COULTER PHARMACEUTICALS INC, S-1/A, 1996-12-23

COULTER PHARMACEUTICALS INC
S-1/A, 1996-12-23
PHARMACEUTICAL PREPARATIONS

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 23, 1996

REGISTRATION NO. 333-17661

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1 TO

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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COULTER PHARMACEUTICAL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S> <C> <C>
DELAWARE 2834 94-3219075
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>

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550 CALIFORNIA AVENUE, SUITE 200

PALO ALTO, CALIFORNIA 94306-1440
(415) 842-7300
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
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MICHAEL F. BIGHAM

PRESIDENT AND CHIEF EXECUTIVE OFFICER
COULTER PHARMACEUTICAL, INC.
550 CALIFORNIA AVENUE, SUITE 200
PALO ALTO, CALIFORNIA 94306-1440
(415) 842-7300
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
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COPIES TO:

<TABLE>
<S> <C>
JAMES C. KITCH, ESQ. ALAN K. AUSTIN, ESQ.
JOHN A. DADO, ESQ. ELIZABETH R. FLINT, ESQ.
COOLEY GODWARD LLP WILSON SONSINI GOODRICH & ROSATI
FIVE PALO ALTO SQUARE PROFESSIONAL CORPORATION
3000 EL CAMINO REAL 650 PAGE MILL ROAD
PALO ALTO, CALIFORNIA 94306 PALO ALTO, CALIFORNIA 94304
</TABLE>

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APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: As soon as practicable
after the effective date of this Registration Statement.
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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, please 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(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 delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
TITLE OF SECURITIES AMOUNT TO BE PROPOSED MAXIMUM OFFERING PROPOSED MAXIMUM AGGREGATE AMOUNT OF
TO BE REGISTERED REGISTERED(1) PRICE PER SHARE(2) OFFERING PRICE(2) REGISTRATION FEE(3)
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<S> <C> <C> <C> <C>
Common Stock,
$0.001 par value............ 2,875,000 $14.00 $40,250,000 $12,197
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</TABLE>

(1) Includes 375,000 shares of Common Stock issuable upon exercise of the
Underwriters' over-allotment option.

(2) Estimated solely for the purpose of calculating the amount of the
registration fee in accordance with Rule 457 under the Securities Act of
1933.

(3) Includes an additional registration fee of $3,106 with respect to the
increase in the size of the offering. A registration fee of $9,091 was
previously paid.

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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 THAT SPECIFICALLY STATES 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 SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.

SUBJECT TO COMPLETION, DATED DECEMBER 23, 1996

PROSPECTUS
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2,500,000 SHARES

COULTPHARM.LOGO

COMMON STOCK

All of the 2,500,000 shares of Common Stock offered hereby are being sold
by Coulter Pharmaceutical, Inc. ("Coulter Pharmaceutical" or the "Company").
Prior to this offering, there has been no public market for the Common Stock of
the Company. It is currently estimated that the initial public offering price
will be between $12.00 and $14.00 per share. See "Underwriting" for a discussion
of the factors to be considered in determining the initial public offering
price. The Company has applied to have the Common Stock approved for quotation
on the Nasdaq National Market under the symbol CLTR.

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

THE SHARES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK.

SEE "RISK FACTORS" COMMENCING ON PAGE 6.

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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) COMPANY(2)
<S> <C> <C> <C>
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Per Share............................. $ $ $
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Total(3).............................. $ $ $
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</TABLE>

(1) See "Underwriting" for indemnification arrangements with the several
Underwriters.

(2) Before deducting expenses payable by the Company estimated at $665,000.

(3) The Company has granted the Underwriters a 30-day option to purchase up to
375,000 additional shares of Common Stock solely to cover over-allotments,
if any. If all such shares are purchased, the total Price to Public,
Underwriting Discount and Proceeds to Company will be $ ,
$ and $ , respectively. See "Underwriting."

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

The shares of Common Stock are offered by the several Underwriters subject
to prior sale, receipt and acceptance by them and subject to the right of the
Underwriters to reject any order in whole or in part and certain other
conditions. It is expected that certificates for such shares will be available
for delivery on or about , 1997, at the office of the agent of
Hambrecht & Quist LLC in New York, New York.

HAMBRECHT & QUIST

ALEX.BROWN & SONS
INCORPORATED

PACIFIC GROWTH EQUITIES, INC.

, 1997
<PAGE> 3

Depicted above is a computer screen display from the interactive database
of clinical trial data which the Company intends to submit to the FDA in
connection with its application for marketing approval of its B-1 Therapy. The
four medical images represent a time sequence response of a non-Hodgkin's
lymphoma patient treated with the Company's B-1 Therapy. This patient had failed
three prior regimens of chemotherapy and was treated with the B-1 Therapy as
part of the Company's completed Phase I/II clinical trial. The lymph nodes of
the patient's upper chest (outlined in yellow) are depicted (1) immediately
prior to B-1 Therapy, (2) three months and (3) six months after treatment as the
malignancy disappears, as well as (4) 28 months after treatment where the lymph
nodes have returned to normal or have become residual scar tissue. The images
depicted represent the results of treatment for only one patient and are not
necessarily indicative of results that will be obtained from extensive clinical
testing. See "Risk Factors -- Uncertainties Related to Product Development and
"Business -- Clinical Results and Development Plan." The Company's B-1 Therapy
has not been approved for sale in the United States or elsewhere. The Company
will be required to conduct additional clinical trials prior to submitting an
application to the FDA for marketing approval of the B-1 Therapy.

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OF
THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.

2
<PAGE> 4

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and the Consolidated Financial Statements and Notes thereto
appearing elsewhere in this Prospectus. The Common Stock offered hereby involves
a high degree of risk. See "Risk Factors."

THE COMPANY

Coulter Pharmaceutical is engaged in the development of novel drugs and
therapies for the treatment of people with cancer. The Company currently is
developing a family of cancer therapeutics based upon two platform technologies:
conjugated antibodies and tumor-activated peptide ("TAP") pro-drugs. The
Company's most advanced product candidate, the "B-1 Therapy," consists of a
monoclonal antibody conjugated with a radioisotope. In a Phase I/II clinical
trial of the B-1 Therapy, 40 patients with low-grade or transformed low-grade
non-Hodgkin's lymphoma ("NHL") who had relapsed from previous chemotherapy
regimens achieved an 82% overall response rate and a 45% complete response rate.
The Company has commenced a pivotal Phase II/III clinical trial for the
treatment of NHL in low-grade and transformed low-grade patients refractory to
chemotherapy. The Company intends to file for U.S. Food and Drug Administration
("FDA") marketing approval of its B-1 Therapy for this indication in the second
half of 1998. The Company believes that the B-1 Therapy, if successfully
developed, could become the first radioimmunotherapy approved in the United
States for the treatment of people with cancer. The Company's TAP pro-drug
program is designed to broaden significantly the therapeutic windows of
conventional chemotherapies. The Company currently is developing a pro-drug
version of doxorubicin to treat certain solid tumor cancers with the objective
of commencing clinical trials in early 1998.

Cancer is a family of more than one hundred diseases that can be
categorized into two broad groups: hematologic ("blood-borne") malignancies and
solid tumor cancers. The Company's B-1 Therapy addresses NHL, a blood-borne
cancer of the immune system affecting B-cells that is categorized as low-,
intermediate- or high-grade disease. In the United States, the Company estimates
that approximately 140,000 patients have low-grade or transformed low-grade NHL.
While patients with low-grade and transformed low-grade NHL often can achieve
one or more remissions with chemotherapy, eventually these patients relapse and
ultimately die from the disease or from complications of treatment.

The B-1 Therapy is designed to optimize therapeutic benefit for each
patient without the debilitating side effects typically associated with
conventional cancer treatments. The Company's B-1 Therapy consists of a
radioisotope, (131)Iodine ("(131)I"), combined with a monoclonal antibody (the
"B-1 Antibody") which recognizes and binds to the CD20 antigen, an antigen
commonly expressed on the surface of B-cells primarily during that stage of
their life cycle when NHL arises. The B-1 Therapy is administered to patients
pursuant to a proprietary therapeutic protocol consisting of a single, two-dose
regimen that the Company believes can be administered primarily on an outpatient
basis.

