaceutical Products Ltd. A/S.
	10.13(1)	License Agreement, dated as of June 7, 2001, by and between the Registrant, Pharmion GmbH and Pharmacia & Upjohn Company.
	10.14(1)	Interim Sales Representation Agreement, dated as of May 29, 2002, by and between Pharmion GmbH and Schering Aktiengesellschaft.
	10.15(1)	Distribution and Development Agreement, dated as of May 29, 2002, by and between Pharmion GmbH and Schering Aktiengesellschaft.
	10.16(1)	First Amendment Agreement dated August 20, 2003 by and between Pharmion GmbH and Schering Aktiengesellschaft.
	10.17(3)*	Employment Agreement, dated as of February 23, 2004, by and between the Registrant and Patrick J. Mahaffy.
	10.18(3)*	Amended and Restated Employment Agreement, dated as of March 1, 2004, by and between the Registrant and Judith A. Hemberger.
	10.19(1)*	Non-Competition and Severance Agreement, dated as of November 29, 2001, by and between the Registrant and Michael Cosgrave.
	10.20(1)*	Employment Agreement, dated as of January 5, 2001, by and between the Registrant and Michael Cosgrave.
	10.21(3)*	Amended and Restated Employment Agreement, dated as of March 1, 2004, by and between the Registrant and Erle Mast.

56

Exhibit
Number		Description of Document
	10.22(3)*	Amended and Restated Employment Agreement, dated as of March 1, 2004, by and between the Registrant and Gillian C. Ivers-Read.
	10.23(1)	Office Lease, dated as of April 24, 2002, by and between the Registrant and Centro III, LLC.
	10.24(1)	First Amendment to Lease, dated as of January 31, 2003, to Office Lease, dated as of April 24, 2002, by and between the Registrant and Centro III, LLC.
	10.25(2)*	Addendum to Employment Agreement, dated June 15, 2004, by and between the Registrant and Michael Cosgrave.
	10.26(4)	Amendment No. 2, dated as of December 3, 2004, to Amended and Restated Distribution and License Agreement, dated November 16, 2001, by and between Pharmion GmbH and Celgene U.K. Manufacturing II Limited (formerly Penn T Limited).
	10.27(4)	Letter Agreement, dated as of December 3, 2004, by and between the Registrant, Pharmion GmbH and Celgene Corporation amending the Letter Agreement regarding clinical funding, dated April 2, 2003, between Registrant, Pharmion GmbH and Celgene.
	10.28(4)	Letter Agreement, dated as of December 3, 2004, by and between the Registrant, Pharmion GmbH and Celgene Corporation amending the License Agreement, dated November 16, 2001, among Registrant, Pharmion GmbH and Celgene.
	10.29(4)	Lease, dated as of December 21, 2004, by and between Pharmion Limited and Alecta Pensionsförsäkring Ömsesidigit.
	10.31(5)	Supply Agreement, dated as of March 31, 2005, by and between the Registrant and Ash Stevens, Inc.
	10.32(6)	Manufacturing and Service Contract, dated as of December 20, 2005, by and between the Registrant and Ben Venue Laboratories, Inc.
	10.33(6)	Co-Development and License Agreement, dated as of December 19, 2005, by and between the Registrant, Pharmion GmbH and GPC Biotech AG.
	10.34(6)	Supply Agreement, dated as of December 19, 2005, by and between the Registrant, Pharmion GmbH and GPC Biotech AG.
	10.35	Pharmion Corporation 2000 Stock Incentive Plan (Amended and Restated effective as of February 9, 2006)
	23.1	Consent of Independent Registered Public Accounting Firm.
	24.1	Power of Attorney (reference is made to page 58)
	31.1	Sarbanes-Oxley Act of 2002, Section 302 Certification for President and Chief Executive Officer.
	31.2	Sarbanes-Oxley Act of 2002, Section 302 Certification for Chief Financial Officer.
	32.1	Sarbanes-Oxley Act of 2002, Section 906 Certification for President and Chief Executive Officer and Chief Financial Officer.

(1)	Incorporated by reference to our Registration Statement on Form S-1 (File No. 333-108122) and amendments thereto, declared effective November 5, 2003.
(2)	Incorporated by reference to our Registration Statement on Form S-1 (File No. 333-116252) and amendments thereto, declared effective June 30, 2004.
(3)	Incorporated by reference to our Quarterly Report on Form 10-Q for the quarter ended March 31, 2004.
(4)	Incorporated by reference to the exhibits to our Annual Report on Form 10-K for the year ended December 31, 2004.
(5)	Incorporated by reference to our Quarterly Report on Form 10-Q for the quarter ended March 31, 2005.
(6)	Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24B-2 of the Securities Exchange Act of 1934, as amended.

* Management Contract or Compensatory Plan or Arrangement

57

SIGNATURES

      Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Pharmion Corporation

By:  /s/ Patrick J. Mahaffy

Patrick J. Mahaffy

President and Chief Executive Officer

Date: March 16, 2006

POWER OF ATTORNEY

      KNOW ALL PERSONS BY THESE PRESENTS, that each individual whose signature appears below constitutes and appoints Patrick J. Mahaffy and Erle T. Mast, and each of them, his true and lawful attorneys-in-fact and agents with full power of substitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments to this Form 10-K, and to file the same, with all exhibits thereto and all documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or his or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

      Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Form 10-K has been signed by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Name	Title	Date
/s/ Patrick J. Mahaffy Patrick J. Mahaffy	President, Chief Executive Officer and Director (Principal Executive Officer)	March 16, 2006
/s/ Erle T. Mast Erle T. Mast	Executive Vice President, Chief Financial Officer (Principal Financial and Accounting Officer)	March 16, 2006
/s/ Judith A. Hemberger Judith A. Hemberger	Executive Vice President, Chief Operating Officer and Director	March 16, 2006
/s/ Edward J. McKinley Edward J. McKinley	Director	March 16, 2006
/s/ Brian G. Atwood Brian G. Atwood	Director	March 16, 2006
/s/ Thorlef Spickschen Thorlef Spickschen	Director	March 16, 2006

58

Name	Title	Date
/s/ M. James Barrett M. James Barrett	Director	March 16, 2006
/s/ James Blair James Blair	Director	March 16, 2006
/s/ Cam Garner Cam Garner	Director	March 16, 2006
/s/ John C. Reed John C. Reed	Director	March 16, 2006

59

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Pharmion Corporation Consolidated Financial Statements:
	Report of Independent Registered Public Accounting Firm	F-2
	Consolidated Balance Sheets	F-3
	Consolidated Statements of Operations	F-4
	Consolidated Statements of Stockholders’ Equity	F-5
	Consolidated Statements of Cash Flows	F-6
	Notes to Consolidated Financial Statements	F-7
	Schedule II — Valuation and Qualifying Accounts	S-1

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders of Pharmion Corporation

      We have audited the accompanying consolidated balance sheets of Pharmion Corporation as of December 31, 2005 and 2004, and the related consolidated statements of operations, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2005. Our audits also included the financial statement schedule listed in the index at Item 15(a)2. These financial statements and schedule are the responsibility of management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

      We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

      In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Pharmion Corporation at December 31, 2005 and 2004, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2005, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

      We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of Pharmion Corporation’s internal control over financial reporting as of December 31, 2005, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 16, 2006 expressed an unqualified opinion thereon.

/s/ ERNST & YOUNG LLP

Denver, Colorado

March 16, 2006

F-2

PHARMION CORPORATION

CONSOLIDATED BALANCE SHEETS

		December 31,
		2005			2004
ASSETS
Current assets:
	Cash and cash equivalents	$	90,442,655		$	119,657,986
	Short-term investments		152,962,977			125,884,838
	Accounts receivable, net of allowances of $3,573,249 and $2,209,842, respectively		32,213,282			35,193,222
	Inventories, net		11,471,925			3,687,496
	Prepaid clinical research and development costs		16,020,245			—
	Other current assets		5,778,458			4,396,282
Total current assets			308,889,542			288,819,824
Product rights, net			104,044,740			108,478,367
Goodwill			12,919,650			9,425,524
Property and equipment, net			6,606,144			4,283,763
Other assets			170,233			222,994
Total assets		$	432,630,309		$	411,230,472
LIABILITIES AND STOCKHOLDERS EQUITY
Current liabilities:
	Accounts payable	$	8,456,049		$	9,891,391
	Accrued and other current liabilities		73,813,032			45,562,831
Total current liabilities			82,269,081			55,454,222
Long term liabilities:
	Deferred tax liability		2,797,717			3,605,721
	Other long-term liabilities		939,859			217,828
Total long term liabilities			3,737,576			3,823,549
Total liabilities			86,006,657			59,277,771
Stockholders’ equity
	Common stock: par value $0.001, 100,000,000 shares authorized, 31,912,751 and 31,780,715 shares issued and outstanding, respectively		31,913			31,781
	Preferred stock: par value $0.001, 10,000,000 shares authorized, no shares issued and outstanding		—			—
	Additional paid-in capital		482,892,598			482,660,589
	Deferred compensation		(226,709	)		(679,572	)
	Accumulated other comprehensive income		(246,657	)		8,036,088
	Accumulated deficit		(135,827,493	)		(138,096,185	)
Total stockholders’ equity			346,623,652			351,952,701
Total liabilities and stockholders’ equity		$	432,630,309		$	411,230,472

See accompanying notes.

F-3

PHARMION CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

			Years Ended December 31,
			2005		2004			2003
Net sales			$	221,243,681	$	130,170,640		$	25,539,248
Operating expenses:
	Cost of sales, inclusive of royalties, exclusive of product rights amortization shown separately below			59,799,818		43,634,611			11,461,994
	Clinical, development and regulatory			42,943,902		28,391,812			24,615,968
	Acquired in-process research			21,242,803		—			—
	Selling, general and administrative			83,323,008		66,847,663			36,108,728
	Product rights amortization			9,345,328		3,395,504			1,971,597
Total operating expenses				216,654,859		142,269,590			74,158,287
Income (loss) from operations				4,588,822		(12,098,950	)		(48,619,039	)
Interest and other income (expense), net				6,473,548		2,414,838			(154,390	)
Income (loss) before taxes				11,062,370		(9,684,112	)		(48,773,429	)
Income tax expense				8,793,678		7,853,067			1,285,473
Net income (loss)				2,268,692		(17,537,179	)		(50,058,902	)
Less accretion of redeemable convertible preferred stock to redemption value				—		—			(10,090,971	)
Net income (loss) attributable to common stockholders			$	2,268,692	$	(17,537,179	)	$	(60,149,873	)
Net income (loss) attributable to common stockholders per common share:
		Basic	$	.07	$	(.63	)	$	(14.70	)
		Diluted	$	.07	$	(.63	)	$	(14.70	)
Weighted average number of common and common equivalent shares used to calculate net income (loss) per common share:
		Basic		31,836,783		27,933,202			4,093,067
		Diluted		32,875,516		27,933,202			4,093,067
Unaudited pro forma net loss attributable to common stockholders per common share assuming conversion of preferred stock, basic and diluted (Note 2)				N/A		N/A		$	(2.66	)
Shares used in computing unaudited pro forma net loss attributable to common stockholders per common share assuming conversion of preferred stock, basic and diluted (Note 2)				N/A		N/A			18,791,015

See accompanying notes.

F-4

PHARMION CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

																			Total
	Common Stock						Additional						Other						Stockholders’
							Paid-In			Deferred			Comprehensive			Accumulated			Equity
	Shares			Amount			Capital			Compensation			Income			Deficit			(Deficit)
Balance at January 1, 2003		869,177		$	869		$	—		$	(44,149	)	$	776,938		$	(62,949,948	)	$	(62,216,290	)
Comprehensive Loss:
Net loss		—			—			—			—			—			(50,058,902	)		(50,058,902	)
Foreign currency
translation adjustment		—			—			—			—			3,609,244			—			3,609,244
Comprehensive loss																				(46,449,658	)
Exercise of stock options		53,190			53			73,595			—			—			—			73,648
Repurchase of unvested shares of common stock		(4,687	)		(4	)		(1,871	)		—			—			—			(1,875	)
Deferred compensation associated with stock option grants		—			—			1,740,879			(1,740,879	)		—			—			—
Amortization of deferred compensation		—			—			—			629,859			—			—			629,859
Issuance of warrants associated with convertible notes		—			—			729,697			—			—			—			729,697
Accretion of preferred stock to redemption value		—			—			(2,540,815	)		—			—			(7,550,156	)		(10,090,971	)
Conversion of preferred stock to common stock		17,030,956			17,031			146,060,825			—			—			—			146,077,856
Issuance of common stock, net of issuance costs		6,000,000			6,000			76,155,469			—			—			—			76,161,469
Balance at December 31, 2003		23,948,636		$	23,949		$	222,217,779		$	(1,155,169	)	$	4,386,182		$	(120,559,006	)	$	104,913,735
Comprehensive Loss:
Net loss		—			—			—			—			—			(17,537,179	)		(17,537,179	)
Foreign currency translation adjustment		—			—			—			—			3,923,764			—			3,923,764
Net unrealized loss on available-for-sale investments		—			—			—			—			(273,858	)		—			(273,858	)
Comprehensive loss																				(13,887,273	)
Exercise of stock options and warrants		1,206,551			1,207			8,384,438			—			—			—			8,385,645
Repurchase of unvested shares of common stock		(6,642	)		(7	)		(3,979	)		—			—			—			(3,986	)
Conversion of debt and accrued interest to equity		1,342,170			1,342			14,160,149			—			—			—			14,161,491
Amortization of deferred compensation		—			—			—			475,597			—			—			475,597
Issuance of common stock, net of issuance costs		5,290,000			5,290			237,902,202			—			—			—			237,907,492
Balance at December 31, 2004		31,780,715		$	31,781		$	482,660,589		$	(679,572	)	$	8,036,088		$	(138,096,185	)	$	351,952,701
Comprehensive Loss:
Net income		—			—			—			—			—			2,268,692			2,268,692
Foreign currency translation adjustment		—			—			—			—			(8,240,429	)		—			(8,240,429	)
Net unrealized loss on available-for-sale investments		—			—			—			—			(42,316	)		—			(42,316	)
Comprehensive loss																				(6,014,053	)
Exercise of stock options		134,120			134			487,469			—			—			—			487,603
Repurchase of unvested shares of common stock		(2,084	)		(2	)		(1,248	)		—			—			—			(1,250	)
Amortization of deferred compensation		—			—			—			198,651			—			—			198,651
Cancellation of deferred compensation associated with stock option forfeitures		—			—			(254,212	)		254,212			—			—			—
Balance at December 31, 2005		31,912,75		$	31,913		$	482,892,598		$	(226,709	)	$	(246,657	)	$	(135,827,493	)	$	346,623,652

See accompanying notes.

F-5

PHARMION CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

				Years Ended December 31,
				2005			2004			2003
Operating activities
	Net income (loss)			$	2,268,692		$	(17,537,179	)	$	(50,058,902	)
	Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
		Depreciation and amortization			11,758,686			5,609,395			3,516,450
		Compensation expense related to stock option issuance			198,651			475,597			629,859
		Amortization of discounts and premiums on short-term investments, net			(417,331	)		(331,753	)		—
		Other			(518,975	)		(207,412	)		201,675
		Changes in operating assets and liabilities:
			Accounts receivable, net		25,005			(25,432,117	)		(5,610,818	)
			Inventories		(8,502,763	)		1,682,708			(1,733,357	)
			Other current assets		(17,664,045	)		(39,688	)		(232,363	)
			Other long-term assets		41,300			324,875			1,033,649
			Accounts payable		(786,093	)		5,215,896			(1,081,441	)
			Accrued and other current liabilities		39,543,872			24,176,512			5,632,587
Net cash provided by (used in) operating activities					25,946,999			(6,063,166	)		(47,702,661	)
Investing activities
	Purchases of property and equipment				(5,220,190	)		(1,164,801	)		(2,468,685	)
	Acquisition of business, net of cash acquired				(10,072,160	)		(19,032	)		(12,289,524	)
	Purchase of product rights				(5,000,00	)		(80,000,000	)		(1,000,000	)
	Purchase of available-for-sale investments				(172,896,091	)		(158,593,097	)		—
	Sale and maturity of available-for-sale investments				146,020,399			32,584,820			—
	Net cash used in investing activities				(47,168,042	)		(207,192,110	)		(15,758,209	)
Financing activities
	Proceeds from sale of common stock, net of issuance costs				—			237,907,492			76,161,469
	Proceeds from exercise of common stock options and warrants				486,353			8,381,659			71,774
	Proceeds from issuance of convertible debt and warrants				—			—			14,000,000
	Payment of debt obligations				(4,261,246	)		(3,972,033	)		(1,075,924	)
	Net cash provided by (used in) financing activities				(3,774,893	)		242,317,118			89,157,319
	Effect of exchange rate changes on cash and cash equivalents				(4,219,395	)		2,054,351			241,025
	Net increase (decrease) in cash and cash equivalents				(29,215,331	)		31,116,193			25,937,474
	Cash and cash equivalents, beginning of period				119,657,986			88,541,793			62,604,319
	Cash and cash equivalents, end of year			$	90,442,655		$	119,657,986		$	88,541,793
Noncash items:
	Financed product rights acquisition				1,869,712			—			8,208,071
	Conversion of debt and accrued interest to common stock				—			14,161,491			—
	Accrual of additional business acquisition consideration				—			5,457,600			—
Supplemental disclosure of cash flow information:
	Cash paid for interest				178,057			485,787			237,421
	Cash paid for income taxes				13,196,589			1,317,307			237,389

See accompanying notes.

F-6

PHARMION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Business Operations

      Pharmion Corporation (the “Company”) was incorporated in Delaware on August 26, 1999 and commenced operations in January 2000. The Company is engaged in the acquisition, development and commercialization of pharmaceutical products for the treatment of oncology and hematology patients. The Company’s product acquisition and licensing efforts are focused on both development products as well as those approved for marketing. In exchange for distribution and marketing rights, the Company generally grants the seller royalties on future sales and, in some cases, up front cash payments. The Company has acquired the rights to six products, including four that are currently marketed or sold on a compassionate use or named patient basis, and two products that are in varying stages of clinical development. The Company has established operations in the United States, Europe and Australia. Through a distributor network, the Company can reach the hematology and oncology community in additional countries in the Middle East and Asia.

      On September 25, 2003, the Company effected a one for four reverse stock split of its common stock. All share and per share amounts included in these consolidated financial statements have been retroactively adjusted for all periods presented to give effect to the reverse stock split.

      On November 12, 2003, the Company completed an initial public offering, which resulted in net proceeds of $76.2 million from the issuance of 6,000,000 shares of common stock. In connection with the initial public offering, all of the outstanding shares of the Company’s preferred stock were converted into shares of common stock.

      On July 7, 2004, the Company completed a public offering of common stock. A total of 5,290,000 shares of common stock were sold at a price to the public of $48.00 per share, resulting in net proceeds to the Company of $237.9 million.

2. Summary of Significant Accounting Policies

Basis of Presentation

      The consolidated financial statements include the accounts of Pharmion Corporation and all subsidiaries. All material intercompany accounts and transactions have been eliminated in consolidation.

Cash and Cash Equivalents

      Cash and cash equivalents consist of money market accounts and overnight deposits. The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Interest income resulting from cash, cash equivalents and short-term investments was $6,883,247, $2,559,956 and $494,595 for the years ended December 31, 2005, 2004, and 2003, respectively.

      The Company has entered into several standby letters of credit to guarantee both current and future commitments with office lease agreements. The aggregate amount outstanding under the letters of credit was approximately $1.6 million at December 31, 2005 and is secured by restricted cash held in U.S. cash accounts.

Short-term Investments

      Short-term investments consist of investment grade government agency, auction rate, and corporate debt securities due within one year. Investments with maturities beyond one year are classified as short-term based on their highly liquid nature and because such investments represent the investment of cash that is available for current operations. All investments are classified as available-for-sale and are recorded at market value. Unrealized gains and losses are reflected in other comprehensive income.

F-7

PHARMION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Inventories

      Inventories consist of Vidaza, Innohep, Refludan and thalidomide. Vidaza is sold commercially in the U.S. and, to a limited extent, on a compassionate use basis within international markets. Innohep is sold exclusively in the U.S. market, and Refludan and thalidomide are both sold within the international markets. All of the products are manufactured by third-party manufacturers and delivered to the Company as finished goods. Inventories are stated at the lower of cost or market, cost being determined under the first-in, first-out method. The Company periodically reviews inventories, and items considered outdated or obsolete are reduced to their estimated net realizable value. For the years ended December 31, 2005, 2004 and 2003, the Company recorded a provision to reduce the estimated net realizable value of obsolete and short-dated inventory by $0.6 million, $1.4 million, and $1.8 million, respectively.

      Inventories consisted of the following at December 31, 2005 and 2004.

	2005		2004
Raw material	$	3,444,311	$	351,263
Finished goods		8,027,614		3,336,233
Total inventory	$	11,471,925	$	3,687,496

      At December 31, 2005, the Company had firm inventory purchase commitments, due within one year, of approximately $8.7 million.

Product Rights

      The cost of acquiring the distribution and marketing rights of the Company’s products that are approved for commercial use were capitalized and are being amortized on a straight-line basis over the estimated benefit period of 10-15 years.

Goodwill

      In association with a business acquisition in 2003 and related milestone payments that were made in 2004 and 2005, goodwill was created. In accordance with Statement of Financial Accounting Standards (SFAS) No. 142, “Goodwill and Other Intangible Assets,” the Company does not amortize goodwill. SFAS No. 142 requires the Company to perform an impairment review of goodwill at least annually. If it is determined that the value of goodwill is impaired, the Company will record the impairment charge in the statement of operations in the period it is discovered. During the years ended December 31, 2005 and 2004, the Company recorded increases of approximately $4.8 million and $5.5 million, respectively, to goodwill to reflect additional consideration due the seller of the business acquired in 2003 (see Note 4). The increase in 2005 was partially offset by a reduction of approximately $1.3 million, due to currency translation adjustments.

Property and Equipment

      Property and equipment are stated at cost. Repairs and maintenance are charged to operations as incurred, and significant expenditures for additions and improvements are capitalized. Leasehold improvements are amortized over the economic life of the asset or the lease term, whichever is shorter. Depreciation

F-8

PHARMION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

and amortization of property and equipment are computed using the straight-line method based on the following estimated useful lives:

	Estimated Useful Life
Computer hardware and software		3 years
Leasehold improvements		3-5 years
Equipment		7 years
Furniture and fixtures		10 years

Long-Lived Assets

      Long-lived assets, other than goodwill, consist primarily of product rights and property and equipment. In accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, the recoverability of the carrying value of long-lived assets to be held and used is evaluated if changes in the business environment or other facts and circumstances that suggest they may be impaired. If this evaluation indicates the carrying value will not be recoverable, based on the undiscounted expected future cash flows generated by these assets, the Company reduces the carrying amount to the estimated fair value.

Revenue Recognition

      The Company sells its products to wholesale distributors and, for certain products, directly to hospitals and clinics. Revenue from product sales is recognized when ownership of the product is transferred to the customer, the sales price is fixed and determinable, and collectibility is reasonably assured. Within the U.S. and certain foreign countries revenue is recognized upon shipment (freight on board shipping point) since title to the product passes and the customers have assumed the risks and rewards of ownership. In certain other foreign countries, it is common practice that ownership transfers upon receipt of product and, accordingly, in these circumstances revenue is recognized upon delivery (freight on board destination) when title to the product effectively transfers.

      The Company records allowances for product returns, chargebacks, rebates and prompt pay discounts at the time of sale, and reports revenue net of such amounts. In determining allowances for product returns, chargebacks and rebates, the Company must make significant judgments and estimates. For example, in determining these amounts, the Company estimates end-customer demand, buying patterns by end-customers and group purchasing organizations from wholesalers and the levels of inventory held by wholesalers. Making these determinations involves estimating whether trends in past buying patterns will predict future product sales.

      The nature of the Company’s allowances requiring accounting estimates, and the specific considerations the Company uses in estimating its amounts, are as follows:

      Product returns. The Company’s customers have the right to return any unopened product during the 18-month period beginning 6 months prior to the labeled expiration date and ending 12 months past the labeled expiration date. As a result, in calculating the allowance for product returns, the Company must estimate the likelihood that product sold to wholesalers might remain in its inventory or in end-customers’ inventories to within 6 months of expiration and analyze the likelihood that such product will be returned within 12 months after expiration.

      To estimate the likelihood of product remaining in wholesalers’ inventory, the Company relies on information from its wholesalers regarding their inventory levels, measured end-customer demand as reported by third party sources, and on internal sales data. The Company believes the information from its wholesalers and third party sources is a reliable indicator of trends, but the Company is unable to verify the accuracy of

F-9

PHARMION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

such data independently. The Company also considers its wholesalers’ past buying patterns, estimated remaining shelf life of product previously shipped and the expiration dates of product currently being shipped.

      Since the Company does not have the ability to track a specific returned product back to its period of sale, the product returns allowance is primarily based on estimates of future product returns over the period during which customers have a right of return. Such estimates are primarily based on historical sales and return rates as well as estimates of the remaining shelf life of our products sold to customers.

      For the years ended December 31, 2005 and 2004, $0.1 million and $0.2 million of product was returned to the Company, respectively, representing approximately 0.04% and 0.15% of net sales revenue, respectively. The allowance for returns was $0.6 million at both December 31, 2005 and 2004.

      Chargebacks and rebates. Although the Company sells its products in the U.S. primarily to wholesale distributors, the Company typically enters into agreements with certain governmental health insurance providers, hospitals, clinics, and physicians, either directly or through group purchasing organizations acting on behalf of their members, to allow purchase of Company products at a discounted price and/or to receive a volume-based rebate. The Company provides a credit to the wholesaler, or a chargeback, representing the difference between the wholesaler’s acquisition list price and the discounted price. Rebates are paid directly to the end-customer, group purchasing organization or government insurer.

      As a result of these contracts, at the time of product shipment the Company must estimate the likelihood that product sold to wholesalers might be ultimately sold to a contracting entity or group purchasing organization. For certain end-customers, the Company must also estimate the contracting entity’s or group purchasing organization’s volume of purchases.

      The Company estimates its chargeback allowance based on its estimate of the inventory levels of its products in the wholesaler distribution channel that remain subject to chargebacks, and specific contractual and historical chargeback rates. The Company estimates its Medicaid rebate and commercial contractual rebate accruals based on estimates of usage by rebate-eligible customers, estimates of the level of inventory of its products in the distribution channel that remain potentially subject to those rebates, and terms of its contractual and regulatory obligations.

      At December 31, 2005 and 2004, the allowance for chargebacks and rebates was $2.6 million and $2.7 million, respectively.

      Prompt pay discounts. As incentive to expedite cash flow, the Company offers some customers a prompt pay discount whereby if they pay their accounts within 30 days of product shipment, they may take a 2% discount. As a result, the Company must estimate the likelihood that its customers will take the discount at the time of product shipment. In estimating the allowance for prompt pay discounts, the Company relies on past history of its customers’ payment patterns to determine the likelihood that future prompt pay discounts will be taken and for those customers that historically take advantage of the prompt pay discount, the Company increases the allowance accordingly.

      At December 31, 2005 and 2004, the allowance for prompt pay discounts was $0.5 million and $0.3 million, respectively.

      The Company has adjusted the allowances for product returns, chargebacks and rebates and prompt pay discounts in the past based on its actual experience, and the Company will likely be required to make adjustments to these allowances in the future. The Company continually monitors the allowances and makes adjustments when the Company believes actual experience may differ from estimates.

F-10

PHARMION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Cost of Sales

      Cost of sales includes the cost of product sold, royalties due on the sales of the products and the distribution and logistics costs related to selling the products. Cost of sales does not include product rights amortization expense as it is shown separately.

Risks and Uncertainties

      The Company is subject to risks common to companies in the pharmaceutical industry including, but not limited to, uncertainties related to regulatory approvals, dependence on key products, dependence on key customers and suppliers, and protection of proprietary rights.

Advertising Costs

      The Company expenses all advertising, promotional and publication costs as incurred. Total advertising costs were approximately $6.8 million, $5.6 million, and $2.2 million for the years ended December 31, 2005, 2004 and 2003, respectively.

Translation of Foreign Currencies

      The functional currencies of the Company’s foreign subsidiaries are the local currencies, primarily the British pound sterling, euro and Swiss franc. In accordance with SFAS No. 52, Foreign Currency Translation, assets and liabilities are translated using the current exchange rate as of the balance sheet date. Income and expenses are translated using a weighted average exchange rate over the period ending on the balance sheet date. Adjustments resulting from the translation of the financial statements of the Company’s foreign subsidiaries into U.S. dollars are excluded from the determination of net loss and are accumulated in a separate component of stockholders’ equity. Foreign exchange transaction gains and losses which, to date have not been significant, are included in the results of operations.

Comprehensive Income

      The Company reports comprehensive income in accordance with the provisions of SFAS No. 130, Reporting Comprehensive Income. Comprehensive income includes all changes in equity for cumulative translation adjustments resulting from the consolidation of foreign subsidiaries and unrealized gains and losses on available-for-sale securities.

Concentration of Credit Risk

      Financial instruments which potentially subject the Company to concentrations of credit risk are primarily cash and cash equivalents, short-term investments and accounts receivable. The Company maintains its cash, cash equivalent and short-term investment balances in the form of money market accounts, debt securities and overnight deposits with financial institutions that management believes are creditworthy. The Company has no financial instruments with off-balance-sheet risk of accounting loss.

F-11

PHARMION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      The Company’s products are sold both to wholesale distributors and directly to hospitals and clinics. Ongoing credit evaluations of customers are performed and collateral is generally not required. Many of the international hospitals and clinics are government supported and may take a significant amount of time to collect. U.S. and international accounts receivable consisted of the following at December 31, 2005 and 2004.

	2005		2004
U.S. accounts receivable, net of allowances	$	11,195,675	$	12,852,798
International accounts receivable, net of allowances		21,403,403		22,340,424
Total accounts receivable, net of allowances	$	32,213,282	$	35,193,222

      At December 31, 2005 and 2004, the accounts receivable balance of our customer, Oncology Supply, represented 11% and 16%, respectively, of total net accounts receivable. No other individual customer had accounts receivable balances greater than 10% of total net accounts receivable.

      The Company maintains a reserve for potential credit losses based on the financial condition of customers and the aging of accounts. Losses have been within management’s expectations. The provision for bad debts for the years end December 31, 2005, 2004 and 2003 was $0.7 million, $0.6 million and $0.1 million, respectively.

      Net sales generated as a percent of total consolidated net sales, for the three largest customers in the U.S. were as follows for the years ended December 31, 2005, 2004 and 2003:

	Years Ended
	December 31,
	2005		2004		2003
Oncology Supply		17%		11%		0%
Cardinal Health		15%		11%		3%
McKesson Corporation		14%		14%		3%

      Net sales generated from international customers were individually less than 5% of consolidated net sales.

Clinical, Development and Regulatory Costs

      Clinical, development, and regulatory costs include salaries, benefits and other personnel related expenses as well as fees paid to third parties for clinical development and regulatory services. Such costs are expensed as incurred.

Acquired In-Process Research

      In December 2005, the Company entered into a co-development and licensing agreement with GPC Biotech whereby it acquired commercialization rights to a drug development candidate called satraplatin in Europe, the Middle East, Turkey, Australia and New Zealand. Satraplatin is in Phase III development for the treatment of hormone refractory prostate cancer. Under terms of the license agreement, the Company made an up front payment to GPC Biotech of $37.1 million in early January 2006, which included $21.2 million for reimbursement for past satraplatin development costs incurred by GPC Biotech. This portion of the up front payment was immediately expensed as acquired in-process research as satraplatin has not yet achieved regulatory approval for marketing and, absent obtaining such approval, has no alternative future use.

F-12

PHARMION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Fair Value of Financial Instruments

      Financial instruments consist of cash and cash equivalents, short-term investments, accounts receivable, accounts payable and accrued liabilities. The carrying values of these instruments approximate fair value due to their short-term nature.

Use of Estimates

      The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Accounting for Stock-Based Compensation

      The Company has elected to account for its stock compensation arrangements to employees under the provisions of Accounting Principles Board Opinion (APB) No. 25, Accounting for Stock Issued to Employees, and its related interpretations. Under the provisions of APB No. 25, the company utilizes the intrinsic value method of accounting. Under this method, compensation expense is recognized on the date of grant if the current market price of the underlying stock exceeds the exercise price. The difference in value between the current market price and the exercise price is recorded as deferred compensation and is amortized to expense over the vesting period of the option on a straight-line basis. Pro forma information regarding net loss is required by SFAS No. 123, Accounting for Stock-Based Compensation, and has been determined as if the Company had accounted for its employee stock options under the fair value method of that statement. The fair value for options granted was estimated at the date of grant using the Black-Scholes valuation model. Under this model, the following weighted average assumptions were used:

	2005			2004			2003
Expected dividend yield		0	%		0	%		0	%
Expected stock price volatility		49	%		76	%		86	%
Risk free interest rate		4.1	%		2.9	%		2.8	%
Expected life of options		4.0  years			4.6  years			5.0  years

      The expected stock price volatility was estimated using percentages reported by similar public companies within the pharmaceutical industry prior to 2004 as well as trading history of the Company’s common stock subsequently. The weighted-average fair value per share was $10.36, $20.67, and $8.98, for the options granted

F-13

PHARMION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

in 2005, 2004, and 2003, respectively. The difference between the actual expense recorded and pro forma expense for all periods presented is provided in the table below:

	Years Ended December 31,
	2005			2004			2003
Net income (loss) attributable to common stockholders as reported	$	2,268,692		$	(17,537,179	)	$	(60,149,873	)
Add stock based compensation expense included in net income (loss)		198,651			475,597			585,710
Deduct total stock based compensation expense determined using the fair value method for all rewards		(23,618,782	)		(3,821,369	)		(931,910	)
Pro forma net loss attributable to common stockholders	$	(21,151,438	)	$	(20,882,951	)	$	(60,496,073	)
Net income (loss) per common share, basic and diluted, as reported	$	.07		$	(.63	)	$	(14.70	)
Net income (loss) per common share, basic and diluted, pro forma	$	(.66	)	$	(.75	)	$	(14.78	)

      During the period January 1, 2003 through November 5, 2003, options were granted to employees and directors at exercise prices that were less than the estimated fair value of the underlying shares of common stock as of the grant date. In accordance with APB No. 25, deferred compensation expense is being recognized for the excess of the estimated fair value of the Company’s common stock as of the grant date over the exercise price of the options and amortized to expense on a straight-line basis over the vesting periods of the related options, which is generally four years. The Company recorded compensation expense totaling $198,651, $475,597 and $585,710 for the years ended December 31, 2005, 2004 and 2003, respectively. As of December 31, 2005 and 2004, the unamortized compensation expense recorded as deferred compensation within the statement of stockholders’ equity was $226,709 and $679,572, respectively.

      Option valuation models such as the Black-Scholes value method described above require the input of highly subjective assumptions. Because the Company’s employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in the opinion of the Company’s management, the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options.

      On December 6, 2005, the Board of Directors approved the acceleration of vesting for certain unvested incentive and non-qualified stock options granted to employees under the 2000 stock incentive plan. Vesting acceleration was performed on employee options granted prior to April 1, 2005 with an exercise price per share of $21.00 or higher. A total of 839,815 shares of the Company’s common stock became exercisable as a result of the vesting acceleration. The acceleration of vesting was consummated in order to reduce the non-cash compensation expense that would have been recorded in future periods following the effective date of SFAS No. 123(R). The effect of this acceleration is the avoidance of future non-cash expenses of approximately $15.8 million, which is included in the pro-forma net loss for the year ended December 31, 2005.

      The Company accounts for options issued to consultants using the provisions of SFAS No. 123 and Emerging Issues Task Force (EITF) 96-18, Accounting for Equity Instruments that are Issued to other than Employees for Acquiring or in Conjunction with Selling Goods or Services.

F-14

PHARMION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Net Income (Loss) Per Share

      Basic net income (loss) per share is computed by dividing net income (loss) for the period by the weighted average number of shares of common stock outstanding during the period reduced, where applicable, for outstanding, yet unvested, shares. Diluted net income (loss) per share is computed by dividing the net income (loss) for the period by the weighted average number of common and potential incremental common shares outstanding during the period, if their effect is dilutive. Potential incremental common shares include shares of common stock issuable upon the exercise of stock options and warrants and upon the conversion of convertible notes and redeemable convertible preferred stock outstanding during the period. The potential shares of common stock that have not been included in the diluted net income (loss) per share calculation totaled 1,132,212, 1,599,076, and 3,625,180 for the years ended December 31, 2005, 2004 and 2003, respectively.

Pro Forma Net Loss Per Share

      Immediately prior to the effective date of the Company’s initial public offering (November 12, 2003), all redeemable convertible preferred stock shares outstanding converted into an aggregate of 17,030,956 shares of common stock. The pro forma net loss per share was calculated on the consolidated statement of operations for the year ending December 31, 2003 to show the effects of this conversion on earnings per share. It is computed by dividing net loss before accretion of redeemable convertible preferred stock by the weighted average number of common shares outstanding, including the pro forma effects of conversion of all outstanding redeemable convertible preferred stock into shares of the Company’s common stock.

Recently Issued Accounting Standards

      In December 2004, the Financial Accounting Standards Board issued SFAS No. 123 (revised 2004), Share-Based Payment, which is a revision of SFAS No. 123, Accounting for Stock-Based Compensation. SFAS No. 123(R) supersedes APB No. 25, Accounting for Stock Issued to Employees, and amends SFAS No. 95, Statement of Cash Flows. Generally, the approach in SFAS No. 123(R) is similar to the approach described in SFAS No. 123. However, SFAS No. 123(R) requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on the grant-date fair value of the award.

      As permitted by SFAS No. 123, the Company currently accounts for share-based payments to employees using the intrinsic value provisions of APB No. 25 and, as such, generally recognized no compensation costs for employee stock options. Accordingly, the adoption of SFAS No. 123(R)’s fair value method is expected to impact our results of operations. The impact of the adoption of SFAS no. 123(R) cannot be quantified at this time because it will depend on levels of share-based payments granted in the future. However, had the Company adopted SFAS No. 123(R) in prior periods, the impact would have approximated the impact of SFAS No. 123 as described in the disclosure of pro forma net income and earning per share in Note 2, Summary of Significant Accounting Policies — Accounting for Stock-Based Compensation, except for the acceleration of $15.8 million of expense reflected in the year ended December 31, 2005. SFAS No. 123(R) also requires the benefits of tax deductions in excess of recognized compensation cost to be reported as a financing cash flow.

      The Company is required to adopt the standard as of January 1, 2006. SFAS No. 123(R) permits public companies to adopt its requirements using one of two methods:

•  A “modified prospective” method in which compensation cost is recognized beginning with the effective date (a) based on the requirements of SFAS No. 123(R) for all share-based payments granted after the effective date and (b) based on the requirements of SFAS No. 123 for all rewards

F-15

PHARMION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

	granted to employees prior to the effective date of SFAS No. 123(R) that remain unvested on the effective date; or
•	A “modified retrospective” method which includes the requirements of the modified prospective method described above, but also permits entities to restate based on the amounts previously recognized under SFAS No. 123 for purposes of pro forma disclosures either (a) all prior periods or (b) prior interim periods of the year of adoption.

      At this time, the Company expects to use the modified prospective method. The Company is also considering the implementation guidance for SFAS No. 123(R) issued by the SEC in Staff Accounting Bulletin No. 107 in the adoption of SFAS No. 123(R).

3. Geographic Information

      Foreign and domestic financial information (in thousands):

			United			Foreign
	Year		States			Entities			Total
Net sales		2005	$	130,886		$	90,358		$	221,244
		2004		55,642			74,529			130,171
		2003		3,751			21,788			25,539
Operating income (loss)		2005	$	21,469		$	(16,880	)	$	4,589
		2004		(16,472	)		4,373			(12,099	)
		2003		(32,899	)		(15,720	)		(48,619	)
Total assets		2005	$	244,316		$	188,314		$	432,630
		2004		235,958			175,272			411,230

4. Acquisition of Laphal Développement

      In March 2003, a subsidiary of the Company acquired 100% of the outstanding stock of Gophar S.A.S. and its wholly owned subsidiary, Laphal Développement S.A. (collectively, “Laphal”). Laphal is a French pharmaceutical company focused on the sale of orphan drugs primarily in France and Belgium. Under the terms of the related Stock Purchase Agreement (SPA), the Company paid €12 million at closing, less the amount of Laphal’s net financial debt (as defined in the SPA). The actual amount of cash paid for Laphal, net of cash received in the acquisition and including transaction costs incurred was approximately $12.3 million. Two additional payments totaling €8 million (approximately $10.3 million) were also due if certain aggregate sales milestones were achieved. These milestones were achieved in the fourth quarter of 2004 and the first quarter of 2005, and the payments were made in 2005. As a result of this purchase, the Company acquired the rights to the Laphal thalidomide formulation and access to certain European markets.

      The operating results of Laphal have been included in the results of the Company from the date of the acquisition. Product rights relate to thalidomide and are being amortized over the 15 year period in which the Company expects to generate significant sales from this product.

      The following pro forma combined financial information for the year ended December 31, 2003 is derived from the historical financial statements of the Company and of Laphal for the period then ended, adjusted to give effect to their consolidation using the purchase method of accounting and to reflect interest costs on the convertible notes issued by the Company to fund the acquisition. This pro forma financial information assumes the acquisition of Laphal occurred as of the beginning of the period shown. It is provided for

F-16

PHARMION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

illustrative purposes only and is not indicative of the operating results that would have been achieved had the acquisition been consummated at the date indicated, nor is it necessarily indicative of future operating results:

	Year Ended
	December 31,
	2003
Net sales	$	27,326,566
Net loss	$	(50,426,996	)
Net loss attributable to common stockholders per common share, basic and diluted	$	(14.79	)

5. Short-term Investments

      The amortized cost, gross unrealized gains, gross unrealized losses and fair value of available-for-sale investments by security classification at December 31, 2005 and 2004, were as follows:

			Gross		Gross			Estimated Fair
December 31, 2005	Amortized Cost		Unrealized Gain		Unrealized Loss			Value
Government agencies	$	57,122,513	$	—	$	(170,891	)	$	56,951,622
Corporate debt securities		42,925,942		38,227		(123,893	)		42,840,276
Auction rate notes		30,671,341		521		—			30,671,862
Asset backed securities		22,559,355		1,702		(61,840	)		22,499,217
Total securities	$	153,279,151	$	40,450	$	(356,624	)	$	152,962,977

			Gross		Gross			Estimated Fair
December 31, 2004	Amortized Cost		Unrealized Gain		Unrealized Loss			Value
Government agencies	$	77,194,609	$	—	$	(158,545	)	$	77,036,064
Corporate debt securities		28,688,241				(48,763	)		28,639,478
Asset backed securities		17,500,097		—		(66,550	)		17,433,547
Other debt securities		2,775,749		—		—			2,775,749
Total securities	$	126,158,696	$	—	$	(273,858	)	$	125,884,838

      During the year ended December 31, 2005 and 2004, the gross realized gains on sales of available-for-sale securities totaled $661 and $342,809, respectively, and the gross realized losses totaled $(173,231) and $(181,333), respectively. The gains and losses on available-for-sale securities are based on the specific identification method.

      The fair value of available-for-sale securities with unrealized losses at December 31, 2005 were as follows:

	Held less than 12 Months					Held greater than 12 Months					Total
	Estimated Fair		Gross			Estimated Fair		Gross			Estimated Fair		Gross
December 31, 2005	Value		Unrealized Loss			Value		Unrealized Loss			Value		Unrealized Loss
Government agencies	$	56,951,622	$	(170,891	)	$	—	$	—		$	56,951,622	$	(170,891	)
Corporate debt securities		36,710,787		(123,893	)		—		—			36,710,787		(123,893	)
Asset backed securities		13,911,826		(51,757	)		3,570,430		(10,083	)		17,482,256		(61,840	)
Total securities	$	107,574,235	$	(346,541	)	$	3,570,430	$	(10,083	)	$	111,144,665	$	(356,624	)

F-17

PHARMION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

     Unrealized losses were due to changes to interest rates associated with securities with short maturity lives and are deemed to be temporary.

      The amortized cost and estimated fair value of the available-for-sale securities at December 31, 2005, by maturity, were as follows:

			Estimated Fair
Maturity	Amortized Cost		Value
Due within one year	$	100,048,454	$	99,791,899
Due after one year through three years		12,369,235		12,328,580
Due after three years through five years		10,190,121		10,170,636
Due after five years		30,671,341		30,671,862
Total securities	$	153,279,151	$	152,962,977

6. License Agreements

      The cost value and accumulated amortization associated with the Company’s product rights were as follows:

	As of December 31, 2005					As of December 31, 2004
	Gross Carrying		Accumulated			Gross Carrying		Accumulated
	Amount		Amortization			Amount		Amortization
Amortized product rights:
Thalidomide	$	101,837,285	$	(9,690,198	)	$	97,242,280	$	(2,509,252	)
Refludan		12,208,071		(3,560,418	)		12,208,071		(2,212,732	)
Innohep		5,000,000		(1,750,000	)		5,000,000		(1,250,000	)
Total product rights	$	119,045,356	$	(15,000,616	)	$	114,450,351	$	(5,971,984	)

      Amortization expense of $9.3 million, $3.4 million, and $2.0 million was recorded for the years ended December 31, 2005, 2004 and 2003, respectively. The estimated amortization expense for the next five years is approximately $9.7 million per year.

Thalidomide

      In 2001, the Company licensed rights relating to the development and commercial use of thalidomide from Celgene and separately entered into an exclusive supply agreement for thalidomide with Celgene U.K. Manufacturing II Limited (formerly known as “Penn T Limited”), or CUK, which was acquired by Celgene in 2004. Under the agreements, as amended in December 2004, the territory licensed from Celgene is for all countries other than the United States, Canada, Mexico, Japan and all provinces of China (except Hong Kong).The Company pays (i) Celgene a royalty/license fee of 8% on the Company’s net sales of thalidomide under the terms of the license agreements, and (ii) CUK product supply payments equal to 15.5% of the Company’s net sales of thalidomide under the terms of the product supply agreement. The agreements with Celgene and CUK each have a ten-year term running from the date of receipt of the Company’s first regulatory approval for thalidomide in the United Kingdom.

      In December 2004, the Company amended its thalidomide agreements with Celgene and CUK to reduce the thalidomide product supply payment, expand the Company’s licensed territory, and eliminate certain license termination rights held by Celgene. The Company paid Celgene a one-time payment of $80 million in exchange for (i) the reduction in the cost of product supply from 28.0% of net sales to 15.5% of net sales, (ii) the addition of Korea, Hong Kong, and Taiwan to the Company’s licensed territory and, (iii) elimination

F-18

PHARMION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

of Celgene’s right to terminate the license agreement in the event the Company has not obtained a marketing authorization approval for thalidomide in the United Kingdom by November 2006. The $80 million payment was capitalized as part of the thalidomide product rights and is being amortized over the remaining period the Company expects to generate significant thalidomide sales, approximately 13 years from December 31, 2004.

      In connection with a patent dispute, associated with thalidomide, the Company agreed to make a $5.0 million payment in 2005, with two $1.0 million payments due in 2006 and 2007. Accordingly, these amounts increased the thalidomide product rights.

      The Company has also committed to provide funding to support further clinical development studies of thalidomide sponsored by Celgene. Under these agreements, the Company paid Celgene $4.7 million, $3.0 million, and $3.0 million in 2005, 2004 and 2003, respectively, and will pay Celgene $2.7 million in each of 2006 and 2007.

      In connection with the 2003 acquisition of Laphal, the Company acquired rights to Laphal’s formulation of thalidomide. The portion of the purchase price allocated to thalidomide has been included in product rights, net on the accompanying balance sheet.

Vidaza

      In 2001, the Company licensed worldwide rights to Vidaza (azacitidine) from Pharmacia & Upjohn Company, now part of Pfizer, Inc. Under terms of the license agreement, the Company is responsible for all costs to develop and market Vidaza and the Company pays Pfizer a royalty of 8% to 20% of Vidaza net sales. No up-front or milestone payments have or will be made to Pfizer. The license has a term extending for the longer of the last to expire of valid patent claims in any given country or ten years from the first commercial sale of the product in a particular country.

Satraplatin

      In December 2005, the Company entered into a co-development and license agreement for satraplatin. Under the terms of the agreement, the Company obtained exclusive commercialization rights for Europe, Turkey, the Middle East, Australia and New Zealand, while GPC Biotech retained rights to the North American market and all other territories. The Company made an up front payment of $37.1 million to GPC Biotech in early January 2006, including an $21.2 million reimbursement for satraplatin clinical development costs incurred prior to the agreement and $15.9 million for funding of ongoing and certain future clinical development to be conducted jointly by the Company and GPC Biotech. The Company and GPC Biotech will pursue a joint development plan to evaluate development activities for satraplatin in a variety of tumor types and will share global development costs, for which the Company has made an additional commitment of $22.2 million, in addition to the $37.1 million in initial payments. The Company will also pay GPC Biotech $30.5 million based on the achievement of certain regulatory filing and approval milestones, and up to an additional $75 million for up to five subsequent European approvals for additional indications. GPC Biotech will also receive royalties on sales of satraplatin in the Company’s territories at rates of 26% to 30% on annual sales up to $500 million, and 34% on annual sales over $500 million. Finally, the Company will pay GPC Biotech sales milestones totaling up to $105 million, based on the achievement of significant annual sales levels in its territories.

Refludan

      In May 2002, the Company entered into agreements to acquire the exclusive right to market and distribute Refludan in all countries outside the U.S. and Canada. These agreements, as amended in August 2003, transferred all marketing authorizations and product registrations for Refludan in the individual countries within the Company’s territories. The Company has paid Schering an aggregate of $13 million to

F-19

PHARMION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

date and has capitalized to product rights $12.2 million which is being amortized over a 10 year period during which the Company expects to generate revenue. Additional payments of up to $7.5 million will be due Schering upon achievement of certain milestones. Because such payments are contingent upon future events, they are not reflected in the accompanying financial statements. In addition, the Company paid Schering an 8% royalty on net sales of Refludan through December 31, 2003 and will pay a royalty of 14% of net sales of Refludan thereafter until the aggregate royalty payments total $12.0 million measured from January 2004. At that time, the royalty rate will be reduced to 6%.

Innohep

      In June 2002, the Company entered into a ten-year agreement with LEO Pharma A/S for the license of the low molecular weight heparin, Innohep. Under the terms of the agreement, the Company acquired an exclusive right and license to market and distribute Innohep in the United States. On the closing date the Company paid $5 million for the license, which is capitalized as product rights and is being amortized over a 10 year period in which the Company expects to generate significant revenues. On the closing date, the Company paid an additional $2.5 million, which was creditable against royalty payments otherwise due during the period ending March 1, 2005. In addition, the Company is obligated to pay LEO Pharma royalties at the rate of 30% of net sales on annual net sales of up to $20 million and at the rate of 35% of net sales on annual net sales exceeding $20 million, less in each case the Company’s purchase price from LEO Pharma of the units of product sold. Furthermore, the agreement contains a minimum net sales clause that is effective for two consecutive two-year periods. If the company does not achieve these minimum sales levels for two consecutive years, it has the right to pay LEO Pharma additional royalties up to the amount LEO Pharma would have received had the company achieved these net sales levels. If the company opts not to make the additional royalty payment, LEO Pharma has the right to terminate the license agreement. The second of the two-year terms will conclude on December 31, 2006.

7. Property and Equipment

		December 31,
		2005			2004
Property and equipment:
	Computer hardware and software	$	5,639,872		$	5,171,173
	Furniture and fixtures		1,978,234			1,497,455
	Equipment		1,301,061			1,142,592
	Leasehold improvements		4,498,382			1,288,820
			13,417,549			9,100,040
Less accumulated depreciation			(6,811,405	)		(4,816,277	)
Total property and equipment, net		$	6,606,144		$	4,283,763

      Depreciation expense was $2,413,358, $2,213,891, and $1,544,830 for the years ended December 31, 2005, 2004 and 2003, respectively.

F-20

PHARMION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

8. Accrued and Other Current Liabilities

	December 31,
	2005		2004
Accrued and other current liabilities:
Royalties payable	$	10,696,632	$	10,695,532
Income taxes payable		3,175,376		7,319,821
Product rights and notes payable		1,141,794		4,332,811
Accrued salaries and benefits		6,103,501		11,107,500
Accrued operating expenses		15,595,729		12,107,167
Co-development and licensing agreement payable (Note 6)		37,100,000		—
	$	73,813,032	$	45,562,831

9. Other Long-term Liabilities

	December 31,
	2005			2004
Product rights payable	$	1,869,712		$	3,831,399
Notes payable		211,941			719,240
		2,081,653			4,550,639
Current portion of product rights and notes payable		(1,141,794	)		(4,332,811	)
Other long term liabilities	$	939,859		$	217,828

      Maturities of other long-term liabilities are as follows:

2006	$	1,141,794
2007		937,036
2008		2,823
	$	2,081,653

10. Convertible Notes Payable

      In April 2003, the Company issued $14 million of 6% convertible notes with interest payable annually. Holders of the notes also received warrants to purchase an aggregate of 424,242 shares of the Company’s common stock at a price of $11.00 per share. The value of the warrants was reflected as an additional debt discount to be amortized over the term of the debt or 5 years. Effective March 1, 2004, the $14 million of convertible notes plus accrued interest were converted into 1,342,170 shares of common stock. The remaining unamortized debt discount was recorded as a decrease to equity.

11. Leases and Other Commitments

      The Company leases office space and equipment under various noncancelable operating lease agreements. One of these agreements has a renewal term which allows the Company to extend this lease up to six years, or through 2013. Rental expense was $3,491,259, $2,874,934, and $1,561,425 for the years ended December 31, 2005, 2004 and 2003, respectively.

F-21

PHARMION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      As of December 31, 2005, future minimum rental commitments, by fiscal year and in the aggregate, for the Company’s operating leases are as follows:

2006	$	3,502,401
2007		2,971,781
2008		1,972,552
2009		1,707,267
2010		133,538
Total minimum lease payments	$	10,287,539

12. Income Taxes

      The Company accounts for income taxes in accordance with SFAS No. 109, Accounting for Income Taxes. Under the provisions of SFAS No. 109, a deferred tax liability or asset (net of a valuation allowance) is provided in the financial statements by applying the provisions of applicable tax laws to measure the deferred tax consequences of temporary differences that will result in net taxable or deductible amounts in future years as a result of events recognized in the financial statements in the current or preceding years.

      At December 31, 2005, the Company has federal, state, and foreign net operating loss carryforwards for income tax purposes of approximately $131 million, which will expire in the years 2019 through 2025 if not utilized. The majority of the tax loss carryforwards relate to the U.S. ($35.2 million) and Switzerland ($86.7 million). The U.S. net operating loss carryforward includes tax deductions totaling $6.2 million attributable to the exercise of stock options. If these benefits are realized for tax purposes, the amount of the benefit will increase additional paid-in capital and will not be reflected in the Company’s provision for income taxes. At December 31, 2005, the Company had research and development and orphan drug credit carryforwards in the U.S. of approximately $7.2 million, which will expire in the years 2021 through 2025 if not utilized.

      The Tax Reform Act of 1986 contains provisions that limit the utilization of net operating loss and tax credit carryforwards if there has been a “change of ownership” as described in Section 382 of the Internal Revenue Code. Such a change of ownership may limit the Company’s utilization of its net operating loss and tax credit carryforwards, and could be triggered by subsequent sales of securities by the Company or its stockholders.

F-22

PHARMION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      The components of the Company’s deferred tax assets and liabilities are as follows:

				December 31,
				2005			2004
Deferred tax assets:
	Net operating loss			$	25,282,697		$	28,550,438
	Credit carryforwards				7,212,350			6,513,802
	Organization costs				2,044,141			3,406,902
	Allowance on accounts receivable				1,177,160			815,237
	Depreciation				326,364			140,025
	Other				379,601			511,395
		Total gross deferred tax assets			36,422,313			39,937,799
		Valuation allowance			(35,758,680	)		(39,205,040	)
Deferred tax assets, net of valuation allowance					663,633			732,759
Deferred tax liabilities:
	Amortization of product rights				(2,569,888	)		(3,437,962	)
	Prepaid expenses				(891,462	)		(730,964	)
	Other				—			(169,554	)
		Total gross deferred tax liabilities			(3,461,350	)		(4,338,480	)
			Net deferred tax liability	$	(2,797,717	)	$	(3,605,721	)

      A valuation allowance was recorded in 2005 and 2004 due to the Company’s inability to determine if it is more likely than not that the deferred tax asset will be realized in future periods.

      The Company’s effective tax rate differs from the federal income tax rate for the following reasons:

	Years Ended
	December 31,
	2005			2004
Expected federal income tax benefit (expense) at statutory rate		34.0	%		34.0	%
Effect of permanent differences		3.8	%		(10.4	)%
State income tax, net of federal benefit		3.5	%		(6.4	)%
Effect of tax credits		(6.3	)%		23.9	%
Effect of foreign operations		86.4	%		(50.2	)%
Utilization of U.S. tax loss carryforward		(84.4	)%		—
Deferred tax asset valuation allowance		42.5	%		(72.0	)%
		79.5	%		(81.1	)%

F-23

PHARMION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      The provision (benefit) for income taxes is comprised of the following:

		Years Ended December 31,
		2005			2004			2003
Current provision:
	Federal	$	561,557		$	—		$	—
	State		584,192			618,802			194,496
	Foreign		8,297,133			7,647,744			1,090,977
Total			9,442,882			8,266,546			1,285,473
Deferred provision:
	Federal		7,626,728			(8,283,747	)		(7,067,508	)
	State		717,439			(714,122	)		(609,273	)
	Foreign		(5,463,986	)		(2,236,232	)		(3,986,714	)
Total			2,880,181			(11,234,101	)		(11,663,495	)
Deferred tax valuation allowance			(3,529,385	)		10,820,622			11,663,495
Total		$	8,793,678		$	7,853,067		$	1,285,473

      The Company reported income (loss) before taxes from operations within the U.S. and foreign operations for the years ended December 31, 2005, 2004, and 2003 as follows.

	December 31,
	2005			2004			2003
Income (loss) before taxes from U.S. operations	$	33,002,080		$	(14,027,515	)	$	(32,145,799	)
Income (loss) before taxes from foreign operations		(21,939,710	)		4,343,403			(16,627,650	)
Total income (loss) before taxes from operations	$	11,062,370		$	(9,684,112	)	$	(48,773,449	)

      No provision has been made for income taxes on the undistributed earnings of the Company’s foreign subsidiaries of approximately $30.5 million at December 31, 2005 as the Company intends to indefinitely reinvest such earnings.

13. Stock Option Plans

      In 2000, the Company’s Board of Directors approved the 2000 Stock Incentive Plan (the “2000 Plan”). At December 31, 2005, a total of 5,258,000 shares of common stock are reserved under the plan. The 2000 Plan provides for awards of both nonstatutory stock options and incentive stock options within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended, and stock purchase rights to purchase shares of the Company’s common stock. A total of 1,417,883 shares of common stock are available for future stock option issuance to eligible employees and consultants of the Company as of December 31, 2005.

      In 2001, the Company’s Board of Directors approved the 2001 Non-Employee Director Stock Option Plan (the “2001 Plan”). At December 31, 2005, 575,000 shares of common stock are reserved under the plan. The 2001 Plan provides for awards of nonstatutory stock options only. A total of 288,750 shares of common stock are available for future stock option issuance to directors of the Company as of December 31, 2005.

      The 2000 Plan and the 2001 Plan are administered by the compensation committee of the Board of Directors, which has the authority to select the individuals to whom awards will be granted and to determine whether and to what extent stock options and stock purchase rights are to be granted, the number of shares of

F-24

PHARMION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

common stock to be covered by each award, the vesting schedule of stock options, generally over a period of four years, and all other terms and conditions of each award. The grants expire seven and ten years from the date of grant for the 2000 and 2001 Plans, respectively.

      In September 2003, the Board of Directors amended both the 2000 and 2001 plans to allow for automatic “evergreen” annual additions to the stock options available for grant not to exceed 500,000 shares and 50,000 shares, respectively.

      In June 2005, shareholders approved an amendment to both the 2000 and 2001 plans to increase by 1,500,000 and 100,000 shares of common stock reserved for issuance, respectively.

      A summary of the Plans’ activity is as follows:

		Number of			Weighted Average
		Options			Exercise Price
Balance, January 1, 2003			1,321,992		$	1.76
	Granted		610,219			9.21
	Exercised		(53,190	)		1.38
	Terminated		(60,809	)		1.91
Balance, December 31, 2003			1,818,212			4.28
	Granted		1,110,303			34.87
	Exercised		(373,436	)		2.22
	Terminated		(154,395	)		8.52
Balance, December 31, 2004			2,400,684			18.47
	Granted		1,369,932			23.75
	Exercised		(134,120	)		3.64
	Terminated		(249,638	)		26.53
Balance, December 31, 2005			3,386,858		$	20.60

      A summary of options outstanding as of December 31, 2005, is as follows:

	Outstanding Options						Exercisable Options
			Weighted-		Weighted-		Shares		Weighted-
			Average		Average		Currently		Average
	Shares		Remaining		Exercise		Vested and		Exercise
Range of Exercise Prices	Under Option		Contractual Life		Price		Exercisable		Price
$0.40 to 1.60		438,762		3.42	$	1.52		428,663	$	1.52
$1.61 to 2.40		393,592		4.29		2.40		372,594		2.40
$2.41 to 18.20		398,530		5.15		14.40		167,373		14.00
$18.21 to 18.49		585,000		6.93		18.49		—		—
$18.50 to 23.92		424,832		6.02		21.68		369,232		21.49
$23.93 to 35.15		453,847		6.42		28.41		171,948		33.97
$35.16 to 42.34		538,250		5.94		41.04		538,250		41.04
$42.35 to 52.27		154,045		6.19		48.21		154,045		48.21
Total		3,386,858		5.59	$	20.60		2,202,105	$	21.42

F-25

PHARMION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      On December 6, 2005, the Board of Directors approved the acceleration of vesting for certain unvested incentive and non-qualified stock options granted to employees under the 2000 stock incentive plan. Vesting acceleration was performed on employee options granted prior to April 1, 2005 with an exercise price per share of $21.00 or higher. A total of 839,815 shares of the Company’s common stock became exercisable as a result of the vesting acceleration. The acceleration of vesting was consummated in order to reduce the non-cash compensation expense that would have been recorded in future periods following the effective date of SFAS No. 123(R). The effect of this acceleration is the avoidance of future non-cash expenses of approximately $15.8 million, which is included in the pro-forma net loss for the year ended December 31, 2005.

14. Redeemable Convertible Preferred Stock and Warrants

Redeemable Convertible Preferred Stock

      In January 2000, the Company issued 5,069,792 shares of redeemable convertible preferred stock (Series A Preferred), in a first closing, to a group of private investors at a purchase price of $1.00 per share. In December 2000 and January 2001, the Company issued 3,237,500 and 9,605,973 shares, respectively, of Series A Preferred, in a second closing, to the same group of investors at a purchase price of $1.50 per share. In November 2001, the Company issued 31,071,769 shares of redeemable convertible preferred stock (Series B Preferred) to a group of investors at a purchase price of $2.09 per share. In October 2002, the Company issued 19,138,756 shares of redeemable convertible preferred stock (Series C Preferred) at a purchase price of $2.09 per share.

      All of the preferred shares had preferences before common stock in liquidation equal to the initial preferred purchase price, plus any accrued but unpaid noncumulative dividends. In addition, the Series B and Series C Preferred shares had preferences before the Series A Preferred shares and were entitled to share on a pro rata, as if converted, basis in the remaining assets with the common shares after preferential liquidation payments were made to preferred shareholders.

      In connection with the completion of the Company’s initial public offering in November 2003, all of the outstanding shares of redeemable convertible preferred stock were automatically converted into 17,030,956 shares of the Company’s common stock.

Warrants

      In November 2001, the Company issued a warrant to purchase 1,701,805 shares of Series B Preferred stock at $2.09 per share to a business partner which was exercisable one year after the date of grant and expired seven years from the date of grant. Based on the estimated fair value of the warrant, development expense in the amount of $884,939 was recorded in connection with the issuance of this warrant in 2001. Upon conversion of the Company’s preferred shares to common stock in November 2003, the number of shares available under the warrant was automatically modified to 425,451 shares of common stock at $8.36 per share.

      In April 2003, the Company issued two warrants in conjunction with the convertible debt issued in 2003. The warrants had a life of five years and could be exercised immediately. A total of 424,242 shares of common stock could be purchased at a price of $11.00 per share under these warrants. The $729,697 fair value of the warrant was classified as additional paid-in capital with a corresponding amount treated as a debt discount which was being amortized using the interest method.

