AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 13, 2001
REGISTRATION NO. 333-


SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

NORTHWEST BIOTHERAPEUTICS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

           DELAWARE                            2834                           94-3306718
(STATE OR OTHER JURISDICTION OF    (PRIMARY STANDARD INDUSTRIAL            (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION)      CLASSIFICATION CODE NUMBER)         IDENTIFICATION NUMBER)

21720 - 23RD DRIVE S.E., SUITE 100
BOTHELL, WASHINGTON 98021
(425) 608-3000
(ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

DANIEL O. WILDS
CHAIRMAN OF THE BOARD, PRESIDENT AND CHIEF EXECUTIVE OFFICER
21720 - 23RD DRIVE S.E., SUITE 100
BOTHELL, WA 98021
(425) 608-3000
(NAME, ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
AGENT FOR SERVICE)

COPIES TO:

       MICHAEL E. MORGAN                                  ROBERT M. SMITH
        JIM D. JOHNSTON                                DEWEY BALLANTINE LLP
        BRIAN B. DEFOE                            525 MIDDLEFIELD ROAD, SUITE 250
LANE POWELL SPEARS LUBERSKY LLP                  MENLO PARK, CALIFORNIA 94025-3460
 1420 FIFTH AVENUE, SUITE 4100                       TELEPHONE: (650) 462-7400
SEATTLE, WASHINGTON 98101-2338
   TELEPHONE: (206) 223-7000

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as

practicable after the effective date of this registration statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. [ ]

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement of the same offering. [ ] __________

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] __________

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] __________

If delivery of the prospectus is expected to be made pursuant to Rule 434, check the following box. [ ]

CALCULATION OF REGISTRATION FEE

-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
                                                                PROPOSED MAXIMUM
                  TITLE OF EACH CLASS OF                       AGGREGATE OFFERING          AMOUNT OF
                SECURITIES TO BE REGISTERED                         PRICE(1)            REGISTRATION FEE
-----------------------------------------------------------------------------------------------------------
Common Stock, $0.001 par value.............................       $48,300,000               $12,500
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------

(1) Estimated for purposes of calculating the registration fee in accordance with Rule 457(o) under the Securities Act.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATE THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(a), MAY DETERMINE.



THE INFORMATION IN THIS PRELIMINARY PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PRELIMINARY PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IS NOT SOLICITING OFFERS TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.

SUBJECT TO COMPLETION, DATED AUGUST 13, 2001

PROSPECTUS

SHARES

LOGO

COMMON STOCK


This is the initial public offering of shares of the common stock of Northwest Biotherapeutics, Inc. We are selling all of the shares of our common stock offered under this prospectus. We anticipate that the initial public offering price will be between $ and $ per share.

There is currently no public market for our shares. We intend to apply to have our Common Stock approved for listing on the Nasdaq National Market under the symbol "NWBT."

INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS" BEGINNING ON PAGE 7 TO READ ABOUT RISKS YOU SHOULD CONSIDER CAREFULLY BEFORE BUYING SHARES OF OUR COMMON STOCK.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.


                                                              PER SHARE     TOTAL
                                                              ---------    -------
Public offering price.......................................   $           $
Underwriting discounts and commissions......................   $           $
Proceeds, before expenses, to Northwest Biotherapeutics.....   $           $


We have granted the underwriters a 30-day option to purchase up to an additional shares of common stock from us at the initial public offering price less the underwriting discounts. The underwriters expect to deliver the shares on or about .

C.E. UNTERBERG, TOWBIN

The date of this prospectus is , 2001.


PROSPECTUS SUMMARY

The following summary highlights the more detailed information and the consolidated financial statements and the accompanying notes appearing elsewhere in this prospectus. In addition to this summary, we urge you to read this entire prospectus carefully, especially the discussion of risks of investing in our common stock set forth under the caption "Risk Factors" and the consolidated financial statements and accompanying notes, before you decide to buy our common stock.

OVERVIEW

We are a biotechnology company focused on discovering, developing, and commercializing immunotherapy products that safely generate and enhance immune system responses to effectively treat cancer. The American Cancer Society estimates that in the United States, cancer will strike approximately 50% of men and 33% of women. It is the second largest cause of death in the United States after heart disease and is expected to result in approximately 553,000 deaths during 2001. The direct medical costs related to treating cancer in the United States were estimated to be $60 billion in 2000.

Currently approved cancer treatments are frequently ineffective and can cause undesirable side effects. We combine our expertise in dendritic cell biology, monoclonal antibodies, immunology and antigen discovery with our proprietary technologies to develop innovative cancer therapies. These therapies are derived from our two versatile product development programs, DCVax and HuRx.

DCVax. DCVax is a dendritic cell-based cancer immunotherapy platform. Our DCVax therapies are designed to safely elicit potent immune responses that eliminate cancer cells. We are currently developing four DCVax product candidates. Our lead DCVax product candidate, DCVax-Prostate, is a prostate cancer treatment for which we are planning a Phase III clinical trial. We have observed stabilization of disease in 54% of the patients in our Phase I/II clinical trial, and a PSMA-specific immune response to DCVax-Prostate in 75% of patients. To date, we have observed no significant adverse side effects from DCVax-Prostate. Our second DCVax product candidate, DCVax-Brain, is moving towards a Phase II clinical trial for glioblastoma, a lethal form of brain cancer. Our third DCVax product candidate, DCVax-Lung, is moving towards a Phase I clinical trial for non-small cell carcinoma, the most prevalent form of lung cancer. Our fourth DCVax product candidate is designed to treat renal cancer and is in pre-clinical development.

HuRx. HuRx is our fully human monoclonal antibody-based cancer therapy platform. In partnership with Medarex, Inc., we have assembled an initial portfolio of four HuRx product candidates targeted to treat several types of cancers. Our lead HuRx product candidate, HuRx-Prostate, is a fully human antibody-based therapy for the treatment of prostate cancer. HuRx-Prostate is currently being manufactured for our anticipated Phase I clinical trial. We have observed significant anti-cancer activity in tests of human prostate cancer cell cultures treated with HuRx-Prostate. Our other HuRx product candidates are in pre-clinical development.

DCVAX/HURX: THERAPEUTIC ADVANTAGES

DCVax and HuRx are designed to stimulate and enhance a patient's immune response to cancer. We believe that DCVax and HuRx products can overcome the limitations of current cancer therapies and offer cancer patients safe and effective treatment alternatives, alone or in combination with other therapies.

DCVAX

Our DCVax platform combines our expertise in dendritic cell biology, immunology, and antigen discovery with our proprietary technology to develop therapeutic products that stimulate beneficial immune responses to treat cancer. We believe that DCVax has the following significant advantages over current therapies:

- Activates The Natural Immune System. Our DCVax products are designed to elicit a natural immune response. We believe that our pre-clinical and clinical trials have demonstrated that our DCVax product candidates can train a patient's own Killer T cells to seek and destroy specifically targeted

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cancer cells. Our clinical trials have shown that DCVax-Prostate stimulates the body to produce antibodies that bind to cancer-associated antigens and potentially destroy cancer cells marked by these antigens.

- Broad Clinical Applicability. We intend to apply our DCVax platform to treat a wide variety of cancers. The DCVax platform affords the flexibility to target many different forms of cancer through the pairing of dendritic cells with cancer-associated antigens, fragments of cancer-associated antigens or deactivated whole cancer cells.

- No Significant Adverse Side Effects Or Toxicity. Our lead DCVax product candidate, DCVax-Prostate, has shown no significant adverse side effects in over 110 clinically administered injections. We believe that we minimize the potential for toxicity by using the patient's own dendritic cells to create our DCVax products. Additionally, because our DCVax products are designed to target the cancer-associated antigens in the patient, we believe they minimize collateral damage to healthy cells.

- Rapid Development. We believe that our DCVax technology, which has been safely administered in a Phase I/II clinical trial for prostate cancer, will enable us to rapidly move new potential products into clinical trials within six to nine months of concept, subject to FDA approval.

- Ease Of Administration. We initially collect a patient's white blood cells in a single standard outpatient procedure called leukapheresis. After patient-specific manufacturing and quality control testing, each small dose of a DCVax product is administered by a simple intradermal injection in an outpatient setting.

- Complementary With Other Treatments. Our DCVax products are designed to stimulate the patient's own immune system to safely target cancer cells. Consequently, we believe these products may be complementary to traditional therapies such as chemotherapy, radiation therapy, hormone therapy and surgery.

HURX

Our HuRx platform combines our expertise in monoclonal antibodies, immunology and antigen discovery with strategic partners who have expertise in fully human monoclonal antibody development and production. We are co-developing our initial HuRx products with Medarex, Inc. We believe this strategic partnership will enable us to create proprietary fully human monoclonal antibody-based cancer therapies. We believe that products derived from our HuRx platform will have the following advantages over current therapies:

- Fully Human Antibodies. Currently approved monoclonal antibody-based therapies contain mouse protein or fragments of such proteins. Consequently, these therapies have the potential to elicit unwanted immune responses against the mouse proteins or protein fragments. Our HuRx products are based on monoclonal antibodies that are fully human, and thus do not contain any mouse proteins. As a result, we expect these products to exhibit a favorable safety profile and no unwanted immune response against the HuRx antibody-based therapy itself.

- Rapid Development. Our strategic partnership with Medarex enables us to rapidly develop product candidates from our antigen discovery program. Consequently, we believe that, subject to FDA approval, we can progress from antigen discovery to clinical trials for each new HuRx product candidate in twelve months or less.

- Cancer Specificity. Our proprietary antigens are significantly over-expressed in cancer cells. Our HuRx antibodies bind to these targeted cancer-associated antigens and potentially destroy cancer cells marked by these antigens. To date, we have successfully identified four clinically validated antigens associated with six different cancers.

- Multiple Therapeutic Applications. We believe that HuRx antibodies may be used as stand-alone products that bind to cancer-associated antigens and potentially destroy cancer cells marked by these antigens. HuRx antibodies may also be capable of enabling the targeted delivery of existing therapies such as radiation and cytotoxic chemicals. The inherent toxic effects of cytotoxic agents and

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radioactive materials on normal tissue are minimized by coupling these agents to antibodies that have a high degree of specificity to cancer cells.

- Commercialization. We believe that our HuRx antibodies may be manufactured in large quantities within a relatively short period of time. As a result, the manufacturing of these antibodies can be scaled to meet market demand. Antibody-based products are typically characterized by an inherent stability, resulting in a commercially acceptable shelf-life.

- Complementary With Other Treatments. We believe that our HuRx products will be suitable for use alone or in combination with currently approved therapies due to their complementary cell-killing properties.

DCVAX/HURX: CLINICAL AND PRECLINICAL DEVELOPMENT PROGRAMS

We are developing DCVax and HuRx-based therapeutic products for the treatment of cancer. We have completed or largely completed our research and pre-clinical testing phases of four programs, one of which is in clinical trials. We intend to submit INDs to the FDA to enable us to begin clinical testing for the other three programs. Additionally, we have numerous projects in pre-clinical research and development. We are also actively engaged in the research and discovery of cancer-associated antigens and fragments of cancer- associated antigens that can be used with our DCVax and HuRx platforms. The following table summarizes the targeted indications and status of our DCVax and HuRx product candidates:

-------------------------------------------------------------------------------------------------------
   PRODUCT CANDIDATE             TARGET INDICATION                            STATUS
-------------------------------------------------------------------------------------------------------
  DCVAX PLATFORM
-------------------------------------------------------------------------------------------------------
  DCVax-Prostate          Prostate cancer                  Phase III -- protocol submitted to the FDA
  DCVax-Brain             Glioblastoma                     Phase II  -- trial planned to begin Q2 2002
  DCVax-Lung              Non-small cell lung cancer       Phase I  -- trial planned to begin Q1 2002
  DCVax-Renal             Renal Cancer                     Pre-clinical
-------------------------------------------------------------------------------------------------------
  HURX PLATFORM
-------------------------------------------------------------------------------------------------------
  HuRx-Prostate           Prostate cancer                  Phase I  -- trial planned to begin Q3 2002
  HuRx-Lung               Small cell lung cancer           Pre-clinical
  HuRx-Breast             Breast cancer                    Pre-clinical
  HuRx-Brain              Glioblastoma                     Pre-clinical
  HuRx-Colon              Colon cancer                     Pre-clinical
  HuRx-Melanoma           Melanoma                         Pre-clinical
  Flt4                    Prostate cancer                  Pre-clinical
-------------------------------------------------------------------------------------------------------

OUR STRATEGY

Our objective is to become the leading biotechnology company focused on immunotherapy products designed to effectively treat cancer. To achieve this objective, we are pursuing the following strategic initiatives:

- Maximize Speed To Market Of DCVax Prostate. We intend to bring DCVax-Prostate to market after entering and successfully completing a Phase III clinical trial for patients with prostate cancer. Because DCVax-Prostate addresses late-stage prostate cancer, we plan to apply to the FDA for fast-track designation.

- Expand DCVax To Multiple Cancers. We are also applying our DCVax platform to brain, lung and renal cancers. We have conducted extensive pre-clinical studies on the applicability of our DCVax platform to each of these cancers. Subject to FDA approval, we expect to begin a Phase II clinical trial for DCVax-Brain and a Phase I clinical trial for DCVax-Lung within six months.

- Establish A Competitive Position In Antibody-Based Cancer Therapies. We are expanding the development of our HuRx products through our strategic partnership with Medarex. We have

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completed extensive pre-clinical studies on HuRx-Prostate, our lead HuRx product candidate. Subject to FDA approval, we expect to begin a Phase I clinical trial within twelve months.

- Diversify Our Product Portfolio. We will continue to utilize our antigen discovery expertise to identify and validate new cancer-associated antigens that can be paired with our DCVax and HuRx technologies. In addition, we intend to accelerate the development of a broader product portfolio by licensing or acquiring complementary technologies, patents and product candidates.

- Establish Strategic Partnerships. We intend to enter into additional strategic partnerships with various corporate collaborators and academic research institutions to augment our development and commercialization efforts. Although we intend to retain rights to products that we can commercialize ourselves, we intend to collaborate with strategic partners to support the development and commercialization of some of our products. We may also enter into strategic partnerships to obtain value for our proprietary DCVax and HuRx technologies outside our areas of interest.


Our principal executive offices are located at 21720-23rd Drive S.E., Suite 100, Bothell, Washington 98021, and our telephone number is (425) 608-3000. Our corporate website is www.nwbio.com. We do not intend the information contained on our website to be part of this prospectus. We were incorporated in Delaware in July, 1998 as the successor to Northwest Biotherapeutics, LLC, a limited liability company formed in Washington in March 1996.

DCVax(TM) and HuRx(TM) are our trademarks. This prospectus also refers to trademarks and trade names of other organizations.

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THE OFFERING

The following information assumes that the underwriters do not exercise their over-allotment option to purchase additional shares in the offering.

Common stock we are offering........                    shares

Common stock to be outstanding after
the offering........................                    shares

Proposed Nasdaq National Market
symbol..............................     NWBT

Use of proceeds.....................     To fund clinical trial activities,
                                         pre-clinical research and development
                                         activities and contract manufacturing
                                         activities and to pay a fee to
                                         Northwest Hospital, with any remainder
                                         to fund general corporate purposes,
                                         including capital expenditures, and
                                         working capital to fund anticipated
                                         operating losses. See "Use Of
                                         Proceeds."

Unless otherwise indicated, all information in this prospectus has been adjusted to reflect:

- the exercise of warrants to acquire 1,101,402 shares of our common stock at the closing of this offering pursuant to an agreement with the holder;

- the conversion of a note payable and related accrued interest into 168,937 shares of series D convertible preferred stock and exercise of warrants to acquire 33,000 shares of series D convertible preferred stock at the closing of this offering pursuant to an agreement with the holder, and the subsequent automatic conversion of such series D convertible preferred stock into an aggregate of 201,937 shares of our common stock upon the closing of this offering; and

- the conversion of series A convertible preferred stock in connection with an agreement with the holder and the automatic conversion of all other outstanding shares of our convertible preferred stock into 9,776,321 shares of our common stock upon the closing of the offering.

The number of shares of common stock to be outstanding after the offering is based on the number of shares outstanding as of June 30, 2001, adjusted as noted above, and excludes as of June 30, 2001:

- 1,647,340 shares of convertible preferred stock issuable upon the exercise of outstanding warrants at a weighted-average exercise price of $4.61 per share, of which warrants to acquire 1,315,908 shares at a weighted-average exercise price of $4.95 per share will expire upon completion of this offering if not previously exercised;

- 10,000 shares of common stock issuable upon the exercise of outstanding warrants at an exercise price of $5.50 per share;

- 158,600 shares of common stock issuable upon the exercise of outstanding options issued to certain officers at a weighted-average exercise price of $1.25 per share;

- 402,851 shares of common stock issuable upon the exercise of outstanding options under our 1998 Stock Option Plan at a weighted-average exercise price of $0.93 per share;

- 586,166 shares of common stock issuable upon the exercise of outstanding options under our 1999 Executive Stock Option Plan at a weighted-average exercise price of $0.85 per share; and

- 7,242 shares of common stock available for future grant under our 1998 Stock Option Plan, 1,800,000 shares available for future grant under our 2001 Stock Option Plan, 200,000 shares available for future grant under our 2001 Nonemployee Director Stock Incentive Plan and 500,000 shares available for future purchase under our Employee Stock Purchase Plan.

In addition, we have agreed to issue an additional shares if the underwriters exercise their over-allotment option in full, which we describe in "Plan Of Distribution." If the underwriters exercise this option in full, shares of our common stock will be outstanding after this offering.

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SUMMARY FINANCIAL DATA

Our summary financial data are presented in the following table to aid you in your analysis of a potential investment in our common stock. You should read these data in conjunction with "Management's Discussion And Analysis Of Financial Condition And Results Of Operations," our consolidated financial statements and the notes to those consolidated financial statements appearing elsewhere in this prospectus. The pro forma net loss per share data give effect to the automatic conversion, upon completion of this offering, of all outstanding shares of our series B, C and D convertible preferred stock into shares of common stock as if it occurred on January 1 of the respective period or the dates of original issuance, if later.

                                        PERIOD FROM
                                       MARCH 18, 1996
                                        (INCEPTION)                                                    SIX MONTHS ENDED
                                          THROUGH                YEARS ENDED DECEMBER 31,                  JUNE 30,
                                        DECEMBER 31,     -----------------------------------------    ------------------
                                            1996          1997       1998       1999        2000       2000       2001
                                       --------------    -------    -------    -------    --------    -------    -------
                                                             (IN THOUSANDS, EXCEPT PER SHARE DATA)       (UNAUDITED)
STATEMENT OF OPERATIONS DATA:
TOTAL REVENUES.......................     $   227        $   479    $   385    $   211    $    156    $   116    $    60
OPERATING COSTS AND EXPENSES
  Cost of research material sales....          --             --         81         46          51         44         40
  Research and development...........         660          1,966      2,860      2,885       3,114      1,276      2,327
  General and administrative.........         697            884      1,765      2,535       3,682      1,531      2,173
  Depreciation and amortization......         104            142        164        196         199         90        230
                                          -------        -------    -------    -------    --------    -------    -------
    Total operating costs and
      expenses.......................       1,461          2,992      4,870      5,662       7,046      2,941      4,770
                                          -------        -------    -------    -------    --------    -------    -------
    Loss from operations.............      (1,234)        (2,513)    (4,485)    (5,451)     (6,890)    (2,825)    (4,710)
OTHER INCOME (EXPENSE), NET
  Interest expense...................          --            (47)      (262)      (319)     (6,056)    (1,795)      (301)
  Other..............................           1             --         28        161         166        102         80
                                          -------        -------    -------    -------    --------    -------    -------
  Net loss...........................      (1,233)        (2,560)    (4,719)    (5,609)    (12,780)    (4,518)    (4,931)
    Accretion of redemption value of
      mandatorily redeemable
      membership units and preferred
      stock..........................        (106)          (275)      (329)      (354)       (430)      (205)      (219)
    Beneficial conversion feature of
      series D convertible preferred
      stock..........................          --             --         --         --          --         --     (4,274)
                                          -------        -------    -------    -------    --------    -------    -------
    Net loss applicable to common
      stockholders...................     $(1,339)       $(2,835)   $(5,048)   $(5,963)   $(13,210)   $(4,723)   $(9,424)
                                          =======        =======    =======    =======    ========    =======    =======
Net loss per share -- basic and
  diluted(a).........................     $ (0.61)       $ (1.29)   $ (2.29)   $ (2.71)   $  (6.35)   $ (2.14)   $ (4.87)
                                          =======        =======    =======    =======    ========    =======    =======
Weighted average shares used in
  computing basic and diluted net
  loss per share(a)..................       2,203          2,203      2,203      2,203       2,080      2,203      1,935
                                          =======        =======    =======    =======    ========    =======    =======
Pro forma net loss per share - basic
  and diluted(b).....................                                                        (1.82)                (1.10)
                                                                                          ========               =======
Weighted average shares used in
  computing basic and diluted pro
  forma net loss per share...........                                                        7,244                 8,557
                                                                                          ========               =======

                                                                          DECEMBER 31,                         JUNE 30,
                                                      -----------------------------------------------------    --------
                                                       1996       1997       1998        1999        2000        2001
                                                      -------    -------    -------    --------    --------    --------
                                                                               (IN THOUSANDS)
BALANCE SHEET DATA:
Cash and cash equivalents...........................  $   121    $   264    $   638    $    649    $    411    $  7,732
Working capital.....................................       28        108     (1,176)       (209)     (4,488)      3,584
Total assets........................................      730        828      1,400       2,519       4,629      11,814
Long-term obligations, net of current portion and
  discounts.........................................       --      1,463      2,834       2,881         801         291
Mandatorily redeemable convertible preferred
  stock.............................................    1,975      3,380      3,709       4,063       4,493       4,712
Convertible preferred stock.........................       --         --      2,088       9,341      16,444      26,707
Total stockholders' deficit.........................   (1,338)    (4,172)    (9,220)    (14,790)    (22,515)    (24,540)


(a) Net loss per share and weighted average shares outstanding for periods prior to our incorporation in July 1998 are calculated based on the conversion of LLC units to common shares at the time of incorporation. In 1998, we effected a stock split of approximately 1:5.507, for which all prior periods have been adjusted.

(b) Pro forma net loss per share is calculated as if shares of series B, C and D convertible preferred stock were converted to common shares at the beginning of the periods presented or upon issuance, if later.

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RISK FACTORS

You should carefully consider the following risks and all of the other information contained in this prospectus before you decide whether to buy our common stock. We have included a discussion of each material risk that we have identified as of the date of this prospectus. However, additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business operations. If any of the following risks actually occurs, our business, financial condition or results of operations could suffer. In such an event, the trading price of our common stock could decline, and you could lose all or part of the money you paid to buy our common stock.

RISKS RELATED TO OUR BUSINESS

WE EXPECT TO CONTINUE TO INCUR SUBSTANTIAL LOSSES, AND WE MAY NEVER ACHIEVE PROFITABILITY.

We have incurred net losses every year since our inception in March 1996 and, as of June 30, 2001, we had a deficit accumulated during the development stage of $37.8 million. We had net losses applicable to common stockholders as follows:

- $5.0 million in 1998;

- $6.0 million in 1999;

- $13.2 million in 2000; and

- $9.4 million in the six months ended June 30, 2001.

We expect that these losses will continue and anticipate negative cash flow for the foreseeable future. We expect that our operating expenses will significantly increase in the near term, due in part to significant investments we intend to make in research and development and clinical trials. Consequently, we will need to generate significant additional revenue to achieve profitability. We may never achieve profitability. Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis.

AS A COMPANY IN THE EARLY STAGE OF DEVELOPMENT WITH AN UNPROVEN BUSINESS STRATEGY, OUR LIMITED HISTORY OF OPERATIONS MAKES AN EVALUATION OF OUR BUSINESS AND PROSPECTS DIFFICULT.

We have had a limited operating history and are at an early stage of development. We cannot assure you that we will be able to achieve revenue growth in the future. We have generated the following limited revenues:

- $385,000 in 1998;

- $211,000 in 1999;

- $156,000 in 2000; and

- $60,000 in the six months ended June 30, 2001.

As a result of these factors, it is difficult to evaluate our prospects, and our future success is more uncertain than if we had a longer or more proven history of operations.

WE WILL NEED TO RAISE ADDITIONAL CAPITAL THAT MAY NOT BE AVAILABLE, WHICH COULD ADVERSELY AFFECT OUR OPERATIONS.

We will need to raise more money to continue our operations. We may seek additional funds from public and private stock offerings, strategic partnerships and licenses, borrowing under lease lines of credit or other sources. Additional capital may not be available on terms acceptable to us, or at all. Any additional equity financing may be dilutive to stockholders, and debt financing, if available, may include restrictive covenants. If we cannot raise more money when needed, we may have to reduce our capital expenditures, scale back our development of new product candidates, reduce our workforce or license to others product candidates that we otherwise would seek to commercialize ourselves. Moreover, our cash used in operations has exceeded cash

7

generated from operations in each period since our inception. For example, we used approximately $6.4 million of net cash in operating activities in 2000 and approximately $4.3 million for the six months ended June 30, 2001. We expect net cash used in operations to increase in the near future as we make significant investments in research and development and clinical trials. We expect that our current resources, together with the proceeds from this offering, will be sufficient to fund operations through 2002.

FAILURE TO OBTAIN REGULATORY APPROVAL FOR ONE OR MORE OF OUR PRODUCT CANDIDATES COULD SIGNIFICANTLY HARM OUR BUSINESS.

All of our product candidates are in early stages of development. We expect that none of our product candidates will be commercially available in the near term. Significant further research and development, financial resources and personnel will be required to develop commercially viable products and obtain regulatory approvals. Much of our efforts and expenditures over the next few years will be devoted to our lead product candidates, DCVax-Prostate, DCVax-Brain, DCVax-Lung and HuRx-Prostate. Success in pre-clinical and early clinical trials does not ensure that subsequent large-scale trials will be successful nor is it a basis for predicting final results. A number of companies in the biotechnology industry have suffered significant setbacks in advanced clinical trials, even after promising results have been achieved in earlier trials. Failure to obtain Food and Drug Administration, or FDA, approval for one or more of our product candidates could significantly harm our business.

CLINICAL TRIALS FOR OUR PRODUCT CANDIDATES ARE EXPENSIVE AND TIME CONSUMING, AND THEIR OUTCOME IS UNCERTAIN.

The process of obtaining and maintaining regulatory approvals for new therapeutic products is expensive, lengthy and uncertain. It can vary substantially, based upon the type, complexity and novelty of the product involved. Accordingly, any of our current or future product candidates could take a significantly longer time to gain regulatory approval than we expect or may never gain approval, either of which could reduce our anticipated revenues and delay or terminate the potential commercialization of our product candidates.

We have limited experience in conducting and managing clinical trials. We rely on third parties, including our strategic partners, to assist us in managing and monitoring clinical trials. Our reliance on these third parties may result in delays in completing, or failure to complete, these trials if the third parties fail to perform under the terms of our agreements with them.

WE MAY CHOOSE TO, OR MAY BE REQUIRED TO, SUSPEND, REPEAT OR TERMINATE OUR
CLINICAL TRIALS IF THEY ARE NOT CONDUCTED IN ACCORDANCE WITH REGULATORY REQUIREMENTS, THE RESULTS ARE NEGATIVE OR INCONCLUSIVE, OR THE TRIALS ARE NOT WELL DESIGNED.

Clinical trials must be conducted in accordance with the FDA's regulations and guidelines and are subject to oversight by the FDA and institutional review boards, or IRBs, at the medical institutions where the clinical trials are conducted. In addition, clinical trials must be conducted with product candidates produced under the FDA's current Good Manufacturing Practices, or cGMPs, and may require large numbers of test patients. Patient enrollment is a function of many factors, including the size of the patient population, the proximity of patients to clinical sites, the eligibility criteria for the trial, the existence of competing clinical trials and the availability of alternative or new treatments. Clinical trials may be suspended by the FDA or an IRB at any time if the trials are not being conducted in accordance with FDA or IRB requirements, or if the trials expose patients to unacceptable health risks.

In addition, we, the IRB, or the FDA might delay or halt our clinical trials of a product candidate for various reasons, including but not limited to the following:

- the product candidate may have significant adverse side effects;

- the time required to determine whether the product candidate is effective may be longer than expected;

- fatalities or other adverse events may arise during a clinical trial due to medical problems that may or may not be related to clinical trial treatments;

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- the product candidate may not achieve the level of efficacy required by the FDA;

- there may be insufficient patient enrollment in the clinical trials; or

- we may be unable to produce sufficient quantities of the product candidate to complete the trials.

BECAUSE WE ARE NOT CERTAIN THAT WE WILL OBTAIN NECESSARY REGULATORY APPROVALS TO MARKET OUR PRODUCTS IN THE UNITED STATES AND FOREIGN JURISDICTIONS, WE CANNOT PREDICT WHETHER OR WHEN WE WILL BE PERMITTED TO COMMERCIALIZE OUR PRODUCTS.

The biotechnology and biopharmaceutical industries are subject to stringent regulation by a wide range of authorities. We cannot predict whether we will obtain regulatory approval for any product candidate we develop. We cannot market any of our products in the United States until they have completed rigorous pre-clinical testing and clinical trials and the FDA's extensive regulatory approval process. Satisfaction of regulatory requirements typically takes many years, is dependent upon the type, complexity, and novelty of the product and requires the expenditure of substantial resources for research and development, testing, manufacturing, quality control, labeling and promotion of drugs. Neither the FDA nor international regulatory authorities have approved dendritic cell-based immunotherapies for commercialization, and we do not know whether our research and clinical approaches to developing new cancer therapies will lead to products that the FDA will consider safe and effective for indicated uses. We must receive approval from the FDA of an Investigational New Drug, or IND, application before commencing clinical trials in humans. Clinical trials are subject to oversight by IRBs and the FDA and:

- must conform with the FDA's good laboratory practice regulations;

- must meet requirements for informed consent;

- must meet requirements for good clinical practices;

- are subject to continuing FDA oversight; and

- may require large numbers of test subjects.

Before receiving FDA approval to market a product, we must demonstrate that the product is safe and effective for the patient population that will be treated. If we fail to comply with applicable FDA or other regulatory requirements, we could be subject to criminal prosecution, civil penalties, recall or seizure of products, total or partial suspension of production or injunction, as well as other regulatory actions against our product candidates or us.

Outside the United States, our ability to market a product will depend upon receiving marketing approvals from the appropriate regulatory authorities. This foreign regulatory approval process includes all of the risks associated with FDA approval described above.

OUR PRODUCT CANDIDATES MAY NOT GAIN MARKET ACCEPTANCE AMONG PHYSICIANS, PATIENTS, HEALTH CARE PAYORS AND THE MEDICAL COMMUNITY.

The degree of market acceptance of any approved product will depend on a number of factors, including:

- cost-effectiveness;

- potential advantage over alternative treatments; and

- marketing and distribution support.

In addition, government health administrative authorities, private health insurers and other organizations are increasingly challenging both the need for and the price of new medical products and services. Consequently, uncertainty exists as to the reimbursement status of newly approved therapeutics. For these and other reasons, physicians, patients, third-party payors and the medical community may not accept and utilize any product candidates that we develop and, even if they do, adequate levels of reimbursement may not be available to enable us to realize an appropriate return on our investment in research and product development.

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OUR SUCCESS PARTIALLY DEPENDS ON EXISTING AND FUTURE STRATEGIC PARTNERS.

The success of our business strategy partially depends upon our ability to develop and maintain multiple strategic partnerships and to manage them effectively. Therefore, our success depends partially upon the performance of our strategic partners. We cannot directly control the amount and timing of resources that our existing or future strategic partners devote to the research, development or marketing of our products. As a result, those strategic partners:

- may not commit sufficient resources to our programs or products;

- may not conduct their agreed activities on time, or at all, resulting in delay or termination of the development of our products and technology;

- may not perform their obligations as expected;

- may pursue product candidates or alternative technologies in preference to ours; or

- may dispute the ownership of products or technology developed under our strategic partnerships.

We may have disputes with our strategic partners which could be costly and time consuming. Our failure to successfully defend our rights could seriously harm our business, financial condition and operating results.

We intend to continue to enter into strategic partnerships in the future. However, we cannot assure you that we will successfully negotiate any additional strategic partnerships or that any of these relationships, if established, will be scientifically or commercially successful.

We also work with scientists and medical professionals at academic and other institutions, some of whom conduct research for us or assist us in developing our research and development strategy. These scientists and medical professionals are not our employees. They may have commitments to, or contracts with, other businesses or institutions that limit the amount of time they have available to work with us. We have little control over these individuals. We can only expect them to devote to our projects the amount of time required by our license, consulting and sponsored research agreements. In addition, these individuals may have arrangements with other companies to assist in developing technologies that may compete with ours. If these individuals do not devote sufficient time and resources to our programs, our business could be seriously harmed.

WE LACK SALES AND MARKETING EXPERIENCE AND, AS A RESULT, WE MAY EXPERIENCE SIGNIFICANT DIFFICULTIES COMMERCIALIZING OUR PRODUCTS.

The commercial success of any of our products will depend upon the strength of our sales and marketing efforts. We do not have a sales force and have no experience in the sales, marketing or distribution of our pharmaceutical products. If we develop an approved product, we will need to create a substantial marketing staff and sales force with technical expertise and the ability to distribute our products. As an alternative, we could seek assistance from a pharmaceutical or biotechnology company with a large distribution system and a large direct sales force. We may be unable to put either of these plans in place. In addition, if we arrange for others to market and sell our products, our revenues will depend upon the efforts of those parties. Such arrangements may not succeed. If we fail to establish adequate sales, marketing and distribution capabilities, independently or with others, our business will be seriously harmed.

WE HAVE LIMITED MANUFACTURING CAPABILITIES, WHICH COULD ADVERSELY IMPACT OUR ABILITY TO COMMERCIALIZE OUR PRODUCTS.

We have limited manufacturing facilities and expertise to produce our product candidates. For the foreseeable future, third-party manufacturers will produce some or all of our product candidates for pre-clinical and clinical trials and, eventually, for commercial sales. They will also package, label and distribute some or all of those products.

We have never manufactured, on a commercial scale, any of our product candidates. We may be unable to manufacture these product candidates or any other products that we or our strategic partners develop at a

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reasonable cost or in sufficient quantities to be profitable. If we cannot manufacture or contract with manufacturers to provide a sufficient supply of our product candidates on acceptable terms, it will delay:

- our pre-clinical and clinical testing schedule;

- our submission of products for regulatory approval; and

- our new development programs.

These delays would seriously harm our business. Any other delays or difficulties that we may have in manufacturing or contracting with manufacturers to produce, package and distribute our products will also harm our ability to market or sell our products.

EVEN IF WE OBTAIN REGULATORY APPROVAL OF A PRODUCT CANDIDATE, WE WILL BE SUBJECT TO EXTENSIVE REGULATION, WHICH CAN BE COSTLY AND TIME CONSUMING AND MAY SUBJECT US TO UNANTICIPATED DELAYS.

Even if we obtain regulatory approval of a product candidate, we will continue to be subject to extensive governmental regulation. The principal regulating authority in the United States is the FDA. In other countries, similar agencies will regulate our products. These regulations affect product:

- manufacturing;

- labeling;

- marketing;

- sales;

- distribution; and

- export or import.

Any approved product candidate will be subject to extensive governmental regulation. For example, regulatory agencies could:

- withdraw product approvals;

- limit the uses for which our product may be labeled, which would limit the uses for which our new products may be marketed;

- impose burdensome labeling requirements;

- require us to conduct additional clinical trials, thereby suspending our ability to sell any approved products; or

- require us to prepare and submit additional marketing applications.

We may be subject to any of the following penalties or compliance actions for violating government regulations:

- warning letters;

- fines;

- injunctions;

- recall or seizure of our products;

- total or partial suspension of production;

- government refusal to approve our marketing applications; and

- criminal prosecution.

We must also comply with numerous laws, regulations and recommendations relating to:

- safe working conditions;

- laboratory and manufacturing practices;

- experimental use of animals;

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- protection of the environment; and

- safe use and disposal of hazardous substances used in product discovery, research, and development, including radioactive compounds and infectious disease agents.

OUR PRODUCT DEVELOPMENT EFFORTS ARE BASED ON NOVEL TECHNOLOGIES THAT MAY NOT PROVE TO BE VIABLE.

We intend to devote significant resources to the research and development of new products based upon our DCVax and HuRx technologies. We may not be successful in developing products, and we may never realize any benefits from such research and development activities. Our ability to achieve and sustain profitability depends upon our ability to successfully develop new and commercially viable products, which is particularly difficult for us as our technology is novel and its commercial viability is unproven.

COMPETITION IN OUR INDUSTRY IS INTENSE AND MANY OF OUR COMPETITORS HAVE SUBSTANTIALLY GREATER RESOURCES THAN WE HAVE.

The biotechnology and biopharmaceutical industries are characterized by rapidly advancing technologies, intense competition and a strong emphasis on proprietary products. Several companies, such as Cell Genesys, Inc., Dendreon Corporation and Genzyme Molecular Oncology, a division of Genzyme Corporation, are actively involved in the research and development of cell-based cancer therapeutics. Additionally, several companies, such as Abgenix, Inc., Agensys, Inc., IDEC Pharmaceuticals Corporation and Genentech, Inc., are actively involved in the research and development of monoclonal antibody-based cancer therapies. Many other third parties compete with us in developing alternative therapies to treat cancer, including:

- biopharmaceutical companies;

- biotechnology companies;

- pharmaceutical companies;

- academic institutions; and

- other research organizations.

Many of our competitors have significantly greater financial resources and expertise in research and development, manufacturing, pre-clinical testing, conducting clinical trials, obtaining regulatory approvals and marketing than we do. In addition, many of these competitors have become active in seeking patent protection and licensing arrangements in anticipation of collecting royalties for use of technology they have developed. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. These third parties compete with us in recruiting and retaining qualified scientific and management personnel, as well as in acquiring technologies complementary to our programs.

We expect that our ability to compete effectively will be dependent upon our ability to:

- successfully complete clinical trials and obtain all requisite regulatory approvals;

- maintain a proprietary position in our technologies and products;

- attract and retain key personnel; and

- maintain existing or enter into new strategic partnerships.

Our competitors may develop more effective or affordable products, or achieve earlier patent protection or product marketing and sales than we may. As a result, any products we develop may be rendered obsolete and noncompetitive.

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OUR INTELLECTUAL PROPERTY RIGHTS MAY NOT PROVIDE MEANINGFUL COMMERCIAL
PROTECTION FOR OUR PRODUCTS, WHICH COULD ENABLE THIRD PARTIES TO USE OUR TECHNOLOGY, OR VERY SIMILAR TECHNOLOGY, AND COULD REDUCE OUR ABILITY TO COMPETE IN THE MARKET.

We rely on patent, copyright, trade secret and trademark laws to limit the ability of others to compete with us using the same or similar technology in the United States and other countries. However, as described below, these laws afford only limited protection and may not adequately protect our rights to the extent necessary to sustain any competitive advantage we may have. The laws of some foreign countries do not protect proprietary rights to the same extent as the laws of the United States, and we may encounter significant problems in protecting our proprietary rights in these countries.

We will only be able to protect our technology from unauthorized use by third parties to the extent that they are covered by valid and enforceable patents or are effectively maintained as trade secrets. The patent positions of companies developing novel cancer treatments, including our patent position, generally are uncertain and involve complex legal and factual questions, particularly concerning the scope and enforceability of claims of such patents against alleged infringement. Recent judicial decisions are prompting a reinterpretation of the limited case law that exists in this area, and consequently we cannot assure you that historical legal standards surrounding questions of infringement and validity will be applied in future cases. The biotechnology patent situation outside the United States is even more uncertain. Changes in either the patent laws or in interpretations of patent laws in the United States and other countries may therefore diminish the value of our intellectual property.

We own, or have rights under licenses to a variety of issued patents and pending patent applications. However, the patents on which we rely may be challenged and invalidated, and our patent applications may not result in issued patents. Moreover, our patents and patent applications may not be sufficiently broad to prevent others from practicing our technologies or from developing competing products. We also face the risk that others may independently develop similar or alternative technologies or design around our patented technologies.

We have taken security measures to protect our proprietary information, especially proprietary information that is not covered by patents or patent applications. These measures, however, may not provide adequate protection of our trade secrets or other proprietary information. We seek to protect our proprietary information by entering into confidentiality agreements with employees, strategic partners and consultants. Nevertheless, employees, strategic partners or consultants may still disclose our proprietary information, and we may not be able to protect our trade secrets in a meaningful way. If we lose any employees, we may not be able to prevent the unauthorized disclosure or use of our technical knowledge or other trade secrets by those former employees despite the existence of nondisclosure and confidentiality agreements and other contractual restrictions to protect our proprietary technology. In addition, others may independently develop substantially equivalent proprietary information or techniques or otherwise gain access to our trade secrets.

OUR SUCCESS WILL DEPEND PARTLY ON OUR ABILITY TO OPERATE WITHOUT INFRINGING OR MISAPPROPRIATING THE PROPRIETARY RIGHTS OF OTHERS.

Our success will depend to a substantial degree upon our ability to develop, manufacture, market and sell our product candidates without infringing the proprietary rights of third parties and not breaching any licenses we have entered into regarding our product candidates. Numerous U.S. and foreign issued patents and pending patent applications, which are owned by third parties, exist in the general field of immunotherapy. In particular, we are aware of other patents issued to third parties for monoclonal antibodies that bind to prostate-specific membrane antigen, or PSMA, and patent applications of others that may issue with similar claims. Our ability to market a product based on the binding of antibodies to PSMA may depend on the actual invention date of the subject matter of the issued patent, or the scope of claimed coverage of the pending patent applications, both of which are unknown to us.

There is a substantial amount of litigation involving patent and other intellectual property rights in the biotechnology and biopharmaceutical industries generally. Infringement and other intellectual property claims, with or without merit, can be expensive and time-consuming to litigate and can divert management's attention

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from our core business. We may be exposed to future litigation by third parties based on claims that our products infringe their intellectual property rights. This risk is exacerbated by the fact that there are numerous issued and pending patents in the biotechnology industry and the fact that the validity and breadth of biotechnology patents involve complex legal and factual questions for which important legal principles remain unresolved. Our competitors may assert that our products and the methods we employ are covered by U.S. or foreign patents held by them. In addition, because patent applications can take many years to issue, there may be currently pending applications, unknown to us, which may later result in issued patents that our products may infringe. There could also be existing patents of which we are not aware that one or more of our products may inadvertently infringe.

If we lose a patent infringement lawsuit, we could be prevented from selling our products unless we can obtain a license to use technology or ideas covered by such patent or are able to redesign our products to avoid infringement. A license may not be available at all or on terms acceptable to us, or we may not be able to redesign our products to avoid any infringement. If we are not successful in obtaining a license or redesigning our products, we may be unable to sell our products and our business could suffer.

OUR RIGHTS TO THE USE OF TECHNOLOGIES LICENSED TO US BY THIRD PARTIES ARE NOT WITHIN OUR CONTROL, AND WITHOUT THESE TECHNOLOGIES, OUR PRODUCTS AND PROGRAMS MAY NOT BE SUCCESSFUL AND OUR BUSINESS COULD BE HARMED.

We rely on our license from Cytogen to use PSMA and may rely on other licenses in the future to use various technology that may be material to our business. Our rights to use these technologies and employ the inventions claimed in the licensed patents are or may be subject to our licensors abiding by the terms of those licenses and not terminating them. We rely upon our licensors to prevent infringement of the licensed patents. Our license from Cytogen provides us with worldwide exclusive rights in a specified field, but we cannot assure you that the scope of our rights under this or other licenses will not be subject to dispute by our licensors or third parties.

IF WE FAIL TO PROPERLY MANAGE OUR GROWTH, OUR BUSINESS COULD BE ADVERSELY AFFECTED.

We have experienced significant growth in the number of our employees and the scope of our operations. As of December 31, 2000, we had 41 full-time employees, and as of June 30, 2001, we had 46 full-time employees. We expect our number of employees to continue to increase for the foreseeable future. In addition, we have substantially increased the scale of our operations in the last year and expect to continue doing so for the foreseeable future. Our overall growth and need to develop many different areas of our business have placed, and may continue to place, a strain on our management and operations. If we are unable to manage our growth effectively, our business will be harmed. The management of our growth will depend, among other things, upon our ability to improve our operational, financial and management controls, reporting systems and procedures. In addition, upon the approval of any of our DCVax product candidates for commercial sale, we will need to invest significant resources in additional processing facilities to produce sufficient quantities of these products. This will result in additional burdens on our existing systems and resources.

IF WE LOSE KEY MANAGEMENT OR SCIENTIFIC PERSONNEL OR CANNOT RECRUIT QUALIFIED EMPLOYEES, OUR BUSINESS COULD SUFFER.

We are highly dependent on the principal members of our management and scientific staff, including Daniel O. Wilds, our Chairman, President and Chief Executive Officer, and Alton L. Boynton, our Executive Vice President, Chief Operating Officer, Chief Scientific Officer and Secretary, and other members of senior management. The loss of any of their services would harm our business.

With the exception of Mr. Wilds and Dr. Boynton, none of the principal members of our management team or scientific staff have entered into employment agreements with us, nor, with the exception of Mr. Wilds and Dr. Boynton, do we have any key person life insurance on such individuals. Additionally, as a practical matter, any employment agreement we enter into will not ensure the retention of the employee who is a party to the agreement.

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Our future success will also depend in part on the continued service of our key scientific and management personnel and our ability to identify, hire and retain additional personnel. We experience intense competition for qualified personnel. We may be unable to attract and retain the personnel necessary for the development of our business. Moreover, our work force is located in the Seattle, Washington area, where demand for personnel with the scientific and technical skills we seek is extremely high and is likely to remain high. Because of this competition, our compensation costs may increase significantly.

HEALTH CARE REFORM AND OTHER CHANGES IN THE HEALTH CARE INDUSTRY, INCLUDING CHANGES IN REIMBURSEMENT POLICIES, COULD ADVERSELY AFFECT OUR POTENTIAL PROFITABILITY.

Recent proposals to change the health care system in the United States have included measures that would limit or eliminate payments for medical procedures and treatments or subject the pricing of medical treatment products to government control. In addition, as a result of the trend towards managed health care in the United States, as well as legislative proposals to reduce government insurance programs, third-party payors are increasingly attempting to contain health care costs by limiting both coverage and the level of reimbursement for new medical treatment products.

WE ARE EXPOSED TO POTENTIAL PRODUCT LIABILITY CLAIMS, AND IT IS UNCERTAIN THAT INSURANCE AGAINST THESE CLAIMS WILL BE AVAILABLE TO US AT A REASONABLE RATE IN THE FUTURE.

Testing product candidates and marketing and selling commercial biotechnology and biopharmaceutical products involves unavoidable risks. The use in clinical trials of our product candidates, and the sale of products we may develop, could lead to claims or lawsuits against us by:

- consumers;

- regulatory agencies;

- biotechnology and biopharmaceutical companies; or

- others using or selling our product candidates or products.

We have purchased liability insurance coverage for our current clinical trials and for the research products we currently sell. We intend to seek additional liability insurance coverage if and when we develop products that are approved for commercialization. We may be unable to obtain or maintain product liability insurance in the future on acceptable terms. Even if we are able to purchase the insurance, the policy limits may be insufficient to cover all potential claims or liabilities. Insufficient insurance to cover any damages resulting from a claim could seriously harm our business.

WE USE HAZARDOUS MATERIALS AND MUST COMPLY WITH ENVIRONMENTAL, HEALTH AND SAFETY LAWS AND REGULATIONS, WHICH CAN BE EXPENSIVE AND RESTRICT HOW WE DO BUSINESS.

We store, handle, use and dispose of controlled hazardous, radioactive and biological materials in our business. We incur costs to manage these materials, and if we fail to comply with applicable requirements we could be subject to substantial fines and other sanctions, delays in research and production, and increased operating costs. In addition, if regulated materials were improperly released at our current or former facilities or at locations to which we send materials for disposal, we could be strictly liable for substantial damages and costs, including cleanup costs and personal injury or property damages, and incur delays in research and production and increased operating costs.

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RISKS RELATED TO THIS OFFERING

YOU WILL SUFFER IMMEDIATE AND SUBSTANTIAL DILUTION.

We expect the initial public offering price of our shares to be substantially higher than the book value per share of the outstanding common stock. Accordingly, investors purchasing shares of common stock in this offering will:

- pay a price per share that substantially exceeds the value of our assets after subtracting liabilities; and

- contribute % of the total amount invested to date to fund us, but will own only % of the shares of common stock outstanding. To the extent outstanding stock options or warrants are exercised, there will be further dilution to new investors.

OUR PRINCIPAL STOCKHOLDERS, EXECUTIVE OFFICERS AND DIRECTORS OWN A SIGNIFICANT
PERCENTAGE OF OUR STOCK AND, AS A RESULT, THE TRADING PRICE FOR OUR SHARES MAY BE DEPRESSED AND THESE STOCKHOLDERS CAN TAKE ACTIONS THAT MAY BE ADVERSE TO YOUR INTERESTS.

Our executive officers and directors and entities affiliated with them will, in the aggregate, beneficially own approximately % of our common stock following this offering. This significant concentration of share ownership may adversely affect the trading price for our common stock because investors often perceive disadvantages in owning stock in companies with controlling stockholders. These stockholders, acting together, will have the ability to exert substantial influence over all matters requiring approval by our stockholders, including the election and removal of directors and any proposed merger, consolidation or sale of all or substantially all of our assets. In addition, they could dictate the management of our business and affairs. This concentration of ownership could have the effect of delaying, deferring or preventing a change in control, or impeding a merger or consolidation, takeover or other business combination that could be favorable to you.

THE FUTURE SALE OF COMMON STOCK COULD NEGATIVELY AFFECT OUR STOCK PRICE.

After this offering, we will have approximately shares of common stock outstanding, or shares if the underwriters' over-allotment option is exercised in full. The shares sold in this offering, or shares if the underwriters' over-allotment option is exercised in full, will be freely tradable without restriction or further registration under the federal securities laws unless purchased by our affiliates. The remaining shares of common stock outstanding after this offering will be available for sale in the public market 180 days after the date of the final prospectus, relating to this offering, subject in some cases to volume and other limitations. The previous sentence assumes the effectiveness of the lock-up agreements with the underwriters under which holders of substantially all of our common stock have agreed not to sell or otherwise dispose of their shares of common stock. Most of the shares that will be available for sale after the expiration of the lock-up period will be subject to volume restrictions because they are held by our affiliates. In addition, the underwriters may waive these lock-up agreement restrictions prior to the expiration of the lock-up period without prior notice.

If our stockholders sell substantial amounts of common stock in the public market, or the market perceives that such sales may occur, the market price of our common stock could fall. After this offering, the holders of approximately shares of our common stock will have rights, subject to some conditions, to include their shares in registration statements that we may file for ourselves or other stockholders. Furthermore, if we were to include in a company-initiated registration statement shares held by those holders pursuant to the exercise of their registration rights, those sales could impair our ability to raise needed capital by depressing the price at which we could sell our common stock. See "Shares Eligible For Future Sale."

THERE MAY NOT BE AN ACTIVE, LIQUID TRADING MARKET FOR OUR COMMON STOCK.

Prior to this offering, there has been no public market for our common stock. An active trading market for our common stock may not develop following this offering. You may not be able to sell your shares

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quickly or at the market price if trading in our stock is not active. The initial public offering price may not be indicative of prices that will prevail in the trading market. See "Plan Of Distribution" for more information regarding the factors considered in determining the initial public offering price.

OUR COMMON STOCK MAY EXPERIENCE EXTREME PRICE AND VOLUME FLUCTUATIONS, WHICH COULD LEAD TO COSTLY LITIGATION FOR US AND MAKE AN INVESTMENT IN US LESS APPEALING.

The market price of our common stock may fluctuate substantially due to a variety of factors, including:

- announcements of technological innovations or new products by us or our competitors;

- development and introduction of new cancer therapies;

- media reports and publications about cancer therapies;

- announcements concerning our competitors or the biotechnology industry in general;

- new regulatory pronouncements and changes in regulatory guidelines;

- general and industry-specific economic conditions;

- changes in financial estimates or recommendations by securities analysts; and

- changes in accounting principles.

The market prices of the securities of biotechnology companies, particularly companies like ours without earnings and consistent product revenues, have been highly volatile and are likely to remain highly volatile in the future. This volatility has often been unrelated to the operating performance of particular companies. In the past, securities class action litigation has often been brought against companies that experience volatility in the market price of their securities. Moreover, market prices for stocks of biotechnology-related and technology companies, particularly following an initial public offering, can reach levels that bear no relationship to the operating performance of such companies. These market prices generally are not sustainable and are subject to wide variations. Whether or not meritorious, litigation brought against us could result in substantial costs, divert management's attention and resources and harm our financial condition and results of operations.

ANTI-TAKEOVER PROVISIONS OF DELAWARE AND WASHINGTON LAW COULD MAKE A CHANGE IN OUR CONTROL, WHICH MAY BE BENEFICIAL TO OUR STOCKHOLDERS, MORE DIFFICULT.

We are subject to provisions of Delaware and Washington law that could have the effect of delaying, deferring or preventing a change in control of our ownership. These and other impediments to a third-party acquisition or change of control could limit the price investors are willing to pay in the future for shares of our common stock.

OUR INCORPORATION DOCUMENTS AND BYLAWS MAY DELAY OR PREVENT A CHANGE IN OUR MANAGEMENT.

Our amended and restated certificate of incorporation and bylaws contain provisions that could delay or prevent a change in our management team. Some of these provisions:

- authorize the issuance of preferred stock that can be created and issued by the board of directors without prior stockholder approval, commonly referred to as "blank check" preferred stock, with rights senior to those of common stock; and

- provide for a classified board of directors.

These provisions could allow our board of directors to affect your rights as a stockholder since our board of directors can make it more difficult for common stockholders to replace members of the board. Because our board of directors is responsible for appointing the members of our management team, these provisions could in turn affect any attempt to replace our current management team.

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MANAGEMENT WILL HAVE BROAD DISCRETION OVER THE USE OF THE PROCEEDS FROM THIS OFFERING.

We intend to use the net proceeds from this offering to fund clinical trial activities, pre-clinical research and development activities and contract manufacturing activities and to pay a fee to Northwest Hospital, with any remainder to fund general corporate purposes, including capital expenditures and working capital to fund anticipated operating losses. See "Use Of Proceeds." We have not, however, reserved or allocated the net proceeds for any specific transaction, and we cannot specify with certainty how we will use the net proceeds. Accordingly, our management will have considerable discretion in the application of the net proceeds, and you will not have the opportunity, as part of your investment decision, to assess whether the proceeds are being used appropriately. The net proceeds may be used for corporate purposes that do not increase our operating results or market value. Until we use the net proceeds, we intend to invest the funds in short-term, investment grade, interest-bearing securities. We cannot predict whether the proceeds invested will yield a favorable return.

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FORWARD-LOOKING INFORMATION

Some of the statements that we make under "Prospectus Summary," "Risk Factors," "Management's Discussion And Analysis Of Financial Condition And Results Of Operations," "Business" and elsewhere in this prospectus constitute forward-looking statements. These statements relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from those expressed or implied by any of our forward-looking statements. Some of these factors are listed under "Risk Factors" and elsewhere in this prospectus. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "could," "expects," "plans," "intends," "anticipates," "believes," "estimates," "predicts," "potential" or "continue" or the negative of these terms and other comparable terminology. These statements are only predictions. Actual events or results may differ materially.

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USE OF PROCEEDS

Our proceeds from the sale of the shares of common stock we are offering are estimated to be $ , or $ if the underwriters' over-allotment option is exercised in full, assuming a public offering price of $ per share and after deducting the underwriting discounts and commissions and our estimated offering expenses. We currently intend to use the net proceeds as follows:

- approximately $12 to $14 million for clinical trial activities;

- approximately $8 to $10 million for pre-clinical research and development activities;

- approximately $1.5 to $2.5 million for contract manufacturing activities;

- approximately $1.7 million for a fee to Northwest Hospital; and

- any remainder for other general corporate purposes, including capital expenditures and working capital to fund anticipated operating losses.

We have no current plans, agreements or commitments with respect to any acquisition. We may, however, if the opportunity arises, use a portion of the net proceeds to acquire or invest in products, technologies or companies. Our management may spend the proceeds from this offering in ways that our stockholders may not deem desirable.

The timing and amount of our actual expenditures will be based on many factors, including cash flows from operations and the growth of our business.

Until we use the net proceeds of this offering for the above purposes, we intend to invest the funds in short-term, investment grade, interest-bearing securities. We cannot predict whether the proceeds invested will yield a favorable return.

DIVIDEND POLICY

We have never declared or paid any cash dividends on our capital stock. We anticipate that we will retain any earnings to support operations and to finance the growth and development of our business. Therefore, we do not expect to pay cash dividends on our capital stock in the foreseeable future. Any future determination relating to our dividend policy will be made at the discretion of our board of directors and will depend on a number of factors, including future earnings, capital requirements, financial conditions, contractual obligations and future prospects and other factors our board of directors may deem relevant.

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CAPITALIZATION

The following table sets forth our capitalization as of June 30, 2001:

- on an actual basis;

- on a pro forma basis to give effect to:

- the conversion of all outstanding shares of series A convertible preferred stock upon completion of this offering into 550,700 shares of our common stock pursuant to an agreement with the holder and the accrual of a fee of $1.7 million to such holder;

- the automatic conversion of all outstanding shares of series B, C and D convertible preferred stock upon completion of this offering into 9,225,621 shares of our common stock;

- the exercise of warrants to acquire 1,101,402 shares of common stock for an aggregate exercise price of $198,252 in connection with an agreement with the holder; and

- the conversion of an $825,000 note payable to a stockholder and related accrued interest of $19,687 into 168,937 shares of series D convertible preferred stock and the exercise of warrants to acquire 33,000 shares of series D convertible preferred stock for an aggregate exercise price of $165,000 in connection with an agreement with such holder and the automatic conversion of such shares upon completion of this offering into an aggregate of 201,937 shares of our common stock; and

- on a pro forma as adjusted basis to give further effect to the receipt of the estimated net proceeds from the sale of shares of our common stock offered by this prospectus at an assumed initial public offering price of $ per share and payment of the $1.7 million fee described above.

                                                                            JUNE 30, 2001
                                                              ------------------------------------------
                                                                                             PRO FORMA
                                                                 ACTUAL       PRO FORMA     AS ADJUSTED
                                                              ------------   ------------   ------------
Cash and cash equivalents...................................  $  7,731,579   $  8,094,831     $
                                                              ============   ============     =======
Debt and lease obligations:
  Notes and other payables to stockholders, including
    accrued interest payable of $19,687 and net of discount
    of $660,089.............................................  $    184,598   $  1,700,000     $
  Capital lease obligations.................................       259,079        259,079
                                                              ------------   ------------     -------
    Total debt and lease obligations........................       443,677      1,959,079
Mandatorily redeemable convertible preferred stock, $0.001
  par value:
  Series A, 550,700 shares authorized; 550,700 shares issued
    and outstanding actual; no shares issued and outstanding
    pro forma and pro forma as adjusted.....................     4,712,225             --
Convertible preferred stock, $0.001 par value:
  Series B, 897,513 shares authorized; 897,489 shares issued
    and outstanding actual; no shares issued and outstanding
    pro forma and pro forma as adjusted.....................     2,088,330             --
  Series C, 3,609,062 shares authorized; 3,350,600 shares
    issued and outstanding, actual; no shares issued and
    outstanding pro forma and pro forma as adjusted.........     7,253,091             --
  Series D, 6,500,000 shares authorized; 4,135,823 shares
    issued and outstanding, actual; no shares issued and
    outstanding pro forma and pro forma as adjusted.........    17,365,335             --
Stockholders' deficit:
  Common stock, $0.001 par value, 30,000,000 shares
    authorized, 1,935,382 shares issued and outstanding
    actual; 13,015,042 shares issued and outstanding
    pro-forma;             shares issued and outstanding pro
    forma as adjusted.......................................         1,935         13,015
  Additional paid-in capital................................    14,198,472     46,814,312
  Deferred compensation.....................................      (921,233)      (921,233)
  Deficit accumulated during the development stage..........   (37,819,063)   (40,179,152)
                                                              ------------   ------------     -------
Total stockholders' equity (deficit)........................   (24,539,889)     5,726,942
                                                              ------------   ------------     -------
Total capitalization........................................  $  7,322,769   $  7,686,021     $
                                                              ============   ============     =======

The above table does not include:

- 1,647,340 shares of convertible preferred stock issuable upon the exercise of outstanding warrants at a weighted-average exercise price of $4.61 per share, of which warrants to acquire 1,315,908 shares at a weighted-average exercise price of $4.95 per share will expire upon completion of the offering if not previously exercised;

- 10,000 shares of common stock issuable upon the exercise of outstanding warrants at an exercise price of $5.50 per share;

21

- 158,600 shares of common stock issuable upon the exercise of outstanding options granted certain officers at a weighted-average exercise price of $1.25 per share;

- 402,851 shares of common stock issuable upon the exercise of outstanding options granted under our 1998 Stock Option Plan at a weighted-average exercise price of $0.93 per share;

- 586,166 shares of common stock issuable upon the exercise of outstanding options granted under our 1999 Executive Stock Option Plan at a weighted-average exercise price of $0.85 per share; and

- 7,242 shares of common stock available for future grant under our 1998 Stock Option Plan, 1,800,000 shares available for future grant under our 2001 Stock Option Plan, 200,000 shares available for future grant under our 2001 Nonemployee Director Stock Incentive Plan and 500,000 shares available for future purchase under our Employee Stock Purchase Plan.

22

DILUTION

If you invest in our common stock, your interest will be diluted by the difference between the public offering price per share of our common stock and the pro forma as adjusted net tangible book value per share of our common stock immediately after this offering. Our pro forma net tangible book value at June 30, 2001 was $5,726,942, or $0.44 per share of common stock. Pro forma net tangible book value per share represents total tangible assets less total liabilities on a pro forma basis, divided by the pro forma number of shares of common stock outstanding at June 30, 2001. Pro forma net tangible book value per share includes the conversion of 8,934,612 shares of our preferred stock into 9,776,321 shares of common stock, conversion of a note payable to a stockholder and related accrued interest into 168,937 shares of series D convertible preferred stock and exercise of 1,134,402 preferred and common stock warrants into an equivalent number of common shares upon the closing of this offering. Assuming our sale of shares of common stock at an assumed initial public offering price of $ per share and after deducting underwriting discounts and commissions and estimated offering expenses, our pro forma as adjusted net tangible book value at June 30, 2001 would have been approximately $ , or $ per share. This represents an immediate increase in pro forma as adjusted net tangible book value of $ per share to existing stockholders and an immediate dilution of $ per share to new investors purchasing shares in this offering. The following table illustrates this per share dilution:

Assumed public offering price per share.....................             $
  Pro forma net tangible book value per share as of June 30,
     2001...................................................  $  0.44
  Increase per share attributable to new investors..........
                                                              -------
Pro forma as adjusted net tangible book value per share
  after the offering........................................
                                                                         -------
Dilution per share to new investors.........................             $
                                                                         =======

The table above assumes no exercise of the underwriters' over-allotment option and excludes exercises of options and warrants after June 30, 2001. The number of shares outstanding as of June 30, 2001 excludes 1,147,617 shares of common stock issuable upon exercise of options outstanding as of June 30, 2001, having a weighted-average exercise price of $0.93 per share and 1,657,340 shares of stock issuable upon exercise of warrants outstanding at June 30, 2001, having a weighted-average exercise price of $4.61 per share, of which 1,315,908 warrants at a weighted-average exercise price of $4.95 per share must either be exercised or expire upon completion of the offering. The exercise of outstanding options and warrants having an exercise price less than the offering price would increase dilution to new investors.

Assuming exercise in full of all of our outstanding stock options and warrants totaling 2,804,957 additional shares and approximately $8.7 million in exercise proceeds, the pro forma as adjusted net tangible book value per share would be reduced and further dilute new investors an additional $ per share, to $ per share.

The following table sets forth, as of June 30, 2001, the differences between the number of shares of common stock purchased from us, the total consideration paid and average price per share paid by existing stockholders on a pro forma basis and by the new investors, before deducting expenses payable by us, using an assumed public offering price of $ per share.

                                                  SHARES PURCHASED        TOTAL CONSIDERATION       AVERAGE
                                               ----------------------    ----------------------    PRICE PER
                                                 NUMBER       PERCENT      AMOUNT       PERCENT      SHARE
                                               -----------    -------    -----------    -------    ---------
Existing stockholders........................   13,015,042               $35,358,782                 $2.72
New investors................................
                                               -----------    ------     -----------    ------       -----
Total........................................                 100.0%     $              100.0%       $
                                               ===========    ======     ===========    ======       =====

If the underwriters' over-allotment option is exercised in full, the following will occur:

- the number of shares of common stock held by existing stockholders will decrease to approximately % of the total number of shares of common stock outstanding; and

- the number of shares held by new public investors will be increased to , or approximately % of the total number of shares of our common stock outstanding after this offering.

23

SELECTED FINANCIAL DATA

The selected financial data set forth below should be read in conjunction with "Management's Discussion And Analysis Of Financial Condition And Results Of Operations" and the consolidated financial statements and the related notes and independent auditors' report included elsewhere in this prospectus. The independent auditors report contains an explanatory paragraph that states that we have incurred losses from operations, have a net capital deficiency and, at December 31, 2000, a net working capital deficit that raise substantial doubt about our ability to continue as a going concern. The consolidated financial statements and the selected financial data do not include any adjustments that might result from the outcome of that uncertainty. The balance sheet data as of December 31, 1999 and 2000 and the statement of operations data for each of the years in the three-year period ended December 31, 2000 are derived from our audited consolidated financial statements included elsewhere in this prospectus. The statement of operations data for the period from March 18, 1996 to December 31, 1996 and the year ended December 31, 1997, and the balance sheet data as of December 31, 1996, 1997 and 1998 are derived from our audited consolidated financial statements that are not included in this prospectus. The statement of operations data for the six-months ended June 30, 2000 and 2001 and the balance sheet data as of June 30, 2001 are derived from our unaudited consolidated financial statements included in this prospectus, and include all adjustments, consisting of only normal, recurring adjustments, which we consider necessary for a fair presentation of the data. The pro forma net loss per share data give effect to the automatic conversion, upon completion of this offering, of all outstanding shares of our series B, C and D convertible preferred stock into shares of common stock as if it occurred on January 1 of the respective period or the dates of original issuance, if later.

                                                 PERIOD FROM
                                                MARCH 18, 1996
                                                 (INCEPTION)                                                    SIX MONTHS ENDED
                                                   THROUGH                YEARS ENDED DECEMBER 31,                  JUNE 30,
                                                 DECEMBER 31,     -----------------------------------------    ------------------
                                                     1996          1997       1998       1999        2000       2000       2001
                                                --------------    -------    -------    -------    --------    -------    -------
                                                                      (IN THOUSANDS, EXCEPT PER SHARE DATA)       (UNAUDITED)
STATEMENT OF OPERATIONS DATA:
TOTAL REVENUES................................     $   227        $   479    $   385    $   211    $    156    $   116    $    60
OPERATING COSTS AND EXPENSES
  Cost of research material sales.............          --             --         81         46          51         44         40
  Research and development....................         660          1,966      2,860      2,885       3,114      1,276      2,327
  General and administrative..................         697            884      1,765      2,535       3,682      1,531      2,173
  Depreciation and amortization...............         104            142        164        196         199         90        230
                                                   -------        -------    -------    -------    --------    -------    -------
    Total operating costs and expenses........       1,461          2,992      4,870      5,662       7,046      2,941      4,770
                                                   -------        -------    -------    -------    --------    -------    -------
    Loss from operations......................      (1,234)        (2,513)    (4,485)    (5,451)     (6,890)    (2,825)    (4,710)
OTHER INCOME (EXPENSE), NET
  Interest expense............................          --            (47)      (262)      (319)     (6,056)    (1,795)      (301)
  Other.......................................           1             --         28        161         166        102         80
                                                   -------        -------    -------    -------    --------    -------    -------
  Net loss....................................      (1,233)        (2,560)    (4,719)    (5,609)    (12,780)    (4,518)    (4,931
    Accretion of redemption value of
      mandatorily redeemable membership units
      and preferred stock.....................        (106)          (275)      (329)      (354)       (430)      (205)      (219)
    Beneficial conversion feature of series D
      convertible preferred stock.............          --             --         --         --          --         --     (4,274)
                                                   -------        -------    -------    -------    --------    -------    -------
    Net loss applicable to common
      stockholders............................     $(1,339)       $(2,835)   $(5,048)   $(5,963)   $(13,210)   $(4,723)   $(9,424)
                                                   =======        =======    =======    =======    ========    =======    =======
Net loss per share -- basic and diluted(a)....     $ (0.61)       $ (1.29)   $ (2.29)   $ (2.71)   $  (6.35)   $ (2.14)   $ (4.87)
                                                   =======        =======    =======    =======    ========    =======    =======
Weighted average shares used in computing
  basic and diluted net loss per share(a).....       2,203          2,203      2,203      2,203       2,080      2,203      1,935
                                                   =======        =======    =======    =======    ========    =======    =======
Pro forma net loss per share - basic and
  diluted(b)..................................                                                        (1.82)                (1.10)
                                                                                                   ========               =======
Weighted average shares used in computing
  basic and diluted pro forma net loss per
  share.......................................                                                        7,244                 8,557
                                                                                                   ========               =======

                                                                                  DECEMBER 31,                         JUNE 30,
                                                              -----------------------------------------------------    --------
                                                               1996       1997       1998        1999        2000        2001
                                                              -------    -------    -------    --------    --------    --------
                                                                                       (IN THOUSANDS)
BALANCE SHEET DATA:
Cash and cash equivalents...................................  $   121    $   264    $   638    $    649    $    411    $  7,732
Working capital.............................................       28        108     (1,176)       (209)     (4,488)      3,584
Total assets................................................      730        828      1,400       2,519       4,629      11,814
Long-term obligations, net of current portion and
  discounts.................................................       --      1,463      2,834       2,881         801         291
Mandatorily redeemable convertible preferred stock..........    1,975      3,380      3,709       4,063       4,493       4,712
Convertible preferred stock.................................       --         --      2,088       9,341      16,444      26,707
Total stockholders' deficit.................................   (1,338)    (4,172)    (9,220)    (14,790)    (22,515)    (24,540)


(a) Net loss per share and weighted average shares outstanding for periods prior to our incorporation in July 1998 are calculated based on the conversion of LLC units to common shares at the time of incorporation. In 1998, we effected a stock split of approximately 1:5.507 for which all prior periods have been adjusted.

(b) Pro forma net loss per share is calculated as if shares of series B, C and D convertible preferred stock were converted to common shares at the beginning of the periods presented or upon issuance, if later.

24

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements and the notes to those statements included elsewhere in this prospectus. This discussion may contain forward-looking statements that involve risks and uncertainties. As a result of many factors, such as those set forth under "Risk Factors" and elsewhere in this prospectus, our actual results may differ materially from those anticipated in these forward-looking statements.

OVERVIEW

We are a biotechnology company focused on discovering, developing and commercializing innovative immunotherapy products that safely generate and enhance effective immune responses to treat cancer.

Since formation in 1996, our activities have primarily been devoted to research and development of our dendritic cell-based immunotherapy platform and our monoclonal antibody-based cancer therapies.

We have a limited history of operations. Since inception, we have incurred significant losses and, as of June 30, 2001, had a deficit accumulated during the development stage of $37,819,063. We anticipate incurring additional losses, which will increase for the foreseeable future, as we expand research and development activities and progress through current and projected clinical trials.

Operating costs and expenses consist primarily of research and development expenses, clinical trial expenses, which are included in research and development, and general and administrative expenses.

Research and development expenses include salary expenses and costs of supplies used in our internal research and development projects. We expect our research and development costs to increase as we continue to develop new applications of our technology, refine our manufacturing processes and move research projects through pre-clinical and clinical trials.

General and administrative expenses include compensation expenses related to executive, information technology management, finance and administrative personnel, the cost of facilities, insurance and legal support, as well as amortization costs of stock options and warrants granted to consultants and for entering into commercial arrangements. We expect general and administrative expenses to increase as we strengthen our infrastructure in support of our anticipated increased operations and expanded clinical trials.

To date, our revenues have primarily been derived from the manufacture and sale of research materials, contract research and development services and Small Business Innovative Research, or SBIR, grants.

Ultimately, we believe our revenue will consist mainly of pharmaceutical product sales, licensing and royalties from marketing and distribution partnerships and technology transfers.

We lack high volume manufacturing, sales and marketing experience and, as a result, we may experience significant difficulties commercializing our anticipated products.

Deferred compensation represents the difference between the fair value of our common stock and the exercise price of options on their date of grant. The fair value of our common stock for purposes of this calculation was determined based on our review of the primary business factors underlying the value of our common stock on the date such option grants were made, viewed in light of this offering and the expected initial public offering price per share. During the six months ended June 30, 2001, we recorded deferred compensation totaling $1,041,297. We are amortizing the deferred compensation to expense using the straight-line method over the vesting period. As of June 30, 2001, there was approximately $921,000 of deferred compensation to be amortized in future periods as follows: $164,000 for the six months ending December 31, 2001, $329,000 for the year ending December 31, 2002, $329,000 for the year ending December 31, 2003, $75,000 for the year ending December 31, 2004 and $24,000 for the year ending December 31, 2005. Additionally, in June of 2000 and 2001, we granted to a consultant an option to purchase 5,000 shares of common stock at exercise prices of $0.85 and $1.25 per share, respectively. The fair value of options granted was determined using the Black-Scholes model. The resulting compensation expense was approximately

25

$37,000 for the six months ended June 30, 2001. The value of the options are periodically remeasured as they vest.

RESULTS OF OPERATIONS

SIX MONTHS ENDED JUNE 30, 2000 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 2001

Total Revenues. Total revenues decreased 48% from $116,254 for the six months ended June 30, 2000 to $60,406 for the six months ended June 30, 2001. Total revenues consisted primarily of research material sales and research grants. This decrease in revenue was primarily due to lower research material sales, which will fluctuate depending upon the timing of purchases by our sole customer, and no grant revenue in the 2001 period.

Cost of Research Material Sales. Cost of research material sales decreased 9% from $44,216 for the six months ended June 30, 2000 to $40,187 for the six months ended June 30, 2001. This decrease was primarily due to lower research material sales.

Research And Development Expense. Research and development expense increased 82% from $1,276,433 for the six months ended June 30, 2000 to $2,326,609 for the six months ended June 30, 2001. This increase was primarily due to increased costs associated with continued patient enrollment in our initial clinical trial, clinical trial monitoring, manufacture of DCVax-Prostate for clinical trial use, research and development costs associated with improving DCVax production techniques and research and development expenditures relating to our HuRx platform. Additionally, we expanded our scientific and manufacturing team to 34 individuals as of June 30, 2001 from 20 as of June 30, 2000.

General And Administrative Expense. General and administrative expense increased 42% from $1,531,305 for the six months ended June 30, 2000 to $2,173,326 for the six months ended June 30, 2001. The increase in costs was primarily due to higher monthly rental costs, and for increased legal costs related to entering into certain contractual arrangements and increased patent research and filings.

Depreciation And Amortization. Depreciation and amortization increased 156% from $89,830 for the six months ended June 30, 2000 to $229,886 for the six months ended June 30, 2001. This increase was primarily due to the significant increase in capitalized leasehold improvements in December 2000, as the result of finalization of tenant improvements at our current facility.

Total Other Income (Expense), Net. Other income (expense), net, consists primarily of interest income and interest expense. Interest income decreased 22% from $102,084 for the six months ended June 30, 2000 to $79,815 for the six months ended June 30, 2001. Invested cash balances during the 2001 period were substantially below the comparable 2000 period, along with a decrease in the rate of interest earned on such investments.

Interest expense decreased 83% from $1,795,126 for the six months ended June 30, 2000 to $300,905 for the six months ended June 30, 2001. The decrease in interest expense was primarily due to the 2000 period including amortization related to the discount and beneficial conversion feature of a convertible promissory note that was converted late in 2000.

YEAR ENDED DECEMBER 31, 1999 COMPARED TO THE YEAR ENDED DECEMBER 31, 2000

Total Revenues. Total revenues decreased 26% from $210,520 for the year ended December 31, 1999 to $155,962 for the year ended December 31, 2000. Total revenues consisted primarily of research material sales, contract research and development from related parties and research grants. Sales of research materials to our sole customer increased from $39,260 in 1999 to $110,757 in 2000. This gain in revenue was offset by a cessation of our contract research and development agreements with Pacific Northwest Cancer Foundation at the end of the first quarter of 1999, under which $84,375 was received in 1999. Additionally, SBIR grant research revenues decreased from 1999 to 2000, due to the timing of service performed under research contracts.

Cost Of Research Material Sales. Cost of research material sales increased 12% from $45,565 for the year ended December 31, 1999 to $50,849 for the year ended December 31, 2000. This increase was

26

primarily due to increased variable manufacturing costs associated with supporting increased sales of research materials, offset by improved efficiencies in the manufacturing process.

Research And Development Expense. Research and development expense increased 8% from $2,885,332 for the year ended December 31, 1999 to $3,114,160 for the year ended December 31, 2000. This increase was primarily due to increased costs associated with patient enrollment in our initial clinical trial, clinical trial monitoring and travel related expenses, manufacture of DCVax-Prostate for clinical trial use. Our scientific and manufacturing team remained constant at 27 individuals.

General And Administrative Expense. General and administrative expense increased 45% from $2,535,200 for the year ended December 31, 1999 to $3,682,015 for the year ended December 31, 2000. This increase was primarily due to increased employee costs as we expanded our administrative team to 14 individuals as of December 31, 2000, from 12 as of December 31, 1999 and higher monthly rental costs as we moved to our current facility. Additionally, legal costs increased, as a result of contractual agreements and patent research and filings.

Depreciation And Amortization. Depreciation and amortization increased 1% from $196,012 for the year ended December 31, 1999 to $198,532 for the year ended December 31, 2000. This slight increase was primarily due to increasing equipment needs to support our ongoing research and development programs.

Total Other Income (Expense), Net. Other income (expense), net, consists primarily of interest income and interest expense. Interest income increased 3.5% from $160,563 for the year ended December 31, 1999 to $166,179 for the year ended December 31, 2000. This increase was primarily due to a slightly higher average cash balance over the respective periods.

Interest expense increased from $318,353 for the year ended December 31, 1999 to $6,055,806 for the year ended December 31, 2000. The increase in interest expense was primarily due to recognizing as interest expense the discount of $4,038,525 related to the value of the warrants issued with the 6% convertible promissory notes and interest expense of $1,025,575 related to the beneficial conversion feature on those notes.

YEAR ENDED DECEMBER 31, 1998 COMPARED TO THE YEAR ENDED DECEMBER 31, 1999

Total Revenues. Total revenues decreased 45% from $385,007 for the year ended December 31, 1998 to $210,520 for the year ended December 31, 1999. Total revenues consisted primarily of research material sales, contract research and development from related parties and research grants. Sales of research material decreased from $47,507 in 1998 to $39,260 in 1999. Contract research and development fees from Pacific Northwest Cancer Foundation decreased from $337,500 in 1998 to $84,375 in 1999 as the contract terminated in the first quarter of 1999. These decreases were offset by an increase in grant revenue, as there were no SBIR grants in 1998.

Cost Of Research Material Sales. Cost of research material sales decreased 44% from $81,043 for the year ended December 31, 1998 to $45,565 for the year ended December 31, 1999. The decrease was primarily due in part to the drop in sales of research materials from $47,507 at the end of 1998 to $39,260 by the end of 1999 and increased start-up costs incurred in 1998.

Research And Development Expense. Research and development expense increased 1% from $2,860,323 for the year ended December 31, 1998 to $2,885,332 for the year ended December 31, 1999. This slight increase was primarily due to increased costs associated with initially developing DCVax-Prostate.

General And Administrative Expense. General and administrative expense increased 44% from $1,765,360 for the year ended December 31, 1998 to $2,535,200 for the year ended December 31, 1999. The increase was primarily due to increased employee costs as we expanded our administrative team to 15 individuals as of December 31, 1999 from 10 as of December 31, 1998 and increased legal support for contractual agreements and patent research and filings.

Depreciation And Amortization. Depreciation and amortization increased 20% from $163,529 for the year ended December 31, 1998 to $196,012 for the year ended December 31, 1999. The increase was

27

primarily due to the build-out of lab facilities to support ongoing research and development and the creation of a cGMP-compliant pilot manufacturing clean room.

Total Other Income (Expense), Net. Other income (expense), net, consists primarily of interest income and interest expense. Interest income increased 482% from $27,601 for the year ended December 31, 1998 to $160,563 for the year ended December 31, 1999. The increase in interest income was primarily due to the receipt of net proceeds from the series C convertible preferred stock offering of approximately $7.6 million, which increased available cash balances for investment.

Interest expense increased 22% from $261,791 for the year ended December 31, 1998 to $318,353 for the year ended December 31, 1999. The increase in interest expense is primarily due to increased borrowings under the $2,900,000 letter of credit from Northwest Hospital.

LIQUIDITY AND CAPITAL RESOURCES

At June 30, 2001, we had cash and cash equivalents of $7,731,579, compared to $410,756 at December 31, 2000.

We used $4,330,149 in cash for operating activities during the first six months of 2001, compared to $2,810,030 in the first six months of 2000. The change in cash used in operating activities from 2000 to 2001 was primarily due to an increased net loss, exclusive of amortization of debt discount and beneficial conversion feature, resulting from expanded operations.

For the six months ended June 30, 2001, we used $107,536 in cash for investing activities compared to $677,511 during the same period of the prior year. Cash used in investing activities consists solely of purchases of property and equipment for both periods.

We generated $11,758,508 in cash from financing activities during the first six months of 2001, compared to $4,742,292 during the first six months of 2000. For the first six months of 2001, cash generated from financing activities consists primarily of proceeds from issuances of our series D convertible preferred stock of $12,648,433, net of issuance costs, offset by payments made on a note payable to a stockholder of $862,232. For the first six months of 2000, cash generated from financing activities consists primarily of proceeds from the issuance of convertible promissory notes and warrants, net of issuance costs.

From inception, we have financed our operations primarily through the private sale of securities, cash generated from the sale of biomedical research products, equipment leases and borrowings from stockholders.

We expect to incur substantial costs as we continue to expand our clinical trials, research and pre-clinical development initiatives. We expect that the net proceeds from this offering, along with our existing cash and cash equivalents will be sufficient to fund operations for the next twelve months. However, during or after this period, if our capital resources are insufficient to meet our capital requirements and expenses, we would need to issue additional equity or debt securities or obtain credit arrangements. Additional financing may not be available on terms acceptable to us or at all. The issuance of additional equity or convertible debt securities could result in additional dilution to our stockholders. Our future capital needs will depend on many unpredictable factors including the size, duration and number of clinical trials, the progress associated with pre-clinical trials, the time frame for successful development of an effective product, if ever, and the commercialization of such product all of which includes the regulatory approval process. The regulatory process is uncertain, includes extensive pre-clinical testing and clinical trials of each product candidate in order to establish its safety and effectiveness, can take many years and requires the expenditure of substantial resources. Additional costs will be incurred through the expense of preparing, filing, maintaining and enforcing patent claims and other intellectual property rights, modifications in existing or the establishment of new strategic partnerships and licensing arrangements, and clinical trials manufacturing costs. As a result of these factors, we cannot predict accurately the amount or timing of future cash needs.

28

We do not have committed external sources of funding and we cannot assure that we will be able to obtain additional funds on acceptable terms, if at all. If adequate funds are not available, we may be required to, among other things:

- delay, reduce the scope of or eliminate one or more of our programs;

- obtain funds through arrangements with strategic partners or others that may require us to relinquish rights to technologies or product candidates that we would otherwise seek to develop ourselves;

- license rights to technologies or lead agents on terms that are less favorable to us than might otherwise be available; or

- dispose of assets and no assurance can be given that the changing value of such assets will be realized upon liquidation.

QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Our exposure to market risk is presently limited to interest rate sensitivity, which is affected by changes in the general level of U.S. interest rates. We are exposed to interest rate changes primarily as a result of our investment activities and borrowings under debt arrangements. The primary objective of our investment activities is to preserve principal while at the same time maximizing the income we receive without significantly increasing risk. To minimize risk, we maintain our cash and cash equivalents in interest-bearing instruments, primarily money market funds. Our interest rate risk management objective with respect to our borrowings is to limit the impact of interest rate changes on earnings and cash flows. Due to the nature of our cash and cash equivalents and borrowings, we believe that we are not subject to any material market risk exposure. We do not have any foreign currency or other derivative financial instruments.