The Company's strategy includes seeking expedited initial approval of the
B-1 Therapy for the treatment of low-grade and transformed low-grade NHL in
patients who are refractory to chemotherapy, while simultaneously pursuing
trials to broaden the initial label indication. For its initial indication, the
Company will pursue approval under the "Clinton-Kessler Cancer Initiative," a
regulatory initiative intended to accelerate the testing, review and approval of
therapies for patients suffering from life-threatening or disabling cancers who
have limited treatment options. Based on this initiative and on guidance from
FDA staff, the Company has designed its pivotal Phase II/III trial to include 60
patients and a post-treatment follow-up period of six months. The Company
intends to seek approval for other NHL indications and, accordingly, is planning
to commence a Phase III/IV "post-approval" clinical trial during the second half
of 1997 in patients with low-grade or transformed low-grade NHL in first or
second relapse. The Company also has commenced a Phase II trial of the B-1
Therapy as a stand-alone, first-line treatment for patients newly diagnosed with
low-grade NHL. The

3
<PAGE> 5

Company believes that this Phase II trial is the first clinical trial of a
radioimmunotherapy as a stand-alone, first-line treatment for people with
cancer.

In its second technology platform, the Company is developing TAP pro-drug
versions of cytotoxic drugs designed to be activated preferentially in the
proximity of metastatic cancer cells, yet stable in circulation and normal
tissues. Accordingly, relatively larger quantities of cytotoxic agents are
expected to reach and enter malignant cells as opposed to normal cells, which
could permit a significant increase in maximum tolerated dosages, potentially
overcoming drug resistance in cancer cells.

The Company is engaged in preclinical development of "Super-Leu-Dox," a
pro-drug version of doxorubicin, with the objective of commencing clinical
trials in early 1998. In vitro studies have shown that Super-Leu-Dox is 40 times
more likely to be absorbed and chemically activated by tumor cells than by
normal cells. An earlier leucine-doxorubicin conjugate was tested as a
stand-alone therapy in the treatment of solid tumors in two separate dose
escalation trials in Europe in a total of 59 patients. Patients in these trials
safely tolerated doses well in excess of those associated with unmodified
doxorubicin.

The Company intends to market and sell its products in the United States
through a direct sales force and, where appropriate, in collaboration with
marketing partners. The Company believes that an established sales and marketing
capability will enable it to compete effectively for opportunities to license or
distribute later-stage product candidates and even approved products.
Internationally, the Company intends to distribute its products through
marketing partners.

The Company's conjugated antibody program is based upon the antibody
therapeutics program which originated in the late 1970s at Coulter Corporation,
a recognized leader in the field of hematology. Upon its formation in February
1995, the Company acquired worldwide rights to the B-1 Therapy and related
intellectual property, know-how and other assets from Coulter Corporation.
Coulter Corporation will own 16.6% of the Company's stock subsequent to the
offering.

The Company was incorporated under the laws of Delaware in February 1995.
The Company's executive offices are located at 550 California Avenue, Suite 200,
Palo Alto, California 94306, and its telephone number is (415) 842-7300.

4
<PAGE> 6

THE OFFERING

<TABLE>
<S> <C>
Common Stock offered by the Company.......... 2,500,000 shares
Common Stock to be outstanding after the
offering................................... 10,010,268 shares (1)
Use of proceeds.............................. For funding of clinical trials,
manufacturing, initial prelaunch marketing of
the B-1 Therapy; and for other research and
development, working capital and general
corporate purposes
Proposed Nasdaq National Market symbol....... CLTR
</TABLE>

SUMMARY CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER
YEAR ENDED DECEMBER 31, 30,
------------------------------------- ------------------
1992 1993 1994 1995 1995 1996
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<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Research and development
expenses......................... $ 1,574 $ 1,838 $ 2,798 $ 2,739 $ 1,688 $ 9,896
Net loss........................... $(1,701) $(2,016) $(3,086) $(3,229) $(2,031) $(10,821)
Pro forma net loss per share....... $ (1.40)
Shares used in computing pro forma
net loss per share(2)............ 7,736
</TABLE>

<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
--------------------------
ACTUAL AS ADJUSTED(3)
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<S> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash, cash equivalents and short-term investments............ $18,835 $ 52,883
Working capital.............................................. 13,497 47,545
Total assets................................................. 20,484 54,532
Deficit accumulated during the development stage............. (13,814) (13,814)
Total stockholders' equity................................... 14,806 48,854
</TABLE>

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(1) Based on the number of shares outstanding at September 30, 1996, after
giving effect to the automatic conversion of all outstanding shares of
Preferred Stock into Common Stock and the assumed cash exercise of warrants
to purchase 498,705 shares of Common Stock prior to the closing of this
offering. Excludes 548,604 shares which were subject to outstanding options
at such date at a weighted average exercise price of $0.62 per share. As of
December 6, 1996, 802,305 shares were subject to outstanding options at such
date at a weighted average exercise price of $1.38 per share, and an
additional 24,666 shares were subject to an outstanding warrant at such date
at an exercise price of $9.75 per share. See "Capitalization,"
"Management -- Stock Option Plans" and Note 8 of Notes to Consolidated
Financial Statements.
(2) See Note 1 of Notes to Consolidated Financial Statements for an explanation
of the determination of shares used in computing pro forma net loss per
share.

(3) As adjusted to reflect the sale of 2,500,000 shares of Common Stock offered
by the Company hereby at an assumed public offering price of $13.00 per
share and the receipt of the estimated proceeds therefrom and after giving
effect to the assumed cash exercise of warrants to purchase 498,705 shares
of Common Stock prior to the closing of this offering. See "Use of Proceeds"
and "Capitalization."

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

Except as otherwise noted, all information in this Prospectus (a) assumes
no exercise of the Underwriters' over-allotment option, (b) reflects a
one-for-three reverse split of capital stock of the Company effected prior to
the effectiveness of this offering and (c) reflects the conversion of all
outstanding Preferred Stock of the Company into Common Stock upon the closing of
this offering. See "Description of Capital Stock," "Underwriting" and Notes to
Consolidated Financial Statements.

5
<PAGE> 7

RISK FACTORS

This Prospectus contains forward-looking statements that involve risks and
uncertainties. Actual results could differ materially from those discussed in
the forward-looking statements as a result of certain factors, including those
set forth below and elsewhere in this Prospectus. The following risk factors
should be considered carefully in addition to the other information in this
Prospectus before purchasing the shares of Common Stock offered hereby.

Uncertainties Related to Product Development. The Company's product
candidates are generally in early stages of development, with only one in
clinical trials. The development of safe and effective therapies for the
treatment of people with cancer is highly uncertain and subject to numerous
risks. Product candidates that may appear to be promising at early stages of
development may not reach the market for a number of reasons. Product candidates
may be found ineffective or cause harmful side effects during clinical trials,
may take longer to progress through clinical trials than had been anticipated,
may fail to receive necessary regulatory approvals, may prove impracticable to
manufacture in commercial quantities at reasonable cost and with acceptable
quality or may fail to achieve market acceptance.

The results of initial preclinical and clinical testing of the products
under development by the Company are not necessarily indicative of results that
will be obtained from subsequent or more extensive preclinical studies and
clinical testing. The Company's clinical data gathered to date with respect to
its B-1 Therapy are primarily from a Phase I/II dose escalation trial which was
designed to develop and refine the therapeutic protocol, to determine the
maximum tolerated dose of total body radiation and to assess the safety and
efficacy profile of treatment with a radiolabeled antibody. Further, the data
from this Phase I/II dose escalation trial were compiled from testing conducted
at a single site and with a relatively small number of patients per NHL
histology and disease stage. Substantial additional development and clinical
testing and investment will be required prior to seeking any regulatory approval
for commercialization of this potential product. There can be no assurance that
clinical trials of the B-1 Therapy or other product candidates under development
will demonstrate the safety and efficacy of such products to the extent
necessary to obtain regulatory approvals for the indications being studied, or
at all. Companies in the pharmaceutical and biotechnology industries have
suffered significant setbacks in advanced clinical trials, even after obtaining
promising results in earlier trials. The failure to demonstrate adequately the
safety and efficacy of the B-1 Therapy or any other therapeutic product under
development could delay or prevent regulatory approval of the product and would
have a material adverse effect on the Company's business, financial condition
and results of operations.

Furthermore, the timing and completion of current and planned clinical
trials of the B-1 Therapy, as well as clinical trials of other products, are
dependent upon, among other factors, the rate at which patients are enrolled,
which is a function of many factors, including the size of the patient
population, the proximity of patients to the clinical sites, the eligibility
criteria for the study and the existence of competing clinical trials. There can
be no assurance that delays in patient enrollment in clinical trials will not
occur, and any such delays may result in increased costs, program delays or
both, which could have a material adverse effect on the Company's business,
financial condition and results of operations.