      In June 2004, a stock purchase warrant was exercised by one of the business partners, resulting in the issuance of 44,026 shares of common stock. The option holder utilized the cashless exercise option allowed under the warrant agreement and surrendered 16,580 shares to the Company as consideration for this exercise.

F-26

PHARMION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      In September 2004, the second business partner exercised two stock purchase warrants which resulted in the issuance of 789,087 shares of common stock. Total exercise proceeds received by the Company were $7.6 million.

15. Employee Savings Plans

      The Company sponsors an employee savings and retirement plan which is qualified under section 401(k) of the Internal Revenue Code for its U.S. employees. Under the sponsored plan, the Company matches 100% of the participant’s contribution up to a limit of 3% of the participant’s annual salary. Matching contributions totaled $411,262, $276,952, and $204,561 in 2005, 2004 and 2003, respectively. The Company’s international employees are eligible to participate in retirement plans, subject to the local laws that are in effect for each country. The Company made contributions of $455,109, $477,695, and $321,695 for these employees in 2005, 2004 and 2003, respectively.

16. Related Parties

      As part of the relocation assistance provided to three officers, during 2002, the Company made loans totaling $400,000 to these individuals. At December 31, 2005 the balance outstanding for these loans is $62,500. The loans do not bear interest and are secured by a second deed of trust on the principal residences of each of the officers. The notes are repayable over terms ranging from two to four years. The Company has agreed, for as long as these officers remain employed by the Company, to make annual bonus payments to these officers in amounts sufficient to pay the loan amounts then due.

17. Subsequent Event

      In January 2006, the Company entered into a license and collaboration agreement for the research, development and commercialization of MethylGene Inc.’s HDAC inhibitors, including its lead compound MGCD0103, in North America, Europe, the Middle East and certain other markets. Under the terms of the agreement, the Company made up front payments to MethylGene totaling $25 million, consisting of a $20 million license fee and a $5 million equity investment in MethylGene common shares. The common shares were purchased at a subscription price of CDN $3.125 which represented a 25% premium over the market closing price on January 27, 2006. Subsequent to the transaction, the Company has a 7.8% ownership in MethylGene. The ownership interest will initially be recorded at fair value and then accounted for as an available for sale security.

      MGCD0103 is currently in Phase I/II development and has a number of clinical studies underway. Under the terms of the license agreement, MethylGene will initially fund 40% of the preclinical and clinical development for MGCD0103 (and any additional second generation compounds) required, to obtain marketing approval in North America, while the Company will fund 60% of such costs. MethylGene will receive royalties on net sales in North America ranging from 13% to 21%. The royalty rate paid to MethylGene will be determined based upon the level of annual net sales achieved in North America and the length of time development costs are funded by MethylGene. MethylGene will have an option, at its sole discretion, as long as it continues to fund development, to co-promote approved products and, in lieu of receiving royalties, to share the resulting net profits equally with the Company. If MethylGene exercises its right, at its sole discretion, to discontinue development funding, the Company will be responsible for 100% of development costs incurred thereafter.

      In all other licensed territories, which include Europe, the Middle East, Turkey, Australia, New Zealand, South Africa and certain countries in Southeast Asia, the Company is responsible for development and commercialization costs and MethylGene will receive a royalty on net sales in those markets at a rate of 10% to 13% based on annual net sales.

F-27

PHARMION CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      Milestone payments to MethylGene for MGCD0103 could reach $145 million, based on the achievement of significant development, regulatory and sales goals. Furthermore, up to $100 million for each additional HDAC inhibitor may be paid, also based on the achievement of significant development, regulatory and sales milestones. In addition, the Company will provide one year of research support (up to $2 million) for a team of eight MethylGene scientists dedicated to identifying second-generation clinical candidates in addition to MGCD0103.

18. Quarterly Information

	March 31,		June 30,		September 30,		December 31,
	2005		2005		2005		2005
	(In thousands, except per share data)
	(Unaudited)
Net sales	$	51,737	$	56,257	$	56,805	$	56,445
Cost of sales, inclusive of royalties, exclusive of product rights amortization		13,947		15,120		15,355		15,378
Income (loss) from operations		5,408		6,492		9,725		(17,036	)
Net income (loss)		4,270		5,554		8,828		(16,383	)
Net income (loss) applicable to common shareholders per share — basic	$	.13	$	.17	$	.28	$	(.51	)
Net income (loss) applicable to common shareholders per share — diluted	$	.13	$	.17	$	.27	$	(.51	)

	March 31,			June 30,			September 30,			December 31,
	2004			2004			2004			2004
Net sales	$	15,721		$	20,396		$	42,576		$	51,478
Cost of sales, inclusive of royalties, exclusive of product rights amortization		6,309			7,453			14,169			15,704
Loss from operations		(8,814	)		(8,221	)		(1,712	)		3,224
Net income (loss)		(9,809	)		(9,983	)		(355	)		2,609
Net income (loss) applicable to common shareholders per share — basic and diluted	$	(.40	)	$	(.39	)	$	(.01	)	$	.08

F-28

SCHEDULE II

Valuation and Qualifying Accounts

				Additions
				Charged
		Balance at		to
		Beginning		Expense					Balance at End
Years Ended December 31,		of Period		or Sales		Deductions			of Period
		(In thousands)
2005
	Allowances for chargebacks, product returns, cash discounts and doubtful accounts	$	2,210	$	13,437	$	(12,074	)	$	3,573
	Inventory reserve		360		606		(924	)		42
2004
	Allowances for chargebacks, product returns, cash discounts and doubtful accounts	$	819	$	7,419	$	(6,028	)	$	2,210
	Inventory reserve		1,387		1,366		(2,393	)		360
2003
	Allowances for chargebacks, product returns, cash discounts and doubtful accounts	$	734	$	2,486	$	(2,401	)	$	819
	Inventory reserve		—		1,761		(374	)		1,387

S-1

EXHIBIT INDEX

Exhibit
Number		Description of Document
	2.1(1)	Stock Purchase Agreement, dated March 7, 2003, by and among Pharmion France and the shareholders of Gophar S.A.S.
	3.1(1)	Amended and Restated Certificate of Incorporation.
	3.2(1)	Amended and Restated Bylaws.
	4.1(1)	Specimen Stock Certificate.
	4.2(1)	Amended and Restated Investors’ Rights Agreement, dated as of November 30, 2001, by and among the Registrant, the founders and the holders of the Registrant’s Preferred Stock.
	4.3(1)	Series C Omnibus Amendment Agreement, dated as of October 11, 2002 to Amended and Restated Investors’ Rights Agreement, dated as of November 30, 2001, by and among the Registrant, the founders and the holders of the Registrant’s Preferred Stock.
	4.4(1)	Amendment, dated as of April 8, 2003 to Amended and Restated Investors’ Rights Agreement, dated as of November 30, 2001, by and among the Registrant, the founders and the holders of the Registrant’s Preferred Stock.
	4.5(1)	Series B Preferred Stock Purchase Warrant, dated November 30, 2001, issued by the Registrant to Celgene Corporation.
	4.6(1)	Senior Convertible Promissory Note, dated April 8, 2003, issued by the Registrant to Celgene Corporation.
	4.7(1)	Common Stock Purchase Warrant, dated April 8, 2003, issued by the Registrant to Celgene Corporation.
	4.8(1)	Convertible Subordinated Promissory Note, dated April 11, 2003, issued by the Registrant to Penn Pharmaceuticals Holdings Limited.
	4.9(1)	Common Stock Purchase Warrant, dated April 11, 2003, issued by the Registrant to Penn Pharmaceuticals Holdings Limited.
	10.1(1)*	Amended and Restated 2001 Non-Employee Director Stock Option Plan.
	10.2(1)*	Amended and Restated 2000 Stock Incentive Plan.
	10.3(1)	Securities Purchase Agreement, dated as of April 8, 2003, by and between the Registrant and Celgene Corporation.
	10.4(1)	Securities Purchase Agreement, dated as of April 11, 2003, by and between the Registrant and Penn Pharmaceuticals Holdings Limited.
	10.5(1)	Amended and Restated Distribution and License Agreement, dated as of November 16, 2001, by and between Pharmion GmbH and Penn T Limited.
	10.6(1)	Amendment No. 1, dated March 4, 2003, to Amended and Restated Distribution and License Agreement, dated as of November 16, 2001, by and between Pharmion GmbH and Penn T Limited.
	10.7(1)	Supplementary Agreement, dated June 18, 2003, to Amended and Restated Distribution and License Agreement, dated as of November 16, 2001, by and between Pharmion GmbH and Penn T Limited.
	10.8(1)	License Agreement, dated as of November 16, 2001, by and among the Registrant, Pharmion GmbH and Celgene Corporation.
	10.9(1)	Amendment No. 1, dated March 3, 2003, to License Agreement, dated as of November 16, 2001, by and among the Registrant, Pharmion GmbH and Celgene Corporation.
	10.10(1)	Letter Agreement, dated April 2, 2003, by and among the Registrant, Pharmion GmbH and Celgene Corporation regarding clinical funding.
	10.11(1)	Amendment No. 2, dated April 8, 2003, to License Agreement, dated as of November 16, 2001, by and among the Registrant, Pharmion GmbH and Celgene Corporation.
	10.12(1)	License and Distribution Agreement, dated as of June 21, 2002, by and between the Registrant and LEO Pharmaceutical Products Ltd. A/S.
	10.13(1)	License Agreement, dated as of June 7, 2001, by and between the Registrant, Pharmion GmbH and Pharmacia & Upjohn Company.
	10.8(1)	License Agreement, dated as of November 16, 2001, by and among the Registrant, Pharmion GmbH and Celgene Corporation.

Exhibit
Number		Description of Document
	10.9(1)	Amendment No. 1, dated March 3, 2003, to License Agreement, dated as of November 16, 2001, by and among the Registrant, Pharmion GmbH and Celgene Corporation.
	10.10(1)	Letter Agreement, dated April 2, 2003, by and among the Registrant, Pharmion GmbH and Celgene Corporation regarding clinical funding.
	10.11(1)	Amendment No. 2, dated April 8, 2003, to License Agreement, dated as of November 16, 2001, by and among the Registrant, Pharmion GmbH and Celgene Corporation.
	10.12(1)	License and Distribution Agreement, dated as of June 21, 2002, by and between the Registrant and LEO Pharmaceutical Products Ltd. A/S.
	10.13(1)	License Agreement, dated as of June 7, 2001, by and between the Registrant, Pharmion GmbH and Pharmacia & Upjohn Company.
	10.14(1)	Interim Sales Representation Agreement, dated as of May 29, 2002, by and between Pharmion GmbH and Schering Aktiengesellschaft.
	10.15(1)	Distribution and Development Agreement, dated as of May 29, 2002, by and between Pharmion GmbH and Schering Aktiengesellschaft.
	10.16(1)	First Amendment Agreement dated August 20, 2003 by and between Pharmion GmbH and Schering Aktiengesellschaft.
	10.17(3)*	Employment Agreement, dated as of February 23, 2004, by and between the Registrant and Patrick J. Mahaffy.
	10.18(3)*	Amended and Restated Employment Agreement, dated as of March 1, 2004, by and between the Registrant and Judith A. Hemberger.
	10.19(1)*	Non-Competition and Severance Agreement, dated as of November 29, 2001, by and between the Registrant and Michael Cosgrave.
	10.20(1)*	Employment Agreement, dated as of January 5, 2001, by and between the Registrant and Michael Cosgrave.
	10.21(3)*	Amended and Restated Employment Agreement, dated as of March 1, 2004, by and between the Registrant and Erle Mast.
	10.22(3)*	Amended and Restated Employment Agreement, dated as of March 1, 2004, by and between the Registrant and Gillian C. Ivers-Read.
	10.23(1)	Office Lease, dated as of April 24, 2002, by and between the Registrant and Centro III, LLC.
	10.24(1)	First Amendment to Lease, dated as of January 31, 2003, to Office Lease, dated as of April 24, 2002, by and between the Registrant and Centro III, LLC.
	10.25(2)*	Addendum to Employment Agreement, dated June 15, 2004, by and between the Registrant and Michael Cosgrave.
	10.26(4)	Amendment No. 2, dated as of December 3, 2004, to Amended and Restated Distribution and License Agreement, dated November 16, 2001, by and between Pharmion GmbH and Celgene U.K. Manufacturing II Limited (formerly Penn T Limited).
	10.27(4)	Letter Agreement, dated as of December 3, 2004, by and between the Registrant, Pharmion GmbH and Celgene Corporation amending the Letter Agreement regarding clinical funding, dated April 2, 2003, between Registrant, Pharmion GmbH and Celgene.
	10.28(4)	Letter Agreement, dated as of December 3, 2004, by and between the Registrant, Pharmion GmbH and Celgene Corporation amending the License Agreement, dated November 16, 2001, among Registrant, Pharmion GmbH and Celgene.
	10.29(4)	Lease, dated as of December 21, 2004, by and between Pharmion Limited and Alecta Pensionsförsäkring Ömsesidigit.
	10.31(5)	.Supply Agreement, dated as of March 31, 2005, by and between the Registrant and Ash Stevens, Inc.
	10.32(6)	Manufacturing and Service Contract, dated as of December 20, 2005, by and between the Registrant and Ben Venue Laboratories, Inc.
	10.33(6)	Co-Development and License Agreement, dated as of December 19, 2005, by and between the Registrant, Pharmion GmbH and GPC Biotech AG.
	10.34(6)	Supply Agreement, dated as of December 19, 2005, by and between the Registrant, Pharmion GmbH and GPC Biotech AG.

Exhibit
Number		Description of Document
	10.35	Pharmion Corporation 2000 Stock Incentive Plan (Amended and Restated effective as of February 9, 2006)
	23.1	Consent of Independent Registered Public Accounting Firm.
	24.1	Power of Attorney (reference is made to page 58)
	31.1	Sarbanes-Oxley Act of 2002, Section 302 Certification for President and Chief Executive Officer.
	31.2	Sarbanes-Oxley Act of 2002, Section 302 Certification for Chief Financial Officer.
	32.1	Sarbanes-Oxley Act of 2002, Section 906 Certification for President and Chief Executive Officer and Chief Financial Officer.

(1)	Incorporated by reference to our Registration Statement on Form S-1 (File No. 333-108122) and amendments thereto, declared effective November 5, 2003.
(2)	Incorporated by reference to our Registration Statement on Form S-1 (File No. 333-116252) and amendments thereto, declared effective June 30, 2004.
(3)	Incorporated by reference to our Quarterly Report on Form 10-Q for the quarter ended March 31, 2004.
(4)	Incorporated by reference to the exhibits to our Annual Report on Form 10-K for the year ended December 31, 2004.
(5)	Incorporated by reference to our Quarterly Report on Form 10-Q for the quarter ended March 31, 2005.
(6)	Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24B-2 of the Securities Exchange Act of 1934, as amended.

* Management Contract or Compensatory Plan or Arrangement

EX-10.32

CONFIDENTIAL

Exhibit 10.32

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN
THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24B-2 OF THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED

MANUFACTURING and SERVICE CONTRACT
For Commercial and Developmental Products

This document hereinafter the “AGREEMENT” is made effective as of December 20, 2005 (the “Effective Date”), by Pharmion, Inc., a corporation organized and existing under the laws of Delaware, with its principal office at 2525 28^th Boulder, CO 80301 (hereinafter “CUSTOMER”), and Ben Venue Laboratories, Inc., a corporation organized and existing under the laws of Delaware, with its principle office at 300 Northfield Road, Bedford, Ohio, 44146 (hereinafter “BVL”).

WITNESSETH

WHEREAS, CUSTOMER is active in the pharmaceutical business and is the owner of all rights or licensee of all rights to certain proprietary technical information, patents and patent applications relating to the PRODUCT(s) included in Attachment(s) A — PRODUCT Supplements, which are attached here to and maybe be amended in writing upon mutual agreement of the parties, (hereinafter “PRODUCT”); and

WHEREAS, BVL provides services to the pharmaceutical industry as a contract manufacturer which supplies its customers with sterile finished dosage forms which it has converted from materials supplied by those customers and/or supplied by BVL and provides developmental services for sterile dosage forms, and

WHEREAS, CUSTOMER and BVL desire to formalize their relationship through this AGREEMENT for the development and MANUFACTURE of PRODUCT; and

WHEREAS, BVL possesses the requisite expertise, personnel and FACILITIES for the development, MANUFACTURE and supply of finished sterile dosage forms of the PRODUCT and is willing to provide development services, MANUFACTURE of such PRODUCT(S) on a contract basis to CUSTOMER;

NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and conditions herein contained, CUSTOMER and BVL agree as follows:

Page 1 of 38          BVL — PHARMION Manufacturing and Service Agreement

CONFIDENTIAL

Index of Agreement

Section 1 — Definitions
Section 2 — Description of Work
Section 3 — Manufacturing Facilities
Section 4 — Volumes and Second Source
Section 5 — Forecast and Purchase Orders
Section 6 — Price and Payment
Section 7 — Quality Agreement
Section 8 — Indemnification
Section 9 — Confidentiality
Section 10 — Term and Termination
Section 11 — Notices
Section 12 — Waiver
Section 13 — Assignment
Section 14 — Governing Law
Section 15 — Force Majeure
Section 16 — Title of Materials
Section 17 — Debarment
Section 18 — Entire Agreement
Section 19 — Severability
Section 20 — Independent Contractor
Section 21 — Amendments
Section 22 — Headings
Section 23 — Review by Legal Counsel
Section 24 — Recalls
Article 25 — English Language

ATTACHMENTS

Attachment A — PRODUCT Supplements
Attachment B — Purchase Order Requirements
Attachment C — Storage Fees
Attachment D — Documents Supplied with BATCH Release
Attachment E — Quality Agreement
Attachment F — Customer Supplied Equipment

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ARTICLE 1 — DEFINITIONS

1.1 Active pharmaceutical ingredient hereinafter “API”, shall mean bulk supplies of the pharmacologically active compounds listed for the PRODUCT(S) included in Attachment(s) A, which CUSTOMER will provide to BVL in bulk form, from time to time, for the sole purpose of MANUFACTURING and/or DEVELOPMENT of the PRODUCTS for CUSTOMER.

1.2 “AFFILIATE” shall mean (1) any corporation or business entity fifty percent (50%) or more of the voting stock or voting equity interests of which are owned directly or indirectly by a party; or (2) any corporation or business entity which directly or indirectly owns fifty percent (50%) or more of the voting stock or voting equity interests of a party; or (3) any corporation or business entity directly or indirectly controlling or under control of a corporation or business entity as described in (1) or (2).

1.3 “AGENCY” or “AGENCIES” shall mean the U.S. Food and Drug Administration (hereinafter the “FDA”) Canadian Health Protection Branch, European Agency for Evaluation of Medicinal Products, hereinafter the “EMEA” and/or any successor organization of any such entity and any other government regulatory authority involved in granting approvals for the MANUFACTURING of the PRODUCTS for any TERRITORY, as such other AGENCIES are mutually agreed upon by the parties in writing.

1.4 “BATCH” shall mean a standard quantity of PRODUCT for each MANUFACTURE expressed in units as defined in Attachment(s) A of this agreement.

1.5 “cGMP” shall mean all laws and regulations relating to the MANUFACTURING of PRODUCT(S), including, but not limited to, the Current Good Manufacturing Practices as specified in the United States Code of Federal Regulations, the EU Good Manufacturing Guidelines and any other applicable laws, guidelines and/or regulations. In the event of conflict Current Good Manufacturing Practices as specified in the United States Code of Federal Regulations specifically as defined by 21 Code of Federal Regulation Sections 210, 211, et seq. will prevail.

1.6 “CALENDAR QUARTER” shall mean shall mean each period of three full consecutive calendar months ending March 31, June 30, September 30 and December 31, as the case may be.

1.7 “COMPOSITION” shall mean any components and/or raw materials that are used in the MANUFACTURING of PRODUCTS as listed in ATTACHMENT(s) A, hereto.

1.8 “DELIVERY” shall be FCA FACILITY (Incoterms 2000) as per CUSTOMER’S instructions required on PURCHASE ORDERS.

1.9 “EQUIPMENT” shall mean the equipment described in the BVL Master BATCH Record which is owned or leased by BVL or owned and leased by the CUSTOMER, included in Attachment F—(Customer Supplied Equipment List) and will be used by BVL for MANUFACTURING of PRODUCTS in accordance with the terms and conditions of this

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AGREEMENT.

1.10 “FACILITY” or “FACILITIES” shall mean BVL’S FACILITY located at 300 Northfield Road, Bedford, Ohio and all other BVL FACILITIES used in the MANUFACTURING of PRODUCTS; provided that such other FACILITIES have been agreed upon by the parties in writing in advance.

1.11 “FIRM ORDER” shall mean a binding commitment, as established by a PURCHASE ORDER by CUSTOMER to have a BATCH as defined in Attachment(s) A of PRODUCT(S) MANUFACTURED by BVL hereunder.

1.12 “IMMEDIATE/IMMEDIATELY” shall mean within twenty-four (24) hours.

1.13 “INVESTIGATION” shall mean a detailed and thorough review of any atypical or MANUFACTURING deviation (or any other matter requiring review pursuant to the terms of this AGREEMENT) documented in a written report, approved at a senior management level. Each such written report shall include, without limitation, a detailed description of the atypical event, deviation or other matter, all steps taken to review such atypical event, deviation or other matter, a root cause analysis, what other lots of CUSTOMER PRODUCT were affected, if any, the proposed and/or taken corrective actions with applicable timelines and a recommendation for permanent correction.

1.14 “MANUFACTURE / MANUFACTURING/ MANUFACTURED” shall mean all operations of BVL in the production, packaging, labeling, warehousing, quality control testing, including in-process, release and stability testing when applicable, release and shipping of PRODUCTS to meet the SPECIFICATIONS for the PRODUCTS.

1.15 “NDA” shall mean New Drug Application.

1.16 “PRODUCT(S)” shall mean the final packaged dosage forms listed separately in each Attachment(s) A to this agreement.

1.17 “PROMPT/PROMPTLY” shall mean within thirty (30) days.

1.18 “PURCHASE ORDER” shall mean a written form submitted by CUSTOMER to BVL authorizing the MANUFACTURE of the PRODUCT or other services as specified on the form, which references this agreement, or a quotation number provided by BVL or other document provided by BVL outlining the services to be performed and the price to be paid for each service listed on the PURCHASE ORDER according the PURCHASE ORDER requirements contained in Attachment B.

1.19 “SPECIFICATIONS” shall mean the specifications, SOP’s and quality standards for PRODUCT(S) contained or referenced in the Master BATCH Record for each PRODUCT or as otherwise mutually agreed to in writing by the parties in accordance with standard procedures of BVL.

Page 4 of 38          BVL — PHARMION Manufacturing and Service Agreement

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1.20 “TERRITORY” shall mean all countries of the world.

Page 5 of 38          BVL — PHARMION Manufacturing and Service Agreement

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ARTICLE 2 — DESCRIPTION OF WORK

2.1 CUSTOMER shall at its own expense supply BVL with sufficient quantities of API and CUSTOMER supplied COMPOSITION needed for the MANUFACTURE of the PRODUCT as specified in the forecast and supporting PURCHASE ORDERS, in order to meet CUSTOMER’S requirements for commercial and/or developmental quantities of PRODUCT in finished dosage form. CUSTOMER supplied COMPOSITION shall be delivered to BVL at least four weeks in advance of the scheduled MANUFACTURING date.

2.2 Pursuant to subsequent provisions of this AGREEMENT, BVL shall MANUFACTURE CUSTOMER’S requirements for commercial and clinical quantities of PRODUCT in finished packaged dosage form as defined in Attachment(s) A. Such PRODUCT shall meet the SPECIFICATIONS. Subject to BVL’S prior written consent, such consent not to be unreasonably withheld, CUSTOMER may, from time to time, change SPECIFICATIONS, which may be subject to new pricing provided by BVL to CUSTOMER.

2.3 Upon CUSTOMER’S request and at its expense BVL will perform development work on the PRODUCT(s) per outlined proposals that are submitted to CUSTOMER by BVL based on information provided to BVL by CUSTOMER and that are agreed upon by both parties in writing via a PURCHASE ORDER for the service referencing the Quotation Number provided.

2.4 Upon written request BVL will provide CUSTOMER with a written proposal to provide services for preparing summary reports of all BATCH MANUFACTURING during a calendar year to be used by CUSTOMER in preparing its Annual Report for the product. CUSTOMER will confirm its acceptance of proposal via a non-cancelable PURCHASE ORDER authorizing BVL to commence such service.

ARTICLE 3 — MANUFACTURE

3.1 BVL represents that it has obtained, and will maintain at its sole cost and expense throughout the term of this AGREEMENT, all relevant non PRODUCT specific approvals required (so far as they are made known to BVL) by the AGENCIES for its MANUFACTURING FACILITIES and that its MANUFACTURING FACILITIES conform, and will throughout the term of this AGREEMENT conform, to the applicable cGMP and conform, or will conform, to similar requirements of all AGENCIES having jurisdiction over the MANUFACTURE of the PRODUCT at any time during the term of this AGREEMENT. No change affecting any government submission or approval required for the PRODUCT, either foreign or domestic, shall be made without prior written consent of CUSTOMER and in accordance with the Quality Agreement Attachment E of this AGREEMENT between both parties. Further, BVL will, at its sole cost and expense, obtain and maintain all non PRODUCT specific licenses, permits, certifications and approvals from any other local state, or federal governmental authorities which are or may become necessary for the MANUFACTURE of the PRODUCT. No changes to BVL’S MANUFACTURING FACILITIES, equipment, testing procedures, validation, suppliers of raw materials and components, or documentation systems that are specific to the PRODUCT shall be made without the prior written consent of

Page 6 of 38          BVL — PHARMION Manufacturing and Service Agreement

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CUSTOMER, unless required by an AGENCY, in such case BVL will notify CUSTOMER.

3.2 BVL warrants that PRODUCT delivered to CUSTOMER pursuant to this AGREEMENT shall conform with the SPECIFICATIONS, and be in compliance with all applicable laws and regulations, and be in compliance with all regulatory requirements of AGENCIES, in the event of conflicting laws and regulations, compliance will be referenced by the then current 21 Code of Federal Regulation Sections 210, 211, et seq .

3.3 All documents and updates with regard to the MANUFACTURE of the PRODUCT which are required by any AGENCY shall be provided by BVL, and BVL shall submit to all inquiries and inspections by any such AGENCY. All PRODUCT specific documents provided by BVL to any AGENCY shall be provided to CUSTOMER, in advance if feasible, and in no case shall such documents be provided to CUSTOMER no later than five (5) business days after such documents are provided to any AGENCY. BVL shall promptly notify CUSTOMER of all scheduled AGENCY inspections concerning the PRODUCT, whereupon CUSTOMER shall have the right to be present for such inspection. Any and all redacted written communications from any AGENCY pertaining to or affecting the PRODUCT shall be provided to CUSTOMER no more than five (5) business days after such communications are received by BVL. CUSTOMER shall provide BVL with copies of all regulatory agency approvals for PRODUCT(S) for both clinical studies and commercial use, in addition CUSTOMER shall provide BVL with two year advance plans for all planned filings with any AGENCY.

3.4 For all routine commercial and/or special BATCH MANUFACTURE, BVL will conduct all MANUFACTURING and development operations required for the MANUFACTURE of the PRODUCT. Dispensing operations are to be performed using appropriate safety measures and containment techniques as dictated by current health, safety and environmental regulations, laws, AGENCY rules and regulations, and industry standards, provided such safety measures and containment techniques are harmonized.

ARTICLE 4 — VOLUMES & SECOND SOURCE

4.1 BVL shall supply CUSTOMER with CUSTOMER’S requirements of clinical and commercial PRODUCT in accordance with the terms of this AGREEMENT and for the TERRITORY. CUSTOMER will purchase from BVL and BVL will supply to CUSTOMER the quantities of the PRODUCT listed in Attachment A for the TERRITORY pursuant to the terms of the AGREEMENT and subject to the limitation in Article 5.

4.2 CUSTOMER appoints BVL as the principal supplier for its requirements of those PRODUCT(S) listed in ATTACHMENT A(s). Principle supplier shall mean that CUSTOMER will procure from BVL at least 65% of its total requirements for all TERRITORIES for the PRODUCT(s). CUSTOMER may qualify at its discretion and cost other Third-Party contractors as it deems necessary to ensure uninterrupted supply and/or regulatory approvals in its TERRITORY, such quantities will not be included in Attachment(s) A. BVL and CUSTOMER acknowledge that quantities provided in forecasts in accordance with this AGREEMENT shall represent at least 65% of the total demand for PRODUCT by CUSTOMER on an annual basis.

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CUSTOMER may qualify a second source of supply other than BVL and may secure PRODUCT(S) from that second source. However, no Confidential Information, as defined in Article 9, disclosed there under by BVL to CUSTOMER shall be disclosed to such second source, it being understood that any PRODUCT specific information contained in the Master Batch Record is not confidential to BVL and may be disclosed to the second source.

4.3 In addition CUSTOMER can qualify a second source principal supplier of PRODUCT(S) for TERRITORY if (i) BVL has materially failed to meet CUSTOMER’S orders for a period of more than three (3) consecutive months on accepted PO’s and said orders have been placed according to the terms of this AGREEMENT, or (ii) BVL has committed to an anticipatory breach of this AGREEMENT, or (iii) a Force Majeure has occurred which CUSTOMER reasonably believes will affect BVL’s ability to supply PRODUCT for a period of at least three (3) months (iv) BVL is non-Compliant with the regulations required to MANUFACTURE PRODUCT and is unable to cure such non-compliance. In the case of a Force Majeure, any of the above four types of occurrences or other material failure, both parties agree that CUSTOMER may use a second source as a principal supplier to supply all or some of the CUSTOMER’S needs until BVL is able to recommence production; provided that both parties shall agree upon a date to resume such production for CUSTOMER in an orderly manner. BVL shall assist CUSTOMER in transferring the MANUFACTURING Process to a Third-Party Contractor by providing technical assistance and documentation as necessary at mutually agreed upon fees provided.

ARTICLE 5 — Forecasts and Purchase Orders

5.1 Forecasts and Purchase Orders

CUSTOMER and BVL shall cooperate in estimating and scheduling the MANUFACTURING of PURCHASE ORDERS. The annual quantity contained in forecast will be divided into individual BATCH PURCHASE ORDERS evenly distributed over the course of any 12 months period, provided that the total quantities ordered by these PURCHASE ORDERS meets the requirements of Article 5. BVL and CUSTOMER may upon written mutual agreement plan production to accommodate varying monthly demand for the PRODUCT.

5.1.1 Five Year Planning Forecasts

CUSTOMER will determine its good faith projected five year PRODUCT MANUFACTURE needs, and the initial forecast for each PRODUCT will be included in Attachment A for each presentation of the PRODUCT. The format of the forecast will be outlined in Attachment A.
The first five-year forecast will be incorporated in Attachment A for each presentation of the PRODUCT to be MANUFACTURED under this AGREEMENT. The five-year forecast will be updated at least annually by CUSTOMER, which will be due by February 28 each year.

In the event the updated five-year forecast represents an increase of greater than [...***...] in any given year included in the prior year five-year forecast or [...***...] over the last year planned in the previous forecast, then the updated forecast will be subject to acceptance by BVL based on available capacity. BVL shall confirm its rejection of the quantities for the first two years of

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each annual update to the five year forecast which are in excess of such [...***...] increase by written notice to CUSTOMER within one hundred and eighty (180) days after receipt of CUSTOMER’s annual update to the 5 year forecast.

5.1.2 Rolling 12 Month Forecast

One Hundred and Twenty (120) days in advance of the first day of each calendar quarter CUSTOMER will provide BVL with a 12 month rolling forecast for all presentations of the PRODUCT(S) included in Attachment(s) A. The first three (3) months or first calendar quarter will be considered FIRM ORDERS for which CUSTOMER will provide PURCHASE ORDERS for each BATCH of production required. BATCHES are defined in the PRODUCT Description incorporated in Attachment(s) A.

5.1.3 Additional Services

In the event that CUSTOMER request or an AGENCY requires additional services in support of PRODUCT(S), BVL will provide CUSTOMER with a proposal for such services. BVL will provide such services only upon receipt from CUSTOMER of a binding PURCHASE ORDER referencing the proposal number provided for the required service.

5.3 It is BVL’S responsibility to maintain a sufficient inventory of BVL supplied COMPOSITION from mutually approved vendors, to meet the forecast. It is CUSTOMER’S responsibility to supply API or CUSTOMER COMPOSITION as indicated in Attachment(s) A. CUSTOMER will coordinate with BVL Materials Management Department according to BVL SOP’s on the specifics related to each shipment of API to BVL. BVL will be responsible to receive, sample, store and maintain the inventory at BVL. At the beginning of each month BVL will provide a standard monthly inventory report of CUSTOMER COMPOSITION. BVL will notify CUSTOMER IMMEDIATELY when the amount of CUSTOMER supplied materials available at BVL reaches the minimum quantity of material as agreed by both parties.

5.4 Manufacturing Capacity — Obligation of BVL MANUFACTURE and of CUSTOMER to Purchase PRODUCT(S)

5.4.1 BVL shall be obligated to MANUFACTURE PRODUCT only (i) in accordance with quantities forecasted by CUSTOMER in accordance with this Article 5, or (ii) as accepted by BVL for increased forecasts which require BVL’s acceptance pursuant to Section 5.1.1 hereof.

5.4.2 In the event that CUSTOMER does not order at least [...***...] of the quantities of the PRODUCTS forecasted by CUSTOMER for the [...***...] in the initial or subsequent five year forecast (as such forecasts may be modified from on an annual basis by CUSTOMER as provided in this Article 5), then BVL shall provide written notice to CUSTOMER of such failure. If CUSTOMER does not within [...***...] after the date of such notice place orders for a. quantity of the PRODUCTS necessary to satisfy at least [...***...] of such forecasted quantities, then CUSTOMER shall be obligated to pay BVL a fee [...***...]) for the quantities of the PRODUCTS not ordered during the relevant [...***...] period to satisfy such [...***...] requirement. Fees payable pursuant to this Section 5.4.2 shall be due on a monthly

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basis in installments in accordance with the schedule of deliveries of the PRODUCTS that should have occurred in accordance with the then-current forecast.

5.4.3 In the event of early termination of this AGREEMENT by CUSTOMER for any reason other than breach of this AGREEMENT by BVL then CUSTOMER shall be obligated to pay BVL a fee equal to [...***...] for quantities of the PRODUCTS each BATCH not ordered for the remaining [...***...] period up to the termination date of the AGREEMENT forecasted, but not MANUFACTURED during that period.

5.4.4. The payment of fees by CUSTOMER to BVL pursuant to this Section 5.4 shall not apply (i) if CUSTOMER is entitled to qualify a supplier pursuant to Section 4.3 hereof, or (ii) BVL is in breach of this Agreement.

ARTICLE 6 — PRICE & PAYMENT

6.1 Price and Shipment

6.1.1 The prices to be paid by CUSTOMER for the services and/or quantities of PRODUCT purchased pursuant to Article 5 of this AGREEMENT are specified in Attachment A(s) — PRODUCT Supplements or in quotations provided to CUSTOMER and confirmed by CUSTOMER’S PURCHASE ORDERS.

6.1.2 All prices are FCA (Incoterms 2000), Ben Venue FACILITIES.

6.1.3 CUSTOMER is responsible for all shipment cost, shipping charges will be paid directly by CUSTOMER.

6.2 Price Adjustments

6.2.1 Annual Price Adjustments

Prices are subject to adjustment on an annual basis by BVL for the next succeeding year. BVL shall notify CUSTOMER of price adjustments for each presentation of the PRODUCT included in Attachment(s) A by October 31 of each year for the following year beginning Jan 1.
The Annual Price adjustment shall be automatically calculated [...***...] for the Producers Price Index for Pharmaceutical commodity code [...***...].

In the event that average for the Producers Price Index for Pharmaceutical commodity code [...***...] is negative in any year, then the price will remain unchanged for the subsequent year.

6.2.2 Price Adjustment on PRODUCT or Process SPECIFICATION Changes

BVL reserves the right to adjust prices based on changes to the SPECIFICATIONS for the PRODUCT or Process regardless of the event or action causing the SPECIFICATIONS change, including but not limited to changes in inspection, packaging and labeling. All changes to the

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SPECIFICATIONS and prices shall be mutually agreed to in writing by BVL and CUSTOMER.

6.2.3 Prices for Developmental Services and Developmental MANUFACTURE

Pricing for Developmental Services and Developmental MANUFACTURE will be provided to CUSTOMER in written proposals provided to CUSTOMER by BVL based on the services requested. CUSTOMER will confirm acceptance of the proposals by way of issuance of a PURCHASE ORDER referencing the quotation number provided on the proposal.

6.3 Payment

The purchase price for PRODUCT or services shall be paid to BVL no later than thirty (30) days after the date of BVL’S invoice to CUSTOMER. BVL will issue an invoice at such time that BVL’S Quality Control Department has completed its testing, found the PRODUCT suitable to be shipped and has shipped the documents identified in Attachment D or upon completion of other services as described in proposals. CUSTOMER may request that a BATCH be shipped before CUSTOMER release i.e., shipment in Quarantine. In the event a Quarantine shipment is made BVL will invoice on the shipment day. CUSTOMER will notify BVL in writing that a lot can be shipped in Quarantine and BVL will make all effort to honor this request.

In the event of nonpayment of balances without reasonable cause within forty-five (45) days of the invoice date, CUSTOMER agrees to pay BVL a monthly late payment charge equal to one and one-half percent (1.5%) of the unpaid balance. Should unpaid balances extend beyond 60 days after an invoice has been issued, BVL reserves the right to require CUSTOMER to pay one-half (1/2) of the price for each BATCH at the time of PURCHASE ORDER issuance and the remaining one-half (1/2) of the price prior to the delivery of those BATCHES until all unpaid balances, including interest charges, have been paid. Should unpaid balances extend beyond 90 days BVL reserves the right to terminate this AGREEMENT unless cured by CUSTOMER within 30 days of notice, or may cease production and/or service performance until cured. CUSTOMER notify BVL in writing within 30 days of the invoice date that CUSTOMER is disputing payment of the invoice and the reason for such dispute.

6.4 Payment for Non Validated Services or Production and Obsolete Materials

CUSTOMER will be required to pay BVL for all PRODUCT MANUFACTURED during any period when any MANUFACTURING Process and Testing Procedures have not been fully developed and validated, regardless of whether the PRODUCT is accepted or rejected by the CUSTOMER unless such rejection is due to the gross negligence of BVL.

CUSTOMER will be required to pay BVL for all packaging components and raw materials which were purchased by BVL for use specifically in the MANUFACTURE of the PRODUCT covered by this AGREEMENT should any of the BVL supplied COMPOSITION become obsolete due to the action of CUSTOMER or any AGENCY.

6.5 Cancellation Fees

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CUSTOMER will pay a cancellation fee equal to [...***...] of the price of the BATCH if cancellation or postponement is made four (4) weeks in advance of the scheduled MANUFACTURING date. If cancellation or postponement is made less than four (4) weeks in advance of the scheduled MANUFACTURING date, CUSTOMER is responsible for payment of the full price of the scheduled MANUFACTURE of the BATCH(ES).

6.6 Storage Fees

CUSTOMER is responsible for storage charges as specified in Attachment C for PRODUCT stored for more than one month beyond BVL’S release. Short-term storage of PRODUCT in BVL’S warehousing FACILITIES beyond one month must receive prior approval from BVL. Such approval will be granted only on a space-available basis.

6.7 Stability Program

During the term of the this AGREEMENT and upon CUSTOMER request and BVL agreement, BVL will conduct and support, at CUSTOMER’S expense, all stability studies in progress or planned (e.g. NDA annual stability studies) as of the Effective Date until such studies are concluded. CUSTOMER shall be responsible for all costs of conducting any stability studies. Stability Program cost will be covered in a separate quotation provided by BVL to CUSTOMER based on the agreed upon protocol. CUSTOMER may also make arrangements for stability work to be performed at a facility other than BVL at CUSTOMERS expense.

6.8 Inspection, Packaging and Labeling.

CUSTOMER shall be responsible for and bear all costs associated with the design, development, quality release and Regulatory Approval of all labeling and packaging materials for PRODUCT. CUSTOMER shall perform its design, development, quality release and Regulatory Approval obligations hereunder in a timely manner sufficient for BVL to satisfy its MANUFACTURE obligations hereunder for the PRODUCT. Labeling and packaging developed by CUSTOMER will conform to labeling and packaging SPECIFICATIONS mutually agreed to in writing. Any change in the inspection, labeling and packaging SPECIFICATIONS will be evaluated by BVL for cost impact and BVL reserves the right to issue a price quotation pursuant to Article 6.

ARTICLE 7 — QUALITY

7.0 All items relating to the Quality Operations are incorporated in Attachment E — Quality Agreement.

ARTICLE 8 — INDEMNIFICATION

8.0. CUSTOMER hereby holds harmless and indemnifies BVL its employees, officers and affiliates against any and all claims, losses, liabilities, lawsuits, proceedings, costs and expenses, including, without limitation, reasonable attorneys’ fees, and the cost of recalls, resulting from, arising out of or in connection with injuries and/or death resulting from, arising out of or in connection with any use of the PRODUCT, including, without limitation, claims based on

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negligence, warranty, strict liability or any other theory of PRODUCT liability or violation of any applicable laws or regulations, (collectively, “Claims”) except to the extent that such injuries or violations were the result of BVL’S negligence or willful misconduct in the MANUFACTURE of PRODUCT according to the terms of this AGREEMENT. If any Claim shall be made against BVL as to which this indemnification applies, BVL shall IMMEDIATELY inform CUSTOMER thereof of any claim which will be brought against BVL and/or CUSTOMER and in such case BVL shall not take any step nor conduct any legal proceeding before consulting and obtaining CUSTOMER’S written confirmation. At BVL’S request, CUSTOMER and/or its insurers shall assume direction and control of the defense against such claim, including, without limitation, the settlement thereof at the sole option of CUSTOMER or its insurer. BVL may, at its option and expense, have its own counsel participate in any proceeding, which is under the direction and control of CUSTOMER. BVL shall cooperate with CUSTOMER and its insurer in the disposition of any such matters. In addition, BVL may at any time relieve CUSTOMER of its responsibilities under this paragraph 8.0 as to any other claim.

8.1 BVL hereby holds harmless and indemnifies CUSTOMER against any and all Claims resulting from, arising out of or in connection with negligence or willful misconduct of BVL in the MANUFACTURE of PRODUCT according to the terms of this AGREEMENT. If any claims shall be made against CUSTOMER as to which this indemnification applies, CUSTOMER shall IMMEDIATELY inform BVL thereof and at CUSTOMER’S request, BVL and/or its insurers shall assume direction and control of the defense against such claim, including, without limitation, the settlement thereof at the sole option of BVL or its insurer. CUSTOMER may, at its option and expense, have its own counsel participate in any proceeding, which is under the direction and control of BVL. CUSTOMER shall cooperate with BVL and its insurer in the disposition of any such matters. In addition CUSTOMER may at any time relieve BVL of its responsibilities under this paragraph as to any other claim.

8.2 CUSTOMER and BVL will, at their own cost and expense, obtain and maintain in full force and effect, during the term of this AGREEMENT, Commercial General Liability insurance, written on the standard approved Policy Form, and Blanket Contractual Liability, with limits of liability of not less than $5,000,000 Combined Single Limit Bodily Injury and Property Damage covering its duties and obligations under the AGREEMENT. Said policy or policies of insurance shall include the other party as an Additional Insured. The limit of liability may be provided through a combination of Primary, Excess/Umbrella or Self-Insured Retention. In addition both parties shall maintain Workers Compensation Insurance.

8.3 Reimbursement for Loss of Customer Supplied COMPOSITION

BVL agrees to reimburse CUSTOMER up to a maximum of [...***...] per BATCH pro-rated over the usable portion of the BATCH if applicable, for any loss of CUSTOMER supplied COMPOSITION (API or components / excipients) for each BATCH that does not meet SPECIFICATIONS and therefore can not be released, provided that the loss of such materials can be proven to be caused by, a.) the failure of BVL to follow procedures, B.) or BVL is negligent, or C.) there is willful misconduct on the part of BVL. In addition to this payment, BVL will be responsible for all MANUFACTURING fees incurred during the MANUFACTURE of the failed BATCH, pro-rated over the usable portion of the BATCH

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if applicable.

ARTICLE 9 — CONFIDENTIALITY

9.1 The terms of this Confidentiality section are mutual between BVL and CUSTOMER as either a Disclosing Party or Receiving Party as the case may be.

9.2 The Disclosing party will provide to the Receiving party certain information including but not limited to, data, reports, patents, patent applications, trade secrets, or the like concerning any scientific, technical, financial, trade, or business information applicable to the PRODUCT, including the contents of this AGREEMENT, the Confidential Information. The Receiving party agrees to protect and keep confidential all Confidential Information and all notes of information obtained pursuant to this Agreement. The Receiving Party agrees that it shall limit its use of the Confidential Information to performing certain services as mutually agreed to in writing by the Parties. The Receiving Party also agrees that it shall not use any Confidential Information, directly or indirectly, for its own benefit or that of any person, firm or corporation other than the Disclosing Party. All information exchanged regardless of format shall be considered Confidential Information.

9.3 The Receiving Party agrees and acknowledges that the Confidential Information to be disclosed to it pursuant to this Agreement constitutes unique and valuable commercial and proprietary information of the Disclosing Party. Accordingly, the Receiving Party shall not duplicate, disclose, or discuss any such Confidential Information to or with third parties, without the prior written consent of the Disclosing Party. Except that the Receiving Party may disclose Confidential Information received by it under this Agreement only to those of its directors, officers, employees, agents, and consultants who have a need to know such Confidential Information in the course of the performance of their duties with respect to the purposes of this Agreement and who are bound by written agreement to protect the confidentiality of such Confidential Information in accordance with the terms hereof.

9.4 Notwithstanding anything to the contrary herein, the Receiving Party shall not be obligated to maintain the confidentiality of any information provided to it under this Agreement which:

a. Is already in the public domain at the time of disclosure to it, or
b. at any time after disclosure to the Receiving Party becomes public knowledge through no fault of the Receiving Party; or
c. is disclosed to the Receiving Party by any third party who is free to make such disclosure; or
d. is disclosed by the Receiving Party with the prior written consent of the Disclosing Party, or
e. is information which the Receiving Party can establish was in it’s possession prior to
disclosure or was subsequently and independently developed by employees of or on behalf of
the Receiving Party without use, direct or indirect, of Confidential Information protected by
this Agreement; or
f. is required to be disclosed pursuant to a requirement of law, subject to provisions outlined in Item 9.8 of Article 9 of this agreement.

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9.5 The confidential undertakings and agreements of the Receiving Party shall survive termination or expiration of this AGREEMENT. Promptly upon termination of this AGREEMENT and request of the Disclosing Party, the Receiving Party shall return to the Disclosing Party all originals and copies of documents or written materials (including electronic notes or documents) of the Disclosing Party containing any Confidential Information and any notes or written materials created by the Receiving Party or summaries thereof containing any Confidential Information of the Disclosing Party or other Confidential Information in its possession. This AGREEMENT shall not be construed as a grant of any right or license to the Receiving Party with respect to Confidential Information or the Disclosing Party’s Product or as a requirement to either party to enter into any further arrangement with respect to Confidential Information or the Disclosing Party’s Product.

9.6 The confidentiality obligations of this AGREEMENT shall be maintained for a period of five years beyond the expiration or termination of this AGREEMENT.

9.7 Provided all obligations of this agreement are maintained, the parties understand and acknowledge that the other may now market or have under development products which are competitive with products now offered or which may be offered by the other, and the parties’ communications hereunder will not serve to impair the right of other to develop, make, use, procure, or market products or services now or in the future which may be competitive to those offered by the other party nor for the parties to disclose any planning or other information to the other.

9.8 Notwithstanding any provision herein to the contrary, in the event that any Receiving Party hereafter becomes obligated by mandatory applicable law, regulatory rule or judicial or administrative order to disclose Confidential Information or any portion thereof, to any third party, governmental authority or court, the Receiving Party shall IMMEDIATELY notify the Disclosing Party thereof of each such requirement and identify the Confidential Information so required thereby, so that the Disclosing Party may seek an appropriate protective order or other remedy with respect to narrowing the scope of such requirement and/or waive Receiving Party’s compliance with the provisions of this AGREEMENT. The parties will consult with each other and cooperate fully on the provisions of this Agreement to be redacted in any filings made by CUSTOMER with the United States Securities and Exchange Commission or as otherwise required by applicable law.

9.9 Both parties agree that should this AGREEMENT be breached, money damages would be inadequate to remedy such a breach. As a result, the non-breaching party shall be entitled to seek, and a court of competent jurisdiction may grant, specific performance and injunctive or other equitable relief as a remedy for any such breach of this Agreement. Such remedy shall be in addition to all other remedies, including money damages, available to a non-breaching party at law or in equity.

9.10 Upon request, each party shall return all copies of the Confidential Information to the other party, except for a single copy to be kept by its legal counsel in its confidential file for the

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purpose of determining compliance with its obligations of this agreement.

9.11 Neither party will issue any press release or other public announcement relating to any activities involving the other party without the prior written consent of the other party, except where such announcements are required by law or regulation. The parties will use all reasonable efforts to consult with the other and cooperate with respect to wording of any such announcement. PRODUCT labeling (primary, secondary, insert) and government filings may indicate that the PRODUCT has been MANUFACTURED for CUSTOMER by BVL.

9.12 New techniques, inventions, processes and know-how (hereinafter “New Developments”) that are useful in the MANUFACTURING, using or selling of the PRODUCT may be developed by BVL during the performance of this AGREEMENT. To the extent CUSTOMER’S Confidential Information is the principle basis for any such New Development, then CUSTOMER shall have ownership of such New Development, and BVL shall have a non-transferable, non-exclusive, royalty-free, worldwide, perpetual, license to make, use and sell New Development so long as BVL’S use does not compromise CUSTOMER’S Confidential Information. Notwithstanding the grant of such license, BVL shall not use such New Development or CUSTOMER’S Confidential Information to compete, or assist third parties to compete directly with CUSTOMER in the sale of PRODUCT. BVL agrees to cooperate in the filing and prosecution of all New Development patent applications owned by CUSTOMER, but CUSTOMER shall bear all associated expenses. As to New Developments that may be developed by BVL during the performance of this AGREEMENT and do not involve CUSTOMER’S Confidential Information, BVL grants CUSTOMER a royalty-free, irrevocable, worldwide, transferable and sub-licensable non-exclusive license to make, have made, use or sell the New Development in connection with PRODUCT.

ARTICLE 10 — TERM

10.1 This AGREEMENT shall become effective on the date first stated above and, except as otherwise provided herein, shall be in effect for an initial term of five (5) years. So long as this AGREEMENT is in force, it shall be automatically renewed for additional terms of two (2) years each, unless one party shall elect to terminate this AGREEMENT by notice thereof to the other party in writing at least twenty-four (24) months prior to expiration of the then existing term.

10.2 Each party agrees to meet within [...***...] prior to the end of the [...***...] of this AGREEMENT, and at the end of each subsequent [...***...] period thereafter, to review the terms of this AGREEMENT and to make any changes which both parties agree are required to: (i) be in compliance with cGMPs and legal & business understandings that may have occurred during the interim; (ii) accommodate changing PRODUCT and MANUFACTURING demands; and (iii) any other changes that may be required in the development or MANUFACTURE of the PRODUCT. This Review Meeting will have no other effect on the other terms of Article 10.

10.3 Either party may terminate this AGREEMENT for a material breach by the other party by giving the breaching party written notice, specifying the breach relied on, and giving the breaching party three (3) months to cure such breach. If the default has not been cured at the end of the three (3) month period, then, upon notice thereof to the breaching party by the other, this

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AGREEMENT shall terminate. Termination for breach will have no effect on performance obligations or amounts to be paid which have accrued up to the effective date of such termination.

10.4 In the event of any proceedings, voluntary or involuntary, in bankruptcy or insolvency, by or against CUSTOMER or BVL, or the appointment with or without the parties’ consent of a receiver for either party, the other party shall be entitled to terminate this AGREEMENT without any liability whatsoever. Such termination shall not effect any claim for damages available to the terminating party.

10.5 In event of termination, transition will be conducted in such a manner as to not cause inconvenience to either party. Should termination be initiated by BVL, BVL shall notify CUSTOMER in writing of its desire to so terminate; provided, however, that termination by BVL shall not be effective until CUSTOMER has located and arranged for continuation of MANUFACTURE of PRODUCT with another supplier, and further provided that such termination procedure shall not extend beyond two (2) years from BVL’S written notice of termination to CUSTOMER. The parties will cooperate during such period to continue any such ongoing project. In the event of notice of such early termination by BVL, BVL shall perform such functions reasonably necessary or required in connection with the orderly wind-down of any active Project as required by the terms of this AGREEMENT or federal, state, or local laws or regulations, including applicable AGENCY regulations. In the event of termination by BVL, CUSTOMER shall pay BVL for MANUFACTURING and other services completed up to the actual date of such termination within thirty (30) days of CUSTOMER’S receipt of all results, reports, data, samples, and other deliverables to be provided pursuant to this AGREEMENT, reduced by all prior payments made by CUSTOMER for said services and production. In the event the funds received by BVL prior to such termination exceed costs incurred to the date of termination, BVL shall refund the difference to CUSTOMER within thirty (30) days after the effective date of termination.

10.6 CUSTOMER shall have the right to terminate this AGREEMENT upon twenty four (24) months written notice to BVL in the event CUSTOMER is purchased by, or CUSTOMER enters into a licensing, partnership, joint venture, or marketing and distribution AGREEMENT with, a third party which has the interest and capability to supply finished parenteral dosage forms for the PRODUCT, or with ninety days written notice when a AGENCY does not license the PRODUCT for marketing, the AGENCY withdraws marketing approval, or CUSTOMER otherwise terminates the commercial sale of PRODUCT in all TERRITORIES. If CUSTOMER terminates pursuant to either provision, CUSTOMER shall reimburse BVL for any purchases of special materials used for PRODUCT that cannot be canceled, unless these materials can be utilized by BVL on other projects. The reimbursement shall be made within thirty (30) days upon receipt by CUSTOMER of an invoice itemizing the material costs. BVL agrees to transfer to CUSTOMER any materials for which CUSTOMER has paid under this provision. Termination under this provision shall have no effect on payment obligations that have accrued up to the effective date of termination. CUSTOMER shall have no further obligations to BVL.

10.7 BVL may elect to terminate this AGREEMENT under the circumstances set forth below after giving CUSTOMER notice and an opportunity to cure in accordance with the provisions of

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Section 10.3 if (i) CUSTOMER fails to provide a Forecast and PURCHASE ORDERS at a required time; (ii) CUSTOMER fails to pay undisputed invoices within 120 days of invoice date. Termination under this option shall have no effect on the parties’ obligations that were incurred prior to termination.

ARTICLE 11 — NOTICES

Any and all notices or other communications required or permitted under this AGREEMENT must be in written form, and be deemed to have been given upon receipt of telefax to the notified party (followed by hard copy of documents) addressed to the party to be notified as listed in the beginning of this AGREEMENT, or to such other address as either party shall have heretofore specified in a notice to the other in the manner herein provided.

If to BVL:

Ben Venue Laboratories, Inc.
300 Northfield Road
Bedford, Ohio 44146
Attn: General Manager, Contract Manufacturing Services

FAX 440-439-6398

With Copy To:

Ben Venue Laboratories, Inc.
300 Northfield Road
Bedford, Ohio 44146
Attn: President & COO

FAX 440-439-6398

If to CUSTOMER:

Pharmion Corporation
2525 28^th Street Suite 200
Boulder, CO 80301
Attn: Vice President and General Counsel

FAX 720-5649191

With Copy To:

Pharmion Corporation
Attn: Vice President Global Manufacturing
9900 W. 109^th Street
Overland Park, KS 66210

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FAX 913-266-0394

ARTICLE 12 — WAIVER

No failure on the part of either party to exercise, and no delay in exercising, and no course of dealing with respect to, any right, power or privilege under this AGREEMENT shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege under this AGREEMENT preclude any other or further exercise thereof or the exercise of any other right, power or privilege.

ARTICLE 13 — ASSIGNMENT OF AGREEMENT

Neither this AGREEMENT, nor any rights or obligations hereunder, may be assigned by either party hereto, EXCEPT to an affiliate or a purchaser of all or substantially all of the stock or assets of either one of the parties, without the prior written consent of the other party, which shall not be unreasonably withheld. Any subsequent assignee, purchaser, or transferee shall be bound by the terms of this AGREEMENT. Any attempted assignment that does not comply with the terms of this Article 13 shall be void and of no further force or effect.

ARTICLE 14 — GOVERNING LAW

This AGREEMENT will be governed and construed in accordance with the laws of the State of Delaware.

ARTICLE 15 — FORCE MAJEURE

No party shall be liable for a failure or delay in performing any of its obligations under this AGREEMENT if, but only to the extent that such failure or delay (directly or indirectly) is due to causes beyond the reasonable control of the affected party, including (i) acts of God; (ii) fire, explosion, or unusually severe weather; (iii) war whether declared or undeclared, invasion, riot or other civil unrest; (iv) enactment or change of laws and regulations by any AGENCY or Government, conflict of laws or regulations by any AGENCY or government, orders, restrictions, actions, embargoes or blockages; (v) national or regional emergency; and (vi) injunctions, strikes, lockouts, labor trouble or other industrial disturbances (regardless of the reasonableness of the demands of labor); (vii) acts of terrorism, provided that the party affected shall PROMPTLY notify the other of the force majeure condition and shall exert reasonable efforts to eliminate, cure or overcome any such causes and to resume performance of its obligations as soon as possible.

ARTICLE 16 — TITLE OF GOODS

Title to and risk of loss of the bulk API and waste, in process and in PRODUCT, shall remain with CUSTOMER.

ARTICLE 17 — DEBARMENT

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Neither party shall use in any capacity persons, or the services of, persons that are debarred, are on the Debarment List, or that have been convicted of actions that could lead to debarment as described in Section 306(a) and (b) of the Federal Food, Drug, and Cosmetic Act.

ARTICLE 18 — ENTIRE AGREEMENT

This AGREEMENT, together with the Attachments identified herein that shall form part of this AGREEMENT, constitutes the entire understanding between the parties and is intended as a final expression of their agreement and as a complete statement of terms and conditions thereof, and shall not be amended except in writing signed by an authorized representative of each party and specifically referring to this AGREEMENT. If there is any inconsistency between this document and any other writings, which are referred to or are incorporated herein, or any PURCHASE ORDERS, invoices, or other documents relating to the PRODUCT, the terms and conditions of this document shall take precedence. This AGREEMENT supersedes any previous agreements or arrangements between the parties and any customary practice of the parties at variance with the terms hereof.

ARTICLE 19 — SEVERABILITY

In the event any provision of this AGREEMENT is held to be invalid or unenforceable, the valid or enforceable portion thereof and the remaining provisions of this AGREEMENT will remain in full force and effect.

ARTICLE 20 — INDEPENDENT CONTRACTOR

Neither party shall have the right to control the activities of the other in the performance of this AGREEMENT and each shall perform as an independent contractor, and nothing herein shall be construed to be inconsistent with that relationship or status. Under no circumstances shall the employees or agents of one party be considered employees or agents of the other. This AGREEMENT shall not constitute, create, or in any way be interpreted as a joint venture, partnership, or formal business organization of any kind.

ARTICLE 21 — AMENDMENTS

No provision of this AGREEMENT or the Attachments attached hereto may be modified or supplemented, except by an instrument in writing signed by BVL and CUSTOMER.

ARTICLE 22 — HEADINGS

The Article headings appearing herein are included only for the convenience of reference and are not intended to affect the interpretation of any provision of this AGREEMENT.

ARTICLE 23 — REVIEW BY LEGAL COUNSEL

Each of the parties agrees that it has read and had the opportunity to review this AGREEMENT

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with its legal counsel. Accordingly, the rule of construction that any ambiguity contained in this AGREEMENT shall not be construed against the party or its representative who drafted this AGREEMENT or any portion thereof.

ARTICLE 24 — RECALL

In the event (a) any AGENCY or governmental authority issues a request, directive, or order that PRODUCT be recalled, or (b) a court of competent jurisdiction orders such a recall, or (c) the parties reasonably determine after consultation with each other that PRODUCT should be recalled (Recall), the parties shall take all appropriate corrective action. CUSTOMER shall also retain the right to conduct a PRODUCT recall for safety reasons CUSTOMER deems significant. In the event that PRODUCT is recalled or that CUSTOMER is required to disseminate information regarding PRODUCT(S) covered by this AGREEMENT, CUSTOMER shall so notify BVL and, not later than may be required to permit CUSTOMER to meet such obligations, BVL shall provide CUSTOMER with such assistance in connection with such recall as may reasonably be requested by CUSTOMER. BVL will only be financially responsible for the costs of any recall for which its actions or negligence are directly responsible and in accordance with the terms and limits specified in Section 8.3 BVL shall not be responsible for any loss of profit, sales or consequential damages due to recalls.

ARTICLE 25 — ENGLISH LANGUAGE

This AGREEMENT, all schedules, attachments, and exhibits hereto, and all reports, documents and notices required hereunder, referred to herein or requested by the parties, in connection with this AGREEMENT shall be written in the English language. Except as otherwise required by applicable law, the binding version of all of the foregoing shall be the English version.

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IN WITNESS WHEREOF, the parties hereto have executed this AGREEMENT by their duly authorized representatives as of the dates set forth below:

For:      Ben Venue Laboratories, Inc.
Signature:	/s/ THOMAS MURPHY	Date:	12-19-05
	Thomas Murphy
	President and COO
For:      CUSTOMER
Signature:	/s/ JUDITH HEMBERGER	Date:	12-14-05
Name:	Judith Hemberger
Title:	COO/Ex. V.P.

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Attachment A1

1.) Product Descriptions

BVL Project Code: [...***...] Pharmion Project Code:

PRODUCT Description (INCLUDING
PACKAGING DESCRIPTION FOR EACH						BATCH
END ITEM NUMBER FROM THE SAME	BVL End Item		BVL Nude Vial		CUSTOMER	Size/Order
NUDE VIAL)	Number		Number		Item Number	Quantity
[...***...]		[...***...]		[...***...]			[...***...]
[...***...]		[...***...]		[...***...]			[...***...]
[...***...]		[...***...]		[...***...]			[...***...]
[...***...]		[...***...]		[...***...]			[...***...]

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Attachment A1

Azacitidine

2.) Azacitidine PRODUCT TESTING SPECIFICATIONS

PRODUCT Description (INCLUDING PACKAGING					BVL Final
DESCRIPTION FOR EACH END ITEM NUMBER FROM	BVL End Item		BVL Nude		Product Specification
THE SAME NUDE VIAL)	Number		Vial Number		Number
Azacitidine, 100mg lyo in a 30ml vial, labeled vial in unit carton with insert, 14 unit cartons shrink wrapped		[...***...]		[...***...]		[...***...]
Azacitidine, 100mg lyo in a 30ml vial, unlabeled bulk packaged		[...***...]		[...***...]		[...***...]

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Attachment A1

Azacitidine

3.) Materials supplied by Pharmion and BVL

For: Azacitidine, 100mg lyo in a 30ml vial, labeled vial in unit carton with insert, 14 unit cartons shrink wrapped BVL End Item Number [...***...]

BVL Item Number	ITEM DESCRIPTION	SUPPLIED BY CUSTOMER	SUPPLIED BY BVL
[...***...]	[...***...]		X
[...***...]	[...***...]		X
[...***...]	[...***...]		X
[...***...]	[...***...]		X
[...***...]	[...***...]	X
[...***...]	[...***...]		X
[...***...]	[...***...]		X
[...***...]	[...***...]		X
[...***...]	[...***...]		X
[...***...]	[...***...]		X

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Attachment A1

Azacitidine

3.) Materials supplied by Pharmion and BVL

For: Azacitidine, 100mg lyo in a 30ml vial, unlabeled bulk packaged
BVL End Item Number [...***...]

BVL Item Number	ITEM DESCRIPTION	SUPPLIED BY CUSTOMER	SUPPLIED BY BVL
[...***...]	[...***...]		X
[...***...]	[...***...]		X
[...***...]	[...***...]		X
[...***...]	[...***...]		X
[...***...]	[...***...]	X
[...***...]	[...***...]		X
[...***...]	[...***...]		X
[...***...]	[...***...]		X

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Attachment A1

Azacitidine

4.) FORECAST

4.1 Five Year Forecast — to be submitted by Pharmion to BVL on an annual basis by February 28 each year for the following 5 years (for example by February 28, 2005 BVL will receive from Pharmion the 5 year forecast for 2006 through 2010), BVL will supply Pharmion with an electronic copy of the five year forecast form. The following represents the understandings of the parties with respect to the estimated volumes to be associated with this AGREEMENT for the next five years.