RECENT ACCOUNTING PRONOUNCEMENTS

In June 1998, the Financial Accounting Standards Board, or FASB, issued Statement of Financial Accounting Standard, or SFAS, No. 133, "Accounting for Derivative Instruments and Hedging Activities." This statement requires companies to record derivatives on the balance sheet as assets and liabilities, measured at fair value. Gains and losses resulting from changes in the values of those derivatives would be accounted for depending on the use of the derivative and whether it qualifies for hedge accounting. SFAS No. 133 was effective for us beginning in the first quarter of fiscal 2001 and did not have an impact on our consolidated financial statements.

In July 2001, the FASB issued Statement No. 141, "Business Combinations," and Statement No. 142, "Goodwill and Other Intangible Assets." Statement 141 requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001. Statement 141 also specifies that certain intangible assets acquired in a purchase method business combination must be recognized and reported apart from goodwill, noting that any purchase price allocable to an assembled workforce may not be accounted for separately. Statement 142 will require that goodwill and intangible assets with indefinite useful lives no longer be amortized, but instead tested for impairment at least annually in accordance with the provisions of Statement 142. Statement 142 will also require that intangible assets with definite useful lives be amortized over their respective estimated useful lives to their estimated residual values, and reviewed for impairment in accordance with SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." Statement 141 is required to be adopted immediately and Statement 142 will be adopted January 1, 2002. As we currently have no intangible assets, adoption is not expected to have a material impact on our financial statements.

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BUSINESS

OVERVIEW

We are a biotechnology company focused on discovering, developing and commercializing immunotherapy products that safely generate and enhance immune system responses to effectively treat cancer. Currently approved cancer treatments are frequently ineffective and can cause significant adverse side effects. We combine our expertise in dendritic cell biology, monoclonal antibodies, immunology, and antigen discovery with our proprietary technologies to develop innovative cancer therapies. These therapies are derived from our two versatile product development programs, DCVax and HuRx.

DCVax. DCVax is a dendritic cell-based cancer immunotherapy platform. Our DCVax therapies are designed to safely elicit potent immune responses that eliminate cancer cells. We are currently developing four DCVax product candidates. Our lead DCVax product candidate, DCVax-Prostate, is a prostate cancer treatment for which we are planning a Phase III clinical trial. We have observed stabilization of disease in 54% of the patients in our Phase I/II clinical trial, and a PSMA-specific immune response to DCVax-Prostate in 75% of patients. To date, we have observed no significant adverse side effects from DCVax-Prostate. Our second DCVax product candidate, DCVax-Brain, is moving towards a Phase II clinical trial for glioblastoma, a lethal form of brain cancer. Our third DCVax product candidate, DCVax-Lung, is moving towards a Phase I clinical trial for non small-cell carcinoma, the most prevalent form of lung cancer. Our fourth DCVax product candidate is designed to treat renal cancer and is in pre-clinical development.

HuRx. HuRx is our fully human monoclonal antibody-based cancer therapy platform. In partnership with Medarex, Inc., we have assembled an initial portfolio of four HuRx product candidates targeted to treat several types of cancers. Our lead HuRx product candidate, HuRx-Prostate, is a fully human monoclonal antibody-based therapy for the treatment of prostate cancer. HuRx-Prostate is currently being manufactured under cGMP conditions for our anticipated Phase I clinical trials. We have observed significant anti-cancer activity in tests of human prostate cancer cell cultures treated with HuRx-Prostate. Our other HuRx product candidates are in pre-clinical development.

INDUSTRY BACKGROUND

INCIDENCE OF CANCER IN THE UNITED STATES

The American Cancer Society estimates that in the United States, men have a 1 in 2 lifetime risk of developing cancer, while women have a risk of 1 in 3. Doctors are expected to diagnose approximately 1.3 million new cases of cancer in the United States during 2001. Cancer is the second leading cause of death in the United States after heart disease and is estimated to result in approximately 553,000 deaths, or 1,500 per day, in 2001. The direct medical costs related to treating cancer in the United States were estimated to be $60 billion in 2000. Our initial therapeutic targets, prostate, brain and lung cancers, cause approximately 37% of the cancer deaths in the United States each year. The American Cancer Society estimates that the incidence of new diagnosis and deaths resulting from several common cancers during 2001 is as follows:

-----------------------------------------------------------
       TYPE OF CANCER            NEW CASES        DEATHS
-----------------------------------------------------------
     Breast                       193,700          40,600
     Prostate                     198,100          31,500
     Colorectal                   135,400          56,700
     Lung                         169,500         157,400
     Kidney                        30,800          12,100
     Melanoma                      51,400           7,800
     Brain                         17,200          13,100
-----------------------------------------------------------

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Our most advanced product candidate, DCVax-Prostate, addresses the treatment of prostate cancer. Prostate cancer is now the most prevalent form of cancer among men in the United States, representing 31% of all new cases in men, resulting in the second highest number of deaths of men from cancer.

CANCER

Cancer is characterized by aberrant cells that multiply uncontrollably. As cancer progresses, the cancer cells may invade other tissues throughout the body producing additional cancers, called metastases. Cancer growth can cause tissue damage, organ failure and, ultimately, death.

Many immunologists believe that cancer cells occur frequently in the human body, yet are effectively controlled by the immune system because these cells are recognized as aberrant. Cancer growth occurs if this natural process fails.

Cancer cells produce abnormal kinds and amounts of substances called antigens, which may be distinguishable from those produced by healthy cells. The use of these cancer-associated antigens is essential to the successful development of products capable of stimulating the immune system to seek and destroy cancer cells marked by these antigens.

THE HUMAN IMMUNE SYSTEM

The immune system is the body's defense mechanism responsible for recognizing and eliminating cancer cells, viruses, bacteria and other disease-causing organisms. This system consists of populations of white blood cells whose components are responsible for initiating the cellular immune response, and the humoral, or antibody-based, immune response.

Dendritic cells, a component of white blood cells, initiate the cellular immune response by processing and displaying disease-associated antigen fragments on their outer cell surface, where they are recognized by naive T cells, which become disease-specific Helper T cells and Killer T cells. Helper T cells then induce Killer T cells to seek and destroy the cells marked by the disease-associated antigen.

B cells direct the humoral immune response by binding to disease-associated antigens on the surface of various cell types, producing disease-specific antibodies. Helper T cells also enhance B cell production of disease-specific antibodies. These antibodies bind to and initiate the destruction of cells marked by the associated disease-specific antigens.

A small population of activated Helper T cells, Killer T cells, and antibody-producing B cells survive for long periods of time, retaining the memory of what the disease fragment looks like. These cells can respond very rapidly to subsequent exposure to disease-specific antigens and fragments. The most effective natural immune response is one in which both Killer T cells and antibody-producing B cells are activated.

The immune system response to cancer is generally characterized by the following sequence:

- Step 1. Dendritic cells ingest cancer antigens, break them into small fragments and display them on their outer cell surfaces.

- Step 2. Dendritic cells bearing these cancer antigen fragments bind to and activate naive T cells, which become disease-specific Helper T and Killer T cells.

- Step 3. The activated Helper T cells produce factors that greatly enhance the cell division of Killer T cells and mature their cancer-killing properties.

- Step 4. Cancer cells and their cancer-associated antigens are also recognized by antibody producing B cells.

- Step 5. The activated Helper T cells produce factors that greatly enhance antibody production by B cells that in turn are specific for the cancer-associated antigens.

- Step 6. The Killer T cells and antibodies, acting alone or in combination, destroy cancer cells.

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LIMITATIONS OF CURRENT CANCER THERAPIES

TRADITIONAL CANCER THERAPY APPROACHES

Cancer is characterized by aberrant cells that multiply uncontrollably. As cancer progresses, the cancer cells may invade other tissues throughout the body producing additional cancers, called metastases. Effective therapies must attack the cancer both at its site of origin and at sites of metastases. Traditional treatments for cancer include:

- Surgery. Surgery may be used to remove cancer cells, but not all cancer cells can be removed surgically. Surgery may also result in significant adverse side effects such as collateral damage to healthy tissue, bleeding and infection.

- Radiation Therapy. Radiation therapy may be used to treat cancers but it can cause significant damage to healthy tissue surrounding the targeted cancer cells. Recurrent cancers may not be treatable with further radiation therapy. Radiation therapy may also cause additional significant adverse side effects such as burns to treated skin, organ damage and hair loss.

- Chemotherapy. Chemotherapy may be used to treat cancer, but involves the use of toxic chemical agents. These toxic chemical agents affect both healthy and diseased cells and may cause additional significant adverse side effects such as hair loss, immune suppression, nausea and diarrhea.

- Hormone Therapy. Hormone therapy may be used to treat cancer, but involves the use of substances that chemically inhibit the production of growth and reproductive hormones. Hormone therapy is limited in effectiveness. Hormone therapy may also cause significant adverse side effects such as bone loss, hot flashes, impotence and blood clots.

CURRENT CANCER IMMUNOTHERAPY APPROACHES

Immunotherapy can stimulate and enhance the body's natural mechanism for destroying pathogens, such as cancer cells, and may overcome many of the limitations of traditional cancer therapies. Immunotherapy may be particularly useful to augment the standard-of-care treatments for cancer. In recent years, two cancer immunotherapy approaches have emerged, with FDA approved products to address the limitations of traditional therapies:

- Antibody-Based Therapies. Currently approved antibody-based cancer therapies have improved survival rates with reduced side effects when compared with traditional therapies. However, these antibody-based therapies can elicit an immune response against themselves because they contain mouse proteins or fragments of such proteins. This can limit their effectiveness and potentially endanger a patient's health.

- Immune-Modulating Agents. Currently approved immune-modulating agents, such as IL-2, GM-CSF and alpha-interferon, have been found to have some ability to enhance the immune system and control cancer growth. However, these therapies involve delivery of the immune modulating agent through the blood system. This lack of selectivity may result in significant toxicity to healthy tissue.

We believe that the most effective way to address these limitations is to stimulate and enhance the patient's natural immune system to seek and destroy cancer cells.

OUR SOLUTIONS

We have developed two proprietary approaches, DCVax and HuRx, for stimulating and enhancing a patient's cellular and humoral immune response to cancer. We believe that DCVax and HuRx products can overcome the limitations of current cancer therapies and offer cancer patients safe and effective treatment alternatives, alone or in combination with other therapies.

DCVAX

Our DCVax platform combines our expertise in dendritic cell biology, immunology and antigen discovery with our proprietary technology to develop therapeutic products that stimulate beneficial immune

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responses to treat cancer. We believe that by providing a reliable method of directly activating Helper T cells, Killer T cells and B cells, DCVax has the following significant advantages over current therapies:

- Activates The Natural Immune System. Our DCVax products are designed to elicit a natural immune response. We believe that our pre-clinical and clinical trials have demonstrated that our DCVax product candidates can train a patient's own Killer T cells to seek and destroy specifically targeted cancer cells. Our clinical trials have also shown that DCVax-Prostate stimulates the body to produce antibodies that bind to cancer-associated antigens and potentially destroy cancer cells marked by these antigens.

- Broad Clinical Applicability. We intend to apply our DCVax platform to treat a wide variety of cancers. The DCVax platform affords the flexibility to target many different forms of cancer through the pairing of dendritic cells with cancer-associated antigens, fragments of cancer-associated antigens or deactivated whole cancer cells.

- No Significant Adverse Side Effects Or Toxicity. Our lead DCVax product candidate, DCVax-Prostate, has shown no significant adverse side effects in over 110 clinically administered injections. We believe that we minimize the potential for toxicity by using the patient's own cells to create our DCVax products. Additionally, because our DCVax products are designed to target the cancer-associated antigens in the patient, we believe they minimize collateral damage to healthy cells.

- Rapid Development. We believe that our DCVax technology, which has been safely administered in a Phase I/II clinical trial for prostate cancer, will enable us to rapidly move new potential products into clinical trials within six to nine months of concept, subject to FDA approval. Identifying promising new DCVax product candidates simply requires identification of cancer-associated antigens, fragments of cancer-associated antigens or whole cancer cells.

- Ease Of Administration. We initially collect a patient's white blood cells in a single standard outpatient procedure called leukapheresis. After patient-specific manufacturing and quality control testing, each small dose of a DCVax product is administered by a simple intradermal injection in an outpatient setting.

- Complementary With Other Treatments. Our DCVax products are designed to stimulate the patient's own immune system to safely target cancer cells. Consequently, we believe these products may be complementary to traditional therapies such as chemotherapy, radiation therapy, hormone therapy and surgery.

HURX

Our HuRx platform combines our expertise in monoclonal antibodies, immunology and antigen discovery with strategic partners who have expertise in fully human monoclonal antibody development and production. We are co-developing our initial HuRx products with Medarex, Inc. This strategic partnership enables us to create proprietary fully human monoclonal antibody-based cancer therapies. We believe that products derived from our HuRx platform will have the following advantages over current therapies:

- Fully Human Antibodies. Current monoclonal antibody-based therapies contain mouse protein or fragments of such proteins. Consequently, these therapies have the potential to elicit unwanted immune responses against the mouse proteins or protein fragments. Our HuRx products are based on monoclonal antibodies that are fully human, and thus do not contain any mouse proteins. As a result, we expect these products to exhibit a favorable safety profile and no unwanted immune response against the HuRx antibody-based therapy itself.

- Rapid Development. We are developing our initial HuRx products in collaboration with Medarex. This strategic partnership combines expertise in fully human monoclonal antibody technology, in-house development and clinical supply manufacturing. Our strategic partnership with Medarex enables us to rapidly develop product candidates from our antigen discovery program. Consequently,

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we believe that, subject to FDA approval, we can progress from antigen discovery to clinical trials for each new HuRx product candidate in twelve months or less.

- Cancer Specificity. Our proprietary antigens are significantly over-expressed in cancer cells. Our HuRx antibodies bind to these targeted cancer-associated antigens and potentially destroy cancer cells marked by these antigens. To date, we have successfully identified four clinically validated antigens associated with six different cancers.

- Multiple Therapeutic Applications. We believe that HuRx antibodies may be used as stand-alone products that bind to cancer-associated antigens, and potentially destroy cancer cells marked by these antigens. HuRx antibodies may also enable the targeted delivery of existing therapies such as radiation and cytotoxic chemicals. The inherent toxic effects of cytotoxic agents and radioactive materials on normal tissue are minimized by coupling these agents to antibodies that have a high degree of specificity to cancer cells.

- Commercialization. We believe that our HuRx antibodies may be manufactured in large quantities within a relatively short period of time. As a result, the manufacturing of these antibodies can be scaled to meet market demand. Antibody-based products are typically characterized by an inherent stability, resulting in a commercially acceptable shelf-life.

- Complementary With Other Treatments. We believe that our HuRx products may be suitable for use alone or in combination with currently approved therapies due to their complementary cell-killing properties.

In addition, we believe that HuRx antibodies may be useful for the development of cancer diagnostic imaging products.

OUR STRATEGY

Our objective is to become the leading biotechnology company focused on discovering, developing and commercializing immunotherapy products that safely generate and enhance natural immune system responses to effectively treat cancer. To achieve this objective, we are pursuing the following strategic initiatives:

- Maximize Speed To Market Of DCVax-Prostate. We intend to bring DCVax-Prostate to market after entering and successfully completing a Phase III clinical trial for patients with prostate cancer. Because DCVax-Prostate addresses late-stage prostate cancer, we plan to apply to the FDA for fast-track designation.

- Expand DCVax To Multiple Cancers. We are applying our DCVax platform to brain, lung and renal cancers. We have conducted extensive pre-clinical studies on the applicability of our DCVax platform to each of these cancers. Subject to FDA approval, we expect to begin a Phase II clinical trial for DCVax-Brain, and a Phase I clinical trial for DCVax-Lung within six months.

- Establish A Competitive Position In Antibody-Based Cancer Therapies. We are expanding the development of our HuRx products through our strategic partnership with Medarex. We have completed extensive pre-clinical studies on HuRx-Prostate, our lead HuRx product candidate. Subject to FDA approval, we expect to begin Phase I clinical trials within 12 months.

- Diversify Our Product Portfolio. We will continue to utilize our antigen discovery expertise to identify and validate new cancer-associated antigens that can be paired with our DCVax and HuRx technologies. In addition, we intend to accelerate the development of a broader product portfolio by licensing or acquiring complementary technologies, patents and product candidates.

- Establish Strategic Partnerships. We intend to enter into additional strategic partnerships with various corporate collaborators and academic research institutions to augment our development and commercialization efforts. Although we intend to retain rights to products that we can commercialize ourselves, we intend to collaborate with strategic partners to support the development and

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commercialization of some of our products. We may also enter into strategic partnerships to obtain value for our proprietary DCVax and HuRx technologies outside our areas of interest.

OUR CLINICAL AND PRECLINICAL DEVELOPMENT PROGRAMS

We are developing DCVax- and HuRx-based therapeutic products for the treatment of cancer. We have completed or largely completed our research and pre-clinical testing phases of four programs, one of which is in clinical trials. We intend to submit INDs to the FDA to enable us to begin clinical testing for the other three programs. Additionally, we have numerous projects in pre-clinical research and development. We are also actively engaged in the research and discovery of cancer-associated antigens and fragments of cancer- associated antigens that can be used with our DCVax and HuRx platforms.

The following table summarizes the targeted indications and status of our product candidates:

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  PRODUCT CANDIDATE             TARGET INDICATIONS                                 STATUS
--------------------------------------------------------------------------------------------------------------
 DCVAX PLATFORM
--------------------------------------------------------------------------------------------------------------
 DCVax-Prostate        Prostate cancer                        Phase III -- protocol submitted to the FDA
 DCVax-Brain           Glioblastoma                           Phase II  -- trial planned to begin Q2 2002
 DCVax-Lung            Non small-cell lung cancer             Phase I  -- trial planned to begin Q1 2002
 DCVax-Renal           Renal cancer                           Pre-clinical
--------------------------------------------------------------------------------------------------------------
 HURX PLATFORM
--------------------------------------------------------------------------------------------------------------
 HuRx-Prostate         Prostate cancer                        Phase I  -- trial planned to begin Q3 2002
 HuRx-Lung             Small cell lung cancer                 Pre-clinical
 HuRx-Breast           Breast cancer                          Pre-clinical
 HuRx-Brain            Glioblastoma                           Pre-clinical
 HuRx-Colon            Colon cancer                           Pre-clinical
 HuRx-Melanoma         Melanoma                               Pre-clinical
 Flt4                  Prostate cancer                        Pre-clinical
--------------------------------------------------------------------------------------------------------------
 GENE THERAPY
--------------------------------------------------------------------------------------------------------------
 CXCR4                 Breast cancer, Glioblastoma, Colon     Pre-clinical
                       cancer and Melanoma
 CX43                  Breast cancer, Glioblastoma and        Pre-clinical
                       Prostate cancer
--------------------------------------------------------------------------------------------------------------

OUR DCVAX PLATFORM

The DCVax platform uses our proprietary process to efficiently produce and activate dendritic cells outside of a patient's body. Our Phase I/II clinical trial has shown that these cells can generate an effective immune system response when administered therapeutically. Manufacture of a DCVax product takes approximately 30 days to complete, and is characterized by the following sequence:

- Collection. A patient's white blood cells are collected in a single and simple outpatient procedure called leukapheresis.

- Isolation. These cells are sent to our cGMP manufacturing facility, where dendritic cell precursors are isolated from the patient's white blood cells.

- Transformation. Dendritic cell precursors are transformed, through the application of specific growth factors, into highly pure populations of immature dendritic cells during a six-day culture period.

- Maturation. Immature dendritic cells are exposed to a proprietary maturation factor in order to maximize Helper T cell, Killer T cell and B cell activation.

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- Antigen Display. Cancer-associated antigens, fragments of cancer-associated antigens or deactivated whole cancer cells are added to, ingested and processed by the maturing dendritic cells, causing the dendritic cells to display fragments of cancer-associated antigens on their outer cell surfaces.

- Harvest And Separation. These dendritic cells are harvested and separated into single-use DCVax administration vials, frozen and stored.

- Quality Control. Each DCVax product lot undergoes rigorous quality control testing, including 14-day sterility testing for bacterial and mycoplasma contamination, and potency testing prior to shipment to the administration site for intradermal injection.

We believe that, by virtue of the process described above as antigen display, the DCVax platform affords the flexibility to target many different forms of cancer through the pairing of dendritic cells with cancer-associated antigens, pieces of cancer-associated antigens or deactivated whole cancer cells. We have either patented or licensed critical intellectual property encompassing this technology.

DCVAX PRODUCT CANDIDATES

DCVAX-PROSTATE

DCVax-Prostate results from combining the DCVax platform with the cancer-associated antigen PSMA. PSMA is located on the surface of prostate cells. It is expressed at very low levels on benign or healthy prostate cells, and at much higher levels on prostate cancer cells. Because PSMA is over-expressed in all prostate cancers, it represents an effective target for prostate cancer therapeutics. We have an exclusive worldwide license for the use of PSMA as a target for dendritic cell-based prostate cancer immunotherapy.

DCVAX-PROSTATE CLINICAL TRIALS

DCVax-Prostate is moving towards a pivotal double-blind, placebo-controlled Phase III clinical trial involving late stage prostate cancer patients for whom hormone therapy is no longer effective. This trial will include 495 patients enrolled at multiple sites in the United States. Patients will be evaluated throughout the course of the trial, and interim data will be analyzed after 250 patients have completed their first year of the trial.

In September 1999, we filed an IND for a Phase I/II clinical trial for DCVax-Prostate to treat late-stage prostate cancer patients for whom hormone therapy was no longer effective. This trial, carried out at M.D. Anderson Cancer Center and at UCLA, administered DCVax-Prostate to 32 patients in order to establish the safety and efficacy of three different dosage levels of DCVax-Prostate.

In our trial to date, we have observed stabilization of disease in 13 of 24 patients at 20 and/or 26 weeks with no significant adverse side effects related to DCVax-Prostate. Based on our experience, we believe that these patients would have progressed more rapidly had they not been treated with DCVax-Prostate. Our Phase I/II clinical trial data reveal that 75% of patients have an immune response specific to DCVax-Prostate in the form of either antibodies or T cell proliferation. In addition, objective disease progression was assessed at 20 and/or 26 weeks through analysis of bone/CT scans.

Target Market. The American Cancer Society estimates that 198,100 new cases of prostate cancer will be diagnosed in the United States during 2001. Deaths from prostate cancer are estimated at 31,500 per year. We estimate that there is an initial DCVax-Prostate target population consisting of approximately 73,000 patients with late stage or hormone refractory prostate cancer.

Current Treatments. Existing treatments for localized prostate cancer include surgery and various forms of radiation therapy. The current standard-of-care for treating metastatic prostate cancer is hormone therapy. Although this therapy achieves temporary tumor control, the National Cancer Institute's 1989 - 1996 five-year survival rate for metastatic prostate cancer is only 33%. Moreover, hormone therapy may cause significant adverse side effects, including bone loss, hot flashes, impotence and blood clots. Disease progression in the presence of hormone therapy occurs on average in two years, and is then classified as hormone refractory prostate cancer. Approximately 50% of patients with hormone refractory prostate cancer will die within one

36

year of its onset. Currently, the only FDA approved treatments for hormone refractory prostate cancer are chemotherapy and radioactive pharmaceuticals, which can alleviate cancer-related symptoms but may cause significant adverse side effects and do not prolong survival. We believe that DCVax-Prostate addresses this critical unmet medical need.

DCVAX-BRAIN

DCVax-Brain uses our DCVax platform in combination with glioblastoma-associated antigen fragments. Our clinical collaborators at UCLA are conducting a Phase I clinical trial to assess the safety and efficacy of dendritic cell-based immunotherapy for glioblastoma. They have informed us that it has been safely administered to eight patients. Based on these results, we intend to discuss with the FDA the transfer to us of the IND on which the UCLA study was based, for the purpose of initiating a Phase II clinical trial with DCVax-Brain at several clinical sites. Because DCVax-Brain is not identical to the product used in the UCLA trial, there can be no assurance that the FDA will not require us to perform Phase I clinical trials using DCVax-Brain prior to proceeding to Phase II.

Target Market. The American Cancer Society estimates that 17,200 new cases of brain cancer will be diagnosed in the United States during 2001. Deaths from brain cancer are estimated at 13,100 per year. The most common and lethal form of brain cancer is glioblastoma, the indication we are targeting with DCVax- Brain. We estimate that DCVax-Brain addresses a population consisting of approximately 10,000 new patients per year.

Current Treatments. Existing treatments for glioblastoma include surgery, radiation and chemotherapy that are used in various combinations and/or sequences. These treatments have significant adverse side effects. In its most recent study, The National Institute of Health reported that the 1989 - 1996 five-year survival rate for all brain cancer patients was only 31%. Following initial treatment, virtually all cases of this cancer recur, with a life expectancy of approximately one year following recurrence. No effective therapy exists for these patients. We believe that DCVax-Brain addresses this critical unmet medical need.

DCVAX-LUNG

DCVax-Lung uses our DCVax platform in combination with isolated and deactivated lung cancer cells as antigens. We are moving towards a Phase I clinical trial to assess the safety and efficacy of DCVax-Lung. We have completed all pre-clinical work for this trial and have submitted a request for a pre-IND meeting with the FDA.

Target Market. The American Cancer Society estimates that 169,500 new cases of lung cancer will be diagnosed in the United States during 2001. Approximately 80% of these cases will be attributable to non small-cell lung cancer, the indication we are targeting with DCVax-Lung. Deaths from all forms of lung cancer are estimated at 157,400 per year.

Current Treatments. Existing treatments for non small-cell lung cancer include surgery and radiation therapy, which are used in various combinations. These treatments have significant adverse side effects. In its most recent study, the National Institute of Health reported that the 1989 - 1996 five-year survival rate for non small-cell lung cancer patients was only 6.2%. Following initial treatment, virtually all cases of this cancer recur, with a life expectancy of approximately one year following recurrence. No effective therapy exists for these patients. We believe that DCVax-Lung addresses this critical unmet medical need.

DCVAX-RENAL

The American Cancer Society estimates that 30,800 new cases of renal cancer will be diagnosed in the United States during 2001. Deaths from renal cancer are estimated at 12,100 per year. DCVax-Renal is in preclinical development.

OUR HURX PLATFORM

Our HuRx platform combines our expertise in monoclonal antibodies, immunology and antigen discovery with strategic partners who have expertise in fully human monoclonal antibody development. We are

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co-developing our initial HuRx products with Medarex. We believe this strategic partnership will enable us to create proprietary fully human monoclonal antibody-based cancer therapies. We manufacture our HuRx products in the following sequence:

- Identification. We identify, validate and select a potentially useful cancer-associated antigen for our HuRx platform.

- Immunization. This cancer-associated antigen is used to immunize transgenic mice. These mice create B cells, which produce fully human cancer-associated antigen-specific antibodies.

- Selection And Culturing. From the B cells created during immunization, we select single antibody-producing cells, which we then culture to large quantities. These cells produce identical antibodies with high specificity to the targeted cancer-associated antigen.

- Analysis And Evaluation. These fully human monoclonal antibodies are analyzed for specificity to the cancer-associated antigen, ability to bind to live cancer cells with high affinity and ability to kill those cells. In addition, the antibody-producing cells are evaluated for their ability to generate high quantities of the selected antibodies.

- Manufacturing. Our HuRx fully human monoclonal antibodies are manufactured for clinical trials under cGMP conditions.

We believe that our antigen discovery program will enable us to identify and develop cancer-associated antigens in the HuRx platform, potentially expanding our portfolio of therapeutic products. We expect that the antibodies generated by the HuRx platform will be useful as stand-alone products or as products coupled with cytotoxins or radioactive agents.

HURX PRODUCT CANDIDATES

HURX-PROSTATE

HuRx-Prostate results from combining the HuRx platform with the cancer-associated antigen PSMA to create therapeutically useful antibodies. These antibodies bind to and initiate the destruction of cancer cells marked by PSMA. We are moving towards a Phase I clinical trial in hormone refractory prostate cancer patients. We are manufacturing HuRx-Prostate under cGMP conditions for this clinical trial. Pre-clinical work is largely completed.

Target Market. The American Cancer Society estimates that 198,100 new cases of prostate cancer will be diagnosed in the United States during 2001. Deaths from prostate cancer are estimated at 31,500 per year. We estimate that there is an initial HuRx-Prostate target population consisting of approximately 73,000 patients with late stage or hormone refractory prostate cancer.

Current Treatments. Existing treatments for localized prostate cancer include surgery and various forms of radiation therapy. The current standard-of-care for treating metastatic prostate cancer is hormone therapy. Although this therapy achieves temporary tumor control, the National Cancer Institute's 1989 - 1996 five-year survival rate for metastatic prostate cancer is only 33%. Moreover, hormone therapy may cause significant adverse side effects such as bone loss, hot flashes, impotence and blood clots. Disease progression in the presence of hormone therapy occurs on average in two years, and is then classified as hormone refractory prostate cancer. Approximately 50% of patients with hormone refractory prostate cancer will die within one year of its onset. Currently, the only FDA approved treatments for hormone refractory prostate cancer are chemotherapy and radioactive pharmaceuticals, which can alleviate cancer-related symptoms but may cause significant adverse side effects and do not prolong survival. We believe that HuRx-Prostate addresses this critical unmet medical need.

HURX-LUNG, HURX-BREAST, HURX-BRAIN, HURX-COLON AND HURX-MELANOMA

We have selected cancer-associated antigens for non small-cell lung cancer, breast cancer, glioblastoma, colon cancer and melanoma. According to the American Cancer Society, these conditions represent approximately 32% of all cancers expected to be diagnosed in the United States in the year 2001. Through our strategic partnership with Medarex, we are currently developing fully human monoclonal antibodies targeted to antigens associated with these cancers.

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GENE THERAPY PROGRAM

Cancer is characterized by normal cellular activity becoming aberrant as a result of altered gene function or expression. The result of this alteration is uncontrolled cell division. Gene therapy involves the use of genes for purposes of expressing specific proteins in cancer cells that alter the aberrant behavior of those cancer cells in order to:

- normalize uncontrolled cell division;

- increase sensitivity to treatments capable of inducing cell death; or

- induce cell death.

We have identified two genes, which we are evaluating as potential targets for developing therapies for breast cancer, glioblastama, colon cancer, melanoma and prostate cancer. We intend to use the preclinical data developed to explore opportunities to license this technology to others.

STRATEGIC PARTNERSHIPS

We have entered into the following strategic partnerships:

Medarex, Inc. In April 2001, we entered into a collaboration agreement with Medarex to produce fully human monoclonal antibodies to certain antigen targets identified by us. The agreement calls for joint development of antibodies to at least eight cancer-associated antigen targets. This relationship is governed by a joint steering committee composed of representatives of both companies to make development and commercialization decisions concerning jointly developed fully human monoclonal antibody product candidates. Each of us has the right to elect not to participate in the joint development of antibodies to a given antigen target and receive instead certain milestone and royalty payments on net sales. The agreement terminates upon the later of one year after completion of the research activities thereunder, or the date on which neither party is exploiting any products developed thereunder. The agreement is also subject to termination if either party enters bankruptcy or breaches its material obligations thereunder.

UCLA Sponsored Research Agreement. In April 2001, we entered into an agreement with the Regents of the University of California, Los Angeles, pursuant to which scientists at that institution will assist us in our Phase I clinical trials for DCVax-Lung in exchange for certain financial considerations.

Department of Molecular Medicine, Northwest Hospital. In August 2001, we entered into an agreement with the Department of Molecular Medicine, Northwest Hospital, which provides us the right of first refusal to use and exploit any of their cancer-related intellectual property in exchange for certain financial considerations.

MANUFACTURING

We have only limited manufacturing facilities for the production of our product candidates currently under development. We expect to rely upon third-party manufacturers to produce some of our product candidates for pre-clinical, clinical and commercial purposes. Furthermore, the product candidates under development by us have never been manufactured on a commercial scale and may not be able to be manufactured at a cost or in sufficient quantities to make commercially viable products.

MARKETING

We plan to market our products in strategic partnership with established pharmaceutical companies. Our collaboration with these companies may take the form of royalty agreements, licensing agreements or other co-marketing arrangements. The U.S. oncology market is characterized by highly concentrated distribution channels. Consequently, we also intend to develop a direct sales force to market our cancer-related products in the United States.

INTELLECTUAL PROPERTY

We seek to protect our commercially relevant proprietary technologies through patents both in the United States and abroad. We have several issued United States and foreign patents and patent applications pending

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in a number of areas that we believe will be valuable to our business, including dendritic cell isolation and manipulation and the use of dendritic cells for immunotherapy as well as monoclonal antibodies which bind to the portion of PSMA outside of the cell. Our issued patents expire on dates between 2015 and 2016. We intend to continue using our scientific expertise to pursue and patent new developments with respect to uses, methods, and compositions to enhance our position in the field of cancer treatment.

In August 2000, we entered into an agreement with Cytogen for an exclusive world-wide license to make, have made, use, sublicense and sell PSMA as part of our dendritic cell-based immunotherapy for prostate cancer. Our license with Cytogen contains various milestone, commercialization, sublicensing, royalty and other obligations on us and contains customary termination provisions. We intend to continue to license technologies to strengthen our competitive position.

Any patents that we obtain may be circumvented, challenged or invalidated by our competitors. We cannot assure you that any of our patent applications will result in the issuance of any patents, or that any patents that do issue will offer any protection against others who seek to practice the claimed inventions. We have obtained licenses for certain technologies that we use, but we cannot assure you that we will be able to maintain those licenses or that we will be able to secure additional licenses in the future. Thus, we may be forced to abandon certain product areas or develop alternative methods for operating in those areas.

In addition to patents, we rely on copyright protection, trade secrets, proprietary know-how and trademarks to maintain our competitive position. Our success will depend in part on our ability to preserve our copyrights and trade secrets. Although our officers, employees, consultants, contractors, manufacturers, outside scientific collaborators, sponsored researchers and other advisors are required to sign agreements obligating them not to disclose our confidential information, we cannot guarantee these parties will in fact not disclose such information and compromise our trade secrets. We may not have adequate remedies for any such breach. It is also possible that our trade secrets or proprietary know-how will otherwise become known or be independently replicated or otherwise circumvented by competitors.

Our technologies may infringe the patents or violate other proprietary rights of third parties. In the event of infringement or violation, we may be prevented from pursuing further licensing, product development or commercialization. Such a result would materially adversely affect our business, financial condition and results of operations.

If we become involved in any litigation, interference or other administrative proceedings, we will incur substantial expenses and the efforts of our technical and management personnel will be significantly diverted. An adverse determination may subject us to significant liabilities or require us to seek licenses, which may not be available. We may also be restricted or prevented from manufacturing and selling our products, if any, in the event of an adverse determination in a judicial or administrative proceeding, or if we fail to obtain necessary licenses.

COMPETITION

The biotechnology and biopharmaceutical industries are characterized by rapidly advancing technologies, intense competition and a strong emphasis on proprietary products. Several companies, such as Cell Genesys, Inc., Dendreon Corporation and Genzyme Molecular Oncology, a division of Genzyme Corporation, are actively involved in research and development in cell-based cancer therapeutics. Additionally, several companies, such as Abgenix, Inc., Agensys, Inc., IDEC Pharmaceuticals Corporation and Genentech, Inc. are actively involved in research and development of monoclonal antibody-based cancer therapies. Many other third parties compete with us in developing alternative therapies to treat cancer, including:

- biopharmaceutical companies;

- biotechnology companies;

- pharmaceutical companies;

- academic institutions; and

- other research organizations.

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Many of our competitors have significantly greater resources and expertise in research and development, manufacturing, pre-clinical testing, conducting clinical trials, obtaining regulatory approvals and marketing. In addition, many of these competitors have become more active in seeking patent protection and licensing arrangements in anticipation of collecting royalties for use of technology they have developed. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. These third parties compete with us in recruiting and retaining qualified scientific and management personnel, as well as in acquiring technologies complementary to our programs.

We expect that our ability to compete effectively will be dependent upon our ability to:

- successfully complete clinical trials and obtain all requisite regulatory approvals;

- maintain a proprietary position in our technologies and products;

- attract and retain key personnel; and

- maintain existing or enter into new strategic partnerships.

GOVERNMENTAL REGULATION

Governmental authorities in the United States and other countries extensively regulate the pre-clinical and clinical testing, manufacturing, labeling, storage, record-keeping, advertising, promotion, export, marketing and distribution, among other things, of immunotherapeutics. In the United States, the FDA under the Federal Food, Drug, and Cosmetic Act, the Public Health Service Act and other federal statutes and regulations subjects pharmaceutical and biologic products to rigorous review. If we or our strategic partners do not comply with applicable requirements, we may be fined, our products may be recalled or seized, our production may be totally or partially suspended, the government may refuse to approve our marketing applications or allow us to distribute our products, and we may be criminally prosecuted. The FDA also has the authority to revoke previously granted marketing authorizations.

In order to obtain approval of a new product from the FDA, we must, among other requirements, submit proof of safety and efficacy as well as detailed information on the manufacture and composition of the product. In most cases, this proof entails extensive laboratory tests, and pre-clinical and clinical trials. This testing, and the preparation of necessary applications and processing of those applications by the FDA are expensive and typically take several years to complete. The FDA may not act quickly or favorably in reviewing these applications, and we may encounter significant difficulties or costs in our efforts to obtain FDA approvals that could delay or preclude us from marketing any products we may develop. The FDA also may require post-marketing testing and surveillance to monitor the effects of approved products or place conditions on any approvals that could restrict the commercial applications of these products. Regulatory authorities may withdraw product approvals if we fail to comply with regulatory standards or if we encounter problems following initial marketing. With respect to patented products or technologies, delays imposed by the governmental approval process may materially reduce the period during which we will have the exclusive right to exploit the products or technologies.

After an investigational new drug application becomes effective, a sponsor may commence human clinical trials. The sponsor typically conducts human clinical trials in three sequential phases, but the phases may overlap. In Phase I clinical trials, the product is tested in a small number of patients or healthy volunteers, primarily for safety at one or more doses. In Phase II, in addition to safety, the sponsor evaluates the efficacy of the product in a patient population somewhat larger than Phase I clinical trials. Phase III clinical trials typically involve additional testing for safety and clinical efficacy in an expanded population at geographically dispersed test sites. The sponsor must submit to the FDA a clinical plan, or protocol, accompanied by the approval of an IRB responsible for ongoing review of the investigation, prior to commencement of each clinical trial. The FDA or an IRB may order the temporary or permanent discontinuation of a clinical trial at any time, if the trial is not being conducted in accordance with FDA or IRB requirements or presents a danger to its subjects.

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The sponsor must submit to the FDA the results of the pre-clinical and clinical trials, together with, among other things, detailed information on the manufacture and composition of the product, in the form of a new drug application or, in the case of a biologic, a biologics license application. The FDA is regulating our therapeutic vaccine products as biologics and, therefore, we will be submitting biologics license applications to the FDA to obtain approval of our products. In a process which generally takes several years, the FDA reviews this application and, when and if it decides that adequate data is available to show that the new compound is both safe and effective and that other applicable requirements have been met, approves the drug or biologic for marketing. The amount of time taken for this approval process is a function of a number of variables, including the quality of the submission and studies presented, the potential contribution that the compound will make in improving the treatment of the disease in question, and the workload at the FDA. It is possible that our vaccines will not successfully proceed through this approval process or that the FDA will not approve them in any specific period of time, or at all.

Congress enacted the Food and Drug Administration Modernization Act of 1997, in part, to ensure the availability of safe and effective drugs, biologics and medical devices by expediting the FDA review process for new products. The Modernization Act establishes a statutory program for the approval of fast-track products, including biologics. A fast-track product is defined as a new drug or biologic intended for the treatment of a serious or life-threatening condition that demonstrates the potential to address unmet medical needs for this condition. Under the fast-track program, the sponsor of a new drug or biologic may request the FDA to designate the drug or biologic as a fast-track product at any time during the clinical development of the product, prior to marketing approval.

The Modernization Act specifies that the FDA must determine if the product qualifies for fast-track designation within 60 days of receipt of the sponsor's request. The FDA can base approval of a marketing application for a fast-track product on an effect, on a surrogate endpoint, or on another endpoint that is reasonably likely to predict clinical benefit. The FDA may subject approval of an application for certain fast-track products to post-approval studies to validate the surrogate endpoint or confirm the effect on the clinical endpoint and prior review of all promotional materials. In addition, the FDA may withdraw its approval of a fast-track product on a number of grounds, including the sponsor's failure to conduct any required post-approval study with due diligence.

If a preliminary review of clinical data suggests that a fast-track product may be effective, the FDA may initiate review of entire sections of a marketing application for a fast-track product before the sponsor completes the application. This rolling review is available if the applicant provides a schedule for submission of remaining information and pays applicable user fees. However, the time periods specified under the Prescription Drug User Fee Act concerning timing goals to which the FDA has committed in reviewing an application, do not begin until the sponsor submits the entire application.

The FDA may, during its review of a new drug application or biologics license application, ask for additional test data. If the FDA does ultimately approve the product, it may require post-marketing testing, including potentially expensive Phase IV studies, and surveillance to monitor the safety and effectiveness of the drug. In addition, the FDA may in some circumstances impose restrictions on the use of the drug, which may be difficult and expensive to administer, and may require prior approval of promotional materials.

Before approving a new drug application or biologics license application, the FDA also will inspect the facilities at which the product is manufactured and will not approve the product unless the manufacturing facilities are in compliance with cGMPs, which set forth requirements for the manufacture, holding, and distribution of a product. Following approval, the FDA periodically inspects drug and biologic manufacturing facilities to ensure continued compliance with cGMPs. Manufacturers must continue to expend time, money and effort in the area of production and quality control and record keeping and reporting to ensure full compliance with those requirements. The labeling, advertising, promotion, marketing and distribution of a drug or biologic product must be in compliance with FDA regulatory requirements. Failure to comply with applicable requirements can lead to the FDA demanding that production and shipment cease, and, in some cases, that the manufacturer recall products, or to FDA enforcement actions that can include seizures, injunctions and criminal prosecution. These failures can also lead to FDA withdrawal of approval to market the product.

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We, and our strategic partners, are also subject to regulation by the Occupational Safety and Health Administration, the Environmental Protection Agency, the Nuclear Regulatory Commission and other foreign, federal, state and local agencies under various regulatory statutes, and may in the future be subject to other environmental, health and safety regulations that may affect our research, development and manufacturing programs. We are unable to predict whether any agency will adopt any regulation which could limit or impede on our operations.

Sales of pharmaceutical products outside the United States are subject to foreign regulatory requirements that vary widely from country to country. Whether or not we have obtained FDA approval, we must obtain approval of a product by comparable regulatory authorities of foreign countries prior to the commencement of marketing the product in those countries. The time required to obtain this approval may be longer or shorter than that required for FDA approval. The foreign regulatory approval process includes all the risks associated with FDA regulation set forth above, as well as country-specific regulations.

EMPLOYEES

As of June 30, 2001, we employed 46 full-time personnel, including 19 in research and development, 12 in support/administration, and 15 in manufacturing, regulatory affairs, and quality assurance. Each of our employees has signed a confidentiality agreement and none is covered by a collective bargaining agreement. We have never experienced employment-related work stoppages and consider our employee relations to be good.

FACILITIES

We maintain our headquarters in Bothell, Washington where we lease approximately 39,000 square feet of laboratory, research and development, expansion, and general administration space. Our monthly rental obligation for this facility is approximately $88,500, subject to an annual increase of 3.5%. Our lease expires September 2009. The lease may be extended at our option for two five-year periods. We sublease approximately 10,000 square feet of this facility to the Northwest Hospital Department of Molecular Medicine. This sublease expires on August 31, 2003. Northwest Hospital owns in excess of 5% of our outstanding voting stock. C. William Schneider, our Treasurer and a member of our board of directors, is the President and Chief Executive Officer of Northwest Hospital.

LEGAL PROCEEDINGS

From time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of business. As of the date of this prospectus, we are not a party to any material legal proceedings.

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MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

Set forth below is information with respect to each of our current directors and executive officers.

                 NAME                    AGE                           POSITION
                 ----                    ---   ---------------------------------------------------------
Daniel O. Wilds........................  52    Chairman of the Board, President and Chief Executive
                                               Officer
Alton L. Boynton, Ph.D. ...............  57    Executive Vice President, Chief Scientific Officer,
                                               Chief Operating Officer, Secretary and Director
C. William Schneider...................  56    Treasurer and Director
George P. Hutchinson...................  62    Director
Randall L-W. Caudill, D. Phil. ........  54    Director
Haakon Ragde, M.D. ....................  74    Director

Daniel O. Wilds. Mr. Wilds was named Chairman of our board of directors in June 2001, and has served as President, Chief Executive Officer and a director since February 1998. Prior to joining us, Mr. Wilds was President and Chief Executive Officer of Shiloov Biotechnologies (USA), Inc., from July 1997 to January 1998. From 1992 to 1996, Mr. Wilds was President and Chief Executive Officer of Adeza Biomedical Corporation, prior to which he served in several management positions in the biomedical and biopharmaceutical fields. Mr. Wilds holds a B.A. from California State University, Los Angeles and an MBA from Northwestern University.

Alton L. Boynton, Ph.D. Dr. Boynton co-founded our company, has served as Secretary since August 2001, has served as our Executive Vice President since July 2000, has served as our Chief Scientific Officer and a director since our inception in 1996, and was appointed our Chief Operating Officer in August 2001. Dr. Boynton has also served as Director of the Department of Molecular Medicine of Northwest Hospital since 1995 where he has coordinated the establishment of a program centered on carcinogenesis. Dr. Boynton is an internationally recognized scientist in the cellular and molecular mechanisms causing cancer. Dr. Boynton has been funded by the National Cancer Institute for more than 20 years and has authored more than 150 publications. Dr. Boynton received his Ph.D. in Radiation Biology from the University of Iowa in 1972.

C. William Schneider. Mr. Schneider has served as Treasurer and a director since inception, and was Secretary from inception until August 2001. Mr. Schneider has served as Chief Executive Officer, President, and a director of Health Resources Northwest, which is comprised of Northwest Hospital and other health care-related entities, since February 1981. He is also the President/CEO of Northwest Hospital since February 1989. He has held various positions over the past 25 years in the health care field, and is a member of the American College of Health Care Administrators. Mr. Schneider received his B.S. degree from Missouri Western College in 1972.

George P. Hutchinson. Mr. Hutchinson served as Chairman of the Board from inception until June 2001 and is currently a director. Mr. Hutchinson was President of G.P. Hutchinson and Co. from 1990 to 1999, providing investment-banking services to regional companies. Prior to his service on our board of directors, Mr. Hutchinson held several senior executive positions in the investment banking industry. He currently serves as a member of the Board for Health Resources Northwest. Mr. Hutchinson obtained a B.A. degree from the University of Washington in 1961 and an MBA from Columbia University in 1966.

Randall L-W. Caudill, D. Phil. Dr. Caudill has served as a director since July 1998. Since April 1997, Dr. Caudill has been President of Dunsford Hill Capital Partners, a financial consulting firm serving early-stage health care and technology companies. Dr. Caudill was, from 1987 to 1997, a Senior Advisor to Prudential Securities, a full-service investment bank, where he served in various capacities, including Head of their Mergers and Acquisitions Department and Co-Head of their Investment Bank. He also currently serves as a director of SBE, Inc., Locate Networks, Inc., Ramgen Power Systems, Inc. and VaxGen, Inc., as well as

44

several non-profit entities. Dr. Caudill received a D. Phil. from Oxford University, where he was a Rhodes Scholar, and an M.P.P.M. from Yale University.

Haakon Ragde, M.D. Dr. Ragde has served as a director since September 1998. Since April 2001, Dr. Ragde has been medical director of the Grado-Ragde Clinics. From September 1988 until April 2001, Dr. Ragde was employed at Northwest Hospital in various capacities, most recently as the Director of Brachytherapy in the Urological Services Department. Dr. Ragde holds a clinical academic appointment at the University of Virginia Health Sciences Center and conducted the first successful Brachytherapy, or radioactive seed implant, treatment of men with prostate cancer in the United States in 1987. Dr. Ragde also is the recipient of numerous honors including, most recently, election to the Honor Roll of the International Union Against Cancer and receipt of University of Virginia's Honor Award for Outstanding Accomplishments in the field of Urology. Dr. Ragde received his M.D. from University of Virginia Medical School in 1957 and is certified by the American Board of Urology.

BOARD COMPOSITION

Our bylaws provide for a board of directors consisting of up to nine members. The size of our board of directors is currently set at six members. In accordance with the terms of our certificate of incorporation, the terms of office of the directors are divided into three classes:

- Class I, whose term will expire at the annual meeting of stockholders to be held in 2002;

- Class II, whose term will expire at the annual meeting of stockholders to be held in 2003; and

- Class III, whose terms will expire at the annual meeting of stockholders to be held in 2004.

The Class I directors are Dr. Caudill and Mr. Hutchinson, the Class II directors are Dr. Ragde and Mr. Schneider and the Class III directors are Dr. Boynton and Mr. Wilds. At each annual meeting of stockholders after the initial classification or special meeting in lieu thereof, the successors to directors whose terms will then expire will be elected to serve from the time of election and qualification until the third annual meeting following election or special meeting held in lieu thereof. The authorized number of directors may be changed only by resolution of the board of directors. Any additional directorships resulting from an increase in the number directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of the directors. This classification of our board of directors may have the effect of delaying or preventing changes in the control or management of us.

BOARD COMMITTEES

The compensation committee reviews and approves the compensation and benefits for our executive officers. In addition, the compensation committee reviews and makes recommendations to the board about compensation matters for all of our employees. As part of these responsibilities, the compensation committee also administers our stock option plans. The current members of the compensation committee are Mr. Hutchinson, Dr. Ragde and Mr. Schneider.

The audit committee of the board of directors monitors our financial reporting and internal and external audit processes and meets with and considers suggestions from members of management and our internal accounting personnel, as well as our independent accountants, concerning our financial operations. The audit committee reviews our annual financial statements and any other relevant reports or other financial information, as well as our regular internal financial reports prepared by management and any internal auditing department. The audit committee also recommends to the board of directors the selection of the independent accountants and approves the fees and other compensation to be paid to the independent accountants. As part of this responsibility, the audit committee reviews and discusses with the accountants all significant relationships the accountants have with us to determine the accountants' independence, reviews the performance of the independent accountants and approves any proposed discharge of the independent accountants when circumstances so warrant. The audit committee reviews with the independent accountants, following the completion of the annual audit, the results of the audit. The audit committee also reviews the

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independence of each member of the committee. The current members of the audit committee are Dr. Caudill, Mr. Hutchinson and Dr. Ragde.

The executive committee of our board of directors, formed in June 2001, is currently charged with the task of evaluating the merits of implementing a stockholder rights plan, intended to deter coercive takeover practices. Such a plan typically involves the award to each stockholder, as a dividend, of the right to acquire a certain number of shares in the event of activity that may indicate an impending takeover attempt. While such a plan is not currently in place, there can be no guarantee that our board of directors will not adopt such a plan in the future. The adoption of such a plan could discourage certain types of coercive takeover practices and make it necessary for a potential acquiror to negotiate with our board. The current members of the executive committee are Dr. Caudill and Messrs. Hutchinson and Wilds.

DIRECTOR COMPENSATION

Nonemployee directors are reimbursed for reasonable travel and other out-of-pocket expenses incurred in connection with each board or board committee meeting attended. Non-employee directors will each receive, automatically on an annual basis, equity incentives in the form of stock option grants under our 2001 Nonemployee Director Stock Incentive Plan.

On May 1, 1999, we entered into a consulting agreement with Dr. Ragde, a member of our board of directors, to engage him to advise us regarding development of our immunotherapy programs. This agreement provided that we would pay Dr. Ragde up to $24,000 per year and grant him the option to purchase, at fair market value, 1,000 shares of our common stock. This agreement expired on April 30, 2000. We entered into a similar agreements with Dr. Ragde on May 1, 2000 and May 1, 2001. These agreements each provided that we would pay Dr. Ragde up to $48,000 per year and grant him the option to purchase, at fair market value, 5,000 shares of our common stock.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The compensation committee of the board of directors was formed on June 21, 2001, prior to which time all decisions regarding executive officers' compensation were made by a finance committee of our board of directors consisting of Dr. Caudill and Messrs. Hutchinson, Schneider and Wilds. Mr. Schneider is the President and Chief Executive Officer of Northwest Hospital and Mr. Hutchinson serves on the board of directors of Health Resources Northwest, which controls Northwest Hospital. Northwest Hospital has extended a $2.9 million line of credit to us. Interest accrues on amounts we borrow at a rate equal to the sum of 1% plus the large business prime rate as reported by Bank of America. Prior to the closing of this offering, we intend to fully repay the $2.8 million outstanding balance of this loan. Simultaneously, Northwest Hospital has agreed to exercise warrants to purchase 1,101,402 shares of our common stock at a purchase price of $198,252. In August 2001, we entered into an agreement with Northwest Hospital under which the hospital agreed to forego its option to require us to repurchase its 550,700 shares of our redeemable series A convertible preferred stock and we agreed to pay the hospital $1.7 million within 30 days following the closing of this offering. Additionally, Northwest Hospital agreed to extend the maturity date of the line of credit until the earlier of the date of closing of this offering or June 30, 2002.

LIMITATION OF LIABILITY AND INDEMNIFICATION OF OFFICERS AND DIRECTORS

Our certificate of incorporation limits the liability of our directors to the maximum extent permitted by Delaware law. Delaware law provides that directors of a corporation will not be personally liable for monetary damages for breach of their fiduciary duties as directors, except liability for:

- any breach of their duty of loyalty to the corporation or its stockholders;

- acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law;

- unlawful payments of dividends or unlawful stock repurchases or redemptions; or

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- any transaction from which the director derived an improper personal benefit.

This limitation of liability does not apply to liabilities arising under the federal securities laws and does not affect the availability of equitable remedies such as injunctive relief or rescission.

Our certificate of incorporation and bylaws require us to indemnify our directors and officers and permit us to indemnify our employees and other agents to the fullest extent permitted by law. We believe that indemnification under our bylaws covers at least negligence and gross negligence on the part of indemnified parties. Our bylaws also permit us to secure insurance on behalf of any officer, director, employee or other agent for any liability arising out of his or her actions in such capacity, regardless of whether the bylaws would permit indemnification.

SCIENTIFIC ADVISORS

We choose our scientific advisors for their expertise in fields that are important to the research and development of our product candidates. We intend to compensate our scientific advisors for their services with a combination of cash payments and stock options.

Our scientific advisors presently include the following persons:

John T. Grayhack, M.D. Dr. Grayhack is a Professor in the Department of Urology at Northwestern University Medical School and previously served as chairman of the department. He is an internationally recognized urologist and researcher specializing in prostate cancer. Dr. Grayhack serves on many national and international cancer committees and has received numerous honors and awards. Dr. Grayhack received his medical degree from the University of Chicago.

Brian Issell, M.D. Dr. Issell is a Researcher and Professor of Medicine at the Cancer Research Center, University of Hawaii, where he previously served as Director of the Cancer Center from 1988 to 1999. His current work is focused on finding new treatments for cancer patients from studying traditional herbs, botanicals and nutritional supplements used in the traditional practices of Asians and Pacific Islanders. Previously, Dr. Issell has held the positions of Vice President for Research at Cetus, Clinical Professor of Medicine at Stanford University and Director of Clinical Cancer Research at Bristol Laboratories, Bristol Myers Pharmaceuticals, where he was involved in the acquisition, clinical development and FDA approval of major anti-cancer drugs such as cisplatin, carboplatin and etoposide.

Stella C. Knight, Ph.D. Dr. Knight is the MRC Professor of Immunopathology at St. Mary's Hospital Medical School and Imperial College of Science, Technology and Medicine in London, England. She is an internationally recognized immunologist and was one of the first in the world to identify and recognize dendritic cells and their potential for immunotherapy. Dr. Knight has published over 200 papers and is frequently featured as a lecturer at both national and international meetings. Dr. Knight received her Ph.D. in immunology from the University of Birmingham in England.

Cornelis Melief, M.D., Ph.D. Dr. Melief is the Head of the Department of Immunohaematology and Blood Bank at the University of Leiden, The Netherlands. He is a world leader in the field of tumor immunology and immunotherapy. Dr. Melief has made significant contributions on mechanisms to induce T helper and cytotoxic T cell responses to a variety of cancer targets. In addition, Dr. Melief focuses some of his research on antigen processing and presentation by dendritic cells. Dr. Melief serves on eight editorial boards of respected cancer and immunology journals and is a frequent speaker at international meetings on cancer and immunology.

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EXECUTIVE COMPENSATION

The following table sets forth all compensation, including salary, bonuses and stock options, earned during the year ended December 31, 2000 by our Chief Executive Officer and our four other highest-paid executive officers, collectively referred to in this prospectus as the named executive officers. There was no other compensation paid to the named executive officers in 2000.

SUMMARY COMPENSATION TABLE

                                                                                     LONG-TERM
                                                             2000 ANNUAL        COMPENSATION AWARDS
                                                             COMPENSATION      ---------------------
                                                          ------------------   SECURITIES UNDERLYING
              NAME AND PRINCIPAL POSITION                  SALARY     BONUS         OPTIONS(1)
              ---------------------------                 --------   -------   ---------------------
Daniel O. Wilds.........................................  $250,016   $87,500               --
  Chairman of the Board, President and Chief Executive
  Officer
Alton L. Boynton(2).....................................   229,860    61,000               --
  Executive Vice President, Chief Operating Officer,
  Chief Scientific Officer and Secretary
Eric Holmes(3)..........................................   170,086    18,316           10,000
  Vice President of Biomedical Research and Development
Michael Salgaller.......................................   124,733    12,500            5,000
  Vice President of Clinical and Research Affairs
Patricia A. Lodge.......................................   108,762    12,000           10,000
  Vice President of Operations and Process Development


(1) The options generally vest over four years.

(2) We and Northwest Hospital each pay a portion of Dr. Boynton's salary. In 2000, we paid approximately 90% of Dr. Boynton's total salary of $229,860.

(3) We and Northwest Hospital each pay a portion of Dr. Holmes' salary. In 2000, we paid approximately 93% of Dr. Holmes' total salary of $170,086.

The following table shows information regarding options granted to the named executive officers during the year ended December 31, 2000.

The potential realizable value at assumed annual rates of stock price appreciation for the option term represents hypothetical gains that could be achieved for the respective options if exercised at the end of the option term. The 5% and 10% assumed annual rates of compounded stock price appreciation are required by rules of the SEC and do not represent our estimate or projection of our future common stock prices. Actual gains, if any, are dependent, among other things, on the future performance of our common stock and overall stock market conditions. The amounts reflected in the table, therefore, may not necessarily be achieved.

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OPTION GRANTS IN LAST FISCAL YEAR

                                                                                            POTENTIAL REALIZABLE
                                                                                              VALUE AT ASSUMED
                                                                                           ANNUAL RATES OF STOCK
                                NUMBER OF        PERCENTAGE OF                             PRICE APPRECIATION FOR
                               SECURITIES        TOTAL OPTIONS                                  OPTION TERM
                               UNDERLYING         GRANTED TO       EXERCISE   EXPIRATION   ----------------------
           NAME              OPTIONS GRANTED   EMPLOYEES IN 2000    PRICE        DATE         5%           10%
           ----              ---------------   -----------------   --------   ----------   --------      --------
Daniel O. Wilds............          --                --%          $  --            --     $   --        $   --
Alton L. Boynton...........          --                --              --            --         --            --
Eric Holmes................       5,000               4.4            0.85      07/19/10      2,673         6,773
                                  5,000               4.4            1.25      11/15/10      3,931         9,961
Michael Salgaller..........       5,000               4.4            1.25      11/15/10      3,931         9,961
Patricia A. Lodge..........       5,000               4.4            0.85      05/17/10      2,673         6,773
                                  5,000               4.4            1.25      11/15/10      3,931         9,961

The following table shows information concerning each exercise of stock options during 2000 and the number and value of unexercised options held by each of the named executive officers as of December 31, 2000. The values of unexercised in-the-money options as listed below have been calculated as the difference between the initial public offering price and the exercise price.

AGGREGATED OPTION EXERCISES IN 2000 AND YEAR-END OPTION VALUES

                                                            NUMBER OF SECURITIES          VALUE OF UNEXERCISED
                                                           UNDERLYING UNEXERCISED        IN-THE-MONEY OPTIONS AT
                                SHARES                  OPTIONS AT DECEMBER 31, 2000        DECEMBER 31, 2000
                               ACQUIRED       VALUE     ----------------------------   ---------------------------
           NAME              UPON EXERCISE   REALIZED   EXERCISABLE    UNEXERCISABLE   EXERCISABLE   UNEXERCISABLE
           ----              -------------   --------   -----------    -------------   -----------   -------------
Daniel O. Wilds............        --          $ --       266,460         284,241         $              $
Alton L. Boynton...........        --            --        55,070         110,140
Eric Holmes................        --            --         6,250          13,750
Michael Salgaller..........        --            --        11,250           8,750
Patricia A. Lodge..........        --            --         5,500          14,500

EMPLOYMENT AGREEMENTS

Effective as of February 2, 2001, we entered into an employment agreement with Daniel O. Wilds. This agreement provides that Mr. Wilds will serve as our President and Chief Executive Officer until January 31, 2004, with an annual salary of $300,000, subject to annual increases at the discretion of our board of directors. Additionally, Mr. Wilds is entitled, under the agreement, to a 25% increase in his base salary upon the successful completion of this offering. Mr. Wilds' employment agreement granted him a one-time non-qualified stock option for 79,300 common shares and provides him with an annual incentive compensation opportunity of up to 45% of his base salary, based on his ability to meet certain agreed upon financial and other performance goals for each year. The agreement provides that if we terminate his employment without cause or if Mr. Wilds terminates his employment with Good Reason, as such term is defined in the agreement, Mr. Wilds will be entitled to monthly severance payments equal to six months base salary and six months at one-half base salary.

Effective as of February 2, 2001, we entered into an employment agreement with Alton L. Boynton. This agreement provides that Dr. Boynton will serve as our Executive Vice President and Chief Scientific Officer until January 31, 2004, with an annual salary of $265,000, subject to annual increase at the discretion of our board of directors. Additionally, Dr. Boynton is entitled, under the agreement, to a 25% increase in his base salary upon the successful completion of this offering. Dr. Boynton's employment agreement granted

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him a one-time non-qualified stock option for 79,300 common shares and provides him with an annual incentive compensation opportunity of up to 35% of his base salary, based on his ability to meet certain agreed upon financial and other performance goals for each year. The agreement provides that if we terminate his employment without cause or if Dr. Boynton terminates his employment with Good Reason, as such term is defined in the agreement, Dr. Boynton will be entitled to monthly severance payments equal to six months base salary and six months at one-half base salary.

EMPLOYEE BENEFIT PLANS

1998 STOCK OPTION PLAN

The 1998 Stock Option Plan was adopted by our board of directors in July 1998 and approved by our stockholders in February 1999. This plan provides for the grant to our employees, including officers and employee directors, of "incentive stock options" within the meaning of Section 422 of the Internal Revenue Code and for the grant of non-statutory stock options to our employees, officers, directors, including non-employee directors, and consultants. To the extent an optionee would have the right in any calendar year to exercise for the first time one or more incentive stock options for shares having an aggregate fair market value, under all of our plans and determined as of the grant date, in excess of $100,000, any such excess options will be treated as non-statutory options. A total of 413,025 shares of our common stock have been reserved for issuance under this plan and, as of June 30, 2001, 7,242 of such shares remained available for additional option grants.

The compensation committee of our board of directors serves as the administrator of our 1998 Stock Option Plan. Subject to the terms of this plan, the administrator determines the terms of options granted, including the number of shares subject to the option, exercise price, term and exercisability. The exercise price of all incentive stock options granted under this plan must be at least equal to the fair market value of our common stock on the date of grant. The exercise price of any incentive stock option granted to an optionee who owns stock representing more than 10% of the total combined voting power of our outstanding capital stock, or a 10% stockholder, must be at least equal to 110% of the fair market value of our common stock on the date of grant. The exercise price of all non-statutory stock options cannot be less than 85% of the fair market value of our common stock on the date of grant, and in the case of 10% stockholders, the exercise price cannot be less than 110% of the fair market value of our common stock. The term of options granted under this plan may not exceed 10 years, and the term of an incentive stock option granted to a 10% Stockholder may not exceed five years. An option may not be transferred by the optionee other than by will or the laws of descent or distribution. Each option may be exercised during the lifetime of the optionee only by such optionee. Generally, each option granted under this plan becomes exercisable as to 25% of the total number of shares subject to the option after the first anniversary following the date of grant, with subsequent equal monthly vesting over three years, subject to the optionee's continued relationship with us as an employee, director or consultant, as the case may be.

Our board of directors has the authority to amend or terminate this plan, but such action will not adversely affect any outstanding option without the optionee's consent. If not terminated earlier, this plan will terminate in July 2008.

1999 EXECUTIVE STOCK OPTION PLAN

The 1999 Executive Stock Option Plan was adopted by our board of directors in November 1999. This plan provides for the grant of non-statutory stock options to our employees, officers, directors, including non-employee directors, and consultants. A total of 586,166 shares of our common stock have been reserved for issuance under this plan, and, as of June 30, 2001, all of the reserved shares are subject to outstanding options.

The compensation committee of our board of directors serves as the administrator of this plan. Subject to the terms of this plan, the administrator determines the terms of options granted, including the number of shares subject to the option, exercise price, term and exercisability. The exercise price of options under this plan cannot be less than 85% of the fair market value of our common stock on the date of grant and, in the case of 10% stockholders, the exercise price cannot be less than 110% of the fair market value of our

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common stock on the date of grant. The term of options granted under the this plan may not exceed 10 years. An option may not be transferred by the optionee other than by will or the laws of descent or distribution. Each option may be exercised during the lifetime of the optionee only by such optionee. Each option granted under this plan becomes exercisable as to 25% of the total number of shares subject to the option on the first anniversary following the date of grant, with subsequent equal monthly vesting over three years, subject to the optionee's continued relationship with us as an employee or consultant.

Our board of directors has the authority to amend or terminate this plan, but such action will not adversely affect any outstanding option without the optionee's consent. If not terminated earlier, this plan will terminate in November 2009.

2001 STOCK OPTION PLAN

The 2001 Stock Option Plan was both adopted by our board of directors and approved by our stockholders in June 2001. A total of 1,800,000 shares of our common stock have been initially reserved for issuance under this plan. This plan is intended to provide for the grant to our employees, including officers and employee directors, of "incentive stock options" within the meaning of
Section 422 of the Internal Revenue Code and for the grant of non-statutory stock options to our employees and consultants. The number of shares available for grant under this plan is subject to an automatic annual increase in an amount equal to the lesser of (i) 15% of the aggregate number of shares available for granting for the immediately preceding year; or (ii) 300,000 shares. As of June 30, 2001, no options have been granted under this plan.

The compensation committee of our board of directors serves as the administrator of this plan. Subject to the terms of this plan, the administrator determines the terms of options granted, including the number of shares subject to the option, exercise price, term and exercisability. The exercise price of all incentive stock options granted under this plan must be at least equal to the fair market value of our common stock on the date of grant. The term of incentive stock options granted under this plan generally may not exceed 10 years.

Our board of directors has the authority to amend or terminate this plan, but such action may not adversely affect any outstanding option previously granted under the plan. If this plan is not terminated earlier, no incentive stock options can be granted under the plan on or after the later of June 2011 or the 10th anniversary of the date when our board of directors adopted, subject to approval by our stockholders, the most recent increase in the number of shares available for grant under the plan.

2001 NONEMPLOYEE DIRECTOR STOCK INCENTIVE PLAN

The 2001 Nonemployee Director Stock Incentive Plan was adopted by our board of directors in June 2001. This plan provides for the automatic grant to each of our nonemployee directors of a nonstatutory stock option to purchase 5,000 shares of our common stock on the third business day following each annual meeting of our stockholders. A total of 200,000 shares of common stock have been reserved for issuance under this plan and, as of June 30, 2001, no grants have been made under this plan.

This plan is administered by the compensation committee of our board of directors. The exercise price of each option granted pursuant to this plan is the fair market value of the underlying shares of our common stock on the date of grant. Each option granted pursuant to this plan generally becomes exercisable upon six months after the date of grant, subject to certain limitations. Our board of directors has the authority to amend or terminate this plan, but such action may not adversely affect any outstanding option without the optionee's consent.

EMPLOYEE STOCK PURCHASE PLAN

Our Employee Stock Purchase Plan was adopted by our board of directors and approved by our stockholders in June 2001. A total of 500,000 shares of common stock have been reserved for issuance under this plan and, as of June 30, 2001, no shares have been issued under this plan.

This plan is administered by the compensation committee of our board of directors and provides a mechanism for eligible employees to purchase shares of our common stock. To facilitate these purchases, eligible participants are assigned plan accounts, to which they may contribute funds via payroll deduction. The purchases are accomplished through the use of six-month offering periods. Purchases pursuant to this

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plan are made at a price equal to the lower of (a) 85% of the fair market value of our common stock on the last trading day in the offering period or (b) 85% of the fair market value of our common stock on the last trading day before the commencement of such offering period. No participant may purchase more than 1,000 shares of our common stock during any offering period. Additionally, purchases under the plan are limited such that no participant may purchase under the plan, in any offering period that commenced in that calendar year, shares with a fair market value in excess of $25,000 minus the fair market value of any shares that the participant previously purchased in that calendar year. In the case of shares purchased during an offering period that commenced in the preceding calendar year, the limitation is $50,000 minus the fair market value of any shares that the participant purchased during the calendar year of the purchase and the calendar year immediately preceding such purchase.

Our board of directors has the authority to amend or terminate this plan at any time. Amendments to the plan are subject to approval by our stockholders to the extent required by applicable law.

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RELATED PARTY TRANSACTIONS

RELATIONSHIP WITH NORTHWEST HOSPITAL

Northwest Hospital owns in excess of 5% of our voting stock. C. William Schneider, a member of our board of directors, is the President and Chief Executive Officer of Northwest Hospital. Northwest Hospital has extended a $2.9 million line of credit to us. Interest accrues on amounts we borrow at a rate equal to the sum of 1% plus the large business prime rate as reported by Bank of America. Prior to the closing of this offering, we intend to fully repay the $2.8 million outstanding balance of this loan. Simultaneously, Northwest Hospital will exercise warrants to purchase 1,101,402 shares of our common stock at a purchase price of $198,252. In August 2001, we entered into an agreement with Northwest Hospital pursuant to which they agreed to forego their option to require us to repurchase their 550,700 shares of redeemable series A convertible preferred stock and we agreed to pay them $1.7 million within 30 days following the closing of this offering. Additionally, Northwest Hospital agreed to extend the maturity date of the line of credit until the earlier of the date of closing of this offering or June 30, 2002.

Alton L. Boynton, our Executive Vice President, Chief Operating Officer, Chief Scientific Officer, Secretary and a member of our board of directors, founded the Northwest Hospital Department of Molecular Medicine in 1995. Our initial research into the application of dendritic cell technology to the treatment of cancer stemmed from Dr. Boynton's association with the Northwest Hospital Department of Molecular Medicine and Pacific Northwest Cancer Foundation. The department is funded primarily through grants from the National Institute of Health and the National Cancer Institute, and Dr. Boynton has received two such grants during his association with us. Additionally, Dr. Eric Holmes, one of our named executive officers, has received such a grant.

Pursuant to a sublease terminating on August 31, 2003, the Northwest Hospital Department of Molecular Medicine currently leases approximately 10,000 square feet of office, laboratory and storage space from us at our corporate headquarters, at a monthly rate of approximately $2.28 per square foot, subject to an annual 3.5% increase. In addition, we have recently entered into an agreement with the department whereby we have obtained a right of first refusal to cancer and infectious disease related technologies in return for certain financial considerations.

RELATIONSHIP WITH HOLMES HARBOR COMPANY, INC.

Holmes Harbor Company, Inc. is a Washington corporation controlled by Robert M. Trimble. Mr. Trimble owns in excess of 5% of our voting stock. On July 12, 2000, Holmes Harbor loaned us $1,650,000 to fund certain leasehold improvements at our headquarters. The loan was secured by all of our assets. Interest accrued on the loan at a rate of 13% per annum, and principal and interest were due on July 11, 2001. On April 24, 2001, as a condition of our entering our collaborative agreement with Medarex, Inc., we restructured the loan. As part of our restructuring of this loan, we repaid $825,000 in principal and paid $37,232 of accrued interest on May 15, 2001. Additionally, we issued to Holmes Harbor a convertible promissory note in the amount of $825,000 and a warrant to purchase up to 50,000 shares of our series D convertible preferred stock. The convertible promissory note is secured by all our assets except certain intellectual property, and bears interest at the rate of 13% per annum. Under the terms of the convertible promissory note, we are required to make quarterly payments in the amount of $121,603 commencing on September 30, 2001 and we must pay the balance of all principal and interest on the earlier of June 30, 2003 or the closing of this offering. Additionally, Holmes Harbor has elected to convert the entire principal and interest amount into 168,937 shares, at June 30, 2001, of our series D convertible preferred stock at $5.00 per share. The warrant we issued as a result of restructuring this loan entitles Holmes Harbor to purchase 33,000 shares of our series D convertible preferred stock at a price of $5.00 per share if we repay the outstanding loan and all accrued interest on or before June 30, 2002, or 50,000 shares of our series D convertible preferred stock if we repay the balance thereafter. The warrants will expire upon completion of the offering if they are not exercised.

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RELATIONSHIP WITH DUNSFORD HILL CAPITAL PARTNERS, INC.

Dunsford Hill Capital Partners, Inc. is a California corporation owned and controlled by Randall L-W. Caudill, a member of our board of directors. On July 31, 1998, we entered into an agreement with Dunsford Hill, pursuant to which Dunsford Hill was to provide financial and advisory services to us in connection with our series C convertible preferred stock financing. In return for these services, Dunsford Hill received compensation in the form of $263,201 and a warrant to purchase 106,247 shares of our series C convertible preferred stock at an exercise price of $2.50 per share. This agreement terminated on December 31, 1999.

Additionally, in return for services performed in connection with our convertible promissory note and series D convertible preferred stock offerings, Dunsford Hill received compensation in the form of $105,000 and a warrant to purchase 45,000 shares of our series D convertible preferred stock at an exercise price of $5.00 per share.

Dunsford Hill frequently works in association with The Paisley Group LLC, a Washington limited liability company. In connection with our retention of The Paisley Group as a placement agent for our series D convertible preferred stock financing, The Paisley Group requested that $30,000 of their fee be paid to Dunsford Hill.

From the time of the initial agreement to the present date, we have paid Dunsford Hill a total of $398,201 and issued to Dunsford Hill warrants to purchase an aggregate of 151,247 shares of our series C and D convertible preferred stock.

PREFERRED STOCK FINANCINGS

From July 1998 through June 2001, we issued the following securities to various investors in private placement transactions:

- 550,700 shares of series A convertible preferred stock at a purchase price of $5.45 per share in 1998;

- 897,489 shares of series B convertible preferred stock at a purchase price of $2.33 per share in 1998;

- 3,350,600 shares of series C convertible preferred stock at a purchase price of $2.50 per share in 1999; and

- 4,135,823 shares of series D convertible preferred stock at a purchase price of $5.00 per share in 2000 and 2001.

Each share of series C and D convertible preferred stock will convert automatically into one share of common stock upon the closing of this offering. Northwest Hospital has agreed to allow each of its shares of series A convertible preferred stock to convert upon the closing of this offering into one share of common stock. Each share of series B preferred stock will convert into approximately 1.93785 shares of common stock upon the closing of this offering. The purchasers of the above shares of preferred stock are entitled to certain registration rights. See "Description Of Capital Stock -- Registration Rights." Holders of shares purchased in these financings include the following directors, executive officers and holders of more than 5% of our outstanding stock and their affiliates:

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                                             SERIES A          SERIES B          SERIES C          SERIES D
                                            CONVERTIBLE       CONVERTIBLE       CONVERTIBLE       CONVERTIBLE
               PURCHASER                  PREFERRED STOCK   PREFERRED STOCK   PREFERRED STOCK   PREFERRED STOCK
               ---------                  ---------------   ---------------   ---------------   ---------------
DIRECTORS AND EXECUTIVE OFFICERS
  George P. Hutchinson..................           --                --            50,000             9,909
  Haakon Ragde..........................           --             5,732                --             1,137
PRINCIPAL STOCKHOLDERS
  Northwest Hospital(1).................      550,700                --                --                --
  Robert Trimble(2).....................           --                --           400,000           158,817
  Medarex, Inc. ........................           --                --                --           800,000
  Progress Enterprises S.A. ............           --           429,794                --            85,224


(1) C. William Schneider, a member of our board of directors, is President and Chief Executive Officer of Northwest Hospital.

(2) All shares are held by the marital community of Robert and Kathleen Trimble.

We believe that we have executed all of the transactions set forth above on terms no less favorable to us than terms we could have obtained from unaffiliated third parties. It is our intention to ensure that all future transactions, including loans, between us and our officers, directors and principal stockholders and their affiliates, are approved by a majority of the board of directors, including a majority of the independent and disinterested members of the board of directors, and are on terms no less favorable to us than those that we could obtain from unaffiliated third parties.

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PRINCIPAL STOCKHOLDERS

The following table shows information known to us with respect to the beneficial ownership of our common stock as of August 10, 2001, adjusted to reflect the sale of the shares of common stock offered under this prospectus by:

- each of our directors;

- each named executive officer;

- each person or group of affiliated persons who is known by us to own beneficially 5% or more of our common stock; and

- all of our directors and executive officers as a group.

Except as indicated in the footnotes to this table and subject to community property laws where applicable, the persons named in the table have sole voting and investment power with respect to all shares of our common stock shown as beneficially owned by them. Beneficial ownership and percentage ownership are determined in accordance with the rules of the SEC. The table below includes the number of shares underlying options and warrants which are exercisable within 60 days from August 10, 2001 adjusted to reflect the conversion of all shares of our preferred stock into an aggregate of 9,776,321 shares of our common stock, conversion of the note payable to stockholder into 168,937 shares of series D preferred stock and exercise of 1,134,402 preferred and common stock warrants into an equivalent number of common shares upon completion of this offering. It is therefore based on 13,015,042 shares of our common stock outstanding prior to this offering and shares outstanding immediately after this offering. The address for those individuals for which an address is not otherwise indicated is: c/o Northwest Biotherapeutics, Inc., 21720 - 23rd Drive S.E., Suite 100, Bothell, Washington 98021.

                                                          NUMBER OF SHARES    PERCENT OWNED   PERCENT OWNED
                                          NUMBER OF      UNDERLYING OPTIONS    BEFORE THIS     AFTER THIS
          BENEFICIAL OWNER             SHARES OWNED(1)      OR WARRANTS         OFFERING        OFFERING
          ----------------             ---------------   ------------------   -------------   -------------
Directors and named executive
  officers
  Daniel O. Wilds....................            --            381,232              2.9%               %
  Alton L. Boynton...................       385,490            113,995              3.7
  C. William Schneider...............            --                 --               --
  George P. Hutchinson...............            --                 --               --
  Randall L-W. Caudill(2)............            --            166,247              1.3
  Haakon Ragde.......................        12,245              8,238               --*
  Eric Holmes........................        82,605              8,750               --*
  Michael Salgaller..................            --             12,188               --*
  Patricia A. Lodge..................            --              8,396               --*
  All executive officers and
     directors as a group (9
     persons)........................       490,758            699,046              8.4
Five percent stockholders
  Northwest Hospital(3)(4)...........     1,101,400          1,101,402             14.5%               %
  Robert Trimble(5)(6)...............       558,817            158,817              5.2
  Medarex, Inc.(7)...................       800,000                 --              5.8
  Progress Enterprises S.A. (8)......       918,100             85,224              7.2


* Represents beneficial ownership of less than 1%.

(1) Shares of preferred stock are shown on an as-converted basis.

(2) Dunsford Hill Capital Partners, controlled by Dr. Caudill, owns warrants to purchase 151,247 shares of our series C convertible preferred stock. All remaining warrants are held by Dr. Caudill as co-trustee of the JPS Irrevocable Trust, under Agreement dated April 1, 1998.

(3) 1550 North 115th Street, Seattle, WA 98133.

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(4) C. William Schneider, a member of our board of directors, is President and Chief Executive Officer for Northwest Hospital.

(5) 4640 95th Avenue N.E., Bellevue, WA 98004.

(6) All holdings held as part of the marital community of Robert and Kathy Trimble

(7) 707 State Road, Suite 206, Princeton, NJ 08540.

(8) P.O. Box 626, National Westminster House, Le Truchot St. Peter, Port Guernsey, GY1 4PW, Channel Islands.

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DESCRIPTION OF CAPITAL STOCK

The following describes our common stock and preferred stock, as well as options to purchase our common stock, and provisions of our certificate of incorporation and our bylaws, all as will be in effect upon the completion of this offering. This description is only a summary. You should also refer to our certificate of incorporation and bylaws, which have been filed with the Securities and Exchange Commission as exhibits to our registration statement, of which this prospectus forms a part. The descriptions of the common stock and preferred stock, as well as options to purchase our common stock, reflect changes to our capital structure that will occur upon the completion of this offering in accordance with the terms of the certificate of incorporation.

Our authorized capital stock consists of 30,000,000 shares of common stock, $0.001 par value per share, and 12,500,000 shares of preferred stock, $0.001 par value per share.

COMMON STOCK

We are authorized to issue 30,000,000 shares of common stock, par value $0.001 per share. Options to purchase an aggregate of 1,147,617 shares of our common stock, and warrants to purchase 2,808,742 shares of our common stock and convertible preferred stock were outstanding as of June 30, 2001. There will be shares of our common stock outstanding after giving effect to the shares offered in this offering.

Voting rights. The holders of our common stock are entitled to one vote for each share held of record.

Dividends. Holders of record of shares of our common stock are entitled to receive dividends when, if and as may be declared by the board of directors out of funds legally available for such purposes, subject to the rights of preferred stockholders. We presently intend to retain future earnings, if any, for use in the operation and expansion of our business and do not anticipate paying cash dividends in the foreseeable future.

Liquidation rights. Upon our liquidation, dissolution or winding-up, the holders of our common stock are entitled to share ratably in all assets available for distributions after payment in full to creditors and holders of preferred stock.

Other provisions. The holders of our common stock are not entitled to cumulative voting, preemptive rights, subscription rights or the right to convert their common stock into any other securities. There are no redemption or sinking fund provisions applicable to the common stock. All outstanding shares are, and the shares of our common stock sold in the offering will be validly issued, fully paid and nonassessable.

PREFERRED STOCK

Upon the closing of this offering, all outstanding shares of our series C convertible preferred stock and series D convertible preferred stock will be automatically converted on a 1:1 basis into shares of common stock. Each outstanding share of our series B convertible preferred stock will convert on an approximately 1:1.93785 basis. Northwest Hospital has agreed to allow all outstanding shares of series A convertible preferred stock to convert on a 1:1 basis as provided in the original agreement. Thereafter, our board of directors has the authority, without action by our stockholders, to issue up to 3,565,388 shares of preferred stock in one or more series and to designate the rights, preferences and privileges of each series, any or all of which may be greater than the rights of common stock. The effect of the issuance of any shares of preferred stock upon the rights of holders of the common stock, may include diluting the voting power of the common stock, impairing the liquidation rights of the common stock and delaying or preventing a change in control of our company without further action by the stockholders. We have no plans to issue any shares of preferred stock upon completion of this offering.

OPTIONS

As of June 30, 2001, options to purchase a total of 1,147,617 shares of common stock were outstanding. Additional options to purchase a total of 2,007,242 shares of common stock may be granted under the 1998 Stock Option Plan, 2001 Stock Option Plan and 2001 Nonemployee Director Stock Incentive Plan.

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WARRANTS

As of June 30, 2001, warrants to purchase a total of 2,808,742 shares of common stock and convertible preferred stock were outstanding at exercise prices ranging from $0.18 to $5.50, of which holders of 1,134,402 warrants have agreed to exercise their warrants upon completion of the offering and an additional 1,332,908 warrants must either be exercised or expire upon completion of the offering.

AUTHORIZED BUT UNISSUED CAPITAL STOCK

Following the completion of this offering, there will be shares of authorized but unissued common stock, or if the underwriters' over-allotment option is exercised in full. Of this amount at June 30, 2001, 1,147,617 shares of common stock are reserved for issuance upon exercise of options outstanding and 2,007,242 are available for future grant under our 1998 Stock Option Plan, 2001 Stock Option Plan and 2001 Nonemployee Director Stock Incentive Plan and 500,000 shares of common stock are available for purchase under our Employee Stock Purchase Plan. A total of 2,808,742 shares of common stock are also issuable upon the exercise of warrants that were outstanding as of June 30, 2001. In addition, following the completion of this offering, there will be 3,565,388 shares of authorized preferred stock. Delaware law does not require stockholder approval for the issuance of authorized shares. However, the listing requirements of The Nasdaq Stock Market, Inc., which apply so long as the common stock remains included in that inter-dealer quotation system, require prior stockholder approval of specified issuances, including issuances of shares bearing voting power equal to or exceeding 20% of the pre-issuance outstanding voting power or pre-issuance outstanding number of shares of common stock. These additional shares could be used for a variety of corporate purposes, including, but not limited to, facilitating corporate acquisitions. One of the effects of the unissued and unreserved common stock and preferred stock may be to enable our board of directors to issue shares to persons who may agree or be inclined to vote in concert with current management on issues put to consideration of stockholders, which issuance could render more difficult or discourage an attempt to obtain control of us by means of a merger, tender offer, proxy contest or otherwise, and protect the continuity of our management and possibly deprive our stockholders of the opportunity to sell their shares of our common stock at prices higher than prevailing market prices.