Early Stage of Development. Since its inception in 1995, the Company has
been engaged in the development of drugs and related therapies for the treatment
of people with cancer. The Company's product candidates are generally in early
stages of development, with only one in clinical trials. No revenues have been
generated from product sales or product royalties; and products resulting from
the Company's research and development efforts, if any, are not expected to be
available commercially for at least the next few years. No assurance can be
given that the Company's product development efforts, including clinical trials,
will be successful, that required regulatory approvals for the indications being
studied can be obtained, that its products can be manufactured at acceptable
cost and with appropriate quality or that any approved products can be
successfully marketed. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."

6
<PAGE> 8

Government Regulation; No Assurance of Regulatory Approvals. All new drugs
and biologics, including the Company's products under development, are subject
to extensive and rigorous regulation by the federal government, principally the
FDA under the Food, Drug and Cosmetic Act and other laws including, in the case
of biologics, the Public Health Services Act, and by state and local
governments. Such regulations govern, among other things, the development,
testing, manufacture, labeling, storage, premarket clearance or approval,
advertising, promotion, sale and distribution of such products. If drug products
are marketed abroad, they also are subject to extensive regulation by foreign
governments.

The regulatory process, which includes preclinical studies and clinical
trials of each potential product, is lengthy, expensive and uncertain. Prior to
commercial sale in the United States, most new drugs and biologics, including
the Company's products under development, must be cleared or approved by the
FDA. Securing FDA marketing clearances and approvals often requires the
submission of extensive preclinical and clinical data and supporting information
to the FDA. Product clearances and approvals, if granted, can be withdrawn for
failure to comply with regulatory requirements or upon the occurrence of
unforeseen problems following initial marketing. Moreover, regulatory clearances
or approvals for products such as new drugs and biologics, even if granted, may
include significant limitations on the uses for which such products may be
marketed.

There can be no assurance that the Company will be able to obtain necessary
regulatory clearances or approvals on a timely basis, if at all, for any of its
product candidates, and delays in receipt or failures to receive such clearances
or approvals or failures to comply with existing or future regulatory
requirements could have a material adverse effect on the Company's business,
financial condition and results of operations. Certain material manufacturing
changes to new drugs and biologics also are subject to FDA review and clearance
or approval. There can be no assurance that any clearances or approvals that are
required, once obtained, will not be withdrawn or that compliance with other
regulatory requirements can be maintained. Further, failure to comply with
applicable FDA and other regulatory requirements can result in sanctions being
imposed on the Company or the manufacturers of its products, including warning
letters, fines, product recalls or seizures, injunctions, refusals to permit
products to be imported into or exported out of the United States, refusals of
the FDA to grant premarket clearance or premarket approval of drugs and
biologics or to allow the Company to enter into government supply contracts,
withdrawals of previously approved marketing applications and criminal
prosecutions.

Manufacturers of drugs and biologics also are required to comply with the
applicable FDA good manufacturing practice ("GMP") regulations, which include
requirements relating to quality control and quality assurance as well as the
corresponding maintenance of records and documentation. Manufacturing facilities
are subject to inspection by the FDA, including unannounced inspection, and must
be licensed before they can be used in commercial manufacturing of the Company's
products. There can be no assurance that the Company or its suppliers will be
able to comply with the applicable GMP regulations and other FDA regulatory
requirements. Such failure could have a material adverse effect on the Company's
business, financial condition and results of operations.

An important part of the Company's strategy is to obtain expedited
marketing approval for its B-1 Therapy based upon policy changes in the
regulatory environment broadly referred to as the Clinton-Kessler Cancer
Initiative, announced in March 1996. Significant uncertainty exists as to the
extent to which such initiative will result in accelerated review and approval.
Further, the FDA has not made available comprehensive guidelines with respect to
this initiative, retains considerable discretion to determine eligibility for
accelerated review and approval and is not bound by discussions that an
applicant may have had with FDA staff. Accordingly, the FDA could employ such
discretion to deny eligibility of the B-1 Therapy as a candidate for accelerated
review or to require additional clinical trials or other information before
approving the B-1 Therapy. A determination that the B-1 Therapy is not eligible
for accelerated review or delays and additional expenses associated with
generating a response to any such request for additional trials could have a
material adverse effect on the Company's business, financial condition and
results of operations. See "Business -- Government Regulation."

7
<PAGE> 9

Dependence on Suppliers; Manufacturing and Scale-up Risk. The Company has
no existing capacity or experience with respect to manufacturing products for
large-scale clinical trials or commercial purposes. The Company is supplying the
B-1 Antibody to clinical trial sites from an existing, finite inventory produced
by Coulter Corporation. There can be no assurance that existing supplies of B-1
Antibody are sufficient to meet the Company's clinical trial requirements or
that supplies can be obtained from a third-party supplier on a timely basis, if
at all. To achieve the levels of production necessary to support ongoing
clinical trials and for early commercialization of its B-1 Therapy, the Company
has contracted with a third-party manufacturer, LONZA Biologics plc ("Lonza"),
to produce unlabeled B-1 Antibody for use in clinical trials and intends to
enter into a commercial supply agreement. However, in order to begin using
Lonza-produced material in clinical trials, the Company must seek an FDA
clearance of an Investigational New Drug ("IND") supplement showing that the
Lonza-produced material is biologically equivalent to the material currently in
use in clinical trials. There can be no assurance that the FDA will provide such
clearance in a timely manner, if at all, and that clinical trials will not be
delayed or disrupted as a result of the planned transition to the Lonza-produced
material. Lonza has limited experience producing the B-1 Antibody on a
commercial scale, and there can be no assurance that Lonza will be able to
produce the Company's requirements at commercially reasonable prices or with
acceptable quality.

The Company also has contracted with MDS Nordion Inc. ("Nordion") to
develop a process for radiolabeling the B-1 Antibody with (131)I at a
centralized site. Further, the Company is in negotiations with Nordion to
establish a centralized radiolabeling facility and to supply radiolabeled B-1
Antibody. Radiolabeling of the B-1 Antibody currently is conducted at individual
clinical trial sites, but the Company plans to switch to centrally radiolabeled
antibody from Nordion in mid-1997, for both completion of clinical trials and
commercial supplies. However, before using Nordion-labeled material, an IND
supplement must be cleared by the FDA. There can be no assurance that the FDA
will provide such clearance in a timely manner, if at all, and that clinical
trials will not be delayed or disrupted as a result. Furthermore, if the B-1
Therapy is approved and is successful in the market, Nordion's initial capacity
to radiolabel antibodies would not be sufficient to meet all of the Company's
commercial requirements, and additional capacity would have to be developed.
There can be no assurance that Nordion would be able to complete any such
expansion scale-up in a timely or cost effective manner, if at all, or that the
Company could obtain such capacity from others.

The Company is aware of only a limited number of manufacturers capable of
producing the B-1 Antibody in commercial quantities or radiolabeling the
antibody with (131)I on a commercial scale. Should either of the Company's
existing or planned contractual relationships for production or radiolabeling of
the B-1 Antibody cease or be interrupted, or if its existing suppliers are
unable to meet the Company's requirements for any reason, there can be no
assurance that any additional or alternative third parties could be engaged to
carry out said production or radiolabeling on a timely basis or on commercially
acceptable terms, if at all. To establish and qualify a new facility to
centrally radiolabel antibodies could take as long as two years. Further,
radiolabeled antibody cannot be stockpiled against future shortages due to the
eight-day half-life of the (131)I radioisotope. Accordingly, any change in the
Company's existing contractual relationships with, or interruption in supply
from, its producer of unlabeled antibody or its radiolabeler could affect
adversely the Company's ability to complete its ongoing clinical trials and to
market the B-1 Therapy, if approved. Any such change or interruption would have
a material adverse effect on the Company's business, financial condition and
results of operations.

Third-party manufacturers must comply with GMP regulations prescribed by
the FDA and other standards prescribed by various federal, state and local
regulatory agencies in the United States and any other relevant country. Failure
to comply with these regulations could have a material adverse effect on the
Company's business, financial condition and results of operations. See
"-- Government Regulation; No Assurance of Regulatory Approvals" and
"Business -- Government Regulation."

8
<PAGE> 10

Future Capital Needs; Uncertainty of Additional Funding. The Company's
operations to date have consumed substantial and increasing amounts of cash. The
negative cash flow from operations is expected to continue and to accelerate in
the foreseeable future. The development of the Company's technology and
potential products will require a commitment of substantial funds. The Company
expects that its existing capital resources, including the net proceeds of this
offering and interest thereon, will be adequate to satisfy the requirements of
its current and planned operations through 1998. However, the rate at which the
Company expends its resources is variable, may be accelerated and will depend on
many factors, including the scope and results of preclinical studies and
clinical trials, continued progress of the Company's research and development of
product candidates, the cost, timing and outcome of regulatory approvals, the
expenses of establishing a sales and marketing force, the timing and cost of
establishment or procurement of requisite production, radiolabeling and other
manufacturing capacities, the cost involved in preparing, filing, prosecuting,
maintaining, defending and enforcing patent claims, the acquisition of
technology licenses, the status of competitive products and the availability of
other financing.