		BATCH
PRODUCT	BVL End Item	Size/Order	2005	2006	2007	2008	2009
Description	Number	Quantity	Batches	Batches	Batches	Batches	Batches
Azacitidine, 100mg lyo in a 30ml vial, labeled vial in unit carton with insert, 14 unit cartons shrink wrapped	[...***...]	[...***...]	[...***...]	[...***...]	[...***...]	[...***...]	[...***...]
Azacitidine, 100mg lyo in a 30ml vial, labeled vial in unit carton with insert, 14 unit cartons shrink wrapped	[...***...]	[...***...]
Azacitidine, 100mg lyo in a 30ml vial, unlabeled bulk packaged	[...***...]	[...***...]		[...***...]	[...***...]	[...***...]	[...***...]
Azacitidine, 100mg lyo in a 30ml vial, unlabeled bulk packaged	[...***...]	[...***...]

Note: Above forecast is based on annual vial requirements assuming a theoretical [...***...] batch. Annual vial requirements can be produced with a smaller vial batch size provided that the equivalent number of total vials are delivered annually.

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Attachment A1

Azacitidine

4.2 Rolling 12 month Forecast — to be provided Quarterly by Pharmion to BVL. BVL will provide Pharmion with an electronic copy utilizing Microsoft Excel of the following form for submission, which will include 12 monthly periods for forecasting. Pharmion shall provide the rolling 12 month forecast 120 days in advance of the first day of the next Calendar Quarter.

The following is for representation of the format only.

		Batch
PRODUCT	BVL End Item	Size/Order
Description	Number	Quantity	Month 1	Month 2	Month 3	Month 4	Month 5
Azacitidine, 100mg lyo in a 30ml vial, labeled vial in unit carton with insert, 14 unit cartons shrink wrapped	[...***...]	[...***...]
Azacitidine, 100mg lyo in a 30ml vial, labeled vial in unit carton with insert, 14 unit cartons shrink wrapped	[...***...]	[...***...]
Azacitidine, 100mg lyo in a 30ml vial, unlabeled bulk packaged	[...***...]	[...***...]
Azacitidine, 100mg lyo in a 30ml vial, unlabeled bulk packaged	[...***...]	[...***...]

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Attachment A1

Azacitidine

5.) Pricing for Azacitidine

BATCH PRICING
     Effective From [...***...]

	BVL Nude		BATCH	Price Per BATCH for
	Vial	BVL End Item	Size/Order	End Item with No Split
PRODUCT Description	Number	Number	Quantity	Pack-outs
Azacitidine, 100mg lyo in a 30ml vial, labeled vial in unit carton with insert, 14 unit cartons shrink wrapped	[...***...]	[...***...]	[...***...]	[...***...]
Azacitidine, 100mg lyo in a 30ml vial, labeled vial in unit carton with insert, 14 unit cartons shrink wrapped	[...***...]	[...***...]	[...***...]	[...***...]
Azacitidine, 100mg lyo in a 30ml vial, unlabeled bulk packaged	[...***...]	[...***...]	[...***...]	[...***...]
Azacitidine, 100mg lyo in a 30ml vial, unlabeled bulk packaged	[...***...]	[...***...]	[...***...]	[...***...]

All other configurations/quantities/ packaging splits will be quoted separately upon request by Pharmion to BVL. The above prices are for full BATCH quantities packaged as described.

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Attachment B

Information to be provided on each Purchase Order

1.	BVL end item number
2.	BVL PRODUCT description
3.	BATCH Size in vials from Quotation or as described in Attachment A
4.	Number of Batches
5.	Delivery Date (Date for BVL to release the lot and deliver product & batch record)
6.	BVL Quotation Number if Product/Service not included in Attachment A, or Reference this AGREEMENT Date
7.	Delivery Address
8.	Shipping requirements & Instructions (temperature, dedicated trucks, preferred carrier, overnight etc.) Contact name for Preferred Carrier, Temperature Monitors, Ship on BVL Release or Hold for Customer Authorization to Ship.
9.	Billing Address
10.	Special Instructions for Specific Batch
		(Examples)
		“Annual Stability Batch”
		“Process Validation Batch”
		“Special Sampling Instructions mutually agreed to and included in Batch Record”
11.	Customer Lot# and Expiration Date if Applicable

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Attachment C

MONTHLY STORAGE FEES

Effective through [...***...]

BVL has limited storage capacity. Therefore, customers are expected to have their PRODUCT(S) shipped to them no later than 30 days after BVL Quality Operations has released their PRODUCT and has shipped the documents identified Attachment D to CUSTOMER. Should unforeseen events lead to a request by a customer for storage beyond this 30 day grace period, the customer must request such storage by BVL in writing at least 15 days before the initial 30 day grace period has expired. The request will be granted only if BVL has sufficient storage capacity to accommodate the request. Then, the following terms will apply.

Monthly storage fees are assessed on a per lot basis, and begin to accrue 30 days following the BVL release date of the BATCH by BVL’S Quality Operations Dept. BVL will request a separate PURCHASE ORDER be issued for the storage charges. These charges listed below will be reviewed and updated annually.

Monthly Storage Charge — per square foot per month

Room Temperature Storage.	$	[...***...]
Refrigerated Storage	$	[...***...]
Freezer Storage	$	[...***...]

Minimum Storage Charge — per lot per month

Room Temperature Storage.	$	[...***...]
Refrigerated Storage	$	[...***...]
Freezer Storage	$	[...***...]

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Attachment D

Documents to be supplied by BVL to Pharmion as part of BATCH release

1.)	BVL Certificate of Analysis
2.)	BVL Certificate of Compliance
3.)	Copies of the executed BATCH Record
4.)	Raw Material C of A’s generated by BVL used in the lot (Part of Batch Record)
5.)	Reports documenting deviations and investigations (Part of batch record)
6.)	Out Of Specification Results and investigations (Part of batch record)

NOTE: Raw analytical data, Environmental data (Airborne particulates, Pressure differential between MANUFACTURING rooms and the other data BVL is monitoring) is not copied or otherwise provided to a customer except that these data can be inspected as part of scheduled or for cause audits by the customer.

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ATTACHMENT E

QUALITY AGREEMENT

By and between Ben Venue Laboratories Inc. and Pharmion Inc.

DEFINITIONS SHALL BE THE SAME AS THOSE CONTAINED IN THE MANUFACTURING AND SERVICE AGREEMENT.

E.1 Licensure of PRODUCT(S) in TERRITORIES

CUSTOMER is responsible for Licensure of the PRODUCT in all TERRITORIES.

CUSTOMER is responsible to insure that all filings with any AGENCY are consistent with the SPECIFICATIONS for the PRODUCT.

BVL will be responsible for contacting CUSTOMER to discuss changes which impact the MANUFACTURING license(s) for any TERRITORY. CUSTOMER will be responsible for applying for any necessary variation to the MANUFACTURING license(s) to allow production of the PRODUCT(S).

CUSTOMER will be responsible for informing the appropriate regulatory authorities of any future variation to the Manufacturer’s License and for accordingly informing BVL of any such variations that may affect the MANUFACTURE of the PRODUCTS.

E.2 Maintenance of PRODUCT License(s)

CUSTOMER will be responsible for insuring that the BVL’S Master Batch Record,
SPECIFICATIONS and SOP’s relevant to the MANUFACTURING of the PRODUCT comply with the License(s) of all Territories.

CUSTOMER shall provide BVL with copies of all approvals by all AGENCIES for use of the PRODUCT in clinical trials and commercial distribution in all TERRITORIES. CUSTOMER shall also advise BVL of all planned filing at least 2 years in advance or as soon as such information is known by CUSTOMER.

E.3 PRODUCTION AND CONTROL

BVL will ensure that its production and quality control comply with the SPECIFICATIONS.

BVL and CUSTOMER undertake to provide the other with all reasonable information and assistance so that the both parties can discharge their responsibilities under this AGREEMENT.

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E.4 Date of Manufacture and Expiration Dating

The shelf-life and storage conditions of the PRODUCTS will be in accordance with the
requirements of the License(s). The format for Date of MANUFACTURE and expiration date of the PRODUCTS will be as specified on the PURCHASE ORDER provided by CUSTOMER or as contained in the SPECIFICATIONS whichever is applicable. Each BATCH will have a unique lot number in accordance with the SPECIFICATIONS and BVL SOP’s.

E.5 Retained Samples

CUSTOMER shall retain sufficient samples of the labeled and secondary packaged
PRODUCT as required to be in compliance with all License(s).

E.6 Packaging Items and Raw Materials — COMPOSITION

BVL is responsible for arranging supply of the BVL COMPOSITION as specified in Attachment(s) A. BVL COMPOSITION will be in accordance with the SPECIFICATIONS mutually agreed to by BVL and CUSTOMER. API and CUSTOMER COMPOSITION will be provided by the CUSTOMER as specified in Attachment(s) A and in accordance with the SPECIFICATIONS.

E.7 PRODUCT Analysis and Sampling Plan

The Sterility, Bacterial Endotoxin and the Particulate testing will be carried
out by the BVL in accordance with the approved methods, SPECIFICATIONS and BVL SOP’s. BVL will take samples from MANUFACTURE and perform analytical release testing according the SPECIFICATIONS or in the event analytical release testing is performed by an outside laboratory or the CUSTOMER, BVL will deliver to the outside laboratory or the CUSTOMER samples for analytical release testing, in accordance with the instructions contained in the SPECIFICATIONS.

E.8 Stability Testing

CUSTOMER will be responsible for arranging the Stability testing of the PRODUCTS.
All stability samples will be taken as described in the SPECIFICATIONS for the PRODUCT.

E.9 Finished PRODUCT Release — Responsibilities for Release of PRODUCT

BVL will provide CUSTOMER with a Certificate of Analysis, a BVL formatted Certificate of
Compliance, signed by BVL’S QA Representative, for the operations carried out by BVL
and a copy of the executed BATCH record for the PRODUCT. CUSTOMER is responsible for the release of
the PRODUCT for further packaging, distribution, sale, or for use within the TERRITORIES.

E.10 Complaints

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It is expected that most complaints and inquiries will be received by CUSTOMER.
CUSTOMER and BVL will inform each other in writing of all quality related complaints and CUSTOMER will, where appropriate, provide BVL with returned samples for examination and investigation. Potentially serious complaints will be communicated to BVL IMMEDIATELY by CUSTOMER. BVL will investigate all complaints PROMPTLY and will provide CUSTOMER with a written report. In the case of a potentially serious complaint BVL will make an initial response within 3 working days, however, it is accepted that completion of an investigation may take longer. CUSTOMER will be responsible for correspondence with all complainants.

E.11 Recall of Batches

The decision to recall a BATCH is the responsibility of CUSTOMER. The nature and urgency of a recall will be decided following discussions (where appropriate), between the CUSTOMER and BVL. Once the decision to recall a BATCH has been taken, the recall will be initiated by CUSTOMER. CUSTOMER will inform BVL of any action that is required of it. CUSTOMER will be responsible for contacting and discussing the nature of the recall with the relevant regulatory AGENCIES. Assistance may be required from BVL on technical matters. CUSTOMER will update BVL as to the progress of the recall.

E.12 Serious Incidents

If a serious incident, such as sterility assurance failure, occurs relating either to the
PRODUCT MANUFACTURED for CUSTOMER, or other products, which are produced using the same FACILITIES as those used for the PRODUCTS and where such an incident could impact the CUSTOMER’S PRODUCT, BVL will inform CUSTOMER.

E.13 INSPECTIONS

Any deficiencies noted during an inspection of BVL’S FACILITIES by an AGENCY, which relate directly to the PRODUCT or its MANUFACTURING must be brought to the attention of CUSTOMER. BVL will IMMEDIATELY notify CUSTOMER of all PRODUCT specific AGENCY inspections.

E.14 WAREHOUSING

The PRODUCT(S) will be stored at BVL under conditions contained in the SPECIFICATIONS and in accordance with BVL’S SOP(S).

E.15 SUB-CONTRACTING

BVL will not subcontract to a third party any of the work entrusted under this AGREEMENT other than what is agreed to in the SPECIFICATIONS, without CUSTOMER’S prior evaluation, and written approval of the sub-contractor and sub-contract agreements.

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E.16 CONTROL AND SUPPLY OF INFORMATION

Documentation to be supplied with batches — Attachment D
For each BATCH of finished PRODUCT, BVL will provide CUSTOMER with a Certificate of
Analysis, a BVL formatted Certificate of Compliance signed by BVL’S QA Representative, for the
MANUFACTURE by BVL and a copy of the executed BATCH records.

E.15 Retention of BATCH Documentation

The BATCH records consisting of MANUFACTURING, packaging, analytical, control, release and delivery documentation, data and records for each BATCH of PRODUCT will be maintained by BVL in a secure location for a period of 7 years.

E.16 Finished PRODUCT Post Marketing Surveillance

Post marketing surveillance will be the responsibility of the CUSTOMER.

E.17 Quality Defects

If PRODUCT in any MANUFACTURE fails to comply with the SPECIFICATIONS, either upon receipt or during the shelf-life of the PRODUCT, CUSTOMER will formally contact BVL in writing. BVL will carry out a formal investigation according to BVL SOP’s of its operations and report its findings in full to CUSTOMER in writing. Decision on final disposition of PRODUCT will be jointly agreed by BVL and CUSTOMER.

E.18 Right to Observe, Inspect and Audit

CUSTOMER and any third-party consultant appointed by CUSTOMER shall have reasonable access to observe and inspect BVL’S FACILITIES and SOP’S with respect to the PRODUCT(S), including all analytical and MANUFACTURING documentation related to the PRODUCT(S) upon reasonable prior notice to and scheduling in advance by BVL. Any such CUSTOMER appointed third-party consultant must be pre-approved by BVL, although such approval shall not be unreasonably or untimely withheld. Upon scheduling in advance, CUSTOMER shall have the right to one annual audit and at such other times as mutually agreed upon by the parties for cause to (i) observe, inspect and audit the manner in which BVL conducts MANUFACTURE of CUSTOMER PRODUCT(S), (ii) inspect BVL’S FACILITIES and records relating to BVL’S quality and other controls related to its MANUFACTURE of the PRODUCT(S), and (iii) observe and audit the books and records of BVL relating to the existence, safeguard, use and maintenance by BVL of the CUSTOMER COMPOSITION. BVL shall make such books and records available to CUSTOMER for review. Information provided during audits will be limited to technical information related to the MANUFACTURE of PRODUCT(S) no financial information is provided for auditing.

CUSTOMER employees and CUSTOMER’S consultants who inspect BVL’S FACILITIES shall at all times comply with BVL’S rules, regulations and SOP’s relating to their inspection and CUSTOMER assumes responsibility for the presence and actions of its employees on BVL’S

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premises. Quality Audits are limited to one per calendar year and will be scheduled in advance with BVL’S Quality Operations Department.

CUSTOMER shall PROMPTLY provide BVL with a written report of all audit findings. BVL shall PROMPTLY provide CUSTOMER with a written response to all audit observations with corrective actions when appropriate.

E.19 — Annual Product Review and Annual Reports

CUSTOMER shall be responsible for the Annual Product Review and Annual Reports required by any AGENCY.

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Attachment F

CUSTOMER Supplied Equipment

None

Page 38 of 38          BVL — PHARMION Manufacturing and Service Agreement

EX-10.33

Exhibit 10.33

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN
THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24B-2 OF THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED

CO-DEVELOPMENT AND LICENSE AGREEMENT

This Co-Development and License Agreement (the “Agreement”) is made and entered into effective as of December 19, 2005 (the “Effective Date”) by and between GPC Biotech AG, a German corporation, having its place of business at Fraunhoferstrasse 20, 82152 Martinsried/Munich, Germany (“GPC Biotech”); and Pharmion GmbH, a Swiss limited liability company and wholly-owned subsidiary of Pharmion Corporation, a Delaware corporation, having a place of business at Aeschenvorstadt 71, 4051 Basel, Switzerland (“Licensee”). GPC Biotech and Licensee are sometimes referred to herein individually as a “Party” and collectively as the “Parties.”

RECITALS

     WHEREAS, GPC Biotech has rights with respect to the platinum complex known as “Satraplatin” and has commenced a Phase III registrational trial for the use of the same for the second-line treatment of hormone-refractory prostate cancer;

     WHEREAS, Licensee and its Affiliates have specialized experience in, among other things, the development and commercialization of pharmaceutical compounds for the treatment of cancer in the Licensee Territory (as defined below); and

     WHEREAS, GPC Biotech desires to grant a license to Licensee, and Licensee desires to obtain a license, to Develop and Commercialize (each as defined below) the above-mentioned pharmaceutical compound in accordance with the terms and conditions set forth below.

     NOW, THEREFORE, in consideration of the foregoing premises, the mutual promises and covenants of the Parties contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto, intending to be legally bound, do hereby agree as follows:

ARTICLE 1

DEFINITIONS

     Unless otherwise specifically provided herein, the following terms shall have the following meanings:

     1.1 “Additional Indication(s)” shall mean each indication, other than the Initial Indication.

     1.2 “Adverse Event Experience” shall have the meaning set forth in Section 9.2.

     1.3 “Affiliate” shall mean, with respect to a Party, any Person that, directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with such Party. For purposes of this definition, “control” and, with correlative meanings, the terms “controlled by” and “under common control with” shall mean (a) the

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possession, directly or indirectly, of the power to direct the management or policies of a business entity, whether through the ownership of voting securities, by contract relating to voting rights or corporate governance, or otherwise, or (b) the ownership, directly or indirectly, of at least fifty percent (50%) of the voting securities or other ownership interest of a business entity (or, with respect to a limited partnership or other similar entity, its general partner or controlling entity).

     1.4 “Agreement” shall have the meaning set forth in the preamble to this Agreement.

     1.5 “Alliance Manager” shall have the meaning set forth in Section 4.4.7.

     1.6 “ANDA Act” shall have the meaning set forth in Section 8.3.2.

     1.7 “ANZ Territory” shall mean the Commonwealth of Australia and New Zealand.

     1.8 “Applicable Law” shall mean applicable laws, rules and regulations, including any rules, regulations, guidelines or other requirements of the Regulatory Authorities, that may be in effect from time to time.

     1.9 “Arbitration Matter” shall have the meaning set forth in Section 15.7.4.

     1.10 “Arbitration Rules” shall have the meaning set forth in Section 15.7.4.

     1.11 “Arbitrator” shall have the meaning set forth in Section 7.12.

     1.12 “Breaching Party” shall have the meaning set forth in Section 14.2.

     1.13 “Business Day” shall mean a day other than a Saturday or Sunday on which banking institutions in Munich, Germany are open for business.

     1.14 “Calendar Quarter” shall mean each successive period of three (3) calendar months commencing on January 1, April 1, July 1 and October 1.

     1.15 “Calendar Year” shall mean each successive period of twelve (12) calendar months commencing on January 1 and ending on December 31.

     1.16 “Change of Control” means, with respect to Licensee, its ultimate parent corporation or any successor to the foregoing, (a) a merger, consolidation, share exchange or other similar transaction involving such party and any Third Party which results in the holders of the outstanding voting securities of such party immediately prior to such merger, consolidation, share exchange or other similar transaction ceasing to hold more than fifty percent (50%) of the combined voting power of the surviving, purchasing or continuing entity immediately after such merger, consolidation, share exchange or other similar transaction, (b) any transaction or series of related transactions in which any “person”, as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), together with any of such person’s “affiliates” or “associates”, as such terms are used in the Exchange Act, becomes the beneficial owner of fifty percent (50%) or more of the combined voting power of the outstanding securities of such party, or (c) the sale or other transfer to a Third Party of all or substantially all of such party’s assets which relate to this Agreement.

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     1.17 “Clinical Data” shall mean all information with respect to the Licensed Product and the Licensed Compound, made, collected or otherwise generated in the performance of or in connection with Clinical Studies or Post Approval Studies for the Licensed Product, including any data, reports and results with respect thereto.

     1.18 “Clinical Studies” shall mean Phase I, Phase II, Phase III and such other tests and studies in patients that are required by Applicable Law, or otherwise recommended by the Regulatory Authorities, to obtain or maintain Regulatory Approvals, but excluding Post Approval Studies.

     1.19 “Collaboration Costs” shall mean the FTE Costs (charged in accordance with Sections 6.1.2, 6.1.3, 6.1.4 and 6.1.6) incurred, and the direct out-of-pocket costs recorded as an expense in accordance with GAAP, by or on behalf of: a Party or any of its Affiliates on or after October 1, 2005 or during the term of and pursuant to this Agreement, in connection with (i) tasks that are specifically identified in or reasonably allocable to the Development Plan and Budget or (ii) Joint Commercialization Activities specifically identified in the applicable Commercialization Plan and Budget. Except in the case of Collaboration Costs incurred in accordance with Section 1.19.5, Collaboration Costs incurred on or after the Effective Date with respect to Development activities or Joint Commercialization Activities shall be included in “Collaboration Costs” for the Licensed Product only to the extent less than or equal to the amounts set forth in the applicable Development Budget or Commercialization Budget for such activities (subject to permitted overruns pursuant to Sections 2.3.2 and 3.10.2). Subject to the foregoing, Collaboration Costs shall include such costs incurred in connection with the following activities:

          1.19.1 pre-clinical and non-clinical activities such as toxicology and formulation development, test method development, stability testing, quality assurance, quality control development and statistical analysis;

          1.19.2 Clinical Studies and Post Approval Studies for the Licensed Product, including (a) the preparation for and conduct of clinical trials; (b) data collection and analysis and report writing; (c) clinical laboratory work; and (d) regulatory activities in connection with such studies, including adverse event recordation and reporting;

          1.19.3 the preparation of a regulatory dossier reasonably necessary to obtain Initial Regulatory Approval for the Licensed Product in both the GPC Biotech Territory and the European Union;

          1.19.4 Manufacturing Costs for (a) the Licensed Product for use in Clinical Studies, Post Approval Studies or other Development activities for the Licensed Product and (b) the manufacture, purchase or packaging of comparators or placebo for use in Clinical Studies or Post Approval Studies for the Licensed Product (with the manufacturing costs for comparators or placebo to be determined in the same manner as Manufacturing Costs are determined for any Licensed Product) and (c) costs and expenses of disposal of drugs and other supplies used in such Clinical Studies, Post Approval Studies or other Development activities;

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          1.19.5 Losses incurred in connection with Third Party Claims described in Section 13.3 to the extent such losses are to be included in Collaboration Costs pursuant to Section 13.3; and

          1.19.6 Costs for the development of the Manufacturing Process for the Licensed Product, scale-up, Manufacturing Process validation, including validation batches, manufacturing improvements and qualification and validation of Third Party contract manufacturers; provided, however, as set forth in Section 3.1.3 of the Supply Agreement, Licensee’s share pursuant to Section 6.1.1 of any such costs allocable to the Manufacture of any validation batch (or part thereof) that is subsequently sold commercially by or on behalf of Licensee or any of its Affiliates, Sublicensees or Distributors, shall be credited against the Supply Price for such supply.

For the avoidance of doubt and notwithstanding the foregoing, Collaboration Costs shall not include any (a) FTE costs or other costs and expenses that are specifically identifiable or reasonably allocable to Unilateral Activities of either Party during the applicable Opt-Out Period, (b) filing fees in connection with the filing of applications for Regulatory Approvals (c) Third Party Payments or (d) intercompany payments or charges of a Party or its Affiliates (or between such Affiliates).

     1.20 “Combination Product” shall mean a Licensed Product that contains the Licensed Compound as an active ingredient together with one or more other active ingredients that are sold either as a fixed dose or as separate doses in a single package.

     1.21 “Commercialization” shall mean any and all activities (whether before or after Regulatory Approval) directed to the marketing, Detailing and promotion of the Licensed Product and shall include pre-launch and post-launch marketing, promoting, Detailing, marketing research, distributing, offering to commercially sell and commercially selling the Licensed Product, importing, exporting or transporting the Licensed Product for commercial sale and regulatory affairs with respect to the foregoing, but shall not include Post Approval Studies or Manufacturing. When used as a verb, “Commercializing” means to engage in Commercialization and “Commercialize” and “Commercialized” shall have corresponding meanings.

     1.22 “Commercialization Budget” shall mean the budget for the Joint Commercialization Activities set forth in the Commercialization Plan, as provided in Section 3.2.1.

     1.23 “Commercialization Plan” shall mean the plan for the Commercialization of the Licensed Product in the Field in the Licensee Territory and for the Joint Commercialization Activities in support of the Commercialization of the Licensed Product in the Field in the Territory to be developed and amended as provided in Section 3.2.1.

     1.24 “Commercialization Plan and Budget” shall mean the Commercialization Plan and the Commercialization Budget.

     1.25 “Commercially Reasonable Efforts” shall mean, with respect to the Development or Commercialization of the Licensed Product, as the case may be, efforts and

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resources commonly used in the research-based pharmaceutical industry by companies similarly situated to the applicable Party, but in no event less than those efforts and resources commonly used by companies similarly situated to the applicable Party as of the Effective Date, for an internally-developed product of similar commercial potential at a similar stage in its lifecycle. Commercially Reasonable Efforts shall be determined on a market-by-market basis for the Licensed Product without regard to the particular circumstances of a Party, including any other product opportunities of such Party and, with respect to Licensee, without regard to any payments owed to GPC Biotech under Articles 6 and 7. When used as an adjective, “Commercially Reasonable” shall mean using Commercially Reasonable Efforts.

     1.26 “Committee” shall mean any one of the JEC, the JDC or the JCC and “Committees” shall mean two or more of the JEC, the JDC or the JCC.

     1.27 “Competitive Program” means a clinical development program in a Phase II or Phase III stage or later anywhere in the Territory in support of commercialization activities in the Licensee Territory or commercialization activity (including marketing or promotion) in the Licensee Territory that involves a compound or product (other than the Licensed Product) [...***...].

     1.28 “Complaining Party” shall have the meaning set forth in Section 14.2.

     1.29 “Complaint” shall have the meaning set forth in Section 9.1.

     1.30 “Completion Notice” shall have the meaning set forth in Section 2.5.6(b).

     1.31 “Compound Option Notice” shall have the meaning set forth in Section 5.4.

     1.32 “Confidential Information” shall have the meaning set forth in Section 11.1.

     1.33 “Control” shall mean, with respect to any item of Information, Drug Master File, Regulatory Documentation, Patent or Intellectual Property Right, possession of the right, whether directly or indirectly, and whether by ownership, license or otherwise (other than by

*** Confidential Treatment Requested

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     operation of the assignments, license and other grants in Article 5 and Sections 8.1.3 and 8.1.4 of this Agreement), to assign or grant a license, sublicense or other right to or under, such Information, Drug Master File, Regulatory Documentation, Patent or Intellectual Property Right as provided for herein without violating the terms of any agreement or other arrangement with any Third Party.

     1.34 “Corporate Names” shall mean (a) in the case of GPC Biotech, the Trademark “GPC BIOTECH” and the GPC Biotech corporate logo or such other names and logos as GPC Biotech may designate in writing from time to time and (b) in the case of Licensee, the Trademark “PHARMION” and the Licensee corporate logo or such other names and logos as Licensee may designate in writing from time to time, in each case ((a) and (b)) together with any variations and derivatives thereof.

     1.35 “Country Commercialization Plan” shall have the meaning set forth in Section 3.2.3.

     1.36 “Derivative Compound” means an analog or derivative of the Licensed Compound. For clarity, a Derivative Compound is not an Improvement.

     1.37 “Detail” shall mean an interactive face-to-face contact of a sales representative, who is fully equipped with, and knowledgeable of, applicable Promotional Materials and Product Labeling for the Licensed Product, with a physician or other medical professional licensed to prescribe drugs or other healthcare professional that has a significant impact or influence on prescribing decisions, in which relevant characteristics of the Licensed Product are described by the sales representative in a fair and balanced manner consistent with the requirements of this Agreement and Applicable Law, and in a manner that is customary in the industry for the purpose of promoting a prescription pharmaceutical product. When used as a verb, “Detail” means to engage in a Detail.

     1.38 “Developing Party” shall have the meaning set forth in Section 2.5.2(a).

     1.39 “Development” shall mean all activities related to research, preclinical and other non-clinical testing, test method development and stability testing, toxicology, formulation, process development, manufacturing scale-up, qualification and validation, quality assurance/quality control related to the foregoing manufacturing activities, Clinical Studies and Post Approval Studies, including manufacturing in support thereof, statistical analysis and report writing, the preparation and submission of Drug Approval Applications, regulatory affairs with respect to the foregoing and all other activities otherwise requested or required by a Regulatory Authority as a condition or in support of obtaining or maintaining a Regulatory Approval. When used as a verb, “Develop” shall mean to engage in Development.

     1.40 “Development Budget” shall mean the budget for the Development of the Licensed Product agreed to by the Parties as of the Effective Date, as it may be amended from time to time in accordance with Section 2.3.1. For clarity, the Development Budget shall not include budgets for Unilateral Activities.

     1.41 “Development Lead” shall mean, with respect to a Development activity, the Party that (a) is assigned primary responsibility for the day-to-day implementation of such

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Development activity as provided in the Development Plan or (b) is the Developing Party for a Unilateral Activity.

     1.42 “Development Plan” shall mean the plan for the Development of the Licensed Product in the Field agreed to by the Parties as of the Effective Date, as it may be amended from time to time in accordance with Sections 2.2.1 and 2.5.1. For clarity, the Development Plan shall not include any Development plans for Unilateral Activities.

     1.43 “Development Plan and Budget” shall mean the Development Plan and the Development Budget.

     1.44 “Dispute” shall have the meaning set forth in Section 15.7.

     1.45 “Distributor” shall mean a Person, other than a Sublicensee or an Affiliate, in one or more countries in the Licensee Territory that (a) purchases the Licensed Product in finished form or in bulk capsule form (to be packaged or labeled by such Person in accordance with Applicable Law) from the Licensee, its Affiliate or Sublicensee for such country(ies), (b) assumes responsibility from the Licensee for all or a portion of the Commercialization of the Licensed Product in such country(ies) and (c) sells Licensed Product in such country(ies).

     1.46 “Drug Approval Application” shall mean a New Drug Application (an “NDA”) as defined in the FFDCA and the regulations promulgated thereunder, or any corresponding foreign application in the Territory, including, with respect to the European Union, a Marketing Authorization Application (a “MAA”) filed with the EMEA pursuant to the centralized approval procedure or with the applicable Regulatory Authority of a country in Europe with respect to the mutual recognition or any other national approval procedure.

     1.47 “Drug Master File” shall mean any drug master files filed with the FDA with respect to the Licensed Product and any equivalent filing in other countries or regulatory jurisdictions.

     1.48 “Effective Date” shall mean the effective date of this Agreement as set forth in the preamble to this Agreement.

     1.49 “EMEA” shall mean the European Medicines Agency and any successor agency thereto.

     1.50 “Europe” shall mean the countries comprising the European Economic Area as it may be constituted from time to time, which as of the date hereof, consists of the member countries of the European Union, Iceland, Norway, Lichtenstein and Switzerland.

     1.51 “European Union” shall mean the economic, scientific and political organization of member states as it may be constituted from time to time, which, as of the date hereof, consists of Austria, Belgium, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, The Netherlands, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden and the United Kingdom of Great Britain and Northern Ireland and that certain portion of Cyprus included in such organization.

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     1.52 “Exchange Act” shall have the meaning set forth in Section 1.16.

     1.53 “Expert” shall have the meaning set forth in Section 15.7.4(b)(i).

     1.54 “Exploit” shall mean to make, have made, import, use, sell or offer for sale, including to research, Develop, Commercialize, register, Manufacture, have Manufactured, hold or keep (whether for disposal or otherwise), have used, export, transport, distribute, promote, market or have sold or otherwise dispose of.

     1.55 “Exploitation” shall mean the act of Exploiting a product or process.

     1.56 “Exploratory Study” shall mean a Clinical Study other than any Registrational Study.

     1.57 “FDA” shall mean the United States Food and Drug Administration and any successor agency thereto.

     1.58 “FFDCA” shall mean the United States Federal Food, Drug, and Cosmetic Act, as amended from time to time.

     1.59 “Field” shall have the meaning set forth in the Spectrum Agreement, as it may be amended from time to time.

     1.60 “Follow Up Registrational Study” shall mean the first Registrational Study, if any, conducted by the Parties pursuant to the Development Plan to obtain Initial Regulatory Approval for the Licensed Product in the United States and Europe with respect to an Additional Indication.

     1.61 “FTE” shall mean the equivalent of the work of one (1) employee full time for one (1) Calendar Year (consisting of at least a total of eighteen hundred (1800) hours per Calendar Year, or such other number as may be agreed by the JDC) of work directly related to the Development of the Licensed Product or any other activities contemplated under this Agreement. No additional payment shall be made with respect to any person who works more than eighteen hundred (1800) hours per Calendar Year (or such other number as may be agreed by the JDC) and any person who devotes less than eighteen hundred (1800) hours per Calendar Year (or such other number as may be agreed by the JDC) shall be treated as an FTE on a pro-rata basis based upon the actual number of hours worked divided by eighteen hundred (1800) (or such other number as may be agreed by the JDC).

     1.62 “FTE Cost” shall mean the FTE rate for employees who shall be performing services under this Agreement which, as of the Effective Date, is equal to [...***...]. Such rate shall be adjusted subsequently in accordance with Section 6.1.4.

     1.63 “GAAP” shall mean United States generally accepted accounting principles consistently applied.

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     1.64 “Generic Product” shall mean, with respect to a Licensed Product in a country, any product (a) that contains the Licensed Compound, (b) in the case of any country in the European Union, is approved for sale in the Field pursuant to an application approved by the applicable Regulatory Authorities in the European Union under Article 10.1 of Directive 2001/83/EC, and for which the applicant is not required under Article 8.3(i) of Directive 2001/83/EC to have submitted any preclinical and clinical data other than data from bioequivalence studies comparing such product to such Licensed Product required under Article 10.1 of that Directive, and in the case of any other country in the Licensee Territory, is approved for sale pursuant to any corresponding application in such country, and (c) is sold for use or consumption in the Field by the general public in such country by a Third Party, other than any Third Party that is a Sublicensee or Distributor or otherwise sells such product pursuant to a (sub)license, distributorship or other arrangement with Licensee, or pursuant to or in reliance on any right of reference granted to such Third Party or any of its Affiliates by or on behalf of Licensee.

     1.65 “Global Strategy” shall have the meaning set forth in Section 3.1.3(a).

     1.66 “GPC Biotech” shall have the meaning set forth in the preamble to this Agreement.

     1.67 “GPC Biotech Activities” shall have the meanings set forth in Section 2.2.2(b).

     1.68 “GPC Biotech Counter-Party” shall mean a Third Party with which GPC Biotech has entered into an agreement that includes Development and Commercialization rights or Commercialization rights for the Licensed Product.

     1.69 “GPC Biotech Improvement” shall mean any Improvement conceived or used by or on behalf of GPC Biotech or its Affiliates in connection with the Development of the Licensed Product under this Agreement but excluding any Joint Improvement.

     1.70 “GPC Biotech Know-How” shall mean all Information, including any GPC Biotech Improvements and Clinical Data, that is Controlled by GPC Biotech or its Affiliates as of the Effective Date or during the term of this Agreement that is not generally known and (a) is developed or acquired by or licensed to GPC Biotech or any of its Affiliates under or in connection with this Agreement or otherwise used by or on behalf of GPC Biotech or any of its Affiliates in the Development or Commercialization of the Licensed Product or (b) is necessary for the Development or Commercialization of the Licensed Product, but excluding any Information to the extent covered or claimed by published GPC Biotech Patents, published Joint Patents and any Joint Know-How.

     1.71 “GPC Biotech Patents” shall mean all of the Patents that GPC Biotech and its Affiliates Control as of the Effective Date or during the term of this Agreement that are necessary (or, with respect to Patent applications, would be necessary if such Patent applications were to issue as Patents) for the Development or Commercialization of the Licensed Product or any Improvement thereto, including those that claim or cover the Licensed Product or the Development or Commercialization thereof, but excluding any Joint Patents. For the avoidance

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of doubt, the GPC Biotech Patents include, as of the Effective Date, the Patents set forth on Exhibit A.

     1.72 “GPC Biotech Territory” shall mean the entire world, other than the Licensee Territory and including any countries or Major Market Regions in which this Agreement is terminated pursuant to Article 14.

     1.73 “Improvement” shall mean any modification, variation or revision to a compound, product or technology or any discovery, technology, device or process or formulation related to such compound, product or technology, whether or not patented or patentable, including any enhancement in the efficiency, operation, manufacture (including any manufacturing process), ingredients, preparation, presentation, formulation, means of delivery, packaging or dosage of such compound, product or technology, any discovery or development of any new or expanded indications for such compound, product or technology or any discovery or development that improves the stability, safety or efficacy of such compound, product or technology; provided that, Improvements shall exclude any Derivative Compound.

     1.74 “Indemnification Claim Notice” shall have the meaning set forth in Section 13.4.

     1.75 “IND” shall mean an investigational new drug application filed with the FDA for authorization to commence Clinical Studies or Post Approval Studies and its equivalent in other countries or regulatory jurisdictions.

     1.76 “Indemnified Party” shall have the meaning set forth in Section 13.4.

     1.77 “Information” shall mean all technical, scientific and other know-how and information, trade secrets, knowledge, technology, means, methods, processes, practices, formulae, instructions, skills, techniques, procedures, experiences, ideas, technical assistance, designs, drawings, assembly procedures, computer programs, apparatuses, specifications, data, results and other material, including: biological, chemical, pharmacological, toxicological, pharmaceutical, physical and analytical, pre-clinical, clinical, safety, manufacturing and quality control data and information, including study designs and protocols; assays and biological methodology; (whether or not confidential, proprietary, patented or patentable) in written, electronic or any other form now known or hereafter developed, but excluding the Regulatory Documentation and the Drug Master File.

     1.78 “Initial Indication” shall mean the second-line treatment of hormone-refractory prostate cancer.

     1.79 “Initial Opt-Out Threshold” shall have the meaning set forth in Section 2.6.1(b).

     1.80 “Initial Regulatory Approval” of the Licensed Product for an indication means (a) with respect to the United States, the approval by FDA (whether through means of an NDA, subpart E, or subpart H filing or otherwise); or (b) with respect to a country in a regulatory jurisdiction in the Licensee Territory, the approval by the applicable Regulatory Authorities, of the Drug Approval Application with respect to the Licensed Product for such indication in the

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applicable regulatory jurisdiction (including, in the European Union, the approval by the EMEA of an MAA filed pursuant to the centralized approval procedure, if applicable, or otherwise with respect to the mutual recognition approval procedure on a country-by-country basis with the applicable Regulatory Authority of a country in Europe).

     1.81 “Intellectual Property Rights” shall mean Trademarks, service marks, trade names, registered designs, design rights, copyrights (including rights in computer software), database rights, trade secrets and any rights or property similar to any of the foregoing (other than Patents) in any part of the Territory whether registered or not registered together with the right to apply for the registration of any such rights.

     1.82 “Invoiced Sales” shall have the meaning set forth in Section 1.114.

     1.83 “Joint Commercialization Activities” shall have the meaning set forth in Section 4.3.2.

     1.84 “Joint Commercialization Committee” or “JCC” shall have the meaning set forth in Section 4.3.1.

     1.85 “Joint Development Committee” or “JDC” shall have the meaning set forth in Section 4.2.1.

     1.86 “Joint Executive Committee” or “JEC” shall have the meaning set forth in Section 4.1.

     1.87 “Joint Improvement” shall mean any Improvement jointly conceived by or on behalf of GPC Biotech or its Affiliates, on the one hand, and Licensee or its Affiliates or Sublicensees, on the other hand.

     1.88 “Joint Intellectual Property Rights” shall have the meaning set forth in Section 8.1.5.

     1.89 “Joint Know-How” shall have the meaning set forth in Section 8.1.5.

     1.90 “Joint Patents” shall have the meaning set forth in Section 8.1.5.

     1.91 “Knowledge” shall mean the actual knowledge or good faith understanding of the vice presidents, senior vice presidents, president or chief executive officer of a Party of the facts and information then in their possession without any duty to conduct any investigation with respect to such facts and information and “Knowingly” shall mean, with respect to any action, to take such action with Knowledge.

     1.92 “Licensed Compound” shall mean the platinum complex af-bis(acetato)-b-ammine-cd-dichloro-e-(cyclohexylamine)platinum(IV).

     1.93 “Licensed Product” shall mean any form, mode of administration or dosage of a pharmaceutical composition or preparation that contains the Licensed Compound as an active ingredient, including any Improvements thereto.

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     1.94 “Licensee” shall have the meaning set forth in the preamble to this Agreement.

     1.95 “Licensee Activities” shall have the meaning set forth in Section 2.2.2(b).

     1.96 “Licensee Change of Control Notice” shall have the meaning set forth in Section 14.5.2.

     1.97 “Licensee Improvement” shall mean any Improvement conceived or used by or on behalf of Licensee or its Affiliates in connection with the Development of the Licensed Product under this Agreement, but excluding any Joint Improvement.

     1.98 “Licensee Initial Indication Study” shall have the meaning set forth in Section 2.6.2(b).

     1.99 “Licensee Know-How” shall mean all Information, including any Licensee Improvements and Clinical Data, that is Controlled as of the Effective Date or during the term of this Agreement by Licensee or any of its Affiliates or Sublicensees that is not generally known and (a) is developed or acquired by or licensed to Licensee or any of its Affiliates or Sublicensees under or in connection with this Agreement or otherwise used by or on behalf of Licensee or any of its Affiliates or Sublicensees in the Exploitation of the Licensed Product or the Licensed Compound or (b) is necessary for the Exploitation of the Licensed Product or the Licensed Compound, but excluding any Information to the extent covered or claimed by published Licensee Patents, published Joint Patents and any Joint Know-How.

     1.100 “Licensee Patents” shall mean all Patents Controlled by Licensee and any of its Affiliates or Sublicensees that are necessary (or with respect to Patent applications, would be necessary if such Patent applications were to issue as Patents) for the Exploitation of the Licensed Product, the Licensed Compound or any Licensee Improvement thereto, including those that claim or cover any Licensed Compound, Licensed Product, Licensee Know-How, any Licensee Improvement thereto or the Exploitation of any of the foregoing, but excluding any Joint Patents.

     1.101 “Licensee Territory” shall mean Europe, the Middle East, the ANZ Territory and any portion of Cyprus not otherwise included within Europe, and except for those countries in which this Agreement is terminated pursuant to Article 14.

     1.102 “Losses” shall have the meaning set forth in Section 13.1.

     1.103 “MAA” shall have the meaning set forth in Section 1.46.

     1.104 “Major Market Country” shall mean (a) with respect to Europe, France, Germany, Italy, Spain and the United Kingdom and (b) with respect to the ANZ Territory, the Commonwealth of Australia and (c) with respect to the Middle East, Israel and the Republic of Turkey.

     1.105 “Major Market Region” shall mean each of Europe, the Middle East, and the ANZ Territory.

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     1.106 “Major Meetings” shall mean meetings (in person or otherwise) scheduled with the Regulatory Authorities in the United States or the Licensee Territory concerning the Licensed Product (including advisory committee meetings and any other meetings of experts convened by a Regulatory Authority concerning any topic relevant to the Licensed Product of which a Party has been notified) that would constitute type “A,” “B” or “C” meetings in the United States, or the equivalent thereof in the European Union, Pre-NDA meetings or meetings relating to Product Labeling.

     1.107 “Manufacture” and “Manufacturing” shall mean all activities related to the production, manufacture, processing, filling, finishing, packaging, labeling, shipping and holding of the Licensed Product or any intermediate thereof, including process development, process qualification and validation, scale up, pre-clinical, clinical and commercial manufacture and analytic development, product characterization, stability testing, quality assurance and quality control.

     1.108 “Manufacturing Cost” shall mean GPC Biotech’s cost to Manufacture the Licensed Product calculated in accordance with the method disclosed by GPC Biotech in its letter to Licensee dated December 13, 2005.

     1.109 “Manufacturing Process” shall mean any process or step thereof that is necessary or useful for Manufacturing the Licensed Product or any intermediate thereof.

     1.110 “Markings” shall have the meaning set forth in Section 3.4.2.

     1.111 “Merger Party” shall have the meaning set forth in Section 14.5.3.

     1.112 “Middle East” shall mean the following countries: Bahrain, Egypt, Iran, Iraq, Israel, Jordan, Kuwait, Lebanon, Oman, the Palestinian Territories (including the West Bank and the Gaza Strip) as they may be constituted from time to time and any successor state comprising such territories, Qatar, the Republic of Turkey, Saudi Arabia, Syria, the United Arab Emirates and Yemen; and any successor state comprising the territory of any such countries.

     1.113 “NDA” shall have the meaning set forth in Section 1.46.

     1.114 “Net Sales” shall mean, for any period, (a) the gross amount invoiced by Licensee and its Affiliates or Sublicensees for the sale of Licensed Product in an arm’s length transaction exclusively for money (the “Invoiced Sales”), after deduction of normal trade discounts and of any credits actually given by Licensee for returned or defective products, as determined in accordance with GAAP, and excluding or making proper deductions for any costs of packing, insurance, carriage and freight and VAT or other sales tax and, in the case of export orders, any import duties or similar applicable governmental levies or export insurance costs expressly subject in all cases to the same being separately charged on customer invoices or (b) in any sale or other disposal of Licensed Product otherwise than in an arm’s length transaction exclusively for money, the fair market value (if higher) in the relevant country of disposal.

     Notwithstanding the foregoing, in the event that the Licensed Product is sold in conjunction with another proprietary component so as to be a Combination Product (whether packaged together or in the same therapeutic formulation), Net Sales shall be calculated by

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multiplying the Net Sales of such Combination Product by a fraction, the numerator of which shall be the fair market value of the Licensed Product if sold separately (determined in accordance with GAAP) and the denominator of which shall be the aggregate fair market value of all the proprietary active components of such Combination Product, including the Licensed Product, if sold separately. In the event that no such separate sales are made by Licensee or its Affiliates or Sublicensees, Net Sales of the Combination Product shall be calculated in a manner to be negotiated and agreed upon by the Parties, reasonably and in good faith, prior to any sale of such Combination Product, which shall be based upon the respective estimated commercial values of the proprietary active components of such Combination Product.

     Licensee’s or any of its Affiliate’s or Sublicensee’s transfer of Licensed Product to an Affiliate or Sublicensee shall not result in any Net Sales, unless the Licensed Product is consumed by such Affiliate or Sublicensee in the course of its commercial activities.

     1.115 “Non-Approvable Study” shall mean, with respect to any Registrational Study for the Initial Indication or any Additional Indication conducted pursuant to the Development Plan, that such study was determined by the applicable Regulatory Authority, or mutually by the Parties, to be insufficient to support Initial Regulatory Approval of the Licensed Product in the designated jurisdiction in the absence of substantial additional data or investment.

     1.116 “Notice Period” shall have the meaning set forth in Section 14.2.

     1.117 “Opt-In” shall have the meaning set forth in Section 2.5.6(a).

     1.118 “Opt-In Exercise Notice” shall have the meaning set forth in Section 2.5.6(b).

     1.119 “Opt-In Exercise Period” shall have the meaning set forth in Section 2.5.6(a).

     1.120 “Opting-Out Party” shall have the meaning set forth in Section 2.5.2(a).

     1.121 “Opt-Out” shall have the meaning set forth in Section 2.5.2(a).

     1.122 “Opt-Out Period” shall mean, with respect to any Unilateral Activity, the period commencing on the date on which an activity is deemed to be a Unilateral Activity pursuant to Section 2.5.2(a) and ending on the earlier to occur of (a) the date of completion of such Unilateral Activity or (b) the date on which the Opt-In Exercise Notice is received by the Developing Party, as applicable.

     1.123 “Party” and “Parties” shall have the meaning set forth in the preamble to this Agreement.

     1.124 “Patents” shall mean (a) all national, regional and international patents and patent applications, including provisional patent applications, (b) all patent applications filed either from such patents, patent applications or provisional applications or from an application claiming priority from either of these, including divisionals, continuations, continuations-in-part, provisionals, converted provisionals and continued prosecution applications, (c) any and all patents that have issued or in the future issue from the foregoing patent applications ((a) and (b)), including utility models, petty patents and design patents and certificates of invention, (d) any

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and all extensions or restorations by existing or future extension or restoration mechanisms, including revalidations, reissues, re-examinations and extensions (including any supplementary protection certificates and the like) of the foregoing patents or patent applications ((a), (b) and (c)) and (e) any similar rights, including so-called pipeline protection or any importation, revalidation, confirmation or introduction patent or registration patent or patent of additions to any of such foregoing patent applications and patents.

     1.125 “Payments” shall have the meaning set forth in Section 7.8.1.

     1.126 “Person” shall mean an individual, sole proprietorship, partnership, limited partnership, limited liability partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture or other similar entity or organization, including a government or political subdivision, department or agency of a government.

     1.127 “Pharmacovigilance Agreement” shall have the meaning set forth in Section 9.3.

     1.128 “Phase I” shall mean a human clinical trial of the Licensed Product, the principal purpose of which is a preliminary determination of safety in healthy individuals or patients or similar clinical study prescribed by the Regulatory Authorities, including the trials referred to in 21 C.F.R. §312.21(a), as amended.

     1.129 “Phase II” shall mean a human clinical trial of the Licensed Product, the principal purpose of which is a determination of safety and efficacy in the target patient population or a similar clinical study prescribed by the Regulatory Authorities, from time to time, pursuant to Applicable Law or otherwise, including the trials referred to in 21 C.F.R. §312.21(b), as amended.

     1.130 “Phase III” shall mean a human clinical trial of the Licensed Product on a sufficient number of subjects that is designated to establish that a pharmaceutical product is safe and efficacious for its intended use and to determine warnings, precautions and adverse reactions that are associated with such pharmaceutical product in the dosage range to be prescribed, which trial is intended to support marketing approval of the Licensed Product, including all tests and studies that are required by the FDA from time to time, pursuant to Applicable Law or otherwise.

     1.131 “Post Approval Study” shall mean any human clinical study or other test or study with respect to a product for an indication that (a) is conducted solely in support of pricing or reimbursement for such product in a country or (b) is not required to obtain or maintain Regulatory Approval for such product for such indication (for clarity, any human clinical study that is intended to expand the Product Labeling for such product shall be a Clinical Study). Subject to the foregoing, Post Approval Studies may include epidemiological studies, modeling and pharmacoeconomic studies, post-marketing surveillance studies, investigator sponsored studies and health economics studies.

     1.132 “Product Labeling” shall mean (a) the Regulatory Authority-approved full prescribing information for the Licensed Product for that country, including any required patient

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information; and (b) all labels and other written, printed or graphic matter upon a container, wrapper or any package insert utilized with or for the Licensed Product.

     1.133 “Product Trademarks” shall mean (a) the Trademark(s) for the Licensed Product Controlled by GPC Biotech during the term of this Agreement and used or intended for use in connection with the Commercialization of Licensed Products, and (b) such other Trademarks designated by the JCC in accordance with Section 3.4.4 and any registrations thereof or any pending applications relating thereto.

     1.134 “Promotional Materials” shall mean all sales representative training materials with respect to the Licensed Product and all written, printed, graphic, electronic, audio or video matter, including journal advertisements, sales visual aids, direct mail, medical information/education monographs, direct-to-consumer advertising, Internet postings, broadcast advertisements and sales reminder aids (e.g., scratch pads, pens and other such items) intended for use or used by a Party, its Affiliates or, with respect to Licensee, its Sublicensees or Distributors, in connection with any promotion of the Licensed Product, except Product Labeling for the Licensed Product.

     1.135 “Proposed Unilateral Activities” shall have the meaning set forth in Section 2.5.2.

     1.136 “Registrational Study” shall mean (a) in the case of a Clinical Study with respect to which GPC Biotech is the Development Lead, a pivotal Clinical Study for the Licensed Product for the Initial Indication or any Additional Indication that is designed to be sufficient to obtain Initial Regulatory Approval by the FDA of the Licensed Product for such indication or (b) in the case of a Clinical Study with respect to which Licensee is the Development Lead, a pivotal Clinical Study for the Licensed Product for the Initial Indication or any Additional Indication that is designed to be sufficient to obtain Initial Regulatory Approval by the applicable Regulatory Authorities in a given country or countries in the Licensee Territory, or if applicable, the European Union. For the avoidance of doubt, the SPARC Study shall be deemed to constitute a Registrational Study for the Initial Indication.

     1.137 “Registrational Study Budgeted Funding Commitment” shall mean [...***...].

     1.138 “Regulatory Approval” shall mean, with respect to a country in the Territory, any and all approvals (including Drug Approval Applications), licenses, registrations or authorizations of any Regulatory Authority necessary to commercially distribute, sell or market the Licensed Product in such country, including, where applicable, (a) pricing or reimbursement approval in such country, (b) pre- and post-approval marketing authorizations (including any prerequisite Manufacturing approval or authorization related thereto), (c) labeling approval and (d) technical, medical and scientific licenses.

     1.139 “Regulatory Authority” shall mean any applicable supra-national, federal, national, regional, state, provincial or local regulatory agencies, departments, bureaus,

*** Confidential Treatment Requested

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commissions, councils or other government entities regulating or otherwise exercising authority with respect to the Exploitation of the Licensed Compound or the Licensed Product in the Territory.

     1.140 “Regulatory Documentation” shall mean all applications, registrations, licenses, authorizations and approvals (including all Regulatory Approvals), all correspondence submitted to or received from Regulatory Authorities (including minutes and official contact reports relating to any communications with any Regulatory Authority) and all supporting documents and all clinical studies and tests, relating to the Licensed Product and all data contained in any of the foregoing, including all INDs, Drug Approval Applications, regulatory drug lists, advertising and promotion documents, Clinical Data, adverse event files and complaint files (but excluding any Drug Master File).

     1.141 “Regulatory Exclusivity Period” shall mean any period of data, market or other regulatory exclusivity, including any such periods listed in the FDA’s Orange Book or periods under national implementations of Article 10.1(a)(iii) of Directive 2001/EC/83 and all international equivalents.

     1.142 “Regulatory Lead” shall mean, with respect to a country or regulatory region, the Party that has primary responsibility for preparing, obtaining and maintaining Regulatory Approvals for, and for conducting communications with the Regulatory Authorities with respect to, the Licensed Product in such country or region as provided in Section 2.4.

     1.143 “Related Unilateral Activities” shall have the meaning set forth in Section 2.5.6(a).

     1.144 “Royalty Rate Floor” shall have the meaning set forth in Section 7.2.

     1.145 “Royalty Term” shall have the meaning set forth in Section 7.3.

     1.146 “Selected Development Activities” shall mean Development activities for the Licensed Product consisting of (a) any Exploratory Study or (b) other Development activities in each case ((a) and (b)) provided for in the Development Plan, excluding in each case ((a) and (b)) any Development activities associated with (i) the SPARC Study, (ii) any other Registrational Study and (iii) any Unilateral Activities.

     1.147 “SPARC Study” shall have the meaning set forth in Section 2.1.1.

     1.148 “Spectrum Agreement” shall mean that certain Co-Development and License Agreement between Spectrum Pharmaceuticals, Inc. (f/k/a Neotherapeutics, Inc.) and GPC Biotech AG, dated September 30, 2002, a redacted copy of which is on file with the United States Securities and Exchange Commission, as Exhibit 10.1 to GPC Biotech’s Form F-1, dated June 9, 2004.

     1.149 “Spectrum Payments” shall have the meaning set forth in Section 8.4.1(a).

     1.150 “Spectrum Royalty Term” shall have the meaning set forth in Section 7.3.

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     1.151 “Statement Cut-Off Date” shall have the meaning set forth in Section 2.5.6(b).

     1.152 “Sublicensee” shall mean a Person, other than an Affiliate, that is granted a sublicense by Licensee under the grant in Section 5.1 as provided in Section 5.3.

     1.153 “Supply Agreement” shall mean the agreement for supply of Licensed Product by GPC Biotech to Licensee executed by the Parties as of the Effective Date.

     1.154 “Supply Price” shall mean one hundred and ten percent (110%) of the Manufacturing Costs.

     1.155 “Territory” shall mean the GPC Biotech Territory and the Licensee Territory.

     1.156 “Third Party” shall mean any Person other than GPC Biotech, Licensee and their respective Affiliates.

     1.157 “Third Party Claims” shall have the meaning set forth in Section 13.1.

     1.158 “Third Party Payment” shall have the meaning set forth in Section 8.4.1(a).

     1.159 “Trademark” shall include any word, name, symbol, color, designation or device or any combination thereof, including any trademark, trade dress, brand mark, service mark, trade name, brand name, logo or business symbol, whether or not registered.

     1.160 “Unilateral Activities” shall have the meaning set forth in Section 2.5.2.

     1.161 “Unilateral Activity Cost Statement” shall have the meaning set forth in Section 2.5.6(b).

     1.162 “United States” or “U.S.” shall mean the United States of America, including its territories and possessions, the District of Columbia and Puerto Rico.

     1.163 “Valid Claim” shall mean, with respect to a particular country, (a) any claim of an issued and unexpired Patent in such country that (i) has not been held permanently revoked, unenforceable or invalid by a decision of a court or governmental agency of competent jurisdiction, which decision is unappealable or unappealed within the time allowed for appeal and (ii) has not been abandoned, disclaimed, denied or admitted to be invalid or unenforceable through reissue or disclaimer or otherwise in such country; or (b) a claim of a pending Patent application, which claim has not been abandoned or finally disallowed without the possibility of appeal or re-filing of the application; provided, however, that if a claim of a patent application has been pending for more than five (5) years, such claim shall not constitute a Valid Claim for the purposes of this Agreement unless and until a Patent issues with such claim.

     1.164 “VAT” shall have the meaning set forth in Section 7.8.2.

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ARTICLE 2

DEVELOPMENT AND REGULATORY

     2.1 Development of the Licensed Product.

          2.1.1 Ongoing Development. As of the Effective Date, GPC Biotech is conducting a Phase III Clinical Study for the Initial Indication described more fully in the Development Plan (the “SPARC Study”) and certain Phase I, Phase I/II and Phase II Clinical Studies for the Licensed Product in the Territory as listed in the Development Plan. The Parties acknowledge and agree that the SPARC Study is a pivotal study which is intended to be sufficient for the filing of an MAA for the Initial Indication in the European Union.

          2.1.2 Diligence.

               (a) In General. Subject to Section 2.1.2(c), each Party shall use Commercially Reasonable Efforts to perform the responsibilities assigned to it under the Development Plan and this Agreement expeditiously and efficiently and in accordance with the Development Budget. For clarity, nothing contained in this Section 2.1.2(a) shall operate to limit any right of the Parties to amend the Development Plan or Development Budget in accordance with the terms and conditions of this Agreement.

               (b) By Licensee. Without limitation to Section 2.1.2(a),

                    (i) Licensee shall use Commercially Reasonable Efforts (1) to Develop and obtain Regulatory Approval for the Licensed Product in all Major Market Countries in the Licensee Territory, and (2) to Develop and obtain Regulatory Approval for the Licensed Product in each other country in the Licensee Territory where performing such Development and seeking such Regulatory Approval would be Commercially Reasonable;

                    (ii) without limitation to Section 2.1.2(b)(i), Licensee shall use Commercially Reasonable Efforts to Develop and obtain Regulatory Approvals for the Licensed Product in each such country and with respect to such indications for which Clinical Data obtained from Clinical Studies performed hereunder is sufficient to support Regulatory Approval for the Licensed Product in such country; and

                    (iii) Notwithstanding anything contained in this Section 2.1.2, in no event shall Licensee have any diligence obligations with respect to the conduct of Clinical Studies that are Unilateral Activities of Licensee, except as otherwise provided in Section 2.6.2(d).

               (c) By GPC Biotech. Notwithstanding anything contained in this Section 2.1.2 or any other term or condition of this Agreement, (i) provided that GPC Biotech shall use Commercially Reasonable Efforts to perform the responsibilities assigned to it under the Development Plan with respect to the SPARC Study, in the event that the SPARC Study is a Non-Approvable Study in the United States, GPC Biotech shall have no obligation to perform

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any additional Registrational Study or part thereof and (ii) in no event shall GPC Biotech have any diligence obligations with respect to Unilateral Activities of GPC Biotech.

          2.1.3 Compliance. Each Party shall perform or cause to be performed, any and all of its Development obligations under this Agreement in good scientific manner, and in compliance with all Applicable Law, and shall endeavor to achieve the objectives of the Development Plan diligently and efficiently by allocating sufficient time, effort, equipment and skilled personnel to complete such Development activities successfully and promptly.

     2.2 Development Plan and Implementation.

          2.2.1 Development Plan.

               (a) As of the Effective Date, the Parties have agreed to the initial Development Plan. The Joint Development Committee shall review the Development Plan within one hundred and eighty (180) days after the Effective Date and, thereafter, at least annually, and shall make amendments thereto with respect to the Development of the Licensed Product in accordance with Section 2.5.1.

               (b) Any amendment to the Development Plan shall continue to provide for the joint Development by the Parties of the Licensed Product and shall assign responsibility for Development activities between the Parties by considering (i) the allocation of responsibility set out in the initial Development Plan, and (ii) the expertise and available resources of the Parties, including the ability to use the Parties’ respective existing facilities and infrastructure.

          2.2.2 Global Development Plan; Development Leads.

               (a) It is contemplated that from and after the Effective Date, the Clinical Studies and Post Approval Studies for the Licensed Product, where practicable and without any obligation to amend the initial Development Plan, shall be structured so as to support the filing of Drug Approval Applications for the Licensed Product in the United States and European Union.

               (b) Except as otherwise provided in the Development Plan, (i) Licensee shall be the Development Lead with respect any Clinical Studies, Post Approval Studies and other Development activities for the Licensed Product that are conducted solely in support of Regulatory Approvals for the Licensed Product or Commercialization of the Licensed Product in the Licensee Territory, including any Development activities that constitute Unilateral Activities of Licensee pursuant to Section 2.5.2 (collectively, the “Licensee Activities”), and (ii) GPC Biotech shall be the Development Lead with respect to all other Clinical Studies, Post Approval Studies and other Development activities for the Licensed Product, including any Development activities that constitute Unilateral Activities of GPC Biotech pursuant to Section 2.5.2 (collectively, “GPC Biotech Activities”).

          2.2.3 Responsibilities of the Development Lead.

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               (a) Under the direction and supervision of the JDC, and subject to the Development Plan and Budget, each Party shall have primary responsibility for the day-to-day implementation of the Clinical Studies and Post Approval Studies for the Licensed Product for which it is the Development Lead.

               (b) The Party that is not the Development Lead with respect to a Clinical Study or Post Approval Study for the Licensed Product shall cooperate with the Development Lead in conducting such Clinical Studies and Post Approval Studies and shall perform such activities with respect thereto as are assigned to it in the Development Plan under the direction of the Development Lead and subject to the Development Plan and Budget; provided, however, that in no event (i) shall GPC Biotech have any obligation to perform any such activities with respect to Licensee Activities without its consent, and (ii) shall either Party have any obligation (1) to cooperate with the Development Lead in conducting Unilateral Activities of such Development Lead, unless the Parties agree in writing to cooperate with respect thereto and the Development Lead agrees to reimburse the other Party for reasonable costs and expenses associated therewith, or (2) to otherwise perform any Development activities consisting of or supporting the Unilateral Activities of the other Party.

               (c) Subject to the provisions of Section 2.5.1, each Party shall prepare and propose, for consideration by the JDC, amendments to the Development Plan and Budget that may be necessary or desirable to efficiently and expeditiously complete the Development activities, including Clinical Studies and Post Approval Studies, for which it is the Development Lead. Further, Licensee shall, subject to the provisions of Section 2.5.1, prepare and propose, for consideration by the JDC, amendments to the Development Plan and Budget that may be necessary or desirable to efficiently and expeditiously obtain and maintain Regulatory Approvals and successfully Commercialize the Licensed Product in each country in the Licensee Territory.

     2.3 Development Budget.

          2.3.1 Amendment of the Development Budget. The Parties have agreed to the initial Development Budget. The Joint Development Committee shall review the Development Budget within one hundred and eighty (180) days after the Effective Date and, thereafter, at least annually, and shall make modifications thereto to reflect any amendments to the Development Plan made pursuant to Sections 2.2.1 and 2.5.1. With respect to any proposed amendments to the Development Plan, each Party shall, in consultation with the other Party, prepare and submit to the JDC, for its review and approval, a proposed budget in a format to be agreed by the Parties for the new Clinical Studies, Post Approval Studies or other Development activities for which it is the Development Lead, which budget shall include line item estimates of Collaboration Costs broken down on a Calendar Year basis.