DELAWARE AND WASHINGTON ANTI-TAKEOVER LAW AND CHARTER AND BYLAW PROVISIONS

Provisions of the Delaware General Corporation Law and our charter documents could make our acquisition and the removal of incumbent officers and directors more difficult. These provisions are expected to discourage certain types of coercive takeover practices and inadequate takeover bids and to encourage persons seeking to acquire control to negotiate with us first. We believe that the benefits of increased protection of our potential ability to negotiate with the proponent of an unfriendly or unsolicited proposal to acquire or restructure us outweigh the disadvantages of discouraging such proposals because, among other things, negotiation of such proposals could result in an improvement of their terms.

We are subject to the provisions of Section 203 of Delaware General Corporation Law. In general, the statute prohibits a publicly held Delaware corporation from engaging in a "business combination" with an "interested stockholder" for a period of three years after the time that the person became an interested stockholder unless, subject to exceptions, the business combination or the transaction in which the person became an interested stockholder is approved in a prescribed manner. Generally, a "business combination" incudes a merger, asset or stock sale, or other transaction resulting in a financial benefit to the stockholder. Generally, an "interested stockholder" is a person who, together with affiliates and associates, owns, or within three years prior, did own, 15% or more of the corporation's voting stock. These provisions may have the effect of delaying, deferring or preventing a change in control without further action by our stockholders.

Furthermore, the laws of the State of Washington, where our principal executive offices are located, impose restrictions on certain transactions between certain foreign corporations and significant stockholders. Chapter 23B.19 of the Washington Business Corporation Act prohibits a "target corporation," with certain exceptions, from engaging in certain "significant business transactions" with a person or group of persons who beneficially own 10% or more of the voting securities of the target corporation, or an "acquiring

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person," for a period of five years after such acquisition, unless the transaction or acquisition of such shares is approved by a majority of the members of the target corporation's board of directors prior to the time of acquisition. Such prohibited transactions include, among other things, a merger or consolidation with, disposition of assets to, or issuance or redemption of stock to or from, the acquiring person, termination of 5% or more of the employees of the target corporation as a result of the acquiring person's acquisition of 10% or more of the shares or allowing the acquiring person to receive disproportionate benefit as a stockholder. After the five-year period, a significant business transaction may take place as long as it complies with certain fair price provisions of the statute. A target corporation includes a foreign corporation if:

- the corporation has a class of voting stock registered pursuant to
Section 12 or 15 of the Exchange Act,

- the corporation's principal executive office is located in Washington, and

- any of (a) more than 10% of the corporation's stockholders of record are Washington residents, (b) more than 10% of its shares are owned of record by Washington residents, (c) 1,000 or more of its stockholders of record are Washington residents, (d) a majority of the corporation's employees are Washington residents or more than 1,000 Washington residents are employees of the corporation or (e) a majority of the corporation's tangible assets are located in Washington or the corporation has more than $50.0 million of tangible assets located in Washington.

A corporation may not opt out of this statute and, therefore, we anticipate this statute will apply to us. Depending upon whether we meet the definition of a target corporation, Chapter 23B.19 of the Washington Business Corporation Act may have the effect of delaying, deferring or preventing a change in control of us.

Our bylaws provide that stockholder action can be taken only at an annual or special meeting of stockholders and may not be taken by written consent and further provide that special meetings of stockholders can be called only by the board of directors, the chairman of the board, if any, and the Chief Executive Officer. Moreover, the business permitted to be conducted at any special meeting of stockholders is limited to the purposes stated in the notice of the meeting. Our bylaws set forth an advance notice procedure with regard to the nomination, other than by or at the direction of the board of directors, of candidates for election as directors and with regard to business to be brought before a meeting of stockholders.

In addition, in July 2000, our board of directors formed an executive committee, charged with the task of evaluating the merits of implementing a stockholder rights plan, intended to deter coercive takeover practices. Such a plan typically involves the award to each stockholder, as a dividend, of the right to acquire a certain number of shares in the event of activity that may indicate an impending takeover attempt. While such a plan is not currently in place, there can be no guarantee that our board of directors will not adopt such a plan in the future. The adoption of such a plan could discourage certain types of coercive takeover practices and make it necessary for a potential acquiror to negotiate with our board.

REGISTRATION RIGHTS

The holders of 9,776,321 shares of common stock, assuming the conversion of all outstanding preferred stock upon the closing of this offering, are entitled to certain rights with respect to the registration of such shares under the Securities Act. These rights are provided under the terms of agreements between us and the holders of these securities. If we register any of our common stock for our own account, the holders of these securities are entitled to include their shares of common stock in that registration, subject to the ability of the underwriters to limit the number of shares included in the offering. We will be responsible for paying all registration expenses, and the holders selling their shares will be responsible for paying all selling expenses.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for our common stock is Mellon Investor Services LLC.

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SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of this offering, we will have shares of common stock outstanding based on shares outstanding as of June 30, 2001. Of these shares, the shares sold in this offering will be freely transferable without restriction under the Securities Act, unless they are held by our "affiliates" as that term is used under the Securities Act and the regulations promulgated thereunder.

All of our shares outstanding as of June 30, 2001 were sold by us in reliance on exemptions from the registration requirements of the Securities Act, are restricted securities within the meaning of Rule 144 under the Securities Act and become eligible for sale in the public market as follows:

- Approximately 4.9 million shares will be immediately eligible for sale in the public market without restriction pursuant to Rule 144(k);

- Approximately 5.4 million shares will become eligible for sale in the public market 90 days after this offering, subject to volume and manner of sale restrictions, under Rule 144;

- Approximately 640,000 shares will be eligible for sale in the public market without restriction 90 days after this offering under Rule 701; and

- Remaining shares will become eligible for sale in the public market pursuant to Rule 144 from time to time after completion of this offering.

The foregoing does not take into consideration the effect of the lock-up agreements as described below. Our officers and directors and substantially all of our stockholders have entered into lock-up agreements pursuant to which they have agreed, subject to limited exceptions, not to offer or sell any shares of common stock or securities convertible into or exchangeable or exercisable for shares of common stock for a period of 180 days from the date of this prospectus without the prior written consent of the underwriters. Any shares subject to lock-up agreements may be released at any time without notice by the underwriters.

In general, under Rule 144 as currently in effect, a person, or persons whose shares are aggregated, including an affiliate, who has beneficially owned restricted shares for at least one year is entitled to sell, within any three-month period commencing 90 days after the date of completion of this offering, a number of shares that does not exceed the greater of 1% of the then outstanding shares of common stock, approximately shares immediately after this offering, or the average weekly trading volume in the common stock during the four calendar weeks preceding such sale, subject to the filing of a Form 144 with respect to such sale and certain other limitations and restrictions. In addition, a person who is not deemed to have been an affiliate of our company at any time during the 90 days preceding a sale and who has beneficially owned the shares proposed to be sold for at least two years, would be entitled to sell such shares under Rule 144(k) without regard to the requirements described above.

Any of our employees, officers, directors or consultants who purchased his or her shares before the date of completion of this offering or who holds options as of that date pursuant to a written compensatory plan or contract is entitled to rely on the resale provisions of Rule 701, which permits non-affiliates to sell their Rule 701 shares without having to comply with the public-information, holding-period, volume-limitation or notice provisions of Rule 144 and permits affiliates to sell their Rule 701 shares without having to comply with Rule 144's holding-period restrictions, in each case commencing 90 days after the date of completion of this offering. However, as described above, we and our officers, directors and substantially all of our stockholders have agreed not to sell or otherwise dispose of any shares of our common stock for the 180-day period after the date of this prospectus without the prior written consent of the underwriters. Any shares subject to lock-up agreements may be released at any time without notice by the underwriters.

We intend to file a registration statement on Form S-8 under the Securities Act of 1933 to register shares of common stock reserved for issuance under our employee benefit plans, thus permitting the resale of such shares by non-affiliates in the public market without restriction under the Securities Act. Such registration statements will become effective immediately upon filing.

61

Before this offering, there has been no public market for our common stock, and any sale of substantial amounts in the open market may adversely affect the market price of our common stock offered hereby.

In addition, after this offering, the holders of preferred stock and warrants convertible into an aggregate of 12,585,062 shares of common stock will be entitled to certain rights to cause us to register the sale of such shares under the Securities Act. Registration of these shares under the Securities Act would result in these shares, other than shares purchased by our affiliates, becoming freely tradable without restriction under the Securities Act. See "Description Of Capital Stock -- Registration Rights."

62

PLAN OF DISTRIBUTION

Subject to the terms and conditions set forth in an underwriting agreement among us and the underwriters, who are represented by C. E. Unterberg, Towbin, each of the underwriters named below has severally agreed to purchase from us and the selling stockholders the following respective number of shares of common stock, less the underwriting discounts and commissions set forth on the cover page of this prospectus, set forth below:

                                                               NUMBER OF
                        UNDERWRITERS                            SHARES
                        ------------                          -----------
C.E. Unterberg, Towbin......................................

                                                              -----------
          Total.............................................
                                                              ===========

The underwriting agreement provides that the obligations of the underwriters are subject to certain conditions, including the approval of legal matters by their counsel. The nature of the underwriters' obligations is that they are committed to purchase and pay for all of the above shares of common stock, other than shares of our common stock covered by the over-allotment option described below, if any are purchased.

PUBLIC OFFERING PRICE AND DEALERS CONCESSION

The underwriters propose initially to offer the shares of common stock offered by this prospectus directly to the public at the initial public offering price per share set forth on the cover page of this prospectus, and to certain dealers at that price less a concession not in excess of $ per share. The underwriters may allow, and these dealers may re-allow, a discount not in excess of $ per share on sales to certain other dealers. After commencement of this offering, the offering price, discount price and re-allowance may be changed by the underwriters. No such change will alter the amount of proceeds to be received by us.

OVER-ALLOTMENT OPTION

We have granted to the underwriters an option, which may be exercised within 30 days after the date of this prospectus, to purchase in the aggregate up to additional shares of common stock to cover over-allotments, if any, at the initial public offering price, less the underwriting discount and commissions set forth on the cover page of this prospectus. If the underwriters exercise their over-allotment option to purchase any of these additional shares of our common stock, these additional shares will be sold by the underwriters on the same terms as those on which the shares offered by this prospectus are being sold. We will be obligated, pursuant to the over-allotment option, to sell shares to the underwriters if the underwriters exercise their over-allotment option. The underwriters may exercise their over-allotment option only to cover over-allotments made in connection with the sale of the shares of common stock offered by this prospectus. To the extent the option is exercised, the underwriters will be severally committed, subject to several conditions, including the approval of legal matters by their counsel, to purchase the additional shares of common stock in proportion to their respective purchase commitments as indicated in the preceding table.

UNDERWRITING COMPENSATION

The underwriting fee is equal to the public offering price per share of common stock less the amount paid by the underwriters to us per share of common stock. The following table summarizes the compensation

63

to be paid to the underwriters by us in connection with this offering. The following amounts are shown assuming both no exercise and full exercise of the underwriters' option to purchase additional shares.

                                                              NO EXERCISE    FULL EXERCISE
                                                              -----------    -------------
Per share...................................................   $               $
Total.......................................................   $               $

C.E. Unterberg, Towbin provided us with financial advisory and investment banking services in connection with our series D convertible preferred stock financing. In return for these services, C.E. Unterberg, Towbin received a fee of approximately $240,000 and warrants to acquire 76,800 shares of series D convertible preferred stock at an exercise price of $5.00 per share. In connection with our series D convertible preferred stock financing, C.E. Unterberg, Towbin and certain of its affiliates purchased approximately 406,000 shares of our series D convertible preferred stock at a purchase price of $5.00 per share. The National Association of Securities Dealers, Inc., or the NASD, may deem a portion of the value of such shares held by C.E. Unterberg, Towbin to represent "underwriting compensation" for purposes of the rules of the NASD.

OTHER OFFERING EXPENSES; ACCEPTANCE AND DELIVERY

We estimate that the total expenses of the offering, excluding underwriting discounts and commissions, will be approximately . The offering of the shares is made for delivery, when, as and if accepted by the underwriters and subject to prior sale and to withdrawal, cancellation or modification of the offering without notice. The underwriters reserve the right to reject an order for the purchase of our shares in whole or in part.

INDEMNIFICATION OF UNDERWRITERS

We have agreed to indemnify the underwriters against certain civil liabilities, including liabilities under the Securities Act, and, where such indemnification is unavailable, contribute to payments the underwriters may be required to make in connection with these liabilities.

LOCK-UP ARRANGEMENTS

We and all of our directors and officers and holders holding an aggregate of approximately shares of our common stock and the holders of options and warrants to purchase approximately shares of our common stock have entered into lock-up agreements pursuant to which they have agreed not to, directly or indirectly, issue, sell, agree to sell, grant any option or contract for the sale of, pledge or otherwise dispose of, or, in any manner, transfer all or a portion of any shares of common stock or any securities convertible into or exercisable or exchangeable for common stock or any interest therein owned as of the date hereof or hereafter acquired for a period of 180 days after the date of this prospectus without the prior written consent of the underwriters. C. E. Unterberg, Towbin has advised us that it has no present intention to release any of the shares subject to the lock-up agreements prior to the expiration of the lock-up period.

DIRECTED SHARE PROGRAM

At our request, the underwriters have reserved for sale at the initial public offering price up to of the shares of common stock to be sold in this offering to our directors, officers, employees and friends, or to persons who are otherwise associated with us and our affiliates, and who have advised us of their desire to purchase such shares through a directed share program. The number of shares available for sale to the general public will be reduced to the extent any reserved shares not so purchased will be offered by the underwriters on the same basis as the other shares offered hereby. We have agreed to indemnify the underwriters against certain liabilities and expenses, including liabilities under the Securities Act, in connection with the sales of the reserved shares.

64

SALES TO DISCRETIONARY ACCOUNTS

C. E. Unterberg, Towbin may sell shares of our common stock to accounts over which it exercises discretionary authority after obtaining prior consent from the account with respect to any sales to such accounts.

STABILIZATION AND OTHER TRANSACTIONS

In connection with this offering, the underwriters may engage in transactions that stabilize, maintain or otherwise affect the market price of our common stock. These transactions may include stabilization transactions effected in accordance with Rule 104 of Regulation M under the Securities Exchange Act, pursuant to which the underwriters may bid for, or purchase, common stock for the purpose of stabilizing the market price. The underwriters also may create a short position by selling more common stock in connection with this offering than they are committed to purchase from us, and in such case may purchase common stock in the open market following completion of this offering to cover all or a portion of such short position. In addition, the underwriters may impose "penalty bids" whereby they may reclaim from a dealer participating in this offering, the selling concession with respect to the common stock that it distributed in this offering, but which was subsequently purchased for the accounts of the underwriters in the open market. Any of the transactions described in this paragraph may result in the maintenance of the price of the common stock at a level above that which might otherwise prevail in the open market. None of the transactions described in this paragraph is required and, if they are taken, they may be discontinued at any time.

DETERMINATION OF OFFERING PRICE

Prior to this offering, there has been no market for our common stock. Accordingly, the initial public offering price for the common stock was determined by negotiation between us and the underwriters.

The primary factors considered in determining the public offering price were:

- our financial and operating history and condition;
- market valuations of other companies engaged in activities similar to ours;
- our prospects and prospects for the industry in which we do business in general;
- our management;
- prevailing equity market conditions; and
- the demand for securities considered comparable to ours.

LEGAL MATTERS

Lane Powell Spears Lubersky LLP, Seattle, Washington will pass for us on the validity of the common stock offered hereby. Jim D. Johnston, a partner of Lane Powell Spears Lubersky LLP, is the Assistant Secretary of Northwest Biotherapeutics. Principals of Lane Powell Spears Lubersky LLP beneficially own an aggregate of 11,500 shares of our common stock and warrants to purchase 5,126 shares of our common stock. Dewey Ballantine LLP, Menlo Park, California, is acting as counsel for the underwriters in connection with selected legal matters.

EXPERTS

Our consolidated financial statements as of December 31, 1999 and 2000 and for each of the years in the three-year period ended December 31, 2000 and the period from March 18, 1996 (inception) through December 31, 2000 have been included in this prospectus and registration statement in reliance upon the report of KPMG LLP, independent auditors, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.

The report of KPMG LLP covering our December 31, 2000 consolidated financial statements contains an explanatory paragraph that states that we have incurred losses from operations, have a net capital deficiency and, at December 31, 2000, a net working capital deficit that raise substantial doubt about our ability to

65

continue as a going concern. Our consolidated financial statements do not include any adjustments that might result from the outcome of that uncertainty.

CHANGE IN INDEPENDENT AUDITORS

In November 2000, we replaced Arthur Andersen LLP as our independent auditors. We had no disagreements with Arthur Andersen LLP on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures during our two most recent fiscal years and interim period prior to our change in independent auditors which, if not resolved to the satisfaction of Arthur Andersen LLP, would have caused them to make reference to the matter in their report. Arthur Andersen LLP has no association with the financial statements presented in this registration statement nor has it read the Registration Statement.

WHERE YOU CAN FIND ADDITIONAL INFORMATION

We have filed a registration statement on Form S-1 with the Securities and Exchange Commission under the Securities Act with respect to the shares of common stock offered in this offering. This prospectus, which is a part of the registration statement, does not contain all of the information set forth in the registration statement, or the exhibits, which are part of the registration statement, parts of which are omitted as permitted by the rules and regulations of the Securities and Exchange Commission. For further information about us and the shares of our common stock to be sold in this offering, please refer to the registration statement and the exhibits, which are part of the registration statement. Statements contained in this prospectus as to the contents of any contract or any other document are not necessarily complete. Each statement in this prospectus regarding the contents of the referenced contract or other document is qualified in all respects by our reference to the copy filed with the registration statement.

For further information about us and our common stock, we refer you to our registration statement and its attached exhibits, copies of which may be inspected without charge at the Securities and Exchange Commission's public reference room at 450 Fifth Street, N. W., Washington, D.C. 20549 and at the regional offices of the Commission located at Seven World Trade Center, Suite 1300, New York, New York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. You can request copies of these documents by writing to the Securities and Exchange Commission and paying a duplicating fee. Please call the Securities and Exchange Commission at 1-800-SEC-0330 for further information about the public reference rooms. The Commission maintains a World Wide Web site on the Internet at http://www.sec.gov that contains reports, proxy and information statements and other information regarding registrants that file electronically with the Commission.

Upon completion of this offering, we will become subject to the information and periodic reporting requirements of the Exchange Act and, in accordance therewith, will file periodic reports, proxy and information statements and other information with the Commission. Our periodic reports, proxy and information statements and other information will be available for inspection and copying at the regional offices, public references facilities and web site of the Commission referred to above.

We intend to furnish our stockholders with annual reports containing audited financial statements and an opinion thereon expressed by independent certified public accountants. We also intend to furnish other reports as we may determine or as required by law.

This prospectus includes statistical data that were obtained from industry publications. These industry publications generally indicate that the authors of these publications have obtained information from sources believed to be reliable, but do not guarantee the accuracy and completeness of their information. While we believe these industry publications to be reliable, we have not independently verified their data.

66

NORTHWEST BIOTHERAPEUTICS, INC.
(A DEVELOPMENT STAGE COMPANY)

AND SUBSIDIARY

TABLE OF CONTENTS

                                                              PAGE
                                                              ----
Independent Auditors' Report................................  F-2
Consolidated Balance Sheets.................................  F-3
Consolidated Statements of Operations.......................  F-4
Consolidated Statements of Stockholders' Deficit and
  Comprehensive Loss........................................  F-5
Consolidated Statements of Cash Flows.......................  F-6
Notes to Consolidated Financial Statements..................  F-7

F-1

INDEPENDENT AUDITORS' REPORT

To the Board of Directors
Northwest Biotherapeutics, Inc.:

We have audited the accompanying consolidated balance sheets of Northwest Biotherapeutics, Inc. (a development stage company) and subsidiary (Company) as of December 31, 1999 and 2000 and the related consolidated statements of operations, stockholders' deficit and comprehensive loss, and cash flows for each of the years in the three-year period ended December 31, 2000 and the period from March 18, 1996 (inception) through December 31, 2000. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. 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 consolidated financial statements referred to above present fairly, in all material respects, the financial position of Northwest Biotherapeutics, Inc. (a development stage company) and subsidiary as of December 31, 1999 and 2000, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2000 and the period from March 18, 1996 (inception) through December 31, 2000 in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in note 3 to consolidated financial statements, the Company has incurred losses from operations, has a net capital deficiency and, at December 31, 2000, a net working capital deficit that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are described in note 3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ KPMG LLP

April 17, 2001, except as to notes 4(b) and
5(d),which are as of May 15, 2001

F-2

NORTHWEST BIOTHERAPEUTICS, INC.
(A DEVELOPMENT STAGE COMPANY)

AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

                                                                      DECEMBER 31,
                                                              ----------------------------
                                                                  1999            2000        JUNE 30, 2001
                                                              ------------    ------------    -------------
                                                                                               (UNAUDITED)
ASSETS
Current assets:
  Cash and cash equivalents.................................  $    648,847    $    410,756    $  7,731,579
  Accounts receivable.......................................        29,602          18,933           3,056
  Accounts receivable from affiliates.......................        77,300          56,692          14,159
  Preferred stock subscription receivable...................            --         273,000         174,417
  Prepaid expenses and other current assets.................        58,275          98,032         152,188
                                                              ------------    ------------    ------------
    Total current assets....................................       814,024         857,413       8,075,399
                                                              ------------    ------------    ------------
Property and equipment:
  Leasehold improvements....................................        61,181       1,693,660       1,700,581
  Laboratory equipment......................................       962,712       1,162,222       1,301,061
  Office furniture and other equipment......................        80,745         325,316         369,694
                                                              ------------    ------------    ------------
                                                                 1,104,638       3,181,198       3,371,336
  Less accumulated depreciation and amortization............       403,877         413,135         636,469
                                                              ------------    ------------    ------------
    Property and equipment, net.............................       700,761       2,768,063       2,734,867
                                                              ------------    ------------    ------------
Restricted cash.............................................     1,003,968       1,003,968       1,003,968
                                                              ------------    ------------    ------------
                                                              $  2,518,753       4,629,444      11,814,234
                                                              ============    ============    ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
  Current portion of note payable to stockholder............  $         --    $    996,675    $     78,644
  Current portion of line of credit with Northwest
    Hospital................................................            --       2,834,262       2,834,262
  Current portion of capital lease obligations..............        29,240          50,176          53,982
  Accounts payable..........................................       410,340         604,617         609,513
  Accounts payable to Northwest Hospital....................       212,276         281,661              --
  Accrued expenses..........................................       371,622         577,836         914,138
                                                              ------------    ------------    ------------
    Total current liabilities...............................     1,023,478       5,345,227       4,490,539
Long-term liabilities:
  Note payable to stockholder, less current portion.........            --         653,325          86,267
  Line of credit with Northwest Hospital, less current
    portion.................................................     2,834,262              --              --
  Capital lease obligations, less current portion...........        46,717         148,024         205,097
  Deferred rent.............................................            --          61,296         153,239
                                                              ------------    ------------    ------------
    Total liabilities.......................................     3,904,457       6,207,872       4,935,142
                                                              ------------    ------------    ------------
Preferred stock, 12,500,000 shares authorized:
  Mandatorily redeemable convertible preferred stock, $0.001
    par value:
    Series A, 550,700 shares authorized; 550,700 shares
      issued and outstanding at December 31, 1999 and 2000
      and June 30, 2001. Liquidation preference of
      $3,000,000 at June 30, 2001...........................     4,062,635       4,492,999       4,712,225
  Convertible preferred stock, $0.001 par value:
    Series B, 897,513 shares authorized; 897,489 shares
      issued and outstanding at December 31, 1999 and 2000
      and June 30, 2001. Liquidation preference and
      redemption value of $2,088,330 at June 30, 2001.......     2,088,330       2,088,330       2,088,330
    Series C, 3,609,062 shares authorized; 3,350,600 shares
      issued and outstanding at December 31, 1999 and 2000
      and June 30, 2001. Liquidation preference and
      redemption value of $8,376,500 at June 30, 2001.......     7,253,091       7,253,091       7,253,091
    Series D, 6,500,000 shares authorized; 0, 1,532,355 and
      4,135,823 shares issued and outstanding at December
      31, 1999 and 2000 and June 30, 2001. Liquidation
      preference and redemption value of $20,679,115 at June
      30, 2001..............................................            --       7,102,597      17,365,335
Stockholders' deficit:
  Common stock, $0.001 par value; 30,000,000 shares
    authorized, 2,202,800, 1,934,450 and 1,935,382 shares
    issued and outstanding at December 31, 1999 and 2000 and
    June 30, 2001...........................................         2,203           1,934           1,935
  Additional paid-in capital................................       394,031       5,878,200      14,198,472
  Deferred compensation.....................................            --              --        (921,233)
  Deficit accumulated during the development stage..........   (15,185,994)    (28,395,579)    (37,819,063)
                                                              ------------    ------------    ------------
    Total stockholders' deficit.............................   (14,789,760)    (22,515,445)    (24,539,889)
Commitments, contingencies and subsequent events............
                                                              ------------    ------------    ------------
                                                              $  2,518,753    $  4,629,444    $ 11,814,234
                                                              ============    ============    ============

See accompanying notes to consolidated financial statements.

F-3

NORTHWEST BIOTHERAPEUTICS, INC.
(A DEVELOPMENT STAGE COMPANY)

AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

                                                                                PERIOD FROM
                                                                               MARCH 18, 1996
                                            YEARS ENDED DECEMBER 31,           (INCEPTION) TO   SIX MONTHS ENDED JUNE 30,
                                    ----------------------------------------    DECEMBER 31,    -------------------------
                                       1998          1999           2000            2000           2000          2001
                                    -----------   -----------   ------------   --------------   -----------   -----------
                                                                                                (UNAUDITED)   (UNAUDITED)
Revenues:
  Research material sales.........  $    47,507   $    39,260   $    110,757    $    197,524    $    81,009   $    60,406
  Contract research and
    development from related
    parties.......................      337,500        84,375             --       1,127,638             --            --
  Research grants and other.......           --        86,885         45,205         132,090         35,245            --
                                    -----------   -----------   ------------    ------------    -----------   -----------
    Total revenues................      385,007       210,520        155,962       1,457,252        116,254        60,406
                                    -----------   -----------   ------------    ------------    -----------   -----------
Operating costs and expenses:
  Cost of research material
    sales.........................       81,043        45,565         50,849         177,457         44,216        40,187
  Research and development........    2,860,323     2,885,332      3,114,160      11,486,478      1,276,433     2,326,609
  General and administrative......    1,765,360     2,535,200      3,682,015       9,563,110      1,531,305     2,173,326
  Depreciation and amortization...      163,529       196,012        198,532         803,575         89,830       229,886
                                    -----------   -----------   ------------    ------------    -----------   -----------
    Total operating costs and
      expenses....................    4,870,255     5,662,109      7,045,556      22,030,620      2,941,784     4,770,008
                                    -----------   -----------   ------------    ------------    -----------   -----------
    Loss from operations..........   (4,485,248)   (5,451,589)    (6,889,594)    (20,573,368)    (2,825,530)   (4,709,602)
Other income (expense):
  Interest expense................     (261,791)     (318,353)    (6,055,806)     (6,682,159)    (1,795,126)     (300,905)
  Interest income.................       27,601       160,563        166,179         355,150        102,084        79,815
                                    -----------   -----------   ------------    ------------    -----------   -----------
      Net loss....................   (4,719,438)   (5,609,379)   (12,779,221)    (26,900,377)    (4,518,572)   (4,930,692)
Accretion of Series A preferred
  stock mandatory redemption
  obligation......................     (328,560)     (353,962)      (430,364)     (1,492,999)      (204,739)     (219,226)
Beneficial conversion feature of
  Series D preferred stock........           --            --             --              --             --    (4,273,566)
                                    -----------   -----------   ------------    ------------    -----------   -----------
    Net loss applicable to common
      stockholders................  $(5,047,998)  $(5,963,341)  $(13,209,585)   $(28,393,376)   $(4,723,311)  $(9,423,484)
                                    ===========   ===========   ============    ============    ===========   ===========
Net loss per share -- basic and
  diluted.........................  $     (2.29)  $     (2.71)  $      (6.35)                   $     (2.14)  $     (4.87)
                                    ===========   ===========   ============                    ===========   ===========
Weighted average shares used in
  computing basic and diluted net
  loss per share..................    2,202,800     2,202,800      2,080,405                      2,202,800     1,934,684
                                    ===========   ===========   ============                    ===========   ===========
Pro forma net loss per
  share -- basic and diluted......                              $      (1.82)                                 $     (1.10)
                                                                ============                                  ===========
Weighted average shares used in
  computing basic and diluted pro
  forma net loss per share........                                 7,244,366                                    8,556,603
                                                                ============                                  ===========

                                     PERIOD FROM
                                    MARCH 18, 1996
                                    (INCEPTION) TO
                                       JUNE 30,
                                         2001
                                    --------------
                                     (UNAUDITED)
Revenues:
  Research material sales.........   $    257,930
  Contract research and
    development from related
    parties.......................      1,127,638
  Research grants and other.......        132,090
                                     ------------
    Total revenues................      1,517,658
                                     ------------
Operating costs and expenses:
  Cost of research material
    sales.........................        217,644
  Research and development........     13,813,087
  General and administrative......     11,736,436
  Depreciation and amortization...      1,033,461
                                     ------------
    Total operating costs and
      expenses....................     26,800,628
                                     ------------
    Loss from operations..........    (25,282,970)
Other income (expense):
  Interest expense................     (6,983,064)
  Interest income.................        434,965
                                     ------------
      Net loss....................    (31,831,069)
Accretion of Series A preferred
  stock mandatory redemption
  obligation......................     (1,712,225)
Beneficial conversion feature of
  Series D preferred stock........     (4,273,566)
                                     ------------
    Net loss applicable to common
      stockholders................   $(37,816,860)
                                     ============
Net loss per share -- basic and
  diluted.........................
Weighted average shares used in
  computing basic and diluted net
  loss per share..................
Pro forma net loss per
  share -- basic and diluted......
Weighted average shares used in
  computing basic and diluted pro
  forma net loss per share........

See accompanying notes to consolidated financial statements.

F-4

NORTHWEST BIOTHERAPEUTICS, INC.
(A DEVELOPMENT STAGE COMPANY)

AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT AND COMPREHENSIVE LOSS

                                                                                                      DEFICIT
                                                                                                    ACCUMULATED
                                                     COMMON STOCK      ADDITIONAL                    DURING THE        TOTAL
                                                  ------------------     PAID-IN       DEFERRED     DEVELOPMENT    STOCKHOLDERS'
                                                   SHARES     AMOUNT     CAPITAL     COMPENSATION      STAGE          DEFICIT
                                                  ---------   ------   -----------   ------------   ------------   -------------
Balance at March 18, 1996.......................         --   $  --    $        --   $        --    $        --    $         --
Accretion of membership units mandatory
  redemption obligation.........................         --      --             --            --       (105,574)       (105,574)
Comprehensive loss -- net loss..................         --      --             --            --     (1,232,589)     (1,232,589)
                                                  ---------   ------   -----------   -----------    ------------   ------------
Balance at December 31, 1996....................         --      --             --            --     (1,338,163)     (1,338,163)
Accretion of membership units mandatory
  redemption obligation.........................         --      --             --            --       (274,539)       (274,539)
Comprehensive loss -- net loss..................         --      --             --            --     (2,559,750)     (2,559,750)
                                                  ---------   ------   -----------   -----------    ------------   ------------
Balance at December 31, 1997....................         --      --             --            --     (4,172,452)     (4,172,452)
Conversion of membership units to common
  stock.........................................  2,202,800   2,203             --            --         (2,203)             --
Accretion of Series A preferred stock mandatory
  redemption obligation.........................         --      --             --            --       (328,560)       (328,560)
Comprehensive loss -- net loss..................         --      --             --            --     (4,719,438)     (4,719,438)
                                                  ---------   ------   -----------   -----------    ------------   ------------
Balances at December 31, 1998...................  2,202,800   2,203             --            --     (9,222,653)     (9,220,450)
Issuance of Series C preferred stock warrants
  for services related to sale of Series C
  preferred shares..............................         --      --        394,031            --             --         394,031
Accretion of Series A preferred stock mandatory
  redemption obligation.........................         --      --             --            --       (353,962)       (353,962)
Comprehensive loss -- net loss..................         --      --             --            --     (5,609,379)     (5,609,379)
                                                  ---------   ------   -----------   -----------    ------------   ------------
Balances at December 31, 1999...................  2,202,800   2,203        394,031            --    (15,185,994)    (14,789,760)
Issuance of Series C preferred stock warrants in
  connection with lease agreement...............         --      --         43,130            --             --          43,130
Exercise of stock options for cash..............      2,000       2            998            --             --           1,000
Issuance of common stock at $0.85 per share for
  license rights................................      5,000       5          4,245            --             --           4,250
Issuance of Series D preferred stock warrants in
  convertible promissory note offering..........         --      --      4,038,525            --             --       4,038,525
Beneficial conversion feature of convertible
  promissory notes..............................         --      --      1,025,575            --             --       1,025,575
Issuance of Series D preferred stock warrants
  for services related to sale of Series D
  preferred shares..............................         --      --        368,182            --             --         368,182
Issuance of common stock warrants in conjunction
  with issuance of promissory note..............         --      --          3,238            --             --           3,238
Cancellation of common stock....................   (275,350)   (276)           276            --             --              --
Accretion of Series A preferred stock mandatory
  redemption obligation.........................         --      --             --            --       (430,364)       (430,364)
Comprehensive loss -- net loss..................         --      --             --            --    (12,779,221)    (12,779,221)
                                                  ---------   ------   -----------   -----------    ------------   ------------
Balances at December 31, 2000...................  1,934,450   1,934      5,878,200            --    (28,395,579)    (22,515,445)
Issuance of Series D preferred stock warrants in
  conjunction with refinancing of note payable
  to stockholder (unaudited)....................         --      --        224,935            --             --         224,935
Beneficial conversion feature of convertible
  promissory note (unaudited)...................         --      --        455,935            --             --         455,935
Beneficial conversion feature of Series D
  preferred stock (unaudited)...................         --      --      4,273,566            --     (4,273,566)             --
Issuance of Series D preferred stock warrants
  for services related to the sale of Series D
  preferred shares (unaudited)..................         --      --      2,287,112            --             --       2,287,112
Exercise of stock options for cash
  (unaudited)...................................        932       1            581            --             --             582
Issuance of stock options to nonemployees for
  services (unaudited)..........................         --      --         36,846            --             --          36,846
Deferred compensation related to employee stock
  options (unaudited)...........................         --      --      1,041,297    (1,041,297)            --              --
Amortization of deferred compensation
  (unaudited)...................................         --      --             --       120,064             --         120,064
Accretion of Series A preferred stock mandatory
  redemption obligation (unaudited).............         --      --             --            --       (219,226)       (219,226)
Comprehensive loss -- net loss (unaudited)......         --      --             --            --      4,930,692      (4,930,692)
                                                  ---------   ------   -----------   -----------    ------------   ------------
Balances at June 30, 2001 (unaudited)...........  1,935,382   $1,935   $14,198,472   $  (921,233)   $(37,819,063)  $(24,539,889)
                                                  =========   ======   ===========   ===========    ============   ============

See accompanying notes to consolidated financial statements.

F-5

NORTHWEST BIOTHERAPEUTICS, INC.
(A DEVELOPMENT STAGE COMPANY)

AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                                           PERIOD FROM
                                                                                          MARCH 18, 1996
                                                       YEARS ENDED DECEMBER 31,           (INCEPTION) TO
                                               ----------------------------------------    DECEMBER 31,
                                                  1998          1999           2000            2000
                                               -----------   -----------   ------------   --------------

Cash flows from operating activities:
  Net loss...................................  $(4,719,438)  $(5,609,379)  $(12,779,221)   $(26,900,377)
  Adjustments to reconcile net loss to cash
    used in operating activities:
    Depreciation and amortization............      163,529       196,012        198,532         803,575
    Amortization of deferred financing
      costs..................................           --            --        319,799         319,799
    Amortization of debt discount............           --            --      4,042,378       4,042,378
    Amortization of beneficial conversion
      feature of convertible promissory
      notes..................................           --            --      1,025,575       1,025,575
    Accrued interest converted to preferred
      stock..................................           --            --        260,378         260,378
    Stock-based compensation costs...........           --            --             --              --
    Loss on retirement of equipment..........           --        82,553             --          82,553
    Changes in operating assets and
      liabilities:
      Accounts receivable....................      (46,729)     (117,171)        31,277         (75,625)
      Prepaid expenses and other current
        assets...............................           --            --          7,008         (51,267)
      Accounts payable and accrued
        expenses.............................      395,784       239,104        400,491       1,182,453
      Accounts payable to Northwest
        Hospital.............................    1,352,038    (1,150,079)        69,385         281,661
      Deferred revenue.......................       84,375       (84,375)            --              --
      Deferred rent..........................           --            --         61,296          61,296
                                               -----------   -----------   ------------    ------------
        Net cash used in operating
          activities.........................   (2,770,441)   (6,443,335)    (6,363,102)    (18,967,601)
                                               -----------   -----------   ------------    ------------
Cash flows from investing activities:
  Purchases of property and equipment, net...     (187,134)     (316,773)    (2,105,608)     (3,418,008)
  Transfer of restricted cash................           --    (1,003,968)            --      (1,003,968)
                                               -----------   -----------   ------------    ------------
        Net cash used in investing
          activities.........................     (187,134)   (1,320,741)    (2,105,608)     (4,421,976)
                                               -----------   -----------   ------------    ------------
Cash flows from financing activities:
  Proceeds from issuance of note payable to
    stockholder..............................           --            --      1,650,000       1,650,000
  Repayment of note payable to stockholder...           --            --             --              --
  Proceeds from issuance of convertible
    promissory notes and warrants, net of
    issuance costs...........................           --            --      5,064,100       5,064,100
  Borrowings under line of credit with
    Northwest Hospital.......................    1,371,471            --             --       2,834,262
  Payments on capital lease obligations......           --            --        (37,983)        (37,983)
  Proceeds from sales of preferred stock, net
    of issuance costs........................    1,960,640     7,774,812      1,873,301      14,608,753
  Proceeds from exercise of stock options....           --            --          1,000           1,000
  Deferred financing costs...................           --            --       (319,799)       (319,799)
                                               -----------   -----------   ------------    ------------
        Net cash provided by financing
          activities.........................    3,332,111     7,774,812      8,230,619      23,800,333
                                               -----------   -----------   ------------    ------------
        Net increase (decrease) in cash and
          cash equivalents...................      374,536        10,736       (238,091)        410,756
Cash and cash equivalents at beginning of
  period.....................................      263,575       638,111        648,847              --
                                               -----------   -----------   ------------    ------------
Cash and cash equivalents at end of period...  $   638,111   $   648,847   $    410,756    $    410,756
                                               ===========   ===========   ============    ============
Supplemental disclosure of cash flow
  information -- cash paid during the period
  for interest...............................  $   154,872   $   318,083   $    412,567    $    928,522
                                               ===========   ===========   ============    ============
Supplemental schedule of noncash financing
  activities:
  Equipment acquired through capital
    leases...................................  $        --   $    75,957   $    160,226         236,183
  Accretion of Series A preferred stock
    mandatory redemption obligation..........      328,560       353,962        430,364       1,492,999
  Issuance of warrants attached to
    convertible promissory note..............           --            --             --              --
  Conversion of convertible promissory notes
    and accrued interest to Series D
    preferred stock..........................           --            --      5,324,478       5,324,478
  Issuance of Series C preferred stock
    warrants in connection with lease
    agreement................................           --            --         43,130          43,130
  Issuance of common stock for license
    rights...................................           --            --          4,250           4,250
  Preferred stock subscription receivable....  $        --   $        --   $    273,000    $    273,000
                                               ===========   ===========   ============    ============

                                                                            PERIOD FROM
                                                   SIX MONTHS ENDED        MARCH 18, 1996
                                                       JUNE 30,            (INCEPTION) TO
                                               -------------------------      JUNE 30,
                                                  2000          2001            2001
                                               -----------   -----------   --------------
                                               (UNAUDITED)   (UNAUDITED)    (UNAUDITED)
Cash flows from operating activities:
  Net loss...................................  $(4,518,572)  $(4,930,692)   $(31,831,069)
  Adjustments to reconcile net loss to cash
    used in operating activities:
    Depreciation and amortization............       89,830       229,886       1,033,461
    Amortization of deferred financing
      costs..................................       91,725            --         319,799
    Amortization of debt discount............    1,158,337        19,167       4,061,545
    Amortization of beneficial conversion
      feature of convertible promissory
      notes..................................      294,157        38,846       1,064,421
    Accrued interest converted to preferred
      stock..................................           --            --         260,378
    Stock-based compensation costs...........           --       156,910         156,910
    Loss on retirement of equipment..........           --            --          82,553
    Changes in operating assets and
      liabilities:
      Accounts receivable....................       14,031        58,410         (17,215)
      Prepaid expenses and other current
        assets...............................       58,034       (54,156)       (105,423)
      Accounts payable and accrued
        expenses.............................       38,300       341,198       1,523,651
      Accounts payable to Northwest
        Hospital.............................      (35,872)     (281,661)             --
      Deferred revenue.......................           --            --              --
      Deferred rent..........................           --        91,943         153,239
                                               -----------   -----------    ------------
        Net cash used in operating
          activities.........................   (2,810,030)   (4,330,149)    (23,297,750)
                                               -----------   -----------    ------------
Cash flows from investing activities:
  Purchases of property and equipment, net...     (677,511)     (107,536)     (3,525,544)
  Transfer of restricted cash................           --            --      (1,003,968)
                                               -----------   -----------    ------------
        Net cash used in investing
          activities.........................     (677,511)     (107,536)     (4,529,512)
                                               -----------   -----------    ------------
Cash flows from financing activities:
  Proceeds from issuance of note payable to
    stockholder..............................           --            --       1,650,000
  Repayment of note payable to stockholder...           --      (862,232)       (862,232)
  Proceeds from issuance of convertible
    promissory notes and warrants, net of
    issuance costs...........................    5,064,100            --       5,064,100
  Borrowings under line of credit with
    Northwest Hospital.......................           --            --       2,834,262
  Payments on capital lease obligations......       (2,009)      (28,275)        (66,258)
  Proceeds from sales of preferred stock, net
    of issuance costs........................           --    12,648,433      27,257,186
  Proceeds from exercise of stock options....           --           582           1,582
  Deferred financing costs...................     (319,799)           --        (319,799)
                                               -----------   -----------    ------------
        Net cash provided by financing
          activities.........................    4,742,292    11,758,508      35,558,841
                                               -----------   -----------    ------------
        Net increase (decrease) in cash and
          cash equivalents...................    1,254,751     7,320,823       7,731,579
Cash and cash equivalents at beginning of
  period.....................................      648,847       410,756              --
                                               -----------   -----------    ------------
Cash and cash equivalents at end of period...  $ 1,903,598   $ 7,731,579    $  7,731,579
                                               ===========   ===========    ============
Supplemental disclosure of cash flow
  information -- cash paid during the period
  for interest...............................  $    89,791   $   185,916    $  1,114,438
                                               ===========   ===========    ============
Supplemental schedule of noncash financing
  activities:
  Equipment acquired through capital
    leases...................................  $    16,162   $    89,154    $    325,337
  Accretion of Series A preferred stock
    mandatory redemption obligation..........      204,739       219,226       1,712,225
  Issuance of warrants attached to
    convertible promissory note..............           --       224,935         224,935
  Conversion of convertible promissory notes
    and accrued interest to Series D
    preferred stock..........................           --            --       5,324,478
  Issuance of Series C preferred stock
    warrants in connection with lease
    agreement................................           --            --          43,130
  Issuance of common stock for license
    rights...................................           --            --           4,250
  Preferred stock subscription receivable....  $        --   $   174,417    $    174,417
                                               ===========   ===========    ============

See accompanying notes to consolidated financial statements.

F-6

NORTHWEST BIOTHERAPEUTICS, INC.
(A DEVELOPMENT STAGE COMPANY)

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 1998, 1999 AND 2000

(INFORMATION AS OF JUNE 30, 2001 AND FOR THE SIX MONTHS ENDED
JUNE 30, 2000 AND 2001 IS UNAUDITED)

(1) ORGANIZATION AND DESCRIPTION OF BUSINESS

Northwest Biotherapeutics, Inc. (Company) was organized to discover and develop innovative diagnostics and immunotherapies for prostate cancer. During 1998, the Company reincorporated as a Delaware corporation. Prior to 1998, the Company was a limited liability company (LLC) formed on March 18, 1996. The Company is a development stage company, has yet to generate significant revenues from its intended business purpose and has no assurance of future revenues. While in the development stage, the Company's principal activities have included defining and conducting research programs, conducting clinical trials, raising capital and recruiting scientific and management personnel.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(A) PRINCIPLES OF CONSOLIDATION

The Company had a 50% ownership interest in Northwest Clinicals, LLC (Northwest Clinicals), which has been consolidated in these financial statements through its August 2000 dissolution, as the Company exercised control over this entity [see note 5(c)]. All significant intercompany balances and transactions have been eliminated in consolidation.

(B) INTERIM FINANCIAL STATEMENTS

The financial information as of June 30, 2001, for the six months ended June 30, 2000 and 2001, and for the period from March 18, 1996 (inception) through June 30, 2001 is unaudited, except as to notes 4(b) and 5(d) through May 15, 2001. These interim financial statements have been prepared on substantially the same basis as the audited financial statements and in the opinion of management contain all adjustments, consisting only of normal recurring adjustments, necessary for the fair presentation of the financial information set forth herein.

(C) INITIAL PUBLIC OFFERING, NET LOSS PER SHARE AND PRO FORMA NET LOSS PER SHARE

In July 2001, the Board of Directors authorized the filing of a registration statement with the Securities and Exchange Commission (SEC) that would permit the Company to sell shares of its common stock in connection with a proposed initial public offering of securities (IPO).

If the offering is consummated under the terms presently anticipated, each of the outstanding shares of Series B, C and D preferred stock will automatically convert into shares of common stock upon closing of the proposed IPO. The pro forma net loss per share is calculated as if the series B, C and D preferred stock had converted into shares of common stock on January 1 of the respective period presented or at the original issuance date of the preferred stock, if later.

(D) USE OF ESTIMATES IN PREPARATION OF FINANCIAL STATEMENTS

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

F-7

NORTHWEST BIOTHERAPEUTICS, INC.
(A DEVELOPMENT STAGE COMPANY)

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1998, 1999 AND 2000

(INFORMATION AS OF JUNE 30, 2001 AND FOR THE SIX MONTHS ENDED
JUNE 30, 2000 AND 2001 IS UNAUDITED)

(E) CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents. Cash equivalents consists of a money market account in the accompanying consolidated balance sheets.

(F) FINANCIAL INSTRUMENTS AND CONCENTRATIONS OF RISK

The Company's financial instruments consist of cash and cash equivalents, receivables, restricted cash, accounts payable, and a note payable to a stockholder. The fair values of these instruments approximate their financial statement carrying amounts due to their short maturities or current market indicators.

Credit is extended based on an evaluation of a customer's financial condition and collateral is generally not required. Accounts receivable are generally derived from revenue earned from entities located in the United States. The Company records an allowance for potential credit losses based upon the expected collectibility of the accounts receivable. To date, the Company has not experienced any material credit losses.

Two customers accounted for substantially all of the Company's revenues from contract research and development and research material sales recognized since its inception. For the years ended December 31, 1999 and 2000 and the six months ended June 30, 2000, approximately 85%, 56% and 72%, respectively, of revenues from research grants and other were from research grants from the Federal Government. No research grant revenue was recognized in 1998 or the six months ended June 30, 2001. No active grants exist at June 30, 2001.

(G) INVENTORIES

Inventories are included in prepaid expenses and other current assets and are stated at the lower of cost, primarily determined by the first-in, first-out method, or market.

(H) PROPERTY AND EQUIPMENT

Property and equipment are stated at cost. Property and equipment are depreciated or amortized over the following estimated useful lives using the straight-line method:

Leasehold improvements...............     Shorter of life of the lease or
                                                    useful life
Laboratory equipment.................                 5 years
Office furniture and other                           3-5 years
  equipment..........................

(I) RESTRICTED CASH

Restricted cash represents a deposit to secure a letter of credit required under a lease agreement entered into by the Company in 1999. The deposit is restricted in full for five years and will be released over the remaining five year term of the lease.

(J) DEFERRED RENT

The Company's lease for its main operating facility includes increases yearly through the ten year term. The Company recognizes expense for the lease using the straight-line method. Additional expense recognized in excess of cash payments is recorded as deferred rent.

F-8

NORTHWEST BIOTHERAPEUTICS, INC.
(A DEVELOPMENT STAGE COMPANY)

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1998, 1999 AND 2000

(INFORMATION AS OF JUNE 30, 2001 AND FOR THE SIX MONTHS ENDED
JUNE 30, 2000 AND 2001 IS UNAUDITED)

(K) REVENUE RECOGNITION

In December 1999, the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin (SAB) No. 101, "Revenue Recognition in Financial Statements." Management believes the Company's revenue recognition policies are in accordance with the guidance provided by the SEC and therefore the Company's adoption of SAB No. 101 in the fourth quarter of 2000 had no impact on the Company's results of operations or financial position.

The Company earns revenues through sale of research materials, providing research services to third parties and through research grants.

Revenues from sale of research materials are to a single customer with whom there is no other contractual relationship and are recognized when shipped to the customer and title has passed.

Research contracts and grants require the Company to perform research activities as specified in each respective contract or grant on a best efforts basis, and the Company is reimbursed based on the fees stipulated in the respective contracts and grants which approximate the costs incurred by the Company in performing such activities. The Company recognizes revenue under the research contracts and grants based on completion of performance under the respective contracts and grants where no ongoing obligation on the part of the Company exists. Direct costs related to these contracts and grants are reported as research and development expenses.

(L) RESEARCH AND DEVELOPMENT EXPENSES

Research and development costs are expensed as incurred.

(M) INCOME TAXES

Deferred income taxes are provided based on the estimated future tax effects of carryforward and temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those carryforwards and temporary differences are expected to be recovered or settled. The effect on the deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date. A valuation allowance is recorded for deferred tax assets when it is more likely than not that such deferred tax assets will not be realized. Prior to 1998, the Company was an LLC and the Company's tax losses and credits generally flowed directly to the members.

(N) STOCK-BASED COMPENSATION

The Company accounts for its stock option plans for employees in accordance with the provisions of Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations. As such, compensation expense related to employee stock options is recorded if, on the date of grant, the fair value of the underlying stock exceeds the exercise price. The Company applies the disclosure-only requirements of SFAS No. 123, Accounting for Stock-Based Compensation, which allows entities to continue to apply the provisions of APB Opinion No. 25 for transactions with employees, and to provide pro forma results of operations disclosures for employee stock option grants as if the fair-value-based method of accounting in SFAS No. 123 had been applied to those transactions.

F-9

NORTHWEST BIOTHERAPEUTICS, INC.
(A DEVELOPMENT STAGE COMPANY)

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1998, 1999 AND 2000

(INFORMATION AS OF JUNE 30, 2001 AND FOR THE SIX MONTHS ENDED
JUNE 30, 2000 AND 2001 IS UNAUDITED)

Stock compensation costs related to fixed employee awards with pro rata vesting are recognized on a straight-line basis over the period of benefit, generally the vesting period of the options. For options and warrants issued to non-employees, the Company recognizes stock compensation costs utilizing the fair value methodology prescribed in SFAS No. 123 over the related period of benefit.

(o) NET LOSS PER SHARE

Basic net loss per share is computed on the basis of the weighted average number of shares outstanding for the reporting period including for 1998 reflecting LLC membership units as converted for the entire year using the actual ratio at incorporation. Diluted loss per share is computed on the basis of the weighted average number of common shares plus dilutive potential common shares outstanding using the treasury stock method. Potential dilutive common shares consists of shares issuable to holders of unexercised stock options and warrants outstanding and shares issuable upon conversion of preferred stock.

Net loss per share applicable to common stockholders has been adjusted for the accretion of Series A preferred stock mandatory redemption obligation.

(p) OPERATING SEGMENTS

The Company is principally engaged in the discovery and development of innovative diagnostics and immunotherapies for cancer and has a single operating segment as management reviews financial information on a consolidated basis for the purposes of making decisions and assessing the financial performance of the company.

(q) RECENTLY ISSUED ACCOUNTING STANDARDS

In June 1998, the Financial Accounting Standards Board (FASB) issued SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities. This statement, as amended, is effective for the Company beginning January 1, 2001. Effective January 1, 2001, the Company adopted SFAS No. 133 which establishes accounting and reporting standards requiring that every derivative instrument, including certain derivative instruments embedded in other contracts, be recorded in the balance sheet as either an asset or liability measured at its fair value. The statement also requires that changes in the derivative's fair value be recognized in earnings unless specific hedge accounting criteria are met. The adoption of SFAS No. 133 had no effect on the Company's consolidated financial position or results of operations.

(3) GOING CONCERN

The Company has incurred losses from operations and has a deficit accumulated during the development stage which creates doubt that the Company may be able to continue as a going concern. The consolidated financial statements do not include any adjustments that might be necessary if the Company were unable to continue as a going concern.

The Company will need to raise substantial additional funds to conduct the research and development activities, preclinical studies and clinical trials necessary to bring its product candidates to market. The Company intends to seek additional funding through public or private equity financings, strategic alliances with corporate collaborators or other sources. However, there is no assurance that such efforts will be successful and that adequate funds will be available to the Company.

F-10

NORTHWEST BIOTHERAPEUTICS, INC.
(A DEVELOPMENT STAGE COMPANY)

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1998, 1999 AND 2000

(INFORMATION AS OF JUNE 30, 2001 AND FOR THE SIX MONTHS ENDED
JUNE 30, 2000 AND 2001 IS UNAUDITED)

The Company believes that its current cash balances, credit facilities, and proceeds from the contemplated initial public offering of common stock will be sufficient to meet its operating cash requirements and to fund budgeted capital expenditures in fiscal year 2001 and beyond. The Company's actual cash needs will depend on many unpredictable factors, including the time frame of successful development of an effective product, if ever, and the commercialization of such product all of which includes the regulatory approval process. The regulatory process is uncertain, includes extensive pre-clinical testing and clinical trials of each product in order to establish its safety and effectiveness, can take many years and requires the expenditure of substantial resources. As a result of these factors, the Company cannot predict accurately the amount or timing of future cash needs. If the Company cannot obtain sufficient cash if and when needed, the Company may be unable to fund all obligations as they become due or at all. Should the Company need to dispose of assets to generate cash, the Company can offer no assurance that the carrying values will be realizable upon liquidation outside the ordinary course of business. Any inability to obtain additional cash if and when needed could have a material adverse effect on its financial position, results of operations and the Company's ability to continue in existence.

(4) STOCKHOLDERS' DEFICIT, CONVERTIBLE PREFERRED STOCK, AND MANDATORILY REDEEMABLE CONVERTIBLE SERIES A PREFERRED STOCK

(a) MANDATORILY REDEEMABLE CONVERTIBLE SERIES A PREFERRED STOCK

The Company issued a total of 500,000 LLC membership units in 1996 for a combination of cash and certain rights. The Company received cash of $3,000,000 for 100,000 mandatorily redeemable LLC membership units. The Company received rights to research and development revenues and future royalties under a license agreement in exchange for 100,000 LLC units. Other unit holders contributed research, know-how and intellectual property rights for their 300,000 LLC units. The contributed royalty rights and other intangibles were recorded at the contributing unit holders' reported book value, which was zero.

During 1998, as part of the Company's reincorporation as a Delaware corporation, the 100,000 mandatorily redeemable LLC membership units were canceled and exchanged for 550,700 shares of Mandatorily Redeemable Series A Preferred Shares (Series A shares). The Series A shares are entitled to dividends at a rate of $0.08 per share per annum if and when declared by the Board of Directors and in preference to dividends paid to common stockholders. In the event of liquidation, the holders of the Series A shares are entitled to receive $5.447 per share held plus declared and unpaid dividends. Each share of the Series A Preferred Stock is convertible into one share of common stock at the holder's option and converts automatically upon an initial public offering (IPO) meeting certain criteria if not earlier redeemed. At the holder's request, the Series A shares may be redeemed between March 18, 1999 and March 18, 2002 with 60 days written notice for $5.447 per share plus an increasing redemption premium based on the prime rate plus 1%. The Company accounts for the difference between the carrying amount of the Series A shares and the redemption value by increasing the carrying amount for periodic accretion, so that the carrying amount will equal the redemption value, including amounts accrued under the redemption premium, at the redemption date.

Also as part of the reincorporation, the 400,000 other LLC membership units were canceled and exchanged for 2,202,800 shares of common stock. 550,700 shares of common stock were issued to a

F-11

NORTHWEST BIOTHERAPEUTICS, INC.
(A DEVELOPMENT STAGE COMPANY)

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1998, 1999 AND 2000

(INFORMATION AS OF JUNE 30, 2001 AND FOR THE SIX MONTHS ENDED
JUNE 30, 2000 AND 2001 IS UNAUDITED)

stockholder of which 275,300 shares were held in escrow subject to certain milestones being reached by the Company related to the originally contributed intellectual property of that stockholder. These shares were subsequently returned to the Company during 2000. See note 5(c).

(b) CONVERTIBLE PREFERRED STOCK AND 6% CONVERTIBLE PROMISSORY NOTES

In September 1998, the Company sold 897,489 shares of Series B Preferred Stock at $2.33 per share resulting in proceeds, net of offering costs, of $2,088,330.

During 1999, the Company sold 3,350,600 shares of Series C Preferred Stock at $2.50 per share resulting in proceeds, net of offering costs, of $7,647,122. In conjunction with the sale, the Company issued fully vested warrants to purchase 234,542 shares of Series C Preferred Stock to third parties for services performed related to the sale of the Series C shares. The warrants are exercisable at $2.50 per share and will expire upon the earlier of October 31, 2008 or a change of control of the Company. The fair value of the warrants was $394,031 on the date of grant determined using the Black-Scholes option pricing model with the following assumptions:
expected dividend yield of 0%, risk-free interest rate of 6.55%, volatility of 50%, and an expected life of 9 years. The value of the warrants was recorded as a reduction in the proceeds from the sale of the Series C shares.

The Company closed a private placement offering of $5,064,100, 6% convertible promissory notes (Notes) and warrants in May 2000 resulting in proceeds, net of financing costs, of $4,744,301. The Notes, including accrued interest, were required to be converted into shares of Series D Preferred Stock no later than January 1, 2001. The purchasers of the Notes also received fully vested warrants to purchase 1,064,895 shares of Series D Preferred Stock. The warrants are exercisable at $5.00 per share and expire upon the earlier of (i) January 31, 2004, (ii) an IPO, or (iii) a change of control of the Company. The fair value of the warrants was $4,038,525 on the date of grant determined using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%, risk-free interest rate of 6.23%, volatility of 96%, and an expected life of 5 years. The value of the warrants is included in interest expense in 2000.

The Company recorded $1,025,575 as additional paid-in capital in 2000 for the beneficial conversion feature on the Notes. In accordance with the Emerging Issues Task Force Issue No. 98-5, "Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios" (EITF 98-5), the beneficial conversion feature was limited to the proceeds allocated to the Notes after the initial allocation of the total proceeds to the warrants and Notes, and was charged to interest expenses over the term of the Notes.

The Notes, plus accrued interest of $260,378, were converted at $5.00 per share into 1,064,895 shares of Series D Preferred Stock in December 2000. In the fourth quarter of 2000, the Company sold an additional 467,460 shares of the Series D Preferred Stock at $5.00 per share resulting in proceeds, net of offering costs, of $2,146,301. In conjunction with the sale, the Company issued 96,890 fully vested warrants to purchase shares of Series D Preferred Stock to third parties for services performed related to the sale of the Series D shares. The warrants are exercisable at $5.00 per share and will expire upon the earlier of April 30, 2010 or a change in control of the Company. The fair value of the warrants was $368,182 on the date of grant determined using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%, risk-free interest rate of 6.59%, volatility of 96%,

F-12

NORTHWEST BIOTHERAPEUTICS, INC.
(A DEVELOPMENT STAGE COMPANY)

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1998, 1999 AND 2000

(INFORMATION AS OF JUNE 30, 2001 AND FOR THE SIX MONTHS ENDED
JUNE 30, 2000 AND 2001 IS UNAUDITED)

and an expected life of 5 years. The value of the warrants was recorded as a reduction in the proceeds from the sale of the Series D shares.

Through May 15, 2001, the Company sold an additional 2,251,668 shares of Series D preferred stock at $5.00 per share resulting in proceeds, net of offering costs, of $11,258,340. From May 15 through June 30, 2001, the Company sold another 351,800 shares of Series D Preferred Stock at $5.00 per share resulting in additional proceeds, net of offering costs, of $1,291,510. In conjunction with the sale of the Series D preferred shares in 2001, the Company issued 227,093 fully vested warrants to purchase shares of Series D Preferred Stock to third parties for services performed related to the sale. The warrants are exercisable at $5.00 per share and will expire upon the earlier of (i) ten years from the issuance date, (ii) a change in control of the Company, or (iii) an IPO. The fair value of the warrants was $1,062,135 on the date of grant determined using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%, risk-free interest rate of 6.00%, volatility of 108%, and an expected life of 10 years. The value of the warrants was recorded as a reduction in the proceeds from the sale of the Series D shares. Of the Series D preferred shares issued during the six months ended June 30, 2001, 2,209,568 shares were issued with a conversion price which was less than the fair value of the common stock into which the Series D preferred stock is convertible. This beneficial conversion feature aggregated $4,273,566 and was charged as an increase to the net loss applicable to common stockholders immediately upon issuance of the related Series D preferred shares since the Series D shares are immediately convertible at the option of the stockholder.

The following is a summary of the significant terms of the Company's Series B, C and D Preferred Stock:

Conversion

Each share of Series B Preferred Stock is convertible, at the option of the holder, into approximately 1.93785 shares of the Company's common stock. Each share of Series C and D Preferred Stock is convertible, at the option of the holder, into one share of the Company's common stock. Additionally, shares of Series B, C and D Preferred Stock convert automatically into common stock upon consummation of an initial public offering of the Company's common stock in which gross proceeds exceed $7.5 million and are subject to redemption in the event of a liquidation or change in control of the Company.

Voting

Holders of Series B, C and D shares have voting rights equal to the number of shares of common stock into which the preferred stock is convertible.

(C) STOCK PURCHASE WARRANTS

In connection with the founding of the Company, Northwest Hospital and Pacific Northwest Cancer Foundation (PNCF), each received an option to purchase supplemental LLC membership interests in the Company. These options were exchanged in September 1998 for fully vested warrants to purchase an aggregate of 1,101,402 shares of the Company's common stock (each party received 550,701 warrants). PNCF subsequently assigned its rights to the warrants to Northwest Hospital. These warrants are

F-13

NORTHWEST BIOTHERAPEUTICS, INC.
(A DEVELOPMENT STAGE COMPANY)

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1998, 1999 AND 2000

(INFORMATION AS OF JUNE 30, 2001 AND FOR THE SIX MONTHS ENDED
JUNE 30, 2000 AND 2001 IS UNAUDITED)

exercisable at $0.18 per share and expire upon the earlier of October 25, 2009 or a change in control of the Company.

In September 2000, the Company issued 23,920 fully vested warrants to purchase shares of Series C Preferred Stock to the owner of the building in which it leases space in conjunction with signing a ten year lease. The warrants are exercisable at $2.50 per share and expire upon the earlier of
(i) December 31, 2004, (ii) an IPO, or (iii) a change in control of the Company. The fair value of the warrants of $43,130, which is being amortized over the term of the lease, was determined on the date of grant using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%, risk-free interest rate of 5.92%, volatility of 96%, and an expected life of 4.3 years.

A summary of stock purchase warrants outstanding at December 31, 2000 is as follows:

                                                                        WEIGHTED-
                                                                         AVERAGE
                                                           NUMBER       EXERCISE
                    TYPE OF WARRANT                      OUTSTANDING      PRICE
                    ---------------                      -----------    ---------
Common stock warrants..................................   1,111,402       $0.23
Series C preferred stock warrants......................     258,462        2.50
Series D preferred stock warrants......................   1,161,785        5.00

All of the common and preferred stock warrants outstanding at December 31, 2000 are exercisable.

(D) STOCK OPTION PLANS

The Company has a 1998 Stock Option Plan (1998 Plan) under which 413,025 shares of common stock have been reserved for stock option grants to employees, directors and consultants of the Company. As of December 31, 2000 and June 30, 2001, 43,342 and 7,242 shares, respectively, remained available for grant under the 1998 Plan. The Company also has a 1999 Executive Stock Option Plan (1999 Plan) under which 586,166 shares of common stock were reserved for issuance, none of which remained available for grant at December 31, 2000 and June 30, 2001.

In June 2001, the Company adopted the 2001 Stock Option Plan (2001 Plan) and the 2001 Nonemployee Director Stock Incentive Plan (2001 Director Plan). Under the 2001 Plan, 1,800,000 shares of the Company's common stock have been reserved for grant of stock options to employees and consultants. Additionally, on January 1 of each year commencing January 1, 2002, the number of shares reserved for grant under the 2001 Plan will increase by the lesser of (i) 15% of the aggregate number of shares available for grant under the 2001 Plan or (ii) 300,000 shares. Under the 2001 Director Plan, 200,000 shares of the Company's common stock have been reserved for grant of stock options to nonemployee directors of the Company.

The plans are administered by the Board of Directors, which determines the terms and conditions of the options granted, including exercise price, number of options granted and vesting period of such options. Options granted under the plans are generally priced at or above the estimated fair market value of the Company's common stock on the date of grant and generally vest over four years. Compensation expense, if any, is charged over the period of service. All options, if not previously exercised or

F-14

NORTHWEST BIOTHERAPEUTICS, INC.
(A DEVELOPMENT STAGE COMPANY)

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1998, 1999 AND 2000

(INFORMATION AS OF JUNE 30, 2001 AND FOR THE SIX MONTHS ENDED
JUNE 30, 2000 AND 2001 IS UNAUDITED)

canceled, expire ten years from the date of grant, or the expiration date specified in the individual option agreement, if earlier.

During the six months ended June 30, 2001, the Company granted options to purchase an aggregate of 192,700 shares of common stock to various employees with exercise prices which were less than the fair value of the underlying common stock on the date of grant resulting in deferred compensation of $1,041,297.

A summary of stock option activity is as follows:

                                                          OPTIONS OUTSTANDING
                                                      ---------------------------
                                                                      WEIGHTED
                                                      NUMBER OF       AVERAGE
                                                       SHARES      EXERCISE PRICE
                                                      ---------    --------------
Balance at December 31, 1997........................         --        $  --
  Granted...........................................    182,147         0.80
                                                      ---------        -----
Balance at December 31, 1998........................    182,147         0.80
  Granted...........................................    681,766         0.85
  Forfeited.........................................    (18,600)        0.56
                                                      ---------        -----
Balance at December 31, 1999........................    845,313         0.84
  Granted...........................................    114,336         1.09
  Exercised.........................................     (2,000)        0.50
  Forfeited.........................................     (3,800)        0.70
                                                      ---------        -----
Balance at December 31, 2000........................    953,849         0.86
  Granted...........................................    197,700         1.25
  Exercised.........................................       (932)        0.62
  Forfeited.........................................     (3,000)        1.25
                                                      ---------        -----
Balance at June 30, 2001............................  1,147,617        $0.93
                                                      =========        =====

Total exercisable options to purchase common shares and their weighted average exercise prices per share at December 31, 1998, 1999 and 2000 were 66,742, 115,800 and 406,643 shares, and $0.80, $0.80

F-15

NORTHWEST BIOTHERAPEUTICS, INC.
(A DEVELOPMENT STAGE COMPANY)

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1998, 1999 AND 2000

(INFORMATION AS OF JUNE 30, 2001 AND FOR THE SIX MONTHS ENDED
JUNE 30, 2000 AND 2001 IS UNAUDITED)

and $0.82, respectively. Additional information regarding stock options outstanding and exercisable at December 31, 2000 is as follows:

                              OPTIONS OUTSTANDING
                  -------------------------------------------
                                 WEIGHTED-                          OPTIONS EXERCISABLE
                                  AVERAGE                       ----------------------------
                                 REMAINING       WEIGHTED-                      WEIGHTED-
   RANGE OF         NUMBER      CONTRACTUAL       AVERAGE         NUMBER         AVERAGE
EXERCISE PRICES   OUTSTANDING   LIFE (YEARS)   EXERCISE PRICE   EXERCISABLE   EXERCISE PRICE
---------------   -----------   ------------   --------------   -----------   --------------
 $   0.50            54,300         8.2            $0.50           55,986         $0.50
 0.85 - 0.91        831,113         8.9             0.86          350,657          0.87
     1.25            68,436         9.9             1.25               --            --
 -------------      -------         ---            -----          -------         -----
0$.50 - 1.25...     953,849         8.9            $0.86          406,643         $0.82
 =============      =======         ===            =====          =======         =====

Had the Company recognized the compensation cost of employee stock options based on the fair value of the options on the date of grant as prescribed by SFAS No. 123, the pro forma net loss available to common stockholders and net loss per share would have been adjusted to the pro forma amounts indicated below:

                                                 1998           1999            2000
                                              -----------    -----------    ------------
Net loss applicable to common stockholders,
  as reported...............................  $(5,047,998)   $(5,963,341)   $(13,209,585)
Net loss applicable to common stockholders,
  pro forma.................................   (5,056,195)    (6,020,172)    (13,271,666)
Basic and diluted net loss per share, as
  reported..................................        (2.29)         (2.71)          (6.35)
Basic and diluted net loss per share, pro
  forma.....................................        (2.30)         (2.73)          (6.38)

The per share weighted average fair value of stock options granted during the years ended December 31, 1998, 1999 and 2000 was $0.18, $0.23 and $0.24, respectively, on the date of grant using the minimum-value method with the following assumptions:

                                                           1998       1999       2000
                                                          -------    -------    -------
Risk-free interest rate.................................    5.15%      6.55%      4.99%
Expected life...........................................  5 years    5 years    5 years
Expected volatility.....................................       0%         0%         0%
Dividend yield..........................................       0%         0%         0%

F-16

NORTHWEST BIOTHERAPEUTICS, INC.
(A DEVELOPMENT STAGE COMPANY)

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1998, 1999 AND 2000

(INFORMATION AS OF JUNE 30, 2001 AND FOR THE SIX MONTHS ENDED
JUNE 30, 2000 AND 2001 IS UNAUDITED)

(E) NET LOSS PER SHARE

The following presents the reconciliation of the Company's reported net loss to net loss applicable to common stockholders used for basic and diluted net loss per share:

                                  YEAR ENDED DECEMBER 31,            SIX MONTHS ENDED JUNE 30,
                          ----------------------------------------   -------------------------
                             1998          1999           2000          2000          2001
                          -----------   -----------   ------------   -----------   -----------
Net loss................  $(4,719,438)  $(5,609,379)  $(12,779,221)  $(4,518,572)  $(4,930,692)
Accretion of Series A
  preferred stock
  mandatory redemption
  obligation............     (328,560)     (353,962)      (430,364)     (204,739)     (219,226)
Beneficial conversion
  feature of Series D
  preferred stock.......           --            --             --            --    (4,273,566)
                          -----------   -----------   ------------   -----------   -----------
Net loss applicable to
  common stockholders...   (5,047,998)   (5,963,341)   (13,209,585)   (4,723,311)   (9,423,484)
Weighted average common
  shares outstanding
  during the period used
  to compute basic and
  diluted net loss per
  share.................    2,202,800     2,202,800      2,080,405     2,202,800     1,934,684
                          -----------   -----------   ------------   -----------   -----------
Basic and diluted net
  loss per share........  $     (2.29)  $     (2.71)  $      (6.35)  $     (2.14)  $     (4.87)
                          ===========   ===========   ============   ===========   ===========

The following common stock equivalents on an as-converted basis were excluded from the calculation of diluted net loss per share as the effect would be antidilutive:

                                     YEARS ENDED DECEMBER 31,          SIX MONTHS ENDED JUNE 30,
                                -----------------------------------    --------------------------
                                  1998         1999         2000          2000           2001
                                ---------    ---------    ---------    -----------    -----------
Common stock options..........    182,147      845,813      953,849       879,013      1,147,617
Common stock warrants.........  1,101,402    1,101,402    1,111,402     1,101,402      1,111,402
Convertible preferred stock...  2,289,898    5,640,498    7,172,853     5,640,498      9,776,321
Convertible preferred stock
  warrants....................         --      234,542    1,420,247     1,299,437      1,697,340
Convertible promissory note
  and accrued interest........         --           --           --     1,012,820        168,937

(f) EMPLOYEE STOCK PURCHASE PLAN

In June 2001, the Company adopted an employee stock purchase plan (ESPP) to become effective upon consummation of an IPO and reserved 500,000 shares of common stock for issuance under the ESPP. Under the ESPP, employees may purchase up to 1,000 shares of the Company's common stock during each six-month offering period commencing on April 1 and October 1 of each year. The purchase price of the common stock is equal to the lower of 85% of the market price on the first and last day of each offering period.

F-17

NORTHWEST BIOTHERAPEUTICS, INC.
(A DEVELOPMENT STAGE COMPANY)

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1998, 1999 AND 2000

(INFORMATION AS OF JUNE 30, 2001 AND FOR THE SIX MONTHS ENDED
JUNE 30, 2000 AND 2001 IS UNAUDITED)

(5) RELATED PARTY TRANSACTIONS

(a) TRANSACTIONS WITH NORTHWEST HOSPITAL (HOSPITAL)

The Company has a $2,900,000 line of credit through the Hospital, a stockholder, of which $2,834,262 was outstanding at December 31, 1999 and 2000. Borrowings bear interest at the prime rate plus 1% (9.5% at December 31, 2000), becomes due upon the earlier of (i) June 30, 2001, (ii) consummation of an IPO or (iii) consummation of a significant merger or substantial sale of the Company's assets, and is secured by substantially all the assets of the Company, subordinated to the note payable to stockholder discussed in note 5(d). Interest expense related to the line of credit was $261,791, $241,764, $289,116, $139,810 and $128,024 for the years ended December 31, 1998, 1999 and 2000 and the six months ended June 30, 2000 and 2001, respectively.

Through 1999, the Company subleased office and laboratory space from the Hospital. Rent expense totaled $40,209 and $49,059 for 1998 and 1999, respectively. Also, the Company shares certain employees with the Hospital. The Company received reimbursement for shared employees totaling $101,619, $41,450 and $41,672 in 1998, 1999 and 2000, respectively, and paid expenses for shared employees totaling $53,079 in 1999. In 2000, the Hospital began subleasing office and laboratory space from the Company for which the Company received $146,597.

The Hospital owns all of the Company's outstanding Series A preferred stock. In August 2001, the Company entered into an agreement whereby the Hospital agreed to not require redemption but allow for conversion of all of the outstanding Series A preferred stock upon completion of the IPO, to extend the line of credit through the earlier of June 30, 2002 or completion of the IPO, and to exercise its 1,101,402 common stock warrants in exchange for a $1.7 million fee. Such fee is considered to be a deemed dividend and will increase the net loss applicable to common stockholders.

(b) TRANSACTIONS INVOLVING PACIFIC NORTHWEST CANCER FOUNDATION (PNCF)

In July 1996, PNCF, then a member, entered into an agreement with Hybritech, a wholly owned subsidiary of Beckman Instruments, Inc., in which Hybritech licensed from PNCF the patent rights for the diagnostic in-vitro use of prostate specific membrane antigen (PSMA). As part of this agreement, PNCF was to receive research funding of $1,350,000, in three equal annual installments through April 1, 1999. PNCF then entered into another agreement in 1996 with the Company in which 75% of the research funding and all future royalties on sales received from Hybritech would be transferred to the Company in exchange for the Company performing certain research services. In 1998 and 1999, the Company recognized revenue of $337,500 and $84,375, respectively, based on the research activities performed by the Company under the agreement.

(c) AGREEMENT WITH PROSTAGEN, INC. (PROSTAGEN)

In July 1998, the Company acquired exclusive rights from Prostagen to manufacture and sell the PSMA protein in the Company's dendritic cell-based immunotherapy for prostate cancer, subject to contingent future milestone payments of $2,900,000.

In connection with the Prostagen agreement, the Company issued 550,700 shares of the Company's common stock to a director of the Company who was also an affiliate of Prostagen with a controlling interest in Prostagen. The Company also paid the director $100,000 in connection with the Prostagen

F-18

NORTHWEST BIOTHERAPEUTICS, INC.
(A DEVELOPMENT STAGE COMPANY)

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1998, 1999 AND 2000

(INFORMATION AS OF JUNE 30, 2001 AND FOR THE SIX MONTHS ENDED
JUNE 30, 2000 AND 2001 IS UNAUDITED)

agreement. This director is also a senior partner in a law firm that provided legal services to the Company. During 1999, the Company paid approximately $157,000 to this law firm for services. In 1999, the director tendered his resignation from the Company.

In June 1999, Cytogen Corporation (Cytogen) acquired all of the outstanding capital stock of Prostagen.

In August 2000, the Company, Northwest Clinicals and Cytogen entered into a Release and Settlement Agreement which effectively terminated the agreement between the Company and Prostagen, including the $2.9 million of milestone payments that were to be paid to Prostagen. In addition, this agreement dissolved Northwest Clinicals with all of its assets going to the Company. The terms of the agreement also provided the release and return to the Company of 275,300 shares of common stock held in escrow for the above former director of the Company.

Under the terms of a separate sublicense agreement, the Company obtained the right to make, use and sublicense PSMA. The sublicense agreement terms include milestone payments, which require the Company to pay Cytogen $250,000 after the first product approval, and another $750,000 to Cytogen in the form of a 2% royalty on the first two years of net product sales. In addition, the Company is to pay a 5% royalty to Cytogen on future net sales of products that include PSMA and agreed to make minimum annual payments of $10,000 to Cytogen until the commencement of a Phase III clinical trial involving PSMA.

(D) NOTE PAYABLE TO STOCKHOLDER

In July 2000, the Company obtained $1.65 million in financing in the form of a promissory note from a stockholder of the Company. The note was secured by substantially all assets of the Company and bore interest at 13% with interest only payments until due on July 11, 2001. Interest expense on the note amounted to approximately $102,000 for the year ended December 31, 2000.

As an inducement to obtain the note, the Company issued fully vested warrants to purchase 10,000 shares of the Company's common stock to the stockholder. The warrants are exercisable at $5.50 per share and expire upon the earlier of July 10, 2010 or a change in control of the Company. The fair value of the warrants was $3,238 on the date of grant determined using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%, risk-free interest rate of 6.09%, volatility of 96%, and an expected life of 10 years. The fair value of the warrants was recorded as a discount on the note and is being amortized to interest expense over the term of the note.

The note was restructured in April 2001. Under the terms of the restructured loan agreement, the Company repaid $825,000 plus accrued and unpaid interest. In addition, in settlement of the remaining balance due, the Company issued a convertible promissory note in the amount of $825,000 and a ten-year warrant to purchase up to 50,000 shares of the Company's Series D preferred stock at an exercise price of $5.00 per share. The note is secured by substantially all of the assets of the Company and bears interest at a rate of 13% per annum with quarterly principal and interest payments due beginning on September 30, 2001. Any unpaid principal and interest on the note shall be due in full on June 30, 2003. All obligations under the note are accelerated upon a change of control or completion of an IPO. The note is convertible into shares of the Company's Series D preferred stock at $5.00 per share at the option of the holder.

F-19

NORTHWEST BIOTHERAPEUTICS, INC.
(A DEVELOPMENT STAGE COMPANY)

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1998, 1999 AND 2000

(INFORMATION AS OF JUNE 30, 2001 AND FOR THE SIX MONTHS ENDED
JUNE 30, 2000 AND 2001 IS UNAUDITED)

The warrant vests as follows: 10,000 shares vest if the note is paid in full by June 30, 2001; 33,000 shares vest if the note is paid in full by June 30, 2002; and 50,000 shares vest if the note is paid in full after June 30, 2002 The warrants expire upon the earliest of (i) April 23, 2011,
(ii) completion of an IPO; or (iii) a change in control. The fair value of the warrants was $224,935 on the date of grant determined using the Black-Scholes option pricing model and the probability that the warrants will vest. The following assumptions were used in the Black-Scholes calculation: expected dividend yield of 0%, risk free interest rate of 6.00%, volatility of 108%, and an expected life equal to the contractual term of 10 years. The fair value of the warrants was accounted for as a discount on the note and is being recognized as interest expense over the stated term of the note. Additionally, the Company recorded $455,935 as additional paid-in capital for the beneficial conversion feature on the note. The beneficial conversion amount is also being charged to interest expenses over the term of the note.

In August 2001, the stockholder entered into an agreement with the Company to convert the promissory note payable upon completion of the planned IPO in accordance with provisions of the original agreement.

(6) INCOME TAXES

There was no income tax benefit attributable to net losses for 1998, 1999 and 2000. The difference between taxes computed by applying the U.S. federal corporate tax rate of 34% and the actual income tax provision in 1998, 1999 and 2000 is primarily the result of establishing a valuation allowance on the Company's deferred tax assets.

The tax effects of temporary differences and tax loss and credit carryforwards that give rise to significant portions of deferred tax assets at December 31 are comprised of the following:

                                                       1999           2000
                                                    -----------    -----------
Net operating loss carryforwards..................  $ 2,894,537    $ 5,576,190
Research and development credit carryforwards.....      328,249        484,146
Tax basis incorporation intangibles...............      740,633        677,338
Other.............................................       27,508         27,123
                                                    -----------    -----------
          Gross deferred tax assets...............    3,990,927      6,764,797
Less valuation allowance..........................   (3,990,927)    (6,764,797)
                                                    -----------    -----------
          Net deferred tax assets.................  $        --    $        --
                                                    ===========    ===========

The increase in the valuation allowance for deferred tax assets for 1998, 1999 and 2000 of $894,087, $940,445 and $2,773,870, respectively, was due primarily to the inability to utilize net operating losses and research and development credits.

At December 31, 2000, the Company had net operating loss carryforwards for income tax purposes of approximately $16,400,000 and unused research and development tax credits of approximately $484,146 available to offset future taxable income and income taxes, respectively, expiring through 2018. The Company's ability to utilize net operating loss and credit carryforwards is limited pursuant to the Tax Reform Act of 1986, due to cumulative changes in stock ownership in excess of 50%.

F-20

NORTHWEST BIOTHERAPEUTICS, INC.
(A DEVELOPMENT STAGE COMPANY)

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1998, 1999 AND 2000

(INFORMATION AS OF JUNE 30, 2001 AND FOR THE SIX MONTHS ENDED
JUNE 30, 2000 AND 2001 IS UNAUDITED)

(7) SCIENTIFIC COLLABORATION ARRANGEMENTS

In April 2001, the Company entered into a collaboration agreement with Medarex, Inc. (Medarex) to jointly research, development and commercialize HuRx(TM) therapeutic human monoclonal antibodies for certain cancer targets. Under the agreement, certain development costs will be incurred solely by each party as specified in the agreement and certain costs will be shared equally by each party. Development activity under this arrangement was not significant through June 30, 2001. Upon achievement of certain milestones in the development process, the Company will be required to make milestone payments to Medarex. Additionally, the Company is required to make royalty payments to Medarex based upon commencement of Phase II trials ($500,000 per target), commencement of Phase III clinical trials ($1,000,000 per target) and additionally as targets are approved for sale.

In conjunction with the collaboration agreement, Medarex purchased 800,000 shares of the Company's Series D preferred stock at $5.00 per share. Additionally, in the event the Company closes an IPO of its common stock, Medarex agreed to invest $3.5 million in the IPO at the same terms as the investors in the IPO. Medarex's obligation to invest in the IPO will terminate, at the option of Medarex, if either (i) the IPO has not closed within one year from the effective date of the agreement or (ii) as of the date of the closing of the IPO, the Company has not satisfactorily obtained certain licenses from third parties as specified in the collaboration agreement.

The Company has also entered into other collaborative arrangements under which it may be obligated to pay royalties or milestone payments if product development is successful. It is not anticipated that the aggregate amount of any royalty or milestone obligations under these other arrangements will be material to the Company's operations.