The Company will need to raise substantial additional capital to fund its
operations. The Company intends to seek such additional funding through public
or private equity or debt financings from time to time, as market conditions
permit. There can be no assurance that additional financing will be available on
acceptable terms, if at all. If additional funds are raised by issuing equity
securities, substantial dilution to stockholders may result. If adequate funds
are not available, the Company may be required to delay, reduce the scope of, or
eliminate one or more of its research and development programs or obtain funds
through arrangements with collaborative partners or others that may require the
Company to relinquish rights to certain of its technologies, product candidates
or products that the Company would otherwise seek to develop or commercialize.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations."

Uncertainty of Market Acceptance of the B-1 Therapy. Even if the Company's
product candidates are approved for marketing by the FDA and other regulatory
authorities, there can be no assurance that the Company's products will be
commercially successful. If the Company's most advanced product candidate, the
B-1 Therapy, is approved, it would represent a significant departure from
currently approved methods of treatment for NHL and would require the handling
of radioactive materials. Accordingly, the B-1 Therapy may experience
under-utilization by oncologists and hematologists who are unfamiliar with the
application of the B-1 Therapy in the treatment of NHL. Further, oncologists and
hematologists are not typically licensed to administer radioimmunotherapies such
as the Company's B-1 Therapy and will need to engage a nuclear medicine
physician or receive specialty training to administer the B-1 Therapy. Market
acceptance of the B-1 Therapy also could be affected adversely if recently
enacted regulations of the Nuclear Regulatory Commission are not interpreted in
a manner to permit the B-1 Therapy to be administered on an outpatient basis in
most cases as is currently contemplated by the Company. Furthermore, market
acceptance could be affected adversely because some hospitals may be required to
administer the therapeutic dose of the B-1 Therapy on an inpatient basis under
applicable state or local or individual hospital regulations. Market acceptance
also could be affected by the availability of third-party reimbursement. See
"-- Uncertainty Related to Health Care Reform and Third-Party Reimbursement,"
"-- Hazardous and Radioactive Materials," and "Business -- Radioactive and Other
Hazardous Materials."

Absence of Commercialization Resources and Experience. The Company intends
to sell its products in the United States through a direct sales force and,
where appropriate, in collaboration with marketing partners, and internationally
through marketing partners. The Company currently does not possess the resources
and experience necessary to commercialize any of its product candidates. If and
when the FDA approves the Company's B-1 Therapy, the Company's ability to market
the product will be contingent upon recruitment, training and deployment of a
sales and marketing force. Development of an effective sales force will require
significant financial resources and time. There can be no assurance that the
Company will be able to establish such a sales force in a timely or cost
effective manner, if at all, or that such a sales force will be capable of
generating demand for the Company's B-1

9
<PAGE> 11

Therapy or other product candidates. The Company has no arrangements for the
international distribution of its B-1 Therapy, and there can be no assurance
that the Company will be able to enter into any such arrangements in a timely
manner or on commercially favorable terms, if at all. See "Business -- Marketing
and Sales."

Dependence Upon Proprietary Technology; Uncertainty of Patents and
Proprietary Technology. The pharmaceutical and biotechnology fields are
characterized by a large number of patent filings. A substantial number of
patents have already been issued to other pharmaceutical and biotechnology
companies. Research has been conducted for many years in the monoclonal antibody
field by pharmaceutical and biotechnology companies and other organizations.
Competitors may have filed applications for or have been issued patents and may
obtain additional patents and proprietary rights related to products or
processes competitive with or similar to those of the Company. Patent
applications are maintained in secrecy for a period after filing. Publication of
discoveries in the scientific or patent literature tends to lag behind actual
discoveries and the filing of related patent applications. The Company may not
be aware of all of the patents potentially adverse to the Company's interests
that may have been issued to other companies, research or academic institutions,
or others. No assurance can be given that such patents do not exist, have not
been filed, or could not be filed or issued, which contain claims relating to
the Company's technology, products or processes.

To date, no consistent policy has emerged regarding the breadth of claims
allowed in pharmaceutical and biotechnology patents. If patents have been or are
issued to others containing preclusive or conflicting claims and such claims are
determined ultimately to be valid, the Company may be required to obtain
licenses to one or more of such patents or to develop or obtain alternative
technology. The Company is aware of certain patents that have been issued to
others that pertain to a portion of the Company's prospective business; however,
the Company believes based on the advice of counsel that it does not infringe
any patents that ultimately would be determined to be valid. There can be no
assurance that patents do not exist in the United States or in other foreign
countries or that patents will not be issued to third parties that contain
preclusive or conflicting claims with respect to the B-1 Therapy or any of the
Company's other product candidates or programs. Commercialization of monoclonal
antibody-based products may require licensing and/or cross-licensing of one or
more patents with other organizations in the field. There can be no assurance
that the licenses that might be required for the Company's processes or products
would be available on commercially acceptable terms, if at all.

The Company's breach of an existing license or failure to obtain a license
to technology required to commercialize its product candidates may have a
material adverse effect on the Company's business, financial condition and
results of operations. Litigation, which could result in substantial costs to
the Company, may also be necessary to enforce any patents issued to the Company
or to determine the scope and validity of third-party proprietary rights. If
competitors of the Company prepare and file patent applications in the United
States that claim technology also claimed by the Company, the Company may have
to participate in interference proceedings declared by the United States Patent
and Trademark Office to determine priority of invention, which could result in
substantial cost to the Company, even if the eventual outcome is favorable to
the Company. An adverse outcome could subject the Company to significant
liabilities to third parties and require the Company to license disputed rights
from third parties or to cease using such technology.

The Company also relies on trade secrets to protect its technology,
especially where patent protection is not believed to be appropriate or
obtainable. The Company protects its proprietary technology and processes, in
part, by confidentiality agreements with its employees, consultants,
collaborators and certain contractors. There can be no assurance that these
agreements will not be breached, that the Company would have adequate remedies
for any breach, or that the Company's trade secrets or those of its
collaborators or contractors will not otherwise become known or be discovered
independently by competitors.

10
<PAGE> 12

patents or obtain additional proprietary rights relating to products or
processes used or proposed to be used by the Company. Moreover, there is certain
subject matter which is patentable in the United States and not generally
patentable outside of the United States. Statutory differences in patentable
subject matter may limit the protection the Company can obtain on some of its
inventions outside of the United States. For example, methods of treating humans
are not patentable in many countries outside of the United States. These and/or
other issues may prevent the Company from obtaining patent protection outside of
the United States which would have a material adverse effect on the Company's
business, financial condition and results of operations. See
"Business -- Patents and Other Intellectual Property."

History of Operating Losses; Anticipated Future Losses. The Company has a
limited history of operations and has experienced significant losses since
inception. As of September 30, 1996, the Company's accumulated deficit was
approximately $13.8 million. The Company expects to incur significant additional
operating losses over the next several years and expects cumulative losses to
increase substantially due to expanded research and development efforts,
preclinical studies and clinical trials and development of manufacturing,
marketing and sales capabilities. The Company expects that losses will fluctuate
from quarter to quarter and that such fluctuations may be substantial. All of
the Company's product candidates are in development in preclinical studies and
clinical trials, and no revenues have been generated from product sales. To
achieve and sustain profitable operations, the Company, alone or with others,
must develop successfully, obtain regulatory approval for, manufacture,
introduce, market and sell its products. The time frame necessary to achieve
market success is long and uncertain. The Company does not expect to generate
product revenues for at least the next few years. There can be no assurance that
the Company will ever generate sufficient product revenues to become profitable
or to sustain profitability. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."

Highly Competitive Industry; Risk of Technological Obsolescence. The
pharmaceutical and biotechnology industries are intensely competitive. Any
product candidate developed by the Company would compete with existing drugs and
therapies. There are many pharmaceutical companies, biotechnology companies,
public and private universities and research organizations actively engaged in
research and development of products for the treatment of people with cancer.
Many of these organizations have financial, technical, manufacturing and
marketing resources greater than those of the Company. Several of them may have
developed or are developing therapies that could be used for treatment of the
same diseases targeted by the Company. One competitor known to the Company
currently is conducting Phase III clinical trials of a chimeric antibody
treatment for NHL. If a competing company were to develop or acquire rights to a
more efficacious or safer cancer therapy for treatment of the same diseases
targeted by the Company, or one which offers significantly lower costs of
treatment, the Company's business, financial condition and results of operations
could be materially adversely affected. The Company believes that its product
development programs will be subject to significant competition from companies
utilizing alternative technologies as well as to increasing competition from
companies that develop and apply technologies similar to the Company's
technologies. Other companies may succeed in developing products earlier than
the Company, obtaining approvals for such products from the FDA more rapidly
than the Company or developing products that are safer and more effective than
those under development or proposed to be developed by the Company. There can be
no assurance that research and development by others will not render the
Company's technology or product candidates obsolete or non-competitive or result
in treatments superior to any therapy developed by the Company, or that any
therapy developed by the Company will be preferred to any existing or newly
developed technologies. See "Business -- Competition."