          2.3.2 Cost Overruns.

               (a) In any Calendar Year, each Party shall promptly inform the other Party upon such Party determining that it is likely to overspend or underspend by more than ten percent (10%) its respective total Collaboration Costs set forth in the Development Budget for that Calendar Year.

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               (b) If in any such Calendar Year a Party exceeds its budgeted costs and expenses by more than ten percent (10%), the Party that has so exceeded its budget shall provide to the JDC and to the JEC (if the matter is escalated to the JEC because it cannot be resolved by the JDC) a full explanation for exceeding the Development Budget. If and to the extent that any such overspend (i) was outside the reasonable control of the applicable Party, or (ii) resulted from a reasonable or necessary acceleration of Development activities within a particular Calendar Year, some or all of which activities had been expected to occur in a subsequent Calendar Year; then (in each case (i) and (ii)), provided the applicable Party has promptly notified the other Party of such overspend and, in the case of overspends covered by clause (i) of this Section 2.3.2(b), used reasonable efforts to mitigate the size of such overspend, then such overspend shall be included in Collaboration Costs and shared by the Parties pursuant to Section 6.1.1.

               (c) To the extent that any overspend is not included in Collaboration Costs as provided in this Section 2.3.2, the Party that has exceeded its budget by more than ten percent (10%) for a Calendar Year shall be solely responsible for the overspend.

     2.4 Regulatory Matters.

          2.4.1 Regulatory Lead. Licensee shall be the Regulatory Lead with respect to any Drug Approval Applications and other Regulatory Approvals for the Licensed Product (which, for clarity, does not include filings of or with respect to INDs and other filings with respect to the Development of the Licensed Product, which shall be the responsibility of the applicable Development Lead) in the Licensee Territory. GPC Biotech shall be the Regulatory Lead with respect to any Drug Approval Applications or Regulatory Approvals for the Licensed Product (which, for clarity, does not include filings of or with respect to INDs and other filings with respect to the Development of the Licensed Product, which shall be the responsibility of the applicable Development Lead) in the GPC Biotech Territory.

          2.4.2 Regulatory Responsibilities With Respect to Licensee Territory; Preparation of Regulatory Submissions. As promptly as practicable after the Effective Date, under the direction and supervision of the JDC, Licensee shall assume control of and responsibility for all regulatory submissions with respect to Regulatory Approvals, including Drug Approval Applications, for the Licensed Product in the Licensee Territory and Licensee Activities in those countries where such activities are conducted. Ownership of Regulatory Approvals and related submissions within the Licensee Territory relating to the Licensed Product shall be governed by Section 8.1.3.

          2.4.3 Clinical and Non-Clinical Data.

                    (a) Subject to Section 2.5.5, each Party shall promptly provide to the other Party copies of all all clinical and non-clinical data, and other results and analyses with respect to any Development activities with respect to the Licensed Product, when and as such data, results and analyses become available; provided, however, in the event that GPC Biotech enters into an agreement with a GPC Biotech Counter-Party, GPC Biotech shall have no further obligation to provide Licensee with such data, results or analyses with respect to Unilateral

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Activities or any Development activities in connection with such agreement for which Licensee has not funded its share as determined hereunder or for which Licensee has Opted-Out.

                    (b) Subject to Section 2.5.5, each Party shall support the other, as may be reasonably necessary, in obtaining Regulatory Approvals for the Licensed Product, including providing necessary documents or other materials required by Applicable Law to obtain Regulatory Approvals, in each case in accordance with the terms and conditions of this Agreement and the Development Plan and Budget.

               2.4.4 Communications with Regulatory Authorities.

                    (a) Licensee Territory.

                         (i) In General. Licensee shall be responsible for any communications with the Regulatory Authorities occurring or required in connection with performing its responsibilities set forth in Section 2.4.2 and shall designate a representative to serve as the designated regulatory representative with respect to such communications.

                         (ii) Written Communications. Licensee, in consultation with GPC Biotech, shall prepare and submit to the JDC for its review, all material submissions (including any supplements or modifications thereto) to the Regulatory Authorities in the Licensee Territory or for which Licensee is the Development Lead. The JDC shall have the right to expeditiously review and comment on the content and subject matter of, and strategy for, each Drug Approval Application and other filing for Regulatory Approval, all correspondence submitted to the Regulatory Authorities related to the design of Clinical Studies and Post Approval Studies, and all proposed Product Labeling for the Licensed Product and related communications and decisions with the Regulatory Authorities (including the final approved Product Labeling for the Licensed Product and any changes thereto); provided, however, Licensee shall not be required to delay any submission to the applicable Regulatory Authorities if the JDC does not provide its comments within a reasonable time after receipt of such proposed material submissions, taking into account any submission deadlines imposed by the Regulatory Authorities. Without limiting the foregoing, Licensee shall promptly provide GPC Biotech with (1) copies of all material written or electronic communications received by Licensee, its Affiliates, Sublicensees or Distributors, from, or forwarded by Licensee or its Affiliates, Sublicensees or Distributors to, the Regulatory Authorities with respect to obtaining or maintaining any Regulatory Approvals in the Licensee Territory or any other Licensee Activities, and (2) copies of all contact reports produced by Licensee, its Affiliates, Sublicensees or Distributors, in each case ((1) and (2)) within two (2) Business Days of receiving, forwarding or producing any of the foregoing.

                    (b) GPC Biotech Territory.

                         (i) GPC Biotech shall be solely responsible for any communications with the Regulatory Authorities occurring or required in connection with obtaining or maintaining any Regulatory Approvals for the Licensed Product in the GPC Biotech Territory.

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                         (ii) GPC Biotech shall promptly provide Licensee with copies of all written or electronic correspondence material to the Development or Commercialization of the Licensed Product in the Licensee Territory received by GPC Biotech or its Affiliates from, or forwarded by GPC Biotech or its Affiliates to, the Regulatory Authorities with respect to obtaining or maintaining any Regulatory Approvals in the United States; provided, however, in the event that GPC Biotech enters into an agreement with a GPC Biotech Counter-Party, GPC Biotech shall have no further obligation to provide Licensee with such correspondence (to the extent GPC Biotech’s agreement with such GPC Biotech Counter-Party prohibits providing Licensee with such correspondence), except for any such correspondence that relates to matters that could reasonably be expected to have a material adverse effect on the Product Labeling in the Licensee Territory which must be provided to Licensee notwithstanding the foregoing.

                    (c) Adverse Event Experiences. Without limitation to anything contained in this Section 2.4.4, each Party shall provide to the other Party documentation concerning Adverse Event Experiences required to be reported to a Regulatory Authority pursuant to Applicable Law in accordance with Article 9.

               2.4.5 Meetings with Regulatory Authorities. Each Party shall provide the other Party with prior written notice of any Major Meeting promptly after the Party receives notice of the scheduling of such Major Meeting, when practicable, within such time period as may be necessary in order to give the other Party a reasonable opportunity to attend such Major Meeting. GPC Biotech shall be entitled to have reasonable representation present at, and subject to Section 2.4.6, to participate in at its expense, all such Major Meetings relating to the Licensed Product in the Licensee Territory; provided, however, that with respect to Major Meetings relating to Unilateral Activities of Licensee, GPC Biotech shall be entitled to attend at its expense all such Major Meetings strictly as a silent observer. Licensee shall be entitled to attend at its expense all such Major Meetings with the FDA relating to the Licensed Product in the GPC Biotech Territory strictly as a silent observer unless GPC Biotech otherwise agrees in writing to permit Licensee to participate actively in any such meeting; provided, however, that GPC Biotech shall have no obligation under this Section 2.4.5 to permit Licensee to attend any such Major Meeting to the extent it results from or otherwise relates to Unilateral Activities of GPC Biotech; provided, further, that in the event that GPC Biotech enters into an agreement with a GPC Biotech Counter-Party, GPC Biotech shall have no further obligation to permit Licensee to attend Major Meetings (to the extent GPC Biotech’s agreement with such GPC Biotech Counter-Party prohibits such attendance), except where the subject of such Major Meeting relates to matters that could reasonably be expected to have a material adverse effect on the Product Labeling in the Licensee Territory in which case Licensee shall continue to have the rights specified herein. The Parties, through the JDC, shall use reasonable efforts to agree in advance on the scheduling of such Major Meetings and, in the case of Major Meetings with respect to the Licensee Territory, on the objectives to be accomplished at, GPC Biotech’s active role with respect to, and the agenda for, such meetings. Each Party shall promptly forward to the other Party copies of all meeting minutes and summaries of all Major Meetings, as well as any significant written communications received from representatives of the Regulatory Authorities relating thereto.

               2.4.6 Pricing and Reimbursement Approvals. Licensee shall take the lead in all pricing and reimbursement approval proceedings relating to the Licensed Product in the

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Licensee Territory; provided that GPC Biotech shall have the right to have one (1) representative attend all meetings with Regulatory Authorities relating to pricing and reimbursement approvals strictly as a silent observer, but only if GPC Biotech’s presence is permitted by the relevant Regulatory Authority and is not otherwise prohibited by Applicable Law. Licensee shall provide GPC Biotech with reasonable advance notice of all such meetings and advance copies of all related documents (including documents to be submitted in connection with pricing and reimbursement approvals) and other relevant information relating to such meetings.

          2.4.7 Regulatory Records. Licensee and GPC Biotech each shall maintain, or cause to be maintained, records of its respective Development activities with respect to the Licensed Product in sufficient detail and in good scientific manner appropriate for patent and regulatory purposes, which shall be complete and accurate and shall fully and properly reflect all work done and results achieved in the performance of its respective Development activities, and which shall be retained by such Party for at least three (3) years after the termination of this Agreement, or for such longer period as may be required by Applicable Law. Each Party shall have the right, during normal business hours and upon reasonable notice, to inspect and copy any such records, except to the extent that a Party reasonably determines that such records contain Confidential Information that is not licensed to the other Party, or to which the other Party does not otherwise have a right hereunder. Licensee shall provide GPC Biotech with such additional information regarding the Licensee Activities as GPC Biotech may reasonably request from time to time.

     2.5 Plan Amendments; Unilateral Development.

          2.5.1 Criteria for Amendments to the Development Plan. Either Party, through its representatives on the JDC, may propose amendments to the Development Plan, including modifications to a Clinical Study or Post Approval Study already initiated and ongoing under the Development Plan or the addition of new Clinical Studies for Additional Indications for the Licensed Product (including for a higher line of therapy for an indication that is already under Development) and Post Approval Studies for the Licensed Product. Any material amendment proposed by a Party to the Development Plan with respect to a Clinical Study or Post Approval Study must meet the following criteria, as applicable:

               (a) Any proposed Exploratory Study, or any material amendment thereto, whether or not contemplated in the Development Plan as of the Effective Date, shall be designed to comply with all applicable regulatory guidelines of both the FDA and the EMEA;

               (b) Any proposed Post Approval Study, or any material amendment thereto, whether or not contemplated in the Development Plan as of the Effective Date, shall be designed to satisfy all applicable regulatory requirements of both the FDA and the EMEA;

               (c) Any proposed Registrational Study, whether or not contemplated in the Development Plan as of the Effective Date, shall be: (i) based on a scientific rationale supported by the results of an Exploratory Study; and (ii) designed to satisfy regulatory requirements of both the FDA and the EMEA, including, where applicable, conforming to any scientific advice obtained by a Party from Regulatory Authorities in its portion of the Territory. Any proposed Registrational Study that is not contemplated in the Development Plan as of the

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Effective Date must, in addition to the criteria in clause (i) and (ii) above, be for an indication having sufficient commercial potential in both the United States and Europe to justify conduct of the study taking into consideration the risks of adverse results.

               (d) Any material amendment proposed by a Party with respect to a Registrational Study already initiated and ongoing under the Development Plan must be either suggested by Regulatory Authorities or otherwise required or reasonably necessary to obtain Regulatory Approval in the proposing Party’s portion of the Territory.

     Notwithstanding the foregoing, either Party may propose a material amendment that does not meet the foregoing criteria if both Parties agree to the proposal. The Party that is proposing any amendment to the Development Plan pursuant to this Section 2.5.1 shall provide, at the other Party’s request, reasonable documentation to the JDC demonstrating that such amendment satisfies the foregoing criteria. Any Dispute in the JDC concerning whether a proposed amendment fails to meet the applicable criteria shall be referred to the JEC for resolution pursuant to Section 4.4.4, and, failing resolution by the JEC pursuant to Section 4.4.4 or by the Parties pursuant to Section 15.7.2(a)(iv), to arbitration in accordance with Section 15.7.4(b).

          2.5.2 Unilateral Activities.

               (a) With respect to any Clinical Study or Post Approval Study that satisfies the criteria set forth in Section 2.5.1, if either Party (the “Opting-Out Party”), pursuant to the terms of Section 2.6, opts-out (each, an “Opt-Out”) of: (a) any modification of a (i) Clinical Study or (ii) a Post Approval Study, in each case ((i) and (ii)) already initiated and ongoing under the Development Plan; or (b) initiation of (i) a Clinical Study (including a Registrational Study), or (ii) a Post Approval Study, in each case ((i) and (ii)) for any part of the Territory, the Party (the “Developing Party”) desiring to proceed with such activities (“Proposed Unilateral Activities”) shall prepare and provide to the JDC a proposed development plan and budget with respect thereto. Such proposed development plan and budget shall in each case be in a format and with such detail corresponding to the Development Plan in effect at such time. If the JDC determines or it is otherwise determined that any such Proposed Unilateral Activities comply and are otherwise consistent with Section 2.5.3, then such activities shall be deemed to be “Unilateral Activities” hereunder, and the Developing Party shall have the right to proceed with such Unilateral Activities in accordance with the terms and conditions of this Agreement.

               (b) Notwithstanding the foregoing, either Party may propose to the JDC as a Unilateral Activity a Clinical Study or Post Approval Study that is scientifically reasonable but does not satisfy the requirements of Section 2.5.1. In such event, the Parties may agree to incorporate such Clinical Study in the Development Plan as a joint activity hereunder or the proposing Party may conduct such Clinical Study or Post Approval Study as a Unilateral Activity. For purposes of this Agreement, the Party that is conducting such Unilateral Activity shall be deemed the Developing Party with respect to such Unilateral Activity and the other Party shall be deemed to be the Opting-Out Party with respect to such Unilateral Activity following confirmation from the other Party that it did not wish to Opt-In.

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          2.5.3 Limitations on Unilateral Activities. Notwithstanding anything contained in this Section 2.5, Licensee shall not have the right to conduct any Clinical Study or Post Approval Study with respect to the Licensed Product for its portion of the Territory where the proposed protocol of such study creates an unreasonable risk of adverse results that could reasonably be expected to have a material adverse effect on the Development or Commercialization of Licensed Product in the GPC Biotech Territory, including with respect to the ability of GPC Biotech to obtain or maintain Regulatory Approval for the Licensed Product for the Initial Indication or an Additional Indication in any country in such territory. Any Dispute in the JDC concerning whether such study could reasonably be expected to have such effect shall be referred to the JEC for resolution pursuant to Section 4.4.4, and, failing resolution by the JEC pursuant to Section 4.4.4 or by the Parties pursuant to Section 15.7.2(a)(v), to arbitration in accordance with Section 15.7.4(b).

          2.5.4 Costs of Unilateral Activities. In the case of Unilateral Activities (a) the Developing Party shall bear the sole cost and expense of such Unilateral Activities, and (b) the Opting-Out Party shall have no further financial obligation to support or otherwise fund any efforts in respect of such Unilateral Activities, unless it Opts-In pursuant to Section 2.5.6.

          2.5.5 Limitation on Rights to Clinical Data. With respect to any Unilateral Activities, the Opting-Out Party, notwithstanding the right of reference granted in Section 5.1.3 or 5.6, as applicable, shall not have the right to use or reference any Clinical Data or other information resulting from such Unilateral Activities to support an application for Regulatory Approval for the Licensed Product unless such Party Opts-In pursuant to Section 2.5.6, provided that if the inclusion of such Clinical Data or other information is required solely to comply with a requirement to report worldwide clinical studies to Regulatory Authorities in a filing seeking or maintaining a Regulatory Approval of the Licensed Product, the Opting-Out Party shall have the right to use such data and other information solely for such purpose and such use shall not trigger an Opt-In or other cost-sharing pursuant to Section 2.5.6.

          2.5.6 Opt-In Rights.

               (a) In General. The Opting-Out Party shall have the right to opt-in (“Opt-In”) with respect to any Unilateral Activities for which such Party Opted-Out at any time within fifty (50) days after receipt by the Opting-Out Party of a Completion Notice with respect thereto, in each case in accordance with this Section 2.5.6 (such period, the “Opt-In Exercise Period”); provided, that in each case the Opting-Out Party shall be required at the time of Opt-In with respect to any Unilateral Activities relating to a particular indication, to Opt-In with respect to (i) such Unilateral Activities, and (ii) any other Unilateral Activities with respect to such indication that are being conducted at such time or that previously were conducted by the Developing Party (“Related Unilateral Activities”). For clarity, the Opting-Out Party shall be permitted to Opt-In with respect to Related Unilateral Activities described in clause (ii) of this Section 2.5.6(a), notwithstanding the fact that the Opt-In Exercise Period with respect to Related Unilateral Activities may have earlier terminated without the Opting-Out Party’s having exercised an Opt-In with respect to such Related Unilateral Activities.

               (b) Opt-In Exercise. With respect to any Unilateral Activities conducted by the Developing Party, promptly after the completion thereof the Developing Party

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shall prepare a report that includes a reasonable summary of the data and top-line results with respect thereto and provide such report to the Opting-Out Party, together with a notice of completion of such Unilateral Activities (each a “Completion Notice”). The Completion Notice shall be accompanied by a written statement of costs and expenses (the “Unilateral Activity Cost Statement”) incurred by the Developing Party in connection with such Unilateral Activities and any Related Unilateral Activities through the last day of the Calendar Quarter immediately preceding the Calendar Quarter in which such notice is provided (such date, the “Statement Cut-Off Date”). In the event that the Opting-Out Party has an interest in Opting-In with respect to any Unilateral Activities, it shall provide written notice thereof to the other Party within the Opt-In Exercise Period (an “Opt-In Exercise Notice”). Thereafter, not later than sixty (60) days after receiving the Opt-In Exercise Notice, the Developing Party shall provide to the Opting-Out Party a statement of costs and expenses incurred by the Developing Party in connection with such Unilateral Activities for the period commencing on the day after the Statement Cut-Off Date and ending on the date of receipt of the Opt-In Exercise Notice, and the Opting-Out Party shall within sixty (60) days of the receipt of such statement make a payment to the Developing Party equal to [...***...] the Opting-Out Party’s funding contribution would have been had the Developing Party’s total costs and expenses with respect to such activity (and any Related Unilateral Activities) been Collaboration Costs, up to a maximum of [...***...]of the total costs and expenses of the Unilateral Activity. From and after the Developing Party’s receipt of the Opt-In Exercise Notice from the Opting-Out Party, such Unilateral Activities shall cease to be Unilateral Activities and shall be deemed Development activities under the Development Plan, and the Parties shall share all such costs and expenses as Collaboration Costs in accordance with Section 6.1.1.

     2.6 Opt-Out Rights.

          2.6.1 Contemplated Exploratory Studies or Post Approval Studies.

               (a) GPC Biotech shall have the right to Opt-Out for any reason with respect to the initiation of any Exploratory Study or Post Approval Study proposed by Licensee.

               (b) Licensee shall have the right to Opt-Out with respect to the initiation of any Exploratory Study or Post Approval Study proposed by GPC Biotech only if: (i) the total amount that Licensee has paid to GPC Biotech pursuant to Section 6.1 with respect to the SPARC Study and any Selected Development Activities (including such Licensee payments for expenses incurred in connection with the Development activities under the Development Plan not allocated to a particular Clinical Study or Post Approval Study), exceeds [...***...] (the “Initial Opt-Out Threshold”); or (ii) there is no reasonable scientific rationale for such proposed study. For clarity, except as otherwise provided in Section 2.6.3, if, with respect to any Exploratory Studies or Post Approval Studies, Licensee is not permitted to Opt-Out pursuant to this Section 2.6.1 prior to the initiation thereof, Licensee shall not have the right subsequently to Opt-Out of such Exploratory Studies or Post Approval Studies as a result of the actual amounts paid by Licensee with respect to the SPARC Study and Selected Development Activities exceeding the Initial Opt-Out Threshold as a result of any overruns included within Collaboration Costs pursuant to Section 2.3.2.

*** Confidential Treatment Requested

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          2.6.2 Contemplated Registrational Studies.

               (a) GPC Biotech shall have the right to Opt-Out for any reason with respect to the initiation of any Registrational Study proposed by Licensee.

               (b) Licensee shall have the right to Opt-Out with respect to the initiation of any Registrational Study proposed by GPC Biotech only if: (i) Licensee’s share of the total estimated costs of such Registrational Study is projected to exceed the Registrational Study Budgeted Funding Commitment; (ii) in the case of a Registrational Study for an Additional Indication, the available Clinical Data from Exploratory Studies relating to such Additional Indication does not support the asserted scientific rationale for such Registrational Study; (iii) the SPARC Study is a Non-Approvable Study with respect to the European Union and Licensee elects to conduct as a Unilateral Activity of Licensee an additional Registrational Study for the Initial Indication (a “Licensee Initial Indication Study”); (iv) GPC Biotech has elected not to pursue any additional Registrational Studies pursuant to Section 2.1.2(c) and Licensee elects to conduct as a Unilateral Activity of Licensee an additional Registrational Study for approval of an Additional Indication in the Licensee Territory; or (v) at such time, the Parties are in agreement as to the initiation of another Registrational Study other than the SPARC Study under the Development Plan.

               (c) Licensee shall not have the right to Opt-Out, in reliance on Section 2.6.2(b)(i), with respect to a Registrational Study proposed by GPC Biotech if GPC Biotech agrees in writing to increase the share of the Collaboration Costs that GPC Biotech otherwise would have an obligation to bear pursuant to Section 6.1.1 (i.e., sixty-five percent (65%)) with respect to such study and activities and to decrease the share of the Collaboration Costs that Licensee otherwise would have an obligation to bear with respect thereto pursuant to Section 6.1.1 (i.e., thirty-five percent (35%)), in each case by an amount sufficient to ensure that, taking account of such adjusted shares, the Collaboration Costs projected for the proposed Registrational Study would not result in Licensee’s funding obligation with respect to such budgeted Collaboration Costs exceeding the Registrational Study Budgeted Funding Commitment. Any such share adjustment shall apply with respect to the budgeted Collaboration Costs for such additional Registrational Study, and to the actual Collaboration Costs specifically identifiable or reasonably allocable to such additional Registrational Study, and the calculation of any overruns with respect to such Collaboration Costs, but for no other purpose. In the event of any Dispute between the Parties with respect to whether the Collaboration Costs projected for the proposed Registrational Study would result in Licensee’s funding obligation exceeding the Registrational Study Budgeted Funding Commitment, such Dispute shall be resolved pursuant to Section 15.7.4(b).

               (d) If, in reliance on Section 2.6.2(b)(iii), Licensee Opts-Out of any Registrational Study proposed by GPC Biotech and Licensee fails to use Commercially Reasonable Efforts to commence, conduct and complete the Licensee Initial Indication Study within a reasonable time, GPC Biotech shall have the right, upon thirty (30) days’ written notice to Licensee, to cause Licensee to Opt-In with respect to the Registrational Study for an Additional Indication with respect to which Licensee previously Opted-Out and with respect to any Related Unilateral Activities for such indication. Such Opt-In shall be deemed to be made pursuant to Section 2.5.6(b) (regardless of any prior termination or expiration of the Opt-In

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Exercise Period with respect to such study) as of the date on which Licensee receives from GPC Biotech such notice (and a statement of costs and expenses incurred to date by GPC Biotech in connection with such Registrational Study and any Related Unilateral Activities with respect to such Additional Indication). Licensee shall make a payment to GPC Biotech in the amount required pursuant to Section 2.5.6(b) no later than thirty (30) days after receiving from GPC Biotech such notice (and accompanying statement). In the event of any Dispute between the Parties with respect to whether Licensee has used Commercially Reasonable Efforts to commence, conduct and complete the Licensee Initial Indication Study within a reasonable time, such Dispute shall be resolved pursuant to Section 15.7.4(b).

               2.6.3 Material Modifications to Existing Studies. If a proposed amendment to the Development Plan and Budget materially modifies any Clinical Study or Post Approval Study being conducted under the Development Plan, each Party shall have the right to Opt-Out of such Clinical Study or Post Approval Study on a going forward basis, subject to the provisions of Sections 2.6.1(b) and 2.6.2(b). Upon and following such Opt-Out by a Party, such activity shall be deemed a Unilateral Activity of the other Party for purposes of Section 2.5.5.

               2.6.4 New Clinical Studies or Post Approval Studies. Each Party shall have the right to Opt-Out of any proposed new Clinical Study (including a Registrational Study) or Post Approval Study that is not contemplated in the Development Plan as of the Effective Date, subject to the provisions of Sections 2.6.1(b) and 2.6.2(b).

               2.6.5 Notice of Opt-Out. The Opting-Out Party shall provide the other Party with written notice of the Opting-Out Party’s intention to Opt-Out not later than thirty (30) days after the JDC receives pursuant to Section 2.5.1 a written proposal for a new Clinical Study or Post Approval Study or a material modification to a Clinical Study or Post Approval Study being conducted under the Development Plan. In such event, the provisions of Section 2.5.2 shall apply to the conduct of such study as a Unilateral Activity. With respect to a material modification to a Clinical Study or Post Approval Study for which a Party has Opted-Out, any Collaboration Costs that have been incurred prior to the beginning of an Opt-Out Period shall not be reduced or refundable to the Opting-Out Party.

          2.7 Supply of Licensed Product. Licensee shall purchase its supply of Licensed Product, and GPC Biotech agrees to supply to Licensee such quantities subject to the terms of the Supply Agreement.

ARTICLE 3

COMMERCIALIZATION

     3.1 Commercialization of the Licensed Product.

          3.1.1 In General. Except with respect to Joint Commercialization Activities, if any, Licensee shall have the sole right to Commercialize the Licensed Product in the Licensee Territory at its sole expense in accordance with the Commercialization Plan and shall do so in

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compliance with this Agreement and all Applicable Law. Joint Commercialization Activities, which are agreed by the Parties, shall be conducted by the Parties, in accordance with the Commercialization Plan and Budget and in compliance with Applicable Law.

     3.1.2 Commercialization Obligations. Licensee shall use Commercially Reasonable Efforts: (a) to Commercialize the Licensed Product in each country in the Licensee Territory where conducting such activities would be Commercially Reasonable; and (b) without limitation to the foregoing, within ninety (90) days after obtaining all Regulatory Approvals necessary in such a country in the Licensee Territory for the Commercialization of the Licensed Product for the Initial Indication or any Additional Indication that is the subject of a Follow Up Registrational Study, to commence Commercialization of the Licensed Product in such country. Licensee shall allocate sufficient time, effort and skilled personnel to achieve the objectives of the Commercialization Plan and each Country Commercialization Plan.

     3.1.3 Global Strategy.

              (a) Within six (6) months after the Effective Date, the Parties shall jointly develop the global strategy for Commercializing Licensed Product throughout the Territory which strategy shall support the goal of maximizing Product revenue and profit in both the Licensee Territory and the GPC Biotech Territory and (i) shall be consistent with any approved Product Labeling for the Licensed Product and (ii) take into account, where Commercially Reasonable, any unique market characteristics of any of the Major Market Countries in Europe and the ANZ Territory (the “Global Strategy”). Any Dispute regarding the development of the Global Strategy shall be referred to the JEC for resolution pursuant to Section 4.4.4, and, failing resolution by the JEC pursuant to Section 4.4.4, shall be subject to resolution under Section 15.7.2(a)(ii).

              (b) Licensee shall use Commercially Reasonable Efforts to ensure, wherever possible in keeping with its obligation to use Commercially Reasonable Efforts in the Commercialization of the Licensed Product, that the branding, positioning and messaging for the Licensed Product in the Licensee Territory is consistent with such Global Strategy for the Licensed Product; provided however, that Licensee may not act in any manner that is inconsistent with the Global Strategy with respect to the branding, positioning and messaging for the Licensed Product that could reasonably result in a material adverse effect on the Commercialization of the Licensed Product in the GPC Biotech Territory. Any Dispute in the JCC concerning whether the branding, positioning or messaging for the Licensed Product in the Licensee Territory is consistent with such Global Strategy or whether any action of the Licensee that is inconsistent with the Global Strategy with respect to the branding, positioning and messaging for the Licensed Product could reasonably result in a material adverse effect on the Commercialization of the Licensed Product in the GPC Biotech Territory shall be referred to the JEC for resolution pursuant to Section 4.4.4, and, failing resolution by the JEC pursuant to Section 4.4.4, shall be subject to resolution under Section 15.7.2(a)(vi).

     3.1.4 Product Trademarks. Except with respect to the Corporate Names as provided in Section 3.4.2, Licensee and its Affiliates, Sublicensees and Distributors shall Commercialize the Licensed Product solely under the Product Trademarks designated by the JCC pursuant to Section 3.4.4.

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     3.2 Commercialization Plan and Implementation.

             3.2.1 Commercialization Plan.

     The Commercialization of the Licensed Product in the Licensee Territory and any Joint Commercialization Activities shall be conducted pursuant to a comprehensive multi-year plan and budget to be prepared by Licensee pursuant to Section 3.2.2 with respect to the Licensee Territory, and by the JCC pursuant to Section 4.3.2(d) with respect to any Joint Commercialization Activities, and approved by the JCC pursuant to Section 4.3.2(c) (the “Commercialization Plan”), which plan and budget shall be consistent with the Global Strategy and the Parties’ respective obligations set forth in Section 3.1. The Commercialization Plan shall include: for each Major Market Region and each Major Market Country in the Licensee Territory (i) general strategies for the promoting, Detailing, marketing and distribution of the Licensed Product, (ii) pre-launch commercialization activities and the expected date of launch, (iii) sales force size and allocation throughout the Licensee Territory, (iv) the expected frequency and position of Details to be carried out, (v) the nature of promotional activities and Licensed Product sampling activities, if any, (vi) market and sales forecasts for the Licensed Product, (vii) advertising, public relations and other promotional programs, including medical education programs such as professional symposia and speaker and peer-to-peer activity programs to be used in the Commercialization the Licensed Product, (viii) proposals for any Additional Indications or Post Approval Studies, (ix) projected Net Sales for Licensed Product, (x) reimbursement and pricing information, and (xi) plans regarding distribution and supply chain management; and (y) any Joint Commercialization Activities. The Parties agree that any forecasts provided by Licensee as part of the Commercialization Plan are Licensee’s good faith estimates based upon conditions then existing and shall not be binding upon Licensee.

             3.2.2 Review and Approval. No later than twelve (12) months prior to the expected date of the first Regulatory Approval of the Licensed Product, Licensee shall prepare for review and approval by the JCC a proposed Commercialization Plan for the Licensed Product from the date of launch through the third anniversary of December 31 of the Calendar Year in which the first Drug Approval Application for the Licensed Product is expected to be approved in the Licensee Territory. The Joint Commercialization Committee shall review such proposed plan within sixty (60) days after receipt thereof and amend such plan to include any Joint Commercialization Activities, as provided in Section 4.3.2. Thereafter, Licensee shall, on or before September 30 of each Calendar Year, provide the JCC with proposed amendments to the Commercialization Plan, which, after the first anniversary of December 31 of the Calendar Year in which the first Drug Approval Application for the Licensed Product is approved in the Licensee Territory, shall include the Commercialization Plan for the Calendar Year commencing on the third anniversary of January 1 of the then-current Calendar Year. The Commercialization Plan may not be amended in any manner that materially reduces Licensee’s Commercialization efforts to be made in the next two (2) full Calendar Years following such amendment unless such reduction in efforts is justified by circumstances or events beyond Licensee’s control that have had or would reasonably be expected to have a material adverse impact on the market for or the commercial potential of the Licensed Product in the Licensee Territory or any relevant portion of the Licensee Territory. The JCC, or if there is a dispute in the JCC, the JEC, shall endeavor to obtain approval for any amendment or addition to the Commercialization Plan by no later than

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November 30 of the Calendar Year in which it was proposed. Any Disputes resulting from review or approval of the Commercialization Plan or a Country Commercialization Plan shall be settled in accordance with Section 4.4.4 below, except with respect to disputes regarding Joint Commercialization Activities, for which the Parties must reach a mutually acceptable resolution (or otherwise discontinue such activities). Subject to the foregoing, the JCC may from time to time amend the Commercialization Plan with respect to the Joint Commercialization Activities. The Commercialization Plan and any amendment thereto shall be consistent with the Global Strategy.

             3.2.3 Other Country Commercialization Plans. In addition to the Country Commercialization Plan with respect to the Major Market Countries, Licensee shall provide to the JCC for its review and comment copies of the commercialization plans prepared by Licensee in the regular course of its business with respect to any other countries in the Licensee Territory (each such plan a “Country Commercialization Plan”).

       3.3 [...***...]. [...***...].

       3.4 Promotional Materials and Activities.

             3.4.1 In General. Except with respect to Promotional Materials that are jointly developed by the Parties pursuant to a Joint Commercialization Activity, Licensee shall be responsible for preparing all Promotional Materials used to support the Commercialization of the Licensed Product in the Licensee Territory, in consultation with the JCC. All such Promotional Materials shall be submitted to the JCC prior to use by Licensee; provided that the content of Promotional Materials, once submitted, need not be submitted again prior to re-use unless the Product Labeling for the Licensed Product applicable to such Promotional Materials has been changed since such prior submission date. All Promotional Materials shall be consistent with the Global Strategy, the Commercialization Plan, the applicable Country Commercialization Plan(s), Applicable Law and with the approved Product Labeling for the Licensed Product. Licensee shall be responsible for obtaining any approvals from the Regulatory Authorities in a country within the Licensee Territory required for the use of any Promotional Materials and shall submit all applicable Promotional Materials to the Regulatory Authorities in such country as required by Applicable Law.

             3.4.2 Markings. All Promotional Materials, packaging and Product Labeling for the Licensed Product used by Licensee, its Affiliates, Sublicensees or Distributors in connection with the Licensed Product in any country in the Licensee Territory shall (a) comply with the requirements of Section 8.1(c) of the Spectrum Agreement and (b) contain (i) the Product Trademarks, (ii) Corporate Names of Licensee and (to the extent permitted by Applicable Law) GPC Biotech where practical with equal prominence, and (iii) if required by Applicable Law, the logo and corporate name of the manufacturer (collectively, the

*** Confidential Treatment Requested

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“Markings”). The manner in which the Markings are to be presented on Promotional Materials, packaging and Product Labeling for the Licensed Product shall be subject to (y) prior review and approval by the JCC and (z) Sections 5.1.5, 5.5, 5.6 and 8.1.6.

             3.4.3 Audit. Upon request of GPC Biotech at reasonable intervals, Licensee shall provide to GPC Biotech copies or samples of any Promotional Materials, packaging and Product Labeling for the Licensed Product that have not been previously reviewed by GPC Biotech.

             3.4.4 Product Trademarks. The JCC shall discuss the Parties’ use of the Product Trademarks with respect to Commercialization and may, from time to time, recommend and approve additional Trademarks, packaging designs and other trade dress in connection with the foregoing for use in the Licensee Territory. The JCC shall have the right to designate additional Product Trademarks as may be reasonably required to address requirements under Applicable Law or to avoid adverse effects on the Commercialization of the Licensed Product in a particular country in the Licensee Territory resulting from local customs, language and other country-specific circumstances. For the avoidance of doubt, each such Trademark shall be treated as Product Trademark under the terms of this Agreement.

     3.5 Statements and Compliance with Applicable Law.

             3.5.1 Public Statements Regarding Licensed Product. Licensee shall be responsible for disseminating accurate information regarding the Licensed Product based on Product Labeling and Promotional Materials for the Licensed Product (and for causing its Affiliates, Sublicensees and Distributors to so disseminate such accurate information). In exercising its rights pursuant to this Article 3, Licensee shall seek to prevent claims or representations in respect of the Licensed Product or the characteristics of the Licensed Product (e.g., safety or efficacy) being made by or on behalf of it or its Affiliates, Sublicensees or Distributors (by members of its or their sales force or otherwise) that do not represent an accurate or fairly balanced summary or explanation of the Product Labeling for the Licensed Product in the country in question.

             3.5.2 Sales Force Compliance. Licensee shall instruct its sales representatives to and shall use Commercially Reasonable Efforts to train and monitor its sales representatives so that such sales representatives, (i) use only Promotional Materials (without any addition, deletion or other modification) approved for use under Section 3.4.1 for the promotion of the Licensed Product in the Licensee Territory, (ii) limit claims of efficacy and safety for the Licensed Product to those that are consistent with Applicable Law and with approved (by the appropriate Regulatory Authority) promotional claims in Product Labeling and Promotional Materials for the Licensed Product, and not add, delete or otherwise modify claims of efficacy and safety in the promotion of the Licensed Product in any respect from those claims of efficacy and safety that are contained in such approved Product Labeling and Promotional Materials and (iii) Commercialize the Licensed Product in accordance in all material respects with Applicable Law.

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             3.5.3 Medical and Other Inquiries. The Licensee shall be responsible for responding to all medical questions or inquiries from customers or others in the Licensee Territory relating to the Licensed Product sold in Licensee Territory. The Licensee shall keep such records and make such reports as are reasonably necessary to document such communications in compliance with all Applicable Law.

             3.5.4 Compliance with Laws. Licensee shall comply with all Applicable Law with respect to the Commercialization of Licensed Product. Neither Party shall be required to undertake any activity relating to the Commercialization of the Licensed Product that it believes, in good faith, may violate Applicable Law. Licensee shall in all material respects conform its practices and procedures relating to educating the medical community in the Licensee Territory with respect to the Licensed Product to any applicable industry association regulations, policies and guidelines, as the same may be amended from time to time and shall comply with Applicable Law with respect thereto.

     3.6 Use of Distributors. Notwithstanding any other term or condition of this Agreement to the contrary, Licensee shall not use Distributors to Commercialize the Licensed Product in any country in the Licensee Territory, except in the countries listed in Exhibit B hereto, which may be amended from time to time, upon mutual written agreement of the Parties.

     3.7 Sales and Distribution in Licensee Territory. Licensee shall be solely responsible for invoicing and booking sales, establishing all terms of sale (including pricing and discounts) and warehousing and distributing the Licensed Product in the Licensee Territory and shall perform all related services, in each case in a manner consistent with the terms and conditions of this Agreement. Licensee shall also be solely responsible for handling all returns, recalls or withdrawals in accordance with Article 10, order processing, invoicing and collection, distribution and inventory and receivables in the Licensee Territory.

     3.8 Unauthorized Sales. Licensee with respect to the Licensee Territory, and GPC Biotech with respect to the GPC Biotech Territory (a) shall, and shall cause its Affiliates, sublicensees and distributors to, distribute, market, promote, offer for sale and sell the Licensed Product only in its respective part of the Territory, and (b) shall not, and shall not permit its Affiliates, sublicensees or distributors to, distribute, market, promote, offer for sale or sell the Licensed Product directly or indirectly (i) to any Person outside its part of the Territory or (ii) to any Person inside its part of the Territory that (1) is reasonably likely to directly or indirectly distribute, market, promote, offer for sale or sell the Licensed Product outside its part of the Territory or assist another Person to do so or (2) has directly or indirectly distributed, marketed, promoted, offered for sale or sold the Licensed Product outside its part of the Territory or assisted another Person to do so. If Licensee, its Affiliates or any Sublicensees or Distributors receives any orders for the Licensed Product for the GPC Biotech Territory, such Person shall refer such orders to GPC Biotech. If GPC Biotech, its Affiliates or any sublicensees or distributors receives any orders for the Licensed Product for the Licensee Territory, such Person shall refer such orders to Licensee. Notwithstanding the foregoing, if any part of the European Union becomes part of the GPC Biotech Territory during the term of this Agreement, the foregoing obligations of this Section 3.8 shall not apply in

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relation to such territory and shall be replaced by the following: Licensee shall not actively solicit orders from customers based in such territory unless the rights to such territory are no longer held exclusively by GPC Biotech or one of its licensees. For the purposes of the preceding sentence, “actively solicit” includes, but is not limited to, the use of direct mail, calling on customers, placing advertisements or making other promotions specifically targeted at customers in such territory, or establishing warehouses or distribution outlets in such territory.

     3.9 Reporting. Licensee shall prepare and maintain complete and accurate records regarding Commercialization of the Licensed Product in the Licensee Territory and shall provide to GPC Biotech and the JCC a detailed report regarding such Commercialization at least twice per Calendar Year. Such report shall contain sufficient detail to enable GPC Biotech to assess Licensee’s compliance with the Global Strategy, the Commercialization Plan and the applicable Country Commercialization Plan(s) including: (i) Licensee’s activities with respect to achieving its general strategies for the promoting, detailing and marketing of the Licensed Product in such country(ies); (ii) pre-launch Commercialization activities; (iii) sales force size and allocation; (iv) the nature of promotional activities and Licensed Product sampling activities conducted, if any; (v) market and sales reports for the Licensed Product; (vi) an approximate number and position of Details carried out in the applicable period; (vii) the conduct of advertising, public relations and other promotional programs, including professional symposia and speaker and peer to peer activity programs used in the Commercialization of the Licensed Product; (viii) Net Sales of Licensed Product in the Licensee Territory; and (ix) actual expenditures with respect to the budgets set forth in the Commercialization Plan and Country Commercialization Plan, including the Commercialization Budget. Licensee shall provide GPC Biotech with such additional information regarding the Commercialization of the Licensed Product as GPC Biotech may reasonably request from time to time.

     3.10 Commercialization Budget. Except for Joint Commercialization Activities, Licensee shall be responsible for Commercialization in the Licensee Territory at its own cost and expense. The budget for Joint Commercialization Activities shall be set forth in the Commercialization Plan, as provided in Section 3.2.1.

             3.10.1 Amendment of the Commercialization Budget. The Joint Commercialization Committee shall review the Commercialization Budget at least annually, and shall make modifications thereto to reflect any changes to ongoing Joint Commercialization Activities or any unforeseen events. With respect to any such changes or unforeseen events, each Party shall, in consultation with the other Party, prepare and submit to the JCC a proposed budget in a format to be agreed by the Parties for the new or changed Joint Commercialization Activities, which budget shall include line item estimates of Collaboration Costs broken down on a Calendar Year basis.

             3.10.2 Cost Overruns.

                        (a) In any Calendar Year, each Party shall promptly inform the other Party upon such Party determining that it is likely to overspend or underspend by more than ten

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percent (10%) its respective total Collaboration Costs set forth in the Commercialization Budget for that Calendar Year.

                        (b) If in any such Calendar Year a Party exceeds its budgeted costs and expenses by more than ten percent (10%), the Party that has so exceeded its budget shall provide to the JCC and to the JEC (if the matter is escalated to the JEC because it cannot be resolved by the JCC) a full explanation for exceeding the Commercialization Budget. If and to the extent that any such overspend (i) was outside the reasonable control of the applicable Party, or (ii) resulted from a reasonable or necessary acceleration of Joint Commercialization Activities within a particular Calendar Year, some or all of which activities had been expected to occur in a subsequent Calendar Year; then (in each case (i) and (ii)), provided the applicable Party has promptly notified the other Party of such overspend and, in the case of overspends covered by clause (i) of this Section 3.10.2(b), used reasonable efforts to mitigate the size of such overspend, such overspend shall be included in Collaboration Costs and shared by the Parties pursuant to Section 6.1.1.

                        (c) To the extent that any overspend is not included in Collaboration Costs as provided in this Section 3.10.2, the Party that has exceeded its budget by more than ten percent (10%) for a Calendar Year shall be solely responsible for the overspend.

     3.11 GPC Biotech Territory. Licensee acknowledges and agrees that (a) GPC Biotech retains all rights to Exploit the Licensed Product in the GPC Biotech Territory and to Develop and Manufacture the Licensed Product in the Territory in connection therewith, and (b) GPC Biotech has and retains the right to enter into agreements or other arrangements with one or more Third Parties with respect to such Exploitation, Development and Manufacture, including license agreements, co-promotion agreements and supply agreements. GPC Biotech shall have the right to delegate one or more of its obligations with respect to activities conducted pursuant to this Agreement, in whole or in part, to any such Third Party and Licensee shall cooperate with such Third Party. GPC Biotech hereby guarantees the performance in accordance with the terms of this Agreement of any such Third Party to which GPC Biotech delegates obligations under this Agreement, and any such delegation shall not relieve GPC Biotech of its obligations under this Agreement, except to the extent they are satisfactorily performed by such Third Party.

ARTICLE 4

COLLABORATION MANAGEMENT

     4.1 Joint Executive Committee (JEC). Within thirty (30) days after the Effective Date, the Parties shall establish a joint executive committee (the “Joint Executive Committee” or “JEC”), which shall: (a) oversee the Development of the Licensed Product in the Territory, the Commercialization of the Licensed Product in the Licensee Territory and the Joint Commercialization Activities; (b) resolve Disputes that may arise in the JDC or the JCC; (c) coordinate the Parties’ activities under this Agreement, including oversight of the JDC and JCC; (d) review and approve decisions

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regarding Development and Commercialization of the Licensed Product as set forth in this Agreement, including Sections 6.1.5, 8.2.5, 8.4.1 and 11.6; (e) create such other committees with such responsibilities as the Parties may mutually agree to from time to time, such as, by way of example, a joint patent committee or joint manufacturing committee; and (f) perform such other functions as are set forth herein with respect to the JEC, or as the Parties may mutually agree in writing. The JEC shall have the membership and shall operate by the procedures set forth in Section 4.4.1. Each Party shall designate its initial members of the JEC within thirty (30) days after the Effective Date by written notice to the other Party.

     4.2 Joint Development Committee (JDC).

             4.2.1 Formation and Purpose. Within thirty (30) days after the Effective Date, the Parties shall form a joint development committee (the “Joint Development Committee” or “JDC”) to oversee, coordinate and expedite the Development of, and the filing of Drug Approval Applications and other regulatory filings for, the Licensed Product in the Territory in order to obtain and maintain Regulatory Approvals in the Licensee Territory. The JDC shall also facilitate the flow of information with respect to Development activities being conducted for the Licensed Product and direct and supervise all Clinical Studies and Post Approval Studies for the Licensed Product conducted under the Development Plan. The JDC shall have the membership and shall operate by the procedures set forth in Section 4.4.1. Each Party shall designate its initial members of the JDC within thirty (30) days after the Effective Date by written notice to the other Party.

             4.2.2 Specific Responsibilities of the JDC. In support of its responsibility for overseeing, coordinating and expediting the Development of, and regulatory filings for, the Licensed Product, the JDC shall: (a) review and, if necessary, amend the Development Plan and Development Budget from time to time, but no less frequently than once per Calendar Year; (b) establish a worldwide strategy for the Development and Regulatory Approval of the Licensed Product, consistent with the applicable Development Plan and Budget; (c) direct and supervise the implementation of the Development Plan for the Licensed Product; (d) review and approve the statistical analysis plans and protocols for all Clinical Studies for the Licensed Product conducted under the Development Plan and, in consultation with the JCC, Post Approval Studies for the Licensed Product conducted under the Development Plan, and any revisions thereto (in each case other than with respect to Unilateral Activities); (e) review and discuss the development plan for and execution of any Unilateral Activities; (f) review all proposed Product Labeling; (g) review all proposed Drug Approval Applications and other filings with the Regulatory Authorities with respect to Regulatory Approvals in the Licensee Territory; (h) monitor the progress of all Clinical Studies and Post Approval Studies for the Licensed Product, including reviewing costs and activities against the Development Plan and Budget; (i) facilitate the exchange of all information and data relating to all Clinical Studies, Post Approval Studies and other Development activities for the Licensed Product; (j) consult and coordinate with the JCC to assure a smooth transition from Development to Commercialization of the Licensed Product for each indication and with respect to Post Approval Studies or the proposed Development of Additional Indications and lines of therapy for the Licensed Product; (k) consult with the JCC with respect to such other matters as may have an effect on the Commercialization of the Licensed Product; (l) provide updates on JDC’s activities and achievements to the JEC no

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less often than each Calendar Quarter during the term of this Agreement; and (m) perform such other functions as are set forth herein or as the Parties may mutually agree in writing, except where in conflict with any provision of this Agreement.

     4.3 Joint Commercialization Committee (JCC).

             4.3.1 Formation and Purpose. GPC Biotech and Licensee shall establish a joint commercialization committee (the “Joint Commercialization Committee” or “JCC”) and hold the initial meeting of the JCC, as provided in Section 4.4.2, within ninety (90) days after the Effective Date, which Committee shall coordinate and oversee the Commercialization of the Licensed Product in the Licensee Territory to ensure consistent branding, messaging and positioning of the Licensed Product on a worldwide basis in accordance with the Global Strategy and direct any Joint Commercialization Activities undertaken by the Parties in accordance with Article 3. The JCC shall have the membership and shall operate by the procedures set forth in Section 4.4.1. Each Party shall designate its initial members of the JCC within thirty (30) days after the Effective Date by written notice to the other Party.

             4.3.2 Specific Responsibilities of the JCC. In support of its responsibility for coordinating and overseeing the Commercialization of the Licensed Product in the Licensee Territory and directing any Joint Commercialization Activities, the JCC shall: (a) review and provide a forum for the Parties to discuss the Global Strategy; (b) oversee the implementation of the Global Strategy by Licensee in the Licensee Territory; (c) review and approve the Commercialization Plan and Budget and determine conformance of the foregoing with the Global Strategy; (d) identify any activities that will be jointly performed by mutual written agreement of the Parties in support of Commercialization of the Licensed Product in the Territory (the “Joint Commercialization Activities”) and prepare and approve such portions of the Commercialization Plan and Budget with respect thereto; (e) review advertising materials and strategies and Promotional Materials to be used in the Licensee Territory, and Markings and Trademark usage with respect to the Licensed Product in the Licensee Territory and determine conformance with the Global Strategy; (f) facilitate the flow of information with respect to the Commercialization of the Licensed Product between the Parties; (g) review the periodic reports provided by Licensee pursuant to Section 3.9 and otherwise monitor Licensee’s activities under, and compliance with, the Commercialization Plan and Budget and each Country Commercialization Plan; (h) consult with the JDC with respect to all proposed Product Labeling for the Licensed Product; (i) consult with the JDC with respect to Commercialization issues that may arise with respect to the Development of the Licensed Product; (j) review all (i) Drug Approval Applications and other filings with the Regulatory Authorities with respect to Regulatory Approvals for the Licensed Product in the Licensee Territory, (ii) Post Approval Studies for the Licensed Product and Additional Indications and lines of therapy with respect to the Licensed Product and (iii) otherwise work to assure a smooth transition from Development to Commercialization of the Licensed Product for each indication; (k) provide updates on the JCC’s activities and achievements to the JEC no less frequently than each Calendar Quarter during the term of this Agreement; and (l) perform such other functions as are set forth herein or as the Parties may mutually agree in writing.

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     4.4 General Provisions Governing Committees. The following general provisions shall govern the conduct of the JEC, JDC, JCC and such other committees as the JEC may establish from time to time under this Agreement (each, a “Committee”), except as otherwise expressly provided elsewhere in this Agreement or as agreed to by the Parties in writing:

             4.4.1 Membership. Each Committee shall include an equal number of representatives from each of the Parties, each with the requisite experience and seniority to enable them to make decisions on behalf of the Parties with respect to the issues falling within the jurisdiction of such Committee. From time to time, each Party may substitute one or more of its representatives to a Committee on written notice to the other Party. GPC Biotech shall designate one of its representatives on the JEC and JDC to serve as chairperson of such Committees and Licensee shall designate one of its representatives to serve as chairperson of the JCC, which designation such Party may change from time to time by written notice to the other Party. GPC Biotech shall have the right to designate as its representatives on a Committee one or more representatives of Spectrum Pharmaceuticals, Inc. or any GPC Biotech Counter-Party.

             4.4.2 Meetings and Minutes. Each Committee shall meet quarterly, or as otherwise agreed to by the Parties, with the location of such meetings alternating between locations designated by GPC Biotech and locations designated by Licensee, provided that each Committee may meet by teleconference if in-person meetings are not feasible. The chairperson of the Committee shall be responsible for calling meetings, provided that the chairperson shall call a meeting of the Committee promptly upon the reasonable request of Licensee, in the case of the JEC or JDC, or GPC Biotech, in the case of the JCC. The Parties shall provide to the other Party proposed agenda items along with appropriate information at least ten (10) Business Days in advance of each meeting of the applicable Committee; provided that under exigent circumstances requiring Committee input, a Party may provide its agenda items to the other Party within a shorter period of time in advance of the meeting, or may propose that there not be a specific agenda for a particular meeting, so long as such other Party consents to such later addition of such agenda items or the absence of a specific agenda for such Committee meeting, such consent not to be unreasonably withheld or delayed. The Party that designates the location of a meeting shall prepare and circulate for review and approval of the Parties minutes of such meeting within ten (10) Business Days after such meeting. The Parties shall agree on the minutes of each meeting promptly, but in no event later than the next meeting of the applicable Committee.

             4.4.3 Procedural Rules. A Committee shall have the right to adopt such standing rules as shall be necessary for its work to the extent that such rules are not inconsistent with this Agreement. A quorum of a Committee shall exist whenever there is present at a meeting at least one representative appointed by each Party. Members of a Committee may attend a meeting either in person or by telephone, video conference or similar means in which each participant can hear what is said by, and be heard by, the other participants. Representation by proxy shall be allowed. A Committee shall take action by consensus of the members present at a meeting at which a quorum exists, with each Party having a single vote irrespective of the number of representatives of such Party in attendance or by a written resolution signed by a representative of each of the members of the Committee. Employees or consultants of either Party that are not members of a Committee may attend any meeting of such Committee;

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provided, however, that such attendees (a) shall not vote or otherwise participate in the decision-making process of such Committee and (b) are bound by obligations of confidentiality and non-disclosure equivalent to those set forth in Article 11.

             4.4.4 Dispute Resolution. If a Committee (other than the JEC) cannot, or does not, reach consensus on an issue, then the dispute shall be referred to the JEC for resolution and a special meeting of the JEC may be called for such purpose. If the JEC cannot, or does not, reach consensus on an issue, including any dispute arising in another Committee, then the dispute resolution provisions set forth in Section 15.7 shall apply.

             4.4.5 Limitations on Authority. Each Party shall retain the rights, powers and discretion granted to it under this Agreement and no such rights, powers, or discretion shall be delegated to or vested in a Committee unless such delegation or vesting of rights is expressly provided for in this Agreement or the Parties expressly so agree in writing. No committee shall have the power to amend, modify or waive compliance with this Agreement, which may only be amended or modified as provided in Section 15.9 or compliance with which may only be waived as provided in Section 15.12.

             4.4.6 Interactions Between Committees and Internal Teams. The Parties recognize that each Party possesses an internal structure (including various committees, teams and review boards) that will be involved in administering such Party’s activities under this Agreement. Each Committee shall establish procedures to facilitate communications between such Committee and the relevant internal committee, team or board of each of the Parties in order to maximize the efficiency of the Committees and the performance of the Parties of their obligations under this Agreement, including by requiring appropriate members of such Committee to be available at reasonable times and places and upon reasonable prior notice for making appropriate oral reports to, and responding to reasonable inquiries from, the relevant internal committee, team or board.

             4.4.7 Alliance Managers.

                        (a) Appointment. Within thirty (30) days of the Effective Date, each Party shall appoint a single individual to act as a single point of contact between the Parties to assure a successful collaboration (each, an “Alliance Manager”). Each Party may change its designated Alliance Manager from time to time upon written notice to the other Party. Any Alliance Manager may designate a substitute to temporarily perform the functions of that Alliance Manager by written notice to the other Party.

                        (b) Responsibilities. The Alliance Managers shall attend all Committee meetings and support the representatives of each Committee in the discharge of their responsibilities. Alliance Managers shall be nonvoting participants in such Committee meetings, unless they are also appointed members of such Committee pursuant to Section 4.4.1; provided, however, that an Alliance Manager may bring any matter to the attention of any Committee if such Alliance Manager reasonably believes that such matter warrants such attention. Each Alliance Manager shall be charged with creating and maintaining a collaborative work environment within and among the Committees. In addition, each Alliance Manager: (i) shall be the point of first referral in all matters of conflict resolution; (ii) shall coordinate the relevant

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functional representatives of the Parties in developing and executing strategies and plans for the Licensed Product in an effort to ensure consistency and efficiency throughout the Territory; (iii) shall provide a single point of communication for seeking consensus both internally within the respective Parties’ organizations and between the Parties regarding key strategy and plan issues; (iv) shall identify and bring disputes to the attention of the appropriate Committee in a timely manner; (v) shall plan and coordinate cooperative efforts and internal and external communications; and (vi) shall take responsibility for ensuring that governance activities, such as the conduct of required Committee meetings and production of meeting minutes occur as set forth in this Agreement, and that relevant action items resulting from such meetings are appropriately carried out or otherwise addressed.

ARTICLE 5

GRANT OF RIGHTS

     5.1 Grants to Licensee. Subject to the terms and conditions of this Agreement and the applicable terms and conditions of the Spectrum Agreement, GPC Biotech (on behalf of itself and its Affiliates) hereby grants to Licensee:

             5.1.1 an exclusive (including with regard to GPC Biotech and its Affiliates), royalty-bearing license, with the right to grant sublicenses in accordance with Section 5.3, under the GPC Biotech Patents, the GPC Biotech Know-How, the Joint Patents (to the extent Controlled by GPC Biotech) and the Joint Know-How (to the extent Controlled by GPC Biotech) to obtain, maintain and hold Regulatory Approvals for and to Commercialize the Licensed Product in the Field in the Licensee Territory;

             5.1.2 a royalty bearing, non-exclusive license, with the right to grant sublicenses in accordance with Section 5.3, under the GPC Biotech Patents, the GPC Biotech Know-How, the Joint Patents (to the extent Controlled by GPC Biotech) and the Joint Know-How (to the extent Controlled by GPC Biotech) to Develop (but not to Manufacture) the Licensed Product in the Field in the Territory as set forth in the Development Plan, and, subject to the provisions of Section 2.5 with respect to Unilateral Activities, solely for purposes of exercising its rights under Section 5.1.1;

             5.1.3 subject to Section 2.5.5, an exclusive royalty-bearing license and right of reference in the Licensee Territory, with the right to grant further sublicenses and rights of reference to Sublicensees in accordance with Section 5.3, under GPC Biotech’s right, title and interest in and to any Regulatory Approvals, Drug Master File and all Regulatory Documentation that GPC Biotech may Control with respect to the Licensed Product as necessary to exercise its rights under the grants in Sections 5.1.1 and 5.1.2;

             5.1.4 subject to Section 5.5, a royalty-bearing license, exclusive in the Licensee Territory, with the right to grant sublicenses in accordance with Section 5.3, to use the Product Trademarks as necessary to exercise its rights under the grants in Sections 5.1.1 and 5.1.2; and

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             5.1.5 subject to Sections 5.5 and 8.1.6, a non-exclusive, non-transferable (except to Affiliates or as the Parties may agree by mutual written consent, such consent not to be unreasonably withheld or delayed) license, without the right to grant sublicenses, except in connection with the grant of sublicenses pursuant to Section 5.3, to use certain of GPC Biotech’s Corporate Names as necessary to exercise its rights under the grants set forth in Sections 5.1.1 and 5.1.2, as specifically designated by GPC Biotech with respect to a country or as required by Applicable Law to identify GPC Biotech as having Developed, Manufactured or Commercialized the Licensed Product sold in such country, and for no other purpose.

Licensee acknowledges that (a) the GPC Biotech Know-How and the information included in the Drug Master Files and the Regulatory Documentation are secret and substantial and that without GPC Biotech Know-How, the Drug Master Files and the Regulatory Documentation Licensee would not be able to obtain and maintain Regulatory Approvals, (b) such Regulatory Approvals will allow Licensee to obtain and maintain Regulatory Exclusivity Periods with respect to the Licensed Product, (c) access to GPC Biotech Know-How, the rights with respect to the Drug Master Files and the Regulatory Documentation and such Regulatory Approvals and the license to the Product Trademark will provide Licensee with a competitive advantage in the marketplace beyond the exclusivity afforded by the GPC Biotech Patents and the Regulatory Exclusivity Period and (d) the milestone payments and royalties set forth in Sections 7.1.2 and 7.2 are, in part, intended to compensate GPC Biotech for such exclusivity and such competitive advantage. The Parties agree that the royalty rates set forth in Section 7.2 reflect a reasonable allocation of the values provided by GPC Biotech to Licensee.

     5.2 Retention of Rights. Notwithstanding anything to the contrary in this Agreement, GPC Biotech retains all right, title and interest in and to the GPC Biotech Patents, the GPC Biotech Know-How, the Joint Patents (to the extent Controlled by GPC Biotech) and the Joint Know-How (to the extent Controlled by GPC Biotech), the GPC Biotech Corporate Name, the Drug Master Files, the Regulatory Documentation and the Product Trademarks as may be necessary or useful (a) to obtain, maintain and hold Regulatory Approvals for, and to market, sell, have sold and otherwise Commercialize, the Licensed Product in the GPC Biotech Territory, (b) to Develop and Exploit the Licensed Product in the Territory to exercise its rights and perform its obligations hereunder and to market, sell and have sold and otherwise Commercialize the Licensed Product in the GPC Biotech Territory, (c) to use and Exploit the Drug Master Files, Regulatory Documentation, Product Trademarks and GPC Biotech Corporate Name for any and all purposes, subject only GPC Biotech’s obligations expressly set forth hereunder with respect thereto, and (d) to Manufacture and have Manufactured the Licensed Compound and the Licensed Product in the Territory. Except as expressly provided herein, GPC Biotech grants no other right or license, including any rights or licenses to the GPC Biotech Patents, the GPC Biotech Know-How, Drug Master Files, the Regulatory Data, the Product Trademarks, the GPC Biotech Corporate Name, the Licensed Compound, any other Patent or Intellectual Property Rights or any Improvements to any of the foregoing not otherwise expressly granted herein.

     5.3 Sublicenses. The rights and licenses granted to Licensee under Section 5.1 shall include the right to grant sublicenses (or further rights of reference to Sublicensees) in the Field in the Licensee Territory, only with GPC Biotech’s prior written consent (such consent not to be unreasonably withheld or delayed) and the consent of any

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applicable Third Party licensor to the extent required under any license agreement with such Third Party; provided, however, that: (a) Licensee undertakes to use all commercially reasonable efforts to procure the performance by any Sublicensee of the terms of each such sublicense and (b) any Sublicensee shall comply with the applicable terms and conditions of this Agreement and of the Spectrum Agreement. Licensee hereby guarantees the performance of its Affiliates, Distributors and permitted Sublicensees that are sublicensed as permitted herein, and the grant of any such sublicense shall not relieve the Licensee of its obligations under this Agreement, except to the extent they are satisfactorily performed by such Sublicensee. Any such permitted sublicenses shall be consistent with and subject to the terms and conditions of this Agreement. A copy of any sublicense agreement executed by Licensee (with financial terms redacted) shall be provided to the GPC Biotech within fourteen (14) days of its execution.

     5.4 Right of First Negotiation. In the event that GPC Biotech Controls any Derivative Compound during the term of this Agreement for which there is clinical data demonstrating efficacy, GPC Biotech shall provide to Licensee written notice thereof (each, a “Compound Option Notice”), and Licensee shall have an exclusive option and right of first negotiation to obtain rights to Commercialize such Derivative Compound in the Licensee Territory in the Field by giving written notice to GPC Biotech within thirty (30) days after Licensee’s receipt of such Compound Option Notice. If Licensee fails to provide timely written notice of its desire to Commercialize such Derivative Compound, or notifies GPC Biotech in writing that Licensee does not desire to acquire such rights and obligations, then GPC Biotech shall have the right to enter into an agreement with a Third Party to Commercialize and otherwise Exploit such Derivative Compound, without any further obligation to negotiate with Licensee, or provide to Licensee a right of negotiation, with respect thereto. If Licensee provides timely written notice of interest, then the Parties shall negotiate in good faith with respect to the foregoing, but neither Party shall have any obligation to enter into any agreement unless they are able to agree on mutually acceptable terms and conditions at such time. In the event the Parties are unable to conclude such an agreement within [...***...] after receipt by GPC Biotech of Licensee’s written notice of interest, Licensee shall provide to GPC Biotech a detailed written summary of the terms on which Licensee would have been prepared to conclude such agreement. If Licensee indicates in writing at such time to GPC Biotech that Licensee desires to continue negotiations with GPC Biotech, the Parties shall continue to negotiate in good faith, provided that GPC Biotech shall be free from and after the end of such [...***...] negotiation period to negotiate and enter into agreements with Third Parties; provided, further that, for a period of [...***...] after the end of such [...***...] negotiation period, GPC Biotech shall not enter into any such agreement on any terms less favorable to GPC Biotech, when taken as a whole, than those set forth in Licensee’s written offer to GPC Biotech.