(8) COMMITMENTS AND CONTINGENCIES

(A) LEASE OBLIGATIONS

The Company leases its facilities and certain equipment. Commitments for minimum rentals under noncancelable leases in effect as of December 31, 2000 are as follows net of sublease income of $227,096 and $188,991 in 2001 and 2002, respectively:

                                                 CAPITAL LEASES    OPERATING LEASES
                                                 --------------    ----------------
2001...........................................     $ 52,176         $   797,368
2002...........................................       58,246             923,081
2003...........................................       53,624           1,150,992
2004...........................................       27,382           1,191,276
2005...........................................       19,772           1,232,976
Thereafter.....................................           --           6,343,820
                                                    --------         -----------
     Total minimum lease payments..............      211,200         $11,639,513
                                                                     ===========
Less amount representing interest..............       13,000
                                                    --------
     Present value of minimum lease payments...      198,200
Less current portion...........................       50,176
                                                    --------
                                                    $148,024
                                                    ========

F-21

NORTHWEST BIOTHERAPEUTICS, INC.
(A DEVELOPMENT STAGE COMPANY)

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1998, 1999 AND 2000

(INFORMATION AS OF JUNE 30, 2001 AND FOR THE SIX MONTHS ENDED
JUNE 30, 2000 AND 2001 IS UNAUDITED)

Included in property and equipment are assets under capital leases totaling $90,366 and $250,592 and related accumulated amortization totaling $5,554 and $21,365 at December 31, 1999 and 2000, respectively.

Rent expense was $42,069, $73,042 and $596,497 in 1998, 1999 and 2000, respectively.

(B) LEGAL MATTERS

The Company is involved from time to time in claims, proceedings and litigation arising in the normal course of business. The Company does not believe that any present claims, proceedings or litigation, either alone or in the aggregate, will have a material adverse effect on the Company's financial position or results of operations.

F-22



TABLE OF CONTENTS

                                        PAGE
                                        ----
Prospectus Summary....................    1
The Offering..........................    5
Summary Financial Data................    6
Risk Factors..........................    7
Forward-Looking Information...........   19
Use Of Proceeds.......................   20
Dividend Policy.......................   20
Capitalization........................   21
Dilution..............................   23
Selected Financial Data...............   24
Management's Discussion And Analysis
  Of Financial Condition And Results
  Of Operations.......................   25
Business..............................   30
Management............................   44
Related Party Transactions............   53
Principal Stockholders................   56
Description Of Capital Stock..........   58
Shares Eligible For Future Sale.......   61
Plan Of Distribution..................   63
Legal Matters.........................   65
Experts...............................   65
Where You Can Find Additional
  Information.........................   66
Index To Financial Statements.........  F-1

THROUGH AND INCLUDING , 2001 (THE 25TH DAY AFTER COMMENCEMENT OF THIS OFFERING), FEDERAL SECURITIES LAW MAY REQUIRE ALL DEALERS SELLING SHARES OF OUR COMMON STOCK, WHETHER OR NOT PARTICIPATING IN THIS OFFERING, TO DELIVER A PROSPECTUS. THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.





SHARES

LOGO
COMMON STOCK

PROSPECTUS
C.E. UNTERBERG, TOWBIN
, 2001


PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

Other expenses in connection with the issuance and distribution of the securities registered by this prospectus, which will be paid by us, will be substantially as follows:

                            ITEM                              AMOUNT
                            ----                              -------
Commission Registration Fee.................................  $12,500
Nasdaq National Market Fee..................................
NASD Filing Fee.............................................    5,330
Blue Sky Fees and Expenses (Including legal Fees)...........
Accounting Fees and Expenses................................
Legal Fees and Expenses.....................................
Printing and Engraving......................................
Registrar and Transfer Agent Fees...........................
Miscellaneous Expenses......................................
          Total.............................................

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Article VIII of the Bylaws of the Company, in accordance with the provisions of Section 145 of the General Corporation Law of Delaware, provides that the Company shall indemnify any person in connection with any threatened, pending or completed legal proceeding (other than a legal proceeding by or in the right of the Company) by reason of the fact that such person is or was a director or officer of the company or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership or other enterprise against expenses (including attorneys' fees), judgment, fines and amounts paid in settlement actually and reasonably incurred in connection with such legal proceeding if such person acted in good faith and in a manner that such person reasonably believed to be in or not opposed to the best interests of the Company, and, in the case of any criminal action or proceeding, if such person had no reasonable cause to believe that his or her conduct was unlawful. If the legal proceeding is by or in the right of the Company, the director or officer may be indemnified by the Company against expenses (including attorneys' fees) actually and reasonably incurred in connection with the defense or settlement of such legal proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Company, except that such person may not be indemnified in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Company unless a court determines otherwise.

Section 8.6 of the Bylaws allows the Company to maintain director and officer liability insurance on behalf of any person who is or was a director or officer of the Company or such person who serves or served as a director, officer, employee or agent of another corporation, partnership or other enterprise at the request of the Company.

Article VII of the Company's Fifth Amended and Restated Certificate of Incorporation, in accordance with Section 102(b)(7) of the Delaware General Corporation Law, provides that no director of the Company shall be personally liable to the Company or it stockholders for monetary damages for any breach of such director's fiduciary duty as a director; provided, however, that such clause shall not apply to any liability of a director (1) for any breach of such director's duty of loyalty to the Company or its stockholders, (2) for acts or omissions that are not in good faith or that involve intentional misconduct or a knowing violation of the law, (3) under Section 174 of the Delaware General Corporation Law, or (4) for any transaction from which the director derived an improper personal benefit.

II-1


ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

In the three year period ended August 10, 2001, we have issued and sold unregistered securities as follows:

On September 30, 1998, we completed a private equity financing in which we sold 897,489 shares of our series B convertible preferred stock to investors at a purchase price of $2.33 per share resulting in proceeds net of offering costs of $2,088,330 to 21 accredited purchasers and 1 non-accredited purchaser.

On September 14, 1999, we completed a private equity financing in which we sold 3,350,600 shares of our series C convertible preferred stock to investors at a purchase price of $2.50 per share resulting in proceeds net of offering costs of $7,647,122.

The Company closed a private placement offering of $5,064,100 principal amount 6% convertible promissory notes and warrants in May 2000, resulting in proceeds, net of financing costs, of $4,744,301.

In July 2000, we issued a promissory note to Holmes Harbor Company, Inc. in the amount of $1,650,000 that was payable in full in July 2001 and accrued interest at a rate of 13% per annum. This loan was secured by all of the Company's assets. In conjunction with the loan, the Company issued a warrant to purchase 10,000 shares of common stock at an exercise price of $5.50 per share and expiring on April 30, 2010. In April 2001, the note was restructured whereby the Company repaid $825,000 of principal plus accrued interest, and issued a convertible promissory note for the remaining $825,000 of principal. Simultaneously, the Company issued an additional warrant to purchase up to 33,000 shares of series D convertible preferred stock at an exercise price of $5.00 per share if we repay the outstanding loan and accrued interest on or before June 30, 2002 or up to 50,000 shares at $5.00 per share if we repay the balance thereafter.

On April 24, 2001, we entered into a collaboration agreement with Medarex, Inc., pursuant to which we sold to Medarex 800,000 shares of our series D convertible preferred stock at a purchase price of $5.00 per share.

On June 15, 2001, we completed a private equity financing in which we sold 3,070,928 shares of our series D convertible preferred stock to investors at a purchase price of $5.00 per share resulting in proceeds net of offering costs of $14,696,151 to 186 accredited purchasers. As a result of this financing, all existing convertible promissory notes, including both principal amount and interest accrued thereon, converted into an aggregate of 1,064,895 shares of our series D convertible preferred stock. C.E. Unterberg, Towbin acted as an underwriter for a portion of this financing.

In August 2001, Northwest Hospital, of which C. William Schneider, a member of our board of directors, is President and Chief Executive Officer, exercised warrants to purchase 1,101,402 shares of our common stock at a purchase price of $198,252.

From July 19, 1998, the date of the first issuance of options under our 1998 Stock Option Plan, through August 10, 2001, we granted stock options to purchase an aggregate of 1,175,949 shares of common stock, with exercise prices ranging from $0.50 to $1.25 per share, to employees, consultants and directors under our 1998 Stock Option Plan, 1999 Executive Stock Option Plan and outside of such plans. Of the total options granted under these plans, options for an aggregate of 2,932 shares have been exercised, options for a total of 564,625 shares have vested and are outstanding, options for an aggregate of 25,400 have been canceled and options for an aggregate of 1,147,617 shares remain outstanding. The sales and issuances of these securities were exempt from registration under the Securities Act under Rule 701 promulgated thereunder on the basis that these options were offered and sold either under a written compensatory benefit plan or pursuant to written contracts relating to consideration, as provided by Rule 701.

Unless otherwise indicated, the issuances and sales of common stock, preferred stock, convertible promissory notes and warrants to purchase our capital stock described above were exempt under the Securities Act in reliance upon Section 4(2) of the Securities Act or Regulation D promulgated thereunder. The recipients of securities in each such transaction represented their intentions to acquire the securities for investment only and not with view to or for sale in connection with any distribution thereof and appropriate

II-2


legends were affixed to the share certificates issued in such transactions. All recipients had adequate access to information about us.

ITEM 16. LIST OF EXHIBITS

EXHIBIT
NUMBER                            DESCRIPTION
-------                           -----------
   1.1*   Form of Underwriting Agreement.
   3.1    Fifth Amended and Restated Certificate of Incorporation.
   3.2    Bylaws of the Registrant.
   4.1*   Specimen Common Stock Certificate.
   5.1*   Opinion of Lane Powell Spears Lubersky LLP.
  10.1+   PSMA Sublicense Agreement by and between the Registrant and
          Cytogen Corporation.
  10.2+   Collaboration Agreement by and between the Registrant and
          Medarex, Inc.
  10.3    Development Agreement dated July 30, 1997 between the
          Registrant and Medarex, Inc.
  10.4    Employment Agreement dated February 2, 2001 between the
          Registrant and Daniel O. Wilds.
  10.5    Employment Agreement dated February 2, 2001 between the
          Registrant and Alton L. Boynton.
  10.6    Office Lease dated October 22, 1999 between the Registrant
          and Nexus Canyon Park LLC.
  10.7    Subordination, Nondisturbance and Attornment Agreement dated
          November 10, 1999 between the Registrant, Nexus Canyon Park
          LLC and Bank of America, N.A.
  10.8    Sublease Agreement dated September 1, 2000, between the
          Registrant and Northwest Hospital Department of Molecular
          Medicine.
  10.9    Loan Agreement dated April 24, 2001 between the Registrant
          and Holmes Harbor Company, Inc.
  10.10   Master Note for Line of Credit dated July 1, 1997 between
          the Registrant and Northwest Hospital.
  10.11   Amendment to Master Note for Line of Credit dated February
          1, 2000 between the Registrant and Northwest Hospital.
  10.12   Second Amendment to Master Note for Line of Credit dated
          August 9, 2001 between the Registrant and Northwest
          Hospital.
  10.13   Clinical Trial Agreement dated January 7, 2000 between the
          Registrant and the Regents of the University of California.
  10.14   Clinical Trial Agreement dated December 16, 1999 between the
          Registrant and the University of Texas, M.D. Anderson Cancer
          Center.
  10.15   1998 Stock Option Plan.
  10.16   1999 Executive Stock Option Plan.
  10.17   2001 Stock Option Plan.
  10.18   2001 Nonemployee Director Stock Incentive Plan.
  10.19   Employee Stock Purchase Plan
  10.20   Investors' Rights Agreement dated March 1999.
  10.21   Series D Preferred Investors' Rights Agreement dated October
          2000.
  16.1    Letter of Arthur Andersen dated August 9, 2001.
  23.1    Consent of KPMG LLP, Independent Auditors.
  23.2*   Consent of Lane Powell Spears Lubersky LLP (contained in
          exhibit 5.1).
  24.1    Powers of Attorney (included on signature page of
          Registration Statement).


* To be filed by amendment

+ Confidential treatment has been requested for portions of this exhibit

ITEM 17. UNDERTAKINGS

Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the "Act") may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission

II-3


such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreements, certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.

The undersigned registrant hereby undertakes.

(1) That for purposes of determining any liabilities under the Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

(2) That for the purpose of determining any liability under the Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

II-4


SIGNATURES

Pursuant to the requirements of the Securities Act, Northwest Biotherapeutics, Inc. certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-1 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Seattle, King County, State of Washington, on this 10th day of August, 2001.

NORTHWEST BIOTHERAPEUTICS, INC.

By: /s/ DANIEL O. WILDS
  ------------------------------------
         Daniel O. Wilds
  ------------------------------------
    Its:  Chairman of the Board,
         President
    ----------------------------------
          and Chief Executive Officer
    ----------------------------------

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each individual whose signature appears below constitutes and appoints Daniel O. Wilds and Alton L. Boynton, his or her true and lawful attorneys-in-fact each acting alone, with full power of substitution and resubstitution, for him and in his name, place and stead in any and all capacities to sign any or all amendments (including post-effective amendments) to this registration statement, and any registration statement filed pursuant to Rule 462(b) under the Securities Act in connection with the registration under the Securities Act of equity securities of Northwest Biotherapeutics, Inc., and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power of 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 or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact, or their substitutes, each acting alone, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, as amended, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated:

                   SIGNATURE                               TITLE                          DATE
                   ---------                               -----                          ----

              /s/ DANIEL O. WILDS                  Chairman of the Board            August 10, 2001
------------------------------------------------       of Directors,
                Daniel O. Wilds                      President, Chief
                                                   Executive Officer and
                                                    Director (Principal
                                                    Executive Officer)

               /s/ LARRY RICHARDS                  Controller (Principal            August 10, 2001
------------------------------------------------       Financial and
                 Larry Richards                     Accounting Officer)

          /s/ ALTON L. BOYNTON, PH.D.                    Director                   August 10, 2001
------------------------------------------------
            Alton L. Boynton, Ph.D.

       /s/ RANDALL L-W. CAUDILL, D.PHIL.                 Director                   August 10, 2001
------------------------------------------------
         Randall L-W. Caudill, D.Phil.

II-5


                   SIGNATURE                               TITLE                          DATE
                   ---------                               -----                          ----
            /s/ GEORGE P. HUTCHINSON                     Director                   August 10, 2001
------------------------------------------------
              George P. Hutchinson

             /s/ HAAKON RAGDE, M.D.                      Director                   August 10, 2001
------------------------------------------------
               Haakon Ragde, M.D.

            /s/ C. WILLIAM SCHNEIDER                     Director                   August 10, 2001
------------------------------------------------
              C. William Schneider

II-6


EXHIBIT INDEX

EXHIBIT
NUMBER                            DESCRIPTION
-------                           -----------
   1.1*   Form of Underwriting Agreement.
   3.1    Fifth Amended and Restated Certificate of Incorporation.
   3.2    Bylaws of the Registrant.
   4.1*   Specimen Common Stock Certificate.
   5.1*   Opinion of Lane Powell Spears Lubersky LLP.
  10.1+   PSMA Sublicense Agreement by and between the Registrant and
          Cytogen Corporation.
  10.2+   Collaboration Agreement by and between the Registrant and
          Medarex, Inc.
  10.3    Development Agreement dated July 30, 1997 between the
          Registrant and Medarex, Inc.
  10.4    Employment Agreement dated February 2, 2001 between the
          Registrant and Daniel O. Wilds.
  10.5    Employment Agreement dated February 2, 2001 between the
          Registrant and Alton L. Boynton.
  10.6    Office Lease dated October 22, 1999 between the Registrant
          and Nexus Canyon Park LLC.
  10.7    Subordination, Nondisturbance and Attornment Agreement dated
          November 10, 1999 between the Registrant, Nexus Canyon Park
          LLC and Bank of America, N.A.
  10.8    Sublease Agreement dated September 1, 2000, between the
          Registrant and Northwest Hospital Department of Molecular
          Medicine.
  10.9    Loan Agreement dated April 24, 2001 between the Registrant
          and Holmes Harbor Company, Inc.
  10.10   Master Note for Line of Credit dated July 1, 1997 between
          the Registrant and Northwest Hospital.
  10.11   Amendment to Master Note for Line of Credit dated February
          1, 2000 between the Registrant and Northwest Hospital.
  10.12   Second Amendment to Master Note for Line of Credit dated
          August 9, 2001 between the Registrant and Northwest
          Hospital.
  10.13   Clinical Trial Agreement dated January 7, 2000 between the
          Registrant and the Regents of the University of California.
  10.14   Clinical Trial Agreement dated December 16, 1999 between the
          Registrant and the University of Texas, M.D. Anderson Cancer
          Center.
  10.15   1998 Stock Option Plan.
  10.16   1999 Executive Stock Option Plan.
  10.17   2001 Stock Option Plan.
  10.18   2001 Nonemployee Director Stock Incentive Plan.
  10.19   Employee Stock Purchase Plan
  10.20   Investors' Rights Agreement dated March 1999.
  10.21   Series D Preferred Investors' Rights Agreement dated October
          2000.
  16.1    Letter of Arthur Andersen dated August 9, 2001.
  23.1    Consent of KPMG LLP, Independent Auditors.
  23.2*   Consent of Lane Powell Spears Lubersky LLP (contained in
          exhibit 5.1).
  24.1    Powers of Attorney (included on signature page of
          Registration Statement).


* To be filed by amendment

+ Confidential treatment has been requested for portions of this exhibit


EXHIBIT 3.1

FIFTH AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION

OF

NORTHWEST BIOTHERAPEUTICS, INC.

The undersigned, Daniel O. Wilds and C. William Schneider, hereby certify that:

1. They are the duly elected and acting President and Secretary, respectively, of Northwest Biotherapeutics, Inc., a Delaware corporation.

2. The Certificate of Incorporation of this corporation was originally filed with the Secretary of State of Delaware on July 29, 1998.

3. The First Amended and Restated Certificate of Incorporation of this corporation was filed with the Secretary of State of Delaware on September 15, 1998.

4. The Second Amended and Restated Certificate of Incorporation of this corporation was filed with the Secretary of State of Delaware on March 26, 1999.

5. The Third Amended and Restated Certificate of Incorporation of this corporation was filed with the Secretary of State of Delaware on October 24, 2000.

6. The Fourth Amended and Restated Certificate of Incorporation of this corporation was filed with the Secretary of State of Delaware on June 1, 2001.

7. The Certificate of Incorporation of this corporation shall be amended and restated to read in full as follows:

ARTICLE I

The name of the corporation is Northwest Biotherapeutics, Inc. (the "Corporation").

ARTICLE II

The address of the Corporation's registered office in the State of Delaware is 1013 Centre Road, Wilmington, Delaware 19805, County of New Castle. The name of its registered agent at such address is Corporation Service Company.

ARTICLE III

The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the Delaware General Corporation Law.


ARTICLE IV

(A) Classes of Stock. The Corporation is authorized to issue two classes of stock to be designated, respectively, "Common Stock" and "Preferred Stock." The total number of shares which the Corporation is authorized to issue is Forty-Two Million Five Hundred Thousand (42,500,000), each with a par value of $0.001 per share. Thirty Million (30,000,000) shares shall be Common Stock and Twelve Million Five Hundred Thousand (12,500,000) shares shall be Preferred Stock.

(B) Rights, Preferences and Restrictions of Preferred Stock. The Preferred Stock authorized by this Fifth Amended and Restated Certificate of Incorporation "may" or "will" or "shall" be issued from time to time in one or more series. The first series of Preferred Stock shall be designated "Series A Preferred Stock" and shall consist of Five Hundred Fifty Thousand Seven Hundred (550,700) shares. The second series of Preferred Stock shall be designated "Series B Preferred Stock" and shall consist of Eight Hundred Ninety-Seven Thousand Five Hundred Thirteen (897,513) shares. The third series of Preferred Stock shall be designated "Series C Preferred Stock" and shall consist of Three Million Six Hundred Nine Thousand Sixty-Two (3,609,062) shares. The fourth series of Preferred Stock shall be designated "Series D Preferred Stock" and shall consist of Six Million Five Hundred Thousand (6,500,000) shares. The rights, preferences, privileges, and restrictions granted to and imposed on the Series A, Series B, Series C, and Series D Preferred Stock are as set forth below in this Article IV(B).

1. Dividend Provisions. Subject to the rights of each series of Preferred Stock which may from time to time come into existence, the holders of shares of Series A, Series B, Series C, and Series D Preferred Stock shall be entitled to receive dividends, out of any assets legally available therefor, prior and in preference to any declaration or payment of any dividend payable (other than in Common Stock or other securities and rights convertible into or entitling the holder thereof to receive, directly or indirectly, additional shares of Common Stock of the Corporation) on the Common Stock of the Corporation, at the rate of (a) $0.08 per share per annum, on each outstanding share of Series A and Series B Preferred Stock, (b) $0.20 per share per annum, on each outstanding share of Series C, and (c) $0.40 per share per annum on each outstanding share of Series D Preferred Stock, payable quarterly when, as and if declared by the Board of Directors. Such dividends shall not be cumulative.

2. Liquidation.

(a) Preference. In the event of any liquidation, dissolution or winding up of the Corporation, either voluntary or involuntary, subject to the rights of each series of Preferred Stock that may from time to time come into existence, the holders of the Series A, Series B, Series C, and Series D Preferred Stock shall be entitled to receive, prior and in preference to any distribution of any of the assets of the Corporation to the holders of Common Stock by reason of their ownership thereof, an amount per share equal to
(i) $5.447 per share for each share of Series A Preferred Stock then held by them, (ii) $2.326 per share for each share of Series B Preferred Stock then held by them, (iii) $2.50 per share for each share of Series C Preferred Stock then held by them, and (iv) $5.00 per share for each share of Series D Preferred Stock then held by them, plus declared but unpaid dividends. If, upon the occurrence of such

2

event, the assets and funds thus distributed among the holders of the Series A, Series B, Series C, and Series D Preferred Stock shall be insufficient to permit the payment to such holders of the full aforesaid preferential amounts, then, subject to the rights of series of Preferred Stock that may from time to time come into existence, the entire assets and funds of the Corporation legally available for distribution shall be distributed ratably among the holders of the Series A, Series B, Series C, and Series D Preferred Stock in proportion to the preferential amount each such holder is otherwise entitled to receive.

(b) Remaining Assets. Upon the completion of the distribution required by Section 2(a) above and any other distribution that may be required with respect to series of Preferred Stock that may from time to time come into existence, if assets remain in the Corporation, the holders of the Common Stock of the Corporation shall receive all of the remaining assets of the Corporation.

(c) Certain Acquisitions.

(i) Deemed Liquidation. For purposes of this
Section 2, a liquidation, dissolution or winding up of the Corporation shall be deemed to occur if the Corporation shall sell, convey, or otherwise dispose of or encumber all or substantially all of its property or business or merge into or consolidate with any other corporation (other than a wholly owned subsidiary corporation) or effect any other transaction or series of related transactions in which more than fifty percent (50%) of the voting power of the Corporation is disposed of, provided that this Section 2(c)(i) shall not apply to a merger effected exclusively for the purpose of changing the domicile of the Corporation.

(ii) Valuation of Consideration. In the event of a deemed liquidation as described in Section 2(c)(i) above, if the consideration received by the Corporation is other than cash, its value will be deemed its fair market value. Any securities shall be valued as follows:

(A) Securities not subject to investment letter or other similar restrictions on free marketability:

(1) If traded on a securities exchange or the Nasdaq National Market, the value shall be deemed to be the average of the closing prices of the securities on such exchange over the thirty-day period ending three (3) days prior to the closing;

(2) If actively traded over-the-counter, the value shall be deemed to be the average of the closing bid or sale prices (whichever is applicable) over the thirty-day period ending three (3) days prior to the closing; and

(3) If there is no active public market, the value shall be the fair market value thereof, as mutually determined by the Corporation

3

and the holders of at least a majority of the voting power of all then outstanding shares of Preferred Stock.

(B) The method of valuation of securities subject to investment letter or other restrictions on free marketability (other than restrictions arising solely by virtue of a stockholder's status as an affiliate or former affiliate) shall be to make an appropriate discount from the market value determined as above in Section 2(c)(ii)(A) to reflect the approximate fair market value thereof, as mutually determined by the Corporation and the holders of at least a majority of the voting power of all then outstanding shares of Preferred Stock.

(iii) Notice of Transaction. The Corporation shall give each holder of record of Series A, Series B, Series C, or Series D Preferred Stock written notice of such impending transaction within ten
(10) days prior to the stockholders' meeting called to approve such transaction, or within ten (10) days prior to the closing of such transaction, whichever is earlier, and shall also notify such holders in writing of the final approval of such transaction. The first of such notices shall describe the material terms and conditions of the impending transaction and the provisions of Section 2, and the Corporation shall thereafter give such holders prompt notice of any material changes. The transaction shall in no event take place sooner than ten (10) days after the Corporation has given the first notice provided for herein or sooner than ten (10) days after the Corporation has given notice of any material changes provided for herein; provided, however, that such periods may be shortened upon the written consent of the holders of Preferred Stock that are entitled to such notice rights or similar notice rights and that represent at least a majority of the voting power of all then outstanding shares of such Preferred Stock.

(iv) Effect of Noncompliance. In the event the requirements of this Section 2(c) are not complied with, the Corporation shall forthwith either cause the closing of the transaction to be postponed until such requirements have been complied with, or cancel such transaction, in which event the rights, preferences and privileges of the holders of the Series A, Series B, Series C, and Series D Preferred Stock shall revert to and be the same as such rights, preferences and privileges existing immediately prior to the date of the first notice referred to in Section 2(c)(iii) hereof.

3. Redemption.

(a) Redemption Date and Price. Subject to the rights of each series of Preferred Stock which may from time to time come into existence, at any time after March 18, 1999, but not later than March 18, 2002, on a date (the "Redemption Date") within sixty (60) days after receipt by the Corporation of a written request (a "Redemption Election") from the holders of not less than a majority of the then outstanding Series A Preferred Stock that all of the shares of such series be redeemed, the Corporation shall, to the extent it may lawfully do so, redeem the number of shares of Series A Preferred Stock specified in the Redemption Election in accordance with the procedures set forth in this Section 3 by paying in cash therefor a sum per share equal to $5.447 per share of Series A Preferred Stock (as adjusted for any stock dividends,

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combinations or splits with respect to such shares) plus an amount equal to the interest on such sum from March 18, 1996 to the Redemption Date, at the rate of prime plus one percent (1%) per annum, adjusted monthly based upon the prime rate in effect on the 1st day of each month following March 18, 1996, and compounded monthly (the "Redemption Price").

(b) Procedure. Subject to the rights of each series of Preferred Stock which may from time to time come into existence within fifteen
(15) days following its receipt of the Redemption Election, the Corporation shall mail a written notice, first-class postage prepaid, to each holder of record (at the close of business on the business day next preceding the day on which notice is given) of Series A Preferred Stock at the address last shown on the records of the Corporation for such holder, notifying such holder of the redemption to be effected, specifying the number of shares to be redeemed from such holder, the Redemption Date, the applicable Redemption Price, the place at which payment may be obtained and calling upon such holder to surrender to the Corporation, in the manner and at the place designated, such holder's certificate or certificates representing the shares to be redeemed (the "Redemption Notice"). Except as provided in Section 3(c), on or after the Redemption Date, each holder of Series A Preferred Stock to be redeemed shall surrender to the Corporation the certificate or certificates representing such shares, in the manner and at the place designated in the Redemption Notice, and thereupon the Redemption Price of such shares shall be payable to the order of the person whose name appears on such certificate or certificates as the owner thereof and each surrendered certificate shall be canceled.

(c) Effect of Redemption; Insufficient Funds. From and after the Redemption Date, unless there shall have been a default in payment of the Redemption Price, all rights of the holders of shares of Series A Preferred Stock designated for redemption in the Redemption Notice (except the right to receive the Redemption Price without interest upon surrender of their certificate or certificates) shall cease with respect to such shares, and such shares shall not thereafter be transferred on the books of the Corporation or be deemed to be outstanding for any purpose whatsoever. Subject to the rights of series of Preferred Stock which may from time to time come into existence, if the funds of the Corporation legally available for redemption of shares of Series A Preferred Stock on the Redemption Date are insufficient to redeem the total number of shares of Series A Preferred Stock to be redeemed on such date, those funds which are legally available will be used to redeem the maximum possible number of such shares ratably among the holders of such shares to be redeemed based upon the total Redemption Price applicable to each such holder's shares of Series A Preferred Stock which are subject to redemption on such Redemption Date. The shares of Series A Preferred Stock not redeemed shall remain outstanding and entitled to all the rights and preferences provided herein. Subject to the rights of series of Preferred Stock which may from time to time come into existence, at any time thereafter when additional funds of the Corporation are legally available for the redemption of shares of Series A Preferred Stock, such funds will immediately be used to redeem the balance of the shares which the Corporation has become obliged to redeem on the Redemption Date but which it has not redeemed.

4. Conversion. The holders of the Series A, Series B, Series C, and Series D Preferred Stock shall have conversion rights as follows (the "Conversion Rights"):

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(a) Right to Convert. Subject to Section 4(c), each share of Series A, Series B, Series C, and Series D Preferred Stock shall be convertible, at the option of the holder thereof, at any time after the date of issuance of such shares and, with respect to the Series A Preferred Stock, on or prior to the fifth day prior to the Redemption Date, if any, as may have been fixed in any Redemption Notice with respect to the Series A Preferred Stock at the office of the Corporation or any transfer agent for such stock, into such number of fully paid and nonassessable shares of Common Stock as is determined by dividing (i) $5.447 in the case of the Series A Preferred Stock, (ii) $2.326 in the case of the Series B Preferred Stock, (iii) $2.50 in the case of the Series C Preferred Stock, and (iv) $5.00 in the case of the Series D Preferred Stock by the conversion price applicable to such share, determined as hereafter provided, in effect on the date the certificate is surrendered for conversion. The initial conversion price shall be $5.447 for shares of Series A Preferred Stock ("Series A Conversion Price"), $1.2003 for shares of Series B Preferred Stock ("Series B Conversion Price"), $2.50 for shares of Series C Preferred Stock ("Series C Conversion Price"), and $5.00 for shares of Series D Preferred Stock ("Series D Conversion Price"). Such initial conversion price shall be subject to adjustment as set forth in Section 4(d) below.

(b) Automatic Conversion. Each share of Series A, Series B, Series C, and Series D Preferred Stock shall automatically be converted into shares of Common Stock at the conversion price at the time in effect for such share immediately upon the earlier of (i) except as provided below in Section
4(c), the Corporation's sale of its Common Stock in a firm commitment underwritten public offering pursuant to a registration statement under the Securities Act of 1933, as amended (the "Securities Act"), which results in aggregate cash proceeds to the Corporation of $7,500,000 (net of underwriting discounts and commissions) or (ii) the date specified by written consent or agreement of the holders of a majority of the then outstanding shares of Series A, Series B, Series C, and Series D Preferred Stock, voting together as a class.

(c) Mechanics of Conversion. Before any holder of Series A, Series B, Series C, or Series D Preferred Stock shall be entitled to convert the same into shares of Common Stock, he shall surrender the certificate or certificates therefor, duly endorsed, at the office of the Corporation or of any transfer agent for such series of Preferred Stock, and shall give written notice to the Corporation, at its principal corporate office, of the election to convert the same and shall state therein the name or names in which the certificate or certificates for shares of Common Stock are to be issued. The Corporation shall, as soon as practicable thereafter, issue and deliver at such office to such holder of Preferred Stock, or to the nominee or nominees of such holder, a certificate or certificates for the number of shares of Common Stock to which such holder shall be entitled as aforesaid. Such conversion shall be deemed to have been made immediately prior to the close of business on the date of such surrender of the shares of such series of Preferred Stock to be converted, and the person or persons entitled to receive the shares of Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock as of such date. If the conversion is in connection with an underwritten offering of securities registered pursuant to the Securities Act the conversion may, at the option of any holder tendering such Preferred Stock for conversion, be conditioned upon the closing with the underwriters of the sale of securities pursuant to such offering, in which event the person(s) entitled to receive Common Stock upon

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conversion of such Preferred Stock shall not be deemed to have converted such Preferred Stock until immediately prior to the closing of such sale of securities.

(d) Conversion Price Adjustments of Preferred Stock for Certain Issuances, Splits and Combinations. The conversion price of the Series A, Series B, Series C, and Series D Preferred Stock shall be subject to adjustment from time to time as follows:

(i) Series C and Series D Antidilution Protection for Issuances of Additional Stock Below Series C or Series D Purchase Price. If the Corporation shall issue, after the date upon which any shares of Series C or Series D Preferred Stock were first issued (the "Purchase Date"), any Additional Stock (as defined below) without consideration or for a consideration per share less than the Series C Conversion Price or the Series D Conversion Price, as the case may be, in effect immediately prior to the issuance of such Additional Stock, the Series C Conversion Price or the Series D Conversion Price, as the case may be, in effect immediately prior to each such issuance shall automatically be adjusted as set forth in this
Section 4(d)(i), unless otherwise provided in this Section 4(d)(i).

(A) Adjustment Formula. Whenever the Series C Conversion Price or the Series D Conversion Price is adjusted pursuant to this Section (4)(d)(i), the new Series C Conversion Price or Series D Conversion Price shall be determined by multiplying the Series C Conversion Price or Series D Conversion Price then in effect by a fraction, (x) the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to such issuance (the "Outstanding Common") plus the number of shares of Common Stock that the aggregate consideration received by the Corporation for such issuance would purchase at such Series C Conversion Price or Series D Conversion Price; and (y) the denominator of which shall be the number of shares of Outstanding Common plus the number of shares of such Additional Stock. For purposes of the foregoing calculation, the term "Outstanding Common" shall include shares of Common Stock deemed issued pursuant Section 4(d)(i)(E) below.

(B) Definition of "Additional Stock". For purposes of this Section 4(d)(i), "Additional Stock" shall mean any shares of Common Stock issued (or deemed to have been issued pursuant to Section 4(d)(i)(E)) by the Corporation after the Purchase Date) other than:

(1) Common Stock issued pursuant to a transaction described in Section 4(d)(ii) hereof;

(2) Shares of Common Stock issuable or issued to employees, consultants or directors of the Corporation directly or pursuant to a stock option plan or restricted stock plan approved by the Board of Directors of the Corporation;

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(3) Capital stock, or options or warrants to purchase capital stock, issued to financial institutions or lessors in connection with commercial credit arrangements, equipment financing or similar transactions;

(4) Capital stock, or options or warrants to purchase capital stock, issued to academic or research institutions in connection with the license of technology or research and development services, or issued to a strategic partner in connection with a license agreement, joint marketing agreement, technology development or similar strategic relationship;

(5) Shares of Common Stock or Preferred Stock issuable upon exercise of warrants outstanding as of the date of this Fifth Amended and Restated Certificate of Incorporation;

(6) Capital stock or warrants or options to purchase capital stock issued in connection with bona fide acquisitions, mergers or similar transactions, the terms of which are approved by the Board of Directors of the Corporation;

(7) Shares of Common Stock issued or issuable upon conversion of the Preferred Stock; and

(8) Shares of Common Stock issued or issuable in a public offering prior to or in connection with which all outstanding shares of Preferred Stock will be converted to Common Stock.

(C) No Fractional Adjustments. No adjustment of the Conversion Price for the Series C or Series D Preferred Stock shall be made in an amount less than one cent per share, provided that any adjustments which are not required to be made by reason of this sentence shall be carried forward and shall be either taken into account in any subsequent adjustment made prior to three years from the date of the event giving rise to the adjustment being carried forward, or shall be made at the end of three years from the date of the event giving rise to the adjustment being carried forward.

(D) Determination of Consideration. In the case of the issuance of Common Stock for cash, the consideration shall be deemed to be the amount of cash paid therefor before deducting any reasonable discounts, commissions or other expenses allowed, paid or incurred by the Corporation for any underwriting or otherwise in connection with the issuance and sale thereof. In the case of the issuance of Common Stock for a consideration in whole or in part other than cash, the consideration other than cash shall be deemed to be the fair value thereof as determined by the Board of Directors irrespective of any accounting treatment.

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(E) Deemed Issuances of Common Stock. In the case of the issuance (whether before, on or after the applicable Purchase Date) of options to purchase or rights to subscribe for Common Stock, securities by their terms convertible into or exchangeable for Common Stock or options to purchase or rights to subscribe for such convertible or exchangeable securities, the following provisions shall apply for all purposes of this Section 4(d)(i) (and for the purpose specified in
Section 4(d)(ii)):

(1) The aggregate maximum number of shares of Common Stock deliverable upon exercise (assuming the satisfaction of any conditions to exercisability, including, without limitation, the passage of time, but without taking into account potential antidilution adjustments) of such options to purchase or rights to subscribe for Common Stock shall be deemed to have been issued at the time such options or rights were issued and for a consideration equal to the consideration (determined in the manner provided in
Section 4(d)(i)(D)), if any, received by the Corporation upon the issuance of such options or rights plus the minimum exercise price provided in such options or rights (without taking into account potential antidilution adjustments) for the Common Stock covered thereby.

(2) The aggregate maximum number of shares of Common Stock deliverable upon conversion of or in exchange (assuming the satisfaction of any conditions to convertibility or exchangeability, including, without limitation, the passage of time, but without taking into account potential antidilution adjustments) for any such convertible or exchangeable securities or upon the exercise of options to purchase or rights to subscribe for such convertible or exchangeable securities and subsequent conversion or exchange thereof shall be deemed to have been issued at the time such securities were issued or such options or rights were issued and for a consideration equal to the consideration, if any, received by the Corporation for any such securities and related options or rights (excluding any cash received on account of accrued interest or accrued dividends), plus the minimum additional consideration, if any, to be received by the Corporation (without taking into account potential antidilution adjustments) upon the conversion or exchange of such securities or the exercise of any related options or rights (the consideration in each case to be determined in the manner provided in Section
4(d)(i)(D)).

(3) In the event of any change in the number of shares of Common Stock deliverable or in the consideration payable to the Corporation upon exercise of such options or rights or upon conversion of or in exchange for such convertible or exchangeable securities, including, but not limited to, a change resulting from the antidilution provisions thereof, the Series C Conversion Price and the Series D Conversion Price, to the extent in any way affected by or computed using such options, rights or securities, shall be recomputed to reflect such change, but no further adjustment shall be made for the actual issuance of Common Stock or any payment of such consideration upon the

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exercise of any such options or rights or the conversion or exchange of such securities.

(4) Upon the expiration of any such options or rights, the termination of any such rights to convert or exchange, or the expiration of any options or rights related to such convertible or exchangeable securities, the Series C Conversion Price and the Series D Conversion Price, to the extent in any way affected by or computed using such options, rights or securities or options or rights related to such securities, shall be recomputed to reflect the issuance of only the number of shares of Common Stock (and convertible or exchangeable securities which remain in effect) actually issued upon the exercise of such options or rights, upon the conversion or exchange of such securities or upon the exercise of the options or rights related to such securities.

(5) The number of shares of Common Stock deemed issued and the consideration deemed paid therefor pursuant to Sections 4(d)(i)(E)(l) and 4(d)(i)(E)(2) shall be appropriately adjusted to reflect any change, termination or expiration of the type described in either Section 4(d)(i)(E)(3) or
4(d)(i)(E)(4).

(F) No Increased Conversion Price. Notwithstanding any other provisions of this Section
(4)(d)(i), except to the limited extent provided for in Sections 4(d)(i)(E)(3) and 4(d)(i)(E)(4), no adjustment of the Series C Conversion Price or the Series D Conversion Price pursuant to this Section 4(d)(i) shall have the effect of increasing the Series C Conversion Price or Series D Conversion Price above the Series C Conversion Price or Series D Conversion Price, as the case may be, in effect immediately prior to such adjustment.

(ii) Stock Splits and Dividends. In the event the Corporation should at any time or from time to time after the date upon which any shares of Series A, Series B, Series C, or Series D Preferred Stock were first issued (the "Purchase Date," with respect to such series) fix a record date for the effectuation of a split or subdivision of the outstanding shares of Common Stock or the determination of holders of Common Stock entitled to receive a dividend or other distribution payable in additional shares of Common Stock or other securities or rights convertible into, or entitling the holder thereof to receive directly or indirectly, additional shares of Common Stock (hereinafter referred to as "Common Stock Equivalents") without payment of any consideration by such holder for the additional shares of Common Stock or the Common Stock Equivalents (including the additional shares of Common Stock issuable upon conversion or exercise thereof), then, as of such record date (or the date of such, dividend distribution, split or subdivision if no record date is fixed), the Series A, Series B, Series C, and Series D Conversion Price shall be appropriately decreased so that the number of shares of Common Stock issuable on conversion of each share of such series shall be increased in proportion to such increase of the aggregate of shares of Common Stock outstanding and those issuable with respect to such Common Stock Equivalents

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with the number of shares issuable with respect to Common Stock Equivalents determined from time to time as provided in Section 4(d)(iv) below.

(iii) Reverse Stock Splits. If the number of shares of Common Stock outstanding at any time the Purchase Date is decreased by a combination of the outstanding shares of Common Stock, then, following the record date of such combination, the Series A, Series B, Series C, and Series D Conversion Price shall be appropriately increased so that the number of shares of Common Stock issuable on conversion of each share of such series shall be decreased in proportion to such decrease in outstanding shares.

(iv) The following provisions shall apply for the purposes of this Section 4(d):

(A) The aggregate maximum number of shares of Common Stock deliverable upon conversion or exercise of Common Stock Equivalents (assuming the satisfaction of any conditions to convertibility or exercisability, including, without limitation, the passage of time, but without taking into account potential antidilution adjustments) shall be deemed to have been issued at the time such Common Stock Equivalents were issued.

(B) In the event of any change in the number of shares of Common Stock deliverable or in the consideration payable to the Corporation upon conversion or exercise of such Common Stock Equivalents including, but not limited to, a change resulting from the antidilution provisions thereof, the Series A, Series B, Series C, and the Series D Conversion Price, to the extent in any way affected by or computed using such Common Stock Equivalents, shall be recomputed to reflect such change, but no further adjustment shall be made for the actual issuance of Common Stock or any payment of such consideration upon the exercise of any such options or rights or the conversion or exchange of such securities.

(C) Upon the termination or expiration of the convertibility or exercisability of any such Common Stock Equivalents, the conversion price of each of the Series A, Series B, Series C, and the Series D Preferred Stock, to the extent in any way affected by or computed using such Common Stock Equivalents, shall be recomputed to reflect the issuance of only the number of shares of Common Stock (and Common Stock Equivalents which remain convertible or exercisable) actually issued upon the conversion or exercise of such Common Stock Equivalents.

(e) Other Distributions. In the event the Corporation shall declare a distribution payable in securities of other persons, evidences of indebtedness issued by the Corporation or other persons, assets (excluding cash dividends) or options or rights not referred to in Section 4(d)(ii), then, in each such case for the purpose of this Section 4(e), the holders of Series A, Series B, Series C, and Series D Preferred Stock shall be entitled to a proportionate

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share of any such distribution as though they were the holders of the number of shares of Common Stock of the Corporation into which their shares of Preferred Stock are convertible as of the record date fixed for the determination of the holders of Common Stock of the Corporation entitled to receive such distribution.

(f) Recapitalizations. If at any time or from time to time there shall be a recapitalization of the Common Stock (other than a subdivision, combination or merger or sale of assets transaction provided for elsewhere in this Section 4 or Section 2), provision shall be made so that the holders of the Series A, Series B, Series C, and Series D Preferred Stock shall thereafter be entitled to receive upon conversion of such Preferred Stock the number of shares of stock or other securities or property of the Corporation, or otherwise, to which a holder of Common Stock upon conversion would have been entitled on such recapitalization. In any such case, appropriate adjustment shall be made in the application of the provisions of this Section 4 with respect to the rights of the holders of such Preferred Stock after the recapitalization to the end that the provisions of this Section 4 (including adjustment of the Conversion Price then in effect and the number of shares purchasable upon conversion of such Preferred Stock) shall be applicable after that event and be as nearly equivalent as practicable.

(g) No Impairment. The Corporation will not, by amendment of its Certificate of Incorporation or through any reorganization, recapitalization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Corporation, but will at all times in good faith assist in the carrying out of all the provisions of this Section 4 and in the taking of all such action as may be necessary or appropriate in order to protect the Conversion Rights of the holders of Preferred Stock against impairment.

(h) No Fractional Shares and Certificate as to Adjustments.

(i) No fractional shares shall be issued upon the conversion of any share or shares of the Series A, Series B, Series C, or Series D Preferred Stock, and the number of shares of Common Stock to be issued shall be rounded to the nearest whole share. The number of shares issuable upon such conversion shall be determined on the basis of the total number of shares of Series A, Series B, Series C, and Series D Preferred Stock the holder is at the time converting into Common Stock and the number of shares of Common Stock issuable upon such aggregate conversion.

(ii) Upon the occurrence of each adjustment or readjustment of the Conversion Price of Series A, Series B, Series C, or Series D Preferred Stock pursuant to this Section 4, the Corporation, at its expense, shall promptly compute such adjustment or readjustment in accordance with the terms hereof and prepare and furnish to each holder of such Preferred Stock a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Corporation shall, upon the written request at any time of any holder of Series A, Series B, Series C, or Series D Preferred Stock, furnish or cause to be furnished to such holder a like certificate setting forth: (A) the calculation of such adjustment or

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readjustment; (B) the Conversion Price for the Series A, Series B, Series C, or Series D Preferred Stock; as the case may be, at the time in effect; and (C) the number of shares of Common Stock and the amount, if any, of other property which at the time would be received upon the conversion of a share of the Series A, Series B, Series C, or Series D Preferred Stock, as the case may be.

(i) Notices of Record Date. In the event of any taking by the Corporation of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend (other than a cash dividend) or other distribution, any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property, or to receive any other right, the Corporation shall mail to each holder of Series A, Series B, Series C, or Series D Preferred Stock, at least ten (10) days prior to the date specified therein, a notice specifying the date on which any such record is to be taken for the purpose of such dividend, distribution or right, and the amount and character of such dividend, distribution or right.

(j) Reservation of Stock Issuable Upon Conversion. The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of the shares of the Series A, Series B, Series C, and Series D Preferred Stock, such number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of such series of Preferred Stock; and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of such series of Preferred Stock, in addition to such other remedies as shall be available to the holder of such Preferred Stock, the Corporation will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes, including, without limitation, engaging in best efforts to obtain the requisite stockholder approval of any necessary amendment to this Certificate of Incorporation.

(k) Notices. Any notice required by the provisions of this Section 4 to be given to the holders of shares of Series A, Series B, Series C, or Series D Preferred Stock shall be deemed given if deposited in the United States mail, postage prepaid, and addressed to each holder of record at his address appearing on the books of the Corporation.

5. Voting Rights. The holder of each share of Series A, Series B, Series C, or Series D Preferred Stock shall have the right to one vote for each share of Common Stock into which such Preferred Stock could then be converted, and with respect to such vote, such holder shall have full voting rights and powers equal to the voting rights and powers of the holders of Common Stock, and shall be entitled, notwithstanding any provision hereof, to notice of any stockholders' meeting in accordance with the bylaws of the Corporation, and shall be entitled to vote, together with holders of Common Stock, with respect to any question upon which holders of Common Stock have the right to vote. Fractional votes shall not, however, be permitted and any fractional voting rights available on an as-converted basis (after aggregating all shares into which shares of Series A, Series B, Series C, or Series D Preferred Stock held by each holder

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could be converted) shall be rounded to the nearest whole number (with one-half being rounded, upward).

6. Protective Provisions. Subject to the rights of each series of Preferred Stock which may from time to time come into existence, so long as at least 100,000 shares of Preferred Stock are outstanding (as adjusted for stock splits, stock dividends or recapitalizations), the Corporation shall not without first obtaining the approval (by vote or written consent, as provided by law) of the holders of at least a majority of the then outstanding shares of Preferred Stock, voting together as a class:

(a) effect a transaction described in Article IV(B),
Section 2(c)(i) above;

(b) alter or change the rights, preferences or privileges of the shares of Series A, Series B, Series C, or Series D Preferred Stock so as to affect adversely the shares of such series;

(c) increase or decrease (other than by redemption or conversion) the total number of authorized shares of Series A, Series B, Series C, or Series D Preferred Stock;

(d) authorize or issue, or obligate itself to issue, any other equity security, including any other security convertible into or exercisable for any equity security, having a preference over the Series A, Series B, Series C, or Series D Preferred Stock with respect to voting, dividends, redemption, conversion or upon liquidation; or

(e) redeem, purchase or otherwise acquire (or pay into or set funds aside for a sinking fund for such purpose) any share or shares of Preferred Stock or Common Stock; provided, however, that this restriction shall not apply to the repurchase of shares of Common Stock from employees, officers, directors, consultants or other persons performing services for the Corporation or any subsidiary pursuant to agreements under which the Corporation has the option to repurchase such shares at cost upon the occurrence of certain events, such as the termination of employment, or through the exercise of any right of first refusal.

7. Status of Redeemed or Converted Stock. In the event any shares of Preferred Stock shall be redeemed pursuant to Section 3 or converted pursuant to Section 4 of this Article IV(B), the shares so redeemed or converted shall be canceled and shall not be issuable by the Corporation. The Certificate of Incorporation of the Corporation shall be appropriately amended to effect the corresponding reduction in the Corporation's authorized capital stock.

(C) Common Stock.

1. Dividend Rights. Subject to the prior rights of holders of all classes of stock at the time outstanding having prior rights as to dividends, the holders of the Common Stock shall be entitled to receive, when and as declared by the Board of Directors, out of any

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assets of the Corporation legally available therefor, such dividends as may be declared from time to time by the Board of Directors.

2. Liquidation Rights. Upon the liquidation, dissolution or winding up of the Corporation, the assets of the Corporation shall be distributed as provided in Section 2 of Article IV(B).

3. Redemption. The Common Stock is not redeemable.

4. Voting Rights. The holder of each share of Common Stock shall have the right to one vote, and shall be entitled to notice of any stockholders' meeting in accordance with the bylaws of the Corporation, and shall be entitled to vote upon such matters and in such manner as may be provided by law.

5. Protective Provision. The Corporation shall not, without first obtaining the approval (by vote or written consent, as provided by law) of the holders of at least a majority of the outstanding shares of Common Stock, voting as a separate class, effect a transaction described in Section 2(c)(i) of Article IV(B).

ARTICLE V

The Board of Directors of the Corporation is expressly authorized to adopt, amend or repeal Bylaws or adopt new Bylaws; provided however, that the Board of Directors may not repeal or amend any bylaw that stockholders have expressly provided may not be amended or repealed by the Board of Directors. The stockholders shall also have the power to adopt, amend or repeal the Bylaws of this Corporation by the affirmative vote of the holders of not less than two-thirds of the outstanding shares entitled to vote thereon and, to the extent, if any, provided by resolution adopted by the Board of Directors authorizing the issuance of a class of series of Common Stock or Preferred Stock, by the affirmative vote of the holders of not less than two-thirds of the outstanding shares of such class or series, voting as a separate group.

ARTICLE VI

(A) Board of Directors. The business and affairs of the Corporation shall be managed under the direction of a Board of Directors, the number of which shall be fixed from time to time exclusively by the Board of Directors pursuant to a resolution adopted by a majority of the total number of authorized directors (whether or not there exist any vacancies in previously authorized directorships at the time any such resolution is presented to the Board for adoption) (the "Whole Board"). The Directors shall be classified with respect to the time for which they shall severally hold office by dividing them into three classes, Class I, Class II and Class III, each consisting as nearly as possible of one-third of the Whole Board. All Directors shall hold office until their successors are elected and qualified, or until their earlier death, resignation, disqualification or removal. Class I Directors shall be elected for a term of one year; Class II Directors shall be elected for a term of two years; and Class III Directors shall be elected for a term of three years; and at each annual stockholders' meeting thereafter, successors to the Directors whose terms shall expire that year shall be elected to hold office for a term of three years, so that the term of

15

office of one class of Directors shall expire in each year. Any vacancy on the Board of Directors that results from an increase in the number of Directors may be filled by the affirmative vote of a majority of the Directors then in office and a majority of the Continuing Directors, voting separately and as a subclass of Directors, and any other vacancy on the Board of Directors may be filled by the affirmative vote of a majority of the Directors then in office, although less than a quorum, or by a sole remaining Director. Any Director elected to fill a vacancy not resulting from an increase in the number of Directors shall serve for a term equivalent to the remaining unserved portion of the term of such newly elected Director's predecessor. Notwithstanding the foregoing, whenever the holders of any one or more classes or series of preferred stock issued by the Corporation shall have the right, voting separately by class or series, to elect Directors at an annual or special meeting of stockholders, the election, term of office, filling of vacancies and other features of such Directorships shall be governed by the terms of this Amended and Restated Certificate of Incorporation applicable thereto, and such Directors shall not be divided into classes pursuant to this Section (A) unless expressly provided by such terms.

(B) Removal of Directors by Stockholders. A Director may be removed from office only for "cause" at a special meeting of stockholders called for that purpose, by the affirmative vote of the holders of not less than two-thirds of the shares entitled to elect the Director or Directors whose removal is being sought. The vacancy created by the removal of any Director under this Section (B) shall be filled only by the affirmative vote of the holders of at least two-thirds of the shares entitled to elect the Director who was removed. As used herein, "cause" shall mean (a) willful and continued material failure, refusal or inability to perform the Director's duties to the corporation or the willful engaging in gross misconduct that is materially and demonstrably damaging to the corporation; or (b) conviction for any crime involving moral turpitude or any other illegal act that materially and adversely reflects upon the business, affairs or reputation of the corporation or on the Director's ability to perform the Director's duties to the corporation.

ARTICLE VII

(A) To the fullest extent permitted by the Delaware General Corporation Law, as the same exists or as may hereafter be amended, a director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director.

(B) The Corporation shall indemnify to the fullest extent permitted by law any person made or threatened to be made a party to an action or proceeding, whether criminal, civil, administrative or investigative, by reason of the fact that he, his testator or intestate is or was a director or officer of the Corporation or any predecessor of the Corporation, or serves or served at any other enterprise as a director or officer at the request of the Corporation or any predecessor to the Corporation.

(C) Neither any amendment nor repeal of this Article VII, nor the adoption of any provision of the Corporation's Certificate of Incorporation inconsistent with this Article VII, shall eliminate or reduce the effect of this Article VII in respect of any matter occurring, or any

16

action or proceeding accruing or arising or that, but for this Article VII, would accrue or arise, prior to such amendment, repeal or adoption of an inconsistent provision.

ARTICLE VIII

(A) Amendments to Restated Certificate of Incorporation. The following Articles and Sections may be amended or repealed only upon the affirmative vote of the holders of at least two-thirds of the outstanding shares and, to the extent, if any, provided by resolution adopted by the Board of Directors authorizing the issuance of a class or series of Common Stock or Preferred Stock, by the affirmative vote of the holders of at least two-thirds of the outstanding shares of such class or series, voting as a separate voting group:

Article V ("Bylaws");

Article VI ("Directors");

Article VII ("Limitation of Director Liability");

Article VIII ("Amendments to Restated Certificate of Incorporation");

Article IX ("Business Combinations").

ARTICLE IX

(A) Business Combinations.

1. Definitions. For the purposes of this Article IX:

a. "Business Combination" means (i) a merger, share exchange or consolidation of this corporation or any of its Subsidiaries with any other corporation; (ii) the sale, lease, exchange, mortgage, pledge, transfer or other disposition or encumbrance, whether in one transaction or a series of transactions, by this corporation or any of its Subsidiaries of all or a substantial part of this corporation's assets otherwise than in the usual and regular course of business; or (iii) any agreement, contract or other arrangement providing for any of the foregoing transactions.

b. "Subsidiary" means a domestic or foreign corporation, a majority of the outstanding voting shares of which are owned, directly or indirectly, by this corporation.

2. Information Considered by Board of Directors. In considering a Business Combination, the Board of Directors may take into account factors in addition to potential economic benefits to the stockholders, including without limitation (i) comparison of the proposed consideration to be received by stockholders in relation to the then current market price of the corporation's capital stock, the estimated current value of the corporation in a freely negotiated transaction and the estimated future value of the corporation as an independent entity,

17

and (ii) the impact of such a transaction on the employees, suppliers and customers of the corporation and its effect on the communities in which the corporation operates.

The foregoing Fifth Amended and Restated Certificate of Incorporation has been duly adopted by the Corporation's Board of Directors and stockholders in accordance with the applicable provisions of Sections 228, 242 and 245 of the General Corporation Law of the State of Delaware.

Executed at Seattle, Washington, on June 21, 2001.

/s/ Daniel O. Wilds
------------------------------------
Daniel O. Wilds, President


/s/ C. William Schneider
------------------------------------
C. William Schneider, Secretary

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EXHIBIT 3.2

AMENDED AND RESTATED

BYLAWS
OF
NORTHWEST BIOTHERAPEUTICS, INC.

Adopted
June 21, 2001


TABLE OF CONTENTS

                                                                                           PAGE
                                                                                           ----
ARTICLE I         Offices and Records........................................................1

    Section 1.1   Registered Office and Agent................................................1
    Section 1.2   Other Offices..............................................................1
    Section 1.3   Books and Records..........................................................1

ARTICLE II        Meetings of Stockholders...................................................1

    Section 2.1   Annual Meetings............................................................1
    Section 2.2   Special Meetings...........................................................2
    Section 2.3   Place of Meetings..........................................................2
    Section 2.4   Notice of Meetings.........................................................2
    Section 2.5   Voting List................................................................3
    Section 2.6   Quorum and Adjournment.....................................................3
    Section 2.7   Adjourned Meetings.........................................................3
    Section 2.8   Voting.....................................................................3
    Section 2.9   Proxies....................................................................4
    Section 2.10  Record Date................................................................5
    Section 2.11  Conduct of Meetings; Agenda................................................5
    Section 2.12  Inspectors of Election; Opening and Closing of Polls.......................5
    Section 2.13  Procedures for Bringing Business before Annual Meetings....................6
    Section 2.14  Action without Meeting.....................................................8

ARTICLE III       Board of Directors -- Powers, Number, Classification,
                  Nominations, Classification, Resignations, Removal,
                  Vacancies and Compensation.................................................8

    Section 3.1   Management.................................................................8
    Section 3.2   Number and Qualification...................................................8
    Section 3.3   Classes of Directors.......................................................8
    Section 3.4   Election; Term of Office...................................................8
    Section 3.5   Allocation of Directors Among Classes in the Event of
                  Increases or Decreases in the Number of Directors..........................9
    Section 3.6   Nominations................................................................9
    Section 3.7   Resignations..............................................................11
    Section 3.8   Removal...................................................................11
    Section 3.9   Vacancies.................................................................11
    Section 3.10  Subject to Rights of Holders of Preferred Stock...........................12
    Section 3.11  Compensation..............................................................12

ARTICLE IV        Board of Directors -- Meetings and Actions................................12

    Section 4.1   Place of Meetings.........................................................12
    Section 4.2   Regular Meetings..........................................................12
    Section 4.3   Special Meetings..........................................................12
    Section 4.4   Quorum; Voting............................................................13
    Section 4.5   Conduct of Meetings.......................................................13

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    Section 4.6   Presumption of Assent.....................................................13
    Section 4.7   Action without M..........................................................13
    Section 4.8   Telephonic Meetings.......................................................13

ARTICLE V         Committees of the Board of Directors......................................14

    Section 5.1   Executive Committee.......................................................14
    Section 5.2   Other Committees..........................................................14
    Section 5.3   Term......................................................................14
    Section 5.4   Committee Changes; Removal................................................14
    Section 5.5   Alternate Members.........................................................14
    Section 5.6   Rules and Procedures......................................................15
    Section 5.7   Presumption of Assent.....................................................15
    Section 5.8   Action without Meeting....................................................15
    Section 5.9   Telephonic Meetings.......................................................15
    Section 5.10  Resignations..............................................................16
    Section 5.11  Limitations on Authority..................................................16

ARTICLE VI        Officers..................................................................16

    Section 6.1   Number; Titles; Qualification; Term of Office.............................16
    Section 6.2   Election..................................................................17
    Section 6.3   Removal...................................................................17
    Section 6.4   Resignations..............................................................17
    Section 6.5   Vacancies.................................................................17
    Section 6.6   Salaries..................................................................17
    Section 6.7   Chairman of the Board.....................................................17
    Section 6.8   Chief Executive Officer...................................................17
    Section 6.9   President.................................................................18
    Section 6.10  Chief Scientific Officer..................................................18
    Section 6.11  Vice Presidents...........................................................18
    Section 6.12  Treasurer.................................................................19
    Section 6.13  Assistant Treasurers......................................................19
    Section 6.14  Secretary.................................................................19
    Section 6.15  Assistant Secretaries.....................................................19

ARTICLE VII       Stock.....................................................................20

    Section 7.1   Certificates..............................................................20
    Section 7.2   Signatures on Certificates................................................20
    Section 7.3   Legends...................................................................20
    Section 7.4   Lost, Stolen or Destroyed Certificates....................................20
    Section 7.5   Transfers of Shares.......................................................21
    Section 7.6   Registered Stockholders...................................................21
    Section 7.7   Regulations...............................................................21
    Section 7.8   Stock Options, Warrants, etc..............................................21

ARTICLE VIII      Indemnification...........................................................21

    Section 8.1   Third Party Actions.......................................................21
    Section 8.2   Actions By or in the Right of the Corporation.............................22

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    Section 8.3   Expenses..................................................................23
    Section 8.4   Non-exclusivity...........................................................23
    Section 8.5   Enforceability............................................................23
    Section 8.6   Insurance.................................................................23
    Section 8.7   Survival..................................................................24
    Section 8.8   Amendment.................................................................24
    Section 8.9   Definitions...............................................................24

ARTICLE IX        Notices and Waivers.......................................................24

    Section 9.1   Methods of Giving Notices.................................................24
    Section 9.2   Waiver of Notice..........................................................25

ARTICLE X         Miscellaneous Provisions..................................................25

    Section 10.1  Dividends.................................................................25
    Section 10.2  Reserves..................................................................25
    Section 10.3  Checks....................................................................25
    Section 10.4  Corporate Contracts and Instruments.......................................25
    Section 10.5  Attestation...............................................................26
    Section 10.6  Securities of Other Corporations..........................................26
    Section 10.7  Fiscal Year...............................................................26
    Section 10.8  Seal......................................................................26
    Section 10.9  Invalid Provisions........................................................26
    Section 10.10 Headings..................................................................26
    Section 10.11 References/Gender/Number..................................................26
    Section 10.12 Amendments................................................................26

CERTIFICATE OF SECRETARY....................................................................27

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AMENDED AND RESTATED
BYLAWS
OF
NORTHWEST BIOTHERAPEUTICS, INC.

PREAMBLE

These Bylaws are subject to, and governed by, the General Corporation Law of the State of Delaware ("DGCL") and the Certificate of Incorporation ("Certificate of Incorporation") of Northwest Biotherapeutics, Inc. ("Corporation"). In the event of a direct conflict between the provisions of these Bylaws and the mandatory provisions of the DGCL or the provisions of the Certificate of Incorporation, such provisions of the DGCL and the Certificate of Incorporation, as the case may be, will be controlling.

ARTICLE I

OFFICES AND RECORDS

SECTION 1.1 REGISTERED OFFICE AND AGENT. The registered office and registered agent of the Corporation shall be as designated from time to time by the appropriate filing by the Corporation in the office of the Secretary of State of the State of Delaware.

SECTION 1.2 OTHER OFFICES. The Corporation may also have offices at such other places, both within and without the State of Delaware, as the Board of Directors of the Corporation ("Board of Directors") may from time to time determine or the business of the Corporation may require.

SECTION 1.3 BOOKS AND RECORDS. The books and records of the Corporation may be kept at the Corporation's principal executive office or at such other locations as may from time to time be designated by the Board of Directors. Consents and notices may be received in the form of electronic communications provided that they are reproduced in paper form and delivered to the Corporation's principal executive office unless otherwise provided in the Certificate of Formation or the DGCL. The use of reproductions of consents including, but not limited to copies, faxes, and other reliable reproductions, may be used in lieu of the original writing for any and all purposes for which the original writing could be used, provided the reproduction is a complete reproduction of the entire original writing pursuant to the DGCL.

ARTICLE II

MEETINGS OF STOCKHOLDERS

SECTION 2.1 ANNUAL MEETINGS. An annual meeting of the Corporation's stockholders (the "Stockholders") shall be held each calendar year for the purposes of (i) electing directors as provided in Article III and (ii) transacting such other business as may properly be brought before


the meeting. Each annual meeting shall be held on such date (no later than 13 months after the date of the last annual meeting of Stockholders) and at such time as shall be designated by the Board of Directors and stated in the notice or waivers of notice of such meeting.

SECTION 2.2 SPECIAL MEETINGS. Special meetings of the Stockholders, for any purpose or purposes, may be called at any time by the Chairman of the Board (if any) or the Chief Executive Officer and shall be called by the Secretary at the written request, or by resolution adopted by the affirmative vote, of a majority of the total number of directors which the Corporation would have if there were no vacancies (the "Whole Board"), which request or resolution shall fix the date, time and place, and state the purpose or purposes, of the proposed meeting. Except as provided by applicable law, these Bylaws, or the Certificate of Incorporation, Stockholders shall not be entitled to call a special meeting of Stockholders or to require the Board of Directors or any officer to call such a meeting or to propose business at such a meeting. Business transacted at any special meeting of Stockholders shall be limited to the purposes stated in the notice or waivers of notice of such meeting.

SECTION 2.3 PLACE OF MEETINGS. The Board of Directors may designate the place of meeting (either within or without the State of Delaware) for any meeting of Stockholders. If no designation is made by the Board of Directors, the place of meeting shall be held at the principal executive office of the Corporation.

SECTION 2.4 NOTICE OF MEETINGS. (a) Written or electronic notice of each meeting of Stockholders shall be delivered to each Stockholder of record entitled to vote thereat, which notice shall (i) state the place, date and time of the meeting and, in the case of a special meeting, the purpose or purposes for which the meeting is called and (ii) be given not less than 10 nor more than 60 days before the date of the meeting.

(b) Each notice of a meeting of Stockholders shall be given as provided in Section 9.1, except that if no address appears on the Corporation's books or stock transfer records with respect to any Stockholder, notice to such Stockholder shall be deemed to have been given if sent by first-class mail or telecommunication to the Corporation's principal executive office or if published at least once in a newspaper of general circulation in the county where such principal executive office is located.

(c) If any notice addressed to a Stockholder at the address of such Stockholder appearing on the books of the Corporation is returned to the Corporation by the United States Postal Service marked to indicate that the United States Postal Service is unable to deliver the notice to the Stockholder at such address, all further notices to such Stockholder at such address shall be deemed to have been duly given without further mailing if the same shall be available to such Stockholder upon written demand of such Stockholder at the principal executive office of the Corporation for a period of one year from the date of the giving of such notice.

(d) Any previously scheduled meeting of the Stockholders may be postponed by resolution of the Board of Directors upon public notice given prior to the time previously scheduled for such meeting.

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SECTION 2.5 VOTING LIST. At least 10 days before each meeting of Stockholders, the Secretary or other officer or agent of the Corporation who has charge of the Corporation's stock ledger shall prepare a complete list of the Stockholders entitled to vote at such meeting, arranged in alphabetical order and showing, with respect to each Stockholder, his address and the number of shares registered in his name. Such list shall be open to the examination of any Stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least 10 days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice or waivers of notice of the meeting or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept open at the time and place of the meeting during the whole time thereof, and may be inspected by any Stockholder who is present. The stock ledger of the Corporation shall be the only evidence as to who are the Stockholders entitled to examine any list required by this Section 2.5 or to vote at any meeting of Stockholders.

SECTION 2.6 QUORUM AND ADJOURNMENT. The holders of a majority of the voting power of the outstanding shares of the Corporation entitled to vote generally in the election of directors (the "Voting Stock"), present in person or by proxy, shall constitute a quorum at any meeting of Stockholders, except as otherwise provided by applicable law, the Certificate of Incorporation, or these Bylaws. If a quorum is present at any meeting of Stockholders, such quorum shall not be broken by the withdrawal of enough Stockholders to leave less than a quorum and the remaining Stockholders may continue to transact business until adjournment. If a quorum shall not be present at any meeting of Stockholders, the holders of a majority of the voting stock represented at such meeting or, if no Stockholder entitled to vote is present at such meeting, any officer of the Corporation may adjourn such meeting from time to time until a quorum shall be present. Notwithstanding anything in these Bylaws to the contrary, the chairman of any meeting of Stockholders shall have the right, acting in his sole discretion, to adjourn such meeting from time to time.

SECTION 2.7 ADJOURNED MEETINGS. When a meeting of Stockholders is adjourned to another time or place, unless otherwise provided by these Bylaws, notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken; provided, however, if an adjournment is for more than 30 days or if after an adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each Stockholder entitled to vote thereat. At any adjourned meeting at which a quorum shall be present in person or by proxy, the Stockholders entitled to vote thereat may transact any business which might have been transacted at the meeting as originally noticed.

SECTION 2.8 VOTING. (a) Election of directors at all meetings of Stockholders at which directors are to be elected shall be by written ballot or electronic communications and, except as otherwise provided in the Certificate of Incorporation, a plurality of the votes cast thereat shall elect. Except as otherwise provided by applicable law, the Certificate of Incorporation or these Bylaws, all matters other than the election of directors submitted to the Stockholders at any meeting shall be decided by a majority of the votes cast with respect to such matter. Except as otherwise provided in the Certificate of Incorporation or by applicable law, (i) no Stockholder shall have any right of cumulative voting and (ii) each outstanding share, regardless of class, shall be entitled to one vote on each matter submitted to a vote at a meeting of Stockholders.

3

(b) Shares standing in the name of another corporation (whether domestic or foreign) may be voted by such officer, agent or proxy as the bylaws of such corporation may prescribe or, in the absence of such provision, as the board of directors of such corporation may determine. Shares standing in the name of a deceased person may be voted by the executor or administrator of such deceased person, either in person or by proxy. Shares standing in the name of a guardian, conservator, or trustee may be voted by such fiduciary, either in person or by proxy, but no fiduciary shall be entitled to vote shares held in such fiduciary capacity without a transfer of such shares into the name of such fiduciary. Shares standing in the name of a receiver may be voted by such receiver. A Stockholder whose shares are pledged shall be entitled to vote such shares, unless in the transfer by the pledgor on the books of the Corporation he has expressly empowered the pledgee to vote thereon, in which case only the pledgee (or his proxy) may represent the stock and vote thereon.

(c) If shares or other securities having voting power stand of record in the name of two or more persons (whether fiduciaries, members of a partnership, joint tenants, tenants in common, tenants by the entirety or otherwise) or if two or more persons have the same fiduciary relationship respecting the same shares, unless the Secretary is given written notice to the contrary and is furnished with a copy of the instrument or order appointing them or creating the relationship wherein it is so provided, their acts with respect to voting shall have the following effect:

(i) if only one votes, his act binds all;

(ii) if more than one votes, the act of the majority so voting binds all; and

(iii) if more than one votes but the vote is evenly split on any particular matter, each faction may vote the securities in question proportionately or any person voting the shares, or a beneficiary, (if any) may apply to the Delaware Court of Chancery or such other court as may have jurisdiction to appoint an additional person to act with the person so voting the shares, which shall then be voted as determined by a majority such persons and the person so appointed by the court.

If the instrument so filed shows that any such tenancy is held in unequal interests, a majority or even-split for the purpose of the paragraph (c) shall be a majority or even-split in interest.

SECTION 2.9 PROXIES. (a) At any meeting of Stockholders, each Stockholder having the right to vote thereat may be represented and vote either in person or by proxy executed in writing by such Stockholder or by his duly authorized attorney-in-fact. Each such proxy shall be filed with the Secretary of the Corporation at or before the beginning of each meeting at which such proxy is to be voted. Unless otherwise provided therein, no proxy shall be valid after three years from the date of its execution. Each proxy shall be revocable unless expressly provided therein to be irrevocable and coupled with an interest sufficient in law to support an irrevocable power or unless otherwise made irrevocable by applicable law.

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(b) A proxy shall be deemed signed if the Stockholder's name is placed on the proxy (whether by manual signature, telegraphic transmission or otherwise) by the Stockholder or his attorney-in-fact. In the event any proxy shall designate two or more persons to act as proxies, a majority of such persons present at the meeting (or, if only one shall be present, then that one) shall have and may exercise all the powers conferred by the proxy upon all the persons so designated unless the proxy shall otherwise provide.

(c) Except as otherwise provided by applicable law, by the Certificate of Incorporation or by these Bylaws, the Board of Directors may, in advance of any meeting of Stockholders, prescribe additional regulations concerning the manner of execution and filing of proxies (and the validation of same) which may be voted at such meeting.

SECTION 2.10 RECORD DATE. For the purpose of determining the Stockholders entitled to notice of or to vote at any meeting of Stockholders (or any adjournment thereof) or to receive payment of any dividend or other distribution or allotment of any rights or to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date on which the resolution fixing the record date is adopted by the Board of Directors or be more than 60 nor less than 10 days prior to the date of such meeting nor more than 60 days prior to any other action. If no record date is fixed, (i) the record date for determining Stockholders entitled to notice of or to vote at a meeting of Stockholders shall be at the close of business on the day next preceding the day on which notice is given or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held and (ii) the record date for determining Stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. A determination of Stockholders of record entitled to notice of or to vote at a meeting of Stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.

SECTION 2.11 CONDUCT OF MEETINGS; AGENDA. (a) Meetings of the Stockholders shall be presided over by the officer of the Corporation whose duties under these Bylaws require him to do so; provided, however, if no such officer of the Corporation shall be present at any meeting of Stockholders, such meeting shall be presided over by a chairman to be chosen by a majority of the Stockholders entitled to vote at the meeting who are present in person or by proxy. At each meeting of Stockholders, the officer of the Corporation whose duties under these Bylaws require him to do so shall act as secretary of the meeting; provided, however, if no such officer of the Corporation shall be present at any meeting of Stockholders, the chairman of such meeting shall appoint a secretary. The order of business at each meeting of Stockholders shall be as determined by the chairman of the meeting, including such regulation of the manner of voting and the conduct of discussion as seems to him in order.

(b) The Board of Directors may, in advance of any meeting of Stockholders, adopt an agenda for such meeting, adherence to which the chairman of the meeting may enforce.

SECTION 2.12 INSPECTORS OF ELECTION; OPENING AND CLOSING OF POLLS. (a) Before any meeting of Stockholders, the Board of Directors may, and if required by law shall, appoint one or

5

more persons to act as inspectors of election at such meeting or any adjournment thereof. If any person appointed as inspector fails to appear or fails or refuses to act, the chairman of the meeting may, and if required by law or requested by any Stockholder entitled to vote or his proxy shall, appoint a substitute inspector. If no inspectors are appointed by the Board of Directors, the chairman of the meeting may, and if required by law or requested by any Stockholder entitled to vote or his proxy shall, appoint one or more inspectors at the meeting. Notwithstanding the foregoing, inspectors shall be appointed consistent with the mandatory provisions of Section 231 of the DGCL.

(b) Inspectors may include individuals who serve the Corporation in other capacities (including as officers, employees, agents or representatives); provided, however, that no director or candidate for the office of director shall act as an inspector. Inspectors need not be Stockholders.

(c) The inspectors shall (i) determine the number of shares of capital stock of the Corporation outstanding and the voting power of each, the number of shares represented at the meeting, the existence of a quorum and the validity and effect of proxies and (ii) receive votes or ballots, hear and determine all challenges and questions arising in connection with the right to vote, count and tabulate all votes and ballots, determine the results and do such acts as are proper to conduct the election or vote with fairness to all Stockholders. On request of the chairman of the meeting, the inspectors shall make a report in writing of any challenge, request or matter determined by them and shall execute a certificate of any fact found by them. The inspectors shall have such other duties as may be prescribed by Section 231 of the DGCL.

(d) The chairman of the meeting may, and if required by the DGCL shall, fix and announce at the meeting the date and time of the opening and the closing of the polls for each matter upon which the Stockholders will vote at the meeting.

SECTION 2.13 PROCEDURES FOR BRINGING BUSINESS BEFORE ANNUAL MEETINGS.
(a) Notwithstanding anything in these Bylaws to the contrary, no business shall be conducted at an annual meeting of Stockholders except in accordance with the procedures hereinafter set forth in this Section 2.13; provided, however, that nothing in this Section 2.13 shall be deemed to preclude discussion by any Stockholder of any business properly brought before any annual meeting of Stockholders in accordance with such procedures.

(b) At any annual meeting of Stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must be (i) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors, (ii) otherwise properly brought before the meeting by or at the direction of the Board of Directors or (iii) properly brought before the meeting by a Stockholder. In addition to any other applicable requirements, for business to be properly brought before an annual meeting by a Stockholder, the Stockholder must have given timely notice thereof in writing to the Secretary. To be timely, a Stockholder's notice must be delivered to or mailed and received at the principal executive office of the Corporation not less than 120 days nor more than 150 days in advance of the first anniversary of the date of the Corporation's proxy statement released to Stockholders in connection with the

6

previous year's annual meeting of Stockholders; provided, however, that if no annual meeting was held in the previous year or the date of the annual meeting of Stockholders has been changed by more than 30 calendar days from the date contemplated at the time of the previous year's proxy statement, the notice must be received by the Corporation at least 80 days prior to the date the Corporation intends to distribute its proxy statement with respect to such meeting. Any meeting of Stockholders which is adjourned and will reconvene within 30 days after the meeting date as originally noticed shall, for purposes of any Stockholder's notice contemplated by this paragraph (b), be deemed to be a continuation of the original meeting, and no business may be brought before such adjourned meeting by any Stockholder unless timely notice of such business was given to the Secretary of the Corporation for the meeting as originally noticed.

(c) Each notice given by a Stockholder as contemplated by paragraph (b) above shall set forth, as to each matter the Stockholder proposes to bring before the annual meeting, (i) the nature of the proposed business with reasonable particularity, including the exact text of any proposal to be presented for adoption and any supporting statement, which proposal and supporting statement shall not in the aggregate exceed 500 words, and his reasons for conducting such business at the annual meeting, (ii) any material interest of the Stockholder in such business, (iii) the name, principal occupation and record address of the Stockholder, (iv) the class and number of shares of the Corporation which are held of record or beneficially owned by the Stockholder, (v) the dates upon which the Stockholder acquired such shares of stock and documentary support for any claims of beneficial ownership and (vi) such other matters as may be required by the Certificate of Incorporation.

(d) The foregoing right of a Stockholder to propose business for consideration at an annual meeting of Stockholders shall be subject to such conditions, restrictions and limitations as may be imposed by the Certificate of Incorporation. Nothing in this Section 2.13 shall entitle any Stockholder to propose business for consideration at any special meeting of Stockholders.

(e) The chairman of any meeting of Stockholders shall determine whether business has been properly brought before the meeting and, if the facts so warrant, may refuse to transact any business at such meeting which has not been properly brought before the meeting.

(f) Notwithstanding any other provision of these Bylaws, the Corporation shall be under no obligation to include any Stockholder proposal in its proxy statement or otherwise present any such proposal to Stockholders at a meeting of Stockholders if the Board of Directors reasonably believes that the proponents thereof have not complied with Sections 13 and 14 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and regulations promulgated thereunder, and the Corporation shall not be required to include in its proxy statement to Stockholders any Stockholder proposal not required to be included in its proxy statement to Stockholders in accordance with the Exchange Act and such rules or regulations.

(g) Nothing in this Section 2.13 shall be deemed to affect any rights of Stockholders to request inclusion of proposals in the Corporation's proxy statement pursuant to Rule 14a-8 of the Exchange Act.

7

(h) Reference is made to Section 3.4 for procedures relating to the nomination of any person for election or reelection as a director of the Corporation.

SECTION 2.14 ACTION WITHOUT MEETING. No action shall be taken by Stockholders except at a meeting of Stockholders. Stockholders may not act by written consent in lieu of a meeting.

ARTICLE III

BOARD OF DIRECTORS -- POWERS, NUMBER, CLASSIFICATION, NOMINATIONS, RESIGNATIONS,

REMOVAL, VACANCIES AND COMPENSATION

SECTION 3.1 MANAGEMENT. The business and property of the Corporation shall be managed by and under the direction of the Board of Directors. In addition to the powers and authorities expressly conferred upon the Board of Directors by these Bylaws, the Board of Directors may exercise all the powers of the Corporation and do all such lawful acts and things as are not by law, by the Certificate of Incorporation or by these Bylaws directed or required to be exercised or done by the Stockholders.

SECTION 3.2 NUMBER AND QUALIFICATION. The number of directors shall be fixed from time to time exclusively pursuant to resolution adopted by a majority of the Whole Board, but shall consist of not less than one nor more than nine directors, subject, however, to increases above nine members as may be required in order to permit the holders of any series of preferred stock of the Corporation to elect directors under specified circumstances. The directors need not be Stockholders or residents of the State of Delaware. Each director must have attained 21 years of age.

SECTION 3.3 CLASSES OF DIRECTORS. The Board of Directors shall be divided into three classes designated as Class I, Class II and Class III, respectively, all as nearly equal in number as possible, with each director then in office receiving the classification to be determined with respect to such director by the Board of Directors.

SECTION 3.4 ELECTION; TERM OF OFFICE. (a) The initial term of office of Class I directors shall expire at the annual meeting of the Corporation's Stockholders in 2002. The initial term of office of Class II directors shall expire at the annual meeting of Stockholders in 2003. The initial term of office of Class III directors shall expire at the annual meeting of Stockholders in 2004. Subject to Sections 3.9 and 3.10, each director elected at an annual meeting of Stockholders to succeed a director whose term is expiring shall hold office until the third annual meeting of Stockholders after his election or until his successor is elected and qualified or until his earlier death, resignation or removal.

(b) Directors shall be elected by Stockholders only at annual meetings of Stockholders, except that if any such annual meeting is not held or if any director to be elected thereat is not elected, such director may be elected at any special meeting of Stockholders held for that purpose.

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(c) No decrease in the number of directors constituting the Whole Board shall have the effect of shortening the term of any incumbent director.

SECTION 3.5. ALLOCATION OF DIRECTORS AMONG CLASSES IN THE EVENT OF INCREASES OR DECREASES IN THE NUMBER OF DIRECTORS. In the event of any increase or decrease in the authorized number of directors, (i) each director then serving as such shall nevertheless continue as a director of the class of which he is a member and (ii) the newly created or eliminated directorships resulting from such increase or decrease shall be apportioned by the Board of Directors among the three classes of directors so as to ensure that no one class has more than one director more than any other class. To the extent possible, consistent with the foregoing rule, any newly created directorships shall be added to those classes whose terms of office are to expire at the latest dates following such allocation, and any newly eliminated directorships shall be subtracted from those classes whose terms of office are to expire at the earliest dates following such allocation, unless otherwise provided from time to time by resolution adopted by the Board of Directors.

SECTION 3.6 NOMINATIONS. (a) Notwithstanding anything in these Bylaws to the contrary, only persons who are nominated in accordance with the procedures hereinafter set forth in this Section 3.6 shall be eligible for election as directors of the Corporation.

(b) Nominations of persons for election to the Board of Directors at a meeting of Stockholders may be made only (i) by or at the direction of the Board of Directors or (ii) by any Stockholder entitled to vote for the election of directors at the meeting who satisfies the eligibility requirements (if any) set forth in the Certificate of Incorporation and who complies with the notice procedures set forth in this Section 3.6 and in the Certificate of Incorporation; provided, however, Stockholders may not nominate persons for election to the Board of Directors at any special meeting of Stockholders unless the business to be transacted at such special meeting, as set forth in the notice of such meeting, includes the election of directors. Nominations by Stockholders shall be made pursuant to timely notice in writing to the Secretary. To be timely, a Stockholder's notice given in the context of an annual meeting of Stockholders shall be delivered to or mailed and received at the principal executive office of the Corporation not less than 120 days nor more than 150 days in advance of the first anniversary of the date of the Corporation's proxy statement released to Stockholders in connection with the previous year's annual meeting of Stockholders; provided, however, that if no annual meeting was held in the previous year or the date of the annual meeting of Stockholders has been changed by more than 30 calendar days from the date contemplated at the time of the previous year's proxy statement, the notice must be received by the Corporation at least 80 days prior to the date the Corporation intends to distribute its proxy statement with respect to such meeting. To be timely, a Stockholder's notice given in the context of a special meeting of Stockholders shall be delivered to or mailed and received at the principal executive office of the Corporation not earlier than the ninetieth day prior to such special meeting and not later than the close of business on the later of the seventieth day prior to such special meeting or the tenth day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such special meeting. For purposes of the foregoing, "public announcement" means the disclosure in a press release reported by the

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Dow Jones News Service, Associated Press or comparable national news service, or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act. Any meeting of Stockholders which is adjourned and will reconvene within 30 days after the meeting date as originally noticed shall, for purposes of any notice contemplated by this paragraph (b), be deemed to be a continuation of the original meeting and no nominations by a Stockholder of persons to be elected directors of the Corporation may be made at any such reconvened meeting other than pursuant to a notice that was timely for the meeting on the date originally noticed.