Dependence on Management and Other Key Personnel. The Company is dependent
upon a limited number of key management and technical personnel. The loss of the
services of one or more of such key employees could have a material adverse
effect on the Company's business, financial condition and results of operations.
In addition, the Company's success will be dependent upon its ability to attract
and retain additional highly qualified sales, management, manufacturing and
research and develop-

11
<PAGE> 13

ment personnel. The Company faces intense competition in its recruiting
activities, and there can be no assurance that the Company will be able to
attract and/or retain qualified personnel.

Exposure to Product Liability. The manufacture and sale of human
therapeutic products involve an inherent risk of product liability claims and
associated adverse publicity. The Company has only limited product liability
insurance for clinical trials and no commercial product liability insurance.
There can be no assurance that the Company will be able to maintain existing
insurance or obtain additional product liability insurance on acceptable terms
or with adequate coverage against potential liabilities. Such insurance is
expensive, difficult to obtain and may not be available in the future on
acceptable terms, if at all. An inability to obtain sufficient insurance
coverage on reasonable terms or to otherwise protect against potential product
liability claims brought against the Company in excess of its insurance
coverage, if any, or a product recall could have a material adverse effect upon
the Company's business, financial condition and results of operations. See
"Business -- Product Liability and Insurance."

Uncertainty Related to Health Care Reform and Third-Party
Reimbursement. Political, economic and regulatory influences are subjecting the
health care industry in the United States to fundamental change. Recent
initiatives to reduce the federal deficit and to reform health care delivery are
increasing cost-containment efforts. The Company anticipates that Congress,
state legislatures and the private sector will continue to review and assess
alternative benefits, controls on health care spending through limitations on
the growth of private health insurance premiums and Medicare and Medicaid
spending, the creation of large insurance purchasing groups, price controls on
pharmaceuticals and other fundamental changes to the health care delivery
system. Any such proposed or actual changes could cause the Company to limit or
eliminate spending on development projects and affect the Company's ultimate
profitability. Legislative debate is expected to continue in the future, and
market forces are expected to drive reductions of health care costs. The Company
cannot predict what impact the adoption of any federal or state health care
reform measures or future private sector reforms may have on its business.

In both domestic and foreign markets, sales of the Company's proposed
products will depend in part upon the availability of reimbursement from
third-party payors, such as government health administration authorities,
managed care providers, private health insurers and other organizations.
Third-party payors are increasingly challenging the price and cost effectiveness
of medical products and services. Significant uncertainty exists as to the
reimbursement status of newly approved health care products. The Company's B-1
Therapy, as potentially the first radioimmunotherapy for cancer, faces
particular uncertainties due to the absence of a comparable, approved therapy to
serve as a model for pricing and reimbursement decisions. Further, if the B-1
Therapy is not administered in most cases on an outpatient basis, as is
contemplated currently by the Company, the projected cost of the therapy will be
higher than anticipated. In addition, there can be no assurance that products
can be manufactured on a commercial scale for a cost that will enable the
Company to price its products within reimbursable rates. Consequently, there can
be no assurance that the Company's product candidates will be considered cost
effective or that adequate third-party reimbursement will be available to enable
the Company to maintain price levels sufficient to realize an appropriate return
on its investment in product development. If adequate coverage and reimbursement
rates are not provided by the government and third-party payors for the
Company's products, the market acceptance of these products could be adversely
affected, which could have a material adverse effect on the Company's business,
financial condition and results of operations. See "Business -- Pharmaceutical
Pricing and Reimbursement."

Hazardous and Radioactive Materials. The manufacturing and use of the
Company's B-1 Therapy requires the handling and disposal of (131)I, a
radioactive isotope of iodine. The radiolabeling of the B-1 Antibody currently
is performed by radiopharmacies at the individual clinical trial sites. These
sites must comply with various state and federal regulations regarding the
handling and use of radioactive materials. Violation of these state and federal
regulations by a clinical trial site could delay significantly completion of
such trials. For the continuation of its ongoing clinical trials and for
commercial-scale

12
<PAGE> 14

production, the Company plans to rely on a contract manufacturer, Nordion, to
radiolabel the B-1 Antibody with (131)I, initially at a single location in
Canada. Violations of safety regulations could occur with this manufacturer,
and, therefore, there is a risk of accidental contamination or injury. In the
event of any such noncompliance or accident, the supply of radiolabeled B-1
Antibody for use in clinical trials or commercially could be interrupted, which
could have a material adverse effect on the Company's business, financial
condition and results of operations.

The Company also expects to use hazardous chemicals and radioactive
compounds in its ongoing research activities. The Company could be held liable
for any damages that result from such an accident, contamination or injury from
the handling and disposal of these materials, as well as for unexpected remedial
costs and penalties that may result from any violation of applicable
regulations, which could result in a material adverse effect on the Company's
business, financial condition and results of operations. In addition, the
Company may incur substantial costs to comply with environmental regulations.
See "Business -- Radioactive and Other Hazardous Materials."

Control By Officers, Directors and Principal Stockholders. Following
completion of this offering, directors, executive officers and principal
stockholders of the Company will beneficially own approximately 52.1% of the
outstanding shares of the Company's Common Stock. Further, two of the Company's
stockholders, InterWest Partners and Coulter Corporation together with
associated persons, will beneficially own approximately 37.9% of the outstanding
shares of the Company's Common Stock. Accordingly, these stockholders,
individually and as a group, may be able to control the Company and direct its
affairs and business, including any determination with respect to a change in
control of the Company, future issuances of Common Stock or other securities by
the Company, declaration of dividends on the Common Stock and the election of
directors. See "Principal Stockholders."

No Prior Public Market for Common Stock; Potential Volatility of Stock
Price. Prior to this offering, there has been no public market for the
Company's Common Stock, and there can be no assurance that an active trading
market for the Common Stock will develop or continue after this offering. The
initial public offering price will be determined through negotiations between
the Company and the Underwriters. In addition, the securities markets have from
time to time experienced significant price and volume fluctuations that are
unrelated to the operating performance of particular companies. The market
prices of the common stock of many publicly held biotechnology and
pharmaceutical companies have in the past been, and can in the future be
expected to be, especially volatile. Announcements of technological innovations
or new products by the Company or its competitors, release of reports by
securities analysts, developments or disputes concerning patents or proprietary
rights, regulatory developments, changes in regulatory or medical reimbursement
policies, economic and other external factors, as well as period-to-period
fluctuations in the Company's financial results, may have a significant and
adverse impact on the market price of the Common Stock. See "Underwriting."

Potential Adverse Impact of Shares Eligible for Future Sale. Sales of
shares of Common Stock (including shares issued upon the exercise of outstanding
options) in the public market after this offering could adversely affect the
market price of the Common Stock. Such sales also might make it more difficult
for the Company to sell equity securities or equity-related securities in the
future at a time and price that the Company deems appropriate. Upon completion
of this offering, the Company will have outstanding an aggregate of 10,035,604
shares of Common Stock, assuming no exercise of the Underwriters' over-allotment
option and no exercise of options outstanding as of December 6, 1996. Of these
shares, the 2,500,000 shares of Common Stock sold in this offering will be
freely tradable without restriction or further registration under the Securities
Act, unless held by affiliates of the Company as that term is defined in Rule
144 under the Securities Act ("Affiliates"). The remaining 7,535,604 shares of
Common Stock held by existing stockholders are restricted securities as that
term is defined in Rule 144 under the Securities Act (the "Restricted Shares").
Restricted Shares may be sold in the public market only if registered or if they
qualify for an exemption from registration under Rules 144 or 701, promulgated
under the Securities Act. As a result of agreements not to sell such shares (the

13
<PAGE> 15

"Lock-up Agreements") and the provisions of Rules 144 and 701, additional shares
will be available in the public market as follows: (i) no Restricted Shares will
be eligible for immediate sale on the effective date of this offering; (ii)
2,937,608 Restricted Shares (plus 154,794 shares of Common Stock issuable to
employees and consultants pursuant to stock options that are then vested) will
be eligible for sale upon expiration of Lock-up Agreements 180 days after the
date of this Prospectus; and (iii) the remainder of the Restricted Shares will
be eligible for sale from time to time thereafter upon expiration of their
respective two-year holding periods. However, proposals currently under
consideration by the Securities and Exchange Commission ("SEC") would permit
shares to be sold under Rule 144 upon completion of a one-year holding period.
Upon completion of this offering, the holders of 7,097,994 shares of Common
Stock, or their transferees, will be entitled to certain rights with respect to
the registration of such shares under the Securities Act. Registration of such
shares under the Securities Act would result in such shares becoming freely
tradable without restriction under the Securities Act (except for shares
purchased by Affiliates) immediately upon the effectiveness of such
registration.