     5.5 Use of Trademarks and Corporate Names.

             5.5.1 GPC Biotech shall have the sole right to own and, subject to Section 3.4.4 with respect to the Licensee Territory, determine the Product Trademarks to be used with respect to the Exploitation of the Licensed Product on a worldwide basis. Licensee shall not, and shall not permit its Sublicensees, Distributors or Affiliates to use in their respective businesses, any Trademark that is confusingly similar to, misleading or deceptive with respect to or that dilutes

*** Confidential Treatment Requested

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any (or any part) of the Product Trademarks. Licensee shall, and shall cause its Sublicensees, Distributors and Affiliates to, (y) conform to the customary industry standards for the protection of Trademarks for pharmaceutical products and such guidelines of GPC Biotech (as provided in writing by GPC Biotech) with respect to manner of use of the Product Trademarks and (z) maintain the quality standards of GPC Biotech with respect to the goods sold and services provided in connection with such Product Trademarks. Licensee shall, and shall cause its Affiliates, Sublicensees and Distributors to, use commercially reasonable efforts not to do any act which endangers, destroys or similarly affects, in any material respect, the value of the goodwill pertaining to the Product Trademarks. Licensee shall not, and shall not permit its Sublicensees, Distributors or Affiliates to, attack, dispute or contest the validity of or ownership of such Product Trademark anywhere in the Territory or any registrations issued or issuing with respect thereto. Licensee acknowledges and agrees that no ownership rights are vested or created in such Product Trademark anywhere in the Territory by the licenses and other rights granted in Section 5.1 and that all use of such Product Trademark by Licensee, its Sublicensees, Distributors and Affiliates, whether in combination with or apart from Licensee Corporate Names, including any goodwill generated in connection therewith, inures to the benefit of GPC Biotech, and GPC Biotech may call for a confirmatory assignment thereof.

             5.5.2 With respect to any Corporate Names licensed to a Party under Sections 5.1.5 or 5.6.2, such Party agrees to conform to the customary guidelines of the granting Party with respect to manner of use (as provided in writing by the owner of the Corporate Name), and to maintain the quality standards of such granting Party with respect to the goods sold and services provided in connection with such Party’s Corporate Names. Each Party shall use commercially reasonable efforts not to do any act which endangers, destroys or similarly affects the value of the goodwill pertaining to the other Party’s Corporate Names. Each Party shall execute any documents required in the reasonable opinion of the other Party to be entered as a “registered user” or recorded licensee of the other Party’s Corporate Names or to be removed as registered user or licensee thereof.

     5.6 Grants to GPC Biotech. Subject to the terms and conditions of this Agreement, Licensee (on behalf of itself and its Affiliates) hereby grants to GPC Biotech:

             5.6.1 a perpetual, irrevocable royalty-free license, with the right to sublicense through multiple tiers of sublicensees, under the Licensee Patents, Licensee Know-How, the Joint Patents (to the extent Controlled by Licensee) and Joint Know-How (to the extent Controlled by Licensee):

                        (a) to Develop the Licensed Product in the Field in the Territory in accordance with the Development Plan or as otherwise provided in Article 2, which license shall be co-exclusive with Licensee (except as otherwise provided in Section 14.8.2 below);

                        (b) to obtain, maintain and hold Regulatory Approvals for the Licensed Product in the Field in the GPC Biotech Territory, which license shall be exclusive (except as otherwise provided in Section 14.8.2 below);

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               (c) to Exploit the Licensed Compound and the Licensed Product in the Field in the Territory as necessary or useful to exercise its rights and perform its obligations hereunder, and the right to otherwise Exploit the Licensed Compound and the Licensed Product in the GPC Biotech Territory, which license shall be exclusive in the GPC Biotech Territory (except as otherwise provided in Section 14.8.2 below); and

               (d) to Manufacture and have Manufactured the Licensed Compound and the Licensed Product in the Territory, which grant shall be exclusive (except as otherwise provided in Section 14.8.2 below).

Further, subject to Section 2.5.5, Licensee (on behalf of itself and its Affiliates and Sublicensees) grants to GPC Biotech a royalty free license and right of reference, with the right to grant further rights of reference, under Licensee’s right, title and interest in and to the Regulatory Approvals and any Regulatory Documentation with respect thereto that Licensee may Control with respect to the Licensed Product as necessary to conduct Manufacturing and Development throughout the Territory in accordance with the terms hereof and as necessary to Exploit the Licensed Product in the Field in the GPC Territory, which license and right shall be exclusive in the GPC Biotech Territory; and

          5.6.2 subject to Sections 5.5 and 8.1.6, a non-exclusive, non-transferable (except to Affiliates or as the Parties may agree by mutual written consent, such consent not to be unreasonably withheld or delayed) license, without the right to grant sublicenses, to use certain of Licensee’s Corporate Names to exercise GPC Biotech’s rights under the grants set forth in this Section 5.6, as specifically designated by Licensee with respect to a country as necessary or as required by Applicable Law to identify Licensee as having Developed, Commercialized or performed other activities with respect to the Licensed Product sold in such country, and for no other purpose.

     5.7 No Implied Rights. For the avoidance of doubt, Licensee and its Affiliates, Sublicensees and Distributors shall have no right, express or implied, with respect to the GPC Biotech Patents, the GPC Biotech Know-How, the Regulatory Documentation, the Drug Master Files, the Product Trademarks and the GPC Biotech Corporate Names, and GPC Biotech and its Affiliates and sublicensees shall have no right, express or implied, with respect to the Licensee Patents, the Licensee Know-How, the Regulatory Documentation and the Licensee Corporate Names, except, in each case, as expressly provided in Sections 5.1 and 5.6.

ARTICLE 6

COLLABORATION COSTS

     6.1 General.

          6.1.1 Responsibility for Collaboration Costs. The Parties shall share all Collaboration Costs in the following proportions: GPC Biotech shall bear sixty-five percent

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(65%) of all Collaboration Costs and Licensee shall bear thirty-five percent (35%) of all Collaboration Costs.

          6.1.2 Initial Collaboration Costs. On or before January 3, 2006, Licensee shall make a payment to GPC Biotech in the amount of Nineteen Million One Hundred Thousand U.S. Dollars ($19,100,000), representing its thirty-five percent (35%) share of (a) the Collaboration Costs incurred by GPC Biotech after October 1, 2005 and prior to the Effective Date and (b) those payments on Collaboration Costs identified in Section 6.1.6(a).

          6.1.3 FTE Costs. Each Party shall record and account for its FTE Costs and its out-of-pocket costs for the Development of the Licensed Product and the Joint Commercialization Activities and shall report such costs to the JDC on a quarterly basis, in each case in a manner that allocates costs to the extent possible to a specific activity in the Development Plan and Budget or Commercialization Plan and Budget. FTEs allocable to the Development Plan shall be charged to Collaboration Costs. Out-of-pocket costs allocable to Collaboration Costs, but otherwise included within FTE Costs, shall not be charged separately as Collaboration Costs.

          6.1.4 Adjustment of FTE Costs. The FTE Costs shall be adjusted annually, with each annual adjustment effective as of January 1 of each Calendar Year, the first such annual adjustment to be made as of January 1, 2007, based on the percentage change in the U.S. Department of Labor Consumer Price Index for All Urban Consumers for the prior Calendar Year or as otherwise mutually agreed upon by the Parties.

          6.1.5 Reports. Each Party shall report to the other Party within forty five (45) days after the end of each Calendar Quarter the Collaboration Costs incurred by such Party during such Calendar Quarter for the Licensed Product. Such report shall specify in reasonable detail all amounts included in such Collaboration Costs with respect to the Licensed Product during such Calendar Quarter (broken down by activity) and shall be accompanied by invoices or other appropriate supporting documentation for any payments made by such Party to Third Parties that individually exceed Fifty Thousand U.S. Dollars ($50,000) or Fifty Thousand Euros (€50,000), as applicable, or as may be determined by the JEC. Each such report shall enable the receiving Party to compare the reported costs against the Development Plan and Budget and Commercialization Plan and Budget, on both a quarterly basis and a cumulative basis for each activity. The Parties shall seek to resolve any questions related to such accounting statements within thirty (30) days following receipt by each Party of the other Party’s report hereunder.

          6.1.6 Payments.

               (a) Payment of Collaboration Costs. The up-front payment of Collaboration Costs made by Licensee pursuant to Section 6.1.2 shall consist of the following payments of Collaboration Costs to be incurred in accordance with the Development Budget: (i) [...***...] for the SPARC Study (including reimbursement of Collaboration Costs incurred by GPC Biotech after October 1, 2005 and prior to the Effective Date); (ii) [...***...] for Exploratory Studies and Post Approval Studies; and (iii) [...***...] for other expenses incurred in connection with the

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Development activities not allocated to a particular Clinical Study or Post Approval Study, including, for example, Manufacturing Costs, as itemized in the Development Budget. With respect to payments for a further Registrational Study to be conducted by the Parties in accordance with the Development Plan and Budget, Licensee shall make payments in accordance with the following schedule:

                    (x) Forty Percent (40%) of Licensee’s share of the total Collaboration Costs budgeted for such Registrational Study at the time the first patient is accrued in such study;

                    (y) Thirty Percent (30%) of Licensee’s share of the total Collaboration Costs budgeted for such Registrational Study upon reaching fifty percent (50%) of the target accrual for patients specified in the approved protocol for the study; and

                    (z) Thirty Percent (30%) of Licensee’s share of the total Collaboration Costs budgeted for such Registrational Study at the time such study is fully accrued.

          (b) Ongoing Collaboration Costs. The Parties agree that the above payments made by Licensee shall be credited toward Licensee’s share of Collaboration Costs (including associated FTE Costs) incurred by GPC Biotech for a given Development activity specified in the Development Plan and Budget or for the categories specified in Section 6.1.6(a) (as offset by GPC Biotech’s share (sixty-five percent (65%)) of the Collaboration Costs incurred by Licensee for such activities). Within forty five (45) days after the end of each Calendar Quarter during the term of this Agreement, each Party will provide to the other Party a reasonably complete and accurate report of its Collaboration Costs (including associated FTE Costs) itemized per category. Once Licensee’s share of the Collaboration Costs incurred exceed the payments made for any category pursuant to Section 6.1.6(a), each Party’s share of Collaboration Costs in such category shall be paid as follows:

                    (i) Within thirty (30) days after the date of each Party’s quarterly report on Collaboration Costs, Licensee shall pay to GPC Biotech its share of the Collaboration Costs in such category or categories incurred during such Calendar Quarter, as offset by GPC Biotech’s (sixty-five percent (65%)) share of the Collaboration Costs incurred by Licensee during such quarter as noted in Licensee’s report thereon and taking account of any overruns included within such Collaboration Costs pursuant to Section 2.3.2 or 3.10.2.

                    (ii) With respect to Collaboration Costs associated with any further Registrational Studies (as specified in Section 6.1.6(a)(x-z) above), within sixty (60) days of the last day of the Calendar Quarter in which such study is completed, including any early termination of such study, the Party that has paid less than its share of the actual total Collaboration Costs incurred in connection with such study, taking account of any overruns included within such Collaboration Costs pursuant to Section 2.3.2 and any payments previously made by Licensee pursuant to pursuant to Section 6.1.6(a)(x-z), shall make a reconciling payment to the other Party to achieve the appropriate allocation of the Collaboration Costs with respect thereto.

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     6.2 Accounting Procedures. For purposes of determining Collaboration Costs, any expense allocated by either Party to a particular category under Collaboration Costs for the Licensed Product shall not also be allocated to another category under Collaboration Costs for the Licensed Product. Each Party shall determine Collaboration Costs with respect to the Licensed Product using its standard accounting procedures in accordance with GAAP, consistently applied, to the maximum extent practical as if the Licensed Product were a solely-owned product of the Party (provided that the application of such procedures results, on balance, in outcomes that are fair and equitable to both Parties taking into consideration the interests of both Parties as reflected in this Agreement). Each Party shall have the right to audit the other Party’s records to confirm the accuracy of the other Party’s costs and reports as provided in Section 7.11. If the Parties fail to agree on the accuracy of such costs and reports, such Dispute shall be resolved in accordance with Section 15.7.4(b).

ARTICLE 7

CONSIDERATION

     7.1 Payments to GPC Biotech. In partial consideration of the licenses and other rights granted herein, Licensee shall make the following payments to GPC Biotech:

          7.1.1 Reimbursement of Past Development Costs. Licensee shall make a non-refundable, non-creditable payment of Eighteen Million U.S. Dollars ($18,000,000) on or before January 3, 2006 to reimburse GPC Biotech for Licensee’s thirty-five percent (35%) share of a proportion of the total costs related to Development of the Licensed Product incurred prior to October 1, 2005.

          7.1.2 Milestone Payments. Licensee shall make the milestone payments provided below within ten (10) days following achievement, after the Effective Date, of the corresponding milestone event:

Clinical and Regulatory Milestones & Payments

(a) Upon the first to occur of the filing with the EMEA of the first MAA for (i) the Initial Indication or (ii) any of the Additional Indications listed in clause (d) below	Eight Million U.S. Dollars ($8,000,000)
(b) Upon the first to occur of obtaining the first Regulatory Approval in a country in Europe for (i) the Initial Indication or (ii) any of the Additional Indications listed in clause (d) below	Twenty Million U.S. Dollars ($20,000,000)
(c) Upon the first to occur of obtaining the first Regulatory Approval in a country in the ANZ Territory for (i) the Initial Indication or (ii) any of	Two Million Five Hundred Thousand

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the Additional Indications listed in clause (d) below

U.S. Dollars ($2,500,000)

(d) Upon obtaining the first Regulatory Approval in a country in Europe for each of the following Additional Indications for which a milestone payment has not been made under clause (b) hereof: non-small cell lung cancer, breast cancer, ovarian cancer, gastric cancer, head and neck cancer, bladder cancer, esophageal cancer, cervical/uterine cancer, for use as a radiation therapy adjuvant, or first-line treatment of prostate cancer

Fifteen Million U.S. Dollars ($15,000,000), per such additional Regulatory Approval, with a maximum of five (5) such additional Regulatory Approvals

Commercial Milestones & Payments

(e) One Hundred and Fifty Million U.S. Dollars ($150,000,000) in aggregate Net Sales in the Licensee Territory in any Calendar Year	Ten Million U.S. Dollars ($10,000,000)
(f) Two Hundred and Fifty Million U.S. Dollars ($250,000,000) in aggregate Net Sales in the Licensee Territory in any Calendar Year	Fifteen Million U.S. Dollars ($15,000,000)
(g) Five Hundred Million U.S. Dollars ($500,000,000) in aggregate Net Sales in the Licensee Territory in any Calendar Year	Thirty Million U.S. Dollars ($30,000,000)
(h) One Billion U.S. Dollars ($1,000,000,000) in aggregate Net Sales in the Licensee Territory in any Calendar Year	Fifty Million U.S. Dollars ($50,000,000)

For clarification, except with respect to the milestone set forth in Section 7.1.2(d) above, each milestone payment shall be payable only once irrespective of the number of times the milestone events set forth in this Section 7.1.2 have been achieved and the milestone set forth in Section 7.1.2(d) shall be payable each time one of the applicable milestones is achieved. Licensee shall notify GPC Biotech promptly of any determination, filing or approval that would trigger a payment by Licensee to GPC Biotech under this Section 7.1.2 and the amount of the payment required and shall pay such amount as provided herein.

     7.2 Royalties. Subject to Sections 7.3 and 7.4, Licensee shall pay to GPC Biotech, for each full or partial Calendar Year, royalties based on aggregate Net Sales of the Licensed Product in the Licensee Territory during such Calendar Year as set forth in Sections 7.2.1, 7.2.2 and 7.2.3 below, provided that, except as otherwise expressly provided in Sections 7.4.1, 7.4.2 and 8.4.1(b), in no event shall the royalty rate on Net Sales fall below [...***...] (the “Royalty Rate Floor”):

          7.2.1 for that portion of aggregate Net Sales of the Licensed Product in the Licensee Territory in such Calendar Year that is less than One Hundred Fifty Million U.S. Dollars ($150,000,000), the royalty rate shall be Twenty-Six and One Quarter Percent (26.25%);

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          7.2.2 for that portion of aggregate Net Sales of the Licensed Product in the Licensee Territory in such Calendar Year that equals or exceeds One Hundred and Fifty Million U.S. Dollars ($150,000,000) but is less than Five Hundred Million U.S. Dollars ($500,000,000), the royalty rate shall be Thirty Percent (30%); and

          7.2.3 for that portion of aggregate Net Sales of the Licensed Product in the Licensee Territory in such Calendar Year that equals or exceeds Five Hundred Million U.S. Dollars ($500,000,000), the royalty rate shall be Thirty-Four Percent (34%).

     7.3 Royalty Term. Licensee’s obligations to pay royalties under this Article 7 shall terminate, on a country-by-country basis, with respect to the Licensed Product, on the last to occur of: (a) the date that the sales of Generic Product(s) by one or more Third Parties in such country in any six (6)-month period exceed (on a per unit basis) [...***...] of the entire market for the Licensed Product and such Generic Product(s) in such country; (b) the last day of the Royalty Term, as defined in the Spectrum Agreement (such term, the “Spectrum Royalty Term”), (c) the expiration date in such country of the last to expire of any GPC Biotech Patent or Joint Patent that includes at least one Valid Claim that would, in the absence of the licenses granted hereunder, be infringed by the sale of the Licensed Product (or, in the case of a Valid Claim of a Patent application, would be infringed if a Patent were to issue from such Patent application) and (d) the expiration of all Regulatory Exclusivity Periods with respect to the Licensed Product in such country (such period when royalties are due hereunder with respect to a country, the “Royalty Term”).

     7.4 Royalty Adjustments.

          7.4.1 Expiration of Royalty Obligation Under Spectrum Agreement. On a country-by-country basis during the applicable Royalty Term, (a) the royalty rates set forth in Sections 7.2.1, 7.2.2 and 7.2.3 and (b) the applicable Royalty Rate Floor, shall be reduced by [...***...] with respect to Net Sales in such country that occur after the first date on which the Spectrum Royalty Term has expired; provided, however, that such reductions shall not apply with respect to any Net Sales that are subject to a royalty reduction pursuant to Section 7.4.2.

          7.4.2 Step-Down Period. On a country-by-country basis during the applicable Royalty Term, (a) the royalty rates set forth in Sections 7.2.1, 7.2.2 and 7.2.3, and (b) the applicable Royalty Rate Floor, shall be reduced by [...***...] with respect to Net Sales in such country that occur after the first date on which (i) the Spectrum Royalty Term has expired, and (ii) the last to expire of any GPC Biotech Patent or Joint Patent that includes at least one Valid Claim (that would, in the absence of the licenses granted hereunder, be infringed by the sale of the Licensed Product or, in the case of a Valid Claim of a Patent application, would be infringed if a Patent were to issue from such Patent application) has expired in such country, and (iii) all Regulatory Exclusivity Periods have expired in such country.

          7.4.3 Supply Price Adjustment. In the event that the Supply Price for the Licensed Product, expressed as a percentage of Net Sales of Licensed Product for which such Supply Price applies, exceeds [...***...], Licensee may deduct the excess amount from royalties owed pursuant to Section 7.2 for those Net Sales for which

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such Supply Price applies; provided that, in no event shall the royalty rate on Net Sales payable to GPC Biotech fall below the applicable Royalty Rate Floor.

     7.5 Royalty Payments. Running royalties shall be payable on a quarterly basis, within sixty (60) days after the end of each Calendar Quarter, based upon the Net Sales during such Calendar Quarter. Royalties shall be calculated in accordance with GAAP and with the terms of this Article 7. Only one royalty payment shall be due on Net Sales even though the sale or use of the Licensed Product may be covered by more than one Patent or Know-How in a country.

     7.6 Royalty Statements. Each royalty payment hereunder shall be accompanied by a statement showing, at a minimum (a) Invoiced Sales and Net Sales, (b) the number of units of Licensed Product sold on a country-by-country basis during the applicable Calendar Quarter, (c) a detailed breakdown of any deductions from the Invoiced Sales that were taken to calculate Net Sales, and (d) the amount of royalties due on such Net Sales.

     7.7 Mode of Payment. All payments to GPC Biotech or Licensee under this Agreement shall be made by deposit of (a) Euros, in the case of any royalty payments, and (b) United States Dollars, in the case of all other payments, in each case ((a) and (b)) in the requisite amount to such bank account as the receiving Party may from time to time designate by notice to the paying Party. With respect to sales outside the European Union, payments shall be calculated based on currency exchange rates for the Calendar Quarter for which remittance is made for royalties. For each month and each currency, such exchange rate shall equal the arithmetic average of the daily exchange rates (obtained as described below) during such Calendar Quarter; each daily exchange rate shall be obtained from the Reuters Daily Rate Report or The Wall Street Journal, Eastern Edition or, if not so available, as otherwise agreed by the Parties. Notwithstanding the foregoing, for purposes of calculating the Net Sales thresholds and ceilings set forth in Sections 7.2.1, 7.2.2 and 7.2.3, the aggregate Net Sales with respect to each Calendar Quarter within a Calendar Year shall be calculated based on the currency exchange rates for the Calendar Quarter in which such Net Sales occurred, in a manner consistent with the exchange rate procedures set forth in the immediately preceding sentence.

     7.8 Taxes.

          7.8.1 General. The royalties, milestones and other amounts payable by Licensee to GPC Biotech pursuant to this Agreement (“Payments”) shall not be reduced on account of any taxes unless required by Applicable Law. GPC Biotech alone shall be responsible for paying any and all taxes (other than withholding taxes required by Applicable Law to be paid by Licensee) levied on account of, or measured in whole or in part by reference to, any Payments it receives. Licensee shall deduct or withhold from the Payments any taxes that it is required by Applicable Law to deduct or withhold. Notwithstanding the foregoing, if GPC Biotech is entitled under any applicable tax treaty to a reduction of rate of, or the elimination of, applicable withholding tax, it may deliver to Licensee or the appropriate governmental authority (with the assistance of Licensee to the extent that this is reasonably required and is expressly requested in writing) the prescribed forms necessary to reduce the applicable rate of withholding or to relieve Licensee of its obligation to withhold tax, and Licensee shall apply the reduced rate

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of withholding, or dispense with withholding, as the case may be, provided that Licensee has received evidence, in a form reasonably satisfactory to Licensee, of GPC Biotech’s delivery of all applicable forms (and, if necessary, its receipt of appropriate governmental authorization) at least fifteen (15) days prior to the time that the Payments are due. If, in accordance with the foregoing, Licensee withholds any amount, it shall pay to GPC Biotech the balance when due, make timely payment to the proper taxing authority of the withheld amount and send to GPC Biotech proof of such payment within sixty (60) days following that payment. Licensee shall be responsible for any sales tax that GPC Biotech may be required to collect with respect to the Payments.

          7.8.2 Value Added Tax. Notwithstanding anything contained in Section 7.8.1, this Section 7.8.2 shall apply with respect to value added tax (“VAT”). All Payments are exclusive of VAT. If any VAT is chargeable in respect of any Payments, Licensee shall pay VAT at the applicable rate in respect of any such Payments following the receipt of a VAT invoice in the appropriate form issued by GPC Biotech in respect of those Payments, such VAT to be payable on the later of the due date of the payment of the Payments to which such VAT relates and sixty (60) days after the receipt by Licensee of the applicable invoice relating to that VAT payment.

     7.9 Interest on Late Payment. If any payment due to either Party under this Agreement is overdue (and is not subject to a good faith dispute), then such paying Party shall pay interest thereon (before and after any judgment) at an annual rate (but with interest accruing on a daily basis) of the lesser of four percent (4%) above the prime rate as reported in The Wall Street Journal, Eastern Edition, and the maximum rate permitted by Applicable Law, such interest to run from the date upon which payment of such sum became due until payment thereof in full together with such interest.

     7.10 Financial Records. Licensee shall, and shall cause its Affiliates, Sublicensees and Distributors to, keep reasonably complete and accurate books and records pertaining to the Commercialization, sale, delivery and use of the Licensed Product, including books and records of the Invoiced Sales (including any deductions therefrom) and Net Sales of Licensed Product, in sufficient detail to calculate the royalties payable under this Agreement. Both Parties shall, and shall cause their respective Affiliates and, with respect to Licensee, its Sublicensees to, keep reasonably complete and accurate books and records pertaining to Collaboration Costs. Such books and records shall be retained by both Parties and their Affiliates and with respect to Licensee, its Sublicensees and Distributors, until the later of (a) three (3) years after the end of the period to which such books and records pertain and (b) the expiration of the applicable tax statute of limitations (or any extensions thereof), or for such longer period as may be required by Applicable Law.

     7.11 Audit. At the request of either Party, the other Party shall, and shall cause its Affiliates and, with respect to Licensee, its Sublicensees and Distributors, to, permit the requesting Party and its representatives, at reasonable times and upon reasonable notice, to examine the books and records maintained pursuant to Section 7.10. Such examinations may not (a) be conducted for any Calendar Quarter more than three (3) years after the end of such quarter, (b) be conducted more than once in any twelve (12) month period or (c) be repeated for any Calendar Quarter. Except as provided below, the cost of this examination

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shall be borne by the Party that requested the examination, unless the audit reveals a variance of more than five percent (5%) from the reported amounts, in which case the audited Party shall bear the cost of the audit. Unless disputed pursuant to Section 7.12 below, if such audit concludes that additional payments were owed or that excess payments were made during such period, the paying Party shall pay the additional royalties or the receiving Party shall reimburse such excess payments, with interest from the date originally due as provided in Section 7.9, within sixty (60) days after the date on which a written report of such audit is delivered to the Parties.

     7.12 Audit Dispute. In the event of a Dispute regarding such books and records, including the amount of royalties owed to GPC Biotech under this Article 7 or the calculation or allocation of Collaboration Costs pursuant to Article 6, GPC Biotech and Licensee shall work in good faith to resolve the disagreement. If the Parties are unable to reach a mutually acceptable resolution of any such Dispute within thirty (30) days, the dispute shall be submitted for arbitration to a certified public accounting firm selected by each Party’s certified public accountants or to such other Person as the Parties shall mutually agree (the “Arbitrator”). The decision of the Arbitrator shall be final and the costs of such arbitration as well as the initial audit shall be borne between the Parties in such manner as the Arbitrator shall determine. Not later than ten (10) days after such decision, (a) with respect to such decisions regarding royalties, Licensee shall pay to GPC Biotech any additional royalties owed to GPC Biotech, in accordance with such decision and (b) with respect to such decisions regarding Collaboration Costs and in accordance with such decision, the paying Party shall pay the additional payments or the receiving Party shall reimburse such excess payments, as applicable. For clarity, notwithstanding anything contained in Section 15.7, any Dispute subject to arbitration pursuant to this Section 7.12 shall not be subject to the terms and conditions of Section 15.7.

     7.13 Confidentiality. The receiving Party shall treat all information subject to review under this Article 7 in accordance with the confidentiality provisions of Article 11 and the Parties shall cause any auditor or the Arbitrator to enter into a reasonably acceptable confidentiality agreement with the audited Party obligating such firm to retain all such financial information in confidence pursuant to such confidentiality agreement.

ARTICLE 8

INTELLECTUAL PROPERTY

     8.1 Ownership of Intellectual Property.

          8.1.1 Ownership of Technology. Subject to Sections 8.1.2, 8.1.3, 8.1.4, 8.1.5 and 8.1.6 and the licenses and rights of reference granted under Sections 5.1 and 5.6, as between the Parties, each Party shall own and retain all right, title and interest in and to any and all: (a) Information that is conceived, discovered, developed or otherwise made, as necessary to

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establish authorship, inventorship or ownership under applicable United States law, by or on behalf of such Party under or in connection with this Agreement (or its Affiliates or its licensees or Sublicensees), whether or not patented or patentable, and any and all Patents and Intellectual Property Rights with respect thereto, except to the extent that any such Information, or any Patents or Intellectual Property Rights with respect thereto, is Joint Know-How or Joint Patents, and (b) other Information or other inventions and Patents and Intellectual Property Rights that are owned or otherwise Controlled (other than pursuant to the license grants set forth in Sections 5.1 and 5.6) by such Party, its Affiliates or its licensees or Sublicensees.

          8.1.2 Ownership of Product Trademarks, GPC Biotech Patents and GPC Biotech Know-How. Subject to the licenses and rights of reference granted under Sections 5.1 and 5.6, as between the Parties, GPC Biotech shall own and retain all right, title and interest in and to all Product Trademarks, GPC Biotech Patents and GPC Biotech Know-How.

          8.1.3 Ownership of Regulatory Documentation and the Drug Master File. Subject to the licenses and rights of reference granted to GPC Biotech under Section 5.6, as between the Parties, Licensee shall own all right, title and interest in and to all Regulatory Approvals (other than the Drug Master Files) with respect to the Licensed Product in the Licensee Territory and the Regulatory Documentation (other than Clinical Data except as otherwise provided in Section 8.1.4) with respect thereto. Subject to the right of reference granted to Licensee under Section 5.1.3, GPC Biotech shall own and retain all right, title and interest in and to all other Regulatory Approvals, all Regulatory Documentation and all Drug Master Files with respect to the Licensed Compound or the Licensed Product. Licensee shall promptly disclose to GPC Biotech in writing, and shall cause its Affiliates, Sublicensees and Distributors to so disclose, the development, making, conception or reduction to practice of any such Regulatory Approvals, Regulatory Documentation and Clinical Data (except for Clinical Data referred to in Section 8.1.4), and shall, and does hereby, assign, and shall cause its Affiliates, Sublicensees and Distributors to so assign, to GPC Biotech, without additional compensation, such right, title and interest in and to any such Regulatory Approvals, Regulatory Documentation and Clinical Data (except for Clinical Data referred to in Section 8.1.4) as well as any Patents and other Intellectual Property Rights with respect thereto, as is necessary to fully vest sole ownership in GPC Biotech as provided for in foregoing sentence.

          8.1.4 Clinical Data. Subject to the right of reference granted to GPC Biotech in Section 5.6, Licensee shall own and retain all right, title and interest in and to all Clinical Data generated by or on behalf of Licensee in connection with the Unilateral Activities of Licensee. Subject to the right of reference granted to Licensee under Section 5.1.3, GPC Biotech shall own and retain all right, title and interest in and to all other Clinical Data. For each Unilateral Activity of Licensee for which GPC Biotech Opts-In pursuant to Section 2.5.6, Licensee hereby assigns to GPC Biotech all of Licensee’s right, title and interest in and to the Clinical Data generated by or on behalf of Licensee in connection with the Unilateral Activity of Licensee for which GPC Biotech elects to Opt-In pursuant to Section 2.5.6.

          8.1.5 Ownership of Joint Patents and Joint Know-How. Except as expressly set forth in Section 8.1.3 and 8.1.4, as between the Parties, the Parties shall each own an equal, undivided interest in any and all (a) Information and Improvements that are conceived, discovered, developed or otherwise made, as necessary to establish authorship, inventorship or

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ownership under applicable United States law, jointly by or on behalf of GPC Biotech (or its Affiliates), on the one hand, and Licensee (or its Affiliates or its Sublicensees), on the other hand, in connection with the work conducted under or in connection with this Agreement, whether or not patented or patentable (to the extent such Information or Improvements are not generally known and not covered or claimed by published Joint Patents, the “Joint Know-How”) and (b) Patents and Intellectual Property Rights with respect to such Information and Improvements (the “Joint Patents”). Together, such Information, Improvements, Patents and Intellectual Property Rights as described in clause (a) and clause (b) of this Section 8.1.5 shall be referred to herein as the “Joint Intellectual Property Rights.” Each Party shall promptly disclose to the other Party in writing, and shall cause its Affiliates, licensees and Sublicensees to so disclose, the development, making, conception or reduction to practice of any Joint Know-How or Joint Patents. Each Party shall have the right to Exploit the Joint Intellectual Property Rights outside the scope of this Agreement in any manner that is not inconsistent with the rights and obligations of the Parties under this Agreement in its sole discretion, in each case, without the consent of the other Party, and provided, that neither Party shall assign, pledge, encumber or otherwise transfer any of its rights in any Joint Intellectual Property Rights without the other Party’s prior written consent, such consent not to be unreasonably withheld or delayed.

          8.1.6 Ownership of Corporate Names. As between the Parties, each Party shall retain all right, title and interest in and to its Corporate Names and agrees that it shall not attack, dispute or contest the validity of or ownership of such other Party’s Corporate Names or any registrations issued or issuing with respect thereto. Each Party expressly acknowledges and agrees that no ownership rights are vested or created by the limited rights of use granted pursuant to Section 5.1.5 or 5.6 and that all use of the Corporate Names in accordance therewith, including any goodwill generated in connection therewith, inures to the benefit of the respective owner of the Corporate Names and the owner of such Corporate Names may call for a confirmatory assignment thereof.

     8.2 Maintenance and Prosecution of Patents and Trademarks.

          8.2.1 GPC Biotech Patents and Product Trademarks. Subject to Section 8.2.4 and the Spectrum Agreement, GPC Biotech, through patent attorneys or agents of its choice, shall be responsible for obtaining, prosecuting and maintaining throughout the Territory the GPC Biotech Patents and the Product Trademarks. In this regard, GPC Biotech shall have the first right to (a) file, prosecute and maintain Patent applications to seek Patent rights for the Licensed Compound and the Licensed Product and any patentable GPC Biotech Know-How in the Major Market Countries and such other countries as determined by GPC Biotech (after taking into account in good faith Licensee’s comments with respect thereto) or as mutually agreed by GPC Biotech and Licensee and (b) control the registration, prosecution and maintenance of the Product Trademarks in the Territory. Reasonable and verifiable expenses incurred by GPC Biotech in the preparation, registration, filing, prosecution and maintenance (as applicable) of the GPC Biotech Patents and Product Trademarks (i) in the GPC Biotech Territory shall be borne by GPC Biotech and (ii) in the Licensee Territory after October 1, 2005 shall be borne by Licensee, subject to the provisions hereof; provided that with respect to any such expenses incurred in connection with activities in support of the preparation, registration, filing, prosecution or maintenance of the GPC Biotech Patents or Product Trademarks filed or intended

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for filing in both the Licensee Territory and the GPC Biotech Territory, Licensee shall bear thirty-five percent (35%) of such expenses and GPC Biotech shall bear sixty-five (65%) percent of such expenses. With respect to the Licensee Territory, GPC Biotech shall not abandon or cease the prosecution of any such application for a Patent or Trademark or permit any Patent or Trademark registration issuing therefrom to lapse without first notifying Licensee and permitting Licensee to continue the prosecution of such applications or registrations or pay any required fees in the name of GPC Biotech, at Licensee’s expense and through patent attorneys of its choice. Licensee shall not become an assignee of any Patent or application for Patent or Trademark as a result of its continuing the prosecution or registration of an application for Patent or Trademark or paying any fees according to this Section 8.2.1.

          8.2.2 Licensee Patents. Subject to Section 8.2.4, Licensee, through patent attorneys or agents of its choice and at its sole cost and expense, shall be responsible for obtaining, prosecuting and maintaining throughout the Territory the Licensee Patents. In this regard, Licensee shall have the first right to prepare, file, prosecute and maintain Patent applications to seek Patent rights for the Licensed Compound and Licensed Product and any patentable Licensee Know-How in the GPC Biotech Territory and Major Market Countries and such other countries as determined by Licensee or as mutually agreed by GPC Biotech and Licensee. With respect to any Licensee Patent, Licensee shall not abandon or cease the prosecution of any such application for a Patent (or preparation thereof) or permit any Patent issuing therefrom to lapse without first notifying GPC Biotech and permitting GPC Biotech to continue the preparation, filing, prosecution and maintenance of such applications or pay any required fees in the name of Licensee, at GPC Biotech’s expense and through patent attorneys or agents of its choice. GPC Biotech shall not become an assignee of any application for Patent or Patent as a result of its continuing the prosecution of an application for Patent or paying any fees according to this Section 8.2.2.

          8.2.3 Joint Patents. Subject to Section 8.2.4 and the Spectrum Agreement, GPC Biotech, through patent attorneys or agents of its choice, shall have the first right, but not obligation, to prepare and file Patent applications claiming the Joint Know-How and to obtain, prosecute and maintain Joint Patents throughout the Territory. GPC Biotech shall not abandon or cease the prosecution of any such application for a Patent or permit any Patent issuing therefrom to lapse without first notifying Licensee and permitting Licensee to continue the prosecution of such applications, or pay any required fees in connection therewith, through patent attorneys or agents of its choice. Reasonable and verifiable expenses incurred by the Party that prepares, files, obtains, prosecutes and maintains the Joint Patents (a) in the GPC Biotech Territory shall be borne by GPC Biotech and (b) in the Licensee Territory shall be borne by Licensee; provided that Licensee shall bear thirty-five percent (35%) and GPC Biotech shall bear sixty-five percent (65%) of any such expenses incurred in connection with the preparation and filing of PCT patent applications for the Joint Patents that are to be filed in both the Licensee Territory and the GPC Biotech Territory. In the event that either Party provides the other Party written notice that such notifying Party no longer wishes to fund such prosecution or maintenance of one or more Joint Patents, such notifying party shall assign and agrees to assign such Patent to the other Party. Any such Joint Patents assigned by GPC Biotech shall become Licensee Patents hereunder and any such Joint Patents assigned by Licensee shall become GPC Biotech Patents hereunder.

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          8.2.4 Cooperation. Each Party shall assist and cooperate with the other Party as such other Party may reasonably request from time to time in connection with its activities set forth in Section 8.2.1, 8.2.2 and 8.2.3. Each Party shall (a) keep the other Party currently informed of the status of and all steps to be taken in the preparation and prosecution of all applications filed by it according to this Section 8.2, (b) furnish the other Party with copies of such applications for Patents, amendments thereto and other related material correspondence to and from patent offices, and (c) to the extent reasonably practicable, permit the other Party an opportunity to offer its comments thereon and give such comments good faith consideration before making a submission to a patent office which could materially affect the scope or validity of the Patent coverage that may result. Such other Party shall offer its comments, if any, promptly.

          8.2.5 Patent Term Extensions. The JEC shall be responsible for making decisions regarding patent term extensions, including supplementary protection certificates and any other extensions that are now or become available in the future, wherever applicable, for GPC Biotech Patents, Licensee Patents and Joint Patents in any country in the Licensee Territory, provided that (a) any Dispute with respect thereto shall be resolved by GPC Biotech and (b) any applications or filings with respect thereto shall be made by GPC Biotech. Each Party shall reasonably cooperate, as requested by the other Party, to promptly and timely implement or effect such decisions. Notwithstanding the foregoing, the Parties shall coordinate their activities with respect to any patent term extension with respect to all Patents in order to secure the optimal protection for the Licensed Product available under Applicable Law.

     8.3 Enforcement of Patents and Trademarks.

          8.3.1 Rights and Procedures. In the event that either Party reasonably believes that a Third Party may be infringing any of the GPC Biotech Patents, the Licensee Patents, the Joint Patents or the Product Trademarks, such Party shall promptly notify the other Party in writing, identifying the alleged infringer and the alleged infringement complained of and furnishing the information upon which such determination is based. With respect to the GPC Biotech Patents, the Joint Patents and the Product Trademarks, GPC Biotech shall, subject to the Spectrum Agreement, have the first right, but not the obligation, through counsel of its choosing, to take any measures it deems appropriate to stop such infringing activities by such Third Party in any part of the Territory or, to the extent not in conflict with the terms of this Agreement, to grant the infringing Third Party adequate rights and licenses necessary for continuing such activities. With respect to the Licensee Patents, Licensee shall have the first right, but not the obligation, through counsel of its choosing, to take any measures it deems appropriate to stop such infringing activities by such Third Party in any part of the Territory or, to the extent not in conflict with the terms of this Agreement, to grant the infringing Third Party adequate rights and licenses necessary for continuing such activities. Upon reasonable request by the enforcing Party, the other Party shall give the enforcing Party all reasonable information and assistance, including allowing the enforcing Party access to the other Party’s files and documents and to the other Party’s personnel who may have possession of relevant information and, if necessary for the enforcing Party to prosecute any legal action, joining in the legal action as a party at its own expense. In the event the enforcing Party fails within ninety (90) days following notice of such infringement, as provided in the first sentence of this Section 8.3.1, or earlier notifies the other

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Party in writing of its intent not to take commercially appropriate steps to stop any infringement of any (a) GPC Biotech Patent, Joint Patent or Product Trademark in the Licensee Territory, in the case of GPC Biotech, or (b) Licensee Patent in the Territory, in the case of Licensee, that is likely or could reasonably be expected to have a material adverse effect on the sale of the Licensed Product in the Territory and the enforcing Party has not granted the infringing Third Party rights and licenses to continue its otherwise infringing activities, then, unless the enforcing Party provides the other Party with a commercially reasonable basis in writing for not taking such steps, the other Party shall have the right, but not the obligation, to do so at the other Party’s sole cost and expense; provided, however, that if the enforcing Party has commenced negotiations with an alleged infringer for discontinuance of such infringement within such ninety (90) day period, the enforcing Party shall have an additional ninety (90) days to conclude its negotiations before the other Party may bring suit for such infringement. Upon reasonable request by the other Party, the enforcing Party shall give the other Party all reasonable information and assistance in connection with such suit for infringement.

          8.3.2 Generic Competition. Notwithstanding the foregoing, if either Party (a) reasonably believes that a Third Party may be filing or preparing or seeking to file a generic or abridged Drug Approval Application that refers to or relies on Regulatory Documentation submitted by either Party to any Regulatory Authority whether or not such a filing may be in violation of any Regulatory Exclusivity Period or infringe the GPC Biotech Patents, the Licensee Patents or the Joint Patents or (b) receives any notice of certification regarding the GPC Biotech Patents, Joint Patents or Licensee Patents pursuant to the U.S. “Drug Price Competition and Patent Term Restoration Act” of 1984 (21 United States Code §355(b)(2)(A)(iv) or (j)(2)(A)(vii)(IV)) (“ANDA Act”) claiming that any such Patents are invalid or unenforceable or claiming that the any such Patents will not be infringed by the Manufacture, use, marketing or sale of a product for which an application under the ANDA Act is filed or (c) receives any equivalent or similar certification or notice in any other jurisdiction, it shall notify the other Party in writing, identifying the alleged applicant or potential applicant and furnishing the information upon which such determination is based, and provide the other Party a copy of any such notice of certification within ten (10) days of receipt and the Parties’ rights and obligations with respect to any legal action as a result of such certification shall be as set forth in Section 8.3.1; provided, however, that if the enforcing Party elects not to bring suit against the Third Party providing notice of such certification within thirty (30) days of receipt of such notice with respect to any (y) GPC Biotech Patent or Joint Patent in the Licensee Territory or (z) Licensee Patent in the Territory, then the other Party shall have the right, but shall not the obligation, to bring suit against such Third Party and to join the enforcing Party as a Party plaintiff if necessary to bring such a suit, in which event the other Party shall hold the enforcing Party harmless from and against any and all costs and expenses of such litigation, including reasonable attorney’s fees and expenses.

          8.3.3 Costs and Expenses. Each Party shall bear its own costs and expenses relating to any enforcement action pursuant to Section 8.3.1 or 8.3.2. Any damages or other amounts collected shall be used to reimburse the Parties for their costs and expenses in making such recovery (which amounts shall be allocated pro rata if insufficient to cover the totality of such expenses), with any remainder being retained by the Party that pursued such enforcement action; provided, however, with respect to any amount received by the enforcing Party that

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relates to infringement of a Patent in the Licensee Territory, such remainder shall be shared equally by the Parties.

     8.4 Potential Third Party Rights

          8.4.1 Third Party Licenses. If the Exploitation of the Licensed Product in accordance with the terms and conditions of this Agreement, by Licensee, its Affiliates or any of its Sublicensees or Distributors infringes or misappropriates any Patent or any Intellectual Property Right of a Third Party in any country, such that Licensee or any of its Affiliates, Sublicensees or Distributors cannot, in the reasonable opinion of Licensee as advised by competent patent counsel, Develop or Commercialize the Licensed Product in such country without infringing the Patent or Intellectual Property Right of such Third Party, then, subject to the Spectrum Agreement, (x) if such Patent or other Intellectual Property Right is pending, issued or registered only in the Licensee Territory, Licensee shall have the first right to take the lead on negotiating the terms of each such license with such Third Party and (y) otherwise GPC Biotech shall have the first right to take the lead on negotiating the terms of each such license, and in each case ((x) and (y)), if such Party does not take such lead, then the other Party may do so; provided that Licensee may seek or obtain any such license solely with respect to one or more countries in the Licensee Territory; and provided, further, in either case: the terms of any such license shall permit the Party obtaining such license to grant to the other Party a sublicense thereunder; the Parties shall cooperate in negotiating the terms of such license with such Third Party; and the Party obtaining such license shall consult with the other Party prior to making any proposal regarding, or otherwise agreeing to, the terms of any such license. The determination of whether to seek and the terms of any such license shall be approved by the JEC. If one or both Parties enter into such a Third Party license agreement for the Licensee Territory, then:

               (a) Each Party shall be solely responsible for all license fees, milestones, royalties or other such payments due to such any Third Party (“Third Party Payments”) (irrespective of the Party that has entered into an agreement with, or first made a payment to, such Third Party) consisting of payments with respect to the Commercialization of such Licensed Product in each Party’s portion of the Territory. Any Third Party Payments (irrespective of the Party that has entered into an agreement with, or first made a payment to, such Third Party) consisting of license fees, milestones or other payments with respect to Development shall be shared by the Parties such that Licensee shall bear thirty-five percent (35%) of such Third Party Payments and GPC Biotech shall bear sixty-five (65%) percent of such Third Party Payments; provided that GPC Biotech shall be solely responsible for all license fees, milestones and royalties due to Spectrum pursuant to the Spectrum Agreement (the “Spectrum Payments”) and any Third Party Payments under any agreements entered into pursuant to clause (y) of Section 8.4.1 to the extent such agreement relates solely to the GPC Biotech Territory; and, provided, further, that Licensee shall be solely responsible for Third Party Payments under any agreement entered into pursuant to clause (x) of Section 8.4.1. In the event that either Party has entered into such Third Party license agreement pursuant to this Section and has the obligation pursuant to such agreement to pay to such Third Party such Third Party Payments, such amounts shall be paid by the other Party to such contracting Party as early as may be necessary to ensure that such contracting Party has received from the other Party the required payment at least five (5) Business Days prior to the date on which such contracting

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Party owes the corresponding payment to the Third Party. For clarity, no amount paid by Licensee to a Third Party as a Third Party Payment for the Licensee Territory in accordance with this Section shall be included in the Collaboration Costs; and

               (b) Licensee shall have the right to deduct up to [...***...] of any Third Party Payments paid by Licensee with respect to the Licensee Territory from royalty payments set forth in Section 7.2 hereunder, provided that the royalty rate payable to GPC Biotech under Section 7.2 shall not be reduced by more than [...***...] in any Calendar Quarter. In the event that any reduction permitted under this Section is so limited, Licensee may carry the unused portion of such Third Party Payments, comprised solely of upfront license fee payments, forward to subsequent Calendar Quarters, subject to the application of the limitations set forth in this Section.

          8.4.2 Invalidity or Unenforceability Defenses or Actions.

               (a) In the event that a Third Party or Sublicensee asserts, as a defense or as a counterclaim in any infringement action under Section 8.3.1, that any Product Trademark, GPC Biotech Patent, Licensee Patent or Joint Patent is invalid or unenforceable, then the Party pursuing such infringement action shall promptly give written notice to the other Party. With respect to the Product Trademarks, GPC Biotech Patents and the Joint Patents, subject to the Spectrum Agreement, GPC Biotech shall have the first right, but not the obligation, through counsel of its choosing, to respond to such defense or defend against such counterclaim (as applicable) and, if Licensee is pursuing the applicable infringement action under Section 8.3.1, Licensee shall allow GPC Biotech to control such response or defense (as applicable). With respect to the Licensee Patents Licensee shall have the first right, but not the obligation, through counsel of its choosing, to respond to such defense or defend against such counterclaim (as applicable) and, if GPC Biotech is pursuing the applicable infringement action under Section 8.3.1, GPC Biotech shall allow Licensee to control such response or defense (as applicable). Any costs and expenses with respect to such response or defense against such counterclaim shall be borne by the Party controlling such response or defense. If either Party determines not to respond to such defense or defend against such counterclaim (as applicable), the other Party shall, at its sole cost and expense, have the right to respond to such defense or defend against such counterclaim (as applicable); provided, however, that such other Party shall obtain the written consent of GPC Biotech, with respect to the GPC Biotech Patents and the Joint Patents, or Licensee, with respect to the Licensee Patents, prior to ceasing to defend, settling or otherwise compromising such defense or counterclaim, such consent not to be unreasonably withheld or delayed.

               (b) Similarly, if a Third Party or Sublicensee asserts, in a declaratory judgment action or similar action or claim filed by such Third Party, that any Product Trademark, GPC Biotech Patent, Licensee Patent or Joint Patent is invalid or unenforceable, then the Party first becoming aware of such action or claim shall promptly give written notice to the other Party. With respect to the Product Trademarks, GPC Biotech Patents and Joint Patents, subject to the Spectrum Agreement, GPC Biotech shall have the first right, but not the obligation, through counsel of its choosing, to defend against such action or claim. With respect to the Licensee Patents Licensee shall have the first right, but not the obligation, through counsel of its choosing, to defend against such action or claim. Any costs and expenses with respect to such

*** Confidential Treatment Requested

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defense shall be borne by the Party defending against such action or claim. If either Party determines not to assume such defense with respect to (y) the Product Trademarks, GPC Biotech Patents and Joint Patents in the Licensee Territory or (z) the Licensee Patents in the Territory, then other Party shall, at its sole cost and expense, have the right to defend against such action or claim; provided, however, that the other Party shall obtain the written consent of GPC Biotech, with respect to the GPC Biotech Patents and the Joint Patents, or Licensee, with respect to the Licensee Patents, prior to ceasing to defend, settling or otherwise compromising any such action or claim, such consent not to be unreasonably withheld or delayed.

               (c) Each Party shall provide to the other Party all reasonable assistance requested by the other Party in connection with any action, claim or suit under this Section 8.4.2, including allowing such other Party access to the assisting Party’s files and documents and to the assisting Party’s personnel who may have possession of relevant information. In particular, the assisting Party shall promptly make available to the other Party, free of charge, all information in its possession or control that it is aware will be reasonably necessary to assist the other Party in responding to any such action, claim or suit.

          8.4.3 Third Party Litigation. In the event of any actual or threatened suit against Licensee or its Affiliates, Sublicensees, Distributors or customers alleging that the Development or Commercialization of the Licensed Product in the Licensee Territory infringes the Patents or Intellectual Property Rights of any Third Party, Licensee shall, subject to the Spectrum Agreement, assume direction and control of the defense of claims arising therefrom (including the right to settle such claims at its sole discretion); provided, however, that Licensee shall obtain the written consent of GPC Biotech prior to ceasing to defend, settling or otherwise compromising such claims where such settlement or compromise would have an adverse affect on the validity or enforceability of any Patents and Intellectual Property Rights of GPC Biotech (including the Joint Intellectual Property Rights) or where such consent would otherwise be required pursuant to Section 13.5.2, such consent not to be unreasonably withheld or delayed. Each Party shall provide the other Party with copies of any notices it receives from Third Parties relating to any patent nullity actions, declaratory judgment actions and any alleged infringement or misappropriation of the Intellectual Property Rights of a Third Party by the Development, Manufacture or Commercialization of the Licensed Product in any country of the Territory. Such notices shall be provided promptly, but in no event more than ten (10) days following receipt thereof or, with respect to notices received prior to the Effective Date, on or prior to the Effective Date.

          8.4.4 Retained Rights. Nothing in this Section 8.4 shall prevent Licensee, at its own expense, from obtaining any license or other rights from Third Parties it deems appropriate in order to permit the full and unhindered exercise of its rights under this Agreement.

          8.4.5 Cooperation. In the event that a Third Party [...***...] institutes a Patent, trade secret or other infringement suit against GPC Biotech, Licensee or their respective Affiliates or, in the case of Licensee, Sublicensees or Distributors, during the term of this Agreement with respect to the Licensed Products, each Party shall, at its own cost and expense, use all reasonable efforts to assist and cooperate with the other Party in connection with the defense of such suit.

*** Confidential Treatment Requested

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ARTICLE 9

ADVERSE EVENT REPORTING

     9.1 Complaints. Each Party shall maintain a record of any and all Complaints it receives with respect to the Licensed Product. Each Party shall notify the other Party in reasonable detail of any Complaint received by it within five (5) days after the event, and in any event in sufficient time to allow such Party to comply with all Applicable Law in any country or with respect to any activity for which it is the Regulatory Lead or the Development Lead, as applicable. For purposes of this Section 9.1, a “Complaint” means any oral or written communication of dissatisfaction regarding the identity, quality, durability, reliability or performance of the Licensed Product. Examples include appearance, low fills, foreign materials, foreign product, defective packaging or defective labeling.

     9.2 Adverse Event Reporting. Each Party shall provide the other Party with all information necessary or desirable for such other Party to comply with its pharmacovigilance responsibilities in the Territory, including any Adverse Event Experiences from pre-clinical or clinical laboratory, animal toxicology and pharmacology studies, clinical trials and commercial experiences with the Licensed Product. “Adverse Event Experience” shall mean (a) any finding from tests in laboratory animals or in vitro that suggests a significant risk for human subjects including reports of mutagenicity, teratogenicity or carcinogenicity and (b) any undesirable, untoward or noxious event or experience associated with the clinical, commercial or other use or occurring following administration, of the Licensed Product in humans, occurring at any dose, whether expected or unexpected and whether or not considered related to or caused by the Licensed Product, including such an event or experience as occurs in the course of the use of the Licensed Product in professional practice, in a clinical trial, from overdose, whether accidental or intentional, from abuse, from withdrawal or from a failure of expected pharmacological or biological therapeutic action of the Licensed Product, and including those events or experiences that are required to be reported to the FDA under 21 C.F.R. sections 312.32 or 314.80 or to foreign Regulatory Authorities under corresponding Applicable Law outside the United States.

     9.3 Pharmacovigilance. Subject to the terms of this Agreement, within three (3) months of the Effective Date, GPC Biotech and Licensee shall discuss and develop mutually acceptable guidelines and procedures for the investigation, exchange, receipt, recordation, communication (as between the Parties) and exchange of Adverse Event Experience information and all other information regarding matters covered in this Article 9. Until such guidelines and procedures are set forth in an agreement between the Parties (the “Pharmacovigilance Agreement”), the terms of Sections 9.1 and 9.2 shall apply. Following the execution of the Pharmacovigilance Agreement, such Sections shall continue to apply unless expressly amended by the Parties, provided that in the event of any conflict between the terms of Sections 9.1 and 9.2 and the terms of the Pharmacovigilance Agreement, the terms of the Pharmacovigilance Agreement shall control. It is anticipated that such Pharmacovigilance Agreement shall include provisions for the exchange between the Parties of Adverse Event Experience reports, the creation and maintenance by GPC Biotech of

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an electronic database comprised of all adverse events reported on a worldwide basis with respect to the Licensed Product and the establishment of appropriate mechanisms by which Licensee can, in a timely manner, access such database on a read only basis to comply with Applicable Law and to perform its responsibilities and exercise its rights under this Agreement. Each Party shall be responsible for its own costs incurred in connection with receiving, recording, reviewing, communicating, reporting and responding to adverse events.

ARTICLE 10

LICENSED PRODUCT RECALL

     10.1 Notification and Recall. In the event that any Regulatory Authority issues or requests a recall or takes similar action in connection with the Licensed Product or in the event either Party determines that an event, incident or circumstance has occurred that may result in the need for a recall or market withdrawal, the Party notified of or desiring such recall or similar action shall, within twenty-four (24) hours, advise the other Party thereof by telephone (and confirm by email or facsimile), email or facsimile. Following notification of a recall in the Licensee Territory, the JEC shall meet to discuss such notification or recall and Licensee shall decide whether to conduct a recall (except in the case of a government-mandated recall) and the manner in which any such recall shall be conducted. Following notification or a recall in the GPC Biotech Territory, the JEC shall meet to discuss such notification or recall and GPC Biotech shall decide whether to conduct a recall (except in the case of a government-mandated recall) and the manner in which any such recall shall be conducted.

     10.2 Recall Expenses. Licensee shall bear the expenses of any recall of the Licensed Product in the Licensee Territory; provided, however, that GPC Biotech shall bear the expense of a recall to the extent that such recall resulted from GPC Biotech’s breach of its obligations hereunder or under the Supply Agreement or its gross negligence or willful misconduct. GPC Biotech shall bear the expenses of any recall of the Licensed Product in the GPC Biotech Territory.

ARTICLE 11

CONFIDENTIALITY AND NON-DISCLOSURE

     11.1 Confidentiality Obligations. At all times during the term of this Agreement and for a period of ten (10) years following termination or expiration hereof, each Party shall, and shall cause its officers, directors, employees and agents to, keep completely confidential and not publish or otherwise disclose and not use, directly or indirectly, for any purpose, any Confidential Information furnished or otherwise made known to it, directly or indirectly, by the other Party, except to the extent such disclosure or use is expressly permitted by the terms of this Agreement or is reasonably

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necessary for the performance of this Agreement. “Confidential Information” means any information provided by one Party to another relating to the terms of this Agreement, the Licensed Compound or the Licensed Product (including the Regulatory Documentation, Regulatory Approvals and Drug Master Files any information or data contained therein), any Development or Commercialization of the Licensed Compound or the Licensed Product or the scientific, regulatory or business affairs or other activities of either Party. All Clinical Data shall be the Confidential Information of the Party that owns such data, regardless of which Party furnished such data. Such Confidential Information may be used by the receiving Party only for the purposes of carrying out obligations or exercising its rights set forth in this Agreement. Notwithstanding the foregoing, Confidential Information shall not include any information that:

          11.1.1 is or hereafter becomes part of the public domain by public use, publication, general knowledge or the like through no wrongful act, fault or negligence on the part of receiving Party;

          11.1.2 can be demonstrated by documentation or other competent proof to have been in the receiving Party’s possession prior to disclosure by the disclosing Party without any obligation of confidentiality with respect to said information;

          11.1.3 is subsequently received by the receiving Party from a Third Party who is not bound by any obligation of confidentiality with respect to said information;

          11.1.4 has been published by a Third Party or otherwise enters the public domain through no fault of the receiving Party in breach of this Agreement; or

          11.1.5 can be demonstrated by documentation or other competent evidence to have been independently developed by or for the receiving Party without reference to the disclosing Party’s Confidential Information.

Specific aspects or details of Confidential Information shall not be deemed to be within the public domain or in the possession of the receiving Party merely because the Confidential Information is embraced by more general information in the public domain or in the possession of the receiving Party. Further, any combination of Confidential Information shall not be considered in the public domain or in the possession of the receiving Party merely because individual elements of such Confidential Information are in the public domain or in the possession of the receiving Party unless the combination and its principles are in the public domain or in the possession of the receiving Party.

     11.2 Permitted Disclosures. Each Party may disclose Confidential Information to the extent that such disclosure is:

          11.2.1 Made in response to a valid order of a court of competent jurisdiction or other supra-national, federal, national, regional, state, provincial and local governmental or regulatory body of competent jurisdiction or, if in the reasonable opinion of the receiving Party’s legal counsel, such disclosure is otherwise required by law; provided, however, that the receiving Party shall first have given notice to the disclosing Party and given the disclosing Party a reasonable opportunity to quash such order and to obtain a protective order requiring that the

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Confidential Information and documents that are the subject of such order be held in confidence by such court or agency or, if disclosed, be used only for the purposes for which the order was issued; and provided further that if a disclosure order is not quashed or a protective order is not obtained, the Confidential Information disclosed in response to such court or governmental order shall be limited to that information which is legally required to be disclosed in response to such court or governmental order;

          11.2.2 Made by the receiving Party to the Regulatory Authorities as required in connection with any filing, application or request for Regulatory Approval; provided, however, that reasonable measures, to the extent available, shall be taken to assure confidential treatment of such information; or

          11.2.3 Made by either Party or its Affiliates or sublicensees to Third Parties as may be necessary or useful in connection with the Manufacture or Exploitation of the Licensed Compound, the Licensed Product, (to the extent permitted or contemplated hereunder) Improvements thereto or otherwise in connection with the performance of its obligations or exercise of its rights (including, with respect to GPC Biotech, its rights under Sections 5.2 and 5.6 or disclosures to Spectrum or GPC Biotech Counter-Parties) as contemplated by this Agreement, including subcontracting and sublicensing transactions in connection therewith; provided, however, that such persons shall be subject to obligations of confidentiality and non-use with respect to such Confidential Information comparable to the obligations of confidentiality and non-use of the receiving Party pursuant to this Article 11.

     11.3 Use of Name. Except as expressly set forth in Sections 5.1.5 and 5.6.2, neither Party shall mention or otherwise use the name, insignia, symbol, Trademark, trade name or logotype of the other Party (or any abbreviation or adaptation thereof) in any publication, press release, promotional material or other form of publicity without the prior written approval of such other Party in each instance. The restrictions imposed by this Section shall not prohibit either Party from making any disclosure identifying the other Party that is required by Applicable Law.

     11.4 Press Releases. Press releases or other similar public communication by either Party relating to this Agreement shall be approved in advance by the other Party, which approval shall not be unreasonably withheld or delayed, except for those communications required by Applicable Law, disclosures of information for which consent has previously been obtained, information that has been previously disclosed publicly or as otherwise set forth in this Agreement; provided that the other Party is given a reasonable opportunity to review and comment on any such press release or public communication in advance thereof.

     11.5 Patient Information. The Parties agree to abide (and to cause their respective Affiliates, Sublicensees and Distributors to abide) and to take (and to cause their respective Affiliates, Sublicensees and Distributors to take) all reasonable and appropriate actions to ensure that all Third Parties conducting or assisting with any clinical development activities hereunder in accordance with, and subject to the terms of, this Agreement, shall abide, to the extent applicable, by all Applicable Law concerning the confidentiality or protection of patient identifiable information and/or patient’s protected health

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information, including the regulations at 45 C.F.R. Parts 160 and 164 and where relevant, the applicable national laws implementing the European Union Directive 95/46/EC on the protection of individuals with regard to the processing of personal data and on the free movement of such data of 24 October 1995 and any other Applicable Law, in the course of their performance under this Agreement.

     11.6 Publications. The JEC (or its appropriate designees) shall determine the strategy for, and coordinate, the publication and presentation of results of studies of the Licensed Product or other data generated under this Agreement. Each Party recognizes that the publication of papers regarding results of and other information regarding activities under this Agreement, including oral presentations and abstracts, may be beneficial to both Parties, provided such publications are subject to reasonable controls to protect Confidential Information. In particular, it is the intent of the Parties to maintain the confidentiality of any Confidential Information included in any Patent application until such Patent application has been filed. Accordingly, each Party shall have the right to review and approve any paper proposed for publication by the other Party, including any oral presentation or abstract, which pertains to results of Clinical Studies, Post Approval Studies or other studies with respect to the Licensed Product or includes other data generated under this Agreement or which includes Confidential Information of the other Party. Before any such paper is submitted for publication or an oral presentation is made, the publishing or presenting Party shall deliver a complete copy of the paper or materials for oral presentation to the other Party at least thirty (30) days prior to submitting the paper to a publisher or making the presentation. The other Party shall review any such paper and give its comments to the publishing Party within fifteen (15) days of the delivery of such paper to the other Party. With respect to oral presentation materials and abstracts, the other Party shall make reasonable efforts to expedite review of such materials and abstracts, and shall return such items as soon as practicable to the publishing or presenting Party with appropriate comments, if any, but in no event later than fifteen (15) days from the date of delivery to the other Party. Failure to respond within such fifteen (15) days shall be deemed approval to publish or present. If approval is not given or deemed given, either Party may refer the matter to the JEC for resolution together with the reasons for withholding approval. Notwithstanding the foregoing, the publishing or presenting Party shall comply with the other Party’s request to delete references to such other Party’s Confidential Information in any such paper and shall withhold publication of any such paper or any presentation of same for an additional sixty (60) days in order to permit the Parties to obtain patent protection if either Party deems it necessary. Any publication shall include recognition of the contributions of the other Party according to standard practice for assigning scientific credit, either through authorship or acknowledgement, as may be appropriate. Each Party shall use commercially reasonable efforts to cause investigators and institutions participating in Clinical Studies and Post Approval Studies for the Licensed Product with which it contracts to agree to terms substantially similar to those set forth in this Section, which efforts shall satisfy such Party’s obligations under this Section with respect to such investigators and institutions.