(c) Each notice given by a Stockholder as contemplated by paragraph (b) above shall set forth the following information, in addition to any other information or matters required by the Certificate of Incorporation:

(i) as to each person whom the Stockholder proposes to nominate for election or re-election as a director, (A) the exact name of such person, (B) such person's age, principal occupation, business address and telephone number and residence address and telephone number, (C) the number of shares (if any) of each class of stock of the Corporation owned directly or indirectly by such person and (D) all other information relating to such person that is required to be disclosed in solicitations of proxies for election of directors pursuant to Regulation 14A under the Exchange Act or any successor regulation thereto (including such person's notarized written acceptance of such nomination, consent to being named in the proxy statement as a nominee and statement of intention to serve as a director if elected);

(ii) as to the Stockholder giving the notice, (A) his name and address, as they appear on the Corporation's books, (B) his principal occupation, business address and telephone number and residence address and telephone number, (C) the class and number of shares of the Corporation which are held of record or beneficially owned by him and (D) the dates upon which he acquired such shares of stock and documentary support for any claims of beneficial ownership; and

(iii) a description of all arrangements or understandings between the Stockholder giving the notice and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by such Stockholder.

At the request of the Board of Directors, any person nominated by the Board of Directors for election as a director shall furnish to the Secretary of the Corporation that information required to be set forth in a Stockholder's notice of nomination which pertains to the nominee.

(d) The foregoing right of a Stockholder to nominate a person for election or reelection to the Board of Directors shall be subject to such conditions, restrictions and limitations as may be imposed by the Certificate of Incorporation.

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(e) Nothing in this Section 3.6 shall be deemed to affect any rights of Stockholders to request inclusion of proposals in the Corporation's proxy statement pursuant to Rule 14a-8 of the Exchange Act.

(f) The chairman of a meeting of Stockholders shall have the power and duty to determine whether a nomination was made in accordance with the procedures set forth in this Section 3.6 and, if any nomination is not in compliance with this Section 3.6, to declare that such defective nomination shall be disregarded.

SECTION 3.7 RESIGNATIONS. Any director may resign at any time by giving notice, either written or by electronic communications, to the Board of Directors or the Secretary. Such resignation shall take effect at the date of receipt of such notice or at any later time specified therein. Acceptance of such resignation shall not be necessary to make it effective. When one or more directors shall resign from the Board of Directors, effective at a future date, a majority of the directors then in office, including those who have so resigned, shall have the power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall become effective, and each director so chosen shall hold office for the unexpired portion of the term of the director whose place shall be vacated and until his successor shall have been duly elected and qualified.

SECTION 3.8 REMOVAL. No director may be removed before the expiration of his term of office except for cause and then only by the affirmative vote of the holders of not less than a majority of the voting power of all outstanding Voting Stock, voting together as a single class. The Board of Directors may not remove any director, and no recommendation by the Board of Directors that a director be removed may be made to the Stockholders unless such recommendation is set forth in a resolution adopted by the affirmative vote of not less than 66-2/3% of the Whole Board.

SECTION 3.9 VACANCIES. (a) In case any vacancy shall occur on the Board of Directors because of death, resignation or removal, such vacancy may be filled by a majority of the directors remaining in office (though less than a quorum) or by the sole remaining director. The director so appointed shall serve for the unexpired term of his predecessor or until his successor is elected and qualified or until his earlier death, resignation or removal. If there are no directors then in office, an election of directors may be held in the manner provided by applicable law.

(b) Any newly-created directorship resulting from any increase in the number of directors constituting the Whole Board may be filled by a majority of the directors then in office (though less than a quorum), or by the sole remaining director. The director so appointed shall be assigned to such class of directors as such majority of directors, or the sole remaining director, as the case may be, shall determine; provided however, that newly-created directorships shall be apportioned among the classes of directors so that all classes will be as nearly equal in number as possible. Each director so appointed shall hold office until his successor is elected and qualified or until his earlier death, resignation or removal.

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(c) Except as expressly provided in these Bylaws or the Certificate of Incorporation or as otherwise provided by law, Stockholders shall not have any right to fill vacancies on the Board of Directors, including newly-created directorships.

(d) If, as a result of a disaster or emergency (as determined in good faith by the then remaining directors), it becomes impossible to ascertain whether or not vacancies exist on the Board of Directors, and a person is, or persons are, elected by the directors, who in good faith believe themselves to be a majority of the remaining directors, or the sole remaining director, to fill a vacancy or vacancies that such remaining directors in good faith believe exists, then the acts of such person or persons who are so elected as directors shall be valid and binding upon the Corporation and the Stockholders, although it may subsequently develop that at the time of the election (i) there was in fact no vacancy or vacancies existing on the Board of Directors or (ii) the directors, or the sole remaining director, who so elected such person or persons did not in fact constitute a majority of the remaining directors.

SECTION 3.10 SUBJECT TO RIGHTS OF HOLDERS OF PREFERRED STOCK. Notwithstanding the foregoing provisions of this Article III, if the resolutions of the Board of Directors creating any series of preferred stock of the Corporation entitle the holders of such preferred stock, voting separately by series, to elect additional directors under specified circumstances, then all provisions of such resolutions relating to the nomination, election, term of office, removal, filling of vacancies and other features of such directorships shall, as to such directorships, govern and control over any conflicting provisions of this Article III.

SECTION 3.11 COMPENSATION. The Board of Directors shall have the authority to fix, and from time to time to change, the compensation of directors. Each director shall be entitled to reimbursement from the Corporation for his reasonable expenses incurred in attending meetings of the Board of Directors (or any committee thereof) and meetings of the Stockholders. Nothing contained in these Bylaws shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor.

ARTICLE IV

BOARD OF DIRECTORS -- MEETINGS AND ACTIONS

SECTION 4.1 PLACE OF MEETINGS. The directors may hold their meetings and have one or more offices, and keep the books of the Corporation, in such place or places, within or without the State of Delaware, as the Board of Directors may from time to time determine.

SECTION 4.2 REGULAR MEETINGS. Regular meetings of the Board of Directors may be held without notice at such time and place, within or without the State of Delaware, as shall from time to time be determined by the Board of Directors. Except as otherwise provided by applicable law, any business may be transacted at any regular meeting of the Board of Directors.

SECTION 4.3 SPECIAL MEETINGS. Special meetings of the Board of Directors shall be called by the Secretary at the request of the Chairman of the Board (if any) or the Chief Executive Officer on not less than 24 hours' notice to each director, specifying the time, place

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and purpose of the meeting. Special meetings shall be called by the Secretary on like notice at the request, in writing or by electronic communication, of any two directors, which request shall state the purpose of the meeting.

SECTION 4.4 QUORUM; VOTING. (a) At all meetings of the Board of Directors, a majority of the Whole Board shall be necessary and sufficient to constitute a quorum for the transaction of business. If a quorum shall not be present at any meeting of the Board of Directors, the directors present thereat may adjourn the meeting from time to time (without notice other than announcement at the meeting) until a quorum shall be present. A meeting of the Board of Directors at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of directors; provided, however, that no action of the remaining directors shall constitute the act of the Board of Directors unless the action is approved by at least a majority of the required quorum for the meeting or such greater number of directors as shall be required by applicable law, by the Certificate of Incorporation or by these Bylaws.

(b) The act of a majority of the directors present at any meeting of the Board of Directors at which there is a quorum shall be the act of the Board of Directors unless, by express provision of law, the Certificate of Incorporation, or these Bylaws, a different vote is required, in which case such express provision shall govern and control.

SECTION 4.5 CONDUCT OF MEETINGS. At meetings of the Board of Directors, business shall be transacted in such order as shall be determined by the chairman of the meeting unless the Board of Directors shall otherwise determine the order of business. The Board of Directors shall keep regular minutes of its proceedings which shall be placed in the minute book of the Corporation.

SECTION 4.6 PRESUMPTION OF ASSENT. A director who is present at a meeting of the Board of Directors at which action on any corporate matter is taken shall be presumed to have assented to such action unless his dissent shall be entered in the minutes of the meeting or unless he shall file his dissent, either in writing or by electronic communication, to such action with the person acting as secretary of the meeting before the adjournment thereof or shall forward any dissent by certified or registered mail to the Secretary immediately after the adjournment of the meeting. Such right to dissent shall not apply to any director who voted in favor of such action.

SECTION 4.7 ACTION WITHOUT MEETING. Unless otherwise provided in the Certificate of Incorporation or these Bylaws, any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting if all directors consent thereto in writing. All such written consents shall be filed with the minutes of proceedings of the Board of Directors.

SECTION 4.8 TELEPHONIC MEETINGS. Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, members of the Board of Directors may participate in a meeting of the Board of Directors by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at such meeting.

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ARTICLE V

COMMITTEES OF THE BOARD OF DIRECTORS

SECTION 5.1 EXECUTIVE COMMITTEE. (a) The Board of Directors may, by resolution adopted by the affirmative vote of a majority of the Whole Board, designate an Executive Committee which, during the intervals between meetings of the Board of Directors and subject to Section 5.11, shall have and may exercise, in such manner as it shall deem to be in the best interests of the Corporation, all of the powers of the Board of Directors in the management or direction of the business and affairs of the Corporation, except as reserved to the Board of Directors or as delegated by the Board of Directors to another committee of the Board of Directors or as may be prohibited by law. The Executive Committee shall consist of not less than two directors, the exact number to be determined from time to time by the affirmative vote of a majority of the Whole Board. None of the members of the Executive Committee need be an officer of the Corporation.

(b) Meetings of the Executive Committee may be called at any time by the Chairman of the Board (if any) or the Chief Executive Officer on not less than one day's notice to each member given verbally or in writing, which notice shall specify the time, place and purpose of the meeting.

SECTION 5.2 OTHER COMMITTEES. The Board of Directors may, by resolution adopted by a majority of the Whole Board, establish additional standing or special committees of the Board of Directors, each of which shall consist of two or more directors (the exact number to be determined from time to time by the Board of Directors) and, subject to Section 5.11, shall have such powers and functions as may be delegated to it by the Board of Directors. No member of any such additional committee need be an officer of the Corporation.

SECTION 5.3 TERM. Each member of a committee of the Board of Directors shall serve as such until the earliest of (i) his death, (ii) the expiration of his term as a director, (iii) his resignation as a member of such committee or as a director and (iv) his removal as a member of such committee or as a director.

SECTION 5.4 COMMITTEE CHANGES; REMOVAL. The Board of Directors shall have the power at any time to fill vacancies in, to change the membership of, and to abolish any committee of the Board of Directors; provided, however, that no such action shall be taken in respect of the Executive Committee unless approved by a majority of the Whole Board.

SECTION 5.5 ALTERNATE MEMBERS. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. If no alternate members have been so appointed or each such alternate committee member is absent or disqualified, the committee member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any absent or disqualified member.

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SECTION 5.6 RULES AND PROCEDURES. (a) The Board of Directors may designate one member of each committee as chairman of such committee; provided, however, that, except as provided in the following sentence, no person shall be designated as chairman of the Executive Committee unless approved by a majority of the Whole Board. If a chairman is not so designated for any committee, the members thereof shall designate a chairman.

(b) Each committee shall adopt its own rules (not inconsistent with these Bylaws or with any specific direction as to the conduct of its affairs as shall have been given by the Board of Directors) governing the time, place and method of holding its meetings and the conduct of its proceedings and shall meet as provided by such rules.

(c) If a committee is comprised of an odd number of members, a quorum shall consist of a majority of that number. If a committee is comprised of an even number of members, a quorum shall consist of one-half of that number. If a committee is comprised of two members, a quorum shall consist of both members. If a quorum is not present at a meeting of any committee, a majority of the members present may adjourn the meeting from time to time, without notice other than an announcement at the meeting, until a quorum is present. The act of a majority of the members present at any meeting at which a quorum is in attendance shall be the act of a committee, unless the act of a greater number is required by law, the Certificate of Incorporation, these Bylaws or the committee's rules as adopted in Section 5.6(b).

(d) Each committee shall keep regular minutes of its meetings and report the same to the Board of Directors when requested.

(e) Unless otherwise provided by these Bylaws or by the rules adopted by any committee, notice of the time and place of each meeting of such committee shall be given to each member of such committee as provided in these Bylaws with respect to notices of special meetings of the Board of Directors.

SECTION 5.7 PRESUMPTION OF ASSENT. A member of a committee of the Board of Directors who is present at a meeting of such committee at which action on any corporate matter is taken shall be presumed to have assented to such action unless his dissent shall be entered in the minutes of the meeting or unless he shall file his dissent, in writing or by electronic communication, to such action with the person acting as secretary of the meeting before the adjournment thereof or shall forward any dissent by certified or registered mail to the Secretary of the Corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to any member who voted in favor of such action.

SECTION 5.8 ACTION WITHOUT MEETING. Unless otherwise provided in the Certificate of Incorporation or these Bylaws, any action required or permitted to be taken at any meeting of a committee of the Board of Directors may be taken without a meeting if all members of such committee consent thereto in writing or by electronic communication. All such consents shall be filed with the minutes of proceedings of such committee.

SECTION 5.9 TELEPHONIC MEETINGS. Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, members of any committee of the Board of Directors may

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participate in a meeting of such committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at such meeting.

SECTION 5.10 RESIGNATIONS. Any committee member may resign at any time by giving notice, in writing or by electronic communication, to the Board of Directors or the Secretary. Such resignation shall take effect at the date of receipt of such notice or at any later time specified therein. Acceptance of such resignation shall not be necessary to make it effective.

SECTION 5.11 LIMITATIONS ON AUTHORITY. Unless otherwise provided in the Certificate of Incorporation, no committee of the Board of Directors shall have the power or authority to (i) authorize an amendment to the Certificate of Incorporation, (ii) adopt an agreement of merger or consolidation, recommend to the Stockholders the sale, lease or exchange of all or substantially all of the Corporation's property and assets, (iii) recommend to the Stockholders a dissolution of the Corporation or a revocation of a dissolution, (iv) amend these Bylaws, (v) declare a dividend or other distribution on, or authorize the issuance, purchase or redemption of, securities of the Corporation, (vi) elect any officer of the Corporation or (vii) approve any material transaction between the Corporation and one or more of its directors, officers or employees or between the Corporation and any corporation, partnership, association or other organization in which one or more of its directors, officers or employees are directors or officers or have a financial interest; provided, however, that the Executive Committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares of preferred stock adopted by the Board of Directors as provided in the Certificate of Incorporation, fix the designations and any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the Corporation or the conversion into, or the exchange of such shares for, shares of any other class or classes of stock of the Corporation or fix the number of shares of any series of stock or authorize the decrease or increase of the shares of any such series.

ARTICLE VI

OFFICERS

SECTION 6.1 NUMBER; TITLES; QUALIFICATION; TERM OF OFFICE. (a) The officers of the Corporation shall be a Chief Executive Officer, a President, a Chief Scientific Officer, a Secretary and a Treasurer. The Board of Directors from time to time may also elect such other officers (including, without limitation, a Chairman of the Board, Chief Financial Officer and one or more Vice Presidents) as the Board of Directors deems appropriate or necessary. Each officer shall hold office until his successor shall have been duly elected and shall have been qualified or until his earlier death, resignation or removal. Any two or more offices may be held by the same person, but no officer shall execute any instrument in more than one capacity if such instrument is required by law or any act of the Corporation to be executed or countersigned by two or more officers. None of the officers need be a Stockholder or a resident of the State of Delaware. No officer (other than the Chairman of the Board, if any) need be a director.

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(b) The Board of Directors may delegate to the Chairman of the Board (if any) and/or the Chief Executive Officer the power to appoint one or more employees of the Corporation as divisional or departmental vice presidents and fix their duties as such appointees. However, no such divisional or departmental vice presidents shall be considered an officer of the Corporation, the officers of the Corporation being limited to those officers elected by the Board of Directors.

SECTION 6.2 ELECTION. At the first meeting of the Board of Directors after each annual meeting of Stockholders at which a quorum shall be present, the Board of Directors shall elect the officers of the Corporation.

SECTION 6.3 REMOVAL. Any officer may be removed, either with or without cause, by the Board of Directors; provided, however, that (i) the Chairman of the Board (if any) and the Chief Executive Officer may be removed only by the affirmative vote of a majority of the Whole Board and (ii) the removal of any officer shall be without prejudice to the contract rights, if any, of such officer. Election or appointment of an officer shall not of itself create contract rights.

SECTION 6.4 RESIGNATIONS. Any officer may resign at any time by giving notice, in writing or by electronic communication, to the Board of Directors, the Chairman of the Board (if any) or the Chief Executive Officer. Any such resignation shall take effect on receipt of such notice or at any later time specified therein. Unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. Any such resignation is without prejudice to the rights, if any, of the Corporation under any contract to which the officer is a party.

SECTION 6.5 VACANCIES. If a vacancy shall occur in any office because of death, resignation, removal, disqualification or any other cause, the Board of Directors may elect or appoint a successor to fill such vacancy for the remainder of the term.

SECTION 6.6 SALARIES. The salaries of all officers of the Corporation shall be fixed by the Board of Directors or pursuant to its direction, and no officer shall be prevented from receiving such salary by reason of the fact that he is also a director of the Corporation.

SECTION 6.7 CHAIRMAN OF THE BOARD. The Chairman of the Board (if any) shall have all powers and shall perform all duties incident to the office of Chairman of the Board and such other powers and duties as may be prescribed by the Board of Directors or these Bylaws. The Chairman of the Board, if present, shall preside at all meetings of the Board of Directors and of the Stockholders. During the time of any vacancy in the office of Chief Executive Officer or in the event of the absence or disability of the Chief Executive Officer, the Chairman of the Board shall have the duties and powers of the Chief Executive Officer unless otherwise determined by the Board of Directors. In no event shall any third party having dealings with the Corporation be bound to inquire as to any facts required by the terms of this Section 6.7 for the exercise by the Chairman of the Board of the powers of the Chief Executive Officer.

SECTION 6.8 CHIEF EXECUTIVE OFFICER. (a) The Chief Executive Officer shall be the chief executive officer of the Corporation and, subject to the supervision, direction and control of

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the Board of Directors, shall have general supervision, direction and control of the business and officers of the Corporation with all such powers as may be reasonably incident to such responsibilities. He shall have the general powers and duties of management usually vested in the chief executive officer of a corporation.

(b) During the time of any vacancy in the office of the Chairman of the Board or in the event of the absence or disability of the Chairman of the Board, the Chief Executive Officer shall have the duties and powers of the Chairman of the Board unless otherwise determined by the Board of Directors. During the time of any vacancy in the office of President or in the event of the absence or disability of the President, the Chief Executive Officer shall have the duties and powers of the President unless otherwise determined by the Board of Directors. In no event shall any third party having any dealings with the Corporation be bound to inquire as to any facts required by the terms of this
Section 6.8 for the exercise by the Chief Executive Officer of the powers of the Chairman of the Board or the President.

SECTION 6.9 PRESIDENT. (a) The President shall be the chief operating officer of the Corporation and, subject to the supervision, direction and control of the Chief Executive Officer and the Board of Directors, shall manage the day-to-day operations of the Corporation. He shall have the general powers and duties of management usually vested in the chief operating officer of a corporation and such other powers and duties as may be assigned to him by the Board of Directors, the Chief Executive Officer or these Bylaws.

(b) During the time of any vacancy in the offices of the Chairman of the Board and Chief Executive Officer or in the event of the absence or disability of the Chairman of the Board and the Chief Executive Officer, the President shall have the duties and powers of the Chief Executive Officer unless otherwise determined by the Board of Directors. In no event shall any third party having any dealings with the Corporation be bound to inquire as to any facts required by the terms of this Section 6.9 for the exercise by the President of the powers the Chief Executive Officer.

SECTION 6.10 CHIEF SCIENTIFIC OFFICER. The Chief Scientific Officer shall be the chief scientific officer of the Corporation and, subject to the supervision, direction and control of the Board of Directors and President, shall have general supervision, direction and control of the Corporation's scientific endeavors with all such powers as may be reasonably incident to such responsibilities. He shall have the general powers and duties of management usually vested in the chief scientific officer of a corporation.

SECTION 6.11 VICE PRESIDENTS. In the absence or disability of the President, the Vice Presidents, if any, in order of their rank as fixed by the Board of Directors, or if not ranked, the Vice President designated by the President, shall perform all the duties of the President as chief operating officer of the Corporation, and when so acting shall have all the powers of, and be subject to all the restrictions upon, the President as chief operating officer of the Corporation. In no event shall any third party having dealings with the Corporation be bound to inquire as to any facts required by the terms of this Section 6.11 for the exercise by any Vice President of the powers of the President as chief operating officer of the Corporation. The Vice Presidents shall

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have such other powers and perform such other duties as from time to time may be assigned to them by the Board of Directors, the Chief Executive Officer or the President.

SECTION 6.12 TREASURER. The Treasurer shall (i) have custody of the Corporation's funds and securities, (ii) keep full and accurate account of receipts and disbursements, (iii) deposit all monies and valuable effects in the name and to the credit of the Corporation in such depository or depositories as may be designated by the Board of Directors and (iv) perform such other duties as may be prescribed by the Board of Directors or the Chief Executive Officer.

SECTION 6.13 ASSISTANT TREASURERS. Each Assistant Treasurer shall have such powers and duties as may be assigned to him by the Board of Directors, the Chief Executive Officer or the President. In case of the absence or disability of the Treasurer, the Assistant Treasurer designated by the President (or, in the absence of such designation, the Treasurer) shall perform the duties and exercise the powers of the Treasurer during the period of such absence or disability. In no event shall any third party having dealings with the Corporation be bound to inquire as to any facts required by the terms of this
Section 6.13 for the exercise by any Assistant Treasurer of the powers of the Treasurer under these Bylaws.

SECTION 6.14 SECRETARY. (a) The Secretary shall keep or cause to be kept, at the principal office of the Corporation or such other place as the Board of Directors may order, a book of minutes of all meetings and actions of the Board of Directors, committees of the Board of Directors and Stockholders, with the time and place of holding, whether regular or special, and, if special, how authorized, the notice thereof given, the names of those present at meetings of the Board of Directors and committees thereof, the number of shares present or represented at Stockholders' meetings and the proceedings thereof.

(b) The Secretary shall keep, or cause to be kept, at the principal office of the Corporation or at the office of the Corporation's transfer agent or registrar, a share register, or a duplicate share register, showing the names of all Stockholders and their addresses, the number and classes of shares held by each, the number and date of certificates issued for the same and the number and date of cancellation of every certificate surrendered for cancellation.

(c) The Secretary shall give, or cause to be given, notice of all meetings of the Stockholders and of the Board of Directors required by these Bylaws or by law to be given, and he shall keep the seal of the Corporation, if one be adopted, in safe custody, and shall have such other powers and perform such other duties as may be prescribed by the Board of Directors, the Chairman of the Board (if any), the Chief Executive Officer, the President or these Bylaws.

(d) The Secretary may affix the seal of the Corporation, if one be adopted, to contracts of the Corporation.

SECTION 6.15 ASSISTANT SECRETARIES. Each Assistant Secretary shall have such powers and duties as may be assigned to him by the Board of Directors, the Chairman of the Board (if any), the Chief Executive Officer or the President. In case of the absence or disability of the Secretary, the Assistant Secretary designated by the President (or, in the absence of such designation, the Secretary) shall perform the duties and exercise the powers of the Secretary

19

during the period of such absence or disability. In no event shall any third party having dealings with the Corporation be bound to inquire as to any facts required by the terms of this Section 6.15 for the exercise by any Assistant Secretary of the powers of the Secretary under these Bylaws.

ARTICLE VII

STOCK

SECTION 7.1 CERTIFICATES. Certificates for shares of stock of the Corporation shall be in such form as shall be approved by the Board of Directors. The certificates shall be signed (i) by the Chairman of the Board (if any), the Chief Executive Officer, the President or a Vice President and (ii) by the Secretary, an Assistant Secretary, the Treasurer or an Assistant Treasurer.

SECTION 7.2 SIGNATURES ON CERTIFICATES. Any or all of the signatures on the certificates may be a facsimile and the seal of the Corporation (or a facsimile thereof), if one has been adopted, may be affixed thereto. In case any officer, transfer agent or registrar who has signed, or whose facsimile signature has been placed upon, a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, such certificate may be issued by the Corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue.

SECTION 7.3 LEGENDS. The Board of Directors shall have the power and authority to provide that certificates representing shares of stock of the Corporation bear such legends and statements (including, without limitation, statements relating to the powers, designations, preferences and relative, participating, optional or other special rights and qualifications, limitations or restrictions of the shares represented by such certificates) as the Board of Directors deems appropriate in connection with the requirements of federal or state securities laws or other applicable laws.

SECTION 7.4 LOST, STOLEN OR DESTROYED CERTIFICATES. The Board of Directors, the Secretary and the Treasurer each may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Corporation alleged to have been lost, stolen or destroyed, in each case upon the making of an affidavit of that fact by the owner of such certificate, or his legal representative. When authorizing such issue of a new certificate or certificates, the Board of Directors, the Secretary or the Treasurer, as the case may be, may, in its or his discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as the Board of Directors, the Secretary or the Treasurer, as the case may be, shall require and/or to furnish the Corporation a bond in such form and substance and with such surety as the Board of Directors, the Secretary or the Treasurer, as the case may be, may direct as indemnity against any claim, or expense resulting from any claim, that may be made against the Corporation with respect to the certificate alleged to have been lost, stolen or destroyed.

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SECTION 7.5 TRANSFERS OF SHARES. Shares of stock of the Corporation shall be transferable only on the books of the Corporation by the holders thereof in person or by their duly authorized attorneys or legal representatives. Upon surrender to the Corporation, or the transfer agent of the Corporation, of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, the Corporation or its transfer agent shall issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon the Corporation's books.

SECTION 7.6 REGISTERED STOCKHOLDERS. The Corporation shall be entitled to treat the holder of record of any share of stock of the Corporation as the holder in fact thereof and, accordingly, shall not be bound to recognize any equitable or other claim or interest in such share on the part of any other person, whether or not the Corporation shall have express or other notice thereof, except as expressly provided by the laws of the State of Delaware.

SECTION 7.7 REGULATIONS. The Board of Directors shall have the power and authority to make all such rules and regulations as they may deem expedient concerning the issue, transfer and registration or the replacement of certificates for shares of stock of the Corporation. The Board of Directors may
(i) appoint and remove transfer agents and registrars of transfers and (ii) require all stock certificates to bear the signature of any such transfer agent and/or any such registrar of transfers.

SECTION 7.8 STOCK OPTIONS, WARRANTS, ETC. Unless otherwise expressly prohibited in the resolutions of the Board of Directors creating any class or series of preferred stock of the Corporation, the Board of Directors shall have the power and authority to create and issue (whether or not in connection with the issue and sale of any stock or other securities of the Corporation) warrants, rights or options entitling the holders thereof to purchase from the Corporation any shares of capital stock of the Corporation of any class or series or any other securities of the Corporation for such consideration and to such persons, firms or corporations as the Board of Directors, in its sole discretion, may determine, setting aside from the authorized but unissued stock of the Corporation the requisite number of shares for issuance upon the exercise of such warrants, rights or options. Such warrants, rights and options shall be evidenced by one or more instruments approved by the Board of Directors. The Board of Directors shall be empowered to set the exercise price, duration, time for exercise and other terms of such warrants, rights and operations; provided, however, that the consideration to be received for any shares of capital stock subject thereto shall not be less than the par value thereof.

ARTICLE VIII

INDEMNIFICATION

SECTION 8.1 THIRD PARTY ACTIONS. The Corporation (i) shall, to the maximum extent permitted from time to time under the laws of the State of Delaware, indemnify every person who is or was a party or is or was threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation), by reason of the fact that such person is or was a director or officer of the Corporation or any of its direct or indirect subsidiaries or is

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or was serving at the request of the Corporation or any of its direct or indirect subsidiaries as a director, officer or fiduciary of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, and (ii) may, to the maximum extent permitted from time to time under the laws of the State of Delaware, indemnify every person who is or was a party or is or was threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation), by reason of the fact that such person is or was an employee or agent of the Corporation or any of its direct or indirect subsidiaries or is or was serving at the request of the Corporation or any of its direct or indirect subsidiaries as an employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, against expenses (including counsel fees), judgments, fines and amounts paid or owed in settlement, actually and reasonably incurred by such person or rendered or levied against such person in connection with such action, suit or proceeding, if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent shall not, in itself, create a presumption that the person did not act in good faith and in a manner which such person reasonably believed to be in or not opposed to the best interests of the Corporation or, with respect to any criminal action or proceeding, that the person had reasonable cause to believe that his conduct was unlawful. Any person seeking indemnification under this Section 8.1 shall be deemed to have met the standard of conduct required for such indemnification unless the contrary is established.

SECTION 8.2 ACTIONS BY OR IN THE RIGHT OF THE CORPORATION. The Corporation (i) shall, to the maximum extent permitted from time to time under the laws of the State of Delaware, indemnify every person who is or was a party or who is or was threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that such person is or was a director or officer of the Corporation or any of its direct or indirect subsidiaries or is or was serving at the request of the Corporation or any of its direct or indirect subsidiaries as a director, officer or fiduciary of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, and (ii) may, to the maximum extent permitted from time to time under the laws of the State of Delaware, indemnify every person who is or was a party or who is or was threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that such person is or was an employee or agent of the Corporation or any of its direct or indirect subsidiaries or is or was serving at the request of the Corporation or any of its direct or indirect subsidiaries as an employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, against expenses (including counsel fees) actually and reasonably incurred by such person in connection with the defense or settlement or such action or suit if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Corporation; provided, however, that no indemnification shall be made with respect to any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that, despite the adjudication of liability

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but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnification.

SECTION 8.3 EXPENSES. Expenses incurred by a director or officer of the Corporation or any of its direct or indirect subsidiaries in defending a civil or criminal action, suit or proceeding shall be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the Corporation as authorized in this Article VIII. Such expenses incurred by other employees and agents of the Corporation and other persons eligible for indemnification under this Article VIII may be paid upon such terms and conditions, if any, as the Board of Directors deems appropriate.

SECTION 8.4 NON-EXCLUSIVITY. The indemnification and advancement of expenses provided by, or granted pursuant to, this Article VIII shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any provision of law, the Certificate of Incorporation, the certificate of incorporation or bylaws or other governing documents of any direct or indirect subsidiary of the Corporation, under any agreement, vote of Stockholders or disinterested directors or under any policy or policies of insurance maintained by the Corporation on behalf of any person or otherwise, both as to action in his official capacity and as to action in another capacity while holding any of the positions or having any of the relationships referred to in this Article VIII.

SECTION 8.5 ENFORCEABILITY. The provisions of this Article VIII (i) are for the benefit of, and may be enforced directly by, each director or officer of the Corporation the same as if set forth in their entirety in a written instrument executed and delivered by the Corporation and such director or officer and (ii) constitute a continuing offer to all present and future directors and officers of the Corporation. The Corporation, by its adoption of these Bylaws, (A) acknowledges and agrees that each present and future director and officer of the Corporation has relied upon and will continue to rely upon the provisions of this Article VIII in becoming, and serving as, a director or officer of the Corporation or, if requested by the Corporation, a director, officer or fiduciary or the like of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, (B) waives reliance upon, and all notices of acceptance of, such provisions by such directors and officers and (C) acknowledges and agrees that no present or future director or officer of the Corporation shall be prejudiced in his right to enforce directly the provisions of this Article VIII in accordance with their terms by any act or failure to act on the part of the Corporation.

SECTION 8.6 INSURANCE. The Board of Directors may authorize, by a vote of the majority of the Whole Board, the Corporation to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such liability under the provisions of this Article VIII.

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SECTION 8.7 SURVIVAL. The provisions of this Article VIII shall continue as to any person who has ceased to be a director or officer of the Corporation and shall inure to the benefit of the estate, executors, administrators, heirs, legatees and devisees of any person entitled to indemnification under this Article VIII.

SECTION 8.8 AMENDMENT. No amendment, modification or repeal of this Article VIII or any provision hereof shall in any manner terminate, reduce or impair the right of any past, present or future director or officer of the Corporation to be indemnified by the Corporation, nor the obligation of the Corporation to indemnify any such director or officer, under and in accordance with the provisions of this Article VIII as in effect immediately prior to such amendment, modification or repeal with respect to claims arising, in whole or in part, from a state of facts extant on the date of, or relating to matters occurring prior to, such amendment, modification or repeal, regardless of when such claims may arise or be asserted.

SECTION 8.9 DEFINITIONS. For purposes of this Article VIII, (i) reference to any person shall include the estate, executors, administrators, heirs, legatees and devisees of such person, (ii) "employee benefit plan" and "fiduciary" shall be deemed to include, but not be limited to, the meaning set forth in Section 1002, subsections 3(3) and 21(A), respectively, of the Employee Retirement Income Security Act of 1974, as amended, (iii) references to the judgments, fines and amounts paid or owed in settlement or rendered or levied shall be deemed to encompass and include excise taxes required to be paid pursuant to applicable law in respect of any transaction involving an employee benefit plan and (iv) references to the Corporation shall be deemed to include any predecessor corporation or entity and any constituent corporation or entity absorbed in a merger, consolidation or other reorganization of or by the Corporation which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, employees, agents and fiduciaries so that any person who was a director, officer, employee, agent or fiduciary of such predecessor or constituent corporation or entity, or served at the request of such predecessor or constituent corporation or entity as a director, officer, employee, agent or fiduciary of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, shall stand in the same position under the provisions of this Article VIII with respect to the Corporation as such person would have with respect to such predecessor or constituent corporation or entity if its separate existence had continued.

ARTICLE IX

NOTICES AND WAIVERS

SECTION 9.1 METHODS OF GIVING NOTICES. Whenever, by applicable law, the Certificate of Incorporation or these Bylaws, notice is required to be given to any Stockholder, any director or any member of a committee of the Board of Directors and no provision is made as to how such notice shall be given, personal notice shall not be required and such notice may be given (i) in writing, by mail, postage prepaid, addressed to such Stockholder, director or committee member at his address as it appears on the books or (in the case of a Stockholder) the stock transfer records of the Corporation or (ii) by any other method permitted by law (including, but not limited to, overnight courier service, telegram, telex or telecopier). Any notice required or

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permitted to be given by mail shall be deemed to be delivered and given at the time when the same is deposited in the United States mail as aforesaid. Any notice required or permitted to be given by overnight courier service shall be deemed to be delivered and given one business day after delivery to such service with all charges prepaid and addressed as aforesaid. Any notice required or permitted to be given by telegram, telex or telecopy shall be deemed to be delivered and given at the time transmitted with all charges prepaid and addressed as aforesaid.

SECTION 9.2 WAIVER OF NOTICE. Whenever any notice is required to be given to any Stockholder, director or member of a committee of the Board of Directors by applicable law, the Certificate of Incorporation, or these Bylaws, a waiver thereof in writing signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be equivalent to the giving of such notice. Attendance of a Stockholder (whether in person or by proxy), director or committee member at a meeting shall constitute a waiver of notice of such meeting, except where such person attends for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened.

ARTICLE X

MISCELLANEOUS PROVISIONS

SECTION 10.1 DIVIDENDS. Subject to applicable law and the provisions of the Certificate of Incorporation, dividends may be declared by the Board of Directors at any meeting and may be paid in cash, in property or in shares of the Corporation's capital stock. Any such declaration shall be at the discretion of the Board of Directors. A director shall be fully protected in relying in good faith upon the books of account of the Corporation or statements prepared by any of its officers as to the value and amount of the assets, liabilities or net profits of the Corporation or any other facts pertinent to the existence and amount of surplus or other funds from which dividends might properly be declared.

SECTION 10.2 RESERVES. There may be created by the Board of Directors, out of funds of the Corporation legally available therefor, such reserve or reserves as the Board of Directors from time to time, in its absolute discretion, considers proper to provide for contingencies, to equalize dividends or to repair or maintain any property of the Corporation, or for such other purpose as the Board of Directors shall consider beneficial to the Corporation, and the Board of Directors may thereafter modify or abolish any such reserve in its absolute discretion.

SECTION 10.3 CHECKS. All checks, drafts or other orders for payment of money, notes or other evidences of indebtedness, issued in the name of or payable to the Corporation shall be signed by such officer or officers or by such employees or agents of the Corporation as may be designated from time to time by the Board of Directors.

SECTION 10.4 CORPORATE CONTRACTS AND INSTRUMENTS. Subject always to the specific directions of the Board of Directors, the Chairman of the Board (if any), the President, any Vice President, the Secretary or the Treasurer may enter into contracts and execute instruments in the name and on behalf of the Corporation. The Board of Directors and, subject to the specific directions of the Board of Directors, the Chairman of the Board (if any) or the President may

25

authorize one or more officers, employees or agents of the Corporation to enter into any contract or execute any instrument in the name of and on behalf of the Corporation, and such authority may be general or confined to specific instances.

SECTION 10.5 ATTESTATION. With respect to any deed, deed of trust, mortgage or other instrument executed by the Corporation through its duly authorized officer or officers, the attestation to such execution by the Secretary or an Assistant Secretary of the Corporation shall not be necessary to constitute such deed, deed of trust, mortgage or other instrument a valid and binding obligation of the Corporation unless the resolutions, if any, of the Board of Directors authorizing such execution expressly state that such attestation is necessary.

SECTION 10.6 SECURITIES OF OTHER CORPORATIONS. The Chairman of the
Board, the Chief Executive Officer, the President or any Vice President of the Corporation shall have the power and authority to transfer, endorse for transfer, vote, consent or take any other action with respect to any securities of another issuer which may be held or owned by the Corporation and to make, execute and deliver any waiver, proxy or consent with respect to any such securities.

SECTION 10.7 FISCAL YEAR. The fiscal year of the Corporation shall be January 1 through December 31, unless otherwise fixed by the Board of Directors.

SECTION 10.8 SEAL. The seal of the Corporation, if any, shall be such as from time to time may be approved by the Board of Directors.

SECTION 10.9 INVALID PROVISIONS. If any part of these Bylaws shall be invalid or inoperative for any reason, the remaining parts, so far as is possible and reasonable, shall remain valid and operative.

SECTION 10.10 HEADINGS. The headings used in these Bylaws have been inserted for administrative convenience only and shall not limit or otherwise affect any of the provisions of these Bylaws.

SECTION 10.11 REFERENCES/GENDER/NUMBER. Whenever in these Bylaws the singular number is used, the same shall include the plural where appropriate. Words of any gender used in these Bylaws shall include the other gender where appropriate. In these Bylaws, unless a contrary intention appears, all references to Articles and Sections shall be deemed to be references to the Articles and Sections of these Bylaws.

SECTION 10.12 AMENDMENTS. These Bylaws may be altered, amended or repealed or new bylaws may be adopted by the affirmative vote of a majority of the Whole Board; provided, however, that no such action shall be taken at any special meeting of the Board of Directors unless notice of such action is contained in the notice of such special meeting. These Bylaws may not be altered, amended or rescinded, nor may new bylaws be adopted, by the Stockholders except by the affirmative vote of the holders of not less than 66-2/3% of the voting power of all outstanding Voting Stock, voting together as a single class. Each alteration, amendment or repeal of these Bylaws shall be subject in all respects to Section 8.7.

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CERTIFICATE OF SECRETARY

I, C. William Schneider, the duly appointed Secretary of Northwest Biotherapeutics, Inc., hereby certify that the foregoing Bylaws constitute the bylaws of Northwest Biotherapeutics, Inc. as adopted by the Board of Directors on June 21, 2001.


C. William Schneider, Secretary

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EXHIBIT 10.1

PSMA SUBLICENSE AGREEMENT

BY AND BETWEEN

CYTOGEN CORPORATION

AND

NORTHWEST BIOTHERAPEUTICS INC.

DATED

AS OF

AUGUST 28, 2000

As Filed with the Securities and Exchange Commission on August 10, 2001.
*INFORMATION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.


PSMA SUBLICENSE AGREEMENT

Dated as of August 28, 2000

CYTOGEN CORPORATION ("Cytogen"), a Delaware corporation, having its place of business at 600 College Road East, Princeton, New Jersey 08540 and NORTHWEST BIOTHERAPEUTICS INC. ("NWBio"), a Delaware corporation, having its principal place of business at 2203 Airport Way South, Suite 200, Seattle, Washington 98134, hereby agree as follows:

1. BASIS FOR AGREEMENT. The following chronology and purposes form the basis for the agreements hereunder:

1.1 MISROCK'S SPONSORSHIP OF RESEARCH ON MOAB 7E11. At the request of Dr. Gerald P. Murphy, then Director of Roswell Park Memorial Institute, Buffalo, New York, S. Leslie Misrock ("Misrock"), who subsequently founded Prostagen Inc. ("Prostagen"), financially sponsored the research of Dr. Julius S. Horoszewicz which led to the discovery of MoAb 7E11, one subclone of which is MoAb 7E11-C5 and another subclone is 7E11-C5.3 which is denominated by Cytogen as CYT-3511. The specific antibody utilized by Drs. Horoszewicz and Murphy is described in Anticancer Research, 7:927-936 (1987), entitled "Monoclonal Antibodies to a New Antigenic Marker in Epithelial Prostatic Cells and Serum of Prostatic Cancer Patients." Additionally, Misrock was responsible for Cytogen's acquisition of Horoszewicz patent rights covering MoAb 7E11 and its subclones.

1.2 SKICR'S USE OF MOAB 7E11-C5 TO ISOLATE PSMA GENE AND PROTEIN. Cytogen furnished MoAb 7E11-C5 to Drs. Ron S. Israeli, Warren D. Heston and William R. Fair at the Sloan-Kettering Institute For Cancer Research ("SKICR"), New York, New York, where these investigators isolated and characterized the gene for prostate specific membrane antigen and subsequently expressed and characterized the protein PSMA (as defined in Section 2) encoded by such gene. The research by Drs. Israeli, Heston and Fair on the isolation and characterization of the PSMA gene and protein is described in Cancer Research, 53:227-230 (1993), entitled "Cloning of a Complementary DNA Encoding a Prostate-Specific Membrane Antigen."

1.3 SKICR FILES FOR PATENT RIGHTS COVERING ITS PSMA DEVELOPMENTS. With funding from Cytogen, SKICR filed a series of United States and foreign counterpart patent applications on its PSMA developments in the names of Drs. Israeli, Heston and Fair, on one of which applications United States Patent No. 5,538,866 was granted on July 23, 1996. The `866 patent, together with all United States patent applications and foreign counterparts filed by or on behalf of SKICR covering its PSMA developments.

1.4 CYTOGEN OBTAINS AND EXERCISES OPTION TO LICENSE SKICR PATENT RIGHTS. Pursuant to the Option and License Agreement ("SKICR Agreement") effective July 1, 1993, by and between Cytogen and SKICR, Cytogen was granted the exclusive option to obtain an exclusive worldwide license to technology and patent rights relating to SKICR's


developments relating to PSMA for a term commencing July 1, 1993 and extending until six (6) months after the issuance of the first United States patent on this technology. Since the `866 patent was granted July 23, 1996, Cytogen's option extended until January 23, 1997. Cytogen has advised and represented to NWBio that it had exercised its option under the SKICR Agreement prior to December 9, 1996.

1.5 CYTOGEN SUBLICENSES PROSTAGEN. Pursuant to the PSMA Therapeutics Sublicense Agreement (as defined in Section 2) Cytogen granted to Prostagen the exclusive right and sublicense throughout the world, with the right to grant sublicenses to others, under the SKICR Patent Rights, inter alia,

(a) to develop therapeutic products utilizing PSMA, prostate specific membrane peptides ("PSMP") containing any peptide sequence appearing within the PSMA protein, mimetopes of such peptides, DNA and/or RNA of PSMA and/or PSMP and/or mimetopes thereof, for the immunotherapeutic treatment of prostate cancer; and

(b) to produce, process or otherwise manufacture or have produced, processed or otherwise manufactured, to use or have used, to sell or have sold, any products for immunotherapy of prostate cancer (1) that contain PSMA, PSMP, mimetopes thereof, the DNA and/or RNA corresponding to such protein or peptides; (2) that are either (i) covered in whole or in part by a Valid Claim in the country in which such product is made, used or sold; or (ii) manufactured by using a process that is covered in whole or in part by a Valid Claim in the country in which such process is used; or (iii) used according to a method which is covered in whole or in part by a Valid Claim in the country in which such method is used; and (3) that embody or are made in accordance with any of the SKICR Patent Rights.

1.6 TERMINATION OF PRIOR AGREEMENTS. Prostagen and NWBio entered into a PSMA Therapeutic Product Sublicense Agreement, dated July 16, 1997 and Prostagen and Northwest Clinical LLC entered into a PSMA Production Sublicense Agreement, dated July 16, 1997, both of those agreements and the PSMA Therapeutic Sublicense Agreement (as defined in Section 2) have been terminated simultaneously with the execution of this Agreement.

2. DEFINITIONS. For the purposes of this Agreement, the following terms, whether used in the singular or plural, shall have the following meanings.

2.1 AFFILIATE. The term "Affiliate" shall mean any person, corporation, company, partnership, joint venture and/or firm which controls, is controlled by, or is under common control with, a party. For purposes of this definition, "control" shall mean (a) in the case of corporate entities, direct or indirect ownership of at least fifty percent (50%) or, if less than fifty percent (50%), the maximum percentage, as allowed by applicable law, of the stock or participating shares entitled to vote for the election of directors; and (b) in the case of noncorporate entities, direct or indirect ownership of at least fifty (50%) or, if less than fifty percent (50%), the maximum percentage, as allowed by applicable law, of the equity interest with the power to direct the management and policies of such noncorporate entity.

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2.2 COMMERCIAL SALE. The term "Commercial Sale" shall mean the commercial sale of Licensed Products by NWBio.

2.3 CONTRACT PERIOD. The term "Contract Period" shall mean the period beginning with the Effective Date of the Agreement and ending upon the date on which this Agreement shall expire or terminate in accordance with the provisions of Section 8 hereof.

2.4 EFFECTIVE DATE. The term "Effective Date of this Agreement" shall mean July 18, 2000.

2.5 FDA. The term "FDA" shall mean the United States Food and Drug Administration.

2.6 IMMUNOTHERAPY. The term "immunotherapy" shall mean and collectively include those ex vivo therapeutic interventions which result in the activation and/or expression of effector cell function by B lymphocytes, T lymphocytes, NK cells, macrophages, expression of mucosal immunity, and/or passive immunity by which immune agents are generated ex vivo and transferred to a patient.

2.7 IND. The term "IND" shall mean an application for investigation of a new drug that has been submitted to the FDA pursuant to the Federal Food Drug and Cosmetic Act, as amended [Title 21, United States Code] and the regulations promulgated thereunder, or an equivalent application to another Regulatory Authority.

2.8 LICENSED PROCESSES. The term "Licensed Processes" shall mean any process for the immunotherapy of prostate cancer in patients by * including, but not limited to *, ex vivo, with a composition including PSMA and/or PSMP, and/or the mimetopes of PSMA or PSMP, and * , the use or practice of which would, but for the licenses granted herein, infringe one or more Valid Claims of an issued patent or pending patent application included in SKICR Patent Rights.

2.9 PSMA. The term "PSMA" shall mean prostate specific membrane antigen and shall include the PSMA protein described in Cancer Research, 53:227-230 (1993).

2.10 PSMP. The term "PSMP" shall mean prostate specific membrane peptides which shall include any peptide sequence appearing within the PSMA protein.

2.11 LICENSED PRODUCTS. The term "Licensed Products" shall mean products for the immunotherapy of prostate cancer which are produced by *, with a composition including PSMA and/or PSMP, and/or the mimetopes of PSMA or PSMP, and *, the manufacture, use and/or sale of which would, but

As Filed with the Securities and Exchange Commission on August 10, 2001.
*INFORMATION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

3

for the licenses granted herein, infringe one or more Valid Claims of an issued patent or pending patent application included in SKICR Patent Rights.

2.12 MAJOR MARKET. The term "Major Market" shall mean any of the United States, United Kingdom, France, Germany, Italy, Spain, Japan or Canada.

2.13 MOAB 7E11. The term "MoAb 7E11 shall mean and collectively include that certain antibody to PSMA known as MoAb 7E11-C5, which such antibody is claimed in United States Patent No 5,162,504, granted November 10, 1992, and entitled "Monoclonal Antibodies to a New Antigenic Marker in Epithelial Prostatic Cells and Serum of Prostate Cancer Patients." One subclone of MoAb 7E11 is MoAb 7E11-C5.3.

2.14 NDA. The term "NDA" shall mean either a New Drug Application and/or a Pre-Market Approval for a Licensed Product that has been submitted to the FDA pursuant to the Federal Food, Drug and Cosmetic Act, as amended [Title 21, United States Code] and the regulations promulgated thereunder or an equivalent application to another Regulatory Authority.

2.15 PHASE III CLINICAL TRIAL. The term "Phase III Clinical Trial" shall mean a pivotal random clinical trial having a sufficient number of patients to provide statistically significant results regarding safety and efficacy of a particular Licensed Product in the treatment of prostate cancer. The Phase III Clinical Trial shall be conducted pursuant to the requirements of the Federal Drug, Food and Cosmetic Act, as amended [Title 21, United States Code] and regulations promulgated thereunder, and shall commence on the first day the first patient is treated under the protocol of such Phase III Clinical Trial.

2.16 PSMA THERAPEUTICS SUBLICENSE AGREEMENT. The term "PSMA
Therapeutics Sublicense Agreement" shall mean the PSMA Therapeutics Sublicense Agreement, dated December 9, 1996, by and between Cytogen and Prostagen, and all amendments thereto.

2.17 REGULATORY APPROVAL. The term "Regulatory Approval" shall mean the approval of an NDA by a Regulatory Authority granting the rights to manufacture, market and import a therapeutic agent for use by human patients.

2.18 REGULATORY AUTHORITY. The term "Regulatory Authority" shall mean the applicable Government authority (which, in the United States, is the FDA) which is responsible for approval for manufacturing, marketing or importing a therapeutic agent in a particular country for human use.

2.19 SKICR. The term "SKICR" shall mean the Sloan-Kettering Institute for Cancer Research, a not-for-profit New York corporation, having its principal place of business at 1275 York Avenue, New York, New York 10021-6007.

2.20 SKICR AGREEMENT. The "SKICR Agreement" shall mean the Option and License Agreement effective July 1, 1993, by and between SKICR and Cytogen, and all

4

amendments thereto. The SKICR Agreement is annexed to be PSMA Therapeutics Sublicense Agreement as Exhibit A.

2.21 SKICR PATENT RIGHTS. The "SKICR Patent Rights" shall mean and collectively include

(a) all patentable inventions specifically pertaining to the Technological Field (1) which are subject to protection under the provisions of the Patent Act [Title 35, United States Code] and/or any foreign patent laws; (2) which were in existence on the effective date of the PSMA Therapeutics Sublicense Agreement and/or which may be made at any time during the term of that agreement at SKICR; and (3) which were legally and/or beneficially owned or otherwise controlled or licensable by Cytogen as at its election under the SKICR Agreement.

(b) any and all patents and patent applications set forth in Schedule A of the PSMA Therapeutics Sublicense Agreement and any and all existing or future divisions, continuations, continuations-in-part and renewals thereof, any and all patents which may be granted thereon, and any and all reissues and extensions thereof. Cytogen shall promptly notify NWBio of any change in the status of any patent application or patent included in Schedule A of the PSMA Therapeutics Sublicense Agreement. Any Improvements relating to the Licensed Product and/or Licensed Processes shall be included in the SKICR Patent Rights to the extent that such Improvements have been licensed to Cytogen by SKICR.

2.22 VALID CLAIM. The term "Valid Claim" with respect to any jurisdiction shall mean any claim of any duly issued patent within the SKICR Patent Rights in such jurisdiction that has not expired, lapsed or been declared invalid by a decision of a court of competent jurisdiction from which an appeal cannot be taken or in respect of which the applicable period of appeal has expired, and any claim in any then pending application for patent within the SKICR Patent Rights in such jurisdiction that has not been the subject of a rejection notice from which an appeal cannot be taken or in respect of which the applicable period of appeal has expired.

2.23 IMPROVEMENTS. The term "Improvements" shall mean any enhancement made by NWBio or its sublicensees to the SKICR Patent Rights.

2.24 NET SALES. The term "Net Sales" shall mean the * from a third party attributable to NWBio or its sublicensee's use, sale or transfer of any Licensed Product * directly attributable to such use, sale or transfer and actually allowed and borne by NWBio or its sublicensee. Such *

As Filed with the Securities and Exchange Commission on August 10, 2001.
*INFORMATION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

5

* . Whenever a product is sold in the form of a combination product containing a Licensed Product and one or more active ingredients, agents or compounds that are proprietary, either by ownership or license, to NWBio, its Affiliates or a third party (other than the Licensed Product), the Net Sales for such combination product shall be calculated by * . If, on a country by country basis, the Licensed Product and such other active ingredients, agents or compounds in the combination product are not sole separately in such country by NWBio or its sublicensees, Net Sales for purposes of determining royalties on the combination product shall be calculated by * .

2.25 TECHNOLOGICAL FIELD. The term "Technological Field" shall mean and collectively include the NWBio Operating Field and the Excluded Field, each of which terms is defined below:

2.25.1 NWBio OPERATING FIELD. The term "NWBio Operating Field" shall mean (a) the manufacture, production, purification or use of PSMA, PSMP and/or any mimetopes of PSMA or PSMP; (b) the use of the gene(s) encoding PSMA or PSMP solely for the manufacture or production of such protein or peptides; (c) the sale of PSMA, PSMP and/or mimetopes of PSMA or PSMP to NWBio's sublicensees; (d) the sale of PSMA, PSMP and/or mimetopes of PSMA or PSMP to sublicensees for ex vivo clinical use, and/or to others for non-clinical research purposes; and (e) the manufacture, production or use of Licensed Processes and/or Licensed Products; in each case for the immunotherapy of prostate cancer. The term "NWBio Operating Field" shall not include any gene therapy with PSMA and/or any PSMP or the use of the DNA or RNA encoding such proteins and/or peptides to pulse any antigen-presenting cells ex vivo.

2.25.2 EXCLUDED FIELD. The term "Excluded Field" shall mean the use of any technology and related SKICR Patent Rights for any purpose other than the NWBio Operating Field.

3. REPRESENTATIONS AND WARRANTIES. The following provisions relate to representations and warranties by the parties:

3.1 BY CYTOGEN. Prostagen represents and warrants to NWBio that all of the facts set forth in Article I of this Agreement are true and accurate, and further represents and warrants, as follows:

3.1.1 POWER TO ACT. Cytogen has all necessary corporate power to enter into and perform its obligations under this Agreement and has taken all necessary

As Filed with the Securities and Exchange Commission on August 10, 2001.
*INFORMATION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

6

corporate action under the laws of the State of Delaware and its charter and bylaws to authorize the execution and consummation of this Agreement.

3.1.2 SKICR PATENT RIGHTS. With respect to the SKICR Patent Rights,

(a) Cytogen is the exclusive licensee under and has the right to grant sublicense rights under the SKICR Patent Rights in the Technological Field, including the right to preclude unauthorized use of such SKICR Patent Rights;

(b) that the list of patents and patent applications set forth in Schedule A of the PSMA Therapeutics Sublicense Agreement represents a full and complete list of all patents and patent applications (1) which are included in the SKICR Patent Rights within the Technological Field; and (2) which were in existence as of the effective date of the PSMA Therapeutics Sublicense Agreement; and

(c) that Cytogen had no knowledge of (1) any impediment to the enforceability of any patent within the SKICR Patent Rights; or (2) any materially relevant prior art reference(s) which has not been cited in the United States Patent and Trademark Office with respect to the prosecution of any of the United States patents or patent applications within such SKICR Patent Rights.

Cytogen has not made any warranty or representation to NWBio as to the enforceability or validity of any patent within the SKICR Patent Rights.

3.1.3 [INTENTIONALLY BLANK]

3.1.4 NO LITIGATION. On the Effective Date, there is no action, suit, claim, proceeding or governmental investigation pending or threatened against Cytogen or Prostagen with respect to any of the SKICR Patent Rights, either at law or in equity, before any court or administrative agency or before any governmental department, commission, board, bureau, agency or instrumentality, whether United States or foreign, and Cytogen has no belief that there are basis or grounds for any such actions, suits or claims.

3.1.5 NO DEFAULT. On the Effective Date, Cytogen is not in default with respect to any term or provision of any agreement, charter, bylaw, mortgage, indenture, statute, rule or regulation applicable to either of them or with respect to any order, writ, injunction, decree, rule or regulation of any court or administrative agency, which will preclude the performance of its obligations under this Agreement.

3.1.6 NO MATERIAL CONTRACTS. Cytogen is not subject to any contract or agreement materially affecting any of the SKICR Patent Rights which will preclude the performance of Cytogen's obligations under this Agreement.

3.1.7 NO CONFLICTS. Neither the execution nor delivery of this Agreement, nor the consummation of the transactions herein contemplated, nor the

7

fulfillment of or compliance with the terms and provisions hereof will
(a) violate any provisions of law, administrative regulation or court decree applicable to Cytogen; or (b) conflict with or result in a breach of any of the terms, conditions or provisions of or constitute a default under the certificate of incorporation or bylaws of Cytogen, or of any agreement or instrument to which Cytogen is a party or by which Cytogen is bound.

3.1.8 NO ADVERSE ACTIVITY. During the term of this Agreement, Cytogen shall engage in no activity or omission that would adversely affect the rights of NWBio under this Agreement.

3.2 BY NWBio. NWBio represents and warrants to Cytogen, as follows:

3.2.1 POWER TO ACT. NWBio has all necessary power to enter into and perform its obligations under this Agreement and has taken all necessary action under the laws of the State of Washington and its articles of incorporation and bylaws to authorize the execution and consummation of this Agreement.

3.2.2 NO DEFAULT. NWBio is not in default with respect to any term or provision of any agreement, charter, bylaw, mortgage, indenture, statute, rule or regulation applicable to it, or with respect to any order writ, injunction, decree, rule or regulation of any court or administrative agency, which will preclude the performance of its obligations under this Agreement.

3.2.3 NO MATERIAL CONTRACTS. NWBio is not subject to any contract or agreement which will preclude the performance of NWBio obligations under this Agreement.

3.2.4 NO CONFLICTS. Neither the execution nor delivery of this Agreement, nor the consummation of the transactions herein contemplated nor the fulfillment of or compliance with the terms and provisions hereof will (a) violate any provisions of law, administrative regulation or court decree applicable to NWBio; or (b) conflict with or result in a breach of any of the terms, conditions or provisions of or constitute a default under the articles of incorporation or bylaws of NWBio, or of any agreement or instrument to which NWBio is a party or by which it is bound.

4. LICENSES. The following provisions relate to the rights and licenses granted hereunder:

4.1 GRANT BY CYTOGEN. Subject to the terms and conditions herein contained, Cytogen hereby grants to NWBio the exclusive right and sublicense throughout the world only in the NWBio Operating Field, with the right to grant sublicenses to others,

(a) to make, have made, distribute, import, export, use and sell, and sell Licensed Products, and

(b) to practice and use Licensed Processes

8

embodying or made in accordance with the appropriate SKICR Patent Rights.

Nothing contained herein shall be construed as granting NWBio any right or license to practice the SKICR Patent Rights within the Excluded Field or for any purpose other than within the NWBio Operating Field.

4.2 LIMITED RIGHT TO MOAB 7E11-C5.3. To enable NWBio to utilize MoAb 7E11-C 5.3 in connection with the development, manufacturing, testing, or conducting quality control tests on Licensed Products and to practice Licensed Processes all in accordance with Section 4.1, Cytogen hereby grants NWBio the right to use MoAb 7E11-C.5.3 solely for such purposes.

4.2.1 ANTIBODY REQUIREMENTS. NWBio agrees to purchase its requirements of MoAb 7E11-C5.3 from Cytogen, and Cytogen agrees to supply NWBio requirements of MoAb 7E11-C5.3, on terms and conditions satisfactory to both Cytogen and NWBio.

4.2.2 CONTINGENT LICENSE. In the event that Cytogen is unable or unwilling to supply NWBio requirements of MoAb 7E11-C5.3, Cytogen shall, upon written request of NWBio, provide to NWBio, at no cost to NWBio, a viable sample of a hybridoma capable of producing MoAb 7E11-C5.3, and thereafter NWBio shall have the right to use the hybridoma and to produce and use MoAb 7E11-C5.3 for the purposes set forth in this Paragraph 4.2.

5. DILIGENCE. NWBio shall use reasonable commercial efforts to promptly develop, obtain Regulatory Approval for, manufacturing, marketing and selling Licensed Products. In the event that Cytogen, from time to time during the term of this Agreement, determines, in the exercise of its reasonable business discretion after interaction and discussion with NWBio, that NWBio is not using reasonable commercial efforts to develop, obtain Regulatory Approval for, manufacturing, marketing and selling Licensed Products within the United States and at least one other Major Market, then the resolution of such matter will be finally settled by binding arbitration in Seattle, Washington in accordance with the then current rules and procedures of the American Arbitration Association, by one (1) arbitrator appointed in accordance with such rules. The arbitrators shall apply the laws of the State of Washington, without reference to rules of conflict of law or statutory rules of arbitration, to the merits of any dispute or claim and shall have the right to grant injunctive relief. Judgment on the award rendered by the arbitrators may be entered in any Court having jurisdiction thereof.

6. MILESTONE PAYMENTS AND ROYALTIES. The following provisions relate to milestone and royalty payments to be made by NWBio hereunder:

6.1 MILESTONE PAYMENTS. The following provisions relate to the milestone payments to be made by NWBio hereunder:

9

6.1.1 FIRST MILESTONE PAYMENT. Within thirty (30) days of the issuance of the first Regulatory Approval for the use of a Licensed Product in a Major Market, other than for PSMA and/or PSMP, NWBio shall pay Cytogen the sum of * .

6.1.2 FINAL MILESTONE PAYMENT. NWBio shall pay Cytogen the sum of * ; which amount shall be payable in installments in accordance with Subsections 6.5.2 and 6.5.3, each of which shall be equal to two percent (2%) of the Net Sales for the immediately preceding calendar quarter. Such installments shall commence on the last day of the month during which the first Commercial Sale transpires and continue until the earlier of (i) two (2) years or (ii) the aggregate amount of such payments * . In the event that that aggregate amount of the such payments is less than * then the amount of the final payment shall be increased so that the aggregate amount of all payments made pursuant to this Subsection 6.1.2 is equal to * . Notwithstanding anything to the contrary in this Agreement, in no event shall the * sum be fully paid by NWBio to Cytogen later than two (2) years from the first payment specified above in this Subsection 6.1.2.

6.2 MINIMUM ANNUAL PAYMENTS. During each twelve (12) month period of the Agreement commencing on the Effective Date, until the commencement of the Phase III Clinical Trial (including pro-rata the last 12 month period), NWBio agrees to pay Cytogen minimum annual payments of * per year.

6.3 ROYALTY PAYMENTS. NWBio shall, during the Contract Period, pay Cytogen a royalty of * on all Net Sales. Such payments will be paid in accordance with Subsections 6.5.2 and 6.5.3 below.

6.4 BOOKS AND RECORDS. NWBio agrees to keep adequate and complete records showing all Net Sales, with respect to which earned royalties are due Cytogen hereunder. Such records shall include all information necessary to verify the total amount and computation of earned royalties hereunder, and shall be open to inspection by Cytogen during reasonable business hours to the extent necessary to verify the amount thereof. Such inspection shall be made no more often than once each calendar year at the expense of Cytogen by an auditor appointed by Cytogen and to whom NWBio has no reasonable objection, provided that such auditor shall be under a confidentiality obligation to NWBio to reveal only that information, and only to Cytogen, necessary to verify the royalties due hereunder. In addition, such inspection shall be limited to a period not to extend beyond two (2) years after the date of the receipt by Cytogen of a report from NWBio relating to such records pursuant to Section 6.5.1. After such two
(2) year period, any such report and the records upon which such report was based shall be deemed presumptively correct.

6.5 REPORTS AND ROYALTY PAYMENTS. The following provisions relate to reports and royalty payments by NWBio:

6.5.1 REPORTS. On or before the last day of each February, May, August, and November throughout the Contract Period, NWBio shall furnish Cytogen

As Filed with the Securities and Exchange Commission on August 10, 2001.
*INFORMATION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

10

with a written report, signed by an authorized officer or agent of NWBio showing all Net Sales with respect to which earned royalties are due Cytogen hereunder.

6.5.2 ROYALTY PAYMENTS. With each such quarterly report, NWBio shall remit to Cytogen the total amount of earned royalties shown thereby to be due. All payments shall be made in lawful funds of the United States of America.

6.5.3 CURRENCY CONTROL RESTRICTIONS. In the event that NWBio is precluded from transferring royalties due Cytogen hereunder at any time during the Contract Period because NWBio has failed after due diligence to obtain the approval of such transfer from the appropriate governmental agency responsible for control of currency exchanges of a particular country in which NWBio has sold Licensed Products, then NWBio agrees (a) to deposit or to cause the deposit of such royalties to the account of Cytogen in a bank in such country designated by Cytogen; (b) to provide or to cause the providing of Cytogen with documentary evidence of such deposits; and (c) to remit or to cause remittance of such deposits to Cytogen immediately upon the subsequent approval of such transfers by such governmental agency. NWBio further agrees that the form of such depository account shall permit Cytogen to withdraw the deposited amounts at will, but shall permit NWBio to withdraw the deposited amounts solely for the purpose of remitting such amounts to Cytogen pursuant to the provisions of this Section 6.5.3.

7. PRODUCT LIABILITY DISCLAIMERS. The following provisions relate to product liability disclaimers:

7.1 PRODUCT LIABILITY DISCLAIMER BY CYTOGEN. Cytogen assumes no responsibility for the manufacturer, product specifications, end-use or provision of any Licensed Products which are manufactured or provided by or for, or sold by NWBio. All warranties in connection with such Licensed Products made or provided by NWBio shall not directly or impliedly obligate Cytogen in any manner whatsoever under such warranties or otherwise.

7.2 PRODUCT LIABILITY DISCLAIMER BY NWBio. NWBio assumes no responsibility for the manufacture or product specifications or end-use of any products which are manufactured by or for Cytogen except for the manufacture or product specifications of materials made by or for NWBio and sold to Cytogen. Any warranties in connection with such products made by Cytogen as user of such products shall nor directly or impliedly obligate NWBio.

8. TERM AND TERMINATION. The following provisions relate to the term and termination of this Agreement:

8.1 TERM. Unless sooner terminated in a manner herein provided, this Agreement shall continue in force until the expiration of the last to expire patent included in SKICR Patent Rights.

8.2 TERMINATION. This Agreement may be terminated, in whole or in part, at any time prior to the term set forth in Paragraph 8.1 hereof, as follows:

11

8.2.1 BY NWBio. At any time after December 31, 2000, NWBio may terminate this Agreement by giving Cytogen at least sixty (60) days notice in writing.

8.2.2 BY BREACH. In the event either party shall materially breach any of the terms, conditions or agreements contained herein to be kept, observed and performed by it, then the other party may give written notice thereof to the breaching party. If the breaching party has not cured the breach within sixty (60) days after receipt of such notice, then the non-breaching party may commence arbitration of such matter pursuant to the arbitration provisions set forth in Section 5 above.

8.2.3 BY BANKRUPTCY, INSOLVENCY OR SUSPENSION OF BUSINESS. In the event (a) NWBio on the one hand or Cytogen on the other hand shall become insolvent or shall suspend business, or shall file a voluntary petition or any answer admitting the jurisdiction of the Court and the material allegations of, or shall consent to an involuntary petition pursuant to or purporting to be pursuant to any reorganization or insolvency law of any jurisdiction, or shall make an assignment for the benefit of creditors, or shall apply for or consent to the appointment of a receiver or trustee of a substantial part of its property, and (b) no Affiliate of such party shall undertake to assume its obligations under the provisions of this Agreement within ninety
(90) days from the date on which such party becomes so disabled, then to the extent permitted by law the other party may thereafter immediately terminate this Agreement by giving written notice of termination to the disabled party.

8.3 ACCRUED RIGHTS AND OBLIGATIONS. Termination of this Agreement shall not relieve any party of any rights and obligations then accrued hereunder or which extend beyond the date of such termination. In the event that this Agreement is terminated pursuant to Sections 8.2.2 or 8.2.3 due to the breach, bankruptcy, insolvency or business suspension of Cytogen, NWBio shall have the right to use the licenses granted under this Agreement until the last to expire patent included in SKICR Patent Rights; provided, however, NWBio shall adhere to all terms and conditions, including making any payments specified herein. If the Agreement is terminated by Cytogen pursuant to the terms of this Agreement, all licenses granted to NWBio shall immediately cease and NWBio will return any and all Cytogen materials. NWBio shall have the right to sell-off any inventory of Licensed Products manufactured prior to the termination date, under the terms and conditions specified in this Agreement.

9. ASSIGNABILITY. Neither this Agreement nor any interest hereunder shall be assignable by either party without the written consent of the other, and any attempted assignment without such consent shall be null and void. For the purposes of this Section 9, a change of corporate domicile by either party hereof shall not result in an assignment of this Agreement or any interest hereunder. This Agreement shall be binding upon the successors and permitted assignees of the parties. Any such successor or permitted assignee shall be subject to the same rights and obligations as the original party hereunder.

10. EXPORT LICENSES. This Agreement is subject to any restrictions concerning the export of products or technical information from the United States which may be imposed by the

12

United States. Accordingly, each party agrees that it will not export directly or indirectly, any technical information acquired under this Agreement or any products utilizing any such technical information to any country for which the United States Government or any agency thereof at the time of export requires an export license or other governmental approval, without first obtaining the written consent to do so from the Department of Commerce or other agency of the United States Government when required by an applicable statute or regulation.

11. MISCELLANEOUS PROVISIONS. The following miscellaneous provisions shall apply to this Agreement:

11.1 NOTICES. All notices and communications provided for hereunder shall be in writing and shall be mailed or delivered to the business address of the respective parties aforementioned, or to such other address as either party shall designate in writing to the others.

11.2 INDEPENDENT CONTRACTORS. No agency, partnership or joint venture is hereby established. Neither Cytogen nor NWBio shall enter into, or incur, or hold itself out to third parties as having authority to enter into or incur on behalf of the other party any contractual obligations, expenses or liabilities whatsoever, except as expressly provided herein.

11.3 COUNTERPARTS. This Agreement may be executed simultaneously in multiple counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same agreement.

11.4 ENTIRE UNDERSTANDING. This Agreement constitutes the entire understanding between the parties hereto with respect to the subject matter hereof. No modifications, extensions, or waiver of any provisions hereof or any release of any right hereunder shall be valid, unless the same is in writing, contains reference to this Agreement and sets forth the plan or intention to modify same, and is consented to by all parties hereto.

11.5 HEADINGS. The headings of this Agreement are intended solely for convenience of reference and shall be given no effect in the construction or interpretation of this Agreement.

11.6 NO IMPLIED RIGHTS. Except as expressly provided for in this Agreement, nothing contained herein shall be construed as conferring any license or other rights, by implication or estoppel, under any patent (including design patent and utility model patent) or patent application, or any copyrights, trademarks, trade names or trade dress.

11.7 NO WAIVER. The failure of either party hereto at any time or times to require performance of any provision hereof shall in no manner affect the right of such party at a later time to enforce the same. No waiver by any party hereto of any condition, or of the breach of any provision, term, covenant, representation, or warranty contained in this Agreement, whether by conduct or otherwise, in any one or more instances, shall be deemed to be or construed as a further or continuing waiver of any such condition or of the breach of any other provision, term, covenant, representation, or warranty of this Agreement.

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11.8 PROMOTION AND ADVERTISING. Nothing contained in this Agreement shall be construed as conferring any right to use in advertising, publicity or other promotional activities any name, trade name, trademark, or other designation (including any contraction, abbreviation, or simulation of any of the foregoing); and, each party hereto agrees not to use any designation of the other party in any promotional activity associated with this Agreement, or with product licensed thereunder, without the express written approval of the other party.

11.9 GOVERNING LAW. This Agreement shall be interpreted, construed, and governed in accordance with the laws of the State of Washington, without reference to conflict of laws principles.

IN WITNESS WHEREOF, the parties have each caused their respective corporate seals to be hereto affixed and duly witnessed and these present to be signed by their respective corporate officers thereunto duly authorized.

CYTOGEN CORPORATION                         NORTHWEST BIOTHERAPEUTICS INC.



By                                          By
  ---------------------------------            ---------------------------------

Title                                       Title
     ------------------------------               ------------------------------

Date:  August 28, 2000                      Date:  August 28, 2000

14

EXHIBIT 10.2

COLLABORATION AGREEMENT

THIS COLLABORATION AGREEMENT ("AGREEMENT") is made and entered into effective as of April 24, 2001 (the "EFFECTIVE DATE"), by and between NORTHWEST BIOTHERAPEUTICS, INC., having principal offices at 21270 23rd Dr. SE, Suite 100, Bothell, Washington 98021 ("NORTHWEST") and MEDAREX, INC., having principal offices at 707 State Road, Suite 206, Princeton, New Jersey 08540-1437, on behalf of itself and its wholly owned subsidiary, GENPHARM INTERNATIONAL, INC., with principal offices at 2350 Qume Drive, San Jose, California 95131 (collectively, "MEDAREX"). Northwest and Medarex each may be referred to herein individually as a "PARTY," or collectively as the "PARTIES."

WHEREAS, Medarex and Northwest desire to enter into a definitive agreement to collaborate to produce fully human monoclonal antibodies to certain antigen targets in order to develop and commercialize genomics-derived, antibody-based products on the terms set forth below;

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

ARTICLE 1
SCOPE OF COLLABORATION; COLLABORATION ACTIVITIES

SECTION 1.1 SCOPE OF COLLABORATION. The Parties have entered into this collaboration (such collective enterprise, the "COLLABORATION") to jointly research, develop and commercialize Collaboration Products with respect to Collaboration Targets throughout the Territory as set forth in this Agreement. Any capitalized term used in this Agreement not otherwise defined herein shall have the meaning set forth on Appendix A.

SECTION 1.2 RESEARCH ACTIVITIES.

1.2.1 GENERAL. Under the direction and supervision of the Steering Committee, the Parties shall use Commercially Reasonable Efforts to conduct their respective research activities in accordance with this Agreement, each Project Plan and each Project Budget.

1.2.2 VALIDATION OF COLLABORATION TARGETS. Northwest shall provide to the Collaboration those Antigens set forth on Appendix C-1 hereto (each such Antigen shall be an "INITIAL ANTIGEN" until accepted by Medarex pursuant to the terms of this subsection 1.2.2, at which time such Initial Antigen shall be deemed a "COLLABORATION TARGET" for all purposes of this Agreement and added to Appendix C-2, which Appendix C-2 may be amended pursuant to this subsection 1.2.2 and Sections 1.7 or 5.1.2 or by the "press written agreement of Medarex and Northwest). In addition, during each of the four (4) years of the Target Entry Period, Northwest shall propose to Medarex additional Antigens (each, a "SUBSEQUENT Antigen") for evaluation by Medarex as provided in this subsection 1.2.2, until such time as Medarex has accepted one (1)

As Filed with the Securities and Exchange Commission on August 10, 2001.
*INFORMATION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.


additional Subsequent Antigen as a Collaboration Target (in addition to the Initial Antigens and any replacements thereto pursuant to subsection (d) below) for each such year. For each Initial Antigen or Subsequent Antigen proposed by Northwest pursuant to this Agreement, Medarex may decline such target in its sole discretion if Medarex (i) is researching or developing, or has researched and developed, in collaboration with a Third Party, antibodies to such Initial Antigen or Subsequent Antigen (either alone or as part of a joint development program with a Third Party) or (ii) has previously granted to a Third Party exclusive rights with respect to such Initial Antigen or Subsequent Antigen or with respect to antibodies to such Initial Antigen or Subsequent Antigen.

(a) ANTIGEN EVALUATION MATERIALS. With respect to each Initial Antigen and each Subsequent Antigen, Northwest shall promptly develop and furnish to Medarex the following data and information ("ANTIGEN EVALUATION MATERIALS"):

(i) a written description of the applicable Antigen, including * thereof, when available;

(ii) the * and/or * for such Antigen,

(iii) * that Northwest believes in good faith to be reasonably necessary for determining whether such * ;

(iv) * data in the possession of Northwest or its Affiliates relating to such Antigen and relevant to the Collaboration-,

(v) all information regarding the * of such Antigen, the * by Northwest and its Affiliates with respect to such Antigen, and any * or otherwise) that would * the Parties' right to fully Exploit any Collaboration Products with respect thereto;

(vi) existing and available * for *;

(vii) a list of * for Antibody Products against such Antigen-,

(viii) * applicable to Antibody Products against such Antigen, to the extent known by Northwest;

(ix) any * undertaken by or on behalf of Northwest or its Affiliates with respect to the * against such Antigen;

As Filed with the Securities and Exchange Commission on August 10, 2001.

* INFORMATION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

2

(x) the * for * for the development of antibody-based products; and

(xi) * in Northwest's or its Affiliates' possession with respect to * .

(b) ADDITIONAL VALIDATION ACTIVITIES. In the event Medarex receives Antigen Evaluation Materials for a given Initial Antigen or Subsequent Antigen pursuant to Section 1.2.2(a), but does not believe such materials are sufficiently complete, the Parties shall discuss in good faith additional analyses to be performed by Northwest in order to complete the Antigen Evaluation Materials and Northwest shall use Commercially Reasonable Efforts to perform such additional analyses to the reasonable satisfaction of Medarex.

(c) EVALUATION OF COLLABORATION TARGETS.

(i) Upon receipt of the Antigen Evaluation Materials pursuant to subsection (a) above and any additional materials pursuant to subsection (b) above, Medarex shall evaluate the scientific merits of the respective Initial Antigen or Subsequent Antigen. If such evaluation reveals in the reasonable opinion of Medarex that such Initial Antigen or Subsequent Antigen is not sufficiently characterized or validated so as to permit a successful development of Collaboration Products under this Agreement, the Parties shall meet to discuss Medarex's concerns. If such concerns remain unresolved after such meeting, such Initial Antigen or Subsequent Antigen shall not become a Collaboration Target, excluded from the Collaboration and returned to Northwest, and Medarex shall have no further rights to such Initial Antigen or Subsequent Antigen under this Agreement.

(ii) Upon request of either Party, the Steering Committee shall solicit a formal patent review and opinion regarding each Collaboration Target prior to the commencement of any development activities with respect to such target. Such review shall be performed by an outside law firm selected by the Steering Committee. The costs of such formal opinion shall be * . If such review reveals that it is more likely than not that Collaboration Products developed against such Collaboration Target will be subject to claims of infringement of Patents owned by Third Parties, the Parties shall meet to discuss how to further proceed. If the Parties agree not to proceed with the identification and development of Collaboration Antibodies against such target, or if the Parties are unable to agree on whether or not to proceed, such Collaboration Target shall be excluded from the Collaboration and returned to Northwest, and Medarex shall have no further rights to such Antigen under this Agreement.

(d) REPLACEMENT OF INITIAL ANTIGENS. For each Initial Antigen and Subsequent Antigen that is excluded from the Collaboration and returned to Northwest as provided in subsection (c)(i) above and for each Collaboration Target that is excluded from the Collaboration pursuant to Section
(c)(ii) above, Northwest shall use Commercially Reasonable Efforts to propose to Medarex within ninety (90) days from the date thereof ("Replacement Period") another Initial Antigen or Subsequent Antigen for inclusion in this Agreement as a Collaboration Target, and the Parties shall proceed with the evaluation of such Initial Antigen or

As Filed with the Securities and Exchange Commission on August 10, 2001.
*INFORMATION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

3

Subsequent Antigen as provided in Section 1.2.2 above. Northwest's obligation to provide new Antigens for evaluation by Medarex shall expire upon the expiration of the Target Entry Period and the Replacement Period with respect to the last Initial Antigen or Subsequent Antigen that has been returned to Northwest as provided above.

(e) ADDITIONAL COLLABORATION TARGETS. Northwest shall have the right to offer additional Antigens to the Collaboration as Collaboration Targets, by providing Medarex with any and all Antigen Evaluation Materials with respect to such Antigen and such other information and data as Medarex may request. In the event that the Parties agree to accept any such additional Antigen into the Collaboration, the Parties shall use good faith efforts to agree on a written description of such Antigen, and Appendix C-2 shall be automatically amended to include such Antigen and such description.

(f) Upon completion of the evaluation pursuant to this
Section 1.2.2 and acceptance of a Collaboration Target by Medarex, the Parties shall proceed with the Collaboration with respect to such target as provided in
Section 1.2.3 et seq. below.

1.2.3 IDENTIFICATION OF APPLICABLE ASSAYS AND SUCCESS CRITERIA.
As part of the Project Plan for a given Collaboration Target, the Steering Committee will:

(a) identify the immunogen(s) (each, an "IMMUNOGEN") to be used to enable Medarex to perform its activities pursuant to Section 1.2.5;

(b) determine which Party will be responsible for delivering the Immunogen(s) to Medarex.

(c) identify a set of assays (each, an "ASSAY") for screening Assay Candidates against such Collaboration Target;

(d) determine which Party will be responsible for delivering the Assays to the Collaboration; and

(e) establish criteria (the "ASSAY SUCCESS CRITERIA") for determining, subject to Section 1.2.6, whether an Assay Candidate should become a Collaboration Antibody; and

(f) update the description of Collaboration Target and the potential utility of Antibody Products thereto in Appendix C to more accurately reflect what Antigens, or portions thereof, are included in the Collaboration as such additional information becomes available in the course of the Collaboration.

The Steering Committee may elect to use a Third Party to provide one or more Immunogen(s) to the Collaboration. In addition, the Steering Committee may elect to have a Third Party develop and/or perform one or more of the Assays.

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1.2.4 ALLOCATION OF COSTS. All costs associated with identifying Collaboration Targets, preparing and furnishing to Medarex complete Antigen Evaluation Materials with respect thereto, and creating and delivering the Immunogen(s) to Medarex (the "NORTHWEST RESEARCH ACTIVITIES") shall be borne 100% by Northwest. All costs associated with immunizing the HuMAb Mice and raising a panel of different Antibodies to the applicable Collaboration Target pursuant to the last sentence of Section 1.2.5 (the "MEDAREX RESEARCH ACTIVITIES") shall be borne * . All costs associated with developing and performing the Assays shall be borne * . The Parties acknowledge and agree that the Northwest Research Activities and the Medarex Research Activities are deemed to be and are of equal value and neither Party shall have any right to reimbursement or credit from the other Party for the cost and expenses associated with such research activities.

1.2.5 RAISING OF ANTIBODIES BY MEDAREX. The Party designated under Section 1.2.3(b) shall provide to Medarex sufficient Immunogen for each Collaboration Target to enable Medarex to perform its activities pursuant to this Section 1.2.5. Upon the delivery of such Immunogen, Medarex shall use Commercially Reasonable Efforts to immunize the HuMAb Mice and raise a panel of different Antibodies to the applicable Collaboration Target.

1.2.6 SELECTION OF ASSAY CANDIDATES; ASSAY SCREENING; SELECTION OF COLLABORATION ANTIBODIES.

(a) Medarex shall select a subset of the Antibodies raised pursuant to Section 1.2.5 to become "ASSAY CANDIDATES" by identifying those of the Antibodies that have a greater likelihood to qualify as Collaboration Antibodies. Medarex will make available to the Steering Committee such raw data and information as may be requested from time to time regarding the Antibodies raised pursuant to Section 1.2.5 and the selection criteria applied by Medarex. Subject to Section 1.2.6(b), upon review of the data presented by Medarex, the Steering Committee shall have the right to designate additional Antibodies as Assay Candidates. As set forth under the applicable Project Plan, the Parties shall run each Assay Candidate through the applicable Assays. Upon completion of the Assay screening for a given Assay Candidate, each Party will be provided with the results of such screening (including the raw data underlying such results). The Steering Committee will then determine whether the Assay Candidate has met the applicable Assay Success Criteria. Subject to Section 1.2.6(b), each Assay Candidate that meets the applicable Assay Success Criteria shall be deemed to be a "COLLABORATION ANTIBODY"; provided, however the Steering Committee may, in its sole discretion, (i) decide that an Assay Candidate that meets the Assay Success Criteria shall nonetheless not be deemed to be a Collaboration Antibody, or (ii) decide that an Assay Candidate that does not meet the Assay Success Criteria shall nonetheless be deemed to be a Collaboration Antibody.

(b) Promptly after the identification of any Assay Candidate that meets the Assay Success Criteria, Medarex shall determine whether Medarex: (i) is researching or developing, or has researched or developed, either alone or in collaboration with a Third Party, such Assay Candidate, or
(ii) has previously granted a Third Party rights with respect to such Assay Candidate (each a "Reserved Antibody"). Medarex shall inform Northwest without delay of its determination, and any Assay Candidates that are Reserved Antibodies shall not become Collaboration Antibodies, and all amounts of such Reserved Antibodies produced pursuant to

As Filed with the Securities and Exchange Commission on August 10, 2001.
*INFORMATION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

5

this Agreement %rill be destroyed. If an Assay Candidate is precluded from becoming a Collaboration Antibody under this Section 1.2.6(b), then notwithstanding Section 1.2.4 and anything herein to the contrary, Medarex:
shall bear one hundred percent (100%) of all cost associated with developing and performing Assays with respect to such Assay Candidate (i.e. pro rated over all Antibodies for which such Assay was developed and performed).