Dilution. Purchasers of the shares of Common Stock offered hereby will
experience immediate dilution of $8.12 in net tangible book value per share
after deducting the underwriting discounts and estimated offering expenses. Such
investors will experience additional dilution upon the exercise of outstanding
options. See "Dilution."

Adverse Impact of Possible Issuances of Preferred Stock; Anti-Takeover
Effect of Certain Charter and Bylaw Provisions. Upon completion of this
offering, the Board of Directors will have authority to issue up to 3,000,000
shares of Preferred Stock and to fix the price, rights, preferences, privileges
and restrictions, including voting rights, of those shares without any further
vote or action by the stockholders. The rights of the holders of Common Stock
will be subject to, and may be adversely affected by, the rights of the holders
of any Preferred Stock that may be issued in the future. The issuance of
Preferred Stock could affect adversely the voting power of holders of Common
Stock and the likelihood that such holders will receive dividend payments and
payments upon liquidation. Additionally, the issuance of Preferred Stock may
have the effect of delaying, deferring or preventing a change in control of the
Company, may discourage bids for the Common Stock at a premium over the market
price of the Common Stock and may affect adversely the market price of and the
voting and other rights of the holders of the Common Stock. In addition, the
Company's Bylaws provide that special meetings of stockholders may be called
only by the Chairman of the Board of Directors, the Chief Executive Officer or
the Board of Directors pursuant to a resolution approved by a majority of the
Board of Directors. In addition, the Company is subject to the anti-takeover
provisions of Section 203 of the Delaware General Corporation Law, which
prohibits the Company from engaging in a "business combination" with an
"interested stockholder" for a period of three years after the date of the
transaction in which the person became an interested stockholder, unless the
business combination is approved in a prescribed manner. These provisions, along
with certain provisions of California law applicable to the Company, could have
the effect of discouraging certain attempts to acquire the Company which could
deprive the Company's stockholders of the opportunity to sell their shares of
Common Stock at prices higher than prevailing market prices. See "Description of
Capital Stock."

Forward-looking Statements. This prospectus contains forward-looking
statements, which may be deemed to include the Company's plans to continue
development of its B-1 Therapy, conduct clinical trials with respect to the B-1
Therapy and other product candidates, seek regulatory approvals, engage
third-party manufacturers to supply its clinical trials and commercial
requirements, establish a sales and marketing capability, evaluate additional
product candidates for subsequent clinical and commercial development and expend
the proceeds of this offering. Actual results could differ materially from those
projected in any forward-looking statements for a variety of reasons, including
those detailed in the other sections of this "Risk Factors" portion of the
Prospectus or elsewhere in this Prospectus.

14
<PAGE> 16

USE OF PROCEEDS

The net proceeds to the Company from the sale of the 2,500,000 shares of
Common Stock offered by the Company hereby at an assumed initial public offering
price of $13.00 per share are estimated to be $29,560,000 ($34,093,750 if the
Underwriters' over-allotment option is exercised in full).

The Company anticipates that approximately $24 million of the proceeds of
this offering will be used to support the development of its B-1 Therapy,
including clinical trials, manufacturing and initial prelaunch marketing. The
balance of the net proceeds of this offering, including interest earned thereon,
is expected to be used primarily in the Company's other research and development
programs such as its TAP pro-drug program and for working capital and other
general corporate purposes. The Company may also use a portion of the net
proceeds to acquire technologies or products complementary to its business,
although no material expenditures in connection with any such acquisitions
currently are anticipated. Pending application as described above, the Company
intends to invest the net proceeds of this offering in short-term,
investment-grade, interest-bearing securities.

The amounts and timing of the Company's actual expenditure for the purposes
described above will depend upon a number of factors, including: the scope and
results of preclinical studies and clinical trials; continued progress of the
Company's research and development of potential products; the cost, timing and
outcome of regulatory approvals; the expenses of establishing a sales and
marketing force; the timing and cost of establishment or procurement of
requisite production, radiolabeling and other manufacturing capacities; the cost
involved in preparing, filing, prosecuting, maintaining, defending and enforcing
patent claims; the acquisition of technology licenses; the status of competitive
products and the availability of other financing. The Company will require
substantial additional funds to conduct its operations in the future, and there
can be no assurance that such funding will be available on acceptable terms, if
at all. The Company expects that its existing capital resources, including the
net proceeds of this offering and interest thereon, will be adequate to satisfy
the requirements of its current and planned operations through 1998.

DIVIDEND POLICY

The Company has never paid a cash dividend on its capital stock and does
not anticipate paying any cash dividends in the foreseeable future.

15
<PAGE> 17

CAPITALIZATION

The following table sets forth the capitalization of the Company as of
September 30, 1996 (i) on an actual basis, (ii) on a pro forma basis to give
effect to the issuance of 498,705 shares of Common Stock upon the assumed cash
exercise of certain outstanding warrants for aggregate proceeds to the Company
of approximately $4,488,000 and (iii) as adjusted to give effect to the sale by
the Company of the 2,500,000 shares of Common Stock offered hereby at an assumed
offering price of $13.00 per share and the application of the estimated proceeds
therefrom. This table should be read in conjunction with the Consolidated
Financial Statements of the Company and the Notes thereto included elsewhere in
this Prospectus.

<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
--------------------------------------------
PRO FORMA
ACTUAL (1) ACTUAL AS ADJUSTED (2)
---------- --------- ---------------
(IN THOUSANDS)
<S> <C> <C> <C>
Stockholders' equity:
Preferred Stock, $0.001 par value, 3,000,000 shares
authorized; no shares issued or outstanding....... $ -- $ -- $ --
Common Stock, $0.001 par value, 30,000,000 shares
authorized; 7,011,563 shares issued and
outstanding actual; 7,510,268 shares issued and
outstanding pro forma actual; 10,010,268 shares
issued and outstanding as adjusted................ 7 8 11
Additional paid-in capital........................... 29,135 33,622 63,179
Net unrealized loss on securities
available-for-sale................................ (24) (24) (24)
Deferred compensation................................ (498) (498) (498)
Deficit accumulated during the development stage..... (13,814) (13,814) (13,814)
-------- --------
Total stockholders' equity........................ 14,806 19,294 48,854
-------- --------
Total capitalization......................... $ 14,806 $ 19,294 $ 48,854
======== ========
</TABLE>

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

(1) Excludes 548,604 shares reserved for issuance upon exercise of stock options
outstanding at September 30, 1996, at a weighted average exercise price of
$0.62 per share and 498,705 shares issuable upon the assumed cash exercise
of warrants outstanding at the same date at a weighted average exercise
price of $9.00 per share. At September 30, 1996, options to purchase 65,148
shares and warrants to purchase 498,705 shares were immediately exercisable.
At December 6, 1996, the Company had 802,305 shares reserved for issuance
upon exercise of outstanding stock options, at a weighted average price of
$1.38 per share, and 523,371 shares issuable upon exercise of warrants
outstanding at a weighted average price of $9.04 per share. At December 6,
1996, options to purchase 58,897 shares and warrants to purchase 523,371
shares were immediately exercisable, including warrants to purchase 498,705
shares which warrants terminate upon the closing of the offering if not
exercised prior thereto. See "Management -- Equity Incentive Plans" and Note
8 of Notes to Consolidated Financial Statements.

(2) Reflects the sale of 2,500,000 shares of Common Stock offered by the Company
hereby at an assumed initial public offering price of $13.00 per share and
the receipt of the estimated proceeds therefrom and includes the issuance of
498,705 shares of Common Stock upon the assumed cash exercise of certain
outstanding warrants for aggregate proceeds to the Company of approximately
$4,488,000.