     11.7 Return of Confidential Information. Upon the effective date of the termination of this Agreement for any reason, either Party may request in writing, and the other Party shall either, with respect to Confidential Information to which such other Party does not retain rights hereunder: (i) promptly destroy all copies of such Confidential Information in the possession of the other Party and

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confirm such destruction in writing to the requesting Party; or (ii) promptly deliver to the requesting Party, at the other Party’s expense, all copies of such Confidential Information in the possession of the other Party; provided, however, the other Party shall be permitted to retain one (1) copy of such Confidential Information for the sole purpose of performing any continuing obligations hereunder or for archival purposes. Notwithstanding the foregoing, such other Party also shall be permitted to retain such additional copies of or any computer records or files containing such Confidential Information that have been created solely by such Party’s automatic archiving and back-up procedures, to the extent created and retained in a manner consistent with such other Party’s standard archiving and back-up procedures, but not for any other use or purpose. All Confidential Information shall continue to be subject to the terms of this Agreement for the period set forth in Section 11.1.

ARTICLE 12

REPRESENTATIONS AND WARRANTIES

     12.1 Representations, Warranties and Covenants. Each Party hereby represents, warrants and covenants to the other Party that, as of the Effective Date:

          12.1.1 Corporate Authority. Such Party (a) has the power and authority and the legal right to enter into this Agreement and perform its obligations hereunder and (b) has taken all necessary action on its part required to authorize the execution and delivery of this Agreement and the performance of its obligations hereunder. This Agreement has been duly executed and delivered on behalf of such Party and constitutes a legal, valid and binding obligation of such Party and is enforceable against it in accordance with its terms subject to the effects of bankruptcy, insolvency or other laws of general application affecting the enforcement of creditor rights and judicial principles affecting the availability of specific performance and general principles of equity, whether enforceability is considered a proceeding at law or equity.

          12.1.2 Litigation. Such Party is not aware of any pending or threatened litigation (and has not received any communication) that alleges that such Party’s activities related to this Agreement have violated or that by conducting the activities as contemplated herein such Party would violate, any of the Patent or Intellectual Property Rights of any other Person.

          12.1.3 Consents and Approvals. All necessary consents, approvals and authorizations of all regulatory and governmental authorities and other Persons required to be obtained by such Party in connection with the execution and delivery of this Agreement and the performance of its obligations hereunder have been obtained.

          12.1.4 Conflicts. The execution and delivery of this Agreement and the performance of such Party’s obligations hereunder (a) do not conflict with or violate any requirement of applicable law or regulation or any provision of the articles of association or limited partnership agreement or any similar instrument of such Party, as applicable, in any

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material way, and (b) do not conflict with, violate or breach or constitute a default or require any consent under, any contractual obligation or court or administrative order by which such Party is bound.

     12.2 Additional Representations, Warranties and Covenants of Licensee. Licensee represents, warrants and covenants to GPC Biotech that, as of the Effective Date:

          12.2.1 Licensee (a) is a corporation duly organized and in good standing under the laws of Switzerland and (b) has full power and authority and the legal right to own and operate its property and assets and to carry on its business as it is now being conducted and as it is contemplated to be conducted by this Agreement.

          12.2.2 Neither Licensee nor any of its Affiliates has been debarred or is subject to debarment and neither Licensee nor any of its Affiliates will use in any capacity, in connection with the services to be performed under this Agreement, any Person who has been debarred pursuant to Section 306 of the FFDCA or who is the subject of a conviction described in such section. Licensee shall inform GPC Biotech in writing immediately if it or any Person who is performing services hereunder is debarred or is the subject of a conviction described in Section 306 or if any action, suit, claim, investigation or legal or administrative proceeding is pending or, to the best of Licensee’s Knowledge, is threatened, relating to the debarment or conviction of Licensee or any Person performing services hereunder.

     12.3 Additional Representations, Warranties and Covenants of GPC Biotech. GPC Biotech represents, warrants and covenants to Licensee that, as of the Effective Date:

          12.3.1 GPC Biotech is a corporation duly organized under the laws of Germany and has full power and authority and the legal right to own and operate its property and assets and to carry on its business as it is now being conducted and as is contemplated to be conducted by this Agreement.

          12.3.2 Neither GPC Biotech nor any of its Affiliates has been debarred or is subject to debarment and neither GPC Biotech nor any of its Affiliates will use in any capacity, in connection with the services to be performed under this Agreement, any Person who has been debarred pursuant to Section 306 of the FFDCA or who is the subject of a conviction described in such section. GPC Biotech shall inform Licensee in writing immediately if it or any Person who is performing services hereunder is debarred or is the subject of a conviction described in Section 306 or if any action, suit, claim, investigation or legal or administrative proceeding is pending or, to the best of GPC Biotech’s Knowledge, is threatened, relating to the debarment or conviction of Licensee or any Person performing services hereunder.

          12.3.3 GPC Biotech Controls the Patents listed on Exhibit A and the GPC Biotech Know-How, and is entitled to grant the licenses specified herein. Except for any obligation of GPC Biotech or any of its Affiliates under the German act on employees’ inventions (Gesetz über Arbeitnehmererfindungen) or corresponding laws in other jurisdictions, the requirements of which, to GPC Biotech’s Knowledge, have been satisfied, GPC Biotech has

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not caused any GPC Biotech Patent to be subject to any liens or encumbrances and GPC Biotech has not granted to any Third Party any rights or licenses under any of the GPC Biotech Know-How or GPC Biotech Patents that would conflict with the licenses granted to Licensee hereunder. To GPC Biotech’s Knowledge, neither the Development nor Commercialization of the Licensed Product in the Field as currently conducted by GPC Biotech or as contemplated by this Agreement does or would infringe or result in the misappropriation of any Patent or other Intellectual Property Rights of any Third Party.

          12.3.4 To GPC Biotech’s Knowledge, the GPC Biotech Patents have been procured or are being procured from the respective Patent Offices in accordance with Applicable Law.

          12.3.5 GPC Biotech has no Knowledge of any actual infringement or threatened infringement of the GPC Biotech Patents or GPC Biotech Know-How by any Person.

          12.3.6 GPC Biotech has no Knowledge of any claim or litigation that has been brought or threatened in writing by any Person alleging that (a) the GPC Biotech Patents or the GPC Biotech Know-How are invalid or unenforceable or (b) the Development and Commercialization of the Licensed Product in the Field as contemplated by this Agreement infringes any Patent or other Intellectual Property Right Controlled by any Third Party.

          12.3.7 GPC Biotech has not, up through and including the Effective Date, Knowingly withheld (except as previously stated by GPC Biotech to Licensee) any material information, including reports of Adverse Event Experiences and warning letters from Regulatory Authorities, in GPC Biotech’s possession from Licensee in response to Licensee’s reasonable inquiries in connection with its due diligence relating to the Licensed Compound, Licensed Product, this Agreement and the underlying transaction. To GPC Biotech’s Knowledge, the clinical data related to Licensed Product in the Field that GPC Biotech has provided to Licensee prior to the Effective Date was, when access was provided to Licensee, up-to-date and accurate in all material respects and GPC Biotech has provided Licensee with any material updates to such clinical data that have occurred since the time such access was provided to Licensee.

          12.3.8 GPC Biotech has provided Licensee with a complete and correct (except as may be redacted by Spectrum or its licensor) copy of the Spectrum Agreement existing as of the Effective Date. To GPC Biotech’s Knowledge, the Spectrum Agreement remains in full force and effect as of the Effective Date and, except for any rights of GPC Biotech under the German act on employees’ inventions (Gesetz über Arbeitnehmererfindungen) or corresponding laws in other jurisdictions, is the only agreement with a Third Party (a) pursuant to which GPC Biotech has acquired any rights to the Licensed Compound or the Licensed Products in the Field, and (b) that imposes an obligation on GPC Biotech to pay royalties to a Third Party based upon Commercialization of the Licensed Product in the Field. GPC Biotech represents and warrants to Licensee that to GPC Biotech’s Knowledge, as of the Effective Date, GPC Biotech is in compliance in all material respects with the terms of the Spectrum Agreement and that the performance of GPC Biotech’s obligations and the exploitation of any rights granted to Licensee hereunder in accordance with the terms and conditions of this Agreement will not violate, breach, or constitute a default or require any consent under, the terms of the Spectrum

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Agreement. GPC Biotech covenants to Licensee and agrees that it shall use all commercially reasonable efforts not to take any action or omit to take any action that would constitute a breach of the Spectrum Agreement or enter into any amendment to the Spectrum Agreement, which amendment would be reasonably likely to have a material adverse effect on the Development or Commercialization of the Licensed Product in the Licensee Territory. GPC Biotech shall provide Licensee promptly with notice of the occurrence of any such breach or any notice alleging that GPC Biotech has committed any such breach. Licensee acknowledges that pursuant to Section 5 of the Spectrum Agreement, Spectrum Pharmaceuticals has a right to negotiate for co-promotion rights to Licensed Products in the United States. Notwithstanding the foregoing, in this event, the operation of the limitations in Sections 2.4.3, 2.4.4 and 2.4.5 by virtue of Spectrum Pharmaceuticals becoming a GPC Biotech Counter Party through such provisions shall not be deemed a material adverse effect.

     12.4 DISCLAIMER OF WARRANTY. EXCEPT FOR THE EXPRESS WARRANTIES SET FORTH IN THIS ARTICLE 12, NEITHER PARTY MAKES ANY REPRESENTATIONS OR GRANTS ANY WARRANTIES, EXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW, BY STATUTE OR OTHERWISE, AND EACH PARTY SPECIFICALLY DISCLAIMS ANY OTHER WARRANTIES, WHETHER WRITTEN OR ORAL, OR EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF QUALITY, MERCHANTABILITY OR FITNESS FOR A PARTICULAR USE OR PURPOSE OR ANY WARRANTY AS TO THE VALIDITY OF ANY PATENTS OR THE NON-INFRINGEMENT OF ANY INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES.

ARTICLE 13

INDEMNITY

     13.1 Indemnification of GPC Biotech. Licensee shall indemnify GPC Biotech, its Affiliates and their respective directors, officers, employees, licensors and agents, and defend and save each of them harmless, from and against any and all losses, damages, liabilities, costs and expenses (including reasonable attorneys’ fees and expenses) (collectively, “Losses”) in connection with any and all suits, investigations, claims or demands of Third Parties (collectively, “Third Party Claims”) arising from or occurring as a result of: (a) the breach by Licensee or its Affiliates, Sublicensees or Distributors of any term of this Agreement; (b) the negligence or willful misconduct on the part of Licensee or its Affiliates or any Sublicensees or Distributors in performing their obligations under this Agreement; or (c) the Unilateral Activities by Licensee or its Affiliates or any Sublicensees in the Territory; or (d) subject to Section 13.3, the Commercialization by Licensee or its Affiliates or any Sublicensees or Distributors of the Licensed Product in the Licensee Territory, except for those Losses which GPC Biotech has an obligation to indemnify Licensee pursuant to Section 13.2 hereof, as to which Losses each Party shall indemnify the other to the extent of their respective liability; provided, however, that Licensee shall not be obligated to indemnify GPC Biotech for any Losses to the extent that such Losses arise as a

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result of gross negligence or willful misconduct on the part of GPC Biotech or any of its Affiliates.

     13.2 Indemnification of Licensee. GPC Biotech shall indemnify Licensee, its Affiliates and their respective directors, officers, employees and agents, and defend and save each of them harmless, from and against any and all Losses in connection with any and all Third Party Claims arising from or occurring as a result of: (a) the breach by GPC Biotech or any GPC Biotech Counter-Party of this Agreement; (b) the negligence or willful misconduct on the part of GPC Biotech or any GPC Biotech Counter-Party in performing its obligations under this Agreement; or (c) the Unilateral Activities by GPC Biotech or any GPC Biotech Counter-Party in the Territory; or (d) subject to Section 13.3, Commercialization by GPC Biotech of the Licensed Compound or Licensed Product in the GPC Biotech Territory, except for those Losses for which Licensee has an obligation to indemnify GPC Biotech and its Affiliates pursuant to Section 13.1 hereof, as to which Losses each Party shall indemnify the other to the extent of their respective liability for the Losses; provided, however, that GPC Biotech shall not be obligated to indemnify Licensee for any Losses to the extent that such Losses arise as a result of gross negligence or willful misconduct on the part of Licensee or any of its Affiliates, Sublicensees or Distributors.

     13.3 Certain Losses. Any Losses for personal injury or death or damage or destruction of property, other than those Losses for which indemnification is provided in Section 13.1(a) or (b) or Section 13.2(a) or (b), in connection with any claim brought against either Party by a Third Party resulting directly or indirectly from the conduct of Clinical Studies of the Licensed Product by either Party (or its Affiliates, employees or agents) in accordance with the Development Plan or the Joint Commercialization Activities in accordance with the Commercialization Plan, shall be included as a Collaboration Cost only to the extent such Losses are not covered by insurance policies of such Party. In no event shall Losses from claims of infringement of Third Party Patent rights in connection with the Development of the Licensed Product be included as a Collaboration Cost. The Parties shall confer through the JEC with respect to how to respond to the claim and how to handle the claim in an efficient manner. In the absence of such an agreement, each Party shall have the right to take such action as it deems appropriate.

     13.4 Notice of Claim. All indemnification claims in respect of a Party, its Affiliates or their respective directors, officers, employees and agents shall be made solely by such Party to this Agreement (the “Indemnified Party”). The Indemnified Party shall give the indemnifying Party prompt written notice (an “Indemnification Claim Notice”) of any Losses or discovery of fact upon which such indemnified Party intends to base a request for indemnification under Section 13.1 or 13.2, but in no event shall the indemnifying Party be liable for any Losses that result from any delay in providing such notice. Each Indemnification Claim Notice must contain a description of the claim and the nature and amount of such Loss (to the extent that the nature and amount of such Loss is known at such time). The Indemnified Party shall furnish promptly to the indemnifying Party copies of all papers and official documents received in respect of any Losses and Third Party Claims.

     13.5 Control of Defense. At its option, the indemnifying Party may assume the defense of any Third Party Claim by giving

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written notice to the Indemnified Party within thirty (30) days after the indemnifying Party’s receipt of an Indemnification Claim Notice. The assumption of the defense of a Third Party Claim by the indemnifying Party shall not be construed as an acknowledgment that the indemnifying Party is liable to indemnify the Indemnified Party in respect of the Third Party Claim, nor shall it constitute a waiver by the indemnifying Party of any defenses it may assert against the Indemnified Party’s claim for indemnification. Upon assuming the defense of a Third Party Claim, the indemnifying Party may appoint as lead counsel in the defense of the Third Party Claim any legal counsel selected by the indemnifying Party. In the event the indemnifying Party assumes the defense of a Third Party Claim, the Indemnified Party shall immediately deliver to the indemnifying Party all original notices and documents (including court papers) received by the Indemnified Party in connection with the Third Party Claim. Should the indemnifying Party assume the defense of a Third Party Claim, except as provided in Section 13.5.1, the indemnifying Party shall not be liable to the Indemnified Party for any legal expenses subsequently incurred by such Indemnified Party in connection with the analysis, defense or settlement of the Third Party Claim. In the event that it is ultimately determined that the indemnifying Party is not obligated to indemnify, defend or hold harmless the Indemnified Party from and against the Third Party Claim, the Indemnified Party shall reimburse the indemnifying Party for any and all costs and expenses (including attorneys’ fees and costs of suit) and any Third Party Claims incurred by the indemnifying Party in its defense of the Third Party Claim.

          13.5.1 Right to Participate in Defense. Without limiting Section 13.5 above, any Indemnified Party shall be entitled to participate in, but not control, the defense of such Third Party Claim and to employ counsel of its choice for such purpose; provided, however, that such employment shall be at the Indemnified Party’s own expense unless, subject to the consent of an insurer, if applicable, (a) the employment thereof has been specifically authorized by the indemnifying Party in writing, (b) the indemnifying Party has failed to assume the defense and employ counsel in accordance with Section 13.5 (in which case the Indemnified Party shall control the defense) or (c) the interests of the indemnitee and the indemnifying Party with respect to such Third Party Claim are sufficiently adverse to prohibit the representation by the same counsel of both parties under Applicable Law, ethical rules or equitable principles.

          13.5.2 Settlement. With respect to any Third Party Claims relating solely to the payment of money damages in connection with a Third Party Claim and that shall not result in the Indemnified Party’s becoming subject to injunctive or other relief or otherwise adversely affecting the business of the Indemnified Party in any manner, and as to which the indemnifying Party shall have acknowledged in writing the obligation to indemnify the Indemnified Party hereunder, the indemnifying Party shall have the sole right to consent to the entry of any judgment, enter into any settlement or otherwise dispose of such Loss, on such terms as the indemnifying Party, in its sole discretion, shall deem appropriate. With respect to all other Losses in connection with Third Party Claims, where the indemnifying Party has assumed the defense of the Third Party Claim in accordance with Section 13.5.1, the indemnifying Party shall have authority to consent to the entry of any judgment, enter into any settlement or otherwise dispose of such Loss provided it obtains the prior written consent of the Indemnified Party (which consent shall not be unreasonably withheld or delayed). The indemnifying Party shall not be liable for any settlement or other disposition of a Loss by an Indemnified Party that is reached without the written consent of the indemnifying Party. Regardless of whether the

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indemnifying Party chooses to defend or prosecute any Third Party Claim, no Indemnified Party shall admit any liability with respect to or settle, compromise or discharge, any Third Party Claim without the prior written consent of the indemnifying Party, such consent not to be unreasonably withheld or delayed.

          13.5.3 Cooperation. Regardless of whether the indemnifying Party chooses to defend or prosecute any Third Party Claim, the Indemnified Party shall, and shall cause each Indemnified Party to, cooperate in the defense or prosecution thereof and shall furnish such records, information and testimony, provide such witnesses and attend such conferences, discovery proceedings, hearings, trials and appeals as may be reasonably requested in connection therewith. Such cooperation shall include access during normal business hours afforded to indemnifying Party to, and reasonable retention by the Indemnified Party of, records and information that are reasonably relevant to such Third Party Claim, and making indemnified Parties and other employees and agents available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder, and the indemnifying Party shall reimburse the Indemnified Party for all its reasonable out-of-pocket expenses in connection therewith.

          13.5.4 Expenses. Except as provided above, the costs and expenses, including fees and disbursements of counsel, incurred by the Indemnified Party in connection with any claim shall be reimbursed on a Calendar Quarter basis by the indemnifying Party, without prejudice to the indemnifying Party’s right to contest the Indemnified Party’s right to indemnification and subject to refund in the event the indemnifying Party is ultimately held not to be obligated to indemnify the Indemnified Party.

     13.6 Limitation on Damages and Liability. EXCEPT IN CIRCUMSTANCES OF GROSS NEGLIGENCE OR INTENTIONAL MISCONDUCT BY A PARTY OR ITS AFFILIATES (OR WITH RESPECT TO LICENSEE, ITS SUBLICENSEES OR DISTRIBUTORS), OR WITH RESPECT TO LOSSES ARISING FROM THIRD PARTY CLAIMS UNDER SECTION 13.1 OR 13.2, NO PARTY OR ANY OF THEIR RESPECTIVE AFFILIATES SHALL BE LIABLE FOR SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES, OR FOR LOST PROFITS, MILESTONES OR ROYALTIES, WHETHER IN CONTRACT, WARRANTY, NEGLIGENCE, TORT, STRICT LIABILITY OR OTHERWISE, ARISING OUT OF (a) THE DEVELOPMENT, MANUFACTURE, USE OR SALE OF THE LICENSED PRODUCT OR LICENSED COMPOUND UNDER THIS AGREEMENT, (b) THE USE OF OR REFERENCE TO ANY PATENTS, KNOW-HOW, REGULATORY DOCUMENTATION OR DRUG MASTER FILE, OR (c) ANY BREACH OF OR FAILURE TO PERFORM ANY OF THE PROVISIONS OF THIS AGREEMENT.

     13.7 Insurance. Each Party shall have and maintain such type and amounts of liability insurance covering the Manufacture, Development, use and sale of the Licensed Product as is normal and customary in the pharmaceutical industry generally for parties similarly situated, and shall upon request provide the other Party with a copy of its policies of insurance in that regard, along with any amendments and revisions thereto. Each Party shall provide the other Party thirty (30) days’ advance written notice of the termination of coverage in its insurance program.

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          13.7.1 Without limiting the generality of the foregoing, at a minimum, Licensee shall maintain during any period in which Licensee has indemnification obligations to GPC Biotech, (a) commercial general liability insurance with a combined single limit for bodily injury and property damage of not less than Five Million U.S. Dollars ($5,000,000) per occurrence and Ten Million U.S. Dollars ($10,000,000) in the aggregate, (b) products liability/completed operations coverage with a minimum indemnity limit of Ten Million U.S. Dollars ($10,000,000) per claim and in the aggregate and (c) a global cargo insurance policy with a minimum indemnity limit of One Million Five Hundred Thousand U.S. Dollars ($1,500,000) per occurrence and insurance on product inventory at processor locations of Five Million U.S. Dollars ($5,000,000) per occurrence. Such policies shall (x) be provided by insurance carrier(s) reasonably acceptable to GPC Biotech, and (y) show GPC Biotech as additional insured and loss payee, as its interests may appear. Such policies shall remain in effect throughout the term of this Agreement and shall not be cancelled or subject to a reduction of coverage without the prior written authorization of GPC Biotech. Should Licensee at any time or for any reason fail to obtain the insurance required herein, or should such insurance be cancelled or reduced below the above limits, GPC Biotech shall have the right to procure the same at Licensee’s expense. GPC Biotech shall have the right to offset any such expense that is owed by Licensee but not paid against any payments owed by GPC Biotech, if any, under this Agreement.

          13.7.2 Without limiting the generality of the foregoing, at a minimum, GPC Biotech shall maintain during any period in which GPC Biotech has indemnification obligations to Licensee, (a) commercial general liability insurance with a combined single limit for bodily injury and property damage of not less than Five Million Euros (€5,000,000) in the aggregate and Two Million U.S. Dollars ($2,000,000) in the aggregate and One Million U.S. Dollars ($1,000,000) per occurrence in the United States, (b) products liability/completed operations coverage with a minimum indemnity limit of Ten Million U.S. Dollars ($10,000,000) per occurrence, (c) a global cargo insurance policy with a minimum indemnity limit of Seven Hundred Fifty Thousand U.S. Dollars ($750,000) per occurrence, and (d) an all-risks insurance policy covering its United States facilities with a minimum indemnity limit of Eight Million U.S. Dollars ($8,000,000) per occurrence and in the aggregate. Such policies shall (x) be provided by insurance carrier(s) reasonably acceptable to Licensee, and (y) show Licensee as additional insured and loss payee, as its interests may appear. Such policies shall remain in effect throughout the term of this Agreement and shall not be cancelled or subject to a reduction of coverage without the prior written authorization of Licensee. Should GPC Biotech at any time or for any reason fail to obtain the insurance required herein, or should such insurance be cancelled or reduced below the above limits reduced, Licensee shall have the right to procure the same at GPC Biotech’s expense. Licensee shall have the right to offset any such expense that is owed by GPC Biotech but not paid against any payments owed by Licensee under this Agreement.

ARTICLE 14

TERM AND TERMINATION

     14.1 Term. This Agreement shall commence upon the Effective Date and shall continue in each country in the Licensee Territory until such time as

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Licensee no longer owes any royalty payments under this Agreement with respect to such country, unless earlier terminated in accordance with this Article 14. Unless earlier terminated in accordance with this Article 14, and subject to the applicable terms and conditions of the Spectrum Agreement, upon expiration of this Agreement on a country-by-country basis, Licensee shall retain a non-exclusive, fully-paid, royalty-free license to the GPC Biotech Know-How and, subject to Section 5.5, the Product Trademarks, in each case, for the purpose of continuing to Commercialize the Licensed Product in the Field in such country.

     14.2 Termination of this Agreement in its Entirety for Material Breach. In the event that either Party (the “Breaching Party”) shall be in material default in the performance of any of its material obligations under this Agreement, in addition to any other right and remedy the other Party (the “Complaining Party”) may have, the Complaining Party may terminate this Agreement in its entirety by sixty (60) days’ prior written notice (the “Notice Period”) to the Breaching Party, specifying the breach and its claim of right to terminate, provided always that the termination shall not become effective at the end of the Notice Period if the Breaching Party cures the breach complained about during the Notice Period (or, if such default cannot be cured within such sixty (60)-day period, if the Breaching Party commences actions to cure such default within the Notice Period and thereafter diligently continues such actions, provided that such default is cured within one hundred eight (180) days after the receipt of such notice), except in the case of a payment default of amounts not subject to a good faith Dispute, as to which the Breaching Party shall have only a ten (10)-day cure period. For the avoidance of doubt, in the event of a Dispute between the Parties with respect to whether Licensee has failed to utilize Commercially Reasonable Efforts with respect to the Development or Commercialization of Licensed Product, or as to whether a payment is owed hereunder, then such Dispute shall be resolved in accordance with Section 15.7.1 and the applicable cure period shall be tolled during the pendency of such resolution.

     14.3 Termination of this Agreement in a Country or Major Market Region for Material Breach. In the event that Licensee shall be in material default in the performance of any of its material obligations under this Agreement with respect to a country, in addition to any other right and remedy GPC Biotech may have, GPC Biotech may without limiting its right to terminate this Agreement in its entirety pursuant to Section 14.2 (with respect to any such default that constitutes a material default within the meaning of Section 14.2 with respect to the Agreement as a whole), terminate this Agreement, at its election, either (a) in such country or (b) if such country is a Major Market Country, in all or any part of the Major Market Region in which such Major Market Country is located, by sixty (60) days’ prior written notice to Licensee, specifying such alleged breach, identifying the countries at issue and specific detailed reasons of such allegation and its claim of right to terminate, provided always that the termination shall not become effective at the end of the Notice Period if Licensee cures such breach during the Notice Period (or, if such default cannot be cured within such sixty (60)-day period, if Licensee commences actions to cure such default within the Notice Period and thereafter diligently continues such actions, provided that such default is cured within one hundred and eighty (180) days after the receipt of such notice), except in the case of a payment default of amounts not subject to good faith Dispute by Licensee as to which Licensee shall have a ten (10)-day cure period. For the avoidance of doubt, in the event of a Dispute between the

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Parties with respect to whether Licensee has failed to utilize Commercially Reasonable Efforts with respect to the Development or Commercialization of Licensed Product in a country, or as to whether a payment is owed hereunder, then such Dispute shall be resolved in accordance with Section 15.7.1 and the applicable cure period shall be tolled during the pendency of such resolution.

     14.4 Termination by Licensee. If Licensee reasonably determines that it is not feasible for Licensee to pursue the Development or Commercialization of the Licensed Product in a country within the Licensee Territory or Europe, in the case of a country within Europe, due to a scientific, technical, regulatory or commercial reasons, including (a) safety or efficacy concerns, including adverse events of the Licensed Product, (b) concerns relating to the present or future marketability or profitability of the Licensed Product, (c) reasons related to patent coverage or (d) existing and anticipated competition, which renders the Commercialization of the Licensed Product no longer commercially practicable for Licensee, then Licensee shall promptly notify GPC Biotech in writing of such determination and provide GPC Biotech with the pertinent information with respect thereto. Promptly following the receipt of such notice from Licensee, the Parties shall meet and discuss any amendments to this Agreement to address Licensee’s concerns. If the Parties are not able to agree on such amendments within ninety (90) days and if Licensee still reasonably believes that it is not feasible for Licensee to pursue the Development, launch or sale of the Licensed Product in a country, Licensee may terminate this Agreement with respect to such country or countries or Europe, in the case of any country within Europe, in the Licensee Territory upon ninety (90) days’ prior written notice to GPC Biotech; provided that if (i) Licensee terminates this Agreement with respect to a country that is a Major Market Country, GPC Biotech shall have the right to terminate the Agreement with respect to all or any part of the Major Market Region in which such Major Market Country is located upon written notice to Licensee, or (ii) Licensee terminates this Agreement with respect to any Major Market Country in Europe, GPC Biotech shall have the right to terminate this Agreement in its entirety upon written notice to Licensee.

     14.5 Termination by GPC Biotech.

          14.5.1 In the event that Licensee or any of its Affiliates, Sublicensees or Distributors, anywhere in the Territory, institutes, prosecutes or otherwise participates in (or in any way aids any Third Party in instituting, prosecuting or participating in), at law or in equity or before any administrative or regulatory body, including the U.S. Patent and Trademark Office or its foreign counterparts, any claim, demand, action or cause of action for declaratory relief, damages or any other remedy or for an enjoinment, injunction or any other equitable remedy, including any interference, re-examination, opposition or any similar proceeding, (a) alleging that any claim in a GPC Biotech Patent is invalid, unenforceable or otherwise not patentable or would not be infringed by activities of Licensee, its Affiliates, Sublicensees, or Distributors absent the rights and licenses granted hereunder or (b) that attacks, disputes or contests the validity of or ownership of a Product Trademark or any registrations issuing with respect thereto, GPC Biotech shall have the right to immediately terminate this Agreement, including the rights of any Sublicensees or Distributors, on written notice to Licensee; provided, however, that the foregoing shall not apply to any defense asserted by Licensee or any of its Affililates,

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Sublicensees or Distributors to any claim or action brought by [...***...] for infringement of any of the GPC Biotech Patents by Licensee or any of its Affililates, Sublicensees or Distributors.

          14.5.2 If Licensee or its ultimate parent corporation proposes or is the subject of a Change of Control, after the Effective Date and during the term of this Agreement, upon any public announcement of such proposed Change of Control, Licensee shall provide GPC Biotech with prompt written notice of the proposed Change of Control in reasonable detail (the “Licensee Change of Control Notice”). If the Change of Control that is described in the Licensee Change of Control Notice involves a Third Party that has a Competitive Program, then, unless the Parties agree otherwise in writing, Licensee shall, within thirty (30) days after the date of the Change of Control, notify GPC Biotech whether Licensee intends to: (x) cease, or cause its relevant Affiliate to cease, the Competitive Program; (y) divest with respect to the Licensee Territory, or cause its relevant Affiliate to so divest, whether by license or otherwise, the Competitive Program; or (z) terminate this Agreement pursuant to Section 14.4, to the extent applicable. Without limitation to any other term or condition of this Agreement, in the case of any Change of Control transaction, whether or not consummated, Licensee may not, between the date of the Licensee Change of Control Notice and the consummation of such Change of Control or the termination of the proposed transaction, reduce the resources applied to Commercialization of the Licensed Product in the Licensee Territory during the applicable time period in terms of sales force size, Detail frequency or promotional efforts below what is specified in the then-current Commercialization Plan, or modify the sales force commission structure in any manner that is prejudicial to the Licensed Products, unless such reduction or modification is justified by circumstances or events beyond the Licensee’s control that have had or would reasonably be expected to have a material adverse impact on the market for or the commercial potential of the Licensed Product in the Licensee Territory or any relevant portion of the Licensee Territory.

               (a) If Licensee notifies GPC Biotech in writing within such thirty (30)-day period that it intends to cease or cause its relevant Affiliate to cease the Competitive Program, Licensee or, if applicable, its Affiliates shall (i) promptly cease the Competitive Program as quickly as possible with due regard for patient safety and the rights of any subjects that are participants in any clinical studies or post-approval studies relating to the Competitive Program and Applicable Law; and (ii) keep GPC Biotech reasonably informed of its efforts and progress in effecting such cessation of activities and shall provide a written summary of such efforts to GPC Biotech each Calendar Quarter until completed.

               (b) If Licensee notifies GPC Biotech in writing within such thirty (30)-day period that it intends to divest such Competitive Program in the Licensee Territory, Licensee or its Affiliate shall use all reasonable efforts to effect such divestiture as quickly as possible and shall keep GPC Biotech reasonably informed of its efforts and progress in effecting such divestiture and shall provide a written summary of such efforts each Calendar Quarter until completed. If Licensee or its Affiliate effects such divestiture by way of one or more sublicenses, the licensor shall be entitled to receive license fees, milestones and royalties on sales of any products developed pursuant to the Competitive Program so divested, [...***...]. If, notwithstanding such reasonable efforts, Licensee is not

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able to effect such a divestiture, it shall have the right to cease such Competitive Program as provided in Section 14.5.2(a).

               (c) If Licensee fails to provide such notice within such thirty (30)-day period, or having provided such notice, fails to carry out the designated actions, then, unless the Parties agree otherwise, GPC Biotech shall have the right to terminate this Agreement effective immediately upon GPC Biotech’s providing written notice thereof to Licensee.

          14.5.3 During the term of the Agreement, in the event that Licensee or its ultimate parent corporation undergoes a Change of Control transaction, Licensee (or its successor) or acquirer, as the case may be, (the “Merger Party”) shall be bound by the obligations of this Agreement, including any Development Plans and Budgets or Commercialization Plans and Budgets existing at the time of the consummation of the Change of Control and all diligence obligations with respect thereto. In the event of any such Change of Control, a Merger Party, in satisfying its obligations to use Commercially Reasonable Efforts to Commercialize Licensed Products hereunder, may not thereafter reduce the resources applied to Commercialization of the Licensed Product in the Licensee Territory during the applicable time period in terms of sales force size, Detail frequency or promotional efforts below what is specified in the then-current Commercialization Plan, or modify the sales force commission structure in any manner that is prejudicial to the Licensed Products, unless such reduction or modification is justified by circumstances or events beyond the Merger Party’s control that have had or would reasonably be expected to have a material adverse impact on the market for or the commercial potential of the Licensed Product in the Licensee Territory or any relevant portion of the Licensee Territory. In the event that a Commercialization Plan has not been approved by the JCC prior to the consummation of the Change of Control transaction, such Merger Party shall provide a proposed Commercialization Plan as provided in Section 3.2.1 within ninety (90) days thereof, which plan shall be subject to written approval by GPC Biotech, such approval not to be unreasonably withheld or delayed. Any Disputes regarding Commercialization Plans proposed pursuant to this Section shall be resolved in accordance with Section 15.7.1 and any Arbitration Matters resulting therefrom shall be resolved pursuant to Section 15.7.4(c).

     14.6 Termination Upon Insolvency. Either Party may terminate this Agreement if, at any time, the other Party or its ultimate parent corporation shall file in any court or agency pursuant to any statute or regulation of any state, country or jurisdiction, a petition in bankruptcy or insolvency or for reorganization or for an arrangement or for the appointment of a receiver or trustee of that Party or of its assets, or if the other Party or its ultimate parent corporation shall be served with an involuntary petition against it, filed in any insolvency proceeding, and such petition shall not be dismissed within sixty (60) days after the filing thereof, or if the other Party or its ultimate parent corporation shall propose or be a party to any dissolution or liquidation, or if the other Party or its ultimate parent corporation shall make an assignment for the benefit of its creditors.

     14.7 Rights in Bankruptcy. All rights and licenses granted under or pursuant to this Agreement by Licensee or GPC Biotech are, and shall otherwise be deemed to be, for purposes of Section 365(n) of the U.S. Bankruptcy Code, licenses of right to “intellectual property” as defined under Section 101 of the U.S. Bankruptcy Code. The Parties agree that the Parties, as licensees of such rights under this

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Agreement, shall retain and may fully exercise all of their rights and elections under the U.S. Bankruptcy Code. The Parties further agree that, in the event of the commencement of a bankruptcy proceeding by or against either Party under the U.S. Bankruptcy Code, the Party hereto that is not a Party to such proceeding shall be entitled to a complete duplicate of (or complete access to, as appropriate) any such intellectual property and all embodiments of such intellectual property, which, if not already in the non-subject Party’s possession, shall be promptly delivered to it (a) upon any such commencement of a bankruptcy proceeding upon the non-subject Party’s written request therefor, unless the Party subject to such proceeding elects to continue to perform all of its obligations under this Agreement or (b) if not delivered under (a) above, following the rejection of this Agreement by or on behalf of the Party subject to such proceeding upon written request therefor by the non-subject Party.

     14.8 Consequences of Termination.

          14.8.1 Upon Termination in its Entirety for Licensee Breach or by Licensee for Convenience. Upon any termination of this Agreement in its entirety by GPC Biotech under Section 14.2, 14.5 or 14.6 or by either Party under Section 14.4:

               (a) All licenses and sublicenses granted to Licensee by GPC Biotech under this Agreement shall terminate, and, subject to Section 14.8.9, Licensee, its Affiliates, Sublicensees and Distributors shall have no further right in or to the GPC Biotech Patents or to use the GPC Biotech Know-How, Product Trademarks or the GPC Biotech Corporate Name.

               (b) Licensee shall and does hereby automatically and without any further consideration relinquish its rights hereunder and assign and cause its Affiliates, Sublicensees and Distributors to assign to GPC Biotech without further compensation therefor, all right, title and interest, if any, in and to the Product Trademarks, Regulatory Approvals, Regulatory Documentation (including any Clinical Data generated from Unilateral Activities of Licensee) and any Drug Master Files, and shall grant to GPC Biotech with effect from the effective date of termination a perpetual, irrevocable and exclusive (including with regard to Licensee and its Affiliates, Sublicensees and Distributors), worldwide, royalty-free license, with the right to grant sublicenses (through multiple tiers of sublicensees), under the Joint Patents (to the extent Controlled by Licensee), Joint Know-How (to the extent Controlled by Licensee), Licensee Know-How and Licensee Patents, solely to Exploit the Licensed Compound and the Licensed Product. Further, Section 2.5 shall terminate and have no further effect with respect to the obligations and restrictions imposed under such Section on GPC Biotech.

               (c) Any payments under Section 7.1 shall be retained by GPC Biotech.

               (d) In the event that GPC Biotech terminates this Agreement pursuant to Sections 14.2, 14.5.1 or 14.5.2(c) hereof, Licensee shall have an obligation to continue funding its share of Collaboration Costs in accordance with the provisions of Section 6.1.6 hereof that are incurred in connection with the Development Budget in existence prior to the effective date of termination, and subject to all other applicable provisions of this Agreement, for [...***...] after termination of the Agreement or, if earlier, until such time as (i) Licensee’s share of the Collaboration Costs paid hereunder totals [...***...],

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or (ii) GPC Biotech enters into an agreement with a Third Party which includes the European Union as a territory under which such Third Party assumes an obligation to fund a share of costs and expenses that would be considered Collaboration Costs equal to or greater than Licensee’s share of Collaboration Costs under this Agreement. In the event that GPC Biotech enters into an agreement with a Third Party which includes the European Union and under which such Third Party assumes an obligation to fund a share of costs and expenses that would be considered Collaboration Costs less than Licensee’s share hereunder, Licensee’s obligation to fund Collaboration Costs incurred thereafter shall be proportionately reduced until Licensee has otherwise satisfied the obligations of this Section.

               (e) In event that Licensee terminates this Agreement pursuant to Section 14.4 hereof, Licensee shall have an obligation to continue funding its share of Collaboration Costs in accordance with the provisions of Section 6.1.6 hereof that are incurred in connection with the Development Budget in existence prior to the effective date of termination, and subject to all other applicable provisions of this Agreement, until such time as (i) Licensee’s share of the Collaboration Costs paid hereunder totals [...***...], or (ii) GPC Biotech enters into an agreement with a Third Party which includes the European Union as a territory under which such Third Party assumes an obligation to fund a share of costs and expenses that would be considered Collaboration Costs equal to or greater than Licensee’s share of Collaboration Costs under this Agreement. In the event that GPC Biotech enters into an agreement with a Third Party which includes the European Union as a territory under which such Third Party assumes an obligation to fund a share of costs and expenses that would be considered Collaboration Costs less than Licensee’s share hereunder, Licensee’s obligation to fund Collaboration Costs incurred thereafter shall be proportionately reduced until Licensee has otherwise satisfied the obligations of this Section.

          14.8.2 Upon Termination in its Entirety for GPC Biotech Breach. Upon any termination of this Agreement in its entirety by Licensee under Section 14.2 or 14.6:

               (a) All licenses and sublicenses granted to Licensee by GPC Biotech under this Agreement shall terminate, and, subject to Section 14.8.9, Licensee, its Affiliates, Sublicensees and Distributors shall have no further right in or to the GPC Biotech Patents or to use the GPC Biotech Know-How, Product Trademarks or the GPC Biotech Corporate Names. Licensee shall and does hereby automatically and without any further consideration relinquish its rights hereunder and assign and cause its Affiliates, Sublicensees and Distributors to assign to GPC Biotech without further compensation therefor, all right, title and interest, if any, in and to the Product Trademarks, Regulatory Approvals, Regulatory Documentation (excluding any Clinical Data generated in connection with Unilateral Activities of Licensee) and any Drug Master Files; provided that Licensee shall have a period of up to one hundred eighty (180) days to continue to Commercialize the Licensed Products in the Licensee Territory prior to the transition of Commercialization to GPC Biotech.

               (b) The licenses granted to GPC Biotech pursuant to Section 5.6.1 shall survive termination of this Agreement on a perpetual and irrevocable, non-exclusive, royalty-free, world-wide basis; provided that at GPC Biotech’s option, such licenses shall be made exclusive and royalty-bearing, subject to an agreement by the Parties on an applicable royalty rate and other related terms and conditions to be negotiated in good faith.

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               (c) Section 2.5.5 shall survive with respect to any obligations and restrictions imposed under such Section on either Party, provided that, in the event of such termination, GPC Biotech shall have the right to Opt-In with respect to any Unilateral Activities conducted by Licensee prior to the effective date of such termination (and the Clinical Data and other information resulting therefrom), with such Opt-In conducted as contemplated under Section 2.5.6, except that (i) such Opt-In right shall not be impacted by any earlier expiration of the applicable Opt-In Exercise Period, and (ii) any request for information concerning such Unilateral Activities provided by GPC Biotech pursuant to this Section 14.8.2 shall be treated as the Opt-In Information Request under Section 2.5.6;

               (d) Any payments under Section 7.1 shall be retained by GPC Biotech.

               (e) Any amounts paid by Licensee to GPC Biotech pursuant to Section 6.1.2 or Section 6.1.6, that have not been expended by GPC Biotech with respect to Development activities as of the effective date of such termination in accordance with the Development Budget in existence prior to the date of Licensee’s notice of termination shall be refunded to Licensee within thirty (30) days of the effective date of termination.

          14.8.3 Upon Partial Termination. Upon any termination of a portion of this Agreement by GPC Biotech under Section 14.3 or by either Party under Section 14.4:

               (a) all licenses and sublicenses granted to Licensee by GPC Biotech under this Agreement shall terminate for such portion of the Licensee Territory terminated pursuant to Section 14.3 or 14.4, as applicable, and, subject to Section 14.8.9, Licensee, its Affiliates, Sublicensees and Distributors shall have no further right in or to the GPC Biotech Patents or to use the GPC Biotech Know-How, Product Trademarks or GPC Biotech Corporate Names in the terminated portion of the Licensee Territory;

               (b) Licensee shall and does hereby automatically and without any further consideration relinquish its rights hereunder and assign and cause its Affiliates, Sublicensees and Distributors to assign to GPC Biotech without further compensation therefor, all right, title and interest, if any, in and to the Product Trademarks, Regulatory Approvals, Regulatory Documentation (including any Clinical Data generated in connection with Unilateral Activities of Licensee) and any Drug Master Files held by Licensee, its Affiliates, Sublicensees or Distributors in that portion of the Licensee Territory terminated pursuant to Section 14.3 or 14.4, as applicable, and shall grant to GPC Biotech with effect from the effective date of termination a perpetual, irrevocable and exclusive (including with regard to Licensee and its Affiliates, Sublicensees and Distributors), royalty-free license, with the right to grant sublicenses (through multiple tiers of sublicensees), under the Joint Patents (to the extent Controlled by Licensee), Joint Know-How (to the extent Controlled by Licensee), Licensee Know-How and Licensee Patents, solely to Exploit the Licensed Compound and the Licensed Product, in such portion of the Licensee Territory terminated pursuant to Section 14.3 or 14.4, as applicable;

               (c) Section 2.5.5 shall survive with respect to any obligations and restrictions imposed under such Section on either Party only with respect to the non-terminated portion of the Licensee Territory; and

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               (d) any payments under Section 7.1 shall be retained by GPC Biotech.

          14.8.4 Ceasing Exploitation of Licensed Product. Subject to Section 14.8.6 and 14.8.9, upon termination of this Agreement, however caused or arising, Licensee shall, and shall cause its Affiliates, Sublicensees and Distributors to, promptly, cease all Exploitation of the Licensed Product in the Territory or such terminated countries, as applicable, and, within thirty (30) days of the effective date of such termination, at GPC Biotech’s election, either destroy or return to GPC Biotech, at Licensee’s expense, any and all unsold quantities of Licensed Product.

          14.8.5 Transfer of Materials. Without limitation to Section 11.7, except as provided in Section 14.8.6, Licensee shall cooperate with GPC Biotech in transferring to GPC Biotech or a Third Party, as GPC Biotech may direct, within sixty (60) days of the termination hereof, all data, files and other materials in the possession or under the control of Licensee or its Affiliates, Sublicensees (subject to Section 14.8.9) or Distributors that are Controlled by GPC Biotech or licensed to GPC Biotech pursuant to this Section 14.8 upon such termination, except that Licensee may retain one (1) copy of such data, files or materials Controlled by GPC Biotech for the sole purpose of performing any continuing obligations hereunder or for archival purposes. Notwithstanding the foregoing, Licensee also shall be permitted to retain such additional copies of or any computer records or files containing such data or files that have been created solely by Licensee’s automatic archiving and back-up procedures, to the extent created and retained in a manner consistent with Licensee’s standard archiving and back-up procedures, but not for any other use or purpose.

          14.8.6 Sale of Inventory. Upon termination of this Agreement by Licensee under Sections 14.2, 14.4 or 14.6 or by GPC Biotech under Sections 14.5 or 14.6 and provided that Licensee is not in material breach of any obligation under this Agreement at the time of such termination, Licensee shall have the right for six (6) months after the effective date of such termination to dispose of all Licensed Product then in its inventory, as though this Agreement had not terminated. For the avoidance of doubt, Licensee shall continue to make payments thereon as provided in Article 7.

          14.8.7 Assignments. In connection with any and all assignments contemplated by this Section 14.8, Licensee shall execute and deliver, and shall cause its Affiliates and Sublicensees to execute and deliver such instruments and take such actions as may be necessary or desirable to effect such transfer.

          14.8.8 Remedies. Except as otherwise expressly provided herein, termination of this Agreement in accordance with the provisions hereof shall not limit remedies which may otherwise be available in law or equity.

          14.8.9 Effect of Termination on Sublicenses. Termination of this Agreement shall not terminate any sublicense granted by Licensee pursuant to Sections 5.1 and 5.3 with respect to a Sublicensee, provided that (a) such Sublicensee is not in breach of any provision of this Agreement or the applicable sublicense agreement, (b) such Sublicensee shall perform all obligations of Licensee under this Agreement and (c) GPC Biotech shall have all rights with respect to any and all Sublicensees as it had hereunder with respect to Licensee prior to termination of this Agreement with respect to Licensee. Licensee shall include in any sublicense

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a provision in which said Sublicensee acknowledges its obligations to GPC Biotech hereunder and the rights of GPC Biotech to terminate this Agreement with respect to any Sublicensee for material breaches of this Agreement by such Sublicensee that are within the scope of Sections 14.2 and 14.3 hereof. The failure of Licensee to include in a sublicense the provision referenced in the immediately preceding sentence shall render the affected sublicense void ab initio.

          14.8.10 Assistance. In the event of any termination pursuant to this Article 14, Licensee shall, and shall cause its Affiliates, Sublicensees and Distributors to, at the request of GPC Biotech, provide GPC Biotech with such assistance as is reasonably necessary to effectuate a smooth and orderly transition of any Development and Commercialization of the Licensed Product, including any ongoing Clinical Studies or Post Approval Studies, to GPC Biotech or its designee so as to minimize any disruption of such activities, including the assignment of any such contracts (to the extent such contracts permit assignment) and the transfer of any such materials related to the Licensed Product, in each case that is the subject of such obligation, to the extent not prohibited under the terms of such contracts. In performing its obligations under this Section 14.8.10, Licensee shall, and shall cause its Affiliates, Sublicensees and Distributors to, cooperate with GPC Biotech (at Licensee’s reasonable expense) to effect such transfers and assignments in an orderly fashion and shall provide to GPC Biotech or its designee any copies of relevant documents and rights of reference or access necessary to allow GPC Biotech to Exploit the Licensed Compound and Licensed Product and any Improvements thereto in the GPC Biotech Territory or, in the event the Agreement is terminated in its entirety, in the Territory. GPC Biotech shall promptly compensate Licensee for all of its direct and indirect costs (including its FTE Costs) associated with the performance of any of it obligations under this Section 14.8.10 with respect to any termination of this Agreement by Licensee under Section 14.2 or 14.6.

     14.9 Accrued Rights; Surviving Obligations.

          14.9.1 Accrued Rights. Termination or expiration of this Agreement for any reason shall be without prejudice to any rights that shall have accrued to the benefit of a Party prior to such termination or expiration. Such termination or expiration shall not relieve a Party from obligations that are expressly indicated to survive the termination or expiration of this Agreement.

          14.9.2 Survival. Without limiting the foregoing, Sections 2.4.7, 5.2, 5.6, 5.7, 7.10, 7.11, 7.12, 7.13, 12.4, 14.7, 14.8, this Section 14.9, Sections 15.3, 15.6, 15.7, 15.8, 15.11, 15.12, 15.14, 15.15, 15.17 and 15.18 and Articles 8 (with respect to provisions which by their nature must survive termination), 9, 10, 11, and 13 of this Agreement shall survive the termination or expiration of this Agreement for any reason and Sections 2.5.5 and 2.5.6 shall survive termination of this Agreement as provided in Section 14.8.2(c) or 14.8.3(c), as applicable.

     14.10 Termination of Spectrum Agreement. Upon any termination of the Spectrum Agreement and as provided in the Spectrum Agreement, the portions of this Agreement applicable to the rights that are sublicensed to Licensee in accordance with the Spectrum Agreement shall be automatically

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assigned to Spectrum Pharmaceuticals, Inc. (f/k/a Neotherapeutics, Inc.) in accordance with the Spectrum Agreement.

ARTICLE 15

MISCELLANEOUS

     15.1 Force Majeure. Neither Party shall be held liable or responsible to the other Party or be deemed to have defaulted under or breached this Agreement for failure or delay in fulfilling or performing any term of this Agreement when such failure or delay is caused by or results from events beyond the reasonable control of the non-performing Party, including fires, floods, earthquakes, embargoes, shortages, epidemics, quarantines, war, acts of war (whether war be declared or not), terrorist acts, insurrections, riots, civil commotion, strikes, lockouts or other labor disturbances (whether involving the workforce of the non-performing Party or of any other Person), acts of God or acts, omissions or delays in acting by any governmental authority. The non-performing Party shall notify the other Party of such force majeure within thirty (30) days after such occurrence by giving written notice to the other Party stating the nature of the event, its anticipated duration, and any action being taken to avoid or minimize its effect. The suspension of performance shall be of no greater scope and no longer duration than is necessary and the non-performing Party shall use commercially reasonable efforts to remedy its inability to perform. In the event that such force majeure event lasts for more than ninety (90) days, such other Party shall have the right to terminate this Agreement upon sixty (60) days written notice to the non-performing Party.

     15.2 Export Control. This Agreement is made subject to any restrictions concerning the export of products or technical information from the United States or other countries that may be imposed on related to the Parties from time to time. Each Party agrees that it shall not export, directly or indirectly, any technical information acquired from the other Party under this Agreement or any products using such technical information to a location or in a manner that at the time of export requires an export license or other governmental approval, without first obtaining the written consent to do so from the appropriate agency or other governmental entity in accordance with Applicable Law.

     15.3 Non-Solicitation. During the term of this Agreement and for a period of one (1) year thereafter, neither Party shall actively recruit or solicit any employee of the other Party or its Affiliates. For the avoidance of doubt, nothing shall limit a Party from engaging in general recruitment efforts through advertisements or recruiting through “head-hunters” so long as the employees of the other Party and its Affiliates are not specifically targeted in such recruitment effort.

     15.4 Assignment. Without the prior written consent of the other Party hereto, neither Party shall sell, transfer, assign, delegate, pledge or otherwise dispose of, whether voluntarily, involuntarily, by operation of law or otherwise, this Agreement or any of its rights or duties hereunder; provided, however, that (a) GPC Biotech may, without such consent, assign this Agreement and its rights and obligations hereunder to an

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Affiliate, to the purchaser of the GPC Biotech Patents or GPC Biotech Know-How or to its successor entity or acquirer in the event of a merger, consolidation or change in control of GPC Biotech and (b) subject to Sections 14.5.2 and 14.5.3, Licensee may, without such consent, assign this Agreement and its rights and obligations hereunder to an Affiliate or to its successor entity or acquirer in the event of a merger, consolidation or Change of Control of Licensee; provided further that in either case ((a) or (b)), with respect to an assignment to an Affiliate, such assigning Party shall remain responsible for the performance by such Affiliate of the rights and obligations hereunder. Any attempted assignment or delegation in violation of the preceding sentence shall be void and of no effect. All validly assigned and delegated rights and obligations of the Parties hereunder shall be binding upon and inure to the benefit of and be enforceable by and against the successors and permitted assigns of GPC Biotech or Licensee, as the case may be. In the event either Party seeks and obtains the other Party’s consent to assign or delegate its rights or obligations to another Party, the assignee or transferee shall assume all obligations of its assignor or transferor under this Agreement

     15.5 Severability. If any provision of this Agreement is held to be illegal, invalid or unenforceable under any present or future law, and if the rights or obligations of either Party under this Agreement will not be materially and adversely affected thereby, (a) such provision shall be fully severable, (b) this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part hereof, (c) the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance herefrom and (d) in lieu of such illegal, invalid or unenforceable provision, there shall be added automatically as a part of this Agreement a legal, valid and enforceable provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible and reasonably acceptable to the Parties. To the fullest extent permitted by applicable law, each Party hereby waives any provision of law that would render any provision hereof illegal, invalid or unenforceable in any respect.

     15.6 Governing Law, Jurisdiction, Venue and Service

          15.6.1 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, excluding any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction. The Parties agree to exclude the application to this Agreement of the United Nations Convention on Contracts for the International Sale of Goods.

          15.6.2 Jurisdiction. Subject to Sections 15.7 and 15.12, the Parties hereby irrevocably and unconditionally consent to the exclusive jurisdiction of the courts of the State of New York and the United States District Court for the Southern District of New York for any action, suit or proceeding (other than appeals therefrom) arising out of or relating to this Agreement, and agree not to commence any action, suit or proceeding (other than appeals therefrom) related thereto except in such courts. The Parties irrevocably and unconditionally waive their right to a jury trial.

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          15.6.3 Venue. The Parties further hereby irrevocably and unconditionally waive any objection to the laying of venue of any action, suit or proceeding (other than appeals therefrom) arising out of or relating to this Agreement in the courts of the State of New York or in the United States District Court for the Southern District of New York, and hereby further irrevocably and unconditionally waive and agree not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.

          15.6.4 Service. Each Party further agrees that service of any process, summons, notice or document by registered mail to its address set forth in Section 15.8.2 shall be effective service of process for any action, suit or proceeding brought against it under this Agreement in any such court.

     15.7 Dispute Resolution. Except with respect to any dispute governed by Section 7.12, if a dispute arises between the Parties in connection with or relating to this Agreement or any document or instrument delivered in connection herewith (a “Dispute”), it shall be resolved pursuant to this Section 15.7.

          15.7.1 General. Except as otherwise provided in Sections 8.2.5, 15.7.2 or 15.7.3, either Party shall have the right to refer any Dispute to the Chief Executive Officers of the Parties who shall confer on the resolution of the issue. Any final decision mutually agreed to by such representatives shall be conclusive and binding on the Parties. If such officers are not able to agree on the resolution of any such issue within fifteen (15) Business Days after such issue was first referred to them, either Party may, by written notice to the other Party, elect to initiate arbitration pursuant to Section 15.7.4(a) for purposes of having the matter settled. For clarity, any Disputes relating Section 14.2 or 14.3 shall be resolved pursuant to this Section 15.7.1 and not pursuant to Section 15.7.2. Any Disputes concerning the proper characterization of a Dispute subject to resolution under this Section 15.7 shall be submitted immediately to arbitration to be resolved pursuant to Section 15.7.4(b).

          15.7.2 JEC Disputes.

               (a) In the event that a Dispute arises with respect to an issue within the jurisdiction of the JEC, or a decision required to be made by the JEC that cannot be resolved in accordance with Section 4.4.4, that relates to:

                  (i) Commercialization of the Licensed Product in the GPC Biotech Territory, such Dispute shall be referred to the Chief Executive Officer of GPC Biotech who shall have the sole right to resolve such Dispute;

                  (ii) the development of the Global Strategy pursuant to Section 3.1.3(a), such Dispute shall be referred to the Chief Executive Officers of the Parties who shall confer on the resolution of the issue. Any final decision mutually agreed to by such representatives with respect thereto shall be conclusive and binding on the Parties. If such officers are not able to agree on the resolution of an issue within fifteen (15) Business Days after such issue was first referred to them, each Party shall have the right to determine the strategies relating to issues under Dispute for such Party’s portion of the Territory; provided that any

87

Dispute relating to the development of elements of the Global Strategy relating to positioning, branding or messaging of the Licensed Product shall be referred to the Chief Executive Officer of GPC Biotech who shall have the sole right to resolve such Dispute.

                    (iii) Development of the Licensed Product in the Territory (other than the Licensee Activities or Unilateral Activities of Licensee, or Disputes subject to subsections (iv) or (v) below), such Dispute shall be referred to the Chief Executive Officer of GPC Biotech who shall have the sole right to resolve such Dispute;

                    (iv) whether a proposed amendment to the Development Plan meets the criteria set forth in Section 2.5.1 (regardless of whether such Dispute relates to a proposal to initiate such activity or materially modify an activity included within the existing Development Plan), such Dispute shall be referred to the Chief Executive Officers of the Parties who shall confer on the resolution of the issue. Any final decision mutually agreed to by such representatives with respect thereto shall be conclusive and binding on the Parties. If such officers are not able to agree on the resolution of an issue within fifteen (15) Business Days after such issue was first referred to them, either Party shall have the right, upon written notice to the other Party, to initiate arbitration to resolve such Dispute pursuant to Section 15.7.4(b);

                    (v) whether under Section 2.5.3 the proposed protocol of any Clinical Study or Post Approval Study with respect to the Licensed Product proposed by Licensee to be conducted for its portion of the Territory creates an unreasonable risk of adverse results that could reasonably be expected to have a material adverse effect on the Development or Commercialization of the Licensed Product in GPC Biotech Territory, such Dispute shall be referred to the Chief Executive Officers of the Parties who shall confer on the resolution of the issue. Any final decision mutually agreed to by such representatives with respect thereto shall be conclusive and binding on the Parties. If such officers are not able to agree on the resolution of an issue within fifteen (15) Business Days after such issue was first referred to them, either Party shall have the right, upon written notice to the other Party, to initiate arbitration to resolve such Dispute pursuant to Section 15.7.4(b); or

                    (vi) whether under Section 3.1.3(b) the branding, positioning or messaging for the Licensed Product in the Licensee Territory is consistent with the Global Strategy or whether any action of the Licensee that is inconsistent with the Global Strategy with respect to the branding, positioning and messaging for the Licensed Product could reasonably result in a material adverse effect on the Commercialization of the Licensed Product in the GPC Biotech Territory, such Dispute shall be referred to the Chief Executive Officers of the Parties who shall confer on the resolution of the issue. Any final decision mutually agreed to by such representatives with respect thereto shall be conclusive and binding on the Parties. If such officers are not able to agree on the resolution of an issue within fifteen (15) Business Days after such issue was first referred to them, either Party shall have the right, upon written notice to the other Party, to initiate arbitration to resolve such Dispute pursuant to Section 15.7.4(b).

               (b) In the event that a Dispute arises with respect to an issue within the jurisdiction of the JEC, or a decision required to be made by the JEC that cannot be resolved in accordance with Section 4.4.4, that relates to:

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                    (i) Commercialization of the Licensed Product in the Licensee Territory; or

                    (ii) Licensee Activities or Unilateral Activities of Licensee (other than Disputes subject to subsection (a)(iv) or (a)(v) above);

such Dispute shall be referred to the Chief Executive Officer of Licensee who shall have the sole right to resolve such Dispute.

          15.7.3 Intellectual Property Disputes. In the event that a Dispute arises with respect the validity, scope, enforceability, inventorship or ownership of any Patent or Intellectual Property Rights, and such Dispute cannot be resolved in accordance with Section 15.7.1, unless otherwise agreed by the Parties in writing, such Dispute shall not be submitted to arbitration in accordance with Section 15.7.4 and instead, either Party may initiate litigation in a court of competent jurisdiction, notwithstanding Section 15.6, in the country in which such rights apply.

          15.7.4 Arbitration. Any arbitration under this Agreement (each an “Arbitration Matter”) shall be administered by the American Arbitration Association under its Commercial Arbitration Rules then in effect (the “Arbitration Rules”) and as otherwise described in this Section 15.7.4. The arbitration shall take place at a location to be agreed by the Parties; provided, however, that in the event that the Parties are unable to agree on a location for an arbitration under this Agreement within five (5) days of the demand therefor, such arbitration shall be held in New York, New York.

               (a) Full Arbitration. Unless Section 15.7.4(b) or 15.7.4(c) is applicable, the following procedures shall apply:

                    (i) The Parties shall appoint an arbitrator by mutual agreement. If the Parties cannot agree on the appointment of an arbitrator within thirty (30) days of the demand for arbitration, an arbitrator shall be appointed in accordance with the Arbitration Rules.

                    (ii) Either Party may apply to the arbitrator for interim injunctive relief until the arbitration decision is rendered or the Arbitration Matter is otherwise resolved. Either Party also may, without waiving any right or remedy under this Agreement, seek from any court having jurisdiction any injunctive or provisional relief necessary to protect the rights or property of that Party pending resolution of the Arbitration Matter pursuant to this Section 15.7.4. The arbitrator shall have the authority to grant any equitable and legal remedies that would be available in any judicial proceeding instituted to resolve the Dispute submitted to such arbitration in accordance with this Agreement; provided, however, that the arbitrator shall not have the power to alter, amend or otherwise affect the terms or the provisions of this Agreement. Judgment upon any award rendered pursuant to this Section may be entered by any court having jurisdiction over the Parties’ other assets. The arbitrator shall have no authority to award punitive or any other type of damages not measured by a Party’s compensatory damages.

                    (iii) Each Party shall bear its own costs and expenses and attorneys’ fees, and the Party that does not prevail in the arbitration proceeding shall pay the arbitrator’s fees and any administrative fees of arbitration.

89

                    (iv) Except to the extent necessary to confirm an award or decision or as may be required by Applicable Law, neither Party may, and the Parties shall instruct the arbitrator not to, disclose the existence, content, or results of an arbitration without the prior written consent of both Parties. In no event shall an arbitration be initiated after the date when commencement of a legal or equitable proceeding based on the Arbitration Matter would be barred by the applicable New York statute of limitations.

                    (v) The Parties hereby agree that any payment to be made by a Party pursuant to a decision of the arbitrator shall be made in United States dollars, free of any tax or other deduction. The Parties further agree that subject to Section 15.7.5, the decision of the arbitrator shall be the sole, exclusive and binding remedy between them regarding determination of the Arbitration Matters presented and the Parties hereby waive the right to contest the award in any court or other forum.

               (b) Accelerated Arbitration. To the extent the Arbitration Matter involves a Dispute that is submitted to arbitration by a Party under Section 2.6.2(c), 2.6.2(d), 3.1.3(b), 6.2, the final sentence of Section 15.7.1, or 15.7.2(a)(iv through vi) or any other matter that is expressly referred to accelerated arbitration elsewhere in this Agreement, the procedures set forth in Section 15.7.4(a) shall apply, except that the following procedures shall also apply:

                    (i) For purposes of arbitration under this Section 15.7.4(b), the arbitrator shall be appointed pursuant to Section 15.7.4(a)(i), but shall be a single independent, conflict-free arbitrator (such arbitrator, the “Expert”), who shall have sufficient scientific background, expertise and experience to resolve the Arbitration Matter.