1.2.7 EFFECT OF DESIGNATION OF COLLABORATION ANTIBODIES. Any Antibody that is designated a Collaboration Antibody in accordance with Section 1.2.6 shall be exclusive to the Collaboration. Except as otherwise provided in this Agreement, once an Antibody is designated a Collaboration Antibody, * as more fully described in Section 4. 1.

1.2.8 LEAD COLLABORATION ANTIBODIES. Out of the pool of Collaboration Antibodies against a given Collaboration Target, the Steering Committee will select the Collaboration Antibody that it believes to be most promising for development and commercialization and it will then move such Collaboration Antibody into Production Process Development. Each Collaboration Antibody that is put into Production Process Development shall be deemed to be a "LEAD COLLABORATION ANTIBODY." It is understood that the Steering Committee may, over time, select more than one Lead Collaboration Antibody against a given Collaboration Target, or substitute one Lead Collaboration Antibody for another. Upon designation of each Lead Collaboration Antibody, the Parties shall commence Production Process Development for such antibody. * of Production Process Development as provided in Section 1.2.7 above; provided that if the Steering Committee elects to have Medarex perform such Production Process Development, then such fifty percent (50%) share of Production Process Development costs shall be calculated based on Medarex's Fully-Burdened Production Process Development Cost.

SECTION 1.3 PROJECT PLAN AND PROJECT BUDGET. Upon designation of a given Antigen as a Collaboration Target pursuant to Section 1.2.2, Medarex and Northwest under the direction of the Steering Committee shall jointly develop and implement a Project Plan (each a "PROJECT PLAN") and Project Budget (each a "PROJECT BUDGET") for the research, development, manufacture and commercialization of Collaboration Antibodies against such Collaboration Target. It is understood that the components of each Project Plan and Project Budget will evolve as the applicable Collaboration Antibodies move through the research, development, manufacture and commercialization life cycle.

SECTION 1.4 PERFORMANCE STANDARDS. Each Party shall perform, or cause to be performed, its respective activities hereunder in good scientific manner, and in compliance in all material respects with all Applicable Law and shall use Commercially Reasonable Efforts to (a) research, develop, file for Regulatory Approval and commercialize one or more Collaboration Products with respect to each Lead Collaboration Antibody, and (b) achieve the objectives of each Project Plan in accordance with each Project Budget, in each case, efficiently and expeditiously by allocating sufficient time, effort, equipment and skilled personnel to complete such activities successfully and promptly.

As Filed with the Securities and Exchange Commission on August 10, 2001.
*INFORMATION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

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SECTION 1.5 PRODUCT TRADEMARKS. The Parties shall develop Product Trademarks for each Collaboration Product that will be commercialized. Such Product Trademarks shall not be confusingly similar to, misleading or deceptive with respect to, or dilute any of the Trademarks owned or Controlled by either of the Parties, or any part of such Trademarks. No Party or any of its Affiliates or sublicensees shall commercialize a Collaboration Product under any Trademark other than the Product Trademarks. No Party or any of its Affiliates or sublicensees shall use in its business any Trademark that is confusingly similar to, misleading or deceptive with respect to, or dilutes any of the Product Trademarks or any other Trademarks used to identify or distinguish a Collaboration Product, or any part of the foregoing. The Steering Committee shall oversee the filing, prosecution and maintenance of all Product Trademark registrations. The * of such filing, prosecution and maintenance. Subject to Applicable Law, the label of any Collaboration Products shall include, at Northwest's sole discretion, the name of Northwest and, at Medarex's sole discretion, the name of Medarex.

SECTION 1.6 SUPPLY OF COLLABORATION PRODUCTS. Each Party shall have the right to submit to the Steering Committee a proposal for the manufacture of clinical and/or commercial supplies of Collaboration Products. The Steering Committee shall negotiate at arm's length with each Party that submits such proposal the price and other terms and conditions of such supply, and, subject to the terms of this Section 1.6, shall select one of the Parties as the manufacturer of Collaboration Products after such arm's length negotiations; provided that the terms arrived at in such negotiations shall be competitive compared to other manufacturers of antibody products in the industry. In the event that the Steering Committee determines that the terms offered by either or both Parties at the end of such negotiations are not competitive, the Steering Committee shall solicit bids from Third Party suppliers to supply the Parties' requirements thereof In any event, the Steering Committee shall use its best efforts to enter into a supply agreement with the supplier that is best able to meet the Parties' requirements, taking into consideration such factors as price, quality, capacity, quantity, reliability, timeliness and reputation.

SECTION 1.7 REVERSION OF COLLABORATION TARGETS. If, notwithstanding the Commercially Reasonable Efforts of the Parties, no Collaboration Antibodies have been designated with respect to a Collaboration Target pursuant to Section 1.2.6(a) within two (2) years, or such other period as the Parties may agree, after the immunization of the HuMAb Mice with respect to such Collaboration Target pursuant to Section 1.2.5, then (a) such Antigen shall cease to be a Collaboration Target (such Antigen, a "REVERSION TARGET"), and Appendix C shall be amended accordingly, (b) any Antibodies with respect thereto shall not become Collaboration Antibodies, (c) any Antibody Products with respect thereto shall not become Collaboration Products, and (d) any licenses granted pursuant to Article 3, with respect to such Antigen, Antibody or Antibody Product shall terminate. Promptly upon such designation, the Parties shall destroy all Antibody Products and other Biological Materials created under this Agreement with respect to such a Reversion Target.

As Filed with the Securities and Exchange Commission on August 10, 2001.
*INFORMATION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

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ARTICLE 2
OPERATION OF THE COLLABORATION

SECTION 2.1 STEERING COMMITTEE.

2.1.1 FORMATION OF STEERING COMMITTEE. The Parties shall establish a joint committee (the "STEERING COMMITTEE"), which shall oversee the research, development and commercialization activities hereunder. Each of Northwest and Medarex: shall appoint an equal number of representatives with the requisite experience and seniority to enable them to make decisions on behalf of the Parties with respect to the Collaboration. From time to time, Northwest and Medarex each may substitute any of its representatives to the Steering Committee.

2.1.2 RESPONSIBILITIES. The Steering Committee shall, in addition to its other responsibilities described in this Agreement: (a) prioritize the research, development, manufacturing and commercialization activities with respect to Collaboration Targets, Collaboration Antibodies and Collaboration Products; (b) subject to Section 1.3, allocate responsibility for such activities between Northwest and Medarex taking into consideration their relevant expertise and available resources; (c) develop and implement a strategy for researching, developing, manufacturing, obtaining and maintaining Regulatory Approvals for, and commercializing, the Collaboration Products; (d) establish such subcommittees as deemed appropriate by the Steering Committee; and (e) take such other actions as are set forth in this Article 2 or as the Parties may unanimously agree. The Steering Committee may evaluate additional technologies that may be necessary or beneficial to the Collaboration and may recommend the acquisition or in-licensing of these technologies to the Parties. Except for its ability to update the Exhibits to this Agreement as expressly permitted in this Agreement, the Steering Committee shall not have any power to amend this Agreement and will have only such powers as are specifically delegated to it hereunder

2.1.3 PROCEDURAL RULES FOR THE STEERING COMMITTEE.

(a) GENERALLY. Except as explicitly set forth in this
Section 2.1.3, the Steering Committee shall establish its own procedural rules for its operation.

(b) VOTING. The Steering Committee shall take action by unanimous consent of Northwest and Medarex, with each such Party having a single vote, irrespective of the number of representatives actually in attendance at a meeting, or by a written resolution signed by the designated representatives of each of Northwest and Medarex.

SECTION 2.2 PROGRESS REPORTS. Within thirty (30) days after the end of each calendar year, or as otherwise required by the Steering Committee, each Party shall provide to the other Party a written progress report, which shall
(a) describe any research, development or commercialization activities with respect to Collaboration Targets or Collaboration Products and any other work relating to the Collaboration Targets and Collaboration Products that it has performed, or caused to be performed, since the last such report, (b) evaluate the work performed in relation to the goals of this Agreement and the applicable Project Plan, and (c) provide such

8

other information as may be required by this Agreement and the applicable Project Plan or reasonably requested by the other Party relating to such activities. In addition to the progress reports provided hereunder, it is contemplated that the Parties will maintain informal communications through the Steering Committee and their day-to-day activities under this Agreement.

SECTION 2.3 DISPUTE RESOLUTION.

2.3.1 STEERING COMMITTEE; CEOs. Any dispute that may arise relating to the terms of this Agreement or the activities of the Parties hereunder shall be brought to the attention of the Steering Committee, which shall attempt in good faith to achieve a resolution. Either Party may convene a special meeting of the Steering Committee for the purpose of resolving disputes. If the Steering Committee is unable to resolve such a dispute within twenty (20) days of the first presentation of such dispute to the Steering Committee, and with respect to all other disputes, such dispute shall be referred to the Chief Executive Officers of each of the Parties (or their respective designees) who shall use their good faith efforts to mutually agree upon the proper course of action to resolve the dispute.

2.3.2 EXPERT; LITIGATION. If any dispute is not resolved by the Chief Executive Officers of the Parties (or their designees) within ten (10) business days after such dispute is referred to them pursuant to subsection 2.3.1 above, then either Party shall have the right (x) if such dispute relates to Sections 1.2.3(a), (c) or (e), 1.2.6(a) (to the extent the dispute relates to the determination of whether an Assay Candidate has met the applicable Assay Success Criteria), 1.2.8 (to the extent the dispute relates to the selection of a Lead Collaboration Antibody), or 1.3 (to the extent the dispute relates to the determination of the activities to be undertaken pursuant to a Project Plan, but not with respect to a dispute regarding which Party will perform any such activities), to refer such dispute to an Expert for expedited arbitration as set forth in subparagraphs 2.3.3 below, or (y) with respect to any other dispute, including with respect to a Party's interpretation of, or any allegation of breach of, this Agreement, to litigate such dispute in accordance with Section 11.5 or to pursue such other dispute resolution mechanism as the Parties may agree.

2.3.3 EXPERT PROCEEDINGS.

(a) With respect to disputes under subparagraph (x) above that are not resolved by the Chief Executive Officers of the Parties (or their designees) pursuant to Section 2.3.1, upon written request by either Party to the other Party, the Parties shall promptly negotiate in good faith to appoint a mutually acceptable disinterested, conflict-free individual not affiliated with either Party, with scientific, technical and regulatory experience with respect to the development of antibody-based products necessary to resolve such dispute (an "Expert"). If the Parties are not able to agree within five (5) days after the receipt by a Party of the written request in the immediately preceding sentence, the CPR Institute for Dispute Resolution shall be responsible for selecting an Expert within seven (7) days of being approached by a Party. The fees and costs of the Expert and the CPR Institute for Dispute Resolution shall be shared equally (50%) by the Parties.

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(b) Within fifteen (15) days after the designation of the Expert, the Parties shall each simultaneously submit to the Expert and one another a written statement of their respective positions on such disagreement. Each Party shall have five (5) days from receipt of the other Party's submission to submit a written response thereto, which shall include any scientific and technical information in support thereof. The Expert shall have the right to meet with the Parties, either alone or together, as necessary to make a determination.

(c) No later than thirty (30) days after the designation of the Expert, 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. The decision of the Expert shall be final and conclusive, absent manifest error.

ARTICLE 3
GRANT OF RIGHTS

SECTION 3.1 LICENSE GRANTS FOR COLLABORATION ACTIVITIES.

3.1.1 MEDAREX GRANT. Subject to Section 3.3 and the other terms and conditions of this Agreement, Medarex hereby grants to Northwest and its Affiliates a co-exclusive (with Medarex and its Affiliates), fully-paid, royalty-free license, with the right to sublicense solely as provided in Sections 3.3.5 and 3.4, under the Medarex Technology and the Collaboration Technology, in each case to (a) perform Northwest's activities under Section 1.2, and (b) jointly Exploit the Collaboration Products in accordance with this Agreement.

3.1.2 NORTHWEST GRANT. Subject to the terms and conditions of this Agreement, Northwest hereby grants to Medarex and its Affiliates a co-exclusive (with Northwest and its Affiliates), fully-paid, royalty-free license, with the right to sublicense solely as provided in Section 3.4, under the Northwest Technology and the Collaboration Technology, in each case to (a) perform Medarex's activities under Section 1.2, and (b) jointly Exploit the Collaboration Products in accordance with this Agreement.

SECTION 3.2 PRODUCT TRADEMARKS FOR COLLABORATION PRODUCTS.

3.2.1 MEDAREX GRANT. Subject to the terms and conditions of this Agreement, Medarex hereby grants to Northwest and its Affiliates a royalty free, fully paid, co-exclusive (with Medarex and its Affiliates), fully-paid, royalty-free license, with the right to sublicense solely as provided in Section 3.4, to use the Product Trademarks to Exploit the Collaboration Products in accordance with this Agreement.

3.2.2 NORTHWEST GRANT. Subject to the terms and conditions of this Agreement, Northwest hereby grants to Medarex and its Affiliates a royalty free, fully paid, co-exclusive (with Northwest and its Affiliates), fully-paid, royalty-free license, with the right to sublicense solely as provided in Section 3.4, to use the Product Trademarks to Exploit the Collaboration Products in accordance with this Agreement.

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SECTION 3.3 EXCLUSIVITY, RESERVED RIGHTS AND PRE-EXISTING GRANTS.

3.3.1 ANTIGEN EXCLUSIVITY. Subject to Sections 3.3.2 and 3.3.4, the Parties acknowledge and agree that this Collaboration shall be exclusive with respect to the Collaboration Targets and that no Party shall engage, directly or indirectly, on behalf of itself or any other party, in the research, development, commercialization or other Exploitation of antibody-based products with respect to any Collaboration Target other than the Collaboration Products and Unilateral Products as provided in this Agreement and any related agreements between the Parties.

3.3.2 RESEARCH AND COMMERCIALIZATION AGREEMENTS. Medarex shall have the right to (a) grant licenses and other rights to other parties, under the Medarex Technology for such parties to Exploit Antibody Products (but not Collaboration Products) with respect to Antigens, including Collaboration Targets, (b) transfer Medarex Know-How to such parties in connection therewith, including by providing instruction with respect to the use and immunization of HuMAb Mice and assistance with respect to the Mice-Related Technology, (c) develop production processes for, and manufacture, such Antibody Products, and
(d) receive license fees, milestone payments, royalties and other remuneration in connection therewith, but, in connection with clause (a), (b), (c) or (d) above, not to otherwise actively participate in the clinical development or commercialization of such Antibody Products by such parties (each agreement with respect to the foregoing, a "Research and Commercialization Agreement").

3.3.3 RETAINED RIGHTS.

(a) OTHER ANTIGENS. Notwithstanding anything in this Agreement to the contrary, each Party does hereby retain the right to (i) enter into collaborations with, and to grant licenses and other rights under its respective Technology to, Third Parties to Exploit Antibody Products with respect to Antigens other than Collaboration Targets, and/or (ii) independently Exploit Antibody Products with respect to Antigens other than Collaboration Targets; provided that Northwest's rights under this subsection (a) shall become effective only after all eight (8) Collaboration Targets have been evaluated and accepted as provided in Section 1.2.2.

(b) NON-ANTIBODY PRODUCTS. Notwithstanding anything in this Agreement to the contrary, each Party does hereby retain the right to (i) enter into collaborations with, and to grant licenses and other rights under its respective Technology (other than Collaboration Technology, which shall be governed by Section 7.1.5) to, Third Parties to Exploit products other than antibody-based products with respect to Collaboration Targets without use or reference to the other Party's technology, and/or (ii) independently Exploit products other than antibody-based products with respect to Collaboration Targets.

3.3.4 EXISTING GRANTS. The Parties further acknowledge and agree that pursuant to the Cross-License Agreement, Medarex has granted a non-exclusive license under certain Medarex Patents to Exploit Antibody Products, including Collaboration Products, `With respect to Antigens, including the Collaboration Targets, in the Territory.

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3.3.5 CROSS LICENSE AGREEMENT. The Cross-License Agreement prohibits Medarex from granting commercialization rights to the same Antibody Product, whether by license or sublicense, under certain Medarex Technology to more than one party in a territory. The Parties shall structure their respective commercialization rights in each country in the Territory, in accordance with this Section 3.3.5, so as to comply with the requirements of the Cross-License Agreement and shall use good faith efforts to ensure that any such structure preserves the intended economic benefits of the Collaboration to the Parties.

(a) So long as the Cross-License Agreement is in effect, if the Steering Committee desires to grant a sublicense with respect to commercialization of a Collaboration Product pursuant to Section 3.4, then the Steering Committee shall provide Medarex with written notice thereof, which shall set forth in reasonable detail the terms and conditions of such sublicense, the Medarex Technology and Collaboration Product involved, and the identity of the proposed sublicensee. Upon receipt of such notice, Medarex shall make a good faith determination as to whether such Medarex Technology is subject to the sublicense restrictions contained in the Cross-License Agreement.

(b) To the extent that Medarex determines that such Medarex Technology is not subject to the sublicense restrictions contained in the Cross-License Agreement, Medarex shall so notify the Steering Committee in writing and the Collaboration thereafter shall have the right to grant such sublicense, subject to Section 3.4.

(c) To the extent that Medarex determines that all or part of such Medarex Technology is subject to the sublicense restrictions contained in the Cross-License Agreement, Medarex shall so notify the Steering Committee in writing. The Parties shall then meet to discuss in good faith how to proceed in order to optimize the commercialization of the applicable Collaboration Product hereunder while complying with the requirements of the Cross-License Agreement.

SECTION 3.4 SUBLICENSES. Subject to Section 3.3.5, each Party shall have the right to grant to Third Parties sublicenses under the licenses granted in Sections 3.1 and 3.2 only with the prior written consent of the Steering Committee, not to be unreasonably withheld or delayed; provided, however, that the grant of any such sublicense shall not relieve the sublicensing Party of its obligations under this Agreement. With respect to any proposed sublicense, the sublicensing Party shall provide the Steering Committee with written notice setting forth in reasonable detail the nature of such sublicense and the identity of the sublicensee.

SECTION 3.5 LICENSE LIMITATIONS. Each Party hereby covenants to the other Party that neither such first Party nor any of its Affiliates, licensees or sublicensees shall use or practice the Technology of such other Party (other than the Collaboration Technology, which shall be governed by Section 7.1.5), directly or indirectly, on behalf of itself or any other party, for any purpose other than as permitted under Section 3.1 and in particular, but without limiting the generality of the foregoing, for any research, development, commercialization or other Exploitation of an Antibody Product or any other product or method, other than a Collaboration Product or a Unilateral Product as provided hereunder.

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SECTION 3.6 NO OTHER RIGHTS. For the avoidance of doubt, Medarex: and its Affiliates shall have no right, express or implied, with respect to the Northwest Technology and Northwest and its Affiliates shall have no right, express or implied, with respect to the Medarex Technology, in each case except as expressly provided in Section 3.1.

ARTICLE 4
FINANCIAL PROVISIONS

SECTION 4.1 PROFIT AND EXPENSE ALLOCATION WITH RESPECT TO COLLABORATION PRODUCTS.

4.1.1 NET PROFITS AND NET LOSSES. Except as otherwise provided in this Agreement, * , as applicable, with respect to the Collaboration Products, as set forth in this Section. Within thirty (30) days after the end of each calendar quarter in which Net Profits or Net Losses are recognized with respect to a Collaboration Product, each Party shall provide the other Party with a statement detailing its Net Profits or Net Losses for such Collaboration Product for such calendar quarter on a country-by-country basis, which statement shall set forth in reasonable detail any Net Sales by such Party or its Affiliates, any Commercialization Expenses and any Other Operating (Income)/Expense, including a detailed breakdown of the components of the foregoing, with respect to such Collaboration Product, provided that such Commercialization Expenses (including the components thereof) may not exceed (or be projected to exceed) the amount set forth in the applicable Project Budget with respect to the commercialization activities set forth in the applicable Project Plan by more than ten percent (10%) without the approval of the Steering Committee ("AUTHORIZED COMMERCIALIZATION EXPENSES"). Within forty-five (45) days after the end of each calendar quarter, the Parties shall make payments to one another so that * , as applicable, for such calendar quarter for each Collaboration Product.

4.1.2 RESEARCH AND DEVELOPMENT EXPENSES. Except as otherwise provided in this Agreement, * of all Authorized R&D Expenses (as defined below) incurred by or on behalf of the Parties in connection with their activities other than the Northwest Research Activities and the Medarex Research Activities. Within thirty (30) days after the end of each calendar quarter, each Party shall furnish the Steering Committee with a statement (a) detailing the costs and expenses actually incurred in connection with the research and development activities (including Phase IV and any other post-Regulatory Approval research and development activities) performed by or on behalf of such Party during such calendar quarter, provided that such costs or expenses may not exceed (or be projected to exceed) the amounts set forth in the relevant Project Budget with respect to such research and development activities by more than ten percent (10%) without the approval of the Steering Committee (the "AUTHORIZED R&D EXPENSES") and (b) comparing such expenses to date with the projections set forth in the Project Budget. Within forty-five (45) days after the end of each calendar quarter, Medarex and Northwest shall make payments to one another so that * of the total Authorized R&D Expenses for such calendar quarter.

As Filed with the Securities and Exchange Commission on August 10, 2001.
*INFORMATION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

13

SECTION 4.2 PAYMENT METHOD. All amounts due by one Party hereunder shall be paid in U.S. dollars by wire transfer in immediately available funds to an account designated by the receiving Party. Any payments or portions thereof due hereunder which are not paid on the date such payments are due under this Agreement shall bear interest at a rate equal to the lesser of the prime rate as published in The Wall Street Journal, Eastern Edition, on the first day of each calendar quarter in which such payments are overdue, plus two percentage points, or the maximum rate permitted by law, calculated on the number of days such payment is delinquent, compounded monthly.

SECTION 4.3 CURRENCY; FOREIGN PAYMENTS. If any currency conversion shall be required in connection with any payment hereunder, such conversion shall be made by using the exchange rate for the purchase of U.S. dollars as published in The Wall Street Journal, Eastern Edition, on the last business day of the calendar quarter to which such payments relate. If at any time legal restrictions prevent the prompt remittance of any Net Profits with respect to Net Sales in any jurisdiction, the applicable Party may notify the other and make such payments by depositing the amount thereof in local currency in a bank account or other depository in such country in the name of the receiving Party or its designee, and such Party shall have no further obligations under this Agreement with respect thereto.

SECTION 4.4 TAXES. A Party may deduct from any amounts it is required to pay pursuant to this Agreement an amount equal to that withheld for or due on account of any taxes (other than taxes imposed on or measured by net income) or similar governmental charge imposed by a jurisdiction other than the United States ("WITHHOLDING TAXES"). At the receiving Party's request, the paying Party shall provide the receiving Party a certificate evidencing payment of any Withholding Taxes hereunder and shall reasonably assist the receiving Party, at the receiving Party's expense, to obtain the benefit of any applicable tax treaty.

SECTION 4.5 RECORDS RETENTION; AUDIT.

4.5.1 RECORD RETENTION. Each Party shall maintain (and shall ensure that its Affiliates and sublicensees shall maintain) complete and accurate books, records and accounts that fairly reflect their respective (a) Authorized R&D Expenses, Authorized Commercialization Expenses, Other Operating (Income)/Expenses, any costs and expenses reimbursable under Article 7, and any other costs and expenses reimbursable or otherwise shared by the Parties hereunder (collectively, the "COLLABORATION EXPENSES"), and (b) Net Sales of Collaboration Products and Net Profits and Net Losses with respect to Collaboration Products, in each case in sufficient detail to confirm the accuracy of any payments required hereunder and in accordance with GAAP, which books, records and accounts shall be retained by such party until the later of
(i) three (3) years after the end of the period to which such books, records and accounts pertain, and (ii) 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.

4.5.2 AUDIT. Each Party shall have the right to have an independent certified public accounting firm of nationally recognized standing, reasonably acceptable to the audited Party, to have access during normal business hours, and upon reasonable prior written notice, to

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such of the records of the other Party (and its Affiliates and sublicensees) as may be reasonably necessary to verify the accuracy of such Collaboration Expenses, Net Sales, or Net Profits or Net Losses, as applicable, for any calendar quarter ending not more than thirty-six (36) months prior to the date of such request; provided, however, that neither Party shall have the right to conduct more than one such audit in any twelve (12)-month period. The accounting firm shall disclose to each Party whether such Collaboration Expenses, Net Sales, or Net Profits or Net Losses, as applicable, are correct or incorrect and the specific details concerning any discrepancies. No other information shall be provided to the requesting Party. The requesting Party shall bear the cost of such audit unless the audit reveals a variance of more than five percent (5%) from the reported results, in which case the audited Party shall bear the cost of the audit. The results of such accounting firm shall be final, absent manifest error.

4.5.3 PAYMENT OF ADDITIONAL AMOUNTS. If, based on the results of such audit, additional payments are owed by a Party under this Agreement, such Party shall make such additional payments, with interest from the date originally due at the rate of * per month, within sixty (60) days after the date on which such accounting firm's written report is delivered to such Party.

4.5.4 CONFIDENTIALITY. The auditing Party shall treat all information subject to review under this Section 4.5 in accordance with the confidentiality provisions of Article 6 and shall cause its accounting firm to enter into a reasonably acceptable confidentiality agreement with the audited Party obligating such firm to maintain all such financial information in confidence pursuant to such confidentiality agreement.

ARTICLE 5
UNILATERAL AND THIRD PARTY DEVELOPMENT AND COMMERCIALIZATION

SECTION 5.1 UNILATERAL DEVELOPMENT AND COMMERCIALIZATION.

5.1.1 OPTING-OUT BY A PARTY. Each Party (i.e., Medarex, on the one hand, and Northwest, on the other hand) (the "OPTING-OUT PARTY") shall have the right, on thirty (30) days' written notice to the other (an "OPT-OUT NOTICE"), to elect not to proceed with the research, development and commercialization ("OPT-OUT") of all Collaboration Products with respect to a given Collaboration Target, provided that such Party shall * associated with the research and development activities with respect to such Collaboration Product(s) that such Party has committed to in the applicable Project Budget as necessary to complete that phase of research and development (e.g., toxicology studies in support of an IND or Phase I, Phase II or Phase III studies) that was under way when such Party Opted-Out. By way of clarification, if a Party Opts-Out of a Collaboration Product with respect to a Collaboration Target, such Party will be deemed to have Opted-Out with respect to all Antibody Products with respect to the same Collaboration Target.

As Filed with the Securities and Exchange Commission on August 10, 2001.
*INFORMATION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

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5.1.2 RIGHTS AND OBLIGATIONS OF PARTIES WITH RESPECT TO UNILATERAL PRODUCTS.

(a) UNILATERAL DEVELOPMENT AND COMMERCIALIZATION. Upon receipt by a Party of an Opt-Out Notice, the receiving Party shall have the right, on written notice to the Opting-Out Party within thirty (30) days following receipt of the Opt-Out Notice (an "ELECTION NOTICE"), to proceed unilaterally with the research, development and commercialization of all Collaboration Antibodies to the applicable Collaboration Target (each, a "UNILATERAL PRODUCT") pursuant to the separate agreement with the Opting-Out Party attached hereto as Appendix D-1 or Appendix D-2, as applicable (each, a "UNILATERAL DEVELOPMENT AND COMMERCIALIZATION AGREEMENT"). Upon receipt by Medarex of an Election Notice from Northwest with respect to a Collaboration Target, the Unilateral Development and Commercialization Agreement set forth in Appendix D-1 shall be automatically amended to include such Collaboration Target and any Antibody Products with respect thereto. Upon receipt by Northwest of an Election Notice from Medarex with respect to a Collaboration Target, the Unilateral Development and Commercialization Agreement set forth in Appendix D-2 shall be automatically amended to include such Collaboration Target and any Antibody Products with respect thereto. Upon such amendment of a Unilateral Development and Commercialization Agreement pursuant to this Section 5.1.2, the applicable Antigen shall cease to be a Collaboration Target and Appendix Q shall be amended accordingly, and any licenses granted pursuant to Article 3, with respect to such Antigen and any Antibodies and Antibody Products with respect thereto, shall terminate. The Parties shall work together to ensure a smooth and orderly transition of the Unilateral Products to the non-Opting-Out Party, including the assignment of any contracts with respect to the Exploitation of such Unilateral Products to the non-Opting-Out Party, and the assumption by the non-Opting-Out Party of any obligations thereunder. Except for the obligations provided for in Section 5.1.1, the Opting-Out Party shall have (x) no further financial obligation to support or otherwise fund any additional efforts in respect of such Unilateral Product, and (y) no obligation, responsibility, or authority regarding such additional efforts in respect of such Unilateral Product. In the event that neither Party elects to proceed with the research, development or commercialization of any Collaboration Product with respect to a Collaboration Target, the rights and obligations of the Parties with respect to such Collaboration Target shall be governed by Sections 5.2 and 5.3.

(b) OPT-OUT OF UNILATERAL PRODUCTS. If, at any time, the non-Opting Out Party elects to Opt-Out of all Unilateral Products with respect to a Unilateral Target (as defined in the applicable Unilateral Development and Commercialization Agreement) pursuant to such Unilateral Development and Commercialization Agreement and the other Party does not elect to proceed unilaterally with the research, development and commercialization of such Unilateral Products, all such Unilateral Products shall become Dormant Products pursuant to Section 5.3 and the non-Opting Out Party shall, without any additional consideration, assign fifty percent (50%) of its right, title and interest in and to any Product Trademark and all Regulatory Documentation with respect to such Unilateral Products, including any Regulatory Approvals and applications therefor (but excluding any Regulatory Documentation comprising Production Process Technology, including any drug master file), to the other Party.

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SECTION 5.2 THIRD-PARTY RESEARCH, DEVELOPMENT AND COMMERCIALIZATION OF COLLABORATION PRODUCTS. The Parties shall have the right, at any time with respect to a Collaboration Product, to license to Third Parties rights with respect to the research, development, manufacture or commercialization of such Collaboration Product on such terms and conditions as the Parties may mutually agree; provided that (a) any such sublicense with respect to the Medarex Technology shall be governed by the procedures set forth in Sections 3.3.5 and 3.4; and (b) any disputes between the Parties as to whether or not to grant such a license shall not be subject to litigation or any other Third Party dispute resolution mechanism.

SECTION 5.3 DORMANT PRODUCTS. If the Parties do not elect to proceed with the research, development or commercialization of a particular Collaboration Product with respect to a Collaboration Target, and the Parties have not licensed rights to such Collaboration Product to a Third Party pursuant, to Section 5.2 that would be inconsistent therewith, (each, a "DORMANT PRODUCT") either Party shall have the right at any time, subject to Section 3.3, to bring such Collaboration Product to the Steering Committee to discuss whether to initiate or reinitiate the research, development or commercialization of such Dormant Product. The initiating Party shall specify the reasons for proposing to initiate or reinitiate, such research, development or commercialization. If, within thirty (30) days after the receipt of such notice, the other Party fails to notify the interested Party in writing that it wishes to participate in the research, development or commercialization of such Dormant Product, then the interested Party shall have the right to pursue research, development or commercialization of such Dormant Product as a Unilateral Product pursuant to
Section 5.1, provided that no Collaboration Product with respect to the same Collaboration Target as such Dormant Product is being Exploited under this Agreement or by the other Party under a Unilateral Development and Commercialization Agreement.

ARTICLE 6
CONFIDENTIALITY

SECTION 6.1 DEFINITION. "Confidential Information" of a Party shall mean all information and know-how and any tangible embodiments thereof provided by or on behalf of such Party to the other Party either in connection with the discussions and negotiations pertaining to this Agreement or in the course of performing this Agreement, including data; knowledge; practices; processes; ideas; research plans, engineering designs and drawings, research data, manufacturing processes and techniques; scientific, manufacturing, marketing and business plans; and financial and personnel matters relating to the disclosing Party or to its present or future products, sales, suppliers, customers, employees, investors or business. For purposes of this Agreement, notwithstanding the Party that disclosed such information or know-how, all Northwest Know-How and all information or know-how with respect thereto, shall be Confidential Information of Northwest and all Medarex Know-How, including all Mice-Related Know-How and all Production Process Know-How, and all information and know-how with respect thereto, shall be Confidential Information of Medarex.

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SECTION 6.2 EXCLUSIONS. Notwithstanding the foregoing, information or know-how of a Party shall not be deemed Confidential Information with respect to a receiving Party for purposes of this Agreement if such information or know-how:

(a) was already known to the receiving Party or its Affiliates, other than under an obligation of confidentiality or non-use, at the time of disclosure to, or, with respect to Know-How, discovery or development by, such receiving Party;

(b) was generally available or known to parties reasonably skilled in the field to which such information or know-how pertains, or was otherwise part of the public domain, at the time of its disclosure to, or, with respect to Know-How, discovery or development by, such receiving Party;

(c) became generally available or known to parties reasonably skilled in the field to which such information or know-how pertains, or otherwise became part of the public domain, after its disclosure to, or, with respect to Know-How, discovery or development by, such receiving Party through no fault of a Party other than the Party that Controls such information and know-how;

(d) was disclosed to such receiving Party or its Affiliates, other than under an obligation of confidentiality or non-use, by a third party who had no obligation to the Party that Controls such information and know-how not to disclose such information or know-how to others; or

(e) was independently discovered or developed by such receiving Party or its Affiliates, as evidenced by their written records, without the use of, and by personnel who had not access to, Confidential Information belonging to the Party that Controls such information and know-how.

Specific aspects or details of Confidential Information shall not be deemed to be within the public domain or in the possession of a Party merely because the Confidential Information is embraced by more general information in the public domain or in the possession of such Party. Further, any combination of Confidential Information shall not be considered in the public domain or in the possession of a Party merely because individual elements of such Confidential Information are in the public domain or in the possession of such Party unless the combination and its principles are in the public domain or in the possession of such Party.

SECTION 6.3 DISCLOSURE AND USE RESTRICTION. Except as expressly provided herein, the Parties agree that, for the Term and for five (5) years thereafter, each Party and its Affiliates and sublicensees shall keep completely confidential and shall not publish or otherwise disclose and shall not use for any purpose except for the purposes contemplated by this Agreement any Confidential Information of the other Party, its Affiliates or sublicensees.

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SECTION 6.4 AUTHORIZED DISCLOSURE. Each Party may disclose Confidential Information of the other Party to the extent that such disclosure is:

6.4.1 REQUIRED BY GOVERNMENTAL ORDER. Made in response to a valid order of a court of competent jurisdiction or other supra-national, federal, national, regional, state, provincial or local governmental or regulatory body of competent jurisdiction; provided, however that such Party shall first have given notice to such other Party and given such other Party a reasonable opportunity to quash such order and to obtain a protective order requiring that the 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;

6.4.2 REQUIRED BY LAW. Otherwise required by law; provided, however, that the disclosing Party shall provide such other Party with notice of such disclosure in advance thereof to the extent practicable;

6.4.3 REQUIRED BY REGULATORY AUTHORITY. Made by such Party to the Regulatory Authorities as required in connection with any filing, application or request for Regulatory Approval; provided, however, that reasonable measures shall be taken to assure confidential treatment of such information;

6.4.4 REQUIRED BY AGREEMENT. Made by such Party, in connection with the performance of this Agreement, to Affiliates, permitted sublicensees, research parties, employees, consultants, representatives or agents, each of whom prior to disclosure must be bound by obligations of confidentiality and non-use at least equivalent in scope to those set forth in this Article 6; or

6.4.5 REQUIRED BY CERTAIN THIRD PARTIES. Made by such Party to existing or potential acquirers or merger candidates; existing or potential pharmaceutical collaborators (to the extent contemplated hereunder); investment bankers; existing or potential investors, venture capital firms or other financial institutions or investors for purposes of obtaining financing; or Affiliates, each of whom prior to disclosure must be bound by obligations of confidentiality and non-use at least equivalent in scope to those set forth in this Article 6. Notwithstanding this Section 6.4.5, neither Party shall disclose any item of the other Party's Confidential Information to any existing or potential acquirer or merger partner that is substantially involved in the Exploitation of Antibodies or Antibody Products without first providing such other Party with reasonable advance written notice of each such disclosure.

SECTION 6.5 USE OF NAME. Each Party may use the name, insignia, symbol, trademark, trade name or logotype of the other Party only (a) in connection with announcements and other permitted disclosures relating to this Agreement and the activities contemplated hereby, (b) as required by Applicable Law, and (c) otherwise as agreed in writing by such other Party.

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SECTION 6.6 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 (which shall be provided to the other Party as soon as practicable after the release or communication thereof), disclosures of information for which consent has previously been obtained, and information of a similar nature to that which has been previously disclosed publicly with respect to this Agreement, each of which shall not require advance approval.

SECTION 6.7 PUBLICATIONS. The Parties acknowledge that scientific lead-time is a key element of the value of the research and development activities under the Collaboration and further agree that scientific publications must be strictly monitored to prevent any adverse effect from premature publication of results of the research or development activities hereunder. At least sixty (60) days prior to submission of any material related to the research or development activities hereunder for publication or presentation, the submitting Party shall provide to the other Party a draft of such material for its review and comment. The receiving Party shall provide any comments to the submitting Party within sixty (60) days of receipt of such materials. No publication or presentation with respect to the research or development activities hereunder shall be made unless and until the other Party's comments on the proposed publication or presentation have been addressed and changes have been agreed upon and any information determined by the other Party to be Confidential Information has been removed. If requested in writing by the other Party, the submitting Party shall withhold material from submission for publication or presentation for an additional sixty (60) days to allow for the filing of a patent application or the taking of such measures to establish and preserve proprietary rights in the information in the material being submitted for publication or presentation.

ARTICLE 7
INTELLECTUAL PROPERTY

SECTION 7.1 INTELLECTUAL PROPERTY OWNERSHIP.

7.1.1 OWNERSHIP OF MEDAREX TECHNOLOGY. Subject to the license grants to Northwest under Article 3, as between the Parties, Medarex shall own and retain all right, title and interest in and to any and all: (a) Information and Inventions that are conceived, discovered, developed or otherwise made, as necessary to establish authorship, inventorship or ownership under Applicable Law, by or on behalf of Medarex (or its Affiliates or its licensees or sublicensees (other than Northwest and its Affiliates)), whether or not patented or patentable, and any and all Patent and other intellectual property rights with respect thereto, except to the extent that any such Information and Inventions, or any Patent or other intellectual property rights with respect thereto, are Collaboration Technology; (b) other Information and Inventions, and Patent and other intellectual property rights that are Controlled (other than pursuant to the license grants set forth in Article 3) by Medarex, its Affiliates or its licensees or sublicensees (other than Northwest), and (c) other Medarex Technology.

7.1.2 OWNERSHIP OF NORTHWEST TECHNOLOGY. Subject to Section 7.1.3 and the license grants to Medarex under Article 3, as between the Parties, Northwest shall own and retain

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all right, title and interest in and to any and all: (a) Information and Inventions that are conceived, discovered, developed or otherwise made, as necessary to establish authorship, inventorship or ownership under Applicable Law, by or on behalf of Northwest (or its Affiliates or its licensees or sublicensees (other than Medarex and its Affiliates)), whether or not patented or patentable, and any and all Patent and other intellectual property rights with respect thereto, except to the extent that any such Information and Inventions, or any Patent or other intellectual property rights with respect thereto, are Collaboration Technology or Mice Materials or Mice-Related Technology, (b) other Information and Inventions, and Patent and other intellectual property rights that are Controlled (other than pursuant to the license grants set forth in Article 3) by Northwest, its Affiliates or its licensees or sublicensees (other than Medarex); and (c) other Northwest Technology.

7.1.3 OWNERSHIP OF MICE-RELATED TECHNOLOGY. Subject to the license grants to Northwest under Article 3, as between the Parties, Medarex shall own and retain all right, title and interest in and to all Mice Materials and Mice-Related Technology, including any and all information and Inventions with respect to the Mice Materials or the Mice-Related Technology (including any Improvements thereto) that are conceived; discovered, developed or otherwise made, as necessary to establish authorship, inventorship or ownership under Applicable Law, by or on behalf of Northwest, its Affiliates or its licensees or sublicensees (other than Medarex and its Affiliates), whether or not patented or patentable, and any and all Patent and other intellectual property rights with respect thereto. Northwest acknowledges and agrees that (a) the licenses granted to it pursuant to Article 3 permit Northwest to use Mice Materials and Mice-Related Technology solely for the Exploitation of Collaboration Products as provided in this Agreement, (b) Northwest has no right to use the HuMAb Mice or to discover, develop or otherwise make Improvements with respect to Mice Materials and Mice-Related Technology under such grants, and (c) neither it, nor any of its Affiliates, licensees or sublicensees, will engage, directly or indirectly, in activities designed to, or otherwise undertake or attempt, either on behalf of itself or another, to discover, develop or make any Information and Inventions that relate to the Mice Materials or the Mice-Related Technology. Accordingly, Northwest shall promptly disclose to Medarex in writing, the conception or reduction to practice, or the discovery, development or making of any Mice Material or Mice-Related Technology and shall, and does hereby, assign, and shall cause its Affiliates, licensees and sublicensees to so assign, to Medarex, without additional compensation, all of their respective rights, titles and interests in and to any Mice Material or Mice-Related Technology.

7.1.4 OWNERSHIP OF PRODUCTION PROCESS TECHNOLOGY. Medarex shall own and retain all right, title and interest in and to the Production Process Technology, including any and all Information and Inventions with respect to such Production Process Technology (including any Improvements thereto) that are conceived, discovered, developed or otherwise made, as necessary to establish authorship, inventorship or ownership under Applicable Law, by or on behalf of Medarex, its Affiliates or, to the extent permitted, its sublicensees, whether or not patented or patentable, and any and all Patent and other intellectual property rights with respect thereto. Except as the Parties may otherwise expressly agree, Northwest shall not have any rights, express or implied, under this Agreement with respect to the Production Process Technology and nothing in this Agreement is intended to or shall be interpreted as granting Northwest any license to the Production Process Technology, whether subordinate or dominant

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to any other Technology. Medarex shall have the right to submit any of its Production Process Know-How with respect to a Collaboration Product directly to the Regulatory Authorities using a drug master file, or any foreign equivalent that is designed to protect Medarex's Confidential Information, which Know-How and filing shall, notwithstanding Section 7.1.7 or any other provision of this Agreement, be and remain the sole and exclusive property of Medarex.

7.1.5 OWNERSHIP OF COLLABORATION TECHNOLOGY. Subject to Sections 7.1.3 and 7.1.4 and the license grants under Article 3, the Parties shall each own an equal, undivided interest in any Collaboration Technology; provided, however that, except as otherwise expressly provided in this Agreement, neither a Party nor any of its Affiliates, licensees or sublicensees shall, directly or indirectly, Exploit any Collaboration Technology, or any intellectual property rights with respect thereto, without the consent of the other Party, not to be unreasonably withheld or delayed, except that each Party shall have the right to Exploit such Collaboration Technology for research and discovery purposes (as opposed to the development, commercialization or other Exploitation of products or technology resulting therefrom), and to license others to do so, without the consent of the other Party. 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 Collaboration Technology, and shall, and does hereby, assign, and shall cause its Affiliates, licensees and sublicensees to so assign, to the other Party, without additional compensation, such right, title and interest in and to any Collaboration Technology as well as any intellectual property rights with respect thereto, as is necessary to fully effect the joint ownership provided for in the foregoing sentence.

7.1.6 OWNERSHIP OF PRODUCT TRADEMARKS. Subject to the license grants in Article 3, the Parties shall each own an equal, undivided interest in each Product Trademark with respect to a Collaboration Product. In the event that a Party Opts-Out with respect to a Collaboration Product, it shall, without any additional consideration, assign all of its right, title and interest in and to any Product Trademark with respect to such Collaboration Product or Unilateral Product to the non-Opting-Out Party; provided, however that each Party shall retain all of its right, title and interest in and to any Product Trademarks with respect to Dormant Products.

7.1.7 FILING FOR REGULATORY APPROVALS; OWNERSHIP OF REGULATORY DOCUMENTATION.

(a) Subject to the license grants in Article 3, all filings for Regulatory Approvals with respect to a Collaboration Product shall be * . With respect to the first Collaboration Product and any other Collaboration Products with respect to the same Collaboration Target, the filings for Regulatory Approvals * or its designee. With respect to the first Collaboration Product with respect to the next Collaboration Target, and any other Collaboration Products with respect to the same Collaboration Target, the filings for Regulatory Approvals * or its designee.

As Filed with the Securities and Exchange Commission on August 10, 2001.
*INFORMATION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

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(b) Subject to the license grants in Article 3, each Party shall, to the extent permitted by law, have an equal, undivided interest in all other Regulatory Documentation, provided that Regulatory Documentation containing or comprising Production Process Know-How shall be and remain the sole and exclusive property of Medarex. Subject to the foregoing sentence, each Party shall promptly (a) disclose to the other Party in writing, and shall cause its Affiliates, licensees and sublicensees to so disclose, such other Regulatory Documentation, and (b) assign, or cause its Affiliates, licensees or sublicensees to assign, to the other Party, without additional compensation, such right, title and interest in and to such other Regulatory Documentation as is necessary to fully effect the joint ownership provided for in the foregoing sentence.

(c) Each non-Opting-Out Party shall have the right to file for all Regulatory Approvals with respect to its Unilateral Products in its own name. In the event that a Party Opts-Out with respect to a Collaboration Product, it shall transfer and assign all of its right, title and interest in and to all Regulatory Documentation with respect to such Collaboration Product, including any Regulatory Approvals and applications therefor (but excluding any Regulatory Documentation comprising Production Process Technology, including any drug master file), to the non-Opting Out Party (or its designee); provided, however, that each Party shall retain any of its right, title and interest in and to-any Regulatory Documentation with respect to a Dormant Product. Notwithstanding the sponsorship of any Regulatory Approval or ownership of any other Regulatory Documentation, each Party shall have the right to use and reference any of the Regulatory Documentation in connection with the Exploitation of Collaboration Products as provided in this Agreement.

SECTION 7.2 PROSECUTION OF PATENTS AND TRADEMARKS.

7.2.1 MEDAREX RIGHTS. As between the Parties, Medarex shall, subject to Section 7.2.5, have the sole right, at its cost and expense, to obtain, prosecute and maintain throughout the world the Medarex. Patents, including the Mice-Related Patents and the Production Process Patents; provided, however, that Northwest shall reimburse Medarex for fifty percent (501/6) of the reasonable out-of-pocket costs incurred by Medarex for filing, prosecuting and maintaining Mice-Related Patents and Production Process Patents filed after the Effective Date, to the extent that they claim or cover the Exploitation of Collaboration Products.

7.2.2 NORTHWEST RIGHTS. As between the Parties, Northwest shall, subject to Section 7.2.5, have the sole right, at its cost and expense, to obtain, prosecute and maintain throughout the world the Northwest Patents.

7.2.3 COLLABORATION TECHNOLOGY AND PRODUCT TRADEMARKS.

(a) FILINGS OF PATENTS. Subject to Section 7.2.6, the Parties shall, and shall cause their respective Affiliates, licensees and sublicensees, as applicable, to, cooperate with one another with respect to the filing, prosecution and maintenance of all Collaboration Patents, including by selecting outside counsel, reasonably acceptable to the Parties, to handle such filing, prosecution and maintenance. The Parties shall share equally in the expenses

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associated with the filing, prosecution (including any interferences, reissue proceedings and reexaminations) and maintenance of all Collaboration Patents.

(b) FILINGS OF PRODUCT TRADEMARKS. The Steering Committee, with respect to a Collaboration Product, shall supervise and direct the filing, prosecution and maintenance of the registrations of the Product Trademarks for such Collaboration Product. The Steering Committee shall provide each Party with (i) drafts of any new application to register a Product Trademark prior to filing that application, allowing adequate time for review and comment by the Parties if possible; provided, however, the Steering Committee shall not be obligated to delay the filing of any application; and
(ii) copies of all correspondence from any and all Trademark offices concerning Product Trademark registrations and an opportunity to comment on any proposed responses, voluntary amendments and submissions of any kind to be made to any and all such Trademark offices. Subject to Section 7.2.6, the Parties shall share equally in the expenses associated with the filing, prosecution and maintenance of such Product Trademark registrations.

7.2.4 COOPERATION. Each Party shall, and shall cause its Affiliates, licensees and sublicensees, as applicable, to, cooperate fully in the preparation, filing, prosecution, and maintenance of the other Party's Patents and the Product Trademarks. Such cooperation includes (a) promptly executing all papers and instruments and requiring employees to execute such papers and instruments as reasonable and appropriate so as to enable such other Party or the Steering Committee, as applicable, to file, prosecute, and maintain its Patents in any country; and (b) promptly informing such other Party of matters that may affect the preparation, filing, prosecution, or maintenance of any such Patents.

7.2.5 PATENT FILINGS. Northwest covenants not to, and to cause its Affiliates, licensees and sublicensees, as applicable, not to, file any patent application disclosing or claiming any Information and Inventions comprising any Medarex Technology or the Exploitation thereof, without Medarex's prior written consent, which consent shall not be unreasonably withheld or delayed. Medarex covenants not to, and to cause its Affiliates, licensees and sublicensees, as applicable, not to, file any patent application disclosing or claiming any Information and Inventions comprising any Northwest Technology or the Exploitation thereof, without Northwest's prior written consent, which consent shall not be unreasonably withheld or delayed.

7.2.6 ELECTION NOT TO PROSECUTE. If a Party elects not (a) to pursue the filing, prosecution or maintenance of a Collaboration Patent in a particular country, (b) to pursue the registration, prosecution or maintenance of a Product Trademark in a particular country, or (c) to take any other action with respect to Collaboration Technology or a Product Trademark in a particular country that is necessary or reasonably useful to establish or preserve rights thereto, then in each such case such Party shall so notify the other Party promptly in writing and in good time to enable such other Party to meet any deadlines by which an action must be taken to establish or preserve any such rights in such Collaboration Technology or Product Trademark, as applicable, in such country. Upon receipt of each such notice by such other Party or if, at any time, such Party fails to initiate any such action within thirty (30) days after a request by such other Party that it do so (or thereafter diligently pursue such action), such other Party shall have

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the right, but not the obligation, to pursue the filing or registration, or support the continued prosecution or maintenance, of such Patent or Product Trademark, as applicable, at its expense in such country. If such other Party elects to pursue such filing or registration, as the case may be, or continue such support, then such other Party shall notify such Party of such election and such Party shall, and shall cause its Affiliates, licensees and sublicensees, as applicable, to, (x) reasonably cooperate with such other Party in this regard, and (y) subject to Article 3, promptly release or assign to such other Party, without compensation, all right, title and interest in and to such Patent or Product Trademark, as applicable, in such country.

SECTION 7.3 ENFORCEMENT OF PATENTS AND TRADEMARKS.

7.3.1 RIGHTS AND PROCEDURES. If Medarex or Northwest determines that any Technology or Product Trademark is being infringed by a Third Party's activities and that such infringement could affect the exercise by the Parties of their respective rights and obligations under this Agreement, it shall promptly notify the other Party in writing and provide such other Party with any evidence of such infringement that is reasonably available. Promptly after the receipt of such written notice, the Parties shall meet and discuss in good faith the removal of such infringement. The pursuing Party shall consider in good faith any comments from the other Party and shall keep the other Party reasonably informed of any steps taken to remove such infringement.

7.3.2 COLLABORATION TECHNOLOGY AND PRODUCT TRADEMARKS. With respect to Collaboration Technology and Product Trademarks, the Steering Committee shall have the first right to remove such infringement using commercially appropriate steps, including the filing of an infringement suit or taking other similar action. * incurred in connection with such action. In the event the Steering Committee fails to take commercially appropriate steps to remove any infringement of any such Collaboration Technology or Product Trademark within ninety (90) days following notice of such infringement, or earlier notifies the Parties in writing of its intent not to take such steps, and (i) such failure to act is due to the refusal of one Party's representatives on the Steering Committee to authorize action over the objection of the other Party's representatives, then the Party whose representatives wish to proceed shall have the right to do so at its expense, or (ii) such failure to act is due to any reason other than as set forth in clause (i) above, then either Party shall have the right to proceed at its expense; provided, however, that if the Steering Committee has commenced negotiations with an alleged infringer for discontinuance of such infringement within such ninety (90) day period, the Steering Committee shall have an additional ninety (90) days to conclude its negotiations before a Party unilaterally may bring suit for such infringement.

7.3.3 OTHER TECHNOLOGY. With respect to Technology of a Party, the owner of such Technology shall have the sole right, but not the obligation, to remove such infringement; provided, however, that the other Party shall reimburse the owner of such Technology for * of the reasonable out-of-pocket costs incurred by such owner with respect to the removal of any such infringement with respect to any Collaboration Product.

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7.3.4 COOPERATION. The Party not enforcing the applicable Technology or Product Trademark shall provide reasonable assistance to the other Party, including providing access to relevant documents and other evidence, making its employees available at reasonable business hours, and joining the action to the extent necessary to allow the enforcing Party to maintain the action.

7.3.5 RECOVERY. Any amounts recovered by a Party pursuant to this Section 7.3, whether by settlement or judgment, shall be used to reimburse the Parties for their reasonable 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 has exercised its right to bring the enforcement action; provided, however, that to the extent that any award is attributable to loss of sales of a Collaboration Product, the Parties shall negotiate in good faith an appropriate allocation of such award to reflect the economic interests of the Parties under this Agreement with respect to such Collaboration Product.

SECTION 7.4 POTENTIAL THIRD PARTY RIGHTS.

7.4.1 THIRD PARTY LICENSES.

(a) If (i) in the Collective Opinion of Counsel, a Party, or any of its Affiliates, licensees or permitted sublicensees, cannot Exploit a Collaboration Product in a country in the Territory without infringing one or more Patents that have issued to a Third Party in such country, or (ii) as a result of any claim made against a Party, or any of its Affiliates, licensees or permitted sublicensees, alleging that the Exploitation of a Collaboration Product infringes or misappropriates any Patent or any other intellectual property right of a Third Party in a country in the Territory, a judgment is entered by a court of competent jurisdiction from which no appeal is taken within the time permitted for appeal, such that a Party cannot Exploit such Collaboration Product in such country without infringing the Patent or other proprietary rights of such Third Party, then, in either case, the Parties shall use Commercially Reasonable Efforts to obtain a license in the names of the Parties from such Third Party as necessary for the Exploitation of any Collaboration Products hereunder in such country. Such activities shall be coordinated through the Steering Committee. Without acknowledging any actual or potential infringement, the Parties agree that it is in the best interests of the Collaboration to seek to enter into a cross license with * to ensure that the Collaboration has freedom to operate with respect to Collaboration Products against the Collaboration Target referred to on Appendix C as PSMA. Accordingly, the Parties further agree that (i) no Collective Opinion of Counsel shall be necessary for the Steering Committee to commence negotiations with * and its licensees to obtain such cross license, and (ii) the Steering Committee shall, promptly after the Effective Date, commence such negotiations and use Commercially Reasonable Efforts to obtain such cross license.

(b) Notwithstanding subsection (a) above, Medarex shall have the sole right to seek any such license with respect to Mice-Related Technology or any Production Process Technology, and shall use Commercially Reasonable Efforts to obtain such a license in its own name from such Third Party in such country, under which Medarex shall, to the extent permissible under such license, grant a sublicense to Northwest as necessary for Northwest, and

As Filed with the Securities and Exchange Commission on August 10, 2001.
*INFORMATION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

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any of its Affiliates and permitted sublicensees, to Exploit the Collaboration Products as provided hereunder in such country. If Medarex is unable to secure the right to sublicense to Northwest, the Parties shall meet to discuss how to proceed. If the Parties are unable to come to a mutually satisfactory arrangement, and if Northwest does not wish to proceed with a joint development and commercialization of a Collaboration Antibody for which such sublicense is required, it shall notify Medarex thereof in writing, which notice shall be deemed to be an Opt-Out Notice as provided in Section 5.1.1.

(c) The Parties shall * of any royalty or other payment obligations under the licenses obtained as provided in subsections (a) or (b) above, except with respect to the Medarex Technology or the Northwest Technology, where Northwest and Medarex, respectively, shall be responsible for
* of only those royalty and other payment obligations with respect to the Exploitation of Collaboration Products and the other activities of the Parties hereunder.

(d) For purposes of this Section 7.4.1, "COLLECTIVE OPINION OF COUNSEL" shall mean the final joint opinion of patent counsel selected by Northwest and patent counsel selected by Medarex, after review of all data and information reasonably available at the time such opinion is rendered. If patent counsel for the Parties cannot agree on a final joint opinion within twenty (20) days after submission of the matter to such counsel, the patent counsel of the Parties shall agree on a third patent counsel who shall offer an independent opinion on the subject matter, which independent opinion shall be deemed the Collective Opinion of Counsel.

7.4.2 THIRD PARTY LITIGATION.

(a) In the event that a Third Party institutes a Patent, Trademark or other infringement suit (including any suit alleging the invalidity or unenforceability of the Patents of a Party or its Affiliates, or claiming confusion, deception or dilution of a Trademark by a Product Trademark) against either Party or its respective Affiliates, licensees or permitted sublicensees during the Term, alleging that the Exploitation of the Collaboration Products in the Territory or any other activities hereunder, infringes one or more Patent, Trademark or other intellectual property rights held by such Third Party (an "INFRINGEMENT SUIT"), the Parties shall cooperate with one another in defending such suit.

(b) With respect to the Medarex Technology or the Northwest Technology, the Parties shall jointly direct and control any Infringement Suit with respect to Collaboration Products or any Collaboration Patents; provided, however, that no Party shall cease to defend, settle or otherwise dispose of a suit with respect to any intellectual property of the other Party without the prior written consent of such other Party.

(c) Each Party shall have the sole right to direct and control (including the right to cease to defend, settle or compromise) any Infringement Suit with respect to its Technology. The Parties * of any costs and expenses of such defense, except with respect to the Medarex Technology or the Northwest Technology, where Northwest and Medarex, respectively, shall be responsible for * of those costs

As Filed with the Securities and Exchange Commission on August 10, 2001.
*INFORMATION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

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and expenses only with respect to the Exploitation of Collaboration Products and the other activities of the Parties hereunder.

7.4.3 RETAINED RIGHTS. Nothing in this Section 7.4 shall prevent either Party, 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 or performance of its obligations under this Agreement; provided, however, that the terms of such license shall not impair the rights of the other Party to Exploit the Collaboration Products.

SECTION 7.5 EXCHANGE OF KNOW-HOW.

7.5.1 INFORMATION DISCLOSURE. Each Party shall, and shall cause its Affiliates, licensees and sublicensees, as applicable, to, without additional compensation and at such Party's sole expense, disclose and make available to the other Party, in whatever form each such other Party may reasonably request, all Regulatory Documentation, all of its other Know-How, all Information and Inventions included in the Collaboration Technology and any other Information and Inventions relating, directly or indirectly, to the Exploitation of any Collaboration Products immediately after the Effective Date and thereafter immediately upon the earlier of the conception or reduction to practice, discovery, development or making of each such Regulatory Documentation, Know-How, or other Information and Inventions.

7.5.2 COOPERATION. With respect to the research, development, commercialization or other Exploitation of the Collaboration Products, each Party, shall cooperate with any and all reasonable requests for assistance from the other Party, including by making its employees, consultants and other scientific staff available upon reasonable notice during normal business hours at their respective places of business to consult with such other Party, as applicable, on issues arising during such research, development, commercialization or Exploitation.

7.5.3 BIOLOGICAL MATERIALS.

(a) For purposes of facilitating the conduct of the research and development activities under this Agreement, Medarex and Northwest shall each provide to the other tissues, cells, cell lines, organisms, blood samples, genetic material, and other biological substances and materials, including the Mice Materials, the Collaboration Targets and other Antigens (collectively, "BIOLOGICAL MATERIALS") specified from time to time in this Agreement or the applicable Project Plan. Each Party agrees to provide all such Biological Materials to the other in accordance with this Agreement and the applicable Project Plan, and under the supervision of the Steering Committee.

(b) The Parties agree that: (a) all Biological Materials provided by one Party to the other Party and any Biological Material (including Collaboration Products and other Mice Materials) produced against or with, or derived from, such Biological Materials shall be used solely for the research and development activities as provided in the Project Plan, and in material compliance with all Applicable Law; (b) all such Biological Materials shall be provided without any warranties, express or implied, (c) the Party providing such Biological Materials

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shall obtain (or cause its Third Party collaborators to obtain or certify that they have obtained) all appropriate and required consents from the source of such Biological Materials; (d) Biological Materials provided by one Party to the other Party (other than Collaboration Products) shall not be made available by such other Party to any Third Party except as expressly provided in the Project Plan, unless the prior written consent of the Party providing such Biological Materials is first obtained; and (e) subject to the license grants in Article 3 and other provisions in this Agreement, all right, title and interest in and to
(i) the Mice Materials and the Mice-Related Technology shall be, and remain, vested in Medarex, and (ii) the Collaboration Targets shall be, and remain, vested in Northwest.

7.5.4 REGULATORY RECORDS. With respect to the subject matter of this Agreement, each Party shall maintain, or cause to be maintained, records of its respective research, development, manufacturing and commercialization activities, including all Regulatory Documentation, 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 such activities, and which shall be retained during the term of this Agreement and for a period of five (5) years thereafter, 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, with respect to Medarex's records, to the extent that such records contain proprietary information with respect to the Production Process Technology or the HuMAb Mice.

7.5.5 PRODUCTION PROCESS TECHNOLOGY. Notwithstanding anything to the contrary in this Section 7.5 or elsewhere in this Agreement, Medarex shall not be obligated to disclose or provide any of its Production Process Technology, including Biological Materials, to Northwest or any Third Party; provided, however, that Medarex shall provide such Production Process Know-How to the Regulatory Authorities as is necessary to obtain and maintain Regulatory Approval for Collaboration Products supplied by it pursuant to Section 1.6. Medarex shall have the right to provide such Know-How to the Regulatory Authorities in a drug master file, or any foreign equivalent that is designed to protect Medarex's Confidential Information.

ARTICLE 8
TERM AND TERMINATION

SECTION 8.1 TERM. The term of this Agreement (the "Term") shall commence upon the Effective Date and shall continue in effect until the later of (a) the first anniversary of the completion of all of the activities in Section 1.2, or
(b) such time as there is no longer any Collaboration Product being Exploited hereunder, whether pursuant to Section 1.7 or otherwise, or any Unilateral Product being Exploited under a Unilateral Development and Commercialization Agreement, unless terminated at an earlier date in accordance with the terms and conditions set forth in this Article 8.

SECTION 8.2 TERMINATION FOR MATERIAL BREACH.

8.2.1 Any material failure by a Party to comply with any of its material obligations contained herein shall entitle the Party not in default to give to the Party in default

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written notice specifying the nature of the default, requiring the defaulting Party to make good or other-wise cure such default, and stating its intention if such default is not cured to terminate or, at the option of the Party not in default, to convert a Collaboration Product to which the material breach applies to a Unilateral Product pursuant to Section 5.1.

8.2.2 If such default is not cured within thirty (30) days after the receipt of notice pursuant to subsection 8.2.1 above (or, if such default cannot be cured within such thirty (30)-day period, if the Party in default does not commence actions to cure such default within such period and thereafter diligently continue such actions or if such default is not otherwise cured within one-hundred and eighty (180) days after the receipt of such notice), except in the case of a payment default, as to which the defaulting Party shall have only a thirty (30) day cure period, the Party not in default shall be entitled, on written notice to the other Party, without prejudice to any of its other rights conferred on it by this Agreement, and in addition to any other remedies available to it by law or in equity, to (a) terminate this Agreement in its entirety, or (b) convert such Collaboration Product to a Unilateral Product pursuant to Section 5.1, whereupon the defaulting Party shall be deemed the Opting-Out Party with respect to such Unilateral Product for all purposes hereunder and the notice provided under this provision shall be deemed equivalent to an Election Notice as provided in Section 5.1.

SECTION 8.3 TERMINATION UPON INSOLVENCY. Either Party may terminate this Agreement if, at any time, the other Party 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 such other Party proposes a written agreement of composition or extension of its debts, or if such other Party 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 such other Party shall propose or be a party to any dissolution or liquidation, or if such other Party shall make an assignment for the benefit of its creditors.

SECTION 8.4 RIGHTS IN BANKRUPTCY. All rights and licenses granted under or pursuant to this Agreement by Medarex or Northwest are, and shall otherwise be deemed to be, for purposes of Section 365(n) of the United States Bankruptcy Code, licenses of rights to "intellectual property" as defined under Section 101 of the United States Bankruptcy Code. The Parties agree that the Parties, as licensees of such rights under this Agreement, shall retain and may fully exercise all of their rights and elections under the United States Bankruptcy Code. The Parties further agree that, in the event of the commencement of a bankruptcy proceeding by or against a Party under the United States 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 continues to perform all of its obligations under this Agreement or (b) if not delivered under clause (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.

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SECTION 8.5 CONSEQUENCES OF EXPIRATION OR TERMINATION.

8.5.1 LICENSES. Upon expiration of the full term of this Agreement in accordance with Section 8.1 and payment of all amounts owed pursuant to Section 4.1, the licenses granted by Medarex to Northwest, and by Northwest to Medarex, hereunder shall be deemed fully-paid up.

8.5.2 RETURN OF INFORMATION AND MATERIALS. Upon expiration of this Agreement pursuant to Section 8.1 or upon termination of this Agreement in its entirety by either Party pursuant to this Article 8, each Party, at the request of the other Party, shall return Biological Materials of such other Party and all data, files, records and other materials in its possession or control relating to such other Party's Technology, or containing or comprising such other Party's Information and Inventions or other Confidential Information (as defined in Article 6) and, in each case, to which the returning Party does not retain rights hereunder (except one copy of which (other than Biological Materials) may be retained solely for archival purposes).

SECTION 8.6 ACCRUED RIGHTS; SURVIVING OBLIGATIONS.

8.6.1 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.

8.6.2 SURVIVAL. Articles 4(with respect to obligations arising prior to expiration or termination), 6 and 9, and Sections 2.3, 3.3.5, 3.4, 7.1, 7.2, 7.5.3, 7.5,4, 7.5.5, 8.5, 11.5 and 11.6 of this Agreement and this Section 8.6 shall survive expiration or termination of this Agreement for any reason.

ARTICLE 9
INDEMNIFICATION AND INSURANCE

SECTION 9.1 INDEMNIFICATION OF MEDAREX. Northwest shall indemnify Medarex and 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, damages, liabilities, costs and expenses (including reasonable attorneys' fees and expenses) in connection with any and all liability suits, investigations, claims or demands (collectively, "LOSSES") arising from or occurring as a result of or in connection with (a) any breach by Northwest of this Agreement, or (b) the gross negligence or willful misconduct on the part of Northwest or its Affiliates, licensees or sublicensees in performing any activity contemplated by this Agreement, except for those Losses for which Medarex has an obligation to indemnify Northwest pursuant to Section 9.2, as to which Losses each Party shall indemnify the other to the extent of their respective liability for the Losses.

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SECTION 9.2 INDEMNIFICATION OF NORTHWEST. Medarex: shall indemnify Northwest, 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 arising from or occurring as a result of or in connection with (a) any breach by Medarex of this Agreement, or (b) the gross negligence or willful misconduct on the part of Medarex or its Affiliates, licensees or sublicensees in performing any activity contemplated by this Agreement, except for those Losses for which Northwest has an obligation to indemnify Medarex: and its Affiliates pursuant to Section 9.1, as to which Losses each Party shall indemnify the other to the extent of their respective liability for the Losses.

SECTION 9.3 INDEMNIFICATION PROCEDURE.

9.3.1 NOTICE OF CLAIM. 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 9.1 or Section 9.2, 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 are 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. All indemnification claims in respect of a Party, its Affiliates or their respective directors, officers, employees and agents (collectively, the "INDEMNITEES" and each an "INDEMNITEE") shall be made solely by such Party to this Agreement (the "INDEMNIFIED PARTY").

9.3.2 THIRD PARTY CLAIMS. The obligations of an indemnifying Party under this Article 9 with respect to Losses arising from claims of any Third Party that are subject to indemnification as provided for in Section 9.1 or 9.2 (a "THIRD PARTY CLAIM") shall be governed by and be contingent upon the following additional terms and conditions:

(a) CONTROL OF DEFENSE.

(i) At its option, the indemnifying Party may assume the defense of any Third Party Claim by giving 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 any Indemnitee in respect of the Third Party Claim, nor shall it constitute a waiver by the indemnifying Party of any defenses it may assert against any Indemnitee's claim for indemnification,

(ii) 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 any Indemnitee in connection with the Third Party Claim. Should the indemnifying Party assume the

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defense of a Third Party Claim, the indemnifying Party shall not be liable to the Indemnified Party or any other Indemnitee for any legal expenses subsequently incurred by such Indemnified Party or other Indemnitee in connection with the analysis, defense or settlement of the Third Party Claim.

(iii) In the event that it is ultimately determined that the indemnifying Party is not obligated to indemnify, defend or hold harmless an Indemnitee 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 Losses incurred by the indemnifying Party in its defense of the Third Party Claim with respect to such Indemnitee.

(b) RIGHT TO PARTICIPATE IN DEFENSE. Without limiting
Section 9.3.2(a), any Indemnitee 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 Indemnitee's own expense unless (i) the employment thereof has been specifically authorized by the indemnifying Party in writing, or (ii) the indemnifying Party has failed to assume the defense and employ counsel in accordance with Section
9.3.2(a) (in which case the Indemnified Party shall control the defense).

(c) SETTLEMENT. With respect to any Losses relating solely to the payment of money damages in connection with a Third Party Claim and that will not result in the Indemnitee's becoming subject to injunctive or other relief or otherwise adversely affect the business of the Indemnitee in any manner, and as to which the indemnifying Party shall have acknowledged in writing the obligation to indemnify the Indemnitee 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 9.3.2(a), 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 Indemnitee that is reached without the written consent of the indemnifying Party. Regardless of whether the indemnifying Party chooses to defend or prosecute any Third Party Claim, no Indemnitee 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.

(d) COOPERATION. Regardless of whether the indemnifying Party chooses to defend or prosecute any Third Party Claim, the Indemnified Party shall, and shall cause each other Indemnitee 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 the 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 Indemnitees and

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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.

(e) EXPENSES. Except as provided above, the reasonable and verifiable 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.

SECTION 9.4 INSURANCE. Each Party shall have and maintain such types and amounts of liability insurance as is normal and customary in the 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.

ARTICLE 10
REPRESENTATIONS AND WARRANTIES

SECTION 10.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. Each Party hereby represents, warrants and covenants to the other Party as of the Effective Date as follows:

10.1.1 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.

10.1.2 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 intellectual property rights of any other party.

10.1.3 CONSENTS, APPROVALS, ETC. All necessary consents, approvals and authorizations of all Regulatory Authorities and other parties 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.

10.1.4 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 any provision of the articles of incorporation, bylaws or any

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similar instrument of such Party, as applicable, in any 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.

10.1.5 DEBARMENT. No such Party nor any of its Affiliates has been debarred or is subject to debarment and neither such Party nor any of its Affiliates will use in any capacity, in connection with the services to be performed under this Agreement, any party who has been debarred pursuant to
Section 306 of the Federal Food, Drug, and Cosmetic Act, as amended, or who is the subject of a conviction described in such section. Each Party will inform the other Party in writing immediately if it or any party 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 such Party's knowledge, is threatened, relating to the debarment or conviction of such Party or any party performing services hereunder.

SECTION 10.2 ADDITIONAL REPRESENTATIONS AND WARRANTIES OF MEDAREX.

10.2.1 Medarex represents and warrants to Northwest that Medarex is a corporation duly organized, validly existing and in good standing under the laws of the State of New Jersey, and has full corporate 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.

10.2.2 Except as set forth in Appendix E on Schedule 10.2 attached hereto, to the knowledge of the officers of Medarex and without a duty to conduct any investigation, as of the Effective Date, there are no existing or threatened (in writing) actions, suits or claims pending with respect to the Medarex Technology.

10.2.3 To the knowledge of the officers of Medarex, there are no issued U.S., EPO or Japanese patents owned by third parties (other than those Controlled by Medarex) that would be infringed by the use of the Mice Materials and/or Medarex Technology by Medarex to elicit, produce in hybridornas and/or identify human monoclonal antibodies in connection with the licenses granted herein; provided, however, that the representation and warranty set forth in this clause does not include any patents or patent applications that cover (A) the targets of such human monoclonal antibodies or (B) the human monoclonal antibodies specific to such targets or (C) the use of such human monoclonal antibodies.

SECTION 10.3 ADDITIONAL REPRESENTATIONS AND WARRANTIES OF NORTHWEST.

10.3.1 Northwest represents and warrants to Medarex that Northwest is a corporation duly organized, validly existing and in good standing under the laws of Delaware, and has full corporate 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.

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10.3.2 Except as set forth in Appendix E on Schedule 10.3 attached hereto, to the knowledge of the officers of Northwest and without a duty to conduct any investigation, as of the Effective Date, there are no existing or threatened (in writing) actions, suits or claims pending with respect to the Northwest Technology.

10.3.3 To the knowledge of the officers of Northwest, there are no issued U.S., EPO or Japanese patents owned by third parties (other than those Controlled by Northwest) that would be infringed by the use of the Collaboration Targets or the human monoclonal antibodies specific to such targets in connection with the licenses granted herein.

SECTION 10.4 KNOWLEDGE; OFFICERS. For purposes of Sections 10.1, 10.2 and 10.3, (a) "knowledge of' a Party shall mean such Party's good faith understanding of the facts and information in its possession without any duty to conduct any investigation with respect to such facts and information, and (b) "officers" of a Party shall mean persons in the positions of vice president, senior vice president, executive vice president, president and chief executive officer.

SECTION 10.5 DISCLAIMER OF WARRANTY. EXCEPT FOR THE EXPRESS WARRANTIES SET FORTH IN SECTIONS 10.1, 10.2 AND 10.3, NORTHWEST AND MEDAREX MAKE NO REPRESENTATIONS AND GRANT NO WARRANTIES, EXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW, BY STATUTE OR OTHERWISE, AND NORTHWEST AND MEDAREX EACH SPECIFICALLY DISCLAIM 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 11
MISCELLANEOUS

SECTION 11.1 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, embargoes, shortages, epidemics, quarantines, war, acts of war (whether war be declared or not), insurrections, riots, civil commotion, strikes, lockouts or other labor disturbances, 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 ten (10) 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; provided, however, that in the event the suspension of performance continues for one-hundred and eighty
(180) days after the date of the occurrence, the Parties shall meet to discuss in good faith how to proceed in order to accomplish the goals of the Collaboration outlined in this Agreement.

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SECTION 11.2 SUBCONTRACTORS. Each Party shall have the right, subject to the prior written consent of the Steering Committee, such consent not to be unreasonably withheld or delayed, to subcontract any of its research, development, manufacture and/or commercialization activities to a Third Party, provided that it furnishes the other Party with advanced written notice thereof, which notice shall specify the work to be subcontracted, and obtains a written undertaking from the subcontractor that it shall be subject to the applicable terms and conditions of this Agreement, including the provisions of Article 6. If a Party wishes to subcontract any of its research, development, manufacturing or commercialization activities to a Third Party and the Steering Committee consents, the other Party may submit a bid to the subcontracting Party to perform such work. The subcontracting Party shall use Commercially Reasonable Efforts to enter into an agreement with the bidder that is best able to meet the Collaboration's requirements, taking into consideration such factors as price, quality, capacity, quantity, reliability and reputation, provided that such bidder is reasonably acceptable to the Steering Committee. Unless the Project Plan provides, or the Steering Committee agrees otherwise, the Parties shall * in the costs and expenses associated with the use of a subcontractor to conduct research, development, manufacture and commercialization activities, but unless the Parties agree otherwise, the subcontracting Party shall remain solely liable for the performance of its research, development, manufacture or commercialization activities by its subcontractor; provided, however, that Northwest and Medarex each shall remain solely responsible for all costs and expenses associated with its-use of subcontractor(s) with respect to the Northwest Research Activities and the Medarex Research Activities, respectively.

SECTION 11.3 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 either Party hereto may assign or transfer this Agreement or any of its rights or obligations hereunder without the consent of the other Party (a) to any Affiliate of such Party; or (b) to any Third Party with which it may merge or consolidate, or to which it may transfer all or substantially all of its assets to which this Agreement relates if in any such event (i) the assigning Party (provided that it is not the surviving entity) remains jointly and severally liable with the relevant Northwest Affiliate, Medarex Affiliate or Third Party assignee under this Agreement, and (ii) the relevant Northwest Affiliate assignee, Medarex Affiliate assignee, Third Party assignee or surviving entity assumes in writing all of the assigning Party's obligations under this Agreement. Any purported assignment or transfer in violation of this
Section shall be void ab initio and of no force or effect.

SECTION 11.4 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

As Filed with the Securities and Exchange Commission on August 10, 2001.
*INFORMATION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

37

unenforceable provision as may be possible and reasonably acceptable to the Parties herein. To the fullest extent permitted by applicable law, each Party hereby waives any provision of law that would render any provision prohibited or unenforceable in any respect.

SECTION 11.5 GOVERNING LAW, JURISDICTION, VENUE AND SERVICE. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, applicable to contracts made and wholly performed within such jurisdiction by residents of such jurisdiction. Subject to Section 2.3, 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 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 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. Each Party hereto further agrees that service of any process, summons, notice or document by U.S. registered mail to its address set forth below shall be effective service of process for any, action, suit or proceeding brought against it under this Agreement in any such court.

SECTION 11.6 NOTICES. All notices or other communications that are required or permitted hereunder shall be in writing and delivered personally, sent by facsimile (and promptly confirmed by personal delivery, registered or certified mail or overnight courier as provided herein), sent by nationally-recognized overnight courier or sent by registered or certified mail, postage prepaid, return receipt requested, addressed as follows:

If to Northwest, to:

Northwest Biotherapeutics, Inc.
21720 23rd Dr. SE, Suite 100
Bothell, Washington 98021

Attention: President
Facsimile- (425) 608-3026

with a copy to:

Lane Powell Spears Lubersky LLP 1420 Fifth Avenue Suite 4100 Seattle, WA 98101-2338
Attention: Jim Johnston, Esq.

Facsimile: (206) 223-7107

38

If to Medarex, to:

Medarex, Inc.
707 State Road, Suite 206 Princeton, New Jersey 08540-1437 Attention: President
Facsimile: (609) 430-2850

with a copy to:

Medarex, Inc.
707 State Road, Suite 206 Princeton, New Jersey 08540-1437 Attention: General Counsel Facsimile: (609) 430-2850

or to such other address as the Party to whom notice is to be given may have furnished to the other Party in writing in accordance herewith. Any such communication shall be deemed to have been given (i) when delivered, if personally delivered or sent by facsimile on a business day, (ii) on the business day after dispatch, if sent by nationally-recognized overnight courier, and (iii) on the third business day following the date of mailing, if sent by mail. It is understood and agreed that this Section 11.6 is not intended to govern the day-to-day business communications necessary between the Parties in performing their duties, in due course, under the terms of this Agreement.

SECTION 11.7 ENTIRE AGREEMENT; MODIFICATIONS. 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, understanding, 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.

SECTION 11.8 RELATIONSHIP OF THE PARTIES. It is expressly agreed that the Parties shall be independent contractors of one another and that the relationship between the Parties shall not constitute a partnership, joint venture or agency. Neither Party 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 to do so. 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.

SECTION 11.9 WAIVER. 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

39

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.

SECTION 11.10 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.

SECTION 11.11 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 parties.

SECTION 11.12 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, or to better assure and confirm unto such other Party its rights and remedies under this Agreement.

SECTION 11.13 ENGLISH LANGUAGE. This Agreement has been written and executed 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.

SECTION 11.14 REFERENCES. Unless otherwise specified, (a) references in this Agreement to any Article, Section, Schedule or Exhibit shall mean references to such Article, Section, Schedule 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.

SECTION 11.15 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.

[Remainder of this page is left blank intentionally]

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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed by their duly authorized representatives as of the date first above written,

MEDAREX, INC.                               NORTHWEST BIOTHERAPEUTICS, INC.



By:                                         By:
   ---------------------------------           ---------------------------------

Name:  Donald L. Drakeman                   Name:
     -------------------------------             -------------------------------

Title:  President and CEO                   Title:
                                                  ------------------------------

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APPENDIX A

DEFINITIONS

This Appendix to the COLLABORATION AGREEMENT ("AGREEMENT") effective as of April 24, 2001, by and between Northwest, INC. ("NORTHWEST") and MEDAREX, INC., on behalf of itself and its wholly owned subsidiary, GENPHARM INTERNATIONAL, INC., (collectively, "MEDAREX") provides agreed upon definitions applicable to the Parties for purposes of the Agreement. All capitalized terms used herein without definition shall have the meanings ascribed thereto in the Agreement, unless otherwise expressly provided herein.

The contents of this Appendix A are hereby incorporated into the Agreement and are governed by the terms and conditions of the Agreement, including the confidentiality provisions set forth therein.

"AFFILIATE" of a party shall mean any other party that, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with such first party. For purposes of this definition only, "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 party, whether through the ownership of voting securities or by contract relating to voting rights or corporate governance, or (b) the ownership, directly or indirectly, of more than fifty percent (50%) of the voting securities or other ownership interest of a party; provided that, if local law restricts foreign ownership, control will be established by direct or indirect ownership of the maximum ownership percentage that may, under such local law, be owned by foreign interests.

"ANTIBODY" shall mean any fully human monoclonal antibody, or fragment thereof, with a * that has a * for an Antigen. References in the Agreement to an "Antibody" shall include (a) * with respect to the * of such Antibody, and (b) * with respect to the * of such Antibody (or a * of such * containing that portion of such * ). By way of clarification, Antibodies with * shall be deemed to be different Antibodies, irrespective of whether they bind to the same Antigen.

"ANTIBODY PRODUCT" shall mean any composition or formulation containing or comprising one or more Antibodies, including, by way of clarification, (a) * one or more of such * with respect to the * of such Antibodies, and (b) * with respect to the * of such Antibodies (or a * of such * containing that portion of such * , for the diagnosis, prophylaxis or treatment of human diseases or conditions.

"ANTIGEN" shall mean any protein (including any glyco- or lipo-protein), carbohydrate, compound or other composition, and any fragment, peptide or epitope thereof, that stimulates the production of antibodies.

As Filed with the Securities and Exchange Commission on August 10, 2001.
*INFORMATION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

42

"APPLICABLE LAW" shall mean the 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 in the Territory,

"BIOSITE AGREEMENT" shall mean that certain Collaboration Agreement, dated as of June 1, 2000, between Medarex and Biosite Diagnostics Incorporated, a Delaware corporation.

"BLA" or "BIOLOGICS LICENSE APPLICATION" shall mean a Biologics License Application, as defined in the U.S. Federal Food, Drug, and Cosmetics Act, as amended, and the regulations promulgated thereunder, and any corresponding foreign or domestic marketing authorization application, registration or certification, necessary or reasonably useful to market a Collaboration Product in the Territory, but not including pricing and reimbursement approvals.

"COLLABORATION PRODUCT" shall mean any Antibody Product that contains a Collaboration Antibody.

"COLLABORATION TARGET" shall mean any Antigen listed on Appendix C, as such appendix may be amended pursuant to this Agreement.

"COLLABORATION TECHNOLOGY" shall mean any and all (a) Information and Inventions, conceived, discovered, developed or otherwise made, as necessary to establish authorship, inventorship or ownership under Applicable Law, by or on behalf of a Party or its Affiliates or, to the extent permitted, its sublicensees (whether alone or jointly), in connection with the work conducted under this Agreement, whether or not patented or patentable, but excluding any Mice Materials, Mice-Related Technology or Production Process Technology-, and
(b) Patents and other intellectual property rights with respect thereto (collectively, "COLLABORATION PATENTS").

"COMMERCIALLY REASONABLE EFFORTS" shall mean, with respect to the research, development, manufacture or commercialization of a Collaboration Target or a resulting Collaboration Product, efforts and resources commonly used in the biotechnology industry for an antibody of similar commercial potential at a similar stage in its lifecycle, taking into consideration its safety and efficacy, its cost to develop, the competitiveness of alternative products, its proprietary position, the likelihood of regulatory approval, its profitability, and all other relevant factors. Commercially Reasonable Efforts shall be determined on a market-by-market basis for each Collaboration Target and Collaboration Product, as applicable

"CONTROL" shall mean, with respect to any Information and Invention, Patent or other intellectual property right, possession of the right, whether directly or indirectly, and whether by ownership, license or otherwise, to assign, or grant a license, sublicense or other right to or under, such Information and Invention, Patent or fight as provided for herein without violating the terms of any agreement or other arrangement with any Third Party.

"CROSS-LICENSE AGREEMENT" shall mean that certain Cross-License Agreement entered into by and among Abgenix, Inc., Cell Genesys, Inc., Japan Tobacco Inc., Xenotech L.P., and GenPharm International, Inc., effective as of March 26, 1997, as amended from time to time.