16
<PAGE> 18

DILUTION

As of September 30, 1996, the Company had a net tangible book value of
approximately $19,282,000 or $2.57 per share of Common Stock (including
approximately $4,488,000 from the assumed cash exercise of warrants to purchase
498,705 shares of Common Stock). Net tangible book value represents the amount
of total tangible assets less total liabilities divided by the number of shares
of Common Stock outstanding. Without taking into account any other changes in
the net tangible book value after September 30, 1996, other than to give effect
to the receipt by the Company of the net proceeds from the sale of the 2,500,000
shares of Common Stock offered by the Company hereby at an assumed initial
public offering price of $13.00 per share, the pro forma net tangible book value
of the Company as of September 30, 1996 would have been approximately
$48,842,000 or $4.88 per share. This represents an immediate increase in net
tangible book value of $2.31 per share to existing stockholders and an immediate
dilution of $8.12 per share to new investors. The following table illustrates
this per share dilution:

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share..................... $13.00
Net tangible book value before the offering....................... $2.57
Increase per share attributable to new investors.................. 2.31
-----
Pro forma net tangible book value per share after the offering...... 4.88
-----
Dilution per share to new investors................................. $ 8.12
=====
</TABLE>

The following table summarizes, on a pro forma basis as of September 30,
1996, the difference between existing stockholders and the new investors with
respect to the number of shares of Common Stock purchased from the Company, the
total consideration paid and the average price per share paid:

<TABLE>
<CAPTION>
TOTAL CASH
SHARES PURCHASED CONSIDERATION
---------------------- ----------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
----------- ------- ----------- ------- -------------
<S> <C> <C> <C> <C> <C>
Existing stockholders.... 7,510,268 75.0% $33,093,553 50.5% $ 4.41
New investors............ 2,500,000 25.0 32,500,000 49.5 13.00
---------- --- ---------- ---
Total.......... 10,010,268 100.0% $65,593,553 100.0%
========== === ========== ===
</TABLE>

Other than as noted above, the foregoing computations assume the exercise
of no stock options or warrants after September 30, 1996. As of September 30,
1996 options were outstanding to purchase 548,604 shares of Common Stock at a
weighted average exercise price of $0.62 per share. As of December 6, 1996,
options were outstanding to purchase 802,305 shares of Common Stock at a
weighted average exercise price of $1.38 per share and warrants were outstanding
to purchase 523,371 shares of Common Stock at a weighted average exercise price
of $9.04 per share, including warrants to purchase 498,705 shares which warrants
terminate upon the closing of the offering if not exercised prior thereto. See
"Management -- Equity Incentive Plans" and Note 8 of Notes to Consolidated
Financial Statements.

17
<PAGE> 19

SELECTED CONSOLIDATED FINANCIAL DATA

The following selected consolidated financial data as of December 31, 1993,
1994 and 1995 and September 30, 1996 and for each of the two years in the period
ended December 31, 1994, the periods from January 1, 1995 to February 15, 1995
and from inception (February 16, 1995) to December 31, 1995, for the nine months
ended September 30, 1996, and for the period from inception (February 16, 1995)
to September 30, 1996 are derived from the Consolidated Financial Statements of
Coulter Pharmaceutical, Inc. and the Financial Statements of the Antibody
Therapeutics Business Operations of Coulter Corporation that have been audited
by Ernst & Young LLP, independent auditors, which are included elsewhere in this
Prospectus. The statement of operations data for the period from inception
(February 16, 1995) to September 30, 1995 are derived from unaudited financial
statements of the Company included elsewhere herein and the statement of
operations data for the year ended December 31, 1992 are derived from unaudited
financial statements of the Antibody Therapeutics Business Operations of Coulter
Corporation not included herein which, in the opinion of management of the
Company and the management of Coulter Corporation, respectively, reflect all
adjustments, consisting only of normal recurring adjustments, that the Company
and Coulter Corporation consider necessary for a fair presentation of the
results of operations for these periods. The operating results of the nine
months ended September 30, 1996 are not necessarily indicative of the results
that may be expected for the entire year.
<TABLE>
<CAPTION>
FIRST NINE
MONTHS 1995
------------
ANTIBODY
THERAPEUTICS
BUSINESS
FULL YEAR 1995
-----------------------------
ANTIBODY THERAPEUTICS BUSINESS OPERATIONS
OPERATIONS
OF COULTER CORPORATION COMPANY OF COULTER
--------------------------------------------- ------------ CORPORATION
INCEPTION ------------
YEAR ENDED DECEMBER 31, JANUARY 1, (FEBRUARY JANUARY 1,
1995 TO 16, 1995) TO 1995 TO
----------------------------- FEBRUARY 15, DECEMBER 31, FEBRUARY 15,
1992 1993 1994 1995 1995 1995
------- ------- ------- ------------ ------------ ------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Operating expenses:
Research and development........ $ 1,574 $ 1,838 $ 2,798 $ 200 $ 2,539 $ 200
General and administrative...... 127 178 288 36 581 36
---- ---- ------ ---- ------ ----
Total operating expenses.... 1,701 2,016 3,086 236 3,120 236
Interest income................. -- -- -- -- 127 --
---- ---- ------ ---- ------ ----
Net loss........................ $(1,701) $(2,016) $(3,086) $ (236) $ (2,993) $ (236)
==== ==== ====== ==== ====== ====
Pro forma net loss per share.... $ (0.44)
======
Shares used in computing pro
forma net loss per share...... 6,798
======

COMPANY
-------------------------------------------------
INCEPTION INCEPTION
(FEBRUARY 16, NINE MONTHS (FEBRUARY 16,
1995) TO ENDED 1995) TO
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1995 1996 1996
------------- ------------- -------------

<S> <<C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Operating expenses:
Research and development........ $ 1,488 $ 9,896 $ 12,435
General and administrative...... 380 1,453 2,034
------ ------- -------
Total operating expenses.... 1,868 11,349 14,469
Interest income................. 73 528 655
------ ------- -------
Net loss........................ $(1,795) $ (10,821) $ (13,814)
====== ======= =======
Pro forma net loss per share.... $ (1.40)
=======
Shares used in computing pro
forma net loss per share...... 7,736
=======
</TABLE>

<TABLE>
<CAPTION>
ANTIBODY THERAPEUTICS
BUSINESS OPERATIONS OF
COULTER CORPORATION COMPANY
------------------------------ -------------------------------
DECEMBER 31, DECEMBER 31, DECEMBER 31, SEPTEMBER 30,
1993 1994 1995 1996
------------ ------------ ------------ -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash, cash equivalents and short-term investments....... $ -- $ -- $ 3,438 $18,835
Working capital (deficit)............................... (124) (50) 2,878 13,497
Total assets............................................ 109 135 3,628 20,484
Deficit accumulated during the development stage........ -- -- (2,993) (13,814)
Total stockholders' equity.............................. -- -- 2,997 14,806
Coulter Corporation's net investment.................... (15) 85 -- --
</TABLE>

18
<PAGE> 20

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

The following discussion and analysis should be read in conjunction with
"Selected Consolidated Financial Data" and the Company's Consolidated Financial
Statements and Notes thereto included elsewhere in this Prospectus. Except for
the historical information contained herein, the discussion in this Prospectus
contains certain forward-looking statements that involve risks and
uncertainties, such as statements of the Company's plans, objectives,
expectations and intentions. The cautionary statements made in this Prospectus
should be read as being applicable to all related forward-looking statements
wherever they appear in this Prospectus. The Company's actual results could
differ materially from those discussed here. Factors that could cause or
contribute to such differences include those discussed in "Risk Factors," as
well as those discussed elsewhere herein.

OVERVIEW

Coulter Pharmaceutical is engaged in the development of novel drugs and
therapies for the treatment of people with cancer. The Company's first product
candidate, the B-1 Therapy, is based upon the antibody therapeutics program
which originated in the late 1970s at Coulter Corporation. Coulter Corporation
conducted research and development on the potential therapeutic applications of
the B-1 Antibody as part of a broader antibody therapeutics program. To
accelerate the pace of development of the B-1 Therapy and to obtain external
sources of capital for the program, Coulter Corporation decided to create a
separate Company into which it placed its conjugated antibody therapeutics
assets. Thus, in February 1995, Coulter Pharmaceutical was incorporated and
acquired worldwide rights to the B-1 Therapy and related intellectual property,
know-how and other assets from Coulter Corporation.

To date, the Company has devoted substantially all of its resources to its
research and development programs. No revenues have been generated from product
sales, and products resulting from the Company's research and development
efforts, if any, are not expected to be available commercially for at least the
next few years. The Company has a limited history of operations and has
experienced significant operating losses to date. The Company expects to incur
significant additional operating losses over the next several years and expects
cumulative losses to increase substantially due to expanded research and
development efforts, preclinical studies and clinical trials and development of
manufacturing, marketing and sales capabilities. The Company expects that losses
will fluctuate from quarter to quarter and that such fluctuations may be
substantial. There can be no assurance that the Company will successfully
develop, manufacture and commercialize its products or ever achieve or sustain
product revenues or profitability. As of September 30, 1996, the Company's
accumulated deficit was approximately $13.8 million.