                    (ii) Each Party shall prepare and submit a written summary of such Party’s position and any relevant evidence in support thereof to the Expert within thirty (30) days of the selection of the Expert. Upon receipt of such summaries from both Parties, the Expert shall provide copies of the same to the other Party. Within fifteen (15) days of the delivery of such summaries by the Expert, each Party shall submit a written rebuttal of the other Party’s summary and may also amend and re-submit its original summary. Oral presentations shall not be permitted unless otherwise requested by the Expert. The Expert shall make a final decision with respect to the Arbitration Matter within thirty (30) days following receipt of the last of such rebuttal statements submitted by the Parties.

               (c) Expedited Arbitration. To the extent the Arbitration Matter involves a Dispute pursuant to the last two sentences of Section 14.5.3 or any other matter that is expressly referred to expedited arbitration elsewhere in this Agreement, the procedures set forth in Section 15.7.4(b) shall apply except that the Expert shall make a determination by selecting the resolution proposed by one of the Parties that as a whole is the most fair and reasonable to the Parties in light of the totality of the circumstances and shall provide the Parties with a written statement setting forth the basis of the determination in connection therewith. For purposes of clarity, the Expert shall only have the right to select a resolution proposed by one of the Parties in its entirety and without modification.

          15.7.5 Interim Relief. Notwithstanding anything herein to the contrary, nothing in this Section shall preclude either Party from seeking interim or provisional relief in a court of

90

competent jurisdiction, including a temporary restraining order, preliminary injunction or other interim equitable relief concerning a Dispute, if necessary to protect the interests of such Party. This Section shall be specifically enforceable.

     15.8 Notices.

          15.8.1 Notice Requirements. Any notice, request, demand, waiver, consent, approval or other communication permitted or required under this Agreement shall be in writing, shall refer specifically to this Agreement and shall be deemed given only if delivered by hand or sent by facsimile transmission (with transmission confirmed) or by internationally recognized overnight delivery service that maintains records of delivery, addressed to the Parties at their respective addresses specified in Section 15.8.2 or to such other address as the Party to whom notice is to be given may have provided to the other Party in accordance with this Section 15.8. Such Notice shall be deemed to have been given as of the date delivered by hand or transmitted by facsimile (with transmission confirmed) or on the second business day (at the place of delivery) after deposit with an internationally recognized overnight delivery service. Any notice delivered by facsimile shall be confirmed by a hard copy delivered as soon as practicable thereafter. This Section 15.8 is not intended to govern the day-to-day business communications necessary between the Parties in performing their obligations under the terms of this Agreement.

          15.8.2 Address for Notice.

If to Licensee, to:		If to GPC Biotech, to:
	Pharmion GmbH		GPC Biotech AG
	Aeschenvorstadt 71,		Fraunhoferstrasse 20
	4051 Basel,		82152 Martinsried/Munich, Germany
	Switzerland		Attention: Chief Executive Officer
	Attention: Director		Facsimile: +49 89 85 65 2610
	Facsimile: +41 61 305 9899
			with a copy to:
	with a copy to:
			GPC Biotech Inc.
	Pharmion Corporation		101 College Road East
	2525 28th Street		Princeton, NJ 08540, U.S.A.
	Boulder, Colorado 80304, U.S.A.		Attention: General Counsel
	Attention: General Counsel		Facsimile: +1 609 524 1050
	Facsimile: +1 720 564 9191

     15.9 Entire Agreement. This Agreement, together with the Exhibits attached hereto, sets forth and constitutes the entire agreement and understanding between the Parties with respect to the subject matter hereof and

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all prior agreements, understandings, promises and representations, whether written or oral, with respect thereto are superseded hereby. Each Party confirms that it is not relying on any representations or warranties of the other Party except as specifically set forth herein. No amendment, modification, release or discharge shall be binding upon the Parties unless in writing and duly executed by authorized representatives of both Parties.

     15.10 English Language. This Agreement shall be written and executed in, and all other communications under or in connection with this Agreement shall be in, the English language. Any translation into any other language shall not be an official version thereof, and in the event of any conflict in interpretation between the English version and such translation, the English version shall control.

     15.11 Equitable Relief. The Parties acknowledge and agree that the restrictions set forth in Article 11 are reasonable and necessary to protect the legitimate interests of the other Party and that such other Party would not have entered into this Agreement in the absence of such restrictions, and that any breach or threatened breach of any provision of Article 11 may result in irreparable injury to such other Party for which there will be no adequate remedy at law. In the event of a breach or threatened breach of any provision of Article 11, the non-breaching Party shall be authorized and entitled to obtain from any court of competent jurisdiction injunctive relief, whether preliminary or permanent, specific performance and an equitable accounting of all earnings, profits and other benefits arising from such breach, which rights shall be cumulative and in addition to any other rights or remedies to which such non-breaching Party may be entitled in law or equity. Both Parties agree to waive any requirement that the other (a) post a bond or other security as a condition for obtaining any such relief and (b) show irreparable harm, balancing of harms, consideration of the public interest or inadequacy of monetary damages as a remedy. Nothing in this Section 15.11 is intended, or should be construed, to limit either Party’s right to equitable relief or any other remedy for a breach of any other provision of this Agreement.

     15.12 Waiver and Non-Exclusion of Remedies. Any term or condition of this Agreement may be waived at any time by the Party that is entitled to the benefit thereof, but no such waiver shall be effective unless set forth in a written instrument duly executed by or on behalf of the Party waiving such term or condition. The waiver by either Party hereto of any right hereunder or of the failure to perform or of a breach by the other Party shall not be deemed a waiver of any other right hereunder or of any other breach or failure by said other Party whether of a similar nature or otherwise.

     15.13 No Benefit to Third Parties. The representations, warranties, covenants and agreements set forth in this Agreement are for the sole benefit of the Parties hereto and their successors and permitted assigns, and they shall not be construed as conferring any rights on any other Persons.

     15.14 Further Assurance. Each Party shall duly execute and deliver, or cause to be duly executed and delivered, such further instruments and do and cause to be done such further acts and things, including the filing of such assignments, agreements, documents and instruments, as may be necessary or as the other Party

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may reasonably request in connection with this Agreement or to carry out more effectively the provisions and purposes hereof, or to better assure and confirm unto such other Party its rights and remedies under this Agreement.

     15.15 Relationship of the Parties. It is expressly agreed that GPC Biotech, on the one hand, and Licensee, on the other hand, shall be independent contractors and that the relationship between the two Parties shall not constitute a partnership, joint venture or agency. Neither GPC Biotech, on the one hand, nor Licensee, on the other hand, shall have the authority to make any statements, representations or commitments of any kind, or to take any action, which shall be binding on the other, without the prior written consent of the other Party to do so, such consent not to be unreasonably withheld or delayed. All persons employed by a Party shall be employees of such Party and not of the other Party and all costs and obligations incurred by reason of any such employment shall be for the account and expense of such Party.

     15.16 Counterparts. This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. This Agreement may be executed by facsimile signatures and such signatures shall be deemed to bind each party hereto as if they were original signature.

     15.17 References. Unless otherwise specified, (a) references in this Agreement to any Article, Section or Exhibit shall mean references to such Article, Section or Exhibit of this Agreement, (b) references in any section to any clause are references to such clause of such section and (c) references to any agreement, instrument or other document in this Agreement refer to such agreement, instrument or other document as originally executed or, if subsequently varied, replaced or supplemented from time to time, as so varied, replaced or supplemented and in effect at the relevant time of reference thereto.

     15.18 Construction. Except where the context otherwise requires, wherever used, the singular shall include the plural, the plural the singular, the use of any gender shall be applicable to all genders and the word “or” is used in the inclusive sense (and/or). The captions of this Agreement are for convenience of reference only and in no way define, describe, extend or limit the scope or intent of this Agreement or the intent of any provision contained in this Agreement. The term “including” as used herein shall mean including, without limiting the generality of any description preceding such term. The language of this Agreement shall be deemed to be the language mutually chosen by the Parties and no rule of strict construction shall be applied against either Party hereto.

[SIGNATURE PAGE FOLLOWS.]

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THIS AGREEMENT IS EXECUTED by the authorized representatives of the Parties as of the date first written above.

GPC BIOTECH AG	PHARMION GMBH
Signature : /s/ Elmar Maier, PhD	Signature : /s/ Patrick J. Mahaffy
Name : Elmar Maier, PhD	Name : Patrick J. Mahaffy
Title : SVP Business Development	Title : Director
Signature : /s/ Bernd R. Seizinger, M.D., PhD	Signature : /s/ Erle T. Mast
Name : Bernd R. Seizinger, M.D., PhD	Name : Erle T. Mast
Title : CEO	Title : Director

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Exhibit A
GPC Biotech Patents

Country	Application No	Grant No
Austria	89 300 787.2	EP 0 328 274
Australia	28971/89	AU 618310
Belgium	89 300 787.2	EP 0 328 274
Brazil	1100963-2	BR 1100963-2
Canada	589,796	CA 1,340,286
Switzerland	89 300 787.2	EP 0 328 274
Germany	89 300 787.2	EP 0 328 274
Denmark	0491/89	DK 175050
Spain	89 300 787.2	EP 0 328 274
Finland	89/0512	FI 91260
France	89 300 787.2	EP 0 328 274
United Kingdom	89 300 787.2	EP 0 328 274
Greece	89 300 787.2	EP 0 328 274
Hungary	52289	HU 205767
Ireland	31989	IE 65503
Israel	89119	IL 89119
Italy	89 300 787.2	EP 0 328 274
Japan	01/24751	JP 2781403
Korea (South)	89/1069	KR 147270
Luxembourg	89 300 787.2	EP 0 328 274
Mexico	9203596	MX 181357
Netherlands	89 300 787.2	EP 0 328 274
Norway	89/0426	NO 177569
New Zealand	227839	NZ 227839
Portugal	89608	PT 89608
Romania	C-20256
Sweden	89 300 787.2	EP 0 328 274
Taiwan	78/100752	TW 51931
United States of America	07/602,931	US 5,072,011
South Africa	89/0831	ZA 89/0831
Hungary	P/P00163	HU 210872
United States of America	07/723,971	US 5,244,919
Austria	95 302 629.1	EP 0 679 656
Australia	17661/95	AU 692521
Belgium	95 302 629.1	EP 0 679 656
Canada	2,147,567
Switzerland	95 302 629.1	EP 0 679 656
Germany	95 302 629.1	EP 0 679 656
Denmark	95 302 629.1	EP 0 679 656
Spain	95 302 629.1	EP 0 679 656
France	95 302 629.1	EP 0 679 656
United Kingdom	95 302 629.1	EP 0 679 656
Greece	95 302 629.1	EP 0 679 656
Ireland	95 302 629.1	EP 0 679 656
Italy	95 302 629.1	EP 0 679 656
Japan	7-100870
Netherlands	95 302 629.1	EP 0 679 656
Portugal	95 302 629.1	EP 0 679 656
Sweden	95 302 629.1	EP 0 679 656
United States of America	08/428,444	US 5,519,155
Malta	2893
PCT	PCT/US2005/24761
Malta	2636
PCT	PCT/EP2005/001733
EPO	05 005 380.0
United States of America	60/664,096

Exhibit B

Distributor Countries

Austria

Switzerland

Turkey

Greece

New Zealand

Israel

Lebanon

Saudi Arabia

Malta

Egypt

Jordan

Syria

Oman

United Arab Emirates

Cyprus

Poland

Slovenia

Slovakia

Latvia

Lithuania

Hungary

Czech Republic

Estonia

Table of Contents

ARTICLE 1 — DEFINITIONS		1
ARTICLE 2 DEVELOPMENT AND REGULATORY		19
2.1	Development of the Licensed Product	19
2.2	Development Plan and Implementation	20
2.3	Development Budget	21
2.4	Regulatory Matters	22
2.5	Unilateral Development
2.6	Certain Development Activities Excluded From Licensee’s Opt-Out Rights
2.7	Supply of Licensed Product	30
ARTICLE 3 COMMERCIALIZATION		30
3.1	Commercialization of the Licensed Product	30
3.2	Commercialization Plan and Implementation	32
3.4	Non-Compete	33
3.4	Promotional Materials and Activities	33
3.5	Statements and Compliance with Applicable Law	34
3.6	Use of Distributors	35
3.7	Sales and Distribution in Licensee Territory	35
3.8	Unauthorized Sales	35
3.9	Reporting	36
3.10	Commercialization Budget	36
3.11	GPC Biotech Territory	37
ARTICLE 4 COLLABORATION MANAGEMENT		37
4.1	Joint Executive Committee (JEC).	37
4.2	Joint Development Committee (JDC)	38
4.3	Joint Commercialization Committee (JCC)	39
4.4	General Provisions Governing Committees	40
ARTICLE 5 GRANT OF RIGHTS		42
5.1	Grants to Licensee	42
5.2	Retention of Rights	43
5.3	Sublicenses	43
5.4	Right of First Negotiation	44
5.5	Use of Trademarks and Corporate Names	44
5.6	Grants to GPC Biotech	45
5.7	No Implied Rights	46
ARTICLE 6 COLLABORATION COSTS		46
6.1	General	46
6.2	Accounting Procedures	49
ARTICLE 7 CONSIDERATION		49

7.1	Payments to GPC Biotech	49
7.2	Royalties	50
7.3	Royalty Term	51
7.4	Royalty Adjustments	51
7.5	Royalty Payments	52
7.6	Royalty Statements	52
7.7	Mode of Payment	52
7.8	Taxes	52
7.9	Interest on Late Payment	53
7.10	Financial Records	53
7.11	Audit	53
7.12	Audit Dispute	54
7.13	Confidentiality	54
ARTICLE 8 INTELLECTUAL PROPERTY		54
8.1	Ownership of Intellectual Property	54
8.2	Maintenance and Prosecution of Patents and Trademarks	56
8.3	Enforcement of Patents and Trademarks	58
8.4	Potential Third Party Rights	60
ARTICLE 9 ADVERSE EVENT REPORTING		63
9.1	Complaints	63
9.2	Adverse Event Reporting	63
9.3	Pharmacovigilance	63
ARTICLE 10 Licensed Product Recall		64
10.1	Notification and Recall	64
10.2	Recall Expenses	64
ARTICLE 11 Confidentiality AND Non-Disclosure		64
11.1	Confidentiality Obligations	64
11.2	Permitted Disclosures	65
11.3	Use of Name	66
11.4	Press Releases	66
11.5	Patient Information	66
11.6	Publications	67
11.7	Return of Confidential Inforamtion	67
ARTICLE 12 Representations and Warranties		68
12.1	Representations, Warranties and Covenants	68
12.2	Additional Representations, Warranties and Covenants of Licensee	69
12.3	Additional Representations, Warranties and Covenants of GPC Biotech	69
12.4	Disclaimer of Warranty	71
ARTICLE 13 Indemnity		71
13.1	Indemnification of GPC Biotech	71
13.2	Indemnification of Licensee	72
13.3	Certain Losses	72
13.4	Notice of Claim	72

13.5	Control of Defense	72
13.6	Limitation on Damages and Liability	74
13.7	Insurance	74
ARTICLE 14 TERM AND TERMINATION		75
14.1	Term	75
14.2	Termination of this Agreement in its Entirety for Material Breach	76
14.3	Termination of this Agreement in a Country or Major Market Region for Material Breach	76
14.4	Termination by Licensee	77
14.5	Termination by GPC Biotech	77
14.6	Termination Upon Insolvency	79
14.7	Rights in Bankruptcy	79
14.8	Consequences of Termination	80
14.9	Accrued Rights; Surviving Obligations	84
14.10	Termination of Spectrum Agreement	84
ARTICLE 15 Miscellaneous		85
15.1	Force Majeure	85
15.2	Export Control	85
15.3	Non-Solicitation	85
15.4	Assignment	85
15.5	Severability	86
15.6	Governing Law, Jurisdiction, Venue and Service	86
15.7	Dispute Resolution	87
15.8	Notices	91
15.9	Entire Agreement	91
15.10	English Language	92
15.11	Equitable Relief	92
15.12	Waiver and Non-Exclusion of Remedies	92
15.13	No Benefit to Third Parties	92
15.14	Further Assurance	92
15.15	Relationship of the Parties	93
15.16	Counterparts	93
15.17	References	93
15.18	Construction	93

List of Exhibits

Exhibit A	GPC Biotech Patents
Exhibit B	Distributor Countries

EX-10.34

Exhibit 10.34

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN
THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24B-2 OF THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED

SUPPLY AGREEMENT

          This Supply Agreement (the “Agreement”) is made and entered into effective as of December 19, 2005 (the “Effective Date”) by and between GPC Biotech AG, a German corporation, having its place of business at Fraunhoferstrasse 20, 82152 Martinsried/Munich, Germany (“GPC Biotech”); and Pharmion GmbH, a Swiss limited liability company and wholly-owned subsidiary of Pharmion Corporation, a Delaware corporation, having a place of business at Aeschenvorstadt 71, 4051 Basel, Switzerland (“Licensee”). GPC Biotech and Licensee are sometimes referred to herein individually as a “Party” and collectively as the “Parties.”

RECITALS

          WHEREAS, the Parties have entered into a Co-Development and License Agreement of even date herewith (the “License Agreement”), pursuant to which GPC Biotech grants a license to Licensee, and Licensee obtains a license, to Develop and Commercialize the Licensed Product (each as defined therein); and

          WHEREAS, in accordance with the terms of the License Agreement, the Parties are required to enter into an agreement providing for the supply by GPC Biotech to Licensee of all of Licensee’s requirements of the Licensed Product; and

          WHEREAS, GPC Biotech desires to supply the Licensed Product to Licensee, and Licensee desires to purchase the Licensed Product, all on the terms and conditions set forth below.

          NOW, THEREFORE, in consideration of the foregoing premises, the mutual promises and covenants of the Parties contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto, intending to be legally bound, do hereby agree as follows:

ARTICLE I

DEFINITIONS

          Unless otherwise specifically provided herein, the following terms shall have the following meanings:

          1.1 “Affiliate” shall mean, with respect to a Party, any Person that, directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with such Party. For purposes of this definition, “control” and, with correlative meanings, the terms “controlled by” and “under common control with” shall mean (a) the possession, directly or indirectly, of the power to direct the management or policies of a business entity, whether through the ownership of voting securities, by contract relating to voting rights or corporate governance, or otherwise, or (b) the ownership, directly or indirectly, of at least fifty percent (50%) of the voting securities or other ownership interest of a business entity (or, with respect to a limited partnership or other similar entity, its general partner or controlling entity).

1

          1.2 “Agreement” shall have the meaning set forth in the preamble to this Agreement.

          1.3 “API” shall mean the Licensed Compound as defined in the License Agreement.

          1.4 “API Facility” shall mean the Manufacturing facility of the API Subcontractor.

          1.5 “API Subcontractor” shall mean, as of the Effective Date, Johnson Matthey Inc. or any other Person appointed by GPC Biotech thereafter and approved by Licensee in writing to supply API, which approval shall not be unreasonably withheld or delayed.

          1.6 “Applicable Law” shall mean applicable laws, rules and regulations, including any rules, regulations, guidelines or other requirements of the Regulatory Authorities, that may be in effect from time to time.

          1.7 “Arbitration Rules” shall have the meaning set forth in Section 9.11.2.

          1.8 “Breaching Party” shall have the meaning set forth in Section 8.2.

          1.9 “Business Day” shall mean a day other than a Saturday or Sunday on which banking institutions in Munich, Germany are open for business.

          1.10 “Calendar Quarter” shall mean each successive period of three (3) calendar months commencing on January 1, April 1, July 1 and October 1.

          1.11 “Calendar Year” shall mean each successive period of twelve (12) calendar months commencing on January 1 and ending on December 31.

          1.12 “cGMP” shall mean (a) the current good manufacturing practices for the methods used in, and the facilities and controls used for, the Manufacture of the Licensed Product promulgated by any Regulatory Authority including, without limitation, US cGMP, the EU Good Manufacturing Guidelines, the International Conference on Harmonization Guidelines and any other applicable laws, guidelines and/or regulations, together with the latest FDA and other applicable guidance documents pertaining to manufacturing and quality control practice, all as updated, amended and revised from time to time.

          1.13 “Claims” shall have the meaning set forth in Section 7.1.

          1.14 “CMC Sections” shall mean the Chemistry, Manufacturing and Controls sections of any Regulatory Documentation, including all information included therein.

          1.15 “Complaining Party” shall have the meaning set forth in Section 8.2.

          1.16 “Dispute” shall have the meaning set forth in Section 9.11.1.

          1.17 “Distributor” shall have the meaning set forth in the License Agreement.

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          1.18 “Drug Master File” shall have the meaning set forth in the License Agreement.

          1.19 “Effective Date” shall mean the effective date of this Agreement as set forth in the preamble to this Agreement.

          1.20 “Exploitation” shall have the meaning set forth in the License Agreement.

          1.21 “Facilities” shall mean (a) the API Facility, (b) the Finishing Facility, and (c) any Manufacturing facility of GPC Biotech or its Affiliates.

          1.22 “FDA” shall mean the United States Food and Drug Administration and any successor agency thereto.

          1.23 “FFDCA” shall mean the United States Federal Food, Drug, and Cosmetic Act, as amended from time to time.

          1.24 “Finishing Facility” shall mean the Manufacturing facility of the Finishing Subcontractor or the Manufacturing facility of GPC Biotech or its Affiliate, as determined by GPC Biotech.

          1.25 “Finishing Subcontractor” shall mean, as of the Effective Date, [...***...], or any other Person appointed by GPC Biotech thereafter to supply Licensed Product in bulk capsule form, and approved by Licensee in writing, which approval shall not be unreasonably withheld or delayed.

          1.26 “Forecast(s)” shall have the meaning set forth in Section 2.2.1.

          1.27 “Full Product Batch” shall mean a specific quantity of Licensed Product equal to approximately 480,000 units comprised of approximately [...***...] units of [...***...] capsules and approximately [...***...] units of [...***...] capsules.

          1.28 “GPC Biotech” shall have the meaning set forth in the preamble to this Agreement.

          1.29 “Indemnification Claim Notice” shall have the meaning set forth in Section 7.3.

          1.30 “Indemnified Party” shall have the meaning set forth in Section 7.3.

          1.31 “Initial Forecast” shall have the meaning set forth in Section 2.2.1.

          1.32 “Joint Manufacturing Committee” or “JMC” shall have the meaning set forth in Section 2.1.4.

          1.33 “License Agreement” shall have the meaning set forth in the first recital to this Agreement.

*** Confidential Treatment Requested

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          1.34 “Licensed Product” shall mean the “Licensed Product” as defined in the License Agreement that has been Manufactured by or on behalf of GPC Biotech and delivered to Licensee pursuant to the terms of this Agreement.

          1.35 “Licensee” shall have the meaning set forth in the preamble to this Agreement.

          1.36 “Licensee Territory” shall have the meaning set forth in the License Agreement.

          1.37 “Losses” shall have the meaning set forth in Section 7.1.

          1.38 “Major Market Country” shall have the meaning set forth in the License Agreement.

          1.39 “Manufacturing” shall mean all activities, steps and processes relating to the production, manufacture, processing and holding of the Licensed Product or any intermediate thereof, including stability testing, quality assurance and quality control. The terms “Manufacture” and “Manufactured” refer to the act of Manufacturing.

          1.40 “Manufacturing Cost” shall have the meaning set forth in the License Agreement.

          1.41 “Manufacturing Process” shall mean any process or step thereof that is necessary or useful for Manufacturing the Licensed Product or any intermediate thereof as evidenced in the batch records or master batch records.

          1.42 “Materials” shall mean all raw materials, excipients, and containers required in connection with the Manufacture of the Licensed Product, excluding API.

          1.43 “Notice Period” shall have the meaning set forth in Section 8.2.

          1.44 “Party” and “Parties” shall have the meaning set forth in the preamble to this Agreement.

          1.45 “Permits” shall have the meaning set forth in Section 6.1.1.

          1.46 “Person” shall mean an individual, sole proprietorship, partnership, limited partnership, limited liability partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture or other similar entity or organization, including a government or political subdivision, department or agency of a government.

          1.47 “Purchase Order” shall mean a written purchase order submitted by Licensee to GPC Biotech in accordance with Section 2.2.2.

          1.48 “Quality Agreement” shall mean the quality assurance agreement between the Parties to be agreed upon within ninety (90) days of the Effective Date.

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          1.49 “Regulatory Authority” shall mean any applicable supra-national, federal, national, regional, state, provincial or local regulatory agencies, departments, bureaus, commissions, councils or other government entities regulating or otherwise exercising authority with respect to the Exploitation of the Licensed Product in the Licensee Territory.

          1.50 “Regulatory Documentation” shall have the meaning set forth in the License Agreement.

          1.51 “Reserve Inventory” shall have the meaning set forth in Section 2.1.2.

          1.52 “Specifications” shall mean the list of tests, references to any analytical procedures and appropriate acceptance criteria which are numerical limits, ranges or other criteria for tests described in order to establish a set of criteria to which Licensed Product, at any stage of Manufacture, should conform to be considered acceptable for its intended use as agreed to in writing by the Parties within ninety (90) days of the Effective Date, as such specifications are amended or supplemented from time to time in accordance with the terms hereof. Without limiting the generality of the foregoing, the Specifications shall be consistent with all applicable Regulatory Documentation filed prior to the Effective Date and shall specify that the Licensed Products, when delivered to Licensee, shall have a minimum remaining shelf life of not less than seventy five percent (75%) of the maximum shelf life that is available for the Licensed Products at the time of Manufacture.

          1.53 “Subcontractor” shall mean either the API Subcontractor or the Finishing Subcontractor.

          1.54 “Sublicensee” shall have the meaning set forth in the License Agreement.

          1.55 “Supply Failure” shall have the meaning set forth in Section 8.5.

          1.56 “Supply Price,” with respect to any Licensed Product delivered hereunder, shall mean one hundred and ten percent (110%) of the Manufacturing Costs for such Licensed Product.

          1.57 “Term” shall have the meaning set forth in Section 8.1.

          1.58 “Third Party” shall mean any Person other than GPC Biotech, Licensee and their respective Affiliates and Sublicensees.

          1.59 “US cGMP” shall mean current good manufacturing practices for the methods used in, and the facilities and controls used for, the Manufacture of the Licensed Products, all as set forth from time to time by the FDA pursuant to the FFDCA and the rules and regulations promulgated thereunder (including specifically Title 21, parts 210 and 211 of the Code of Federal Regulations of the United States).

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ARTICLE II

SUPPLY OF PRODUCT

          2.1 Purchase and Supply Obligations. Subject to the provisions of this Agreement, during the Term Licensee shall, and Licensee shall cause its Sublicensees to, purchase one hundred percent (100%) of their requirements of Licensed Product in bulk capsule form according to the Specifications for sale in the Licensee Territory from GPC Biotech, and GPC Biotech shall Manufacture and supply such quantities of Licensed Product to Licensee. GPC Biotech shall not supply Licensed Products to any Third Party within the Licensee Territory. In the event that GPC Biotech, at any time during the Term, has reason to believe that it or any Subcontractor will be unable to perform the services hereunder or that there will be a material delay in performance thereof, GPC Biotech shall (without limiting any other obligations GPC Biotech may have or rights or remedies Licensee may have ) promptly notify Licensee thereof.

               2.1.1. Subcontracting. Licensee acknowledges and agrees that GPC Biotech may subcontract or delegate any or all of its obligations hereunder to any Subcontractor; provided that any change in Subcontractors requires Licensee’s prior written consent and such subcontracting or delegation shall in no way relieve GPC Biotech of its obligations hereunder except to the extent that such obligations are performed by a Subcontractor. GPC Biotech shall ensure that any Subcontractor engaged by GPC Biotech to Manufacture Licensed Product Manufactures the Licensed Product pursuant to the terms of this Agreement.

               2.1.2. API and Materials; Reserve Inventory. GPC Biotech or its Subcontractors shall obtain and provide all API, Materials and equipment required to Manufacture the Licensed Products hereunder. During the Term of this Agreement, GPC Biotech shall maintain, at its own expense, a reserve inventory of API and capsule shells to be used in the future Manufacturing of Licensed Products (“Reserve Inventory”) in an amount equal to twice Licensee’s Forecast for the then-current Calendar Quarter. When using Reserve Inventory in order to Manufacture Licensed Products in accordance with this Agreement, GPC Biotech and its Subcontractors shall manage such inventory with its own inventories of API and Materials on a “first expiry, first out” basis to maximize shelf life and minimize spoilage. GPC Biotech shall properly store all inventories of API and Materials (including such Reserve Inventory) prior to use in accordance with cGMP and the Specifications.

               2.1.3. Facilities. GPC Biotech shall Manufacture all Licensed Product hereunder only at the Facilities. GPC Biotech shall maintain, or shall cause its Subcontractors to maintain, at their own expense, the Facilities and all equipment required for the Manufacture of the Licensed Product in a state of repair and operating efficiency consistent with the requirements of cGMP and all other Applicable Law.

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               2.1.4. Joint Manufacturing Committee. The JEC (as defined in the License Agreement) will establish a Joint Manufacturing Committee comprising an equal number of representatives of both Parties (the “JMC”). The JMC shall have the overall responsibility for overseeing the Parties’ activities with respect to the Manufacture of Licensed Product hereunder and, in particular, the JMC shall (a) discuss any proposed changes to the Manufacturing Process or Specifications; (b) oversee and coordinate regulatory activities relating to Manufacturing; (c) oversee and establish work plans for analytical methods transfer; (d) coordinate product supply activities; and (e) engage in any other activities or assume any other responsibilities delegated to it by the JEC. The JEC will establish the meeting schedule and decision-making rules that the JMC will follow in carrying out its responsibilities.

2.2 Forecasts and Purchase Orders.

               2.2.1. Not later than ninety (90) days following the Effective Date, Licensee shall provide GPC Biotech with a good faith, written forecast of its anticipated requirements of the Licensed Product and proposed delivery dates thereof for the period beginning on the Effective Date and ending six (6) full Calendar Quarters thereafter (“Initial Forecast”). Not later than thirty (30) days prior to the beginning of the first full Calendar Quarter after the Initial Forecast and each subsequent full Calendar Quarter of the Term, Licensee shall submit to GPC Biotech a good faith, written forecast of its anticipated requirements of the Licensed Product and proposed delivery dates thereof for such Calendar Quarter and the five (5) Calendar Quarters thereafter (such forecasts, together with the Initial Forecast, the “Forecasts”) (for example, not later than thirty (30) days prior to the Calendar Quarter that begins April 1, 2007, Licensee shall submit a Forecast covering the period from April 1, 2007 through September 30, 2008). The quantities of Licensed Product and delivery dates applicable to the first two (2) Calendar Quarters in each Forecast shall constitute a binding obligation of Licensee to purchase and of GPC Biotech to supply such quantities and shall not be subject to change without the prior written approval of both GPC Biotech and Licensee.

               2.2.2. Licensee shall order Licensed Product by the issuance of Purchase Orders to GPC Biotech at least one hundred twenty (120) days prior to the delivery date specified in each respective Purchase Order. Each Purchase Order shall designate the desired quantities of Licensed Product and the delivery date(s) thereof, and each Purchase Order must be consistent with the binding portion of the most recently delivered Forecast and shall constitute a binding commitment by Licensee to order from GPC Biotech and by GPC Biotech to deliver to Licensee when placed. All Purchase Orders shall be for Full Product Batch quantities of Licensed Product or integral multiples thereof.

               2.2.3. GPC Biotech shall confirm acceptance of each Purchase Order submitted in accordance with Section 2.2.2 within thirty (30) days after receipt thereof and shall use commercially reasonable efforts to deliver

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Licensed Product against each Purchase Order in accordance with the delivery date set forth therein.

               2.2.4. Each Purchase Order shall be subject to all of the terms and conditions of this Agreement. To the extent any terms or provisions of a Purchase Order or the written acceptance thereof by GPC Biotech conflict with, or are in addition to, the terms and provisions of this Agreement, the terms and provisions of this Agreement shall control.

          2.3 Delivery Terms; Risk of Loss. GPC Biotech shall deliver all Licensed Product Manufactured hereunder EXW (as defined in Incoterms 2000) the Finishing Facility. Title to all Licensed Product shall pass to Licensee at the time of delivery.

          2.4 Regulatory Approvals. GPC Biotech shall, and shall cause its Subcontractors to, permit any applicable Regulatory Authority to inspect the Facilities and otherwise cooperate fully with such agencies and GPC Biotech shall, and shall cause its Subcontractors to, provide Licensee with such information and assistance as Licensee may reasonably request in order for Licensee to comply with the requirements of such Regulatory Authorities in regard to the Licensed Product. The Parties further agree that GPC Biotech shall, and shall cause its Subcontractors to, use commercially reasonable efforts, at Licensee’s expense, to cooperate in any registration process in the Licensee Territory undertaken by Licensee in accordance with the License Agreement. On or prior to the date agreed to by the Parties (in consultation with the JMC) in connection with the Development of the Licensed Product, GPC Biotech shall, and shall cause its Subcontractors to, at its expense, compile and file a Drug Master File with all Regulatory Authorities in the Major Market Countries in the Licensee Territory that accept such filings. If any Regulatory Authorities in the Licensee Territory do not allow for referencing Drug Master Files for purposes of obtaining Regulatory Approval for the Licensed Product, GPC Biotech shall, and shall cause its Subcontractors to, provide Licensee with all information required to complete the CMC Sections of any Regulatory Documentation required to be submitted in the Major Market Countries in the Licensee Territory as soon as reasonably practicable.

          2.5 Change Control. GPC Biotech shall Manufacture Licensed Product according to cGMP and the applicable Specifications. GPC Biotech shall notify Licensee of any and all changes it proposes in its Manufacturing (including API and Materials), Subcontractors, Facilities, Manufacturing Process or Specifications relating to Licensed Product. GPC Biotech or Licensee may, at any time, request a change to the Manufacturing Process or the Specifications related to the Licensed Product. GPC Biotech and its Subcontractors agree to implement any change to the Manufacturing Process or Specifications that is required by a Regulatory Authority or by Applicable Law in the Licensee Territory. In the event of any other request to modify the Manufacturing Process or Specifications, both Licensee and GPC Biotech shall promptly meet to evaluate such proposed changes including the effect of such changes on the regulatory filings related to the Licensed Product and the costs associated with Manufacturing. No such change shall be made without the approval of both Parties; provided that such approval shall not be unreasonably withheld. To the extent that any change is required by Regulatory Authorities in both the GPC Biotech Territory and the Licensee Territory, the costs associated with implementing such change will be considered Collaboration Costs under

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the License Agreement. The costs associated with implementing all other changes will be the responsibility of (a) GPC Biotech, if GPC Biotech or its Subcontractors requested the change or the change was required by Regulatory Authorities anywhere in the GPC Biotech Territory, or (b) Licensee, if Licensee requested the change or the change was required by Regulatory Authorities anywhere in the Licensee Territory.

          2.6 Lot Numbers. GPC Biotech shall imprint the lot numbers and expiration dates on Licensed Product containers, as required by cGMP, for each Licensed Product delivered. Such lot numbers and expiration dates shall be assigned to each lot by GPC Biotech based on GPC Biotech’s or its Subcontractor’s standard operating procedures.

          2.7 Analytical Methods Transfer. Licensee shall be responsible for primary and secondary packaging and release testing for Licensed Products to be sold by Licensee in the Licensee Territory. In accordance with a work plan and budget to be agreed upon by Licensee and GPC Biotech, GPC Biotech shall provide Licensee with (a) validated analytical methods and reference standards; (b) details of the packaging materials that GPC Biotech has used for its stability studies; and (c) technical support required to transfer the methods to a Third Party laboratory selected by Licensee to perform release testing of Licensed Product provided to Licensee hereunder. The transfer of analytical methods and other related technology hereunder shall be under the supervision and direction of the JMC. Licensee shall pay GPC Biotech’s actual out-of-pocket expenses in connection with conducting the activities described in this Section 2.7.

          2.8 Licensed Product Failure and Rejection; Latent Defects. With each delivery of Licensed Product hereunder, GPC Biotech shall provide a Certificate of Analysis and a Certificate of Compliance, in a form agreed to by the Parties, along with all other documentation required pursuant to the Quality Agreement. Within thirty (30) days following delivery to Licensee of such Licensed Product and all such documentation, Licensee shall have the right to give GPC Biotech notice of rejection of any batch of Licensed Product that, in whole or part, fails to meet the applicable Specifications at the time of delivery. Failure by Licensee to give notice of rejection within the period set forth above shall be deemed acceptance by it of the Licensed Product to which the notice of rejection would have otherwise applied. GPC Biotech retains the right of appeal to an independent laboratory as provided in Section 2.16 of this Agreement. Notwithstanding the foregoing, the requirement for Licensee to provide notice of rejection within the period set forth above shall not apply to any defect not readily discoverable by Licensee within such thirty (30) day period. In the event of any Licensed Product with defects not readily discoverable by Licensee within such thirty (30) day period, notwithstanding anything to the contrary contained herein, Licensee may reject such Licensed Product by delivering notice of rejection to GPC Biotech no later than the earlier of: (a) thirty (30) days after the date of discovery of such defect or (b) expiration of the shelf life of the Licensed Product. If Licensee fails to notify GPC Biotech of such defect within such time period, Licensee shall be deemed to have accepted such Licensed Product. Licensee shall promptly supply GPC Biotech with any evidence it has that relates to whether any Licensed Product delivered to Licensee by GPC Biotech fails to meet the applicable Specifications.

          2.9 Inspection. Licensee shall have the right, no more than once during any Calendar Year during the Term, except for any additional “for cause” inspections where Licensee has been informed of quality issues at any of the Facilities, to enter the Facilities upon

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reasonable advance notice and during normal business hours for the purpose of inspecting the Facilities, procedures and any relevant records relating to the Manufacture of Licensed Product (including all batch sheets and records for all Manufacturing steps); provided, however, that, with respect to any audit of a Subcontractor’s facility, Licensee agrees to enter into a customary confidentiality agreement reasonably acceptable to such Subcontractor prior to such audit and upon such Subcontractor’s request; and provided further, that any inspection of the API Facility or Finishing Facility shall be coordinated with any inspection planned by GPC Biotech. No such inspection shall diminish or increase GPC Biotech’s obligations hereunder, except that GPC Biotech shall, and shall cause its Subcontractors to, undertake to use commercially reasonable efforts to correct promptly any deficiencies reasonably identified by Licensee in such inspection. In the event that any Facility used in the Manufacturing of Licensed Product hereunder is inspected by representatives of any Regulatory Authority in connection with the Manufacture of the Licensed Product, GPC Biotech shall notify Licensee immediately by telephone and follow up in writing, upon learning of such inspection, and shall promptly supply Licensee with copies of any reports or responses prepared by the Regulatory Authority, GPC Biotech or the applicable Subcontractor relating to such inspection. Licensee may send representatives to such Facility and Licensee may participate in any portion of such inspection relating to the Licensed Product of which GPC Biotech receives advance notice.

          2.10 Manufacturing Records. GPC Biotech shall, and shall cause its Subcontractors to, maintain adequate and accurate books and records with respect to its and their activities hereunder, including Manufacturing records and lot traceability records, with respect to each Licensed Product lot delivered hereunder. These records shall be retained until Licensee gives GPC Biotech written consent for records to be destroyed, which consent shall not be unreasonably withheld; provided, however, that in no event shall records be destroyed at any time when such records are required to be retained by Applicable Law. Notwithstanding the foregoing, GPC Biotech shall, prior to discarding any documentation related to the Manufacture of Licensed Product, make such documentation available for collection by Licensee at Licensee’s expense.

          2.11 Batch Records. Upon request by Licensee, GPC Biotech shall make available for review copies of the individual and master batch records received from Subcontractors and used for any step in the Manufacture of Licensed Product delivered hereunder. Licensee may use the information in such batch records as provided in the License Agreement, including in regulatory submissions in order to gain or maintain regulatory approvals.

          2.12 Deviations. GPC Biotech agrees that it or its Subcontractor’s quality assurance function shall review the Manufacturing records for all steps and all lots of Licensed Product delivered hereunder. Upon discovery of any deviation from cGMP or from any warranty hereunder, GPC Biotech shall promptly notify Licensee and conduct an appropriate investigation to determine the cause of such deviation and take appropriate action at its expense to avoid recurrence. GPC Biotech shall provide Licensee with the applicable documentation of such deviations and report to Licensee on the results of the subsequent investigation and corrective actions taken to address such deviations.

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          2.13 Warning Letters. Each Party shall promptly notify the other Party of, and provide the other Party with copies of, any correspondence and/or other documentation received or prepared by the Party in connection with receipt of any warning letter or other regulatory correspondence from the FDA or any other Regulatory Authority in connection with the Manufacture of the Licensed Product; provided that GPC Biotech may redact from such communications portions thereof which it is required to keep confidential pursuant to binding agreements with Third Parties.

          2.14 Annual Reports. GPC Biotech shall supply, on a Calendar Year basis, Licensed Product data related to applicable complaint test results, all investigations (regarding Manufacturing) and the like, at Licensee’s expense, which Licensee reasonably requires in order to complete any filing under any applicable regulatory regime, including any annual product review report that Licensee is required to file with any applicable Regulatory Authority.

          2.15 Communication With Governmental Agencies. Subject to the rights and obligations set forth in the License Agreement, each Party may communicate with any governmental agency, including but not limited to governmental agencies responsible for granting regulatory approval for the Licensed Product, regarding such Licensed Product if, in the opinion of that Party’s counsel, such communication is necessary to comply with the terms of this Agreement or the requirements of any law, governmental order or regulation; provided, however, that, unless in the reasonable opinion of its counsel there is a legal prohibition against doing so, such Party shall permit the other Party to accompany and take part in relevant communications with the agency, to receive copies of all such communications from the agency and to review and provide comments on any written communication with any Regulatory Authority or other government agency prior to submitting such communication.

          2.16 Quality Claims.

                    2.16.1. Independent Laboratory. In the event of any disagreement between GPC Biotech and Licensee relating to Licensed Product conformance to the Specifications at the time of delivery thereof by GPC Biotech to Licensee, the Parties shall use good faith efforts to reach an amicable resolution of such disagreement. In the event that resolution cannot be reached by the Parties within fifteen (15) Business Days, a mutually agreed upon, neutral, independent laboratory meeting the requirements of cGMP shall be brought in to resolve the disagreement upon the request of either Party. Such laboratory shall use the test methods contained in the applicable Specifications. The cost of such laboratory shall be borne by the Party determined by the laboratory to be the non-prevailing Party in such disagreement. The findings of such laboratory shall be binding on Licensee and GPC Biotech solely with respect to determining whether a particular batch, portion of a batch, or multiple batches of Licensed Product conform with the Specifications. Notwithstanding anything set forth in this Agreement to the contrary, GPC Biotech expressly understands and agrees that Licensee shall have the sole and final authority to determine whether all or a portion of any batch of Licensed Product is suitable for release and distribution. In those instances where Licensee has rejected any Licensed Product which has otherwise, according to the provisions of this Section 2.16.1, been deemed suitable for use, Licensee shall pay

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GPC Biotech for such Licensed Product in accordance with the terms of this Agreement.

                    2.16.2. Certain Remedies for Non-Conforming Licensed Product. In the event that any Licensed Product delivered hereunder is determined to be not in conformance with the applicable Specifications at the time of delivery, such Licensed Product shall be returned by Licensee to GPC Biotech at GPC Biotech’s expense and GPC Biotech shall use commercially reasonable efforts to replace such nonconforming Licensed Product within sixty (60) days of such return at no extra charge to Licensee. In the event GPC Biotech cannot replace such nonconforming Licensed Product within such sixty (60) day period, it shall refund to Licensee the amount paid therefor. GPC Biotech shall also reimburse Licensee for freight and any other shipment expenses incurred by Licensee in connection with the disposition or return of any rejected Licensed Product. Licensee acknowledges and agrees that in no event shall GPC Biotech have any liability of any kind for Licensed Product that fails to conform to the applicable Specifications due to acts, omissions or circumstances occurring after the delivery thereof.

          2.17 Second Source; Allocation of Inventory and Supply.

                    2.17.1. The Parties intend to have identified and qualified one or more second source manufacturers for the Licensed Products and API during the term of this Agreement. Except as set forth in Section 8.5 in the event of a Supply Failure, the second source manufacturer shall be selected and qualified by GPC Biotech, with Licensee’s written approval, in accordance with the terms of GPC Biotech’s existing agreements with its Subcontractors; provided that any such second source shall be approved by applicable Regulatory Authorities and shall comply with the provisions of Section 2.4 hereof with respect to the completion of a Drug Master File or, if applicable, CMC Sections of any Regulatory Documentation required to be submitted in the Licensee Territory. The schedule for the qualification of the second source will be agreed upon by the JMC promptly after the Effective Date.

                    2.17.2. In addition to the requirements of Section 2.1.2 hereof with respect to Reserve Inventory levels, in the event of any shortage of available supply of API, Materials or Licensed Product for any reason, GPC Biotech shall, during the period of any such shortage, allocate at least [...***...] of its available Manufacturing capacity at the Facilities to supply Licensed Product to Licensee under this Agreement.

*** Confidential Treatment Requested

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ARTICLE III

CONSIDERATION

          3.1 Payment Terms; Price.

                    3.1.1. Invoicing. Concurrently with or promptly following the delivery of any Licensed Product hereunder, GPC Biotech shall submit to Licensee an invoice covering such Licensed Product. Each such invoice shall, to the extent applicable, identify Licensee’s Purchase Order number, Licensed Product and lot numbers, names and quantities, unit price and the total amount to be remitted by Licensee. In addition, each invoice shall include documentation that, in reasonable detail, supports GPC Biotech’s calculation of Manufacturing Cost in a format to be agreed upon by the Parties. Licensee shall pay all such invoices within forty five (45) days after receipt thereof.

                    3.1.2. Purchase Price. The purchase price to be paid by Licensee for all Licensed Product delivered hereunder shall be an amount equal to the Supply Price for such Licensed Product.

                    3.1.3. Use of Product From Validation Batches. The Parties intend that where Licensed Product Manufactured in any validation batches produced by GPC Biotech or its Subcontractors satisfies all of the requirements set forth in Article 6 hereof, such product may be provided to Licensee under the terms of this Agreement for sale in the Licensee Territory. In this event, where the Manufacturing Costs for the Licensed Products produced in such validation batches were included in Collaboration Costs under the License Agreement, Licensee shall be entitled to a credit applicable against the Supply Price in an amount equal to the portion of such Collaboration Costs specifically attributable to the Manufacture of such validation batches paid by Licensee under the License Agreement.

                    3.1.4. Estimate of Future Manufacturing Costs; Audits. On or before the date that is twelve (12) months prior to the anticipated date of commercial launch of the Licensed Products in the Licensee Territory and annually thereafter, GPC Biotech shall notify Licensee of its estimated Manufacturing Cost for the Licensed Product that will apply for the next one-year period and provide supporting documentation for such Manufacturing Cost calculations. The JMC shall meet to review the estimated Manufacturing Costs provided hereunder and to consider any actions that might be taken to reduce such Manufacturing Costs. GPC Biotech shall maintain reasonably detailed and complete records of its Manufacturing Costs in accordance with generally accepted accounting principles applicable in the United States during the term of this Agreement and for a period of not less than three (3) years from the expiration date of each batch to which such records pertain or such longer period as may be required by Applicable Law. Licensee shall have the right, no more than once during any Calendar Year during the Term, to conduct an audit of GPC Biotech’s books and records upon reasonable advance notice and during normal business

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          hours for the purpose of verifying Manufacturing Costs invoiced to Licensee hereunder.

          3.2 Mode of Payment. All payments to GPC Biotech under this Agreement shall be made by deposit of Euros in the requisite amount to such bank account as GPC Biotech may from time to time designate by notice to Licensee.

          3.3 Taxes. The purchase price payable by Licensee for Licensed Product in accordance with Section 3.1.2 excludes all sales, use, value added or other similar taxes or duties payable in connection with the sale of such Licensed Product; any and all of which shall be the sole responsibility of Licensee.

          3.4 Interest on Late Payment. If any payment due to GPC Biotech under this Agreement is overdue on any amounts invoiced that are not subject to a good faith dispute by Licensee, then Licensee shall pay interest thereon (before and after any judgment) at an annual rate (but with interest accruing on a daily basis) of the lesser of four percent (4%) above the prime rate as reported in The Wall Street Journal, Eastern Edition, and the maximum rate allowed by Applicable Law, such interest to run from the date upon which payment of such sum became due until payment thereof in full together with such interest.

ARTICLE IV
INTELLECTUAL PROPERTY

          4.1 Ownership of Specifications and Manufacturing Process. Licensee acknowledges and agrees that, as between the Parties, the Specifications and Manufacturing Processes for the Licensed Product shall be the sole and exclusive property of GPC Biotech, subject to the licenses granted to Licensee under the License Agreement.

ARTICLE V
CONFIDENTIALITY

          5.1 Confidentiality and Non-Disclosure. Each Party acknowledges and agrees that any information furnished or otherwise made known to it, directly or indirectly, by the other Party in connection with this Agreement shall constitute Confidential Information of the other Party for all purposes of the License Agreement, except to the extent that any such information is not included in the Definition of Confidential Information pursuant to Section 11.1 of the License Agreement. Notwithstanding anything in the foregoing sentence to the contrary, Licensee acknowledges and agrees that Specifications and Manufacturing Processes for the Licensed Product shall constitute the Confidential Information of GPC Biotech subject to all applicable terms and conditions set forth in the License Agreement.

ARTICLE VI
REPRESENTATIONS AND WARRANTIES

          6.1 Representations and Warranties of GPC Biotech. GPC Biotech represents, and warrants to Licensee that:

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                    6.1.1. It or its Subcontractors have obtained (or shall obtain prior to Manufacturing Licensed Product), and shall remain in compliance with during the Term, all permits, licenses and other authorizations (the “Permits”) which are required by Applicable Law to the Manufacture Licensed Product as specified by this Agreement and for qualification of the Facilities for such purposes; provided, however, GPC Biotech shall have no obligation under this Agreement to obtain Permits relating to the sale, marketing, distribution or use of API or Licensed Product or with respect to the labeling of Licensed Product;

                    6.1.2. All Manufacturing under this Agreement shall be conducted in accordance in all respects with cGMP, including (i) availability of adequate personnel and facilities to comply with such requirements and (ii) all other processes, methods and requirements necessary for compliance with cGMP and all other Applicable Laws, the Manufacturing Process, the Quality Agreement and the Specifications. In addition, all Manufacturing shall be conducted in accordance with GPC Biotech’s or its Subcontractor’s standard operating procedures;

                    6.1.3. At the time of delivery thereof to Licensee, the Licensed Product Manufactured under this Agreement, shall be in conformance with the applicable Specifications and shall not be adulterated or misbranded within the meaning of the FFDCA or any substantially similar definition under other Applicable Law;

                    6.1.4. It has not been debarred, nor is it subject to a pending debarment, and shall not use the services of any Persons debarred pursuant to section 306 of the FFDCA, 21 U.S.C. § 335(a) or (b) in any capacity associated with or related to the Manufacture of the Licensed Product. GPC Biotech shall promptly inform Licensee in writing of any debarment, or the commencement of any debarment or like proceedings against GPC Biotech, its employees, officers, agents or Subcontractors, during the Term. GPC Biotech also warrants that neither GPC Biotech nor any of its officers or employees has been convicted of a felony under the U.S. federal law for conduct relating to the development or approval, including the process for development or approval, of any drug product, new drug application or abbreviated new drug application and neither GPC Biotech nor any of its officers or employees has been convicted of a felony under the U.S. federal law for conduct relating to the regulation of any product under the FFDCA; and

                    6.1.5. To GPC Biotech’s Knowledge, as of the Effective Date, GPC Biotech is in compliance in all material respects with the terms of its agreements with Subcontractors relating to the Facilities (the “Subcontractor Agreements”). GPC Biotech covenants to Licensee and agrees that it shall use all commercially reasonable efforts not to take any action or omit to take any action that would constitute a breach of the Subcontractor Agreements or enter into any amendment to the Subcontractor Agreements, which amendment would be reasonably likely to have a material adverse effect on the Manufacturing of the

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Licensed Product in the Licensee Territory or GPC Biotech’s ability to perform its obligations under this Agreement. GPC Biotech shall provide Licensee promptly with notice of the occurrence of any such breach or any notice alleging that GPC Biotech has committed any such breach.

          6.2 Representations and Warranties of Each Party. Each Party represents and warrants to the other Party that it has the full power and right to enter into this Agreement and that there are no outstanding agreements, assignments, licenses, encumbrances or rights of any kind held by other parties, private or public, inconsistent with the provisions of this Agreement.

          6.3 DISCLAIMER OF WARRANTY. EXCEPT FOR THE EXPRESS WARRANTIES SET FORTH IN SECTIONS 6.1 AND 6.2, GPC BIOTECH MAKES NO REPRESENTATIONS AND GRANTS NO WARRANTIES, EXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW, BY STATUTE OR OTHERWISE, AND GPC BIOTECH SPECIFICALLY DISCLAIMS ANY OTHER WARRANTIES, WHETHER WRITTEN OR ORAL, OR EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF QUALITY, MERCHANTABILITY OR FITNESS FOR A PARTICULAR USE OR PURPOSE OR ANY WARRANTY AS TO THE VALIDITY OF ANY PATENTS OR THE NON-INFRINGEMENT OF ANY INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES. LICENSEE’S EXCLUSIVE REMEDY FOR BREACH OF WARRANTY BY GPC BIOTECH SHALL BE DIRECT DAMAGES AND GPC BIOTECH’S OBLIGATION TO REPAIR OR REPLACE THE LICENSED PRODUCT AND RESUBMIT IT TO LICENSEE IN ACCORDANCE WITH THE PROVISIONS OF SECTION 2.8.

ARTICLE VII
INDEMNITY

          7.1 Indemnification of GPC Biotech. Licensee agrees to indemnify, defend and hold harmless GPC Biotech, its Affiliates and their respective directors, officers, employees and agents from and against any and all losses, damages liabilities, lawsuits, proceedings, costs and expenses arising therefrom, including without limitation, reasonable attorneys’ fees and the cost of recalls (collectively, “Losses”) in connection with any and all suits, investigations, claims or demands of Third Parties (collectively, “Claims”) arising from or occurring as a result of (a) the breach by Licensee of this Agreement or (b) the negligence or willful misconduct on the part of Licensee in performing its obligations under this Agreement, except for those Losses for which GPC Biotech has an obligation to indemnify Licensee pursuant to Section 7.2 hereof, as to which Losses each Party shall indemnify the other to the extent of their respective liability; provided, however, that Licensee shall not be obligated to indemnify GPC Biotech for any Losses to the extent that such Losses arise as a result of gross negligence or willful misconduct on the part of GPC Biotech or any of its Affiliates.

          7.2 Indemnification of Licensee. Subject to Section 7.4, GPC Biotech agrees to indemnify, defend and hold harmless Licensee, its Affiliates and their respective directors, officers, employees and agents from and against any and all Losses in connection with any and all Claims arising from or occurring as a result of (a) the breach by GPC Biotech or any Subcontractor of this Agreement or (b) the negligence or willful misconduct on the part of GPC

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Biotech or any Subcontractor in performing its obligations under this Agreement or a Subcontract, except for those Losses for which Licensee has an obligation to indemnify Licensee pursuant to Section 7.1 hereof, as to which Losses each Party shall indemnify the other to the extent of their respective liability; provided, however, that GPC Biotech shall not be obligated to indemnify Licensee for any Losses to the extent that such Losses arise as a result of gross negligence or willful misconduct on the part of Licensee or any of its Affiliates, Sublicensees or Distributors.

          7.3 Indemnification Procedures.

                    7.3.1. All indemnification claims in respect of a Party, its Affiliates or their respective directors, officers, employees and agents shall be made solely by such Party to this Agreement (the “Indemnified Party”). The Indemnified Party shall give the indemnifying Party prompt written notice (an “Indemnification Claim Notice”) of any Losses or discovery of fact upon which such indemnified Party intends to base a request for indemnification under Section 7.1 or 7.2, but in no event shall the indemnifying Party be liable for any Losses that result from any delay in providing such notice. Each Indemnification Claim Notice must contain a description of the claim and the nature and amount of such Loss (to the extent that the nature and amount of such Loss is known at such time). The Indemnified Party shall furnish promptly to the indemnifying Party copies of all papers and official documents received in respect of any Losses and Claims.

                    7.3.2. At its option, the indemnifying Party or, if GPC Biotech is the indemnifying Party and at GPC Biotech’s option, any Subcontractor, may assume the defense of any Claim by giving written notice to the Indemnified Party within thirty (30) days after the indemnifying Party’s receipt of an Indemnification Claim Notice, which notice shall include an express agreement to undertake the defense of such Claim in accordance with the provisions of this Article 7. The assumption of the defense of a Claim by the indemnifying Party shall not be construed as an acknowledgment that the indemnifying Party is liable to indemnify the Indemnified Party in respect of the Claim, nor shall it constitute a waiver by the indemnifying Party of any defenses it may assert against the Indemnified Party’s claim for indemnification. Upon assuming the defense of a Claim, the indemnifying Party may appoint as lead counsel in the defense of the Claim any legal counsel selected by the indemnifying Party. In the event the indemnifying Party assumes the defense of a Claim, the Indemnified Party shall immediately deliver to the indemnifying Party all original notices and documents (including court papers) received by the Indemnified Party in connection with the Claim. Should the indemnifying Party assume the defense of a Claim, except as provided in Section 7.3.1, the indemnifying Party shall not be liable to the Indemnified Party for any legal expenses subsequently incurred by such Indemnified Party in connection with the analysis, defense or settlement of the Claim. In the event that it is ultimately determined that the indemnifying Party is not obligated to indemnify, defend or hold harmless the Indemnified Party from and against the Claim, the Indemnified Party shall reimburse the indemnifying

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Party for any and all costs and expenses (including attorneys’ fees and costs of suit) incurred by the indemnifying Party in its defense of the Third Party Claim.

          7.3.3. Without limiting Section 7.3.2 above, any Indemnified Party shall be entitled to participate in, but not control, the defense of such Claim and to employ counsel of its choice for such purpose; provided, however, that such employment shall be at the Indemnified Party’s own expense unless (i) the employment thereof has been specifically authorized by the indemnifying Party in writing, (ii) the indemnifying Party has failed to assume the defense and employ counsel in accordance with Section 7.3.2 (in which case the Indemnified Party shall control the defense) or (c) the interests of the Indemnified Party and the indemnifying Party (or, if applicable, an indemnifying Subcontractor) with respect to such Claim are sufficiently adverse to prohibit the representation by the same counsel of both parties under applicable law, ethical rules or equitable principles.

          7.3.4. With respect to any Loss relating solely to the payment of money damages in connection with a Claim that shall not result in the Indemnified Party’s becoming subject to injunctive or other relief or otherwise adversely affecting the business of the Indemnified Party in any manner, and as to which the indemnifying Party shall have acknowledged in writing the obligation to indemnify the Indemnified Party hereunder, the indemnifying Party shall have the sole right to consent to the entry of any judgment, enter into any settlement or otherwise dispose of such Loss, on such terms as the indemnifying Party, in its sole discretion, shall deem appropriate; provided that such disposition includes as an unconditional term thereof the giving by the claimant or plaintiff to the Indemnified Party of a release of all liability in respect thereof. With respect to all other Losses in connection with any Claim, where the indemnifying Party has assumed the defense of the Claim in accordance with Section 7.3.2, the indemnifying Party shall have authority to consent to the entry of any judgment, enter into any settlement or otherwise dispose of such Loss provided it obtains the prior written consent of the Indemnified Party (which consent shall not be unreasonably withheld or delayed). Regardless of whether the indemnifying Party chooses to defend or prosecute any Claim, no Indemnified Party shall admit any liability with respect to or settle, compromise or discharge, any Third Party Claim without the prior written consent of the indemnifying Party, such consent not to be unreasonably withheld or delayed.

          7.3.5. If the indemnifying Party chooses to defend or prosecute any Claim, the Indemnified Party shall, and shall cause each Indemnified Party to, cooperate in the defense or prosecution thereof and shall furnish such records, information and testimony, provide such witnesses and attend such conferences, discovery proceedings, hearings, trials and appeals as may be reasonably requested in connection therewith. Such cooperation shall include access during normal business hours afforded to indemnifying Party to, and reasonable retention by the Indemnified Party of, records and information that are reasonably relevant to such Claim, and making indemnified Parties and other

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employees and agents available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder, and the indemnifying Party shall reimburse the Indemnified Party for all its reasonable out-of-pocket expenses in connection therewith.

                    7.3.6. Except as provided above, the costs and expenses, including fees and disbursements of counsel, incurred by the Indemnified Party in connection with any Claim shall be reimbursed on a Calendar Quarter basis by the indemnifying Party, without prejudice to the indemnifying Party’s right to contest the Indemnified Party’s right to indemnification and subject to refund in the event the indemnifying Party is ultimately held not to be obligated to indemnify the Indemnified Party.

          7.4 Limitations.

                    7.4.1. EXCEPT IN CIRCUMSTANCES OF GROSS NEGLIGENCE OR INTENTIONAL MISCONDUCT BY A PARTY OR ITS AFFILIATES (OR WITH RESPECT TO LICENSEE, ITS SUBLICENSEES OR DISTRIBUTORS), OR WITH RESPECT TO CLAIMS UNDER SECTION 7.1 OR 7.2, NO PARTY OR ANY OF THEIR RESPECTIVE AFFILIATES SHALL BE LIABLE FOR SPECIAL, INDIRECT, INCIDENTAL, PUNITIVE OR CONSEQUENTIAL DAMAGES, INCLUDING LOST PROFITS, WHETHER IN CONTRACT, WARRANTY, NEGLIGENCE, TORT, STRICT LIABILITY OR OTHERWISE, ARISING OUT OF ANY BREACH OF OR FAILURE TO PERFORM ANY OF THE PROVISIONS OF THIS AGREEMENT.

                    7.4.2. NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, THE PARTIES AGREE THAT THE AGGREGATE MONETARY LIABILITY OF GPC BIOTECH FOR ANY BREACH OF THE TERMS OF THIS AGREEMENT BY A SUBCONTRACTOR SHALL BE SUBJECT TO ANY LIMITATIONS ON LIABILITY SPECIFIED IN GPC BIOTECH’S AGREEMENT WITH SUCH SUBCONTRACTOR; PROVIDED, HOWEVER, THAT NOTHING IN THIS SECTION 7.4.2 SHALL OPERATE TO LIMIT GPC BIOTECH’S LIABILITY OR LICENSEE’S REMEDIES SPECIFIED IN THE LICENSE AGREEMENT OR ANY NON-MONETARY REMEDIES EXPRESSLY PROVIDED IN THIS AGREEMENT.

ARTICLE VIII
TERM AND TERMINATION

          8.1 Term. Unless earlier terminated as provided herein, the term of this Agreement (the “Term”) shall commence on the Effective Date and shall expire on a country-by-country basis on the date of expiration or termination of the License Agreement for any reason with respect to such country or countries.

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          8.2 Termination of this Agreement for Material Breach. In the event that either Party (the “Breaching Party”) shall be in material default in the performance of any of its material obligations under this Agreement, in addition to any other right and remedy the other Party (the “Complaining Party”) may have, the Complaining Party may terminate this Agreement, in its entirety by sixty (60) days’ prior written notice (the “Notice Period”) to the Breaching Party, specifying the breach and its claim of right to terminate; provided always that the termination shall not become effective at the end of the Notice Period if the Breaching Party cures the breach complained about during the Notice Period (or, if such default cannot be cured within such sixty (60)-day period, if the Breaching Party commences actions to cure such default within the Notice Period and thereafter diligently continues such actions; provided further that such default is cured within one hundred eighty (180) days after the receipt of such notice), except in the case of a payment default (with respect to amounts invoiced by GPC Biotech that are not subject to a good faith dispute by Licensee), as to which the Breaching Party shall have only a ten (10)-day cure period.

          8.3 Termination by Either Party. Either Party shall have the right to terminate this Agreement by written notice to the other Party upon the occurrence of any of the following: (a) the other Party files a petition in bankruptcy, or enters into an agreement with its creditors, or applies for or consents to the appointment of a receiver or trustee, or makes an assignment for the benefit of creditors, or becomes subject to involuntary proceedings under any bankruptcy or insolvency law (which proceedings remain undismissed for sixty (60) days) or (b) a force majeure event pursuant to Section 9.6.

          8.4 Accrued Rights; Surviving Obligations.

                    8.4.1. Accrued Rights. Termination or expiration of this Agreement for any reason shall be without prejudice to any rights that shall have accrued to the benefit of a Party prior to such termination or expiration. Such termination or expiration shall not relieve a Party from obligations that are expressly indicated to survive the termination or expiration of this Agreement.