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"EXPLOIT" or "EXPLOITATION" shall mean to make, have made, import, use, sell, offer for sale, or otherwise dispose of, including all discovery, research, development, registration, modification, enhancement, improvement, manufacture, storage, formulation, exportation, transportation, distribution, promotion and marketing activities related thereto.

"FDA" shall mean the United States Food and Drug Administration and any successor agency thereto.

"GAAP" shall mean United States generally accepted accounting principles consistently applied.

"HuMAb MICE" shall mean any * containing * into *, but * thereof, that are Controlled by Medarex or its Affiliates as of the Effective Date or at any time during the term of this Agreement, but excluding any * that are in-licensed or otherwise acquired by Medarex or its Affiliates after the Effective Date.

"IMPROVEMENT" shall mean any modification to an antibody, compound, product or technology or any discovery, device, process or formulation related to such antibody, compound, product or technology, whether or not patented or patentable, including any enhancement in the efficiency, operation, manufacture, ingredients, preparation, presentation, formulation. means of delivery, packaging or dosage of an antibody, compound, product or technology, any discovery or development of any new or expanded indications or applications for an antibody, compound, product or technology, or any discovery or development that improves the stability, safety or efficacy of an antibody, compound, product or technology.

"IND" shall mean an investigational new drug application filed with the FDA for authorization to commence human clinical trials, and its equivalent in other countries or regulatory jurisdictions.

"INFORMATION AND INVENTIONS" shall mean all technical, scientific and other know-how and information, trade secrets, knowledge, technology, means, methods, processes, practices, formulas, instructions, skills, techniques, procedures, experiences, ideas, technical assistance, designs, drawings, assembly procedures, computer programs, apparatuses, specifications, data, results and other material, including high-throughput screening, gene expression, genomics, proteornics and other drug discovery and development technology, pre-clinical and clinical trial results, manufacturing procedures, test procedures and purification and isolation techniques, (whether or not confidential, proprietary, patented or patentable) in written, electronic or any other form now known or hereafter developed, and all Improvements, whether to the foregoing or otherwise, and other discoveries, developments, inventions and other intellectual property (whether or not confidential, proprietary, patented or patentable)-

"KIRIN AGREEMENT" shall mean that certain Agreement on Essential Terms for Collaboration between Kirin Brewery Co, Ltd. ("KIRIN") and Medarex dated as of December 27, 1999, and any further agreement between Kirin and Medarex entered into pursuant thereto.

As Filed with the Securities and Exchange Commission on August 10, 2001.
*INFORMATION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

44

"KNOW-HOW" shall mean the Medarex Know-How (including the Mice-Related Know-How), the Northwest Know-How and/or the Collaboration Know-How, as applicable.

"LEAD COLLABORATION ANTIBODY" shall have the meaning set forth in
Section 1.2.8. For the avoidance of doubt, a Collaboration Antibody that has been designated a Lead Collaboration Antibody shall continue to be a Collaboration Antibody for purposes of this Agreement.

"MEDAREX KNOW-HOW" shall mean all Information and Inventions in the Control of Medarex or its Affiliates as of the Effective Date or at any time during the Term that are necessary or reasonably useful for the Exploitation of the Collaboration Products or for the exercise of the Medarex Patents, in each case that are not generally known, but excluding (w) any Third Party Know-How,
(x) any Information and Inventions included. in the Collaboration Technology,
(y) any Production Process Know-How, and (z) any Information and Inventions to the extent covered or claimed by the Medarex Patents. Medarex Know-How shall include all: (a) biological, chemical, pharmacological, toxicological, pharmaceutical, physical and analytical, clinical and safety data and information related to the Collaboration Targets and the Collaboration Products, and (b) data and information with respect to, and resulting from, assays and biological methodologies necessary or reasonably useful for the Exploitation of the Collaboration Targets and the Collaboration Products. By way of clarification, Northwest shall not have any rights with respect to Third-Party Know-How under this Agreement unless the Parties enter into a separate written agreement with respect thereto-

"MEDAREX PATENTS" shall mean all of the Patents that Medarex or its Affiliates Control as of the Effective Date and at any time during the Term, that cover or claim any invention necessary or reasonably useful for the Exploitation of the Collaboration Products, but excluding any Third Party Patents, any Collaboration Patents, and any Production Process Patents. By way of clarification, Northwest shall not have any rights with respect to any Third-Party Patents under this Agreement unless the Parties enter into a separate written agreement with respect thereto.

"MEDAREX TECHNOLOGY" shall mean the Medarex Know-How and Medarex Patents, including all Mice-Related Technology.

"MICE MATERIALS" shall mean the HuMAb Mice, any parts or derivatives of the HuMAb Mice, including * with respect to the * of an Antibody or * thereof, and any * thereof or * thereto (e.g., * therein)) or other * derived directly or indirectly from the HuMAb Mice, but excluding any Collaboration Products.

"MICE-RELATED KNOW-HOW" shall mean (a) any Information and Inventions with respect to any Mice Materials or other biological materials derived directly or indirectly from the HuMAb Mice, but excluding any Collaboration Products and any Information and Inventions with respect to Exploitation of Collaboration Products, and (b) any Information and Inventions with respect to the HuMAb Mice and the Exploitation thereof, but in each case excluding any Information and Inventions to the extent covered or claimed by the Mice-Related Patents.

"MICE-RELATED PATENTS" shall mean any Patents that claim or cover (a) Mice Materials or other biological materials derived directly or indirectly from the HuMAb Mice, and any Information

As Filed with the Securities and Exchange Commission on August 10, 2001.
*INFORMATION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

45

and Inventions with respect to the foregoing, but excluding any claims with respect to Collaboration Products or any Information and Inventions with respect to the Exploitation of the Collaboration Products, and (b) the HuMAb Mice and the Exploitation thereof

"MICE-RELATED TECHNOLOGY" shall mean the Mice-Related Know-How and the Mice-Related Patents.

"MRC AGREEMENT" shall mean that certain License Agreement entered into by the Medical Research Council Institute of Animal Physiology and Genetics Research of Babraham Hall and Marianne Bruggdmann and GenPharm International, Inc., effective October 1, 1993, as amended on August 12, 1994.

"NORTHWEST KNOW-HOW" shall mean all Information and Inventions in the Control of Northwest or its Affiliates as of the Effective Date or at any time during the Term that are necessary or reasonably useful for the Exploitation of the Collaboration Products, including the discovery, identification or characterization of Collaboration Targets, or for the exercise of the Northwest Patents, in each case that are not generally known, but excluding (x) any Information and Inventions included in the Collaboration Technology, and (y) any Information and Inventions to the extent covered or claimed by the Northwest Patents. Northwest Know-How shall include all: (a) biological, chemical, pharmacological, toxicological, pharmaceutical, physical and analytical, clinical and safety data and information related to the Collaboration Targets and the Collaboration Products, and (b) data and information with respect to, and resulting from, assays and biological methodologies necessary or reasonably useful for the Exploitation of the Collaboration Targets and the Collaboration Products.

"NORTHWEST PATENTS" shall mean all of the Patents that Northwest and its Affiliates Control as of the Effective Date and at any time during the Term, that claim or cover any invention necessary or reasonably useful for the Exploitation of the Collaboration Products, including any Patents that claim or cover any Collaboration Target or any method for the discovery, identification or characterization of Collaboration Targets, but excluding any Collaboration Patents.

"NORTHWEST TECHNOLOGY" shall mean the Northwest Know-How and Northwest Patents.

"PATENTS" shall mean (x) all patents and patent applications, (y) any substitutions, divisions, continuations, continuations-in-part, reissues, renewals, registrations, confirmations, re-examinations, extensions, supplementary protection certificates and the like, and any provisional applications, of any such patents or patent applications, and (z) any foreign or international equivalent of any of the foregoing.

"PRE-EXISTING AGREEMENT" shall mean, with respect to an Antigen, any agreement with a Third Party that would preclude such Antigen from becoming a Collaboration Target hereunder that was entered into by Northwest or any of its Affiliates, as applicable, prior to the Effective Date.

"PRODUCT TRADEMARKS" shall mean the trademarks developed for the Collaboration Products by the Steering Committee, all packaging designs and other trade dress used in connection with the Collaboration Products and such other Trademarks relating thereto and any registrations thereof or any pending applications relating thereto.

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"PRODUCTION PROCESS DEVELOPMENT" shall mean the development of processes and technology to facilitate production, purification, evaluation, characterization, stability assessment, vialing and distribution, and release of a Collaboration Antibody.

"PRODUCTION PROCESS KNOW-HOW" shall mean any Information and Inventions with respect to the Production Process Development or the manufacture of Antibody Products, but excluding any Information and Inventions to the extent covered or claimed by the Production Process Patents.

"PRODUCTION PROCESS PATENTS" shall mean any Patents of Medarex that claim or cover the Production Process Development or the manufacture of Antibody Products.

"PRODUCTION PROCESS TECHNOLOGY" shall mean any Production Process Know-How and Production Process Patents.

"REGULATORY APPROVAL" shall mean any and all approvals (including pricing and reimbursement approvals), licenses, registrations or authorizations of any Regulatory Authority, necessary for the Exploitation of a Collaboration Product in a country, including any (a) approval for a Collaboration Product (including any INDs, BLAs and supplements and amendments thereto); (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.

"REGULATORY AUTHORITY" shall mean any applicable government entities regulating or otherwise exercising authority with respect to the Exploitation of the Collaboration Targets or the Collaboration Products in the Territory.

"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), all supporting documents and all clinical studies and tests, relating to any Collaboration Antibody, Collaboration Target or any Collaboration Products, and all data contained in any of the foregoing, including all regulatory drug lists, advertising and promotion documents, adverse event files and complaint files.

"TARGET ENTRY PERIOD" shall mean a four (4) year period starting on the Effective Date (1) earlier terminated by (A) the unanimous agreement of the Parties, or (B) either Party pursuant to Article 8; or (ii) extended by unanimous agreement of the Parties. The termination or expiration of the Target Entry Period shall not constitute a termination of this Agreement.

"TECHNOLOGY" shall mean Medarex Technology, the Northwest Technology and/or the Collaboration Technology, as applicable.

"TERRITORY" shall mean the entire world.

"THIRD PARTY" shall mean any party other than Medarex, Northwest or their respective Affiliates,

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"THIRD-PARTY KNOW-HOW" shall mean any and all Information and Inventions that Medarex or any of its Affiliates Control pursuant to the Biosite Agreement, the Kirin Agreement or any other agreement with a Third Party that is entered into after the Effective Date, but excluding any Information and Inventions that are claimed or covered by the Third-Party Patents.

"THIRD-PARTY PATENT" shall mean any Patents that Medarex or any of its Affiliates Control pursuant to the Biosite Agreement, the Kirin Agreement or any other agreement with a Third Party that is entered into after the Effective Date.

"TRADEMARK" shall include any word, name, symbol, color, designation or device or any combination thereof, including any trademark, trade dress, service mark, service name, brand mark, trade name, brand name, logo or business symbol.

TERMS DEFINED ELSEWHERE IN THIS AGREEMENT. The following terms are defined in the applicable Sections of this Agreement:

DEFINED TERM                                    SECTION
Northwest Research Activities                   Section 1.2.4
Antigen Evaluation Material                     Section 1.2.2(a)
Assay                                           Section 1-2.3(c)
Assay Candidate                                 Section 1.2.6(a)
Assay Success Criteria                          Section 1.2.3(e)
Authorized Commercialization Expenses           Section 4. 1.1
Authorized R&D Expenses                         Section 4.1.2
Biological Materials                            Section 7.5.3
Collaboration                                   Section 1.1
Collaboration Antibody                          Section 1.2.6(a)
Collaboration Expenses                          Section 4.5.1
Collective Opinion of Counsel                   Section 7.4.1
Commercialization Expenses                      Appendix B
Confidential Information                        Section 6.1
Dormant Product                                 Section 5.3
Effective Date                                  Preamble
Election Notice                                 Section 5.1.2
Expert                                          Section 2.3. 1 (a)
Fully-Burdened Production Process Development   Appendix B
Cost
Immunogen                                       Section 1.2-3(a)
Indemnification Claim Notice                    Section 9.3.1
Indemnified Party                               Section 9.3.1
Indemnitee                                      Section 9.3.1
Infringement Suit                               Section 7.4.2

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DEFINED TERM                                    SECTION
Initial Antigen                                 Section 1.2.2
Losses                                          Section 9.1
Medarex Research Activities                     Section 1.2.4
Net Profits, Net Losses                         Appendix B
Net Sales                                       Appendix B
Opt-Out                                         Section 5. 1. 1
Opt-Out Notice                                  Section 5. 1.1
Opting-Out Party                                Section 5. 1.1
Other Operating (Income)/Expense                Appendix B
Party                                           Preamble
Project Budget                                  Section 1.3
Project Plan                                    Section 1.3
Replacement Period                              Section 1.2.2(d)
Research and Commercialization Agreement        Section 3.3.2
Reserved Antibody                               Section 1.2.6(b)
Reversion Target                                Section 1.7
Steering Committee                              Section 2. 1.1
Subsequent Antigen                              Section 1.2.2
Term                                            Section 8.1
Third Party Claim                               Section 9.3.2
Third Party Payments                            Appendix B
Unilateral Development and Commercialization    Section 5.1.2
Agreement
Unilateral Product                              Section 5.1.2
Withholding Taxes                               Section 4.4

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EXHIBIT 10.3

DEVELOPMENT AGREEMENT

THIS DEVELOPMENT AGREEMENT (the "Agreement"), effective as of July 30, 1997 (the "Effective Date"), is entered into by and between Northwest Clinicals LLC, a Washington limited liability company with an address at 120 Northgate Plaza, Suite 236, Seattle, Washington 98125 ("Clinicals"), and Medarex, Inc., a New Jersey corporation, with an address at 1545 Route 22 East, P.O. Box 953, Annandale, New Jersey 08801 ("Medarex").

BACKGROUND

Clinicals desires to have the prostate specific membrane antigen ("PSMA") gene cloned and a subclone isolated, and to have recombinant PSMA produce for pre-clinical and clinical testing, and Medarex is willing to perform these tasks and produce these materials on a contractual basis, subject to the terms and conditions set forth herein.

THE PARTIES HEREBY AGREE AS FOLLOWS:

ARTICLE I.

DEVELOPMENT

1.1 Development.

1.1.1 Development Activities. Subject to the terms and conditions set forth in this Agreement, Medarex shall use its commercially reasonable efforts to perform the tasks and produce the recombinant PSMA (the "Produce") as set forth on Exhibit A in accordance with the schedule (Exhibit A, Section III) and the Product specifications (the "Specifications") set forth on Exhibit B. Medarex's performance of such tasks will commence upon receipt by Medarex of the Materials (defined below) pursuant to Section 1.2.1.

1.1.2 Changes. Clinicals shall have the right to request reasonable changes in or modifications to the tasks and schedules set forth on Exhibit A, provided such modifications are agreed to by the parties and provided that Clinicals shall be responsible for all costs related to any such changes.

1.2 Clinicals' Obligations.

1.2.1 Materials. Promptly after the Effective Date, Clinicals shall deliver to Medarex the materials listed in Section I of Exhibit A (the "Materials"). Unless otherwise agreed, upon request by Clinicals (and at Clinicals' expense and direction), after acceptance by Clinicals of the Product, Medarex will return to Clinicals any remaining Materials.

1.2.2 Assistance. Clinicals will perform all biological assays necessary to determine the bioactivity of the Product. In addition, Clinicals agrees to provide reasonable assistance as necessary to facility Medarex's conduct of its activities pursuant to Exhibit A.


1.3 Product. Medarex shall use commercially reasonable efforts to perform the tasks on Exhibit A, Section II, and shall deliver to Clinicals the Product samples and Product in accordance with the Schedule set forth in Exhibit A,
Section III. Product samples and Product will be suitably packed in 100 mg aliquots for shipment and shipped F.O.B. from Medarex's facility in New Jersey pursuant to instruction from Clinicals. All costs of shipping and insurance, as well as any special packaging expenses, shall be paid by Clinicals.

1.4 Acceptance. Upon receipt of a Product sample from Medarex, Clinicals shall evaluate such Product sample to confirm the bioactivity of such Product sample. Clinicals shall have thirty (30) days following its receipt of Product sample to provide a written report to Medarex confirming the bioactivity of such Product sample, or to notify Medarex that such Product sample was inactive. Medarex will ship Product to Clinicals upon receipt by Medarex of Clinicals' report confirming the bioactivity of the applicable Product sample; Medarex will reproduce any inactive Product sample and redeliver to Clinicals as soon as possible another Product sample for testing.

Following confirmation of the bioactivity of the Product sample, Clinicals shall have ten (10) business days to inspect each subsequent shipment of Product, and may reject Product that does not conform to the Specifications, provided that Clinicals shall notify Medarex of any such Product rejection within ten (10) business days of delivery.

1.5 Rejection. Upon the rejection of any Product by Clinicals, Medarex shall promptly deliver to Clinicals appropriate conforming replacement of the rejected Product. Replacement Product shall also be subject to acceptance by Clinicals under the procedure set forth in Section 1.4. If Clinicals does not provide written notice of rejection to Medarex within ten (10) business days of the receipt of Product by Clinicals, Clinicals shall be deemed to have accepted the Product.

1.6 Development Fee. In consideration for the satisfactory and timely performance of the tasks specified in Exhibit A, Clinicals will pay to Medarex a fee of seven hundred twenty-five thousand dollars ($725,000), to be paid as follows:

a. One-third of the fee ($241,666) shall be paid to Medarex upon full execution of this Agreement.

b. One-third of the fee ($241,666) shall be paid after delivery of acceptable Product sample, conforming to the Specifications, for preclinical testing.

c. Final payment of the balance of the fee shall be made following delivery of five (5) grams of Product, conforming to the Specifications, for clinical use, and after completion of the DMF filings.

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ARTICLE II.

CONFIDENTIALITY

2.1 Confidential Information. The parties may from time to time disclose to each other Confidential Information. "Confidential Information" shall mean any information or material disclosed by one party to the other party hereto which if disclosed in tangible form is marked "confidential" or with other similar designation to indicate its confidential or proprietary nature or if disclosed orally is indicated orally to be confidential or proprietary by the party disclosing such information at the time of such disclosure and is confirmed in writing as confidential or proprietary by the disclosing party within thirty (30) days after such disclosure. Notwithstanding the foregoing, Confidential Information shall not include any information that, in each case as demonstrated by written documentation: (i) was already known to be the receiving party, other than under an obligation of confidentiality, at the time of disclosure; (ii) was generally available to the public or otherwise part of the public domain at the time of its disclosure to the receiving party; (iii) became generally available to the public or otherwise part of the public domain after its disclosure and other than through any act or omission of the receiving party in breach of this Agreement; (iv) was subsequently lawfully disclosed to the receiving party by a person other than the disclosing party; or (v) was developed by the receiving party without reference to any Confidential Information of the disclosing party.

2.2 Confidentiality. Each party hereby agrees: (i) to at all times hold and maintain in strict confidence all Confidential Information of the other party; and (ii) not to use or disclose any Confidential Information of the other party at any time except to those employees and consultants who have a need to know, and only as may be necessary to exercise its rights or perform its obligations under this Agreement; provided that each party to whom Confidential Information is disclosed agrees to be bound by the same terms regarding the disclosure and use of confidential Information as set forth in this Article 2. Nothing contained in this Article 2 shall prevent either party from disclosing any Confidential Information of the other party to the extent such Confidential Information is required by law or regulation to be disclosed; provided, however, that the party subject to such disclosure requirement in order to enable the other party to seek a protective order or otherwise prevent disclosure of such Confidential Information.

2.3 Return of Confidential Information. Upon termination or expiration of this Agreement, each party shall return all Confidential Information in its possession that was received from the other party, unless otherwise agreed in writing.

ARTICLE III.

INTELLECTUAL PROPERTY

3.1 Ownership. Subject to the limited license granted in Section 3.2, each party shall have and retain exclusive ownership of any and all of its Confidential Information, technology, inventions, know-how, trade secrets, documentation, data and all other tangible and intangible items, and all intellectual property rights therein and thereto ("Technology").

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3.2 License to Medarex. Clinicals hereby grants to Medarex a non-exclusive, non-transferable license under the Materials and all Clinicals' Technology only for such limited rights as may be necessary for the conduct by Medarex of its obligations under this Agreement. This limited license shall terminate automatically upon the termination of this Agreement unless otherwise agreed in writing by Clinicals.

3.3 Implied Licenses. No rights or licenses with respect to Medarex's Technology or Clinicals' Technology or other intellectual property owned by Medarex or Clinicals are granted or shall be deemed granted hereunder or in connection herewith.

ARTICLE IV.

REGULATORY MATTERS

4.1 DMF Submission. Medarex shall submit a drug master file (the "DMF") for the Product with the United States Food and Drug Administration (the "FDA") in accordance with Exhibit A.

4.2 Inspections. Clinicals' representatives shall have the right at agreed times to visit Medarex's facilities during normal working hours to observe the conduct of the activities set forth in Exhibit A, and to discuss such activities with Medarex. In addition, Medarex shall permit the FDA to conduct such inspections of Medarex's facilities as the FDA may request, and shall cooperate with the FDA with respect to such inspections and any related matters.

ARTICLE V.

REPRESENTATIONS AND WARRANTIES

5.1 Medarex. Medarex represents and warrants that: (i) it has full power to enter into this Agreement and to grant and assign to Clinicals the rights granted and assigned to Clinicals hereunder; (ii) it has obtained all necessary corporate approvals to enter into and execute the Agreement; (iii) Medarex shall materially comply with the requirements of any and all applicable federal, state, and local laws, regulations, and rules governing activities to be conducted by Medarex pursuant to this Agreement; (iv) Medarex will not transfer or deliver the Material or the Product to any person or entity other than Clinicals; and (v) upon shipment to Clinicals, all Product will materially conform to the Specifications for such Product.

5.2 Clinicals. Clinicals represents and warrants that: (i) it has full power to enter into the Agreement; and (ii) it has obtained all necessary corporate approvals to enter and execute into this Agreement; (iii) the Materials provided by Clinicals will be suitable for use by Medarex in connection with the activities set forth on Exhibit A.

5.3 Disclaimer. EXCEPT FOR THE EXPRESS WARRANTIES STATED IN THIS AGREEMENT, MEDAREX MAKES NO ADDITIONAL WARRANTIES, EXPRESS, IMPLIED, OR STATUTORY, WITH RESPECT TO THE PRODUCT OR THE SUBJECT MATTER HEREIN AND ANY AND ALL WARRANTIES OF MERCHANTABILITY,

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FITNESS FOR A PARTICULAR PURPOSE AND NON-INFRINGEMENT OF ANY THIRD PARTY'S INTELLECTUAL PROPERTY RIGHTS ARE EXPRESSLY EXCLUDED.

ARTICLE VI.

INDEMNIFICATION

6.1 Clinicals. Clinicals shall indemnify, defend and hold harmless Medarex, its directors, officers, employees, agents, successors and assigns (each an "Indemnitee") from and against all liabilities, expenses or costs (including reasonable attorneys' fees) ("Liability") arising out of any claim, complaint, suit, proceeding or cause of action against any of them by a third party alleging physical injury or death or otherwise resulting from (i) the clinical testing of the Product by or on behalf of Clinicals; (ii) the safety of the Product distributed by or on behalf of Clinicals; (iii) the promotion, distribution, sale, handling, possession, or use of the Product by or on behalf of Clinicals following its or their acceptance thereof in accordance with
Section 1.4 above; (iv) any negligent or intentionally wrongful acts or omissions of Clinicals; (v) any claim that the Product infringes any third party's intellectual property rights; and (vi) any breach by Clinicals of its representations and warranties under Section 5.2 above, in each case subject to the requirements set forth in Section 6.3 below.

6.2 Medarex. Medarex shall indemnify, defend and hold harmless Clinicals, its directors, officers, employees, agents, successors and assigns (each an "Indemnitee") from and against all liabilities, expenses, and costs (including reasonable attorneys' fees) (a "Liability") arising out of any claim, complaint, suit, proceeding or cause of action against any of them by a third party alleging physical injury or death or otherwise resulting from (i) the grossly negligent or intentionally wrongful acts or omissions of Medarex in connection with the performance of this Agreement, and (ii) any breach by Medarex of any of its representations and warranties under Section 5.1, in each case subject to the requirements set forth in Section 6.3 below.

6.3 Procedure. In the event that any Indemnitee intends to claim indemnification under this Article 6 it shall promptly notify the indemnifying party in writing of such alleged Liability. The indemnifying party shall have the right to control the defense and settlement thereof. The Indemnities shall cooperate with the indemnifying party and its legal representatives in the investigation of any action, claim or liability covered by this Article 6. The Indemnitee shall not, except at its own cost, voluntarily make any payment or incur any expense with respect to any claim or suit without the prior written consent of the indemnifying party, which the indemnifying party shall not be required to give.

ARTICLE VII.

TERM AND TERMINATION

7.1 Term. Unless terminated earlier in accordance with this Article 7, the term of this Agreement shall commence on the Effective Date and shall continue in full force until delivery of all Product as required under its Agreement.

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7.2 Termination for Breach. This Agreement may be terminated at any time by either party if the other party breaches any material term or condition of this Agreement and fails to remedy the breach within thirty (30) days after being given written notice thereof.

7.3 Termination by Clinicals. Every three (3) months during the term of this Agreement, Medarex shall prepare and submit to Clinicals written reports which detail the progress of, and future planned schedules for, the tasks to be performed by Medarex under this Agreement. Further, at any time during the term of this Agreement, if, in the exercise of its reasonable discretion, Clinicals determines that Medarex is not capable of meeting its obligations under this Agreement in a timely manner based upon the tasks to be performed and schedule to be met by Medarex (Exhibit A, Sections II and III), Clinicals may give Medarex notice thereof. Within ten (10) days following its receipt of said notice, Medarex shall provide to Clinicals adequate assurance of future performance acceptable to Clinicals. If said adequate assurance is not given or is not reasonably acceptable to Clinicals, Clinicals may thereupon terminate this Agreement at any time at its election.

7.4 Effect of Termination.

7.4.1 Accrued Rights and Obligations. It is understood that termination or expiration of this Agreement shall not relieve a party from any right or liability which, at the time of such termination or expiration, has already accrued to the other party.

7.4.2 Expenditures. Upon termination of this Agreement, Medarex will immediately cease making expenditures attributable to the activities set forth in Exhibit A. Upon termination, Clinicals shall be responsible only to reimburse Medarex for all costs actually incurred in connection with its performance of this Agreement prior to Medarex's receipt of notice of termination, provided that in no event shall Medarex be entitled to receive more than its portion of the fee set forth in Section 1.6 applicable to the tasks actually performed by Medarex. Within thirty (30) days of the effective date of termination, Medarex shall provide Clinicals a final written report of all costs incurred and shall reimburse Clinicals for any portion of the fee under Section 1.5 which Clinicals advanced which is in excess of such total costs incurred by Medarex.

7.4.3 Survival. The provisions of Sections 3.1, 3.3, 7.4, and Articles 2, 5, 6, and 8 shall survive the termination of this Agreement for any reason. All other rights and obligations of the parties shall cease upon termination of this Agreement.

ARTICLE VIII.

MISCELLANEOUS

8.1 Governing Law. This Agreement shall be governed by the laws of the State of Washington, without reference to conflicts of laws principles.

8.2 Arbitration. Any dispute or claim arising out of or in connection with this Agreement or the performance, breach or termination thereof, shall be finally settled by binding

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arbitration in a mutually agreed neutral location (or in the absence of mutual agreement, Chicago, Illinois) under the Commercial Arbitration Rules of the American Arbitration Association by three (3) arbitrators appointed in accordance with said rules. The decision and/or award rendered by the arbitrators shall be written, final and non-appealable and may be entered in any court of competent jurisdiction. The parties agree that, any provision of applicable law notwithstanding, they will not request, and the arbitrator shall have no authority to award, punitive or exemplary damages against any party. The costs of any arbitration, including administrative fees and fees of the arbitrators, shall be shared equally by the parties, unless otherwise determined by the arbitrators. Each party shall bear the cost of its own attorneys' and expert fees. Notwithstanding the foregoing, either party may apply to any court of competent jurisdiction for injunctive relief without breach of thus arbitration provision.

8.3 Assignment. The parties agree that their rights and obligations under this Agreement may not be assigned or otherwise transferred to a third party without the prior written consent of the other party hereto. Notwithstanding the foregoing, either party may transfer or assign its rights and obligations under this Agreement to a successor to all or substantially all of its business or assets relating to this Agreement whether by sale, merger, operation of law or otherwise. Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of the parties hereto, their successors and assigns.

8.4 Limitation of Liability. NEITHER PARTY SHALL BE LIABLE TO THE OTHER
PARTY OR ANY THIRD PARTY FOR ANY SPECIAL CONSEQUENTIAL, EXEMPLARY OR INCIDENTAL DAMAGES (INCLUDING LOST OR ANTICIPATED REVENUES OR PROFITS RELATING TO THE SAME), ARISING FROM ANY CLAIM RELATING TO THIS AGREEMENT, WHETHER SUCH CLAIM IS BASED ON CONTRACT, TORT (INCLUDING NEGLIGENCE) OR OTHERWISE, EVEN IF AN AUTHORIZED REPRESENTATIVE OF SUCH PARTY IS ADVISED OF THE POSSIBILITY OR LIKELIHOOD OF SAME. THESE LIMITATIONS SHALL APPLY NOTWITHSTANDING THE FAILURE OF THE ESSENTIAL PURPOSE OF ANY LIMITED REMEDY.

8.5 Independent Contractors. The relationship between the parties shall be that of independent contracting parties and nothing in this Agreement shall be construed to create any other relationship between Medarex and Clinicals. Neither party shall have any right, power, or authority to assume, create or incur any expense, liability or obligation, express or implied, on behalf of the other.

8.6 Severability. If any provision(s) of this Agreement shall be held invalid, illegal or unenforceable by a court of competent jurisdiction, this Agreement shall continue in full force and effect without said provisions.

8.7 Waiver. The failure of a party to enforce any provision of the Agreement shall not be construed to be a waiver of the right of such party to thereafter enforce that provision or any other provision or right.

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8.8 Entire Agreement. This Agreement with its Exhibits constitutes the entire Agreement between Clinicals and Medarex with respect to all subject matters covered by the Agreement and supersedes all prior communications, understandings and agreements. This Agreement may only be modified by a written document executed by both parties.

8.9 Notices. Any notices made pursuant to this Agreement shall be in writing and shall be deemed effective when sent by certified mail to the addresses set forth above, or to such other address as each party may specify by written notice with respect thereto.

8.10 Counterparts. This Agreement may be executed in two counterparts, each of which will be deemed an original and both of which together shall constitute one instrument.

8.11 Insurance. Each party shall procure and maintain appropriate levels of comprehensive general liability or product liability insurance coverage of their respective activities under this Agreement and shall upon request provide certificates of such insurance coverage to the other party.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first above written.

MEDAREX, INC., a New Jersey             NORTHWEST CLINICALS LLC, a
corporation                             Washington limited liability company



By:                                     By:
   ---------------------------------       -------------------------------------

Title:                                  Title:
      ------------------------------          ----------------------------------

Date:                                   Date:
     -------------------------------         -----------------------------------

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EXHIBIT A

DEVELOPMENT ACTIVITIES

I. Materials: Clinicals will provide to Medarex the following materials and documents (the "Materials"):

1. Human PSMA DNA clones in a mammalian expression vector;

2. Antibody for determination of PSMA and Western blot analysis;

3. Four (4) to five (5) milligrams of purified PSMA; and,

4. Protocol for purification of recombinant PSMA.

II. Tasks: Medarex will perform the following services:

1. Clone the PSMA gene into Medarex's vector and express PSMA in Medarex's cell lines;

2. Isolate a clone secreting approximately 5 mg/liter of PSMA;

3. Develop serum-free medium conditions for recombinant cell line;

4. Develop and optimize a large scale production process capable of producing up to 5 grams of PSMA;

5. Produce initially several milligrams of PSMA for preclinical laboratory testing;

6. Produce 5 gm. of recombinant PSMA under GMP conditions that meet current FDA standards with regards to purity, sterility, pyrogenicity, safety, toxicity, and identity for well characterized biologicals; and which meet the Specifications set forth on Exhibit B.

7. File all required DMF with the FDA for recombinant PSMA.

III. Schedule:

1. August 1, 1997 -- Clinicals delivers two PSMA constructs to Medarex;'

2. December, 1997 -- Medarex delivers approximately 10 mg of recombinant PSMA to Clinicals for preclinical testing;

3. March, 1998 -- Medarex delivers 150 to 200 mg GMP grade PSMA to Clinicals for Phase I clinical trials; Medarex files a DMF with the FDA;


4. May, 1998 -- Medarex delivers remainder of the 5 gm of GMP grade PSMA to Clinicals; Medarex files a DMF with the FDA if necessary.


EXHIBIT B

SPECIFICATIONS

All Product samples and Product shall pass the following testing procedures to the reasonable satisfaction of Clinicals. Clinicals may perform any or all of the following tests upon any delivery of Product samples or Product, in its discretion:

1. Western Blot assay, using several PSMA specific monoclonal antibodies;

2. PSMA-loaded dendritic cells to stimulate PSMA specific cytotoxic T cells; and

3. Amino acid sequence analysis of a specific cyanogen bromide cleavage peptide from PSMA.


EXHIBIT 10.4

EMPLOYMENT AGREEMENT

This Employment Agreement (this "Agreement"), dated as of April 19, 2001, and effective as of February 2, 2001 (the "Effective Date"), is made and entered into by and between Northwest Biotherapeutics, Inc., a Delaware corporation, (the "Company"), and Daniel O. Wilds (the "Executive").

The Company and Executive hereby agree as follows:

1. EMPLOYMENT

The Company will employ Executive and Executive will accept employment by the Company as President and Chief Executive Officer. During Executive's employment, Executive shall serve the Company faithfully and to the best of his ability, devoting substantially all his working time, attention and energies to the business of the Company, unless otherwise approved in writing by the Board of Directors of the Company (the "Board"). Subject to the direction of the Board, Executive will have such reasonable duties, responsibilities, powers and authority as are prescribed by the Board or the bylaws of the Company. Executive shall not engage in any other business activity (except the management of personal investments, charitable and civic activities, and, upon completion of an initial public offering of the Company's Common Stock, participation as a director for companies that do not compete with the Company, that in the aggregate do not interfere with the performance of Executive's duties) without first obtaining the written consent of the Board, but such consent shall not unreasonably be withheld.

2. TERM OF AGREEMENT

The term of this Agreement ("Term") shall commence on February 2, 2001 and will continue in effect until January 31, 2004, unless otherwise terminated as set forth herein.

3. COMPENSATION

(a) BASE SALARY. Company shall pay Executive a base salary at an annual rate of Three Hundred Thousand Dollars ($300,000) payable in accordance with Company's regular pay schedule for senior management. The Board shall review Executive's salary and performance annually, and Executive shall be eligible for an increase in his base salary based on such review. Upon the successful completion of the Company's first firm commitment underwritten public offering of its Common Stock registered under the Securities Act, Executive's then-current base salary shall increase by 25%.

(b) INCENTIVE COMPENSATION. Company shall establish an incentive compensation plan and Executive shall participate in that plan. Within the first 90 days of each fiscal year, the Board and Executive shall discuss and agree on financial and other performance objectives for Executive and Company for the fiscal year. Executive shall receive an incentive compensation opportunity of up to a maximum of 45% of his base salary based on his ability to meet these objectives and as approved by the Board.

(c) STOCK OPTIONS. The Company shall cause the Board to authorize the issuance of non-qualified options to Executive to acquire shares of the Company's common stock ("Shares"), under the following terms and conditions:


(1) Executive is granted an option to purchase Seventy-Nine Thousand Three Hundred (79,300) Shares at an exercise price of $1.25 per Share.

(2) Executive may, at his or the Company's option, pay for all or any portion of the aggregate exercise price by delivering a combination of any or all of the following:

(i) By delivering shares of the Company's common stock previously held by Executive which have a fair market value at the date of exercise equal to the aggregate exercise price to be paid by Executive upon such exercise. For purposes of this clause, the fair market value such shares is to be determined by the Board and shall be final and binding, provided that if the shares are publicly traded, the shares' fair market value shall be their average opening and closing prices on the date of exercise;

(ii) By delivering a properly executed exercise notice together with irrevocable instructions to a broker to promptly deliver to the Company the amount of sale or loan proceeds to pay the exercise price; or

(iii) By delivering a full recourse promissory note for all or part of the aggregate exercise price, payable on such terms and bearing such interest rate as determined by the Board (but in no event less than the minimum interest rate specified under the Internal Revenue Code at which no additional interest would be imputed and in no event more than the maximum interest rate allowed under applicable usury laws), which promissory note may be either secured or unsecured in such manner as the Board shall approve (including, without limitation, by a security interest in shares of the Company's stock).

(3) The options shall vest in equal amounts monthly over 36 months; provided that, in the event the Company undergoes a change of control ("Change of Control") by virtue of a sale or exchange of shares in a transaction or series of transactions occurring in any twelve-month period resulting in the Company's stockholders as of the beginning of such twelve-month period holding less than 50% of the outstanding equity and underlying options and warrants at the end of such period, all of Executive's options shall become immediately vested and fully exercisable upon such Change of Control.

(4) The option term of Executive's vested options shall terminate upon the first to occur of: (i) Executive's termination of employment with the Company by Company for Cause (as such term is defined in Section 5(f)) or by Executive without Good Reason (as such term is defined in Section 5(g)); or (ii) ten years from the date the options are issued.

(5) The Board will qualify the options for an exemption from registration under the applicable federal and Washington State securities laws.

(d) BENEFITS.

(1) Executive shall be entitled to receive four weeks paid vacation and all benefits (such as medical, dental, sick leave, disability, and retirement benefits) as are generally

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available from time to time to employed senior executives of Company. For purposes of this section, benefits offered to employees leased to Company are not benefits under this section.

(2) Company will maintain a reasonable policy of insurance for directors and officers liability as determined by the Board. Executive will be included within that policy of insurance with the premiums paid by Company.

4. TERMINATION

Employment of Executive pursuant to this Agreement may be terminated as follows:

(a) BY EXECUTIVE. Executive may terminate his employment at any time, for any reason.

(b) BY THE COMPANY. The Company may terminate the employment of Executive at any time, for any reason, with or without cause.

(c) AUTOMATIC TERMINATION. This Agreement and Executive's employment shall terminate automatically upon the death or total disability of Executive. The term "total disability" as used in this Agreement shall mean Executive's inability to perform the duties set forth in Section 1 for a period or periods aggregating one-hundred twenty (120) calendar days in any 12-month period as a result of physical or mental illness, loss of legal capacity or any other cause beyond Executive's control, unless Executive is granted a leave of absence by the Board. Executive and the Company acknowledge that Executive's ability to perform the duties specified in Section 1 is of the essence of this Agreement.

5. TERMINATION PAYMENTS

In the event of termination of the employment of Executive, all compensation and benefits set forth in this Agreement shall terminate, except as specifically provided in this Section 5. For purposes of this Agreement, the effective date of termination shall be thirty (30) days after the Executive or the Company gives written notice of termination.

(a) TERMINATION BY THE COMPANY WITH CAUSE. Upon termination by the Company with Cause (as defined below), the Company shall pay Executive any unpaid annual base salary, earned but unused vacation, and bonuses due (if any), for services already performed (subject to normal withholding and other deductions) to the effective date of termination of employment.

(b) TERMINATION BY THE COMPANY WITHOUT CAUSE. Upon termination by the Company without Cause (as defined below), the Company shall pay Executive any unpaid annual base salary, any amount due but not paid under the Company's Incentive Compensation Plan, earned but unused vacation and bonuses due (if any) for services already performed (subject to normal withholding and other deductions) to the effective date of termination of employment; and monthly severance payments equivalent to six (6) months base salary and six (6) months at one-half (1/2) base salary. These payments will be made in accordance with the Company's customary payroll schedule, minus deductions required by law. The Company will issue and file appropriate tax documents in connection with any severance payments. Payment of the above-described severance compensation and benefits is conditioned on Executive executing a

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full mutual release of all claims related to his employment with or termination from Company in substantially the form attached hereto as Exhibit A. Such a release will not include accrued and unpaid wages and benefits, claims to industrial insurance, vested pension benefits or indemnification rights. Executive will have the duty to mitigate the costs of Company by attempting to obtain other employment within a reasonable time after termination; Executive's compensation from such other employment will be credited against the amounts due from Company to the extent the combined compensation from Executive's new position and Company's payments under this Section 5(b) would otherwise exceed Executive's base salary (or one-half (1/2) base salary, as the case may be) with Company at the date of termination.

(c) TERMINATION BY EXECUTIVE WITHOUT GOOD REASON. Upon termination by Executive without Good Reason (as defined below), Executive shall be paid the compensation as set forth in Section 5(a) and shall not be entitled to any other benefits or payments.

(d) TERMINATION BY EXECUTIVE WITH GOOD REASON. Upon termination by Executive with Good Reason (as defined below), Executive shall receive the compensation as set forth in Section 5(b) and shall not be entitled to any other benefits or payments.

(e) TERMINATION AS A RESULT OF DEATH OR TOTAL DISABILITY. In the event of termination of Executive's employment pursuant to Section 4(c), Executive or his estate shall be paid the compensation set forth in Section 5(a) and shall not be entitled to any other benefits or payments.

(f) DEFINITION OF "CAUSE." "Cause" as used in this Agreement shall mean a determination by the Board that one or more of the following has occurred:

willful misconduct, or dishonesty in the performance of Executive's duties that results in a material adverse effect on the Company;

conviction of Executive of a felony involving an act of dishonesty, moral turpitude, deceit or fraud; or

current use by the Executive of illegal substances.

(g) DEFINITION OF "GOOD REASON." "Good reason" shall mean the occurrence of any of the following events, without the consent of the Executive:

a demotion or other material reduction in the nature or status of Executive's responsibilities; or"

a material reduction in Executive's annual base salary or any failure by the Company to satisfy its duty to compensate the Executive as required under this Agreement.

6. INTELLECTUAL PROPERTY

Company shall own all right, title and interest (including patent rights, copyrights, trade secret rights, mask work rights, sui generis database rights and all other intellectual rights of any sort throughout the world) relating to any and all inventions (whether or not patentable), works of

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authorship, mask works, designs, know-how, ideas and information made or conceived or reduced to practice, in whole or in part, by Executive during the term of Executive's employment with Company to and only to the fullest extent allowed by Washington Revised Code Annotated Section 49.44.140 (which is attached as Exhibit B) (collectively "Inventions") and Executive will promptly disclose all Inventions to Company. Executive will also disclose anything Executive believes is excluded by Section 49.44.140 so that Company can make an independent assessment. Executive hereby makes all assignments necessary to accomplish the foregoing. Executive shall further assist Company, at Company's expense, to further evidence, record and perfect such assignments, and to perfect, obtain, maintain, enforce, and defend any rights specified to be so owned or assigned. Executive hereby irrevocably designates and appoints Company as its agents and attorneys-in-fact to act for and in Executive's behalf to execute and file any document and to do all other lawfully permitted acts to further the purposes of the foregoing with the same legal force and effect as if executed by Executive. If Executive wishes to clarify that something created by Executive prior to Executive's employment that relates to Company's actual or proposed business is not within the scope of this Agreement, Executive has listed it on Exhibit C. If Executive uses or (except where disclosed pursuant to this Section 6 as a claimed exclusion to RCW 49.44.140 or in Exhibit C) discloses Executive's own or any third party's confidential information or intellectual property when acting within the scope of Executive's employment or otherwise on behalf of Company, Company will have and Executive hereby grants Company a perpetual, irrevocable, worldwide royalty-free, non-exclusive, sublicensable right and license to exploit and exercise all such confidential information and intellectual property rights. To the extent allowed by law, this section includes all rights of paternity, integrity, disclosure and withdrawal and any other rights that may be known as or referred to as "moral rights," "artist's rights," "droit moral," or the like (collectively "Moral Rights"). To the extent Executive retains any such Moral Rights under applicable law, Executive hereby ratifies and consents to any action that may be taken with respect to such Moral Rights by or authorized by Company and agree not to assert any Moral Rights with respect thereto. Executive will confirm any such ratifications, consents and agreements from time to time as requested by Company.

7. PRIVACY

Executive recognizes and agrees that Executive has no expectation of privacy with respect to Company's telecommunications, networking or information processing systems (including, without limitation, stored computer files, email messages and voice messages) and that Executive's activity and any files or messages on or using any of those systems may be monitored at any time without notice.

8. RESTRICTIVE COVENANTS

Executive acknowledges: (i) that Executive will have access during his employment with Company to confidential information regarding all Inventions and all other business, technical and financial information (including, without limitation, the identity of and information relating to customers or employees) Executive develops, learns or obtains during the term of Executive's employment that relates to Company or the business or demonstrably anticipated business of Company or that are received by or for Company in confidence, and that all such information constitutes "Proprietary Information"; (ii) that information regarding Proprietary Information constitutes a valuable asset and trade secret of Company; and (iii) that it is reasonable for

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Company to protect itself from misappropriation of Proprietary Information by Executive upon termination of employment or otherwise. Accordingly, in consideration of employment hereunder, and other good and valuable consideration, Executive agrees to the following nondisclosure, noninterference and noncompetition covenants during the Term and for a period of twenty-four
(24) months after the Term:

(a) NONDISCLOSURE. Executive will not copy, remove, or disclose any Proprietary Information, except as may be required by law or in the course of performing services for Company, Executive will hold in confidence and not disclose or, except within the scope of Executive's employment, use any Proprietary Information at any time, even after Executive's employment with Company ends for whatever reason. However, Executive shall not be obligated under this paragraph with respect to information Executive can document by clear and convincing evidence is or becomes readily publicly available without restriction through no fault of Executive. Upon termination of Executive's employment or if sooner requested, Executive will promptly return to Company all items containing or embodying Proprietary Information (including all copies), except that Executive may keep Executive's personal copies of (i) Executive's compensation records, (ii) materials distributed to shareholders generally and
(iii) this Agreement;

(b) NONINTERFERENCE. Executive will not employ, solicit, or seek to employ any person who is an employee of Company or its subsidiaries (i) as of the date hereof; (ii) during the Term, or (iii) at the time of employment or solicitation; and

(c) NONCOMPETITION AND NONSOLICITATION. Executive will not, directly or indirectly, as principal, agent, employee, officer, shareholder, consultant or otherwise, engage in any business that competes directly with Company or any of its subsidiaries, and will not solicit or aid in soliciting, endeavor to obtain as a customer or client, accept sales, marketing, financial, or consulting business from, or perform sales, marketing, consulting or related business for any person, firm, corporation, association or other entity: (i) that is or was a Company customer for whom Executive performed any services or with whom Executive had maintained substantial business contacts at any time during the Term; or (ii) whose business Executive solicited, either alone or in conjunction with others, on behalf of Company or any of its subsidiaries during the Term.

Executive acknowledges and agrees: (i) that a breach of any of the covenants contained in this Section 8 would cause irreparable injury to Company and its subsidiaries for which monetary damages alone would be inadequate to compensate and protect Company and its subsidiaries; (ii) that Company and its subsidiaries may therefore seek and obtain injunctive relief to enjoin any breach of such restrictive covenants in addition to, and not in limitation of, any other legal or equitable remedies that are available as a matter, of law or equity; and (iii) that specific enforcement of this Agreement by way of an injunction shall not prevent Executive from earning a reasonable livelihood.
EXECUTIVE FURTHER ACKNOWLEDGES AND AGREES THAT THE NONDISCLOSURE, NONINTERFERENCE, NONCOMPETITION AND NONSOLICITATION COVENANTS CONTAINED HEREIN ARE NECESSARY FOR THE PROTECTION OF COMPANY'S LEGITIMATE BUSINESS INTERESTS AND ARE REASONABLE IN DURATION, GEOGRAPHIC SCOPE, AND OTHER CONTENT. However, in the event a court of competent jurisdiction should decline to enforce any term of the nondisclosure, noninterference, noncompetition or nonsolicitation covenants, as written herein, such covenant

6

shall be deemed to be modified to require confidentiality and restrict Executive's interference, competition and solicitation with Company and its subsidiaries to the maximum duration, geographic scope, and other content that the court shall find enforceable.

9. ASSIGNMENT

This Agreement is personal to Executive and shall not be assignable by Executive. If the Company changes it name or changes a limited liability corporation to another corporate form, this Agreement will remain in effect between the Executive and the Company's successor. All the terms and provisions of this Agreement shall be binding on and shall inure to the benefit of and be enforceable by the parties and their respective successors and permitted assigns.

10. WAIVERS

No delay or failure by any party to this Agreement in exercising, protecting or enforcing any of its rights, titles, interests or remedies hereunder, and no course of dealing or performance with respect thereto, shall constitute a waiver. The express waiver by a party of any right, title, interest or remedy in a particular instance or circumstance shall not constitute a waiver in any other instance or circumstance. All rights and remedies shall be cumulative and not exclusive of any other rights or remedies.

11. ARBITRATION

Any controversies or claims arising out of or relating to this Agreement shall be fully and finally settled by arbitration in the city of Seattle, Washington in accordance with the Employment Arbitration Rules of the American Arbitration Association then in effect (the "AAA Rules"), conducted by one arbitrator either mutually agreed upon by the Company and Executive or chosen in accordance with the AAA Rules, except that the parties shall have any right to discovery as would be permitted by the Federal Rules of Civil Procedure for a period of 90 days following the commencement of such arbitration, and the arbitrator shall resolve any dispute that arises in connection with such discovery. Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction.

12. AMENDMENTS IN WRITING

No amendment, modification, waiver, termination or discharge of any provision of this Employment Agreement, nor consent to any departure from any provision of this Agreement by either party, shall in any event be effective unless the same shall be in writing, specifically identifying this Agreement and the provision intended to be amended, modified, waived, terminated or discharged and signed by the Company and Executive, and each such amendment, modification, waiver, termination or discharge shall be effective only in the specific instance and for the specific purpose for which given. No provision of this Agreement shall be varied, contradicted or explained by any oral agreement, course of dealing or performance or any other matter not set forth in an agreement in writing and signed by the Company and Executive.

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13. APPLICABLE LAW

This Agreement shall in all respects, including all matters of construction, validity and performance, be governed by, and construed and enforced in accordance with, the laws of the state of Washington, without regard to any rules governing conflicts of laws.

14. SEVERABILITY

If any provision of this Agreement shall be held invalid, illegal or unenforceable in any jurisdiction, for any reason, including, without limitation, the duration of such provision, its geographical scope or the extent of the activities prohibited or required by it, then, to the full extent permitted by law (a) all other provisions shall remain in full force and effect in such jurisdiction and shall be liberally construed in order to carry out the intent of the parties as nearly as may be possible, (b) such invalidity, illegality or unenforceability shall not affect the validity, legality or enforceability of any other provision, and (c) any court or arbitrator having jurisdiction shall have the power to reform such provision to the extent necessary for such provision to be enforceable under applicable law.

15. HEADINGS

All headings used in this Agreement are for convenience only and shall not in any way affect the construction of, or be taken into consideration in interpreting, this Agreement.

16. COUNTERPARTS

This Agreement, and any amendment or modification entered into pursuant to
Section 12, may be executed in any number of counterparts, each of which counterparts, when so executed and delivered, shall be deemed to be an original and all of which counterparts, taken together, shall constitute one and the same instrument.

17. ENTIRE AGREEMENT

This Agreement and the Indemnification Agreement between Executive and the Company (and any addenda, amendments or extensions to those agreements) constitute the entire agreement between the Company and Executive with respect to the subject matters of this Agreement and the Indemnification Agreement.

NORTHWEST BIOTHERAPEUTICS, INC.             EXECUTIVE:

By:
   ---------------------------------        ---------------------------------
   George Hutchinson, Chairman              Daniel O. Wilds

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EXHIBIT A

WAIVER AND RELEASE

For and in consideration of the severance payments and benefits set out in the Employment Agreement attached hereto, Executive, on behalf of himself and his agents, heirs, successors and assigns, expressly waives any claims against Company and releases Company (including its officers, directors, stockholders, managers, agents and representatives) from any and all claims, demands, liabilities, damages, obligations, actions or causes of action of any kind, known or unknown, past or present, arising out of, relating to, or in connection with Executive's employment, termination of employment, or the holding of any office with Company or any other related entity. The claims released by Executive include, but are not limited to, claims for defamation, libel, invasion of privacy, intentional or negligent infliction of emotional distress, wrongful termination, constructive discharge, breach of contract, breach of the covenant of good faith and fair dealing, breach of fiduciary duty, fraud, or for violation of any federal, state or other governmental statute or ordinance, including, without limitation, Title VII of the Civil Rights Act of 1964, the federal Age Discrimination in Employment Act, the Americans with Disabilities Act, the Family and Medical Leave Act, the Employment Retirement Income Security Program or any other legal limitation on the employment relationship.

This waiver and release shall not waive or release claims (1) where the events in dispute first arise after execution of this Release; (2) for rights or benefits due under the Employment Agreement attached hereto; or (3) relating to Executive's rights to indemnity as a corporate officer of Company.

Executive agrees he has been provided the opportunity to consider whether to enter into this Release, and has voluntarily chosen to enter into it on this date. This Release shall be effective when signed. Executive acknowledges that he is voluntarily executing this Release, that he has carefully read and fully understands all aspects of this Release and the attached Employment Agreement, that he has not relied upon any representations or statements not set forth herein or made by Company's agents or representatives, that he has been advised to consult with an attorney prior to executing the Release, and that, in fact, he has consulted with an attorney of his choice as to the subject matter and effect of this Release.


Date Executive

9

EXHIBIT B

WASHINGTON REVISED CODE ANNOTATED SECTION 49.44.140

Washington Revised Code Annotated Section 49.44.140 provides as follows:

A provision in an employment agreement that provides that an employee shall assign or offer to assign any of the employee's rights in an invention to the employer does not apply to an invention for which no equipment, supplies, facilities, or trade secret information of the employer was used and that was developed entirely on the employee's own time, unless:

(a) the invention relates (i) directly to the business of the employer, or (ii) to the employer's actual or demonstrably anticipated research or development, or

(b) the invention results from any work performed by the employee for the employer.

Any provision that purports to apply to such an invention is to that extent against the public policy of this state and is to that extent unenforceable.

An employer shall not require a provision made void and unenforceable by subsection (a) of this section as a condition of employment or continuing employment.


EXHIBIT C

None.


EXHIBIT 10.5

EMPLOYMENT AGREEMENT

This Employment Agreement (this "Agreement"), dated as of April ____, 2001, and effective as of February 2, 2001 (the "Effective Date"), is made and entered into by and between Northwest Biotherapeutics, Inc., a Delaware corporation, (the "Company"), and Alton Lee Boynton (the "Executive").

The Company and Executive hereby agree as follows:

1. EMPLOYMENT

The Company will employ Executive and Executive will accept employment by the Company as Vice President and Chief Scientific Officer. During Executive's employment, Executive shall serve the Company faithfully and to the best of his ability, devoting substantially all his working time, attention and energies to the business of the Company, unless otherwise approved in writing by the Board of Directors of the Company (the "Board"). Subject to the direction of the Board, Executive will have such reasonable duties, responsibilities, powers and authority as are prescribed by the Company's Chief Executive Officer. Executive shall not engage in any other business activity (except the management of personal investments, charitable and civic activities, and, upon completion of an initial public offering of the Company's Common Stock, participation as a director for companies that do not compete with the Company, that in the aggregate do not interfere with the performance of Executive's duties) without first obtaining the written consent of the Board, but such consent shall not unreasonably be withheld.

2. TERM OF AGREEMENT

The term of this Agreement ("Term") shall commence on February 2, 2001 and will continue in effect until January 31, 2004, unless otherwise terminated as set forth herein.

3. COMPENSATION

(a) BASE SALARY. Company shall pay Executive a base salary at an annual rate of Two Hundred Sixty-Five Thousand Dollars ($265,000) payable in accordance with Company's regular pay schedule for senior management. The Board shall review Executive's salary and performance annually, and Executive shall be eligible for an increase in his base salary based on such review. Upon the successful completion of the Company's first firm commitment underwritten public offering of its Common Stock registered under the Securities Act, Executive's then-current base salary shall increase by 25%.

(b) INCENTIVE COMPENSATION. Company shall establish an incentive compensation plan and Executive shall participate in that plan. Within the first 90 days of each fiscal year, the Board and Executive shall discuss and agree on financial and other performance objectives for Executive and Company for the fiscal year. Executive shall receive an incentive compensation opportunity of up to a maximum of 35% of his base salary based on his ability to meet these objectives and as approved by the Board.

(c) STOCK OPTIONS. The Company shall cause the Board to authorize the issuance of non-qualified options to Executive to acquire shares of the Company's common stock ("Shares"), under the following terms and conditions:


(1) Executive is granted an option to purchase Seventy-Nine Thousand Three Hundred (79,300) Shares at an exercise price of $1.25 per Share.

(2) Executive may, at his or the Company's option, pay for all or any portion of the aggregate exercise price by delivering a combination of any or all of the following:

(i) By delivering shares of the Company's common stock previously held by Executive which have a fair market value at the date of exercise equal to the aggregate exercise price to be paid by Executive upon such exercise. For purposes of this clause, the fair market value such shares is to be determined by the Board and shall be final and binding, provided that if the shares are publicly traded, the shares' fair market value shall be their average opening and closing prices on the date of exercise;

(ii) By delivering a properly executed exercise notice together with irrevocable instructions to a broker to promptly deliver to the Company the amount of sale or loan proceeds to pay the exercise price; or

(iii) By delivering a full recourse promissory note for all or part of the aggregate exercise price, payable on such terms and bearing such interest rate as determined by the Board (but in no event less than the minimum interest rate specified under the Internal Revenue Code at which no additional interest would be imputed and in no event more than the maximum interest rate allowed under applicable usury laws), which promissory note may be either secured or unsecured in such manner as the Board shall approve (including, without limitation, by a security interest in shares of the Company's stock).

(3) The options shall vest in equal amounts monthly over 36 months; provided that, in the event the Company undergoes a change of control ("Change of Control") by virtue of a sale or exchange of shares in a transaction or series of transactions occurring in any twelve-month period resulting in the Company's stockholders as of the beginning of such twelve-month period holding less than 50% of the outstanding equity and underlying options and warrants at the end of such period, all of Executive's options shall become immediately vested and fully exercisable upon such Change of Control.

(4) The option term of Executive's vested options shall terminate upon the first to occur of: (i) Executive's termination of employment with the Company by Company for Cause (as such term is defined in Section 5(f)) or by Executive without Good Reason (as such term is defined in Section 5(g)); or (ii) ten years from the date the options are issued.

(5) The Board will qualify the options for an exemption from registration under the applicable federal and Washington State securities laws.

(d) BENEFITS.

(1) Executive shall be entitled to receive a minimum of four weeks paid vacation and all benefits (such as medical, dental, sick leave, disability, and retirement benefits)

2

as are generally available from time to time to employed senior executives of Company. For purposes of this section, benefits offered to employees leased to Company are not benefits under this section.

(2) Company will maintain a reasonable policy of insurance for directors and officers liability as determined by the Board. Executive will be included within that policy of insurance with the premiums paid by Company.

4. TERMINATION

Employment of Executive pursuant to this Agreement may be terminated as follows:

(a) BY EXECUTIVE. Executive may terminate his employment at any time, for any reason.

(b) BY THE COMPANY. The Company may terminate the employment of Executive at any time, for any reason, with or without cause.

(c) AUTOMATIC TERMINATION. This Agreement and Executive's employment shall terminate automatically upon the death or total disability of Executive. The term "total disability" as used in this Agreement shall mean Executive's inability to perform the duties set forth in Section 1 for a period or periods aggregating one-hundred twenty (120) calendar days in any 12-month period as a result of physical or mental illness, loss of legal capacity or any other cause beyond Executive's control, unless Executive is granted a leave of absence by the Board. Executive and the Company acknowledge that Executive's ability to perform the duties specified in Section 1 is of the essence of this Agreement.

5. TERMINATION PAYMENTS

In the event of termination of the employment of Executive, all compensation and benefits set forth in this Agreement shall terminate, except as specifically provided in this Section 5. For purposes of this Agreement, the effective date of termination shall be thirty (30) days after the Executive or the Company gives written notice of termination.

(a) TERMINATION BY THE COMPANY WITH CAUSE. Upon termination by the Company with Cause (as defined below), the Company shall pay Executive any unpaid annual base salary, earned but unused vacation, and bonuses due (if any), for services already performed (subject to normal withholding and other deductions) to the effective date of termination of employment.

(b) TERMINATION BY THE COMPANY WITHOUT CAUSE. Upon termination by the Company without Cause (as defined below), the Company shall pay Executive any unpaid annual base salary, any amount due but not paid under the Company's Incentive Compensation Plan, earned but unused vacation and bonuses due (if any) for services already performed (subject to normal withholding and other deductions) to the effective date of termination of employment; and monthly severance payments equivalent to six (6) months base salary and six (6) months at one-half (1/2) base salary. These payments will be made in accordance with the Company's customary payroll schedule, minus deductions required by law. The Company will issue and file appropriate tax documents in connection with any severance payments. Payment of

3

the above-described severance compensation and benefits is conditioned on Executive executing a full mutual release of all claims related to his employment with or termination from Company in substantially the form attached hereto as Exhibit A. Such a release will not include accrued and unpaid wages and benefits, claims to industrial insurance, vested pension benefits or indemnification rights. Executive will have the duty to mitigate the costs of Company by attempting to obtain other employment within a reasonable time after termination; Executive's compensation from such other employment will be credited against the amounts due from Company to the extent the combined compensation from Executive's new position and Company's payments under this
Section 5(b) would otherwise exceed Executive's base salary (or one-half (1/2) base salary, as the case may be) with Company at the date of termination.

(c) TERMINATION BY EXECUTIVE WITHOUT GOOD REASON. Upon termination by Executive without Good Reason (as defined below), Executive shall be paid the compensation as set forth in Section 5(a) and shall not be entitled to any other benefits or payments.

(d) TERMINATION BY EXECUTIVE WITH GOOD REASON. Upon termination by Executive with Good Reason (as defined below), Executive shall receive the compensation as set forth in Section 5(b) and shall not be entitled to any other benefits or payments.

(e) TERMINATION AS A RESULT OF DEATH OR TOTAL DISABILITY. In the event of termination of Executive's employment pursuant to Section 4(c), Executive or his estate shall be paid the compensation set forth in Section 5(a) and shall not be entitled to any other benefits or payments.

(f) DEFINITION OF "CAUSE." "Cause" as used in this Agreement shall mean a determination by the Board that one or more of the following has occurred:

willful misconduct, or dishonesty in the performance of Executive's duties that results in a material adverse effect on the Company;

conviction of Executive of a felony involving an act of dishonesty, moral turpitude, deceit or fraud; or

current use by the Executive of illegal substances.

(g) DEFINITION OF "GOOD REASON." "Good reason" shall mean the occurrence of any of the following events, without the consent of the Executive:

a demotion or other material reduction in the nature or status of Executive's responsibilities; or"

a material reduction in Executive's annual base salary or any failure by the Company to satisfy its duty to compensate the Executive as required under this Agreement.

6. INTELLECTUAL PROPERTY

Company shall own all right, title and interest (including patent rights, copyrights, trade secret rights, mask work rights, sui generis database rights and all other intellectual rights of any sort

4

throughout the world) relating to any and all inventions (whether or not patentable), works of authorship, mask works, designs, know-how, ideas and information made or conceived or reduced to practice, in whole or in part, by Executive during the term of Executive's employment with Company to and only to the fullest extent allowed by Washington Revised Code Annotated Section
49.44.140 (which is attached as Exhibit B) (collectively "Inventions") and Executive will promptly disclose all Inventions to Company. Executive will also disclose anything Executive believes is excluded by Section 49.44.140 so that Company can make an independent assessment. Executive hereby makes all assignments necessary to accomplish the foregoing. Executive shall further assist Company, at Company's expense, to further evidence, record and perfect such assignments, and to perfect, obtain, maintain, enforce, and defend any rights specified to be so owned or assigned. Executive hereby irrevocably designates and appoints Company as its agents and attorneys-in-fact to act for and in Executive's behalf to execute and file any document and to do all other lawfully permitted acts to further the purposes of the foregoing with the same legal force and effect as if executed by Executive. If Executive wishes to clarify that something created by Executive prior to Executive's employment that relates to Company's actual or proposed business is not within the scope of this Agreement, Executive has listed it on Exhibit C. If Executive uses or (except where disclosed pursuant to this Section 6 as a claimed exclusion to RCW 49.44.140 or in Exhibit C) discloses Executive's own or any third party's confidential information or intellectual property when acting within the scope of Executive's employment or otherwise on behalf of Company, Company will have and Executive hereby grants Company a perpetual, irrevocable, worldwide royalty-free, non-exclusive, sublicensable right and license to exploit and exercise all such confidential information and intellectual property rights. To the extent allowed by law, this section includes all rights of paternity, integrity, disclosure and withdrawal and any other rights that may be known as or referred to as "moral rights," "artist's rights," "droit moral," or the like (collectively "Moral Rights"). To the extent Executive retains any such Moral Rights under applicable law, Executive hereby ratifies and consents to any action that may be taken with respect to such Moral Rights by or authorized by Company and agree not to assert any Moral Rights with respect thereto. Executive will confirm any such ratifications, consents and agreements from time to time as requested by Company.

7. PRIVACY

Executive recognizes and agrees that Executive has no expectation of privacy with respect to Company's telecommunications, networking or information processing systems (including, without limitation, stored computer files, email messages and voice messages) and that Executive's activity and any files or messages on or using any of those systems may be monitored at any time without notice.

8. RESTRICTIVE COVENANTS

Executive acknowledges: (i) that Executive will have access during his employment with Company to confidential information regarding all Inventions and all other business, technical and financial information (including, without limitation, the identity of and information relating to customers or employees) Executive develops, learns or obtains during the term of Executive's employment that relates to Company or the business or demonstrably anticipated business of Company or that are received by or for Company in confidence, and that all such information constitutes "Proprietary Information"; (ii) that information regarding Proprietary Information

5

constitutes a valuable asset and trade secret of Company; and (iii) that it is reasonable for Company to protect itself from misappropriation of Proprietary Information by Executive upon termination of employment or otherwise. Accordingly, in consideration of employment hereunder, and other good and valuable consideration, Executive agrees to the following nondisclosure, noninterference and noncompetition covenants during the Term and for a period of twenty-four (24) months after the Term:

(a) NONDISCLOSURE. Executive will not copy, remove, or disclose any Proprietary Information, except as may be required by law or in the course of performing services for Company, Executive will hold in confidence and not disclose or, except within the scope of Executive's employment, use any Proprietary Information at any time, even after Executive's employment with Company ends for whatever reason. However, Executive shall not be obligated under this paragraph with respect to information Executive can document by clear and convincing evidence is or becomes readily publicly available without restriction through no fault of Executive. Upon termination of Executive's employment or if sooner requested, Executive will promptly return to Company all items containing or embodying Proprietary Information (including all copies), except that Executive may keep Executive's personal copies of (i) Executive's compensation records, (ii) materials distributed to shareholders generally and
(iii) this Agreement;

(b) NONINTERFERENCE. Executive will not employ, solicit, or seek to employ any person who is an employee of Company or its subsidiaries (i) as of the date hereof; (ii) during the Term, or (iii) at the time of employment or solicitation; and

(c) NONCOMPETITION AND NONSOLICITATION. Executive will not, directly or indirectly, as principal, agent, employee, officer, shareholder, consultant or otherwise, engage in any business that competes directly with Company or any of its subsidiaries, and will not solicit or aid in soliciting, endeavor to obtain as a customer or client, accept sales, marketing, financial, or consulting business from, or perform sales, marketing, consulting or related business for any person, firm, corporation, association or other entity: (i) that is or was a Company customer for whom Executive performed any services or with whom Executive had maintained substantial business contacts at any time during the Term; or (ii) whose business Executive solicited, either alone or in conjunction with others, on behalf of Company or any of its subsidiaries during the Term.

Executive acknowledges and agrees: (i) that a breach of any of the covenants contained in this Section 8 would cause irreparable injury to Company and its subsidiaries for which monetary damages alone would be inadequate to compensate and protect Company and its subsidiaries; (ii) that Company and its subsidiaries may therefore seek and obtain injunctive relief to enjoin any breach of such restrictive covenants in addition to, and not in limitation of, any other legal or equitable remedies that are available as a matter, of law or equity; and (iii) that specific enforcement of this Agreement by way of an injunction shall not prevent Executive from earning a reasonable livelihood.
EXECUTIVE FURTHER ACKNOWLEDGES AND AGREES THAT THE NONDISCLOSURE, NONINTERFERENCE, NONCOMPETITION AND NONSOLICITATION COVENANTS CONTAINED HEREIN ARE NECESSARY FOR THE PROTECTION OF COMPANY'S LEGITIMATE BUSINESS INTERESTS AND ARE REASONABLE IN DURATION, GEOGRAPHIC SCOPE, AND OTHER CONTENT. However, in the event a court of competent jurisdiction should decline to enforce any term of the nondisclosure,

6

noninterference, noncompetition or nonsolicitation covenants, as written herein, such covenant shall be deemed to be modified to require confidentiality and restrict Executive's interference, competition and solicitation with Company and its subsidiaries to the maximum duration, geographic scope, and other content that the court shall find enforceable.

9. ASSIGNMENT

This Agreement is personal to Executive and shall not be assignable by Executive. If the Company changes it name or changes a limited liability corporation to another corporate form, this Agreement will remain in effect between the Executive and the Company's successor. All the terms and provisions of this Agreement shall be binding on and shall inure to the benefit of and be enforceable by the parties and their respective successors and permitted assigns.

10. WAIVERS

No delay or failure by any party to this Agreement in exercising, protecting or enforcing any of its rights, titles, interests or remedies hereunder, and no course of dealing or performance with respect thereto, shall constitute a waiver. The express waiver by a party of any right, title, interest or remedy in a particular instance or circumstance shall not constitute a waiver in any other instance or circumstance. All rights and remedies shall be cumulative and not exclusive of any other rights or remedies.

11. ARBITRATION

Any controversies or claims arising out of or relating to this Agreement shall be fully and finally settled by arbitration in the city of Seattle, Washington in accordance with the Employment Arbitration Rules of the American Arbitration Association then in effect (the "AAA Rules"), conducted by one arbitrator either mutually agreed upon by the Company and Executive or chosen in accordance with the AAA Rules, except that the parties shall have any right to discovery as would be permitted by the Federal Rules of Civil Procedure for a period of 90 days following the commencement of such arbitration, and the arbitrator shall resolve any dispute that arises in connection with such discovery. Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction.

12. AMENDMENTS IN WRITING

No amendment, modification, waiver, termination or discharge of any provision of this Employment Agreement, nor consent to any departure from any provision of this Agreement by either party, shall in any event be effective unless the same shall be in writing, specifically identifying this Agreement and the provision intended to be amended, modified, waived, terminated or discharged and signed by the Company and Executive, and each such amendment, modification, waiver, termination or discharge shall be effective only in the specific instance and for the specific purpose for which given. No provision of this Agreement shall be varied, contradicted or explained by any oral agreement, course of dealing or performance or any other matter not set forth in an agreement in writing and signed by the Company and Executive.

7

13. APPLICABLE LAW

This Agreement shall in all respects, including all matters of construction, validity and performance, be governed by, and construed and enforced in accordance with, the laws of the state of Washington, without regard to any rules governing conflicts of laws.

14. SEVERABILITY

If any provision of this Agreement shall be held invalid, illegal or unenforceable in any jurisdiction, for any reason, including, without limitation, the duration of such provision, its geographical scope or the extent of the activities prohibited or required by it, then, to the full extent permitted by law (a) all other provisions shall remain in full force and effect in such jurisdiction and shall be liberally construed in order to carry out the intent of the parties as nearly as may be possible, (b) such invalidity, illegality or unenforceability shall not affect the validity, legality or enforceability of any other provision, and (c) any court or arbitrator having jurisdiction shall have the power to reform such provision to the extent necessary for such provision to be enforceable under applicable law.

15. HEADINGS

All headings used in this Agreement are for convenience only and shall not in any way affect the construction of, or be taken into consideration in interpreting, this Agreement.

16. COUNTERPARTS

This Agreement, and any amendment or modification entered into pursuant to
Section 12, may be executed in any number of counterparts, each of which counterparts, when so executed and delivered, shall be deemed to be an original and all of which counterparts, taken together, shall constitute one and the same instrument.

17. ENTIRE AGREEMENT

This Agreement between Executive and the Company (and any addenda, amendments or extensions to those agreements) constitutes the entire agreement between the Company and Executive with respect to the subject matters of this Agreement.

NORTHWEST BIOTHERAPEUTICS, INC.              EXECUTIVE:

By: __________________________________       ___________________________________
    Daniel O. Wilds, President & CEO         Alton Lee Boynton

8

EXHIBIT A

WAIVER AND RELEASE

For and in consideration of the severance payments and benefits set out in the Employment Agreement attached hereto, Executive, on behalf of himself and his agents, heirs, successors and assigns, expressly waives any claims against Company and releases Company (including its officers, directors, stockholders, managers, agents and representatives) from any and all claims, demands, liabilities, damages, obligations, actions or causes of action of any kind, known or unknown, past or present, arising out of, relating to, or in connection with Executive's employment, termination of employment, or the holding of any office with Company or any other related entity. The claims released by Executive include, but are not limited to, claims for defamation, libel, invasion of privacy, intentional or negligent infliction of emotional distress, wrongful termination, constructive discharge, breach of contract, breach of the covenant of good faith and fair dealing, breach of fiduciary duty, fraud, or for violation of any federal, state or other governmental statute or ordinance, including, without limitation, Title VII of the Civil Rights Act of 1964, the federal Age Discrimination in Employment Act, the Americans with Disabilities Act, the Family and Medical Leave Act, the Employment Retirement Income Security Program or any other legal limitation on the employment relationship.

This waiver and release shall not waive or release claims (1) where the events in dispute first arise after execution of this Release; (2) for rights or benefits due under the Employment Agreement attached hereto; or (3) relating to Executive's rights to indemnity as a corporate officer of Company.

Executive agrees he has been provided the opportunity to consider whether to enter into this Release, and has voluntarily chosen to enter into it on this date. This Release shall be effective when signed. Executive acknowledges that he is voluntarily executing this Release, that he has carefully read and fully understands all aspects of this Release and the attached Employment Agreement, that he has not relied upon any representations or statements not set forth herein or made by Company's agents or representatives, that he has been advised to consult with an attorney prior to executing the Release, and that, in fact, he has consulted with an attorney of his choice as to the subject matter and effect of this Release.


Date Executive

EXHIBIT B

WASHINGTON REVISED CODE ANNOTATED SECTION 49.44.140

Washington Revised Code Annotated Section 49.44.140 provides as follows:

A provision in an employment agreement that provides that an employee shall assign or offer to assign any of the employee's rights in an invention to the employer does not apply to an invention for which no equipment, supplies, facilities, or trade secret information of the employer was used and that was developed entirely on the employee's own time, unless:

(a) the invention relates (i) directly to the business of the employer, or (ii) to the employer's actual or demonstrably anticipated research or development, or

(b) the invention results from any work performed by the employee for the employer.

Any provision that purports to apply to such an invention is to that extent against the public policy of this state and is to that extent unenforceable.

An employer shall not require a provision made void and unenforceable by subsection (a) of this section as a condition of employment or continuing employment.


EXHIBIT C

None.


Exhibit 10.6

LEASE

NEXUS CANYON PARK LLC
"LANDLORD"

AND

NORTHWEST BIOTHERAPEUTICS, INC.
"TENANT"

21720 - 23RD DRIVE S.E., BOTHELL, WASHINGTON


LEASE

TABLE OF CONTENTS

                                                                                          Page
                                                                                          ----
1.      Lease Premises.......................................................................1
2.      Basic Lease Provisions...............................................................1
3.      Term.................................................................................3
4.      Construction and Possession..........................................................3
5.      Rent.................................................................................6
6.      Rental Adjustments...................................................................6
7.      Operating Expenses...................................................................7
8.      Rentable Area.......................................................................10
9.      Security Deposit....................................................................11
10.     Use.................................................................................14
11.     Brokers.............................................................................15
12.     Holding Over........................................................................16
13.     Taxes on Tenant's Property..........................................................16
14.     Condition of Premises...............................................................17
15.     Common Areas and Parking Facilities.................................................17
16.     Utilities and Services..............................................................18
17.     Alterations.........................................................................19
18.     Repairs and Maintenance.............................................................20
19.     Liens...............................................................................20
20.     Indemnification and Exculpation.....................................................21
21.     Insurance - Waiver of Subrogation...................................................22
22.     Damage or Destruction...............................................................25
23.     Eminent Domain......................................................................26
24.     Defaults and Remedies...............................................................27
25.     Assignment or Subletting............................................................31
26.     Attorney's Fees.....................................................................32
27.     Bankruptcy..........................................................................33
28.     Definition of Landlord..............................................................33
29.     Estoppel Certificate................................................................34
30.     Removal of Property.................................................................34
31.     Limitation of Landlord's Liability..................................................35
32.     Control by Landlord.................................................................36
33.     Quiet Enjoyment.....................................................................36
34.     Quitclaim Deed......................................................................36
35.     Subordination and Attornment........................................................36
36.     Surrender...........................................................................37
37.     Waiver and Modification.............................................................37
38.     Waiver of Jury Trial................................................................37
39.     Hazardous Material..................................................................37
40.     Option to Extend Term...............................................................41

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                                                                                          Page
                                                                                          ----
41.     Right of First Refusal to Lease Additional Space....................................42
42.     Miscellaneous.......................................................................43

        42.1   Terms and Headings...........................................................43
        42.2   Examination of Lease.........................................................44
        42.3   Time.........................................................................44
        42.4   Covenants and Conditions.....................................................44
        42.5   Consents.....................................................................44
        42.6   Entire Agreement.............................................................44
        42.7   Severability.................................................................44
        42.8   Recording....................................................................44
        42.9   Impartial Construction.......................................................44
        42.10  Inurement....................................................................44
        42.11  Force Majeure................................................................44
        42.12  Notices......................................................................45
        42.13  Authority to Execute Lease...................................................45
        42.14  Governing Law................................................................45

43.     Definitions.........................................................................45

        43.1   Premises.....................................................................45
        43.2   Site Improvements............................................................45
        43.3   Site Plan....................................................................45
        43.4   Building.....................................................................45
        43.5   Building Shell...............................................................45
        43.6   Tenant Improvements..........................................................45
        43.7   Tenant Improvement Plans.....................................................45
        43.8   Project......................................................................45
        43.9   Tenant Improvement Allowance.................................................46

EXHIBIT "A"     Site Plan of the Project
EXHIBIT "B"     Outline of the Premises
EXHIBIT "C"     Description of Landlord Improvements
EXHIBIT "D"     Form of Letter of Credit
EXHIBIT "E"     Rules and Regulations
EXHIBIT "F"     Calculation of Rentable Area

ii

LEASE

(Nexus/Northwest Biotherapeutics)

THIS LEASE ("Lease") is made as of October 22, 1999, by and between Nexus Canyon Park LLC, a California limited liability company ("Landlord"), and Northwest Biotherapeutics, Inc., a Delaware corporation ("Tenant").

1. LEASE PREMISES.

1.1 Landlord hereby leases to Tenant and Tenant hereby leases from Landlord those certain premises ("Premises") consisting of approximately 38,776 square feet of Rentable Area in the building (the "Building") located at 21720-23rd Drive S.E., Bothell, Washington, on real property legally described as Tract 21-B of Canyon Park Business Center Binding Site Plan recorded under Recording No. 9708195005, records of Snohomish County, Washington, being a portion of the Northwest Quarter of Section 29, Township 27 North, Range 5 East, W.M. The Building consists of approximately 112,000 square feet of Rentable Area. The Building, the real property upon which the Building is located, and all landscaping, parking facilities, and other improvements and appurtenances related thereto are hereinafter collectively referred to as the "Project." The site plan for the Project is attached hereto as Exhibit "A", and the Premises are outlined on Exhibit "B." All portions of the Project which are for the non-exclusive use of tenants of the Project, including without limitation roadways, driveways, sidewalks, parking areas, and landscaped areas, are hereinafter referred to as "Common Areas".

2. BASIC LEASE PROVISIONS.

2.1 For convenience of the parties, certain basic provisions of this Lease are set forth herein, which provisions are subject to the remaining terms and conditions of this Lease and are to be interpreted in light of such remaining terms and conditions.

2.1.1 Address of the Project:

       21720-23rd Drive S.E.
       Bothell, Washington

2.1.2  Designation of Tenant's Suite:
       Suite 100

2.1.3  Rentable Area:
       Approximately 38,776 square feet

2.1.4  Basic Annual Rent: $1,062,074.64 ($27.39 per square foot
       per year of Rentable Area, subject to adjustment pursuant
       to Sections 6.1 and 8.3)

1

2.1.5  Monthly Installment of Basic Annual Rent: $88,506.22
       ($2.2825 per square foot per month of Rentable Area,
       subject to adjustment pursuant to Sections 6.1 and 8.3)

2.1.6  Tenant's Pro Rata Share: 34.6% of the Project (subject to
       adjustment pursuant to Section 8.3)

2.1.7  (a) Estimated Term Commencement Date: July 1, 2000 (to be
           determined pursuant to Section 3.2)

       (b) Term Expiration Date: Ten (10) years from the actual
           Term Commencement Date

2.1.8  Security Deposit: $1,003,968 Letter of Credit

2.1.9  Permitted Use:

        Office, research and development, laboratory,
        manufacturing, distribution, and any other lawful use
        permitted in the applicable zone

2.1.10 Address for Rent Payment and Notices to Landlord:

Nexus Canyon Park LLC 4350 La Jolla Village Drive, Suite 930 San Diego, CA 92122
Attn: Michael J. Reidy

Address for Notices to Tenant Prior to Occupancy:

Northwest Biotherapeutics, Inc.
125 Northgate Plaza
Seattle, WA 98125
Attn: Chief Executive Officer

Address for Notices to Tenant After Occupancy:

Northwest Biotherapeutics, Inc.
21720-23rd Drive S.E.
Bothell, WA
Attn: Chief Executive Officer

2

2.2 The following exhibits are attached hereto and incorporated herein by this reference:

Exhibit "A" Site Plan of the Project Exhibit "B" Outline of the Premises Exhibit "C" Description of Landlord Improvements Exhibit "D" Form of Letter of Credit Exhibit "E" Rules and Regulations Exhibit "F" Calculation of Rentable Area

2.3 Capitalized terms not defined when first used in this Lease shall have the meaning ascribed to them in Article 43 below.

3. TERM.

3.1 This Lease shall take effect upon the date of execution hereof by each of the parties hereto, and each of the provisions hereof shall be binding upon and inure to the benefit of Landlord and Tenant from the date of execution hereof by each of the parties hereto.

3.2 The term of this Lease will be that period from the date Tenant commences conduct of its business on the Premises after the completion of Tenant Improvements or July 1, 2000, whichever is earlier ("Term Commencement Date"), and through ten (10) years from the Term Commencement Date, subject to earlier termination of this Lease or extension of the term as provided herein. The target date set forth in the preceding sentence is based on the assumption that the Premises will be tendered for construction of the Tenant Improvements by February 1, 2000. If the Premises are tendered to Tenant after February 1, 2000, the target date of July 1, 2000 shall be extended by one day for each day of delay beyond February 1, 2000.

3.3 The parties acknowledge that as of the date of execution hereof, Landlord does not own the Project, but has entered into a purchase and sale agreement dated August 9, 1999 ("Purchase and Sale Agreement") with Opus Northwest, L.L.C., for the purchase of the Project. Accordingly, the effectiveness of this Lease is contingent upon (i) Landlord acquiring fee simple title to the Project in accordance with the Purchase Agreement, and (ii) Landlord certifying to Tenant in writing that Landlord has acquired the Project and delivering copies of the recorded deed to verify the closing under the Purchase Agreement has occurred. If the conditions in this Section 3.3 are not satisfied on or before November 30, 1999, then either Landlord or Tenant may terminate this Lease upon written notice to the other within fifteen (15) days thereafter (but in any event prior to the date the conditions are satisfied), in which event Landlord shall immediately reimburse Tenant the reasonable out-of-pocket expenses incurred by Tenant in designing and planning for the Premises and in negotiating and entering into this Lease.

4. CONSTRUCTION AND POSSESSION.

4.1 Commencing promptly after Landlord acquires the Project, Landlord shall construct at Landlord's expense, and in compliance with the warranties set forth in Article 14, the following improvements to the Building, and such other improvements as are described on

3

Exhibit "C" ("Landlord Improvements"): (a) removal of the existing mezzanine and construction of a new mezzanine with a loading capacity of 125 lbs/square foot and two exit stairwells; (b) roof penetrations and structural reinforcement of the roof sufficient to support standard biotech rooftop loads; (c) the addition of one elevator sufficient to carry both freight and passengers; (d) removal of the existing dock loading bays and "squaring out" of the back wall of the Premises; (e) the addition of new exterior windows along the south and west walls of the Building; and (f) construction of a retaining wall on the south end of the Building.