                    8.4.2. Materials. Upon termination of this Agreement for any reason except termination by Licensee pursuant to Section 8.2, Licensee promptly shall reimburse GPC Biotech for the actual costs of all API, Materials and work in process in the possession of GPC Biotech or its Subcontractors, or which GPC Biotech or its Subcontractors have committed to purchase (unless cancelable); provided that the amounts of such API, Materials and work in process shall not exceed the quantities necessary to Manufacture the amount of Licensed Product specified in the binding portion of the most recently submitted Forecast (as provided in Section 2.2.2), unless the Parties mutually agree that inventory levels of API and Materials may exceed the requirements for such periods; provided further that Licensee shall only be liable for any such inventory of API, Materials and work in process including excess inventory mutually agreed by the Parties, that is not otherwise usable by GPC Biotech in the ordinary course of business.

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                    8.4.3. Survival. Without limiting the foregoing, Sections 2.8, 2.10, 2.16, 3.2, 3.3, 3.4, 6.3, 9.1, 9.2, 9.3, 9.5, 9.7, 9.8, 9.9, 9.10, 9.11, 9.12, 9.13, 9.15, 9.16, this Section 8.4, and Articles IV, V and VII of this Agreement shall survive the termination or expiration of this Agreement for any reason.

          8.5 Failure of Supply. In the event of a Supply Failure (as defined below), Licensee shall have the right to identify, establish and maintain a Third Party manufacturer as a second source for the supply of Licensed Product or API, as applicable (a “Second Source”). No later than ten (10) Business Days after a Supply Failure, the JMC shall establish a schedule and budget for activities and responsibilities of the parties, including technology transfer, required to establish the Second Source. Promptly after the selection of a Second Source for the Licensed Product by Licensee and such Second Source enters into a written agreement with GPC Biotech, GPC Biotech shall commence transfer to such Second Source of technology relating to the Manufacturing Process for the Licensed Product which transfer shall be completed as soon as practicable thereafter, subject to the applicable terms of such agreement. Such agreement shall include (a) licenses under Intellectual Property Rights Controlled by GPC Biotech to the extent required to enable the Second Source to Manufacture the Licensed Products for Licensee and (b) adequate protection for the trade secrets and other confidential information of GPC Biotech relating to transferred technology. GPC Biotech shall bear the expenses (including any payments to Third Parties) associated with the activities under this Section 8.5, unless the cause of the Supply Failure is a Force Majeure event (as described in Section 9.6) in which case such costs and expenses shall be deemed “Collaboration Costs” subject to the terms of the License Agreement. For purposes of this Section 8.5, a “Supply Failure” shall be deemed to occur if, at any time during the term of this Agreement, GPC Biotech fails to deliver to Licensee an amount of Licensed Product conforming to the requirements of Article 6 hereof of less than (i) [...***...] of the quantities specified in Purchase Orders over a period of [...***...]; or (ii) [...***...] of the quantities specified in Purchase Orders over a period of [...***...], where in each case such quantities were properly forecast and ordered by Licensee in accordance with this Section 2. In addition, if either Party becomes aware of any conditions or circumstances affecting the supply of Licensed Products or the Facilities that could reasonably be expected to lead to a Supply Failure, such Party will inform the other Party thereof. In such event, Licensee may then begin the process of identifying and contacting potential Second Sources and Licensee shall work with the JMC in establishing a contingency plan for the technology transfer activities specified herein.

ARTICLE IX
MISCELLANEOUS

          9.1 Notices.

                    9.1.1. Notice Requirements. Any notice, request, demand, waiver, consent, approval or other communication permitted or required under this Agreement shall be in writing, shall refer specifically to this Agreement and shall be deemed given only if delivered by hand or sent by facsimile transmission (with transmission confirmed) or by internationally recognized overnight delivery service that maintains records of delivery, addressed to the

*** Confidential Treatment Requested

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Parties at their respective addresses specified in Section 9.1.2 or to such other address as the Party to whom notice is to be given may have provided to the other Party in accordance with this Section 9.1. Such Notice shall be deemed to have been given as of the date delivered by hand or transmitted by facsimile (with transmission confirmed) or on the second business day (at the place of delivery) after deposit with an internationally recognized overnight delivery service. Any notice delivered by facsimile shall be confirmed by a hard copy delivered as soon as practicable thereafter. This Section 9.1 is not intended to govern the day-to-day business communications necessary between the Parties in performing their obligations under the terms of this Agreement.

                    9.1.2. Address for Notice

If to Licensee, to:

Pharmion GmbH
Aeschenvorstadt 71,
4051 Basel,
Switzerland
Attention: Director
Facsimile: +41 61 305 9899

with a copy to:

Pharmion Corporation
2525 28^th Street
Boulder, Colorado 80301
Attention: VP and General Counsel
Facsimile: 720 564 9191

If to GPC Biotech, to:

GPC Biotech AG
Fraunhoferstrasse 20
82152 Martinsried/Munich, Germany
Attention: Chief Executive Officer
Facsimile: +49 89 85 65 2610

with a copy to:

GPC Biotech Inc.
101 College Road East
Princeton, NJ 08540, U.S.A.
Attention: General Counsel
Facsimile: +1 609 524 1050

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          9.2 Governing Law, Jurisdiction, Venue and Service.

                    9.2.1. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, excluding any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction. The Parties agree to exclude the application to this Agreement of the United Nations Convention on Contracts for the International Sale of Goods.

                    9.2.2. Jurisdiction. Subject to Sections 9.3 and 9.11, the Parties hereby irrevocably and unconditionally consent to the exclusive jurisdiction of the courts of the State of New York and the United States District Court for the Southern District of New York for any action, suit or proceeding (other than appeals therefrom) arising out of or relating to this Agreement, and agree not to commence any action, suit or proceeding (other than appeals therefrom) related thereto except in such courts. The Parties irrevocably and unconditionally waive their right to a jury trial.

                    9.2.3. Venue. The Parties further hereby irrevocably and unconditionally waive any objection to the laying of venue of any action, suit or proceeding (other than appeals therefrom) arising out of or relating to this Agreement in the courts of the State of New York or in the United States District Court for the Southern District of New York, and hereby further irrevocably and unconditionally waive and agree not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.

                    9.2.4. Service. Each Party further agrees that service of any process, summons, notice or document by registered mail to its address set forth in Section 9.1.2 shall be effective service of process for any action, suit or proceeding brought against it under this Agreement in any such court.

          9.3 Waiver and Non-Exclusion of Remedies. Any term or condition of this Agreement may be waived at any time by the Party that is entitled to the benefit thereof, but no such waiver shall be effective unless set forth in a written instrument duly executed by or on behalf of the Party waiving such term or condition. The waiver by either Party hereto of any right hereunder or of the failure to perform or of a breach by the other Party shall not be deemed a waiver of any other right hereunder or of any other breach or failure by said other Party whether of a similar nature or otherwise.

          9.4 Assignment. Without the prior written consent of the other Party hereto, neither Party shall sell, transfer, assign, delegate, pledge or otherwise dispose of, whether voluntarily, involuntarily, by operation of law or otherwise, this Agreement or any of its rights or duties hereunder; provided, however, that (a) GPC Biotech may, without such consent, delegate its obligations hereunder in accordance with Section 2.1.1, (b) either Party may, without such consent, assign this Agreement and its rights and obligations hereunder in connection with any assignment of the License Agreement as permitted under Section 15.4 of the License Agreement;

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provided that in the case of such assignment to an Affiliate, such assigning Party shall remain responsible for the performance by such Affiliate of the rights and obligations hereunder. Any attempted assignment or delegation in violation of the preceding sentence shall be void and of no effect. All validly assigned and delegated rights and obligations of the Parties hereunder shall be binding upon and inure to the benefit of and be enforceable by and against the successors and permitted assigns of GPC Biotech or Licensee, as the case may be. In the event either Party seeks and obtains the other Party’s consent to assign or delegate its rights or obligations to another Party, the assignee or transferee shall assume all obligations of its assignor or transferor under this Agreement.

          9.5 Severability. If any provision of this Agreement is held to be illegal, invalid or unenforceable under any present or future law, and if the rights or obligations of either Party under this Agreement shall not be materially and adversely affected thereby, (a) such provision shall be fully severable, (b) this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part hereof, (c) the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance herefrom and (d) in lieu of such illegal, invalid or unenforceable provision, there shall be added automatically as a part of this Agreement a legal, valid and enforceable provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible and reasonably acceptable to the Parties. To the fullest extent permitted by applicable law, each Party hereby waives any provision of law that would render any provision hereof illegal, invalid or unenforceable in any respect.

          9.6 Force Majeure. Notwithstanding anything to the contrary contained herein, neither Party shall be deemed to be in breach hereof or be liable for non-performance, defective or late performance of any of its obligations under this Agreement (other than obligations to pay money) to the extent and for such periods of time as such non-performance, defective or late performance is due to reasons of strike, riots, war, act of God, invasion, fire, explosion, floods, delay of carrier, shortage in the supply of Materials, acts of government or governmental agencies or instrumentalities (other than such acts that arise from or relate to violations of Applicable Law by the affected Party) and any other contingencies beyond the Parties’ or any Subcontractor’s reasonable control. The Party affected shall give written notice to the other Party of any material delay due to such causes. In the event a force majeure event prevents a Party’s performance under this Agreement for one hundred eighty (180) consecutive days, the other Party may (in addition to all other rights of such Party under this Agreement, including Section 8.5) terminate this Agreement upon thirty (30) days prior written notice to the other Party, but such termination shall not be deemed a breach by the Party affected by the force majeure condition.

          9.7 No Benefit to Other Persons. The representations, warranties, covenants and agreements set forth in this Agreement are for the sole benefit of the Parties hereto and their successors and permitted assigns, and they shall not be construed as conferring any rights on any other Persons.

          9.8 Export Control. This Agreement is made subject to any restrictions concerning the export of products or technical information from the United States or other countries that may be imposed on related to the Parties from time to time. Each Party agrees that

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it shall not export, directly or indirectly, any technical information acquired from the other Party under this Agreement or any products using such technical information to a location or in a manner that at the time of export requires an export license or other governmental approval, without first obtaining the written consent to do so from the appropriate agency or other governmental entity in accordance with Applicable Law.

          9.9 Relationship of the Parties. It is expressly agreed that GPC Biotech, on the one hand, and Licensee, on the other hand, shall be independent contractors and that the relationship between the two Parties shall not constitute a partnership, joint venture or agency. Neither GPC Biotech, on the one hand, nor Licensee, on the other hand, shall have the authority to make any statements, representations or commitments of any kind, or to take any action, which shall be binding on the other, without the prior written consent of the other Party to do so, such consent not to be unreasonably withheld or delayed. All persons employed by a Party shall be employees of such Party and not of the other Party and all costs and obligations incurred by reason of any such employment shall be for the account and expense of such Party.

          9.10 References. Unless otherwise specified, (a) references in this Agreement to any Article or Section shall mean references to such Article or Section of this Agreement, (b) references in any section to any clause are references to such clause of such section and (c) references to any agreement, instrument or other document in this Agreement refer to such agreement, instrument or other document as originally executed or, if subsequently varied, replaced or supplemented from time to time, as so varied, replaced or supplemented and in effect at the relevant time of reference thereto.

          9.11 Dispute Resolution.

                    9.11.1. General. Except with respect to Section 2.16, if a dispute arises between the Parties in connection with or relating to this Agreement or any document or instrument delivered in connection herewith (a “Dispute”), then either Party shall have the right to refer such dispute to the Chief Executive Officer of GPC Biotech and the Chief Executive Officer of Licensee who shall confer on the resolution of the issue. Any final decision mutually agreed to by such representatives shall be conclusive and binding on the Parties. If such officers are not able to agree on the resolution of an issue within twenty (20) Business Days after such issue was first referred to them, either Party may, by written notice to the other Party, elect to initiate arbitration pursuant to Section 9.11.2 for purposes of having the matter settled.

                    9.11.2. Arbitration. Any arbitration under this Agreement shall take place at a location to be agreed by the Parties; provided, however, that in the event that the Parties are unable to agree on a location for an arbitration under this Agreement within five (5) days of the demand therefor, such arbitration shall be held in New York, New York. Any arbitration under this Agreement shall be administered by the American Arbitration Association under its Commercial Arbitration Rules then in effect (the “Arbitration Rules”). The Parties shall appoint an arbitrator by mutual agreement. If the Parties cannot agree on the appointment of an arbitrator within thirty (30) days of the demand for arbitration,

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an arbitrator shall be appointed in accordance with the Arbitration Rules. The arbitrator shall have the authority to grant any equitable and legal remedies that would be available in any judicial proceeding instituted to resolve the Dispute submitted to such arbitration in accordance with this Agreement; provided, however, that the arbitrator shall not have the power to alter, amend or otherwise affect the terms or the provisions of this Agreement. Judgment upon any award rendered pursuant to this Section may be entered by any court having jurisdiction over the Parties’ other assets. The arbitrator shall have no authority to award punitive or any other type of damages not measured by a Party’s compensatory damages. Each Party shall bear its own costs and expenses and attorneys’ fees and an equal share of the arbitrator’s fees and any administrative fees of arbitration, unless the arbitrator shall otherwise allocate such costs, expenses and fees between the Parties. The Parties agree that all arbitration awards shall be final and binding on the Parties and their Affiliates. The Parties hereby waive the right to contest the award in any court or other forum. Except to the extent necessary to confirm or enforce an award or as may be required by law, neither a Party nor an arbitrator may disclose the existence, content or results of an arbitration without the prior written consent of both Parties.

                    9.11.3. Interim Relief. Notwithstanding anything herein to the contrary, nothing in this Section shall preclude either Party from seeking interim or provisional relief, including a temporary restraining order, preliminary injunction or other interim equitable relief concerning a dispute, if necessary to protect the interests of such Party. This Section shall be specifically enforceable.

          9.12 Entire Agreement. This Agreement sets forth and constitutes the entire agreement and understanding between the Parties with respect to the subject matter hereof and all prior agreements, understandings, promises and representations, whether written or oral, with respect thereto are superseded hereby. Notwithstanding the foregoing, in event of any conflict between the terms of this Agreement and the terms of the License Agreement, the terms of the License Agreement shall control and take precedence. Each Party confirms that it is not relying on any representations or warranties of the other Party except as specifically set forth herein. No amendment, modification, release or discharge shall be binding upon the Parties unless in writing and duly executed by authorized representatives of both Parties.

          9.13 English Language. This Agreement shall be written and executed in, and all other communications under or in connection with this Agreement shall be in, the English language. Any translation into any other language shall not be an official version thereof, and in the event of any conflict in interpretation between the English version and such translation, the English version shall control.

          9.14 Counterparts. This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. This Agreement may be executed by facsimile signatures and such signatures shall be deemed to bind each Party hereto as if they were original signature.

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          9.15 Further Assurance. Each Party shall duly execute and deliver, or cause to be duly executed and delivered, such further instruments and do and cause to be done such further acts and things, including the filing of such assignments, agreements, documents and instruments, as may be necessary or as the other Party may reasonably request in connection with this Agreement or to carry out more effectively the provisions and purposes hereof, or to better assure and confirm unto such other Party its rights and remedies under this Agreement.

          9.16 Construction. Except where the context otherwise requires, wherever used, the singular shall include the plural, the plural the singular, the use of any gender shall be applicable to all genders and the word “or” is used in the inclusive sense (and/or). The captions of this Agreement are for convenience of reference only and in no way define, describe, extend or limit the scope or intent of this Agreement or the intent of any provision contained in this Agreement. The term “including” as used herein shall mean including, without limiting the generality of any description preceding such term. The language of this Agreement shall be deemed to be the language mutually chosen by the Parties and no rule of strict construction shall be applied against either Party hereto.

[SIGNATURE PAGE FOLLOWS.]

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     THIS AGREEMENT IS EXECUTED by the authorized representatives of the Parties as of the date first written above.

GPC BIOTECH AG	PHARMION GMBH
Signature : /s/ Elmar Maier, PhD	Signature : /s/ Patrick J. Mahaffy
Name : Elmar Maier, PhD	Name : Patrick J. Mahaffy
Title : SVP Business Development	Title : Director
Signature : /s/ Bernd R. Seizinger, M.D., PhD	Signature : /s/ Erle T. Mast
Name : Bernd R. Seizinger, M.D., PhD	Name : Erle T. Mast
Title : CEO	Title : Director

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EX-10.35

Exhibit 10.35

PHARMION CORPORATION
2000 STOCK INCENTIVE PLAN
(Amended and Restated effective as of February 9, 2006)

1. Purpose

     The purpose of the Plan is to provide a means through which the Company and its Subsidiaries may attract able persons to become and remain directors of the Company and enter and remain in the employ of the Company and its Subsidiaries and to provide a means whereby employees, directors and consultants of the Company and its Subsidiaries can acquire and maintain Common Stock ownership, or be paid incentive compensation measured by reference to the value of Common Stock, thereby strengthening their commitment to the welfare of the Company and its Subsidiaries and promoting an identity of interest between stockholders and these employees, directors and consultants.

     So that the appropriate incentive can be provided, the Plan provides for granting Incentive Stock Options, Nonqualified Stock Options, Restricted Stock Awards, Restricted Stock Unit Awards and other Stock-based Awards, or any combination of the foregoing.

2. Definitions

     The following definitions shall be applicable throughout the Plan.

     (a) “Affiliate” of any individual or entity means an individual or entity that is directly or indirectly through one or more intermediaries controlled by or under common control with the individual or entity specified.

     (b) “Award” means, individually or collectively, any Incentive Stock Option, Nonqualified Stock Option, Restricted Stock Award, Restricted Stock Unit Award, or other Stock-based Award.

     (c) “Board” means the Board of Directors of the Company.

     (d) “Cause” means the Company or a Subsidiary having cause to terminate a Participant’s employment or service under any existing employment, consulting or any other agreement between the Participant and the Company or a Subsidiary. In the absence of any such an employment, consulting or other agreement, a Participant shall be deemed to have been terminated for Cause if the Committee determines that his termination of employment with the Company or a Subsidiary is on account of (A) incompetence, fraud, personal dishonesty, embezzlement, defalcation or acts of gross negligence or gross misconduct on the part of Participant in the course of his employment or services, (B) a material breach of Participant’s fiduciary duty of loyalty to the Company or a Subsidiary, (C) a Participant’s engagement in conduct that is materially injurious to the Company or a Subsidiary, (D) a Participant’s conviction by a court of competent jurisdiction of, or pleading “guilty” or “no contest” to, (x) a felony, or (y) any other criminal charge (other than minor traffic violations) which could reasonably be expected to have a material adverse impact on Company’s or a Subsidiary’s reputation and standing in the community; (E) public or consistent drunkenness by a Participant or his illegal use of narcotics which is, or could reasonably be expected to become, materially injurious to the reputation or business of the Company or a Subsidiary or which impairs, or could reasonably be expected to impair, the performance of a Participant’s duties to the Company or a Subsidiary; or (F) willful failure by a Participant to follow the lawful directions of a superior officer or the Board, representing disloyalty to the goals of the Company or a Subsidiary.

     (e) “Code” means the Internal Revenue Code of 1986, as amended. Reference in the Plan to any section of the Code shall be deemed to include any amendments or successor provisions to such section and any regulations under such section.

     (f) “Committee” means the Board, the Compensation Committee of the Board or such other committee of at least two people as the Board may appoint to administer the Plan.

     (g) “Common Stock” means the common stock par value $0.001 per share, of Pharmion Corporation.

     (h) “Company” means Pharmion Corporation.

     (i) “Date of Grant” means the date on which the granting of an Award is authorized or such other date as may be specified in such authorization.

     (j) “Disability”, with respect to any particular Participant, means disability as defined in such Participant’s employment, consulting or other relevant agreement with the Company or a Subsidiary or, in the absence of any such agreement, disability as defined in the long-term disability plan of the Company or a Subsidiary, as may be applicable to the Participant in question, or, in the absence of such a plan, the complete and permanent inability by reason of illness or accident to perform the duties of the occupation at which a Participant was employed or served when such disability commenced or, if the Participant was retired when such disability commenced, the inability to engage in any substantial gainful activity, in either case as determined by the Committee based upon medical evidence acceptable to it.

     (k) “Disinterested Person” means a person who is (i) a “non-employee director” within the meaning of Rule 16b-3 under the Exchange Act, or any successor rule or regulation and (ii) an “outside director” within the meaning of Section 162(m) of the Code; provided, however, that clause (i) shall only apply with respect to grants of Awards on and following the date that the officers and directors of the Company first become subject to Section 16(b) of the Exchange Act and clause (ii) shall apply only with respect to grants of Awards with respect to which the Company’s tax deduction could be limited by Section 162(m) of the Code if such clause did not apply.

     (l) “Eligible Person” means any (i) person regularly employed by the Company or a Subsidiary; provided, however, that no such employee covered by a collective bargaining agreement shall be an Eligible Person unless and to the extent that such eligibility is set forth in such collective bargaining agreement or in an agreement or instrument relating thereto; (ii) director of the Company or a Subsidiary; or (iii) consultant to the Company or a Subsidiary.

     (m) “Exchange Act” means the Securities Exchange Act of 1934.

     (n) “Fair Market Value” on a given date means (i) if the Stock is listed on a national securities exchange, the closing price on the primary exchange with which the Stock is listed and traded on the date prior to such date, or, if there is no such sale on that date, then on the last preceding date on which such a sale was reported; (ii) if the Stock is not listed on any national securities exchange but is quoted in the NASDAQ National Market System on a last sale basis, the closing price reported on the date prior to such date, or, if there is no such sale on that date, then on the last preceding date on which a sale was reported; (iii) if the Stock is not listed on a national securities exchange nor quoted in the NASDAQ National Market System on a last sale basis, the amount determined by the Committee to be the fair market value based upon a good faith attempt to value the Stock accurately and computed in accordance with applicable regulations of the Internal Revenue Service; or (iv) notwithstanding clauses (i) — (iii) above, with respect to Awards granted as of the consummation of the IPO, the price at which Stock is initially offered to the public in the IPO.

     (o) “Holder” means a Participant who has been granted an Award.

     (p) “Incentive Stock Option” means an Option granted by the Committee to a Participant under the Plan which is designated by the Committee as an Incentive Stock Option pursuant to Section 422 of the Code.

     (q) “IPO” means the initial underwritten offering of Common Stock to the public through an effective registration statement.

     (r) “Nonqualified Stock Option” means an Option granted under the Plan which is not designated as an Incentive Stock Option.

     (s) “Normal Termination” means termination of employment or service with the Company and all Subsidiaries:

(i) Upon retirement pursuant to the retirement plan of the Company or a Subsidiary, as may be applicable at the time to the Participant in question;

          (ii) On account of Disability;

          (iii) With the written approval of the Committee; or

          (iv) By the Company or a Subsidiary without Cause.

     (t) “Option” means an Award granted under Section 7 of the Plan.

     (u) “Option Period” means the period described in Section 7(c).

     (v) “Option Price” means the exercise price set for an Option described in Section 7(a).

     (w) “Participant” means an Eligible Person who has been selected by the Committee to participate in the Plan and to receive an Award.

     (a) “Performance Criteria” means the one or more criteria that the Board shall select for purposes of establishing the Performance Goals for a Performance Period. The Performance Criteria that shall be used to establish such Performance Goals may be based on any one of, or combination of, the following: (i) earnings per share; (ii) earnings before interest, taxes and depreciation; (iii) earnings before interest, taxes, depreciation and amortization; (iv) total stockholder return; (v) return on equity; (vi) return on assets, investment, or capital employed; (vii) operating margin; (viii) gross margin; (ix) operating income; (x) net income (before or after taxes); (xi) net operating income; (xii) net operating income after tax; (xiii) pre-tax profit; (xiv) operating cash flow; (xv) sales or revenue targets; (xvi) increases in revenue or product revenue; (xvii) expenses and cost reduction goals; (xviii) improvement in or attainment of working capital levels; (xix) economic value added (or an equivalent metric); (xx) market share; (xxi) cash flow; (xxii) cash flow per share; (xxiii) share price performance; (xxiv) debt reduction; (xxv) implementation or completion of projects or processes; (xxvi) customer satisfaction; (xxvii); stockholders’ equity; and (xxviii) other measures of performance selected by the Board. Partial achievement of the specified criteria may result in the payment or vesting corresponding to the degree of achievement as specified in an applicable Award agreement. The Board shall, in its sole discretion, define the manner of calculating the Performance Criteria it selects to use for such Performance Period.

     (b) “Performance Goals” means, for a Performance Period, the one or more goals established by the Board for the Performance Period based upon the Performance Criteria. Performance Goals may be based on a Company-wide basis, with respect to one or more business units, divisions, Affiliates, or business segments, and in either absolute terms or relative to the performance of one or more comparable companies or a relevant index. At the time of the grant of any Award, the Board is authorized to determine whether, when calculating the attainment of Performance Goals for a Performance Period: (i) to exclude restructuring and/or other nonrecurring charges; (ii) to exclude exchange rate effects, as applicable, for non-U.S. dollar denominated net sales and operating earnings; (iii) to exclude the effects of changes to generally accepted accounting standards required by the Financial Accounting Standards Board; (iv) to exclude the effects of any statutory adjustments to corporate tax rates; and (v) to exclude the effects of any “extraordinary items” as determined under generally accepted accounting principles. In addition, the Board retains the discretion to reduce or eliminate the compensation or economic benefit due upon attainment of Performance Goals.

     (x) “Performance Period” means the period of time selected by the Board over which the attainment of one or more Performance Goals will be measured for the purpose of determining a Participant’s right to and the payment of an Award. Performance Periods may be of varying and overlapping duration, at the sole discretion of the Board.

     (y) “Plan” means the Company’s 2000 Stock Incentive Plan (Amended and Restated effective as of February 9, 2006).

     (z) “Restricted Period” means, with respect to any share of Restricted Stock, the period of time determined by the Committee during which such Award is subject to the restrictions set forth in Section 8.

     (aa) “Restricted Stock” means shares of Stock issued or transferred to a Participant subject to forfeiture and the other restrictions set forth in Section 8.

     (bb) “Restricted Stock Award” means an Award of Restricted Stock granted under Section 8 of the Plan.

     (cc) “Restricted Stock Unit Award” means an Award based on notional units representing the right to receive shares of Stock or, at the discretion of the Committee, cash on the Settlement Date.

     (dd) “Restricted Stock Unit Award Agreement” means the agreement between the Company and a Participant evidencing the terms and conditions of an individual Restricted Stock Unit Award subject to the terms and conditions provided in Section 9 herein.

     (ee) “Securities Act” means the Securities Act of 1933, as amended.

     (ff) “Settlement Date” means the date on which a Restricted Stock Unit Award is settled for shares of Stock or cash, as set forth in Section 9 hereof.

     (gg) “Stock” means the Common Stock or such other authorized shares of stock of the Company as from time to time may be authorized for use under the Plan.

     (hh) “Stock Option Agreement” means the agreement between the Company and a Participant who has been granted an Option pursuant to Section 7 or 8 which defines the rights and obligations of the parties as required in Section 7(d) or 8.

     (ii) “Subsidiary” means any subsidiary of the Company as defined in Section 424(f) of the Code.

3. Effective Date, Amendments, Duration and Shareholder Approval

     The Plan, as amended and restated, is effective as of February 9, 2006. The Plan was reapproved by the stockholders of the Company on September 23, 2003, and the stockholders of the Company approved an amendment to increase the number of shares of Stock that may be offered under the Plan by an additional 1,500,000 shares on June 1, 2005, from 2,758,000 shares to 4,258,000 shares. The Plan was further amended and restated effective as of February 9, 2006 to allow for the grant of Restricted Stock Unit Awards and to add restrictions on option prices and the vesting of Awards.

     The expiration date of the Plan, after which no Awards may be granted hereunder, shall be September 23, 2013; provided, however, that the administration of the Plan shall continue in effect until all matters relating to the payment of Awards previously granted have been settled.

4. Administration

     The Committee shall administer the Plan. Unless otherwise determined by the Board, each member of the Committee shall, at the time he takes any action with respect to an Award under the Plan, be a Disinterested Person, but only to the extent that such definition applies. The majority of the members of the Committee shall constitute a quorum. The acts of a majority of the members present at any meeting at which a quorum is present or acts approved in writing by a majority of the Committee shall be deemed the acts of the Committee.

     Subject to the provisions of the Plan, the Committee shall have exclusive power to:

     (a) Select the Eligible Persons to participate in the Plan;

     (b) Determine the nature and extent of the Awards to be made to each Eligible Person;

     (c) Determine the time or times when Awards will be made to Eligible Persons;

     (d) Determine the duration of each Option Period and Restricted Period and the Settlement Date;

     (e) Determine the conditions to which the payment of Awards may be subject;

     (f) Prescribe the form of Stock Option Agreement or other form or forms evidencing Awards; and

     (g) Cause records to be established in which there shall be entered, from time to time as Awards are made to Participants, the date of each Award, the number of Incentive Stock Options, Nonqualified Stock Options, shares of Restricted Stock, Restricted Stock Unit Awards and other Stock-based Awards granted by the Committee to each Participant, the expiration date, the Settlement Date, the Option Period and the duration of any applicable Restricted Period.

     The Committee shall have the authority to interpret the Plan and, subject to the provisions of the Plan, to establish, adopt, or revise such rules and regulations and to make all such determinations relating to the Plan as it may deem necessary or advisable for the administration of the Plan. The Committee’s interpretation of the Plan or any documents evidencing Awards granted pursuant thereto and all decisions and determinations by the Committee with respect to the Plan shall be final, binding, and conclusive on all parties unless otherwise determined by the Board.

5. Grant of Awards; Shares Subject to the Plan

     The Committee may, from time to time, grant Awards of Options, Restricted Stock, Restricted Stock Unit Awards and other Stock-based Awards to one or more Eligible Persons; provided, however, that:

     (a) Subject to Section 12, the aggregate number of shares of Stock reserved and available for issuance pursuant to Awards under the Plan is 4,258,000, as increased annually on the date of each annual meeting of the Company’s stockholders following an IPO by an amount of shares equal to the lesser of (i) 500,000 shares of Stock or (ii) such lesser number of shares as determined by the Board;

     (b) Except as set forth in Section 5(d), such shares shall be deemed to have been used in payment of Awards only to the extent they are actually delivered and not where the Fair Market Value equivalent of such shares for a Stock-based Award is paid in cash. In the event any Award shall be surrendered, terminate, expire, or be forfeited, the number of shares of Stock no longer subject thereto shall thereupon be released and shall thereafter be available for new Awards under the Plan;

     (c) Stock delivered by the Company in settlement of Awards under the Plan may be authorized and unissued Stock or Stock held in the treasury of the Company or may be purchased on the open market or by private purchase; and

     (d) Following the date that the exemption from the application of Section 162(m) of the Code described in Section 15 (or any other exemption having similar effect) ceases to apply to Awards, no Participant may receive Options or stock appreciation rights under the Plan with respect to more than 125,000 shares of Stock in any one year. For this purpose, such shares shall be deemed to have been used in payment of Awards whether they are actually delivered or where the Fair Market Value equivalent of such shares for a stock appreciation right is paid in cash.

6. Eligibility

     Participation shall be limited to Eligible Persons who have received written notification from the Committee, or from a person designated by the Committee, that they have been selected to participate in the Plan.

7. Discretionary Grant of Stock Options

     The Committee is authorized to grant one or more Incentive Stock Options or Nonqualified Stock Options to any Eligible Person; provided, however, that no Incentive Stock Options shall be granted to any Eligible Person who is not an employee of the Company or a Subsidiary. Each Option so granted shall be subject to the following conditions, or to such other conditions as may be reflected in the applicable Stock Option Agreement.

     (a) Option price. The exercise price (“Option Price”) per share of Stock for each Option shall be set by the Committee at the time of grant but, subject to Section 7(e), shall not be less than the Fair Market Value of a share of Stock at the Date of Grant. Notwithstanding the foregoing, an Incentive Stock Option or Nonstatutory Stock Option may be granted with an exercise price lower than that set forth in the preceding sentence if such Option is granted pursuant to an assumption or substitution for another option in a manner consistent with the provisions of Section 424(a) of the Code.

     (b) Manner of exercise and form of payment. Options which have become exercisable may be exercised by delivery of written notice of exercise to the Committee accompanied by payment of the Option Price. The Option Price may be paid in cash or by bank check (acceptable to the Committee) or, in the discretion of the Committee, (i) in shares of Stock (valued at the Fair Market Value at the time the Option is exercised) having in the aggregate a value equal to the aggregate Option Price, (ii) in other property having a fair market value on the date of exercise equal to the aggregate Option Price, or (iii) following the date of the IPO, by delivering to the Committee a copy of irrevocable instructions to a stockbroker to deliver promptly to the Company an amount of sale or loan proceeds sufficient to pay the aggregate Option Price; provided, however, that the Company shall not directly or indirectly, extend or maintain credit, or arrange for the extension of credit, in the form of a personal loan to or for any director or executive officer of the Company under (iii) above, or otherwise, in violation of Section 402 of the Sarbanes-Oxley Act of 2002.

     (c) Option Period and Expiration. Options shall vest and become exercisable in such manner and on such date or dates determined by the Committee and shall expire after such period, not to exceed ten years, as may be determined by the Committee (the “Option Period”); provided, however, that, except in the event of death or Disability of the Holder or upon any corporate transaction described in clauses A, B or C of Section 12 in which such Option is not assumed or continued: (i) no Options that vest based on the satisfaction of Performance Goals shall vest at a rate more favorable to the Holder than over a one (1)-year period measured from the date of grant; and (ii) other than Options that vest based on the satisfaction of Performance Goals, no Option shall vest at a rate more favorable to the Holder than over a three (3)-year period measured from the date of grant (which vesting may be in monthly, quarterly or other ratable increments determined by the Board in its discretion). In no event shall an Option vest over a period of more than ten (10) years. Unless otherwise specifically determined by the Committee, the vesting of an Option shall occur only while the Participant is employed or rendering services to the Company or its Subsidiaries and all vesting shall cease upon a Holder’s termination of employment or services for any reason. If an Option becomes exercisable in installments, such installments or portions thereof which become exercisable shall remain exercisable until the Option expires. Unless otherwise stated in the applicable Option Agreement, the Option shall expire earlier than the end of the Option Period in the following circumstances:

(i)	If prior to the end of the Option Period, the Holder shall undergo a Normal Termination, the Option shall expire on the earlier of the last day of the Option Period or the date that is three months after the date of such Normal Termination. In such event, the Option shall remain exercisable by the Holder until its expiration, but only to the extent the Option was vested and exercisable at the time of such Normal Termination.
(ii)	If the Holder dies prior to the end of the Option Period and while still in the employ or service of the Company or a Subsidiary, or within three months of Normal Termination, the Option shall expire on the earlier of the last day of the Option Period or the date that is twelve months after the date of death of the Holder. In such event, the Option shall remain exercisable by the person or persons to whom the Holder’s rights under the Option pass by will or the applicable laws of descent and distribution until its expiration, but only to the extent the Option was vested and exercisable by the Holder at the time of death.
(iii)	If the Holder ceases employment or service with the Company and all Subsidiaries for reasons other than Normal Termination or death, the Option shall expire immediately upon such cessation of employment or service.

     (d) Stock Option Agreement — Other Terms and Conditions. Each Option granted under the Plan shall be evidenced by a Stock Option Agreement, which shall contain such provisions as may be determined by the Committee and, except as may be specifically stated otherwise in such Stock Option Agreement, which shall be subject to the following terms and conditions:

(i)	Each Option issued pursuant to this Section 7 or portion thereof that is exercisable shall be exercisable for the full amount or for any part thereof.
(ii)	Each share of Stock purchased through the exercise of an Option issued pursuant to this Section 7 shall be paid for in full at the time of the exercise. Each Option shall cease to be exercisable, as to any share of Stock, when the Holder purchases the share or when the Option expires.
(iii)	Options issued pursuant to this Section 7 shall not be transferable by the Holder except by will or the laws of descent and distribution and shall be exercisable during the Holder’s lifetime only by him; provided,

	however, that the Committee may at any time upon the request of a Holder allow for the transfer of any Option, subject to such conditions or limitations as it may establish.
(iv)	Each Option issued pursuant to this Section 7 shall vest and become exercisable by the Holder in accordance with the vesting schedule established by the Committee and set forth in the Stock Option Agreement.
(v)	Each Stock Option Agreement may contain a provision that, upon demand by the Committee for such a representation, the Holder shall deliver to the Committee at the time of any exercise of an Option issued pursuant to this Section 7 a written representation that the shares to be acquired upon such exercise are to be acquired for investment and not for resale or with a view to the distribution thereof. Upon such demand, delivery of such representation prior to the delivery of any shares issued upon exercise of an Option issued pursuant to this Section 7 shall be a condition precedent to the right of the Holder or such other person to purchase any shares. In the event certificates for Stock are delivered under the Plan with respect to which such investment representation has been obtained, the Committee may cause a legend or legends to be placed on such certificates to make appropriate reference to such representation and to restrict transfer in the absence of compliance with applicable federal or state securities laws.
(vi)	Each Incentive Stock Option Agreement shall contain a provision requiring the Holder to notify the Company in writing immediately after the Holder makes a disqualifying disposition of any Stock acquired pursuant to the exercise of such Incentive Stock Option. A disqualifying disposition is any disposition (including any sale) of such Stock before the later of (a) two years after the Date of Grant of the Incentive Stock Option or (b) one year after the date the Holder acquired the Stock by exercising the Incentive Stock Option.

     (e) Incentive Stock Option Grants to 10% Stockholders. Notwithstanding anything to the contrary in this Section 7, if an Incentive Stock Option is granted to a Holder who owns stock representing more than 10% of the voting power of all classes of stock of the Company or of a Subsidiary, the Option Period shall not exceed five years from the Date of Grant of such Option and the Option Price shall be at least 110% of the Fair Market Value (on the Date of Grant) of the Stock subject to the Option.

     (f) $100,000 Per Year Limitation for Incentive Stock Options. To the extent the aggregate Fair Market Value (determined as of the Date of Grant) of Stock for which Incentive Stock Options are exercisable for the first time by any Participant during any calendar year (under all plans of the Company and its Subsidiaries) exceeds $100,000, such excess Incentive Stock Options shall be treated as Nonqualified Stock Options.

     (g) Voluntary Surrender. The Committee may permit the voluntary surrender of all or any portion of any Nonqualified Stock Option issued pursuant to this Section 7 to be conditioned upon the granting to the Holder of a new Option for the same or a different number of shares as the Option surrendered or require such voluntary surrender as a condition precedent to a grant of a new Option to such Participant. Such new Option shall be exercisable at an Option Price, during an Option Period, and in accordance with any other terms or conditions specified by the Committee at the time the new Option is granted, all determined in accordance with the provisions of the Plan without regard to the Option Price, Option Period, or any other terms and conditions of the Nonqualified Stock Option surrendered.

8. Restricted Stock Awards

     (a) Award of Restricted Stock.

(i) The Committee shall have the authority (1) to grant Restricted Stock, (2) to issue or transfer Restricted Stock to Eligible Persons, and (3) to establish terms, conditions and restrictions applicable to such Restricted Stock, including the Restricted Period, which may differ with respect to each grantee, the time or times at which Restricted Stock shall be granted or become vested and the number of shares to be covered by each grant.

(ii)

The Holder of a Restricted Stock Award shall execute and deliver to the Company an Award agreement with respect to the Restricted Stock setting forth the restrictions applicable to such Restricted Stock. If the Committee determines that the Restricted Stock shall be held in escrow rather than delivered to the Holder pending the release of the applicable restrictions, the Holder additionally shall execute and deliver to the Company (i) an escrow agreement satisfactory to the Committee, and (ii) the appropriate blank stock powers with respect to the Restricted Stock covered by such agreements. If a Holder shall fail to execute a Restricted Stock agreement and, if applicable, an escrow agreement and stock powers, the Award shall be null and void. Subject to the restrictions set forth in Section 8(b), the Holder shall generally have the rights and privileges of a stockholder as to such Restricted Stock, including the right to vote such Restricted Stock. At the discretion of the Committee, cash dividends and stock dividends, if any, with respect to the Restricted Stock may be either currently paid to the Holder or withheld by the Company for the Holder’s account. Unless otherwise determined by the Committee no interest will accrue or be paid on the amount of any cash dividends withheld. Unless otherwise determined by the Committee, cash dividends or stock dividends so withheld by the Committee shall be subject to forfeiture to the same degree as the shares of Restricted Stock to which they relate.

(iii)

Upon the Award of Restricted Stock, the Committee shall cause a stock certificate registered in the name of the Holder to be issued and, if it so determines, deposited together with the stock powers with an escrow agent designated by the Committee. If an escrow arrangement is used, the Committee shall cause the escrow agent to issue to the Holder a receipt evidencing any stock certificate held by it registered in the name of the Holder.

     (b) Restrictions.

(i)

Restricted Stock awarded to a Participant shall be subject to the following restrictions until the expiration of the Restricted Period, and to such other terms and conditions as may be set forth in the applicable Award agreement: (1) if an escrow arrangement is used, the Holder shall not be entitled to delivery of the stock certificate; (2) the shares shall be subject to the restrictions on transferability set forth in the Award agreement; (3) the shares shall be subject to forfeiture to the extent provided in Section 8(d) and the Award Agreement and, to the extent such shares are forfeited, the stock certificates shall be returned to the Company, and all rights of the Holder to such shares and as a shareholder shall terminate without further obligation on the part of the Company.

(ii)

The Committee shall have the authority to remove any or all of the restrictions on the Restricted Stock whenever it may determine that, by reason of changes in applicable laws or other changes in circumstances arising after the date of the Restricted Stock Award, such action is appropriate.

     (c) Restricted Period. The Restricted Period of Restricted Stock shall commence on the Date of Grant and shall expire from time to time as to that part of the Restricted Stock indicated in a schedule established by the Committee and set forth in a written Award agreement, provided, however, that except in the event of death or Disability or upon any corporate transaction described in clauses A, B or C of Section 12: (i) no Restricted Stock Awards that vest based on the satisfaction of Performance Goals shall vest at a rate more favorable to the Holder than over a one (1)-year period measured from the date of grant; and (ii) other than Restricted Stock Awards that vest based on the satisfaction of Performance Goals, no Restricted Stock Award shall vest at a rate more favorable to the Holder than over a three (3)-year period measured from the date of grant (which vesting may be in monthly, quarterly or other ratable increments determined by the Board in its discretion). In no event shall a Restricted Stock Award vest over a period of more than ten (10) years.

     (d) Forfeiture Provisions. Except to the extent determined by the Committee and reflected in the underlying Award agreement, in the event a Holder terminates employment with the Company and all Subsidiaries during a Restricted Period, that portion of the Award with respect to which restrictions have not expired (“Non-Vested Portion”) shall be treated as follows.

(i) Upon the voluntary resignation of a Participant or discharge by the Company or a Subsidiary for Cause, the Non-Vested Portion of the Award shall be completely forfeited.

(ii)	Upon Normal Termination, the Non-Vested Portion of the Award shall be prorated for service during the Restricted Period and shall be received as soon as practicable following termination.
(iii)	Upon death, the Non-Vested Portion of the Award shall be prorated for service during the Restricted Period and paid to the Participant’s beneficiary as soon as practicable following death.

     (e) Delivery of Restricted Stock. Upon the expiration of the Restricted Period with respect to any shares of Stock covered by a Restricted Stock Award, the restrictions set forth in Section 8(b) and the Award agreement shall be of no further force or effect with respect to shares of Restricted Stock which have not then been forfeited. If an escrow arrangement is used, upon such expiration, the Company shall deliver to the Holder, or his beneficiary, without charge, the stock certificate evidencing the shares of Restricted Stock which have not then been forfeited and with respect to which the Restricted Period has expired (to the nearest full share) and any cash dividends or stock dividends credited to the Holder’s account with respect to such Restricted Stock and the interest thereon, if any.

     (f) Stock Restrictions. Each certificate representing Restricted Stock awarded under the Plan shall bear the following legend until the end of the Restricted Period with respect to such Stock:

     “Transfer of this certificate and the shares represented hereby is restricted pursuant to the terms of a Restricted Stock Agreement, dated as of                     , between Pharmion Corporation and. A copy of such Agreement is on file at the offices of Pharmion Corporation.”

     Stop transfer orders shall be entered with the Company’s transfer agent and registrar against the transfer of legended securities.

          9. Restricted Stock Unit Awards

     (a) General. Restricted Stock Unit Awards granted hereunder shall be in such form and shall contain such terms and conditions as the Committee shall deem appropriate, including the time or times at which Restricted Stock Unit Awards shall be granted or become vested and the number of shares of Stock to be covered by each grant, any of which terms and conditions may differ with respect to each grantee. The terms and conditions of each Restricted Stock Unit Award shall be evidenced by a Restricted Stock Unit Award Agreement. No shares of Stock shall be issued at the time a Restricted Stock Unit Award grant is made, and the Company will not be required to set aside a fund for the payment of any such Restricted Stock Unit Award; provided, however, that for purposes of Section 5(a) hereof, the shares of Stock subject to a Restricted Stock Unit shall be deemed reserved for issuance at the time such Restricted Stock Unit Award is granted.

     (b) Vesting. At the time of the grant of a Restricted Stock Unit Award, the Board may impose such restrictions or conditions to the vesting of the Restricted Stock Unit Award as it, in its sole discretion, deems appropriate, provided, however, that except in the event of death or Disability or upon any corporate transaction described in clauses A, B or C of Section 12: (i) no Restricted Stock Unit Awards that vest based on the satisfaction of Performance Goals shall vest at a rate more favorable to the Holder than over a one (1)-year period measured from the date of grant; and (ii) other than Restricted Stock Awards that vest based on the satisfaction of Performance Goals, no Restricted Stock Award shall vest at a rate more favorable to the Holder than over a three (3)-year period measured from the date of grant (which vesting may be in monthly, quarterly or other ratable increments determined by the Board in its discretion).

     (c) Settlement of Restricted Stock Unit Awards. Upon a date or dates on or following the vesting of a Restricted Stock Unit Award, as shall be determined by the Committee and set forth in a Participant’s Restricted Stock Unit Award Agreement (the “Settlement Date(s)”), unless earlier forfeited, the Company shall settle the Restricted Stock Unit Award by delivering a number of shares of Stock then vested and not otherwise forfeited under the Restricted Stock Unit Award. The Company may, in the Committee’s sole discretion, settle a Restricted Stock Unit Award in cash in lieu of the delivery of shares of Stock or partially in cash and partially in shares of Stock. A settlement in cash shall be based on the Fair Market Value of the shares of Stock otherwise to be delivered on the Settlement Date.

     (d) Creditor’s Rights. A Holder of a Restricted Stock Unit Award shall have no rights other than those of a general creditor of the Company. Restricted Stock Unit Awards represent an unfunded and unsecured obligation of the Company, subject to the terms and conditions of the applicable Restricted Stock Unit Award Agreement.

     (e) Forfeiture Provisions. Except to the extent determined by the Committee and reflected in the underlying Restricted Stock Unit Award Agreement, in the event a Holder terminates employment with the Company and all Subsidiaries for any reason prior to the vesting of any Restricted Stock Unit Awards, that portion of the Restricted Stock Unit Award that has not vested on the date Holder’s employment with the Company and all Subsidiaries is terminated shall be completely forfeited.

     (f) Additional Restrictions. At the time of the grant of a Restricted Stock Unit Award, the Board, as it deems appropriate, may impose such restrictions or conditions that delay the delivery of the shares of Stock (or their cash equivalent) subject to a Restricted Stock Unit Award to a time after the vesting of such Restricted Stock Unit Award.

     (g) Dividend Equivalents. Dividend equivalents may be credited in respect of shares of Stock covered by a Restricted Stock Unit Award, as determined by the Board and contained in the Restricted Stock Unit Award Agreement. At the sole discretion of the Board, such dividend equivalents may be converted into additional shares of Stock covered by the Restricted Stock Unit Award in such manner as determined by the Board. Any additional shares covered by the Restricted Stock Unit Award credited by reason of such dividend equivalents will be subject to all the terms and conditions of the underlying Restricted Stock Unit Award Agreement to which they relate.

     (h) Compliance with Section 409A of the Code. Notwithstanding anything to the contrary set forth herein, any Restricted Stock Unit Award granted under the Plan that is not exempt from the requirements of Section 409A of the Code shall contain such provisions so that such Restricted Stock Unit Award will comply with the requirements of Section 409A of the Code. Such restrictions, if any, shall be determined by the Board and contained in the Restricted Stock Unit Award Agreement evidencing such Restricted Stock Unit Award. For example, such restrictions may include, without limitation, a requirement that any Stock that is to be issued in a year following the year in which the Restricted Stock Unit Award vests must be issued in accordance with a fixed pre-determined schedule.

10. Other Stock-Based Awards

     The Committee may grant any other cash, stock or stock-related Awards to any eligible individual under this Plan that the Committee deems appropriate, including, but not limited to, stock appreciation rights, limited stock appreciation rights, phantom stock Awards, the bargain purchase of Stock and Stock bonuses. Any such benefits and any related agreements shall contain such terms and conditions as the Committee deems appropriate. Such Awards and agreements need not be identical. With respect to any benefit under which shares of Stock are or may in the future be issued for consideration other than prior services, the amount of such consideration shall not be less than the amount (such as the par value of such shares) required to be received by the Company in order to comply with applicable state law.

11. General

     (a) Additional Provisions of an Award. Awards under the Plan also may be subject to such other provisions (whether or not applicable to the benefit awarded to any other Participant) as the Committee determines appropriate including, without limitation, provisions to assist the Participant in financing the purchase of Stock upon the exercise of Options, provisions for the forfeiture of or restrictions on resale or other disposition of shares of Stock acquired under any Award, provisions giving the Company the right to repurchase shares of Stock acquired under any Award in the event the Participant elects to dispose of such shares, and provisions to comply with Federal and state securities laws and Federal and state tax withholding requirements. Any such provisions shall be reflected in the applicable Award agreement. Anything herein to the contrary notwithstanding, the Company shall not directly or indirectly extend or maintain credit, or arrange for the extension of credit, in the form of a personal loan to or for any director or executive officer of the Company through the Plan in violation of Section 402 of the Sarbanes-Oxley Act of 2002 (“Section 402 of SOX”), and to the extent that any form of payment would, in the opinion of the Company’s counsel, result in a violation of Section 402 of SOX, such form of payment shall not be available.

     (b) Privileges of Stock Ownership. Except as otherwise specifically provided in the Plan, no person shall be entitled to the privileges of stock ownership in respect of shares of Stock which are subject to Awards hereunder until such shares have been issued to that person.

     (c) Government and Other Regulations. The obligation of the Company to make payment of Awards in Stock or otherwise shall be subject to all applicable laws, rules, and regulations, and to such approvals by governmental agencies as may be required. Notwithstanding any terms or conditions of any Award to the contrary, the Company shall be under no obligation to offer to sell or to sell and shall be prohibited from offering to sell or selling any shares of Stock pursuant to an Award unless such shares have been properly registered for sale pursuant to the Securities Act with the Securities and Exchange Commission or unless the Company has received advice of counsel, satisfactory to the Company, that such shares may be offered or sold without such registration pursuant to an available exemption therefrom and the terms and conditions of such exemption have been fully complied with. The Company shall be under no obligation to register for sale under the Securities Act any of the shares of Stock to be offered or sold under the Plan. If the shares of Stock offered for sale or sold under the Plan are offered or sold pursuant to an exemption from registration under the Securities Act, the Company may restrict the transfer of such shares and may legend the Stock certificates representing such shares in such manner as it deems advisable to ensure the availability of any such exemption.

     (d) Tax Withholding. Notwithstanding any other provision of the Plan, the Company or a Subsidiary, as appropriate, shall have the right to deduct from all Awards cash and/or Stock, valued at Fair Market Value on the date of payment (or the Settlement Date, as applicable), in an amount necessary to satisfy all Federal, state or local taxes as required by law to be withheld with respect to such Awards and, in the case of Awards paid in Stock, the Holder or other person receiving such Stock may be required to pay to the Company or a Subsidiary, as appropriate, prior to delivery of such Stock, the amount of any such taxes which the Company or Subsidiary is required to withhold, if any, with respect to such Stock. Subject in particular cases to the disapproval of the Committee, the Company may accept shares of Stock of equivalent Fair Market Value in payment of such withholding tax obligations if the Holder of the Award elects to make payment in such manner.

     (e) Claim to Awards and Employment Rights. No individual shall have any claim or right to be granted an Award under the Plan or, having been selected for the grant of an Award, to be selected for a grant of any other Award. Neither the Plan nor any action taken hereunder shall be construed as giving any individual any right to be retained in the employ or service of the Company or a Subsidiary.

     (f) Designation and Change of Beneficiary. Each Participant may file with the Committee a written designation of one or more persons as the beneficiary who shall be entitled to receive the rights or amounts payable with respect to an Award due under the Plan upon his death. A Participant may, from time to time, revoke or change his beneficiary designation without the consent of any prior beneficiary by filing a new designation with the Committee. The last such designation received by the Committee shall be controlling; provided, however, that no designation, or change or revocation thereof, shall be effective unless received by the Committee prior to the Participant’s death, and in no event shall it be effective as of a date prior to such receipt. If no beneficiary designation is filed by the Participant, the beneficiary shall be deemed to be his or her spouse or, if the Participant is unmarried at the time of death, his or her estate.

     (g) Payments to Persons Other Than Participants. If the Committee shall find that any person to whom any amount is payable under the Plan is unable to care for his affairs because of illness or accident, or is a minor, or has died, then any payment due to such person or his estate (unless a prior claim therefor has been made by a duly appointed legal representative) may, if the Committee so directs the Company, be paid to his spouse, child, relative, an institution maintaining or having custody of such person, or any other person deemed by the Committee to be a proper recipient on behalf of such person otherwise entitled to payment. Any such payment shall be a complete discharge of the liability of the Committee and the Company therefor.

     (h) No Liability of Committee Members. No member of the Committee shall be personally liable by reason of any contract or other instrument executed by such member or on his behalf in his capacity as a member of the Committee nor for any mistake of judgment made in good faith, and the Company shall indemnify and hold harmless each member of the Committee and each other employee, officer or director of the Company to whom any duty or power relating to the administration or interpretation of the Plan may be allocated or delegated, against any cost or expense (including counsel fees) or liability (including any sum paid in settlement of a claim) arising out of any act or omission to act in connection with the Plan unless arising out of such person’s own fraud or willful bad faith; provided, however, that approval of the Board shall be required for the payment of any amount in settlement of a claim against any such person. The foregoing right of indemnification shall not be exclusive of any other rights of

indemnification to which such persons may be entitled under the Company’s Articles of Incorporation or By-Laws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless.

     (i) Governing law. The Plan shall be governed by and construed in accordance with the internal laws of the State of Colorado without regard to the principles of conflicts of law thereof.

     (j) Funding. No provision of the Plan shall require the Company, for the purpose of satisfying any obligations under the Plan, to purchase assets or place any assets in a trust or other entity to which contributions are made or otherwise to segregate any assets, nor shall the Company maintain separate bank accounts, books, records or other evidence of the existence of a segregated or separately maintained or administered fund for such purposes. Holders shall have no rights under the Plan other than as unsecured general creditors of the Company, except that insofar as they may have become entitled to payment of additional compensation by performance of services, they shall have the same rights as other employees under general law.

     (k) Nontransferability. A person’s rights and interest under the Plan, including amounts payable, may not be sold, assigned, donated, or transferred or otherwise disposed of, mortgaged, pledged or encumbered except, in the event of a Holder’s death, to a designated beneficiary to the extent permitted by the Plan, or in the absence of such designation, by will or the laws of descent and distribution; provided, however, the Committee may, in its sole discretion, allow for transfer of Awards other than Incentive Stock Options to other persons or entities, subject to such conditions or limitations as it may establish.

     (l) Reliance on Reports. Each member of the Committee and each member of the Board shall be fully justified in relying, acting or failing to act, and shall not be liable for having so relied, acted or failed to act in good faith, upon any report made by the independent public accountant of the Company and its Subsidiaries and upon any other information furnished in connection with the Plan by any person or persons other than himself.

     (m) Relationship to Other Benefits. No payment under the Plan shall be taken into account in determining any benefits under any pension, retirement, profit sharing, group insurance or other benefit plan of the Company or any Subsidiary except as otherwise specifically provided in such other plan.

     (n) Expenses. The expenses of administering the Plan shall be borne by the Company and its Subsidiaries.

     (o) Pronouns. Masculine pronouns and other words of masculine gender shall refer to both men and women.

     (p) Titles and Headings. The titles and headings of the sections in the Plan are for convenience of reference only, and in the event of any conflict, the text of the Plan, rather than such titles or headings shall control.

     (q) Termination of Employment. For all purposes herein, a person who transfers from employment or service with the Company to employment or service with a Subsidiary or vice versa shall not be deemed to have terminated employment or service with the Company or a Subsidiary.

     (r) Repurchase of Options or Shares. At any time prior to the IPO, the Board may in its discretion, and on terms it considers appropriate, require a Holder, or the executors or administrators of a Holder’s estate, to sell back to the Company all of his or her Restricted Stock, Options, or shares acquired through the expiration exercise of Options, in the event such optionee’s employment or service with the Company is terminated.

12. Changes in Capital Structure

     Awards granted under the Plan and any agreements evidencing such Awards, the maximum number of shares of Stock subject to all Awards under the Plan and the maximum number of shares of Stock with respect to which any one person may be granted Options or stock appreciation rights during any year may be subject to adjustment or substitution, as determined by the Committee in its sole discretion, as to the number, price or kind of a share of Stock or other consideration subject to such Awards or as otherwise determined by the Committee to be equitable (i) in the event of changes in the outstanding Stock or in the capital structure of the Company by reason of stock dividends, stock splits, reverse stock splits, recapitalizations, reorganizations, mergers, consolidations, combinations, exchanges, or other relevant changes in capitalization occurring after the Date of Grant of any such Award or (ii) in the event of any change in applicable laws or any change in circumstances which results in or would result in any

substantial dilution or enlargement of the rights granted to, or available for, Participants in the Plan, or (iii) for any other reason which the Committee, in its sole discretion, determines otherwise warrants equitable adjustment because it interferes with the intended operation of the Plan. Any adjustment to Incentive Stock Options under this Section 12 shall take into account that adjustments which constitute a “modification” within the meaning of Section 424(h)(3) of the Code may have an adverse tax impact on such Incentive Stock Options and the Committee may, in its sole discretion, provide for a different adjustment or no adjustment in order to preserve the tax effects of Incentive Stock Options. Unless otherwise determined by the Committee, in its sole discretion, any adjustments or substitutions under this Section 12 shall be made in a manner which does not adversely affect the exemption provided pursuant to Rule 16b-3 under the Exchange Act, if applicable. Further, following the date that the exemption from the application of Section 162(m) of the Code described in Section 15 (or any other exemption having similar effect) ceases to apply to Awards, with respect to Awards intended to qualify as “performance-based compensation” under Section 162(m) of the Code, such adjustments or substitutions shall, unless otherwise determined by the Committee in its sole discretion, be made only to the extent that the Committee determines that such adjustments or substitutions may be made without a loss of deductibility for such Awards under Section 162(m) of the Code. The Company shall give each Participant notice of an adjustment hereunder and, upon notice, such adjustment shall be conclusive and binding for all purposes.

     Notwithstanding the above, in the event of any of the following:

     A. The Company is merged or consolidated with another corporation or entity such that after such merger or consolidation the Company is not the surviving entity or the ultimate parent of the surviving entity;

     B. All or substantially all of the assets of the Company or the Common Stock are acquired by another person or entity;

     C. The reorganization or liquidation of the Company; or

     D. The Company shall enter into a written agreement to undergo an event described in clauses A, B or C above,

then the Committee may, in its discretion and upon at least 10 days advance notice to the affected persons, cancel any outstanding Awards and pay to the Holders thereof, in cash or Stock, the value of such Awards based upon the price per share of Stock received or to be received by other shareholders of the Company in the event. The terms of this Section 12 may be varied by the Committee in any particular Award agreement.

13. Nonexclusivity of the Plan

     Neither the adoption of this Plan by the Board nor the submission of this Plan to the stockholder of the Company for approval shall be construed as creating any limitations on the power of the Board to adopt such other incentive arrangements as it may deem desirable, including, without limitation, the granting of stock options otherwise than under this Plan, and such arrangements may be either applicable generally or only in specific cases.

14. Amendments and Termination

     The Board may at any time terminate the Plan. Subject to Section 12, with the express written consent of an individual Participant, the Board or the Committee may cancel or reduce or otherwise alter outstanding Awards if, in its judgment, the tax, accounting, or other effects of the Plan or potential payouts thereunder would not be in the best interest of the Company. The Board or the Committee may, at any time, or from time to time, amend or suspend and, if suspended, reinstate, the Plan in whole or in part; provided, however, that without further stockholder approval neither the Board nor the Committee shall make any amendment to the Plan which would:

     (a) Materially increase the maximum number of shares of Stock which may be issued pursuant to Awards, except as provided in Section 12;

     (b) Extend the maximum Option Period;

     (c) Extend the termination date of the Plan; or

     (d) Change the class of persons eligible to receive Awards under the Plan.

15. Effect of Section 162(m) of the Code

     The Plan, and all Awards issued thereunder, are intended to be exempt from the application of Section 162(m) of the Code, which restricts under certain circumstances the Federal income tax deduction for compensation paid by a public company to named executives in excess of $1 million per year. The exemption is based on Treasury Regulation Section 1.162-27(f) with the understanding that such regulation generally exempts from the application of Section 162(m) of the Code compensation paid pursuant to a plan that existed before a company becomes publicly held. Under such Treasury Regulation, this exemption is available to the Plan for the duration of the period that lasts until the earlier of (i) the expiration or material modification of the Plan, (ii) the exhaustion of the maximum number of shares of Stock available for Awards under the Plan, as set forth in Section 5(a), or (iii) the first meeting of shareholders of the Company at which directors are to be elected that occurs after the close of the third calendar year following the calendar year in which the IPO occurs. To the extent that the Committee determines as of the Date of Grant of an Award that (i) the Award is intended to comply with Section 162(m) of the Code and (ii) the exemption described above is no longer available with respect to such Award, such Award shall not be effective until any stockholder approval required under Section 162(m) of the Code has been obtained.

*            *            *

As adopted by the Board of Directors of
Pharmion Corporation as of
February 3, 2000, and amended and
restated effective as of February 9, 2006.

By:	/s/ PATRICK J. MAHAFFY
Title: President and Chief Executive Officer

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 333-111158, 333-122474, and 333-130200) and Form S-3 (333-122473) of Pharmion Corporation of our reports dated March 16, 2006, with respect to the consolidated financial statements and schedule of Pharmion Corporation, Pharmion Corporation management’s assessment of the effectiveness of internal control over financial reporting, and the effectiveness of internal control over financial reporting of Pharmion Corporation, included in this Annual Report (Form 10-K) for the year ended December 31, 2005.

/s/ Ernst & Young LLP

Denver, Colorado
March 16, 2006

EX-31.1

Exhibit 31.1

SECTION 302 CERTIFICATION — PRINCIPAL EXECUTIVE OFFICER

CERTIFICATIONS

     I, Patrick J. Mahaffy, certify that:

     1. I have reviewed this annual report on Form 10-K of Pharmion Corporation;

     2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

     3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

     4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

     a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

     b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

     c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

     d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

     5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors or (or persons performing the equivalent functions):

     a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

     b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 16, 2006

/s/ Patrick J. Mahaffy  

Patrick J. Mahaffy 

President and Chief Executive Officer
(Principal Executive Officer) 

EX-31.2

Exhibit 31.2

SECTION 302 CERTIFICATION — PRINCIPAL FINANCIAL OFFICER

CERTIFICATIONS

I, Erle T. Mast, certify that:

     1. I have reviewed this annual report on Form 10-K of Pharmion Corporation;

     2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

     3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

     4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

     a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

     b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

     c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

     d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

     5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors or (or persons performing the equivalent functions):

     a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

     b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 16, 2006

/s/ Erle T. Mast  

Erle T. Mast 

Chief Financial Officer
(Principal Financial Officer) 

EX-32.1

Exhibit 32.1

SECTION 906 CERTIFICATION

CERTIFICATION

     In connection with the Annual Report of Pharmion Corporation (the “Company”) on Form 10-K for the period ending December 31, 2005 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Patrick J. Mahaffy, the Chief Executive Officer of the Company, and Erle T. Mast, the Chief Financial Officer of the Company, each hereby certifies that:

1.	The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and
2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ PATRICK J. MAHAFFY	/s/ ERLE T. MAST
Patrick J. Mahaffy	Erle T. Mast
Chief Executive Officer	Chief Financial Officer
(Principal Executive Officer)	(Principal Financial Officer)
Dated: March 16, 2006	Dated: March 16, 2006