4.2 At such time as Landlord has completed the Landlord Improvements to the extent that construction of the Tenant Improvements can commence, Tenant shall construct the Tenant Improvements in accordance with the Tenant Improvement Plans at Tenant's expense, including the expense of design, permitting and construction, subject to Landlord providing the Tenant Improvement Allowance described in Section 4.3 below; provided, however, Landlord will reimburse Tenant for one-half of the expense of constructing the demising wall separating the Premises from other tenant space in the Building. In that part of the Premises to be left in "shell" condition pursuant to the Tenant Improvement Plans, which shall consist of no more than 5,200 square feet of Rentable Area, Tenant shall install at a minimum the mechanical equipment for the anticipated future load capacity of the space (but not the duct work and distribution system), a fully operational fire sprinkler system, a demising wall to separate the "shell" space from the balance of the Premises, and lighting, exiting and other improvements required by applicable law for health and safety reasons. The Tenant Improvement Plans, and any revisions and supplements thereto, shall be subject to the approval of Landlord, which approval shall not be unreasonably withheld or delayed (and shall be deemed approved if Landlord does not respond to a request for approval within ten (10) days after the request). Tenant shall obtain and provide to Landlord a certificate of occupancy as soon as possible after completion of the Tenant Improvements.

4.3 Landlord shall contribute for the cost of Tenant Improvements the amount of $3,489,400 ($89.9886 per square foot of Rentable Area) (the "Tenant Improvement Allowance").

(a) Tenant shall prepare a Tenant Improvement budget equal to the Tenant Improvement Allowance ("Tenant Improvement Budget"), including design fees, architect fees and other direct costs incurred in the design and construction of the Tenant Improvements. The Tenant Improvement Budget, and all revisions thereto, shall be subject to Landlord's approval, which shall not be unreasonably withheld or delayed. As work progresses on the Tenant Improvements, Tenant shall submit an application for payment ("Application for Payment") to Landlord no more often than monthly, and by the twentieth (20th) day of the month, for disbursement of the Tenant Improvement Allowance. Applications for Payment may be made only for work actually completed or services actually provided and shall include a detailed description of such completed Tenant Improvement work or services. Applications for Payment shall include copies of the invoices to Tenant by Tenant's contractor(s) or other vendors for the work completed. As a condition of payment of any Application for Payment, Landlord may require the certification by both Tenant and Tenant's architect that the described Tenant Improvement Work or services have been completed. Landlord shall disburse the requested funds from the Tenant Improvement Allowance directly to the invoicing party (or, in Landlord's

4

discretion, directly to Tenant) no later than the tenth (10th) day of each calendar month for Applications for Payment with required supporting documentation received on or before the twentieth (20th) day of the previous calendar month. Tenant agrees to reasonably cooperate with Landlord in compiling the Applications for Payment in form and content satisfactory to Landlord's construction lender.

(b) If the work described on the Tenant Improvement Budget, as it may be revised from time to time, exceeds the amount of the Tenant Improvement Allowance, because of changes in work, cost overruns, or otherwise, Tenant shall pay the overage on a monthly basis as the work progresses.

(c) Tenant shall, at its expense, install any improvements in addition to those listed on the Tenant Improvement Budget which are necessary to ensure (i) the Premises are completed in accordance with the Tenant Improvement Plans, (ii) the Premises are fully operational, and (iii) a certificate of occupancy is issued for the Premises. Tenant may lease or finance the acquisition of any personal property components of the additional improvements, such as fixtures and equipment for specialized clean rooms and communications, computer and security systems. Landlord shall cooperate with Tenant and any equipment lessor or lender to document an ownership or security interest in such personal property for the lease or loan, as the case may be.

4.4 Landlord shall tender possession of the Premises to Tenant for construction of the Tenant Improvements at such time as Landlord and Landlord's Architect gives Tenant written notice that construction of the Landlord Improvements has progressed to the point that construction of the Tenant Improvements can commence. Tenant agrees that in the event possession of the Premises is not promptly tendered to Tenant, this Lease shall not be void or voidable and Landlord shall not be liable to Tenant for any loss or damage resulting therefrom. Without limiting the generality of the foregoing, Tenant expressly waives any right to terminate this Lease because of delays in completion of construction of the Premises; provided, however, if possession of the Premises is not tendered to Tenant for construction of the Tenant Improvements by May 1, 2000, Tenant may upon written notice to Landlord within thirty (30) days thereafter terminate this Lease.

4.5 Tenant understands that the Site Improvements, Building Shell and Landlord Improvements may not be complete at the time possession of the Premises is tendered to Tenant for construction of the Tenant Improvements, but will be in a condition such that construction of the Tenant Improvements can commence. Landlord shall fully complete construction of the Site Improvements, Building Shell and the Landlord Improvements no later than the date Tenant completes construction of the Tenant Improvements. In the event that the Site Improvements, Building Shell and Landlord Improvements are not fully completed by the date Tenant completes the Tenant Improvements, neither the term of this Lease nor Tenant's obligation to pay Rent shall commence until the date a certificate of occupancy for the Premises would have been issued but for such delay.

4.6 Landlord and Tenant shall diligently and in good faith cooperate with one another, and shall cause their architects and contractors to cooperate with one another, to insure

5

timely and cost effective design, permitting and construction of the Site Improvements, Building Shell, and Tenant Improvements.

4.7 Any dispute between Landlord and Tenant arising under this Article 4 that is not resolved by the parties within fifteen (15) days shall be promptly resolved by binding arbitration conducted by a single neutral arbitrator in Seattle, Washington, under the Commercial Rules of the American Arbitration Association. In order that completion of the Project is not delayed, the party responsible for construction or other performance shall continue to perform pending completion of the arbitration proceeding. In the event of delays caused by Landlord, in failing to reasonably approve the Tenant Improvement Plans or otherwise, the Term Commencement Date and Tenant's obligation to pay Rent shall be extended one day for each day of such delay as determined by agreement of the parties or by the arbitrator if they fail to agree.

5. RENT.

5.1 Tenant agrees to pay Landlord as Basic Annual Rent for the Premises the sum set forth in Section 2.1.4, subject to adjustment as set forth in Sections 6.1 and 8.3, commencing on the Term Commencement Date. Basic Annual Rent shall be paid in the equal monthly installments set forth in Section 2.1.5, subject to adjustment as set forth in Sections 6.1 and 8.3, each in advance on the first day of each and every calendar month during the term of this Lease, commencing on the Term Commencement Date.

5.2 In addition to Basic Annual Rent, Tenant agrees to pay to Landlord as additional rent ("Additional Rent"), at the times hereinafter specified in this Lease (i) Tenant's Pro Rata Share (as defined in Section 7.3(a) and as set forth in Section 2.1.6, subject to adjustment pursuant to Section 8.3) of Operating Expenses as provided in Section 7 and (ii) all other amounts that Tenant assumes or agrees to pay under the provisions of this Lease, including but not limited to any and all other sums that may become due by reason of any default of Tenant or failure on Tenant's part to comply with the agreements, terms, covenants and conditions of this Lease to be performed by Tenant.

5.3 Basic Annual Rent and Additional Rent shall together be denominated "Rent." Except as expressly set forth in this Lease, Rent shall be paid to Landlord, without notice, demand, abatement, suspension, deduction, setoff, counterclaim, or defense, in lawful money of the United States of America, at the office of Landlord as set forth in Section 2.1.10 or to such other person or at such other place as Landlord may from time to time designate in writing.

5.4 In the event the term of this Lease commences or ends on a day other than the first day of a calendar month, then the Rent for such fraction of a month shall be prorated for such period on the basis of a thirty (30) day month and shall be paid at the then current rate for such fractional month prior to the commencement of the partial month.

6. RENTAL ADJUSTMENTS.

6.1 Commencing on the first anniversary of the Term Commencement Date, the Basic Annual Rent then in effect (and as previously increased pursuant to this Section 6.1) shall be

6

increased each year by three and one-half percent (3.5%) on each annual anniversary of the Term Commencement Date for the initial 10-year term of the Lease.

7. OPERATING EXPENSES.

7.1 As used herein, the term "Operating Expenses" shall include:

(a) Government impositions including, without limitation, real and personal property taxes and assessments (but excluding personal property taxes and assessments of other tenants of the Project) levied upon the Project or any part thereof; amounts due under any improvement bond upon the Project and assessments levied in lieu thereof (except to the extent they represent costs related to the construction of the Project); any tax on or measured by gross rentals received from the rental of space in the Project or tax based on the square footage of the buildings in the Project to the extent such tax is in lieu of or in the nature of a property tax; and any utilities surcharges or any other costs levied, assessed or imposed by, or at the direction of, or resulting from statutes or regulations, or interpretations thereof promulgated by, any federal, state, regional, municipal or local government authority in connection with the use or occupancy of the Building or Project, and any expenses, including the cost of attorneys or experts, reasonably incurred by Landlord in seeking reduction by the taxing authority of the applicable taxes not to exceed the amount of any such reduction, less tax refunds obtained as a result of an application for review thereof.

(b) Except as set forth in Section 7.2 below, all other costs paid or incurred by Landlord which, in accordance with accepted principles of sound accounting practice as applied to the operation and maintenance of first class buildings, are properly chargeable to the maintenance and operation of the Project including, by way of examples and not as a limitation upon the generality of the foregoing, costs of (i) maintenance, repairs and replacements to improvements within the Project as appropriate to maintain the Project in first class condition; (ii) utilities furnished to the Project (except those utilities which are separately metered and paid by individual tenants); (iii) sewer fees; (iv) trash collection; (v) cleaning (including windows, but excluding janitorial costs, which will be contracted for directly by Tenant);
(vi) maintenance of landscape and grounds; (vii) maintenance of drives and parking areas, including periodic resurfacing; (viii) reasonable and customary security services, if any; (ix) maintenance, repair, and replacement of reasonable and customary security devices; (x) building supplies; (xi) maintenance, repair, and replacement of equipment utilized for operation and maintenance of the Project; (xii) costs of maintenance, repairs and replacements of mechanical, plumbing, electrical and other systems which are part of the Building Shell; (xiii) insurance premiums; (xiv) insurance deductibles and other portions of insured losses attributable to Tenant Improvements deductible by reason of insurance policy terms; (xv) service contracts for work of a nature before referenced; (xvi) costs of services of independent contractors retained to do work of nature before referenced at reasonable and customary rates; (xvii) costs of compensation (including employment taxes and fringe benefits) of all persons who perform regular and recurring duties connected with the day-to-day operation and maintenance of the Project at reasonable and customary rates; and
(xviii) costs of management services equal to two and three fourths percent (2 3/4%) of Basic Annual Rent for the first five years of the term, and two and

7

one-half percent (2 1/2%) of Basic Annual Rent for the balance of the term, including any extended term.

7.2 Notwithstanding the foregoing, Operating Expenses shall not include, and Tenant shall not be responsible for the payment of, the following costs and expenses:

(a) costs incurred for the initial construction of the Project, except for the costs of the Tenant Improvements in excess of the Tenant Improvement Allowance;

(b) costs incurred for the repair, maintenance or replacement of the structural components of the footings, foundation, ground floor slab, and load bearing walls of the buildings in the Project (but excluding painting and ordinary maintenance and repair of exterior surfaces, which are Operating Expenses under Section 7.1(b));

(c) costs of a capital nature, as defined by generally accepted accounting principles, incurred for the replacement of all other components of the Site Improvements and Building Shell, except to the extent caused by Tenant's negligence;

(d) costs incurred to correct any defects in design, materials or construction of the Project other than the Tenant Improvements, and to comply with Landlord's warranties set forth in Sections 14.1 and 14.2;

(e) costs, expenses and penalties (including without limitation attorneys fees) incurred as a result of the use, storage, removal or remediation of any toxic or hazardous substances or other environmental contamination not caused by Tenant or its employees, contractors, agents, representatives, or invitees;

(f) rentals and other payments by Landlord under any ground lease or other lease underlying the Lease, and interest, principal, points and other fees on debt or amortization of any debt secured in whole or part by all or any portion of the Project (provided that interest upon a government assessment or improvement bond payable in installments is an Operating Expense under Section 7.1(a));

(g) costs incurred in connection with the financing, sale or acquisition of the Project or any portion thereof;

(h) costs, expenses, and penalties (including without limitation attorneys' fees) incurred due to the violation by Landlord of any underlying deed of trust, mortgage or ground lease affecting the Project or any portion thereof,

(i) depreciation and amortization of any type (provided this exclusion is not intended to delete from Operating Expenses actual costs of maintenance, repairs and replacements which are otherwise included within Operating Expenses);

(j) any costs incurred as a result of Landlord's violation of any statute, ordinance or other source of applicable law, or breach of contract or tort liability to any other

8

party, including without limitation, any unrelated third party, or Landlord's employees, contractors, agents or representatives;

(k) costs incurred in leasing or procuring tenants or removing other tenants (including, without limitation, lease commissions, advertising expenses, design costs, attorneys' fees and expenses of renovating space for tenants);

(1) advertising, marketing, media and promotional expenditures regarding the Project and costs of signs identifying the owner, lender or any contractor thereof,

(m) any fees or salaries of the principals of Landlord;

(n) any rentals and related expenses incurred in leasing equipment which may be classified as capital expenditures under generally accepted accounting principles;

(o) any net income, franchise, capital stock, estate or inheritance taxes or taxes which are the personal obligation of Landlord or of another tenant of the Project;

(p) expenses which relate to preparation of rental space for a tenant;

(q) legal expenses arising out of the initial construction of the Project or any tenant improvements or for the enforcement of the provisions of any tenant leases other than this Lease;

(r) the cost of any work or service performed for or facilities furnished to a tenant at such tenant's cost;

(s) any interest or penalties imposed upon Landlord by any taxing authority for late payment or otherwise;

(t) Landlord's general overhead and any other expenses not directly related to the Building or Project;

(u) Janitorial costs, which shall be contracted for directly by Tenant; and

(v) any other expense otherwise chargeable as part of the cost of operation and maintenance but which is not of general benefit to the Project but is primarily for the benefit of one or more specific tenants.

7.3 Commencing on the Term Commencement Date, Tenant shall pay to Landlord on the first day of each calendar month of the term of this lease, as Additional Rent, Landlord's good faith estimate of Tenant's Pro Rata Share (as set forth in Section 2.1.6) of Operating Expenses with respect to the Project for such month.

9

(a) "Tenant's Pro Rata Share" under this Lease shall mean a percentage determined by dividing the Rentable Area of the Premises by the total Rentable Area of the Project, as set forth in Section 2.1.6, subject to adjustment pursuant to Section 8.3.

(b) Within sixty (60) days after the conclusion of each calendar year, Landlord shall furnish to Tenant a statement (the "Annual Operating Expense Statement") showing in reasonable detail the actual Operating Expenses and Tenant's Pro Rata Share of Operating Expenses for the previous calendar year. Any additional sum due from Tenant to Landlord shall be due and payable within thirty (30) days of Tenant's receipt of such statement. If the estimated amounts paid by Tenant pursuant to this Section 7.3 exceed Tenant's Pro Rata Share of the actual Operating Expenses for the previous calendar year, the difference shall be credited by Landlord against the Rent next due and owing from Tenant; provided that, if the Lease term has expired, Landlord shall accompany said statement with payment for the amount of such difference.

(c) Any amount due under this Section 7.3 for any period which is less than a full month shall be prorated for such fractional month on the basis of a thirty (30) day month.

(d) Notwithstanding this Section 7.3, Operating Expenses which can fairly and reasonably be allocated to one or more tenants rather than to all tenants of the Project shall be so allocated, and shall be separately scheduled on the Annual Operating Expense Statement.

7.4 Tenant shall have the right, at Tenant's expense, upon reasonable notice during reasonable business hours, to inspect that portion of Landlord's books which are relevant to preparation of the Annual Operating Expense Statement provided any request for such review shall be furnished within one hundred eighty (180) days after Tenant's receipt of such statement as to a prior year's Operating Expenses. If, as a result of Tenant's inspection of Landlord's books, it is determined that Landlord has overstated Operating Expenses by five percent (5%) or more, then Landlord shall pay Tenant's out-of-pocket costs incurred in connection with such inspection.

7.5 Operating Expenses for the calendar year in which Tenant's obligation to pay them commences and in the calendar year in which such obligation ceases shall be prorated. Expenses such as taxes, assessments and insurance premiums which are incurred for an extended time period shall be prorated based upon time periods to which applicable so that the amounts attributed to the Premises relate in a reasonable manner to the time period wherein Tenant has an obligation to pay Operating Expenses.

8. RENTABLE AREA.

8.1 The Rentable Area of the Project is determined by making separate calculations of the Rentable Area of each floor of all buildings and totaling the Rentable Area of all floors within the buildings. The Rentable Area of a floor is calculated by measuring to the outside finished surface of each permanent outer building wall where it intersects the floor, or where it would have intersected the floor except for recessed entryways, windows and the like (also known as the "drip line", measured from where the outside finished surface of the second floor

10

wall intersects the roof). The full area calculated as set forth above is included as Rentable Area of the Project without deduction for (i) columns or projections, (ii) vertical penetrations including stairs, elevator shafts, flues, pipe shafts, vertical ducts, and the like, and their enclosing walls,
(iii) corridors, equipment rooms, rest rooms, entrance ways, elevator lobbies, and the like, and their enclosing walls, and (iv) any other unusable area of any nature.

8.2 The term "Rentable Area" when applied to Tenant is the approximate area to be occupied by Tenant plus an equitable allocation of Rentable Area within the Project which is not then utilized or expected to be utilized by Tenant or other tenants of the Project, including but not limited to the portions of the buildings devoted to fire exit corridors, stairwells, and equipment rooms (but shall not include one-half of the area occupied by the smaller stairwell in the Premises). In making such allocations, consideration will be given to tenants benefited by space allocated such that areas which primarily serve tenants of only one floor, such as corridors and rest rooms upon such floor, shall be allocated to that tenant's Rentable Area. If the Premises are separated from space occupied by another tenant, the Rentable Area shall be measured to the center of any interior demising walls.

8.3 The Rentable Area as set forth in Section 2.1.3 and reflected on Exhibit "F" is an estimate of the area which constitutes the Rentable Area of the Premises, which, at the request of either Landlord or Tenant made within ninety (90) days after the Term Commencement Date, shall be adjusted in accordance with measurement and certification of the Project architect. If the Rentable Area as determined hereunder is more or less than the Rentable Area set forth in Section 2.1.3, Basic Annual Rent, monthly installments of Basic Annual Rent, and the Tenant Improvement Allowance shall be adjusted upward or downward, as the case may be, based on the actual Rentable Area of the Premises. Rentable Area as adjusted shall also be utilized for computation of Tenant's Pro Rata Share of Operating Expenses among tenants of the Project.

8.4 In the event Landlord expands the Building, Landlord will promptly have its architect measure and certify to Tenant the rentable area of any such expansion, in which case Tenant's Pro Rata Share shall be adjusted, but in no event shall Tenant's Pro Rata Share be increased by any such expansion, or for any other reason other than measurement of the Premises pursuant to Section 8.3, without Tenant's prior written consent.

9. SECURITY DEPOSIT.

9.1 Within thirty (30) days after the execution of this Lease, Tenant shall deposit with Landlord an irrevocable stand-by letter of credit in substantially the form of Exhibit "D" ("Letter of Credit"), or grant to Landlord a security interest in a certificate of deposit in a form reasonably acceptable to Landlord ("Certificate of Deposit"), in favor of Landlord in the principal amount of $1,003,968, to be held by Landlord as security for the faithful performance by Tenant of all of the terms, covenants, and conditions of this Lease to be kept and performed by Tenant during the term and any extension term hereof. If Tenant defaults with respect to any provision of this Lease, including but not limited to any provision relating to the payment of Rent, and subject to any notice requirements and cure periods for Tenant's benefit set forth in Article 24, Landlord may (but shall not be required to) draw from the Letter of Credit the amount required to cure the default, or foreclose on and take possession of the Certificate of Deposit, and to use, apply or

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retain the proceeds thereof for the payment of any Rent or any other sum in default, or to compensate Landlord for any other loss or damage which Landlord may suffer by reason of Tenant's default.

9.2 At the commencement of the sixth year of the term the amount of the Letter of Credit or Certificate of Deposit shall be reduced to $752,976, on the conditions that (i) Tenant is not then in default, (ii) Tenant has not been in default under Section 24.4(a) on more than three (3) separate occasions for failure to make a payment of Rent, and (iii) Tenant then has cash on hand, including cash equivalents and marketable securities, in an amount in excess of Tenant's net loss, as determined under generally accepted accounting principles, for the combined two (2) most recent calendar years.

9.3 At the commencement of the eighth year of the term the amount of the Letter of Credit or Certificate of Deposit shall be reduced to $501,984, on the conditions that (i) Tenant is not then in default, (ii) Tenant has not been in default under Section 24.4(a) on more than three (3) separate occasions for failure to make a payment of Rent, and (iii) Tenant then has cash on hand, including cash equivalents and marketable securities, in an amount in excess of Tenant's net loss, as determined under generally accepted accounting principles, for the combined two (2) most recent calendar years..

9.4 The Letter of Credit or Certificate of Deposit shall be reduced to $501,984 at such time as Tenant achieves, or is merged into or acquired by another company with, a Standard & Poor's investment-grade rating of BBB or better; provided, however, that the other company becomes responsible for Tenant's obligations under this Lease, either by operation of law or an assumption of this Lease in form and substance reasonably satisfactory to Landlord; provided further, that Tenant shall replenish the Letter of Credit or Certificate of Deposit to the amount otherwise required by Sections 9.1 through 9.3 above during any period the Standard & Poor's investment-grade rating of Tenant or the other company, as the case may be, falls below BBB.

9.5 Tenant shall be responsible for any expenses in obtaining, replacing and maintaining the Letter of Credit or Certificate of Deposit. If Landlord draws upon the Letter of Credit, any cash proceeds not used by Landlord shall be deposited in an interest-bearing account with a bank reasonably satisfactory to Tenant. All interest earned on any cash proceeds of the Letter of Credit or any Certificate of Deposit shall belong to Tenant.

9.6 The Letter of Credit, and any replacement Letter of Credit, shall be issued by Bank of America, or another financial institution reasonably acceptable to Landlord, with an office in Seattle, Washington, authorized to disburse funds upon a draw request. Should the institution be placed in conservatorship or receivership by the Federal Deposit Insurance Corporation or any other state of federal regulatory agency, Tenant shall, within thirty (30) days after written request by Landlord, provide a replacement Letter of Credit from a financial institution reasonably acceptable to Landlord, and in the event Tenant fails to do so, Landlord may draw on the Letter of Credit and use the proceeds thereof as a security deposit in accordance with the provisions of
Section 9.1.

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9.7 The Letter of Credit shall provide (i) that the issuer of the Letter of Credit shall pay to Landlord the amount in default immediately upon presentation in Seattle, Washington, of a sight draft by Landlord accompanied by a certified statement signed by an officer of the manager of Landlord (or, if any successor Landlord is a corporation or a partnership, by any officer of the corporation or general partner of the partnership, as the case may be) stating that a default has occurred under the Lease, Landlord has given all required notices to Tenant in accordance with the Lease, and Tenant has failed to cure the default within the applicable time period, as a result of which Landlord is entitled to collect the amount specified in the site draft in order to cure the default, and (ii) that the issuer shall have no obligation to confirm that a default has occurred, or the amount which Landlord is entitled to draw, or that notice of the default has been given to Tenant, or that Tenant has failed to cure the default.

9.8 The initial Letter of Credit shall be for a period of not less than one (1) year, and any replacement Letter of Credit shall be for a period of not less than one (1) year. The initial Letter of Credit (or any later replacement Letter of Credit) shall be replaced by Tenant by delivering to Landlord a replacement Letter of Credit at least thirty (30) days prior to the expiration of the then current Letter of Credit. If Tenant fails to deliver a replacement Letter of Credit at least thirty (30) days prior to the expiration of the then current Letter of Credit, Landlord shall have the right to draw the total amount of the then current Letter of Credit and hold the proceeds thereof as a security deposit pursuant to the provisions of Section 9.1. The Letter of Credit shall be successively renewed or replaced until that date which is thirty (30) days after the expiration of the initial or any extended term of this Lease.

9.9 In the event of a partial draw on the Letter of Credit, or the use of any proceeds of the Certificate of Deposit, Tenant shall immediately replenish the Letter of Credit or substitute a new Letter of Credit, or replenish the Certificate of Deposit, to the full amount set forth above.

9.10 Any Letter of Credit or security interest in a Certificate of Deposit shall be transferable by Landlord to a successor Landlord or mortgagee or beneficiary of a deed of trust encumbering the Premises, or, in the case of a Letter of Credit, a substitute Letter of Credit shall be issued to any such entity at the request of Landlord; provided, however, that Landlord shall pay any expenses incurred by Tenant on account of any such transfer or issuance.

9.11 In the event of bankruptcy or other debtor/creditor proceedings against Tenant, the proceeds of the Letter of Credit or Certificate of Deposit shall be deemed to be applied first to the payment of Rent and other charges due Landlord for all periods prior to the filing of such proceedings.

9.12 Landlord shall deliver the Letter of Credit or security interest in the Certificate of Deposit, and any proceeds thereof, to any purchaser of Landlord's interest in the Premises, and thereupon Landlord shall be discharged from any further liability with respect thereto, provided that such purchaser has agreed to assume in writing the obligations of Landlord hereunder. This provision shall also apply to any subsequent transfers.

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9.13 The Letter of Credit or Certificate of Deposit, and any proceeds thereof, shall be returned to Tenant within thirty (30) days following the expiration of this Lease, except for amounts which are needed by Landlord to cure any default by Tenant.

10. USE.

10.1 Tenant may use the Premises for any use permitted by (i) the applicable zoning, (ii) any other applicable laws, regulations, ordinances, requirements, permits and approvals applicable to the Premises, and (iii) all covenants, conditions and restrictions recorded against the Project, and shall not use the Premises, or permit or suffer the Premises to be used for any other purpose without the prior written consent of Landlord. Landlord represents and warrants that, as of the date of execution of this Lease, the only covenants, conditions and restrictions recorded against the Project are those certain Amended and Restated Declaration of Covenants, Conditions and Restrictions for Canyon Park Business Center recorded on May 4, 1995 as Document No. 95-05040100 in the files of the County Auditor of Snohomish County, Washington.

10.2 Tenant shall conduct its business operations and use the Premises in compliance with all federal, state, and local laws, regulations, ordinances, requirements, permits and approvals applicable to the Premises. Tenant shall not use or occupy the Premises in violation of any law or regulation or the certificate of occupancy issued for the Building, and shall, upon five (5) days' written notice from Landlord, discontinue any use of the Premises which is declared by any governmental authority having jurisdiction to be a violation of law or the certificate of occupancy, subject to Tenant's right to object to or contest the violation in good faith and with diligence. Subject to Landlord's warranties in Sections 14.1 and 14.2, Tenant shall comply with any direction of any governmental authority having jurisdiction which shall, by reason of the nature of Tenant's specific and unique use or occupancy of the Premises, impose any duty upon Tenant or Landlord with respect to the Premises or with respect to the use or occupation thereof which is materially different from those in effect at the Term Commencement Date, including any duty to make structural or capital improvements, alterations, repairs and replacements to the Premises; provided, however, if the costs thereof exceed an amount equal to six (6) monthly installments of the Basic Annual Rent then payable, Tenant may elect to terminate the Lease if Landlord, after notice from Tenant, declines to pay such excess.

10.3 Tenant shall not do or permit to be done anything which will invalidate or increase the cost (unless Tenant agrees to pay such increased cost) of any fire, extended coverage or any other insurance policy covering the Premises, or which will make such insurance coverage unavailable on commercially reasonable terms and conditions, and shall comply with all rules, orders, regulations and requirements of the insurers of the Premises.

10.4 Subject to the warranty of Landlord in Section 14.3, Tenant shall comply with the Americans with Disabilities Act of 1990 ("ADA"), and the regulations promulgated thereunder, as amended from time to time. All responsibility for compliance with the ADA relating to the Premises and the activities conducted by Tenant within the Premises shall be exclusively that of Tenant and not of Landlord, including any duty to make structural or capital improvements, alterations, repairs and replacements to the Premises. Any alterations to the Premises made by

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Tenant for the purpose of complying with the ADA or which otherwise require compliance with the ADA shall be done in accordance with Article 17; provided, that Landlord's consent to such alterations shall not constitute either Landlord's assumption, in whole or in part, of Tenant's responsibility for compliance with the ADA, or representation or confirmation by Landlord that such alterations comply with the provisions of the ADA. However, nothing in this Lease shall be construed to require Tenant to make structural or capital improvements, alterations, repairs or replacements to comply with ADA unless and until required to do so by order of any government entity or court of law exercising proper jurisdiction with regard thereto, subject to any right to appeal or otherwise contest any such order. Furthermore, Landlord shall be responsible for compliance with ADA to the extent of a violation of Landlord's warranty in Section 14.3.

10.5 Tenant may install signage on and about the Premises to the extent permitted by, and in conformity with, the applicable provisions of any governmental law, ordinance or regulation, and to the extent reasonably approved by Landlord. Tenant acknowledges that it understands that other tenants will occupy space in the Project, and that the maximum allowable signage is to be shared among all of the tenants on a fair and reasonable basis. Tenant further acknowledges it is familiar with the restrictions of any governmental law, ordinance or regulation governing signage, and is not relying on any representations or warranty of Landlord regarding the number, size or location of any signage. The expense of design, permits, purchase and installation of any signs shall be the responsibility of Tenant and the cost thereof shall be borne by Tenant, and shall not be paid from the Tenant Improvement Allowance. At the termination of the Lease, all signs shall be the property of Tenant and may be removed from the Premises by Tenant, subject to the provisions of Article 36. Any relocation of Tenant's signage required by Landlord's division of the Project into more than one lot shall be with the consent of Tenant and at Landlord's expense.

10.6 No equipment shall be placed at a location within the Premises other than a location designed to carry the load of the equipment. Equipment weighing in excess of floor loading capacity shall not be placed in the Building. Landlord represents to Tenant that the load capacity of the first floor is approximately 250 lbs/square foot, and the load capacity of the new mezzanine will be no less than 125 lbs/square foot.

10.7 Tenant shall not use or allow the Premises to be used for any unlawful purpose, nor shall Tenant cause, maintain or permit any nuisance or waste in, on, or about the Premises.

11. BROKERS.

11.1 Landlord and Tenant represent and warrant one to the other that there have been no dealings with any real estate broker or agent in connection with the negotiation of this Lease other than Alexander Commercial Real Estate, Inc., which represented Landlord, and Trammell Crow Company, which represented Tenant. The commissions of both brokers shall be paid by Landlord. Landlord and Tenant shall each indemnify, defend, protect, and hold harmless the other from any claim of any other broker as a result of any act or agreement of the indemnitor.

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11.2 Tenant represents and warrants that no broker or agent has made any representation or warranty relied upon by Tenant in Tenant's decision to enter into this Lease other than as contained in this Lease.

12. HOLDING OVER.

12.1 If, with Landlord's consent, Tenant holds possession of all or any part of the Premises after the expiration or earlier termination of this Lease, Tenant shall become a tenant from month to month upon the date of such expiration or earlier termination, and in such case Tenant shall continue to pay in accordance with Article 5 the Basic Annual Rent as adjusted from the Term Commencement Date in accordance with Article 6, together with Operating Expenses in accordance with Article 7 and other Additional Rent as may be payable by Tenant, and such month-to-month tenancy shall be subject to every other term, covenant and condition contained herein.

12.2 If Tenant remains in possession of all or any portion of the Premises after the expiration or earlier termination of the term hereof without the express written consent of Landlord, Tenant shall become a tenant at sufferance upon the terms of this Lease except that each monthly installment of Basic Annual Rent shall be equal to one hundred twenty five percent (125%) of each monthly installment of Basic Annual Rent that was payable during the last twelve (12) months of the Lease term.

12.3 Acceptance by Landlord of Rent after such expiration or earlier termination shall not result in a renewal or reinstatement of this Lease.

12.4 The foregoing provisions of this Article 12 are in addition to and do not affect Landlord's right to re-entry or any other rights of Landlord under Article 24 or elsewhere in this Lease or as otherwise provided by law.

13. TAXES ON TENANT'S PROPERTY.

13.1 Tenant shall pay not less than ten (10) days before delinquency taxes levied against any personal property or trade fixtures placed by Tenant in or about the Premises. Tenant shall not be responsible for taxes levied against any personal property or trade fixtures of other tenants.

13.2 If any such taxes on Tenant's personal property or trade fixtures are levied against Landlord or Landlord's property or, if the assessed valuation of the Project is increased by the inclusion therein of a value attributable to Tenant's personal property or trade fixtures, and if Landlord after written notice to Tenant pays the taxes based upon such increase in the assessed value, then Tenant shall upon demand repay to Landlord the taxes so levied against Landlord.

13.3 If any improvements in or alterations to the Premises, whether owned by Landlord or Tenant and whether or not affixed to the real property so as to become a part thereof, are assessed for real property tax purposes at a valuation higher than the valuation at which improvements in other spaces in the Project are assessed, then the real property taxes and

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assessments levied against Landlord or the Project by reason of such excess assessed valuation shall be deemed to be taxes levied against personal property to Tenant and shall be governed by the provisions of Section 13.2 above. Any such excess assessed valuation due to improvements in or alterations to space in the Project leased by other tenants of Landlord shall not be included in the Operating Expenses defined in Section 7, but shall be treated, as to such other tenants, as provided in this Section 13.3, and shall be allocated to such other tenants. If the records of the County assessor are available and sufficiently detailed to serve as a basis for determining whether said Tenant improvements or alterations are assessed at a higher valuation than improvements in other spaces in the Project, such records shall be binding on both Landlord and Tenant.

13.4 To the extent Tenant fails to make any payment required by this Article 13 and Landlord does so on Tenant's behalf, Tenant shall reimburse Landlord for the cost thereof pursuant to the provisions of Sections 7.1 and 24.3.

14. CONDITION OF PREMISES.

14.1 Tenant acknowledges that neither Landlord nor any agent of Landlord has made any representation or warranty, express or implied, with respect to the condition of the Premises, or to the Project, except as set forth herein, or with respect to their suitability for the conduct of Tenant's business.

14.2 Landlord warrants to Tenant that the Project (other than the Tenant Improvements, which are the responsibility of Tenant), will be built in a good and workmanlike manner and in substantial compliance with the project plans and all applicable building code requirements, laws, rules, orders, ordinances, directions, regulations, permits, approvals, and requirements of all governmental agencies, offices, departments, bureaus and boards having jurisdiction, and with the rules, orders, directions, regulations, and requirements of any applicable fire rating bureau, and will be free of patent and latent defects in design, materials and construction. Landlord shall, at Landlord's expense, promptly correct all such defects upon receiving written notice thereof from Tenant.

14.3 Landlord warrants to Tenant that the Project (other than the Tenant Improvements, which are the responsibility of Tenant) will be in compliance with ADA, and the regulations promulgated thereunder, at such time as the Site Improvements and Building Shell are completed.

15. COMMON AREAS AND PARKING FACILITIES.

15.1 Tenant shall have the nonexclusive right, in common with others, to use the Common Areas, subject to the rules and regulations adopted by Landlord and attached hereto as Exhibit "E" together with such other reasonable and nondiscriminatory rules and regulations as are hereafter promulgated by Landlord (the "Rules and Regulations").

15.2 Tenant shall not place any equipment, storage containers or any other property on the surface parking area or otherwise outside of the Premises without the consent of Landlord.

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In the event Tenant elects to locate Hazardous Material storage facilities, water systems, mechanical equipment, emergency generators, or other Tenant Improvements in the parking area, the space used for such facilities shall be part of the portion of the parking area that Tenant would otherwise use for parking pursuant to Section 15.3.

15.3 As an appurtenance to the Premises, Tenant, and its employees and invitees, shall be entitled to use, without additional charge, at least 91 parking spaces in the parking area (computed at 2.4 spaces per 1,000 square feet of Rentable Area). All parking areas serving the Project shall be used in common with other tenants of the Project; provided, however, twenty (20) spaces immediately in front of the Premises (and not in front of another tenant's premises), at locations mutually acceptable to both Landlord and Tenant, shall be appropriately identified by Landlord at Landlord's expense as reserved for Tenant's use by words painted on the asphalt surface of each such space; provided further, Landlord reserves the right to similarly identify other parking spaces as reserved for other tenants of the Project. Landlord shall not be responsible for policing the use of the reserved spaces.

16. UTILITIES AND SERVICES.

16.1 Tenant shall pay for all water, gas, electricity, telephone, cable television, and other utilities which may be furnished to the Premises during the term of this Lease, together with any taxes thereon. If any such utility is not separately metered to Tenant, Tenant shall pay a reasonable proportion to be determined by Landlord of all charges jointly metered with tenants of other premises and shall be paid together with Operating Expenses. Utilities and services provided to the Premises which are separately metered shall be paid by Tenant directly to the supplier of such utility or service, and Tenant shall pay for such utilities and services prior to delinquency during the term of this Lease.

16.2 Landlord shall not be liable for, nor shall any eviction of Tenant result from, any failure of any such utility or service, and in the event of such failure Tenant shall not be entitled to any abatement or reduction of Rent, nor be relieved from the operation of any covenant or agreement of this Lease, and Tenant waives any right to terminate this Lease on account thereof. However, notwithstanding the foregoing, (i) in the event any such failure is due to Landlord's negligence or willful misconduct and persists for more than five (5) days, Tenant shall be entitled to rent abatement to the extent such failure materially interferes with Tenant's ability to conduct business from the Premises, and (ii) in the event any such failure persists for more than six (6) months, Tenant at its election may terminate this Lease.

16.3 Tenant shall provide and pay for janitors, maintenance personnel, and other persons who perform duties connected with the operation and maintenance of the interior of the Premises.

16.4 Landlord represents that Tenant shall be allocated for its use its Pro Rata Share of 4,000 amps of electricity which will be provided to the Building (the power itself payable as an Operating Expense). Facilities necessary for any additional power requirements of Tenant shall be at Tenant's expense.

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17. ALTERATIONS.

17.1 Tenant shall make no alterations, additions or improvements (hereinafter in this section, "improvements") in or to the Premises, except for non-structural improvements costing less than $50,000 in any one instance nor in the aggregate in any 12-month period, without Landlord's prior written consent, which shall not be unreasonably withheld or delayed. Tenant shall deliver to Landlord final plans and specifications and working drawings for the improvements to Landlord, and Landlord shall have ten (10) days thereafter to grant or withhold its consent. If Landlord does not notify Tenant of its decision within the ten (10) days, Landlord shall be deemed to have given its approval. As used herein, "improvement" shall not include, and Tenant shall not need to obtain Landlord's consent for, interior decorations, cabling, wiring and installation of furniture, fixtures and equipment.

17.2 If a permit is required to construct the improvements, Tenant shall deliver a completed, signed-off inspection card to Landlord within ten (10) days of completion of the improvements, and shall promptly thereafter obtain and record a notice of completion and deliver a copy thereof to Landlord.

17.3 The improvements shall be constructed only by licensed contractors. All contractors, except those constructing non-structural improvements costing less than $50,000 as set forth in Section 17.1, shall be approved by Landlord, which approval shall not be unreasonably withheld or delayed. Any such contractor must have in force a general liability insurance policy of not less than $2,000,000, which policy of insurance shall name Landlord as an additional insured. Tenant shall provide Landlord with a copy of the contract with the contractor and a certificate of insurance showing that the contractor has the insurance required by this Section 17.3 prior to the commencement of construction.

17.4 Tenant agrees that any work by Tenant shall be accomplished in such a manner as to permit any fire sprinkler system and fire water supply lines to remain fully operable at all times except when minimally necessary for building reconfiguration work.

17.5 Tenant covenants and agrees that all work done by Tenant shall be performed in good and workmanlike manner and in full compliance with all laws, rules, orders, ordinances, directions, regulations, permits, approvals, and requirements of all governmental agencies, offices, departments, bureaus and boards having jurisdiction, and in full compliance with the rules, orders, directions, regulations, and requirements of any applicable fire rating bureau. Tenant shall provide Landlord with "as-built" plans showing any change in the Premises within thirty (30) days after completion.

17.6 Before commencing any work (other than interior non-structural alterations, additions or improvements), Tenant shall give Landlord at least five (5) days' prior written notice of the proposed commencement of such work.

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18. REPAIRS AND MAINTENANCE.

18.1 Landlord shall repair and maintain the structural and exterior portions and Common Areas of the Building and Project, including foundations, exterior walls, load bearing walls, windows, plate glass, roofing, and roofing covering materials, and plumbing, fire sprinkler system, heating, ventilating, air conditioning, elevator, telecommunications and electrical systems installed or furnished by Landlord (and not part of the Tenant Improvements), subject to reimbursement by Tenant as its Pro Rata Share of Operating Expenses to the extent provided by Section 7. However, if such maintenance or repairs are required because of any act, neglect, fault of or omissions of any duty by Tenant, its agents, servants, employees, contractors or invitees, Tenant shall pay to Landlord upon demand the costs of the entirety of such maintenance and repairs attributable to such act, neglect, fault or omission, subject to credit for any insurance proceeds recovered on account thereof..

18.2 Except as otherwise set forth in Section 18.1, Tenant shall, throughout the term of this Lease, at Tenant's sole cost and expense, keep the Premises and every part thereof in the same condition and repair as delivered to Tenant, including plumbing, fire sprinkler, heating, ventilating, air conditioning, elevator, and electrical systems installed as part of the Tenant Improvements. Tenant shall upon the expiration or earlier termination of the term hereof surrender the Premises to Landlord in the same condition as when received (together with the Tenant Improvements and any subsequent improvements made by Tenant), ordinary wear and tear and damage from causes beyond the reasonable control of Tenant excepted. Except as set forth in Section 18.1, Landlord shall have no obligation to alter, remodel, improve, repair, decorate or paint the Premises or any part thereof.

18.3 There shall be no abatement of Rent and no liability of Landlord by reason of any injury to or interference with Tenant's business arising from the making of any repairs, alterations or improvements in or to any portion of the Premises, Building or Project, or in or to improvements, fixtures, equipment and personal property therein, unless due to the negligence or willful misconduct of Landlord, in which case Rent shall abate if Tenant is unable to use the Premises for more than five (5) days. If repairs or replacements become necessary which by the terms of this Lease are the responsibility of Tenant and Tenant fails to make the repairs or replacements within a reasonable time after notice from Landlord, Landlord may do so pursuant to the provisions of Section 24.3.

19. LIENS.

19.1 Tenant shall keep the Premises, the Building and the property upon which the Building is situated free from any liens arising out of work performed, materials furnished or obligations incurred by Tenant. Tenant further covenants and agrees that any mechanic's lien filed against the Premises for work claimed to have been done for, or materials claimed to have been furnished to, Tenant, will be discharged by Tenant, by bond or otherwise, within thirty
(30) days after Tenant receives notice of the filing thereof (or within ten (10) days after the filing thereof if requested by Landlord as necessary to facilitate a pending sale or refinancing), at the cost and expense of Tenant.

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19.2 Should Tenant fail to discharge any lien of the nature described in
Section 19.1, Landlord may at Landlord's election pay such claim or post a bond or otherwise provide security to eliminate the lien as a claim against title and the cost thereof shall be immediately due from Tenant as Additional Rent.

19.3 In the event Tenant shall lease or finance the acquisition of office equipment, furnishings, or other personal property utilized by Tenant in the operation of Tenant's business, Tenant warrants that any Uniform Commercial Code financing statement executed by Tenant will upon its face or by exhibit thereto indicate that such financing statement is applicable only to personal property of Tenant specifically described in the financing statement, and that such property is subject to the provisions of Section 30 regarding the removal of property on the expiration or earlier termination of this Lease. In no event shall the address of the Building be furnished on the financing statement without qualifying language as to applicability of the lien only to personal property of Tenant described in the financing statement. Should any holder of a security agreement executed by Tenant record or place of record a financing statement which appears to constitute a lien against any interest of Landlord, Tenant shall within ten (10) days after the filing of such financing statement cause (i) copies of the security agreement or other documents to which the financing statement pertains to be furnished to Landlord to facilitate Landlord's being in a position to show such lien is not applicable to any interest of Landlord, and (ii) the holder of the security interest to amend documents of record so as to clarify that such lien is not applicable to any interest of Landlord in the Premises.

20. INDEMNIFICATION AND EXCULPATION.

20.1 Except to the extent of the responsibility of Landlord pursuant to
Section 20.2 hereof, Tenant agrees to indemnify Landlord, and its partners and affiliates, and their respective shareholders, directors, officers, agents, contractors and employees (collectively, "Landlord's Agents"), against, and to protect, defend, and save them harmless from, all demands, claims, causes of action, liabilities, losses and judgments, and all reasonable expenses incurred in investigating or resisting the same (including reasonable attorneys' fees), for death of or injury to person or damage to property arising out of (i) any occurrence in, upon or about the Premises during the term of this Lease, (ii) Tenant's use, occupancy, repairs, maintenance, and improvements of the Premises and all improvements, fixtures, equipment and personal property thereon, and
(iii) any act or omission of Tenant, its shareholders, directors, officers, agents, employees, servants, contractors, invitees and subtenants, except to the extent caused by the negligence or willful misconduct of Landlord or Landlord's Agents. Tenant's obligation under this Section 20.1 shall survive the expiration or earlier termination of the term of this Lease.

20.2 Landlord agrees to indemnify Tenant and Tenant's shareholders, directors, officers, agents, and employees (collectively "Tenant's Agents") against and save them harmless from all demands, claims, causes of action, liabilities, losses and judgments, and all reasonable expenses incurred in investigating or resisting the same (including reasonable attorneys' fees), for death of, or injury to, any person or damage to property arising from or out of any occurrence in, upon, or about the Premises during the term of this Lease if caused by the act or omission of Landlord or Landlord's Agents, except to the extent caused by the negligence or willful

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misconduct of Tenant or Tenant's Agents. Landlord's obligations under this
Section 20.2 shall survive the expiration or earlier termination of the term of this Lease.

20.3 Notwithstanding any provision of Sections 20.1 and 20.2 to the contrary, Landlord shall not be liable to Tenant and Tenant assumes all risk of damage to any fixtures, goods, inventory, merchandise, equipment, records, research, experiments, animals and other living organisms, computer hardware and software, leasehold improvements, and other personal property of any nature whatsoever, and Landlord shall not be liable for injury to Tenant's business or any loss of income therefrom relative to such damage, unless caused by Landlord's or Landlord's Agents' willful misconduct or gross negligence.

20.4 The indemnity obligations of both Landlord and Tenant under this
Section 20 shall be satisfied to the extent of proceeds of applicable insurance maintained by the indemnifying party to the extent thereof, and thereafter to proceeds of any applicable insurance maintained by the other party; Landlord and Tenant shall be required to satisfy any such obligation only to the extent it is not satisfied by proceeds of applicable insurance as set forth above.

20.5 Security devices and services, if any, while intended to deter crime, may not in given instances prevent theft or other criminal acts, and it is agreed that Landlord shall not be liable for injuries or losses caused by criminal acts of third parties and the risk that any security device or service may malfunction or otherwise be circumvented by a criminal is assumed by Tenant. Tenant shall at Tenant's cost obtain insurance coverages to the extent Tenant desires protection against such criminal acts.

20.6 Landlord shall not be liable for any damages arising from any act or neglect of any other tenant in the Building or Project.

21. INSURANCE - WAIVER OF SUBROGATION.

21.1 Commencing prior to Tenant's first entry onto the Premises for purposes of installing any improvements, fixtures or personal property, but no later than the Term Commencement Date, and continuing at all times during the term of this Lease, Tenant shall maintain, at Tenant's expense, commercial general liability insurance, on an occurrence basis, insuring Tenant and Tenant's agents, employees and independent contractors against all bodily injury, property damage, personal injury and other covered loss arising out of the use, occupancy, improvement and maintenance of the Premises and the business operated by Tenant, or any other occupant, on the Premises. Such insurance shall have a minimum combined single limit of liability per occurrence of not less than $1,000,000.00 and a general aggregate limit of $2,000,000.00. Such insurance shall: (i) name Landlord, and Landlord's lenders if required by such lenders, and any management company retained to manage the Premises if requested by Landlord, as additional insureds; (ii) include a broad form contractual liability endorsement insuring Tenant's indemnity obligations under Section 20.1 if and to the extent available; (iii) include a products liability coverage endorsement (with limits of $2,000,000.00 on a "claims made" basis), a boiler and machinery liability endorsement, and a products completed operations coverage endorsement; (iv) provide that it is primary coverage and noncontributing with any

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insurance maintained by Landlord or Landlord's lenders, which shall be excess insurance with respect only to losses arising out of Tenant's negligence; and
(v) provide for severability of interests or include a cross-liability endorsement, such that an act or omission of an insured shall not reduce or avoid coverage of other insureds.

21.2 At all times during the term of this Lease, Landlord shall maintain, subject to reimbursement by Tenant as an Operating Expense under
Section 7.1(b), "all risk" insurance, including, but not limited to, coverage against loss or damage by fire, vandalism, and malicious mischief covering the Project (exclusive of excavations, foundations and footings), the Tenant Improvements, and all other improvements and fixtures that may be constructed or installed on the Premises, in an amount equal to one hundred percent (100%) of the full replacement value thereof, and including rental interruption insurance for a period of not less than nine (9) months. If any boilers or other pressure vessels or systems are installed on the Premises, Landlord shall maintain, subject to reimbursement by Tenant as an Operating Expense under Section 7.1(b), boiler and machinery insurance in an amount equal to one hundred percent (100%) of the full replacement value thereof. At all times during the course of any major demolition or construction permitted hereunder, or any restoration pursuant to Articles 22 or 23, Tenant shall maintain, at Tenant's expense, "all risk" builder's risk insurance, including, but not limited to, coverage against loss or damage by fire, vandalism and malicious mischief, covering improvements in place and all material and equipment at the job site furnished under contract, in an amount equal to one hundred percent (100%) of the full replacement value thereof. Landlord shall maintain, subject to reimbursement by Tenant as an Operating Expense under Section 7.1(b), earthquake insurance, in such amounts, subject to such deductibles, and for such premiums as are commercially reasonable, but only if such insurance is (i) required by Landlord's permanent mortgage lender, and (ii) prevalent or becoming prevalent for similar projects in the same general area as the Premises. The insurance described in this Section 21.2 shall: (i) insure Landlord, and Landlord's lenders if required by such lenders, as their interests may appear; (ii) contain a Lender's Loss Payable Form (Form 438 BFU or equivalent) in favor of Landlord's lenders and name Landlord, or Landlord's lender if required by such lender, as the loss payee; (iii) provide for severability of interests or include a cross-liability endorsement, such that an act or omission of an insured shall not reduce or avoid coverage of other insureds; (iv) include an agreed amount endorsement and an inflation endorsement; and (v) provide that it is primary coverage and noncontributing with any insurance maintained by Landlord or Landlord's lenders, which shall be excess insurance. The full replacement value of the Project, the Tenant Improvements and other improvements and fixtures insured thereunder shall, for the purpose of establishing insurance limits and premiums only, be determined by the company issuing the insurance policy and shall be redetermined by said company within six (6) months after completion of any material alterations or improvements to the Premises and otherwise at intervals of not more than three (3) years. Landlord shall promptly increase the amount of the insurance carried pursuant to this Section 21.2 to the amount so redetermined. The proceeds of the insurance described in this Section shall be used for the repair, replacement and restoration of the Premises and the Tenant Improvements and other improvements and fixtures insured thereunder, as further provided in Article 22; provided, however, if this Lease is terminated after damage or destruction, the insurance policy or policies, all rights thereunder and all insurance proceeds shall be assigned to Landlord.

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21.3 At all times during the term of this Lease, Tenant shall maintain, at Tenant's expense, business interruption insurance in order to insure that the Basic Annual Rent and Operating Expenses provided for hereunder will be paid for a period of up to one (1) year after any casualty insured against by all risk policy of insurance described in Section 21.2 above or any restriction of access to the Premises as a result of such casualty.

21.4 At all times during the term of this Lease, Tenant shall maintain, at Tenant's expense, "all risk" insurance against all other personal property, including trade fixtures, equipment and merchandise, of Tenant or any subtenant of Tenant that may be occupying the Premises, or any portion thereof, from time to time, in an amount equal to the full replacement value thereof.

21.5 At all times during the term of this Lease, Tenant shall maintain workers' compensation insurance in accordance with state law, and employers' liability insurance with limits typical for companies similar to Tenant.

21.6 All of the policies of insurance referred to in this Article 21 shall be written by companies authorized to do business in Washington and rated A+VII or better in Best's Insurance Guide. Each insurer referred to in this Article 21 shall agree, by endorsement on the applicable policy or by independent instrument furnished to Landlord, that it will give Landlord, and Landlord's lenders if required by such lenders, at least ten (10) days' prior written notice before the applicable policy shall be canceled for nonpayment of premium, and thirty (30) days' prior written notice before the applicable policy shall be canceled or altered in coverage, scope, amount or other material term for any other reason (although any failure of an insurer to give notice as provided herein shall not be a breach of this Lease by Tenant). No policy shall provide for a deductible amount in excess of $100,000, unless approved in advance in writing by Landlord, which approval shall not be unreasonably withheld. Tenant shall deliver to Landlord, and to Landlord's lenders if required by such lenders, copies of the insurance policies required to be carried by Tenant, certified by the insurer, or certificates evidencing such insurance policies, issued by the insurer, together with evidence of payment of the required premiums, prior to the required date for commencement of such coverage. At least thirty (30) days prior to expiration of any such policy, Tenant shall deliver to Landlord, and Landlord's lenders if required by such lenders, a certificate evidencing renewal, or a certified copy of a new policy or certificate evidencing the same, together with evidence of payment of the required premiums. If Tenant fails to provide to Landlord any such policy or certificate by the required date for commencement of coverage, or within fifteen
(15) days prior to expiration of any policy, or to pay the premiums therefor when required, Landlord shall have the right, but not the obligation, to procure said insurance and pay the premiums therefor. Any premiums so paid by Landlord shall be repaid by Tenant to Landlord with the next due installment of rent, and failure to repay the same shall have the same consequences as failure to pay any installment of Rent.

21.7 Landlord may provide the property insurance required under this Article 21 pursuant to a so-called blanket policy or policies of property insurance maintained by Landlord.

21.8 Landlord and Tenant each hereby waives any and all rights of recovery against the other or against the officers, directors, partners, employees, agents, and representatives of the

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other, on account of loss or damage to such waiving party's property or the property of others under its control, to the extent that such loss or damage is caused by or results from risks insured against under any insurance policy which insures such waiving party's property at the time of such loss or damage. Prior to obtaining policies of insurance required or permitted under this Lease, Landlord and Tenant shall give notice to the insurers that the foregoing mutual waiver is contained in this Lease, and each party shall cause such insurer to approve such waiver in writing and to cause each insurance policy obtained by it to provide that the insurer waives all right of recovery by way of subrogation against the other party. If the release of either Landlord or Tenant, as set forth in the first sentence of this Section 21.8, shall contravene any law with respect to exculpatory agreements, the liability of the party in question shall be deemed not released but shall be secondary to the other's insurer.

22. DAMAGE OR DESTRUCTION.

22.1 In the event of damage to or destruction of all or any portion of the Premises or the improvements and fixtures thereon (collectively, "improvements") arising from a risk covered by the insurance described in
Section 21.2, Landlord shall within a reasonable time commence and proceed diligently to repair, reconstruct and restore (collectively, "restore") the Site Improvements and Building Shell to substantially the same condition as they were in immediately prior to the casualty, and Tenant shall within a reasonable time commence and proceed diligently to restore the Tenant Improvements to substantially the same condition as they were in immediately prior to the casualty, whether or not the insurance proceeds are sufficient to cover the actual cost of restoration. Landlord shall be responsible for all insurance deductibles attributable to the Site Improvements and Building Shell, and for all costs of restoration of the Site Improvements and Building Shell in excess of insurance proceeds for the Site Improvements and Building Shell. Tenant shall be responsible for all insurance deductibles attributable to the Tenant Improvements, and for all costs of restoration in excess of insurance proceeds for the Tenant Improvements, as an Operating Expense under Section 7.1(b). Except as expressly set forth below, this Lease shall continue in full force and effect, notwithstanding such damage or destruction.

22.2 In the event of any damage to or destruction of all or any portion of the improvements arising from a risk which is not covered by the insurance described in Section 21.2, Landlord shall within a reasonable time, at its expense, commence and proceed diligently to restore the Site Improvements and Building Shell to substantially the same condition as they were in immediately prior to the casualty, and Tenant shall within a reasonable time, at its expense, commence and proceed diligently to restore the Tenant Improvements to substantially the same condition as they were in immediately prior to the casualty. This Lease shall continue in full force and effect notwithstanding such damage or destruction; provided, however, that if the damage or destruction
(i) occurs during the last two years of the term and the expense of restoration to either Landlord or Tenant exceeds $200,000, or (ii) occurs at any other time and the expense of restoration to either Landlord or Tenant exceeds $500,000, the party responsible for the cost may at its election terminate the Lease unless the other party elects to pay the full cost of restoration.

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22.3 In satisfying its obligations under this Article 22, neither party shall be required to fulfill its restoration responsibilities with improvements identical to those which were damaged or destroyed; rather, with the consent of the other party, which consent will not be unreasonably withheld, the restoring party may restore the damage or destruction with improvements reasonably equivalent or of reasonably equivalent value to those damaged or destroyed.

22.4 In the event of damage, destruction and/or restoration as herein provided, there shall be no abatement of Rent (except that Tenant shall be credited with any proceeds of rental interruption insurance carried by Landlord pursuant to Section 21.2), and Tenant shall not be entitled to any compensation or damages occasioned by any such damage, destruction or restoration. Notwithstanding the foregoing, in the event restoration of the Site Improvements and Building Shell cannot reasonably be completed within nine (9) months following the damage or destruction, Landlord will give notice thereof to Tenant within sixty (60) days following such damage or destruction, and Tenant at its election may by written notice to Landlord terminate this Lease effective nine
(9) months following such damage or destruction. In the event of such termination, Tenant shall have no responsibility for contributing to the expense of restoration.

22.5 Notwithstanding anything to the contrary contained in this Article, should a party be delayed or prevented from completing the restoration of the improvements after the occurrence of such damage or destruction by reason of acts of God, war, government restrictions, inability to procure the necessary labor or materials, strikes, or other causes beyond the control of such party (but excluding economic conditions or financial inability to perform), the time for such party to commence or complete restoration shall be extended for the time reasonably required as a result of such event.

22.6 If an insured casualty occurs, Landlord shall make the loss adjustment with the insurance company, which adjustment shall be subject to the approval of Tenant, which approval shall not be unreasonably withheld, and the proceeds shall be paid to a fund control escrow established by Landlord and Tenant for the purpose of paying for the restoration required by this Article 22.

22.7 Tenant waives the provisions of any statute now existing or hereafter adopted governing destruction of the Premises, so that the parties rights and obligations in the event of damage or destruction shall be governed by the provisions of this Lease.

23. EMINENT DOMAIN.

23.1 In the event the whole of the Premises shall be taken for any public or quasi-public purpose by any lawful power or authority by exercise of the right of appropriation, condemnation or eminent domain, or sold to prevent such taking, Tenant or Landlord may terminate this Lease effective as of the date possession is required to be surrendered to said authority.

23.2 In the event of a partial taking of the Premises for any public or quasi-public purpose by any lawful power or authority by exercise of right of appropriation, condemnation, or eminent domain, or sold to prevent such taking, then Landlord may elect to terminate this Lease

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if such taking is of a material nature such as to make it uneconomical to continue use of the unappropriated portions for the purposes for which they were intended, and Tenant may elect to terminate this Lease if such taking is of material detriment to, and substantially interferes with, Tenant's use and occupancy of the Premises. In no event shall this Lease be terminated when such a partial taking does not have a material adverse effect upon Landlord or Tenant or both. Termination by either party pursuant to this Section shall be effective as of the date possession is required to be surrendered to said authority.

23.3 If upon any taking of the nature described in this Article 23 this Lease continues in effect, then Landlord shall promptly proceed to restore the remaining portion of the Premises, and all improvements and fixtures located thereon, to substantially their same condition prior to such partial taking; provided, however, Landlord's obligation hereunder shall be limited to the amount of the condemnation proceeds. Basic Annual Rent shall be abated proportionately on the basis of the rental value of the Premises, including improvements and fixtures, as restored after such taking compared to the rental value of the Premises prior to such taking. No award for any partial or entire taking shall be apportioned; provided, however, that nothing contained herein shall be deemed to give Landlord any interest in or to require Tenant to assign to Landlord any award made to Tenant for (i) the taking of personal property and fixtures belonging to Tenant, (ii) interruption of or damage to Tenant's business, (iii) Tenant's unamortized costs of leasehold improvements (other than Tenant Improvements paid for by Landlord), and (iv) Tenant's moving expenses.

24. DEFAULTS AND REMEDIES.

24.1 Late payment by Tenant to Landlord of Rent and other sums due will cause Landlord to incur costs not contemplated by this Lease, the exact amount of which will be extremely difficult and impracticable to ascertain. Such costs include, but are not limited to, processing and accounting charges and late charges which may be imposed on Landlord by the terms of any mortgage or trust deed covering the Premises. Therefore, if any installment of Rent due from Tenant is not received by Landlord within ten (10) days after written notice by Landlord to Tenant that the payment is past due, Tenant shall pay to Landlord an additional sum of five percent (5%) of the overdue rent as a late charge. The parties agree that this late charge represents a fair and reasonable estimate of the costs that Landlord will incur by reason of late payment by Tenant. In addition to the late charge, Rent not paid within thirty (30) days of the date such payment is due shall bear interest from thirty (30) days after the date due until paid at the lesser of (i) ten percent (10%) per annum or (ii) the maximum rate permitted by law.

24.2 No payment by Tenant or receipt by Landlord of a lesser amount than the rent payment herein stipulated shall be deemed to be other than on account of the rent, nor shall any endorsement or statement on any check or any letter accompanying any check or payment as rent be deemed an accord and satisfaction, and Landlord may accept such check or payment without prejudice to Landlord's right to recover the balance of such rent or pursue any other remedy provided. If at any time a dispute shall arise as to any amount or sum of money to be paid by Tenant to Landlord, Tenant shall have the right to make payment "under protest" and such payment shall not be regarded as a voluntary payment, and there shall survive the right on the part of Tenant to institute suit for recovery of the payment paid under protest.

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24.3 If Tenant fails to pay any sum of money (other than Basic Annual Rent) required to be paid by it hereunder, or shall fail to perform any other act on its part to be performed hereunder, Landlord may, without waiving or releasing Tenant from any obligations of Tenant, but shall not be obligated to, make such payment or perform such act; provided, that such failure by Tenant continued for ten (10) days after written notice from Landlord demanding performance by Tenant was delivered to Tenant, or that such failure by Tenant unreasonably and materially interfered with the use or efficient operation of the Premises, or resulted or could have resulted in a material violation of law or the cancellation of an insurance policy maintained by Landlord. All sums so paid or incurred by Landlord, together with interest thereon, from the date such sums were paid or incurred, at the annual rate equal to ten percent (10%) per annum or highest rate permitted by law, whichever is less, shall be payable to Landlord on demand as Additional Rent.

24.4 The occurrence of any one or more of the following events shall constitute a default hereunder by Tenant:

(a) The failure by Tenant to make any payment of Rent, as and when due, where such failure shall continue for a period of ten (10) days after written notice thereof from Landlord to Tenant. Such notice shall be in lieu of, and not in addition to, any notice required under Washington law;

(b) The failure by Tenant to observe or perform any obligation other than described in Section 24.4(a) to be performed by Tenant, where such failure shall continue for a period of thirty (30) days after written notice thereof from Landlord to Tenant; provided, however, that if the nature of Tenant's default is such that more than thirty (30) days are reasonably required to cure the default, then Tenant shall not be deemed to be in default if Tenant shall commence such cure within said thirty (30) day period and thereafter diligently prosecute the same to completion. Such notice shall be in lieu of, and not in addition to, any notice required under state law;

(c) Tenant makes an assignment for the benefit of creditors;

(d) A receiver, trustee or custodian is appointed to, or does, take title, possession or control of all, or substantially all, of Tenant's assets;

(e) An order for relief is entered against Tenant pursuant to a voluntary or involuntary proceeding commenced under any chapter of the Bankruptcy Code;

(f) Any involuntary petition is filed against the Tenant under any chapter of the Bankruptcy Code and is not dismissed within ninety (90) days; or

(g) Tenant's interest in this Lease is attached, executed upon, or otherwise judicially seized and such action is not released within ninety (90) days of the action.

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Notices given under this Section shall specify the alleged default and shall demand that Tenant perform the provisions of this Lease or pay the Rent that is in arrears, as the case may be, within the applicable period of time, or quit the Premises. No such notice shall be deemed a forfeiture or a termination of this Lease unless Landlord elects otherwise in such notice, and in no event shall a forfeiture or termination occur without such written notice.

24.5 In the event of a default by Tenant, and at any time thereafter, and without limiting Landlord in the exercise of any right or remedy which Landlord may have, Landlord shall be entitled to terminate Tenant's right to possession of the Premises by any lawful means, in which case this Lease shall terminate and Tenant shall immediately surrender possession of the Premises to Landlord. In such event Landlord shall have the immediate right to re-enter and remove all persons and property, and such property may be removed and stored in a public warehouse or elsewhere at the cost of, and for the account of Tenant, all without service of notice and without being deemed guilty of trespass, or becoming liable for any loss or damage which may be occasioned thereby. In the event that Landlord shall elect to so terminate this Lease, then Landlord shall be entitled to recover from Tenant all damages incurred by Landlord by reason of Tenant's default, including:

(a) The worth at the time of award of any unpaid Rent which had been earned at the time of such termination; plus

(b) The worth at the time of award of the amount by which the unpaid Rent which would have been earned after termination until the time of award exceeds the amount of such rental loss which Tenant proves could have been reasonably avoided; plus

(c) The worth at the time of award of the amount by which the unpaid Rent for the balance of the term after the time of award exceeds the amount of such rental loss which Tenant proves could have been reasonably avoided; plus

(d) Any other amount necessary to compensate Landlord for all the detriment proximately caused by Tenant's failure to perform its obligation under this Lease or which in the ordinary course of things would be likely to result therefrom, including, but not limited to, the cost of restoring the Premises to the condition required under the terms of this Lease; plus

(e) At Landlord's election, such other amounts in addition to or in lieu of the foregoing as may be permitted from time to time by applicable law.

As used in subsections (a), (b) and (c), the "time of award" shall mean the date upon which the judgment in any action brought by Landlord against Tenant by reason of such default is entered or such earlier date as the court may determine. As used in subsections (a) and (b), the "worth at the time of award" shall be computed by allowing interest at the rate specified in
Section 24.1. As used in subsection (c) above, the "worth at the time of award" shall be computed by taking the present value of such amount using the discount rate of the Federal Reserve Bank of San Francisco at the time of award plus one percentage point.

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24.6 In the event of a default by Tenant, and if Landlord does not elect to terminate this Lease as provided in Section 24.5 or otherwise terminate Tenant's right to possession of the Premises, Landlord may continue this Lease in effect for so long as Landlord does not terminate Tenant's right to possession of the Premises, and may enforce all of its rights and remedies under the Lease, including the right from time to time to recover Rent as it becomes due under the Lease. At any time thereafter, Landlord may elect to terminate this Lease and to recover damages to which Landlord is entitled.

24.7 Notwithstanding anything herein to the contrary, Landlord's reentry to perform acts of maintenance or preservation of, or in connection with efforts to relet, the Premises, or any portion thereof, or the appointment of a receiver upon Landlord's initiative to protect Landlord's interest under this Lease, shall not terminate Tenant's right to possession of the Premises or any portion thereof and, until Landlord does elect to terminate this Lease, this Lease shall continue in full force and Landlord may pursue all its remedies hereunder, including, without limitation, the right to recover from Tenant as they become due hereunder all Rent and other charges required to be paid by Tenant under the terms of this Lease.

24.8 All rights, options, and remedies of Landlord contained in this Lease shall be construed and held to be nonexclusive and cumulative. Landlord shall have the right to pursue any one or all of such remedies or any other remedy or relief which may be provided by law, whether or not stated in this Lease. No waiver of any default of Tenant hereunder shall be implied from any acceptance by Landlord of any rent or other payments due hereunder or by any omission by Landlord to take any action on account of such default if such default persists or is repeated, and no express waiver shall affect defaults other than as specified in said waiver.

24.9 Termination of this Lease or Tenant's right to possession by Landlord shall not relieve Tenant from any liability to Landlord which has theretofore accrued or shall arise based upon events which occurred prior to the last to occur of (i) the date of Lease termination or (ii) the date possession of Premises is surrendered.

24.10 Landlord shall not be in default unless Landlord fails to perform obligations required of Landlord within a reasonable time, but in no event later than thirty (30) days after written notice by Tenant specifying wherein Landlord has failed to perform such obligation; provided, however, that if the nature of Landlord's obligation is such that more than thirty (30) days are required for performance, then Landlord shall not be in default if Landlord commences performance within such thirty (30) day period and thereafter diligently prosecutes the same to completion.

24.11 In the event of any default on the part of Landlord, Tenant will give notice by registered or certified mail to any beneficiary of a deed of trust or mortgagee of a mortgage covering the Premises whose address shall have been furnished to Tenant and shall offer such beneficiary and/or mortgagee a reasonable opportunity to cure the default, including time to obtain possession of the Premises by power of sale or a judicial action if such should prove necessary to effect a cure, so long as the beneficiary or mortgagee shall have cured all curable defaults and is diligently pursuing all reasonable steps to obtain possession.

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25. ASSIGNMENT OR SUBLETTING.

25.1 Except as hereinafter provided, Tenant shall not, either voluntarily or by operation of law, sell, hypothecate or transfer this Lease, or sublet the Premises or any part thereof, or permit or suffer the Premises or any part thereof to be used or occupied as work space, storage space, concession or otherwise by anyone other than Tenant or Tenant's employees, without the prior written consent of Landlord in each instance, which consent shall not be unreasonably withheld or delayed.

25.2 If Tenant desires to assign this Lease to any entity into which Tenant is merged, with which Tenant is consolidated, or which acquires all or substantially all of the assets of Tenant, provided that the assignee first executes, acknowledges and delivers to Landlord an agreement whereby the assignee agrees to be bound by all of the covenants and agreements in this Lease arising after the effective date of the transfer, then Landlord upon receipt of proof of foregoing, will consent to the assignment.

25.3 In the event Tenant desires to assign, hypothecate or otherwise transfer this Lease or sublet the Premises or any part thereof to a transferee other than one set forth in Section 25.2, then at least ten (10) days, but not more than forty-five (45) days, prior to the date when Tenant desires the assignment or sublease to be effective (the "Assignment Date"), Tenant shall give Landlord a notice (the "Assignment Notice") which shall set forth the name, address and business of the proposed assignee or sublessee, information (including references and financial statements) concerning the reputation and financial ability of the proposed assignee or sublessee, the Assignment Date, any ownership or commercial relationship between Tenant and the proposed assignee or sublessee, and the consideration and all other material terms and conditions of the proposed assignment or sublease, all in such detail as Landlord shall reasonably require.

25.4 Landlord in making its determination as to whether consent should be given to a proposed assignment or sublease, may give consideration to the reputation of a proposed successor, the financial strength of such successor in the case of a proposed assignment (notwithstanding the assignor remaining liable for Tenant's performance), and any use which such successor proposes to make of the Premises. If Landlord fails to deliver written notice of its determination to Tenant within fifteen (15) days following receipt of the Assignment Notice and the information required under Section 25.3, Landlord shall be deemed to have approved the request. As a condition to any assignment to which Landlord has given consent, any such assignee must execute, acknowledge and deliver to Landlord an agreement whereby the assignee agrees to be bound by all of the covenants and agreements in this Lease.

25.5 Any sale, assignment, hypothecation or transfer of this Lease or subletting of Premises that is not in compliance with the provisions of this Article 25 shall be void.

25.6 The consent by Landlord to an assignment or subletting shall not relieve Tenant or any assignee of this Lease or sublessee of the Premises from obtaining the consent of Landlord to any further assignment or subletting and shall not release Tenant or any assignee or sublessee of Tenant from full and primary liability.

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25.7 If Tenant shall sublet the Premises or any part thereof Tenant hereby immediately and irrevocably assigns to Landlord, as security for Tenant's obligations under this Lease, all rent from any subletting of all or a part of the Premises, and Landlord as assignee of Tenant, or a receiver for Tenant appointed on Landlord's application, may collect such rent and apply it toward Tenant's obligations under this Lease; except that, until the occurrence of an act of default by Tenant, Tenant shall have the right to collect such rent.

25.8 Notwithstanding any subletting or assignment Tenant shall remain fully and primarily liable for the payment of all Rent and other sums due, or to become due hereunder, and for the full performance of all other terms, conditions, and covenants to be kept and performed by Tenant. The acceptance of rent or any other sum due hereunder, or the acceptance of performance of any other term, covenant, or condition hereof, from any other person or entity shall not be deemed to be a waiver of any of the provisions of this Lease or a consent to any subletting or assignment of the Premises. Landlord shall not withhold consent to an assignment back to the original Tenant hereunder from a subsequent assignee.

25.9 Any sublease of the Premises shall be subject and subordinate to the provisions of this Lease, shall not extend beyond the term of this Lease, and shall provide that the sublessee shall attorn to Landlord, at Landlord's sole option, in the event of the termination of this Lease. Landlord and any lender shall upon Tenant's request provide any subtenant of the entirety of the Premises with a recognition and nondisturbance agreement in the form set forth in Article 35 hereof on the condition that the sublessee agrees to attorn to Landlord on exactly the same terms and conditions as this Lease.

25.10 In the event Tenant assigns or otherwise transfers this Lease or sublets the Premises to a transferee other than one set forth in Section 25.2, Tenant shall pay to Landlord, as Additional Rent, fifty percent (50%) of the rent and other consideration received from the transferee during the term of this Lease (but "consideration" shall not include proceeds received by Tenant from the sale of personal property) in excess of Rent payable to Landlord under this Lease, after Tenant has recouped any reasonable commission, legal, improvement and other out-of-pocket expenses occasioned by such transfer and payable to third parties, and after Tenant has recouped any expenses incurred for tenant improvements to the transferred space constructed after the Term Commencement Date.

25.11 Notwithstanding anything to the contrary contained in this Article 25, Landlord acknowledges and agrees that a portion of the Premises may be occupied by the Northwest Hospital Department of Molecular Medicine ("Northwest Hospital"), whose research is integrated with and affiliated with the contemplated use of the Premises by Tenant. Subject to the provisions of Section 25.8, Tenant shall be entitled to sublet, license or otherwise allow Northwest Hospital such use and occupancy of the Premises, and the provisions of Sections 25.7 and 25.10 shall not apply to any such subletting or use.

26. ATTORNEY'S FEES

26.1 If either party becomes a party to any action or proceeding concerning this Lease, the Premises, or the Building or Project in which the Premises are located, by reason of any act

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or omission of the other party or its authorized representatives, and not by any act or omission of the party that becomes a party to that litigation or any act or omission of its authorized representatives, the party that causes the other party to become involved in the litigation shall be liable to that party for reasonable attorneys' fees, expert witness fees, and court costs incurred by it in the litigation.

26.2 If either party commences an action or proceeding against the other party arising out of or in connection with this Lease, the prevailing party shall be entitled to have and recover from the other party reasonable attorneys' fees, expert witness fees and costs of suit.

27. BANKRUPTCY.

27.1 In the event a debtor or trustee under the Bankruptcy Code, or other person with similar rights, duties and powers under any other law, proposes to cure any default under this Lease or to assume or assign this Lease, and is obliged to provide adequate assurance to Landlord that (i) a default will be cured, (ii) Landlord will be compensated for its damages arising from any breach of this Lease, or (iii) future performance under this Lease will occur, then adequate assurance shall include any or all of the following, as determined by the Bankruptcy Court: (a) those acts specified in the Bankruptcy Code or other law as included within the meaning of adequate assurance; (b) a cash payment to compensate Landlord for any monetary defaults or damages arising from a breach of this Lease; (c) the credit worthiness and desirability, as a tenant, of the person assuming this Lease or receiving an assignment of this Lease, at least equal to Landlord's customary and usual credit worthiness requirements and desirability standards in effect at the time of the assumption or assignment, as determined by the Bankruptcy Court; and (d) the assumption or assignment of all of Tenant's interest and obligations under this Lease.

28. DEFINITION OF LANDLORD.

28.1 The term "Landlord" as used in this Lease, so far as covenants or obligations on the part of Landlord are concerned, shall be limited to mean and include only Landlord or the successor-in-interest of Landlord under this Lease at the time in question. In the event of any transfer, assignment or conveyance of Landlord's title or leasehold, the Landlord herein named (and in case of any subsequent transfers or conveyances, the then grantor and any prior grantors) shall be automatically freed and relieved from and after the date of such transfer, assignment or conveyance of all liability for the performance of any covenants or obligations contained in this Lease thereafter to be performed by Landlord and, without further agreement, the transferee of such title or leasehold shall be deemed to have assumed and agreed to observe and perform any and all obligations of Landlord hereunder, during its ownership of the Premises. Landlord may transfer its interest in the Premises or this Lease without the consent of Tenant and such transfer or subsequent transfer shall not be deemed a violation on the part of Landlord or the then grantor of any of the terms or conditions of this Lease.

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29. ESTOPPEL CERTIFICATE.

29.1 Each party shall, within fifteen (15) days of written notice from the other party, execute, acknowledge and deliver to the other party a statement in writing on a form reasonably requested by a proposed lender, purchaser, assignee or subtenant (i) certifying that this Lease is unmodified and in full force and effect (or, if modified, stating the nature of such modification and certifying that this Lease as so modified is in full force and effect) and the dates to which the rental and other charges are paid in advance, if any, (ii) acknowledging that there are not, to each party's knowledge, any uncured defaults on the part of Landlord or Tenant hereunder (or specifying such defaults if any are claimed) and (iii) setting forth such further information with respect to this Lease or the Premises as may be reasonably requested thereon. Any such statement may be relied upon by any prospective lender, purchaser, assignee or subtenant of all or any portion of the Premises.

30. REMOVAL OF PROPERTY.

30.1 Except as provided below, all fixtures and personal property owned by Tenant shall be and remain the property of Tenant, and may be removed by Tenant at the expiration or earlier termination of the term of this Lease; however, fume hoods, chemistry hoods, cabling for telecom and computers, package HVAC units, and case work, including lab benches and sinks, may not be removed by Tenant, even if paid for by Tenant in addition to the Tenant Improvement Allowance. Notwithstanding the foregoing, the parties acknowledge that at the expiration or earlier termination of the term of this Lease, Tenant and/or its subtenants or other occupants may remove any fixtures and personal property which is leased from an equipment leasing company or owned by Northwest Hospital.

30.2 The Project, Building and Tenant Improvements, and all fixtures and personal property owned by Landlord, including all fixtures and improvements paid from the Tenant Improvement Allowance, shall be and remain the property of Landlord, and shall, upon the expiration or earlier termination of this Lease, remain upon and be surrendered with the Premises as a part thereof.

30.3 Notwithstanding Section 30.1, Tenant may not remove any property if such removal would cause material damage to the Premises, unless such damages can be and is repaired by Tenant. Furthermore, Tenant shall repair any damage to the Premises caused by Tenant's removal of any such property, and shall, prior to the expiration or earlier termination of this Lease, restore and return the Premises to the condition they were in when first occupied by Tenant, reasonable wear and tear excepted; provided, however, Tenant shall not be required to restore and return any space later improved by Tenant to the condition it was in when first occupied by Tenant if at the time of such later improvement Landlord consents that the new improvements may remain in place at the termination of the Lease in lieu of the replaced improvements, which consent shall not be unreasonably withheld. At a minimum, even if they are determined to be fixtures or personal property owned by Tenant, and except as set forth in Section 30.1, Tenant shall leave in place and repair any damage to the interior floors, walls, doors and ceilings of the Premises, and the heating, ventilation, air conditioning, plumbing, and electrical systems; all such property shall become the property of Landlord upon the expiration

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or earlier termination of this Lease, and shall remain upon and be surrendered with the Premises as a part thereof. The provisions of Article 17 shall apply to any restoration work under this Article as if the restoration was an alteration, addition or improvement thereunder. Should Tenant require any period beyond the expiration or earlier termination of the Lease to complete such restoration, Tenant shall be a tenant at sufferance subject to the provisions of Section 12.2 hereof.

30.4 If Tenant shall fail to remove any fixtures or personal property which it is entitled to remove under this Article 30 from the Premises prior to termination of this Lease, then Landlord may dispose of the property under the provisions of applicable law now or hereafter in effect.

31. LIMITATION OF LANDLORD'S LIABILITY.

31.1 If Landlord is in default of this Lease, and as a consequence, Tenant recovers a money judgment against Landlord, the judgment shall be satisfied only out of the proceeds of sale received on execution of the judgment and levy against the right, title, and interest of Landlord in the Project of which the Premises are a part, and out of rent or other income from the Project receivable by Landlord or out of the consideration received by Landlord from the sale or other disposition of all or any part of Landlord's right, title, and interest in the Building and Project of which the Premises are a part, or by offsetting Rent under this Lease.

31.2 Neither Landlord nor Landlord's Agents shall be personally liable for any deficiency except to the extent liability is based upon willful and intentional misconduct. If Landlord is a partnership or joint venture, the partners of such partnership shall not be personally liable and no partner of Landlord shall be sued or named as a party in any suit or action, or service of process be made against any partner of Landlord, except as may be necessary to secure jurisdiction of the partnership or joint venture or to the extent liability is caused by willful and intentional misconduct. If Landlord is a corporation, the shareholders, directors, officers, employees, and/or agents of such corporation shall not be personally liable and no shareholder, director, officer, employee, or agent of Landlord shall be sued or named as a party in any suit or action, or service of process be made against any shareholder, director, officer, employee, or agent of Landlord, except as may be necessary to secure jurisdiction of the corporation. If Landlord is a limited liability company, the members, managers, officers, employees, and/or agents of such limited liability company shall not be personally liable and no member, manager, officer, employee, or agent of Landlord shall be sued or named as a party in any suit or action, or service of process be made against any member, manager, officer, employee, or agent of Landlord, except as may be necessary to secure jurisdiction of the corporation. No partner, shareholder, director, member, manager, employee, or agent of Landlord shall be required to answer or otherwise plead to any service of process and no judgment will be taken or writ of execution levied against any partner, shareholder, director, member, manager, employee, or agent of Landlord.

31.3 Each of the covenants and agreements of this Article 31 shall be applicable to any covenant or agreement either expressly contained in this Lease or imposed by statute or by common law.

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32. CONTROL BY LANDLORD.

32.1 Landlord reserves full control over the Building and Project to the extent not inconsistent with Tenant's quiet enjoyment and use of Premises. This reservation includes the right to establish ownership of the buildings separate from fee title to the real property underlying the Buildings, and to divide the Project into more than one lot.

32.2 Tenant shall, should Landlord so request, promptly join with Landlord in execution of such documents as may be appropriate to assist Landlord to implement any such action provided Tenant need not execute any document which is of a nature wherein liability is created in Tenant or if by reason of the terms of such document Tenant will be deprived of the quiet enjoyment and use of the Premises as granted by this Lease.

33. QUIET ENJOYMENT.

33.1 So long as Tenant is not in default, Landlord covenants that Landlord or anyone acting through or under Landlord will not disturb Tenant's occupancy of the Premises except as permitted by the provisions of this Lease and that Landlord shall use reasonable efforts to enforce the lease obligations of tenants of the balance of the Building and Project to the extent they might otherwise disturb Tenant's occupancy.

34. QUITCLAIM DEED.

34.1 Tenant shall execute and deliver to Landlord on the expiration or termination of this Lease, immediately on Landlord's request, a quitclaim deed to the Premises and Project or other document in recordable form suitable to evidence of record termination of this Lease and the right of first refusal and option contained herein.

35. SUBORDINATION AND ATTORNMENT.

35.1 Unless the mortgagee or beneficiary elects otherwise at any time prior to or following a default by Tenant, this Lease shall be subject to and subordinate to the lien of any mortgage or deed of trust now or hereafter in force against the Project and Building of which the Premises are a part, and to all advances made or hereafter to be made upon the security thereof without the necessity of the execution and delivery of any further instruments on the part of Tenant to effectuate such subordination, provided that the lienholder, beneficiary, or mortgagee has previously executed and delivered to Tenant a nondisturbance, attornment, and subordination agreement in such form as the lienholder, beneficiary, or mortgagee may reasonably request and as the Tenant may approve, which approval will not be unreasonably withheld, setting forth that so long as Tenant is not in default hereunder, Landlord's and Tenant's rights and obligations hereunder shall remain in force and Tenant's right to possession shall be upheld. F