RESULTS OF OPERATIONS

The following table consists of operating data for the years ended December
1993 and 1994 for the Antibody Therapeutics Business Operations of Coulter
Corporation. The table combines data for the Antibody Therapeutics Business
Operations of Coulter Corporation (for the period January 1, 1995 to February
15, 1995) and the Company (for the period from February 16, 1995 to December 31,
1995) in order to facilitate management's discussion of financial results.
Certain costs and expenses presented in the statements of operations of the
Antibody Therapeutics Business Operations of Coulter Corporation represent
allocations and Coulter Corporation's management's estimates. As a result, the
statements of operations presented for periods prior to February 16, 1995 are
not strictly comparable to those of subsequent periods and may not be indicative
of the results of operations that would have been achieved had the Antibody
Therapeutics Business Operations of Coulter Corporation operated as a
non-affiliated entity during such period.

19
<PAGE> 21

<TABLE>
<CAPTION>
ANTIBODY THERAPEUTICS
BUSINESS OPERATIONS OF
COULTER CORPORATION COMBINED COMPANY
-------------------------- -------------------------------- -----------------
YEAR ENDED YEAR ENDED YEAR ENDED NINE MONTHS ENDED NINE MONTHS ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, SEPTEMBER 30, SEPTEMBER 30,
1993 1994 1995 1995 1996
------------ ------------ ------------ ------------------ -----------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Operating expenses:
Research and development... $ 1,838 $ 2,798 $ 2,739 $ 1,688 $ 9,896
General and administrative... 178 288 617 416 1,453
----- ------- ------- ------- --------
Total operating expenses... 2,016 3,086 3,356 2,104 11,349
Interest income............ -- -- 127 73 528
----- ------- ------- ------- --------
Net loss................... $ (2,016) $ (3,086) $ (3,229) $ (2,031) $ (10,821)
===== ======= ======= ======= ========
</TABLE>

COMPARISON OF NINE MONTHS ENDED SEPTEMBER 30, 1996 AND COMBINED NINE MONTHS
ENDED SEPTEMBER 30, 1995

Operating Expenses. Research and development expenses were $9.9 million
for the nine months ended September 30, 1996, compared to $1.7 million for the
combined nine month period ended September 30, 1995, an increase of $8.2
million. This increase was due primarily to increases in staffing and
expenditures associated with the development of the B-1 Therapy, including costs
of clinical trials and manufacturing expenses. These manufacturing expenses
included certain expenses associated with scaled-up production of monoclonal
antibodies and the establishment of a centralized radiolabeling capability. The
Company expects its research and development expenses to grow during the
remainder of 1996 and in 1997, reflecting anticipated increased costs related to
additions to staffing, preclinical studies, clinical trials and manufacturing.

General and administrative expenses were $1.5 million for the nine months
ended September 30, 1996, compared to $0.4 million for the combined nine month
period ended September 30, 1995, an increase of $1.1 million. This increase was
incurred to support the Company's facilities expansion, increased research and
development efforts, and related legal and patent activities. The Company
expects its general and administrative expenses to continue to increase during
the remainder of 1996 and in 1997, in support of its increased research and
development, patent and corporate development activities, as well as increasing
commercialization efforts in anticipation of potential product sales.

Interest Income. Interest income was $0.5 million for the nine months
ended September 30, 1996, compared to $0.1 million for the combined nine month
period ended September 30, 1995, an increase of $0.4 million. This increase was
due to higher average cash, cash equivalent and short-term investment balances
as a result of the Company's sale of Preferred Stock in August 1995 and April
1996.

COMPARISON OF COMBINED YEAR ENDED DECEMBER 31, 1995 AND THE ANTIBODY
THERAPEUTICS BUSINESS OPERATIONS OF COULTER CORPORATION FOR THE YEARS ENDED
DECEMBER 31, 1994 AND 1993

Operating Expenses. Research and development expenses were $2.7 million
for the combined year ended December 31, 1995, compared to $2.8 million and $1.8
million for the years ended December 31, 1994 and 1993, respectively. The $0.1
million decrease in expenses from the year ended December 31, 1994 to the
combined year ended December 31, 1995 was due primarily to the net effect of
decreased expenses resulting from the elimination of payments to the Dana-Farber
Cancer Institute for prepaid royalties and sponsored research, primarily offset
by increases in staffing and in expenditures associated with the development of
the B-1 Therapy, including costs of clinical trials and manufacturing expenses.
The $1.0 million increase in expenses from 1993 to 1994 was due primarily to
increased clinical development costs associated with the B-1 Therapy.

General and administrative expenses were $0.6 million for the combined year
ended December 31, 1995, compared to $0.3 million and $0.2 million for the years
ended December 31, 1994 and 1993, respectively. The $0.3 million increase in
expenses for the combined year ended December 31, 1995

20
<PAGE> 22

from the year ended December 31, 1994 primarily represents expenses associated
with the formation of the Company and investment in infrastructure. The $0.1
million increase in expenses from 1993 to 1994 was incurred to support
increasing research and development activities of Coulter Corporation's antibody
therapeutics program.

Interest Income. The Company first reported interest income of $0.1
million for the combined year ended December 31, 1995, which resulted from
investment of the net proceeds from the sale of the Company's Preferred Stock in
1995.

LIQUIDITY AND CAPITAL RESOURCES

Since its inception, the Company has financed its operations primarily
through private placements of equity securities totaling $28.4 million through
September 30, 1996. In December 1996, the Company entered into a $3.8 million
equipment financing agreement, all of which is currently available.

Cash, cash equivalents and short-term investments totaled $18.8 million at
September 30, 1996. The negative cash flow from operations is expected to
continue and to accelerate in the foreseeable future. The Company expects to
incur substantial and increasing research and development expenses, including
expenses related to additions to personnel, preclinical studies, clinical
trials, manufacturing and commercialization efforts. The Company will need to
raise substantial additional capital to fund its operations. The Company intends
to seek such additional funding through public or private equity or debt
financings from time to time, as market conditions permit. There can be no
assurance that additional financing will be available on acceptable terms, if at
all. If adequate funds are not available, the Company may be required to delay,
reduce the scope of, or eliminate one or more of its research and development
programs or obtain funds through arrangements with collaborative partners or
others that may require the Company to relinquish rights to certain of its
technologies, product candidates or products that the Company would otherwise
seek to develop or commercialize.

Net cash used in operations was $6.3 million for the nine months ended
September 30, 1996, compared to $1.4 million for the combined nine month period
ended September 30, 1995. This increase is primarily the net result of the
increased net loss for the period ended September 30, 1996, partially offset by
an increase in accrued liabilities. The Company's capital expenditures increased
to $0.8 million for the nine months ended September 30, 1996 from $0.1 million
for the combined nine month period ended September 30, 1995, primarily
representing investment in equipment associated with the centralized
radiolabeling capability. Net cash provided by financing activities increased to
$22.6 million for the nine months ended September 30, 1996 from $6.1 million for
the combined nine month period ended September 30, 1995, resulting from the sale
of the Company's Preferred Stock in April 1996.

The Company expects that its existing capital resources, including the net
proceeds of this offering and interest thereon, will be adequate to satisfy the
requirements of its current and planned operations through 1998. The Company's
future capital requirements will depend on a number of factors, including: the
scope and results of preclinical studies and clinical trials; continued progress
of the Company's research and development of potential products; the cost,
timing and outcome of regulatory approvals; the expenses of establishing a sales
and marketing force; the timing and cost of establishment or procurement of
requisite production, radiolabeling and other capacities; the cost involved in
preparing, filing, prosecuting, maintaining, defending and enforcing patent
claims; the need to acquire licenses to new technology; the status of
competitive products; and the availability of other financing.

21
<PAGE> 23

BUSINESS

OVERVIEW

Coulter Pharmaceutical is engaged in the development of novel drugs and
therapies for the treatment of people with cancer. The Company currently is
developing a family of cancer therapeutics based upon two platform technologies:
conjugated antibodies and tumor-activated peptide pro-drugs. The Company's most
advanced product candidate, the "B-1 Therapy," consists of a monoclonal antibody
conjugated with a radioisotope. In a Phase I/II clinical trial of the B-1
Therapy, 40 patients with low-grade or transformed low-grade non-Hodgkin's
lymphoma who had relapsed from previous chemotherapy regimens achieved an 82%
overall response rate and a 45% complete response rate. The Company has
commenced a pivotal Phase II/III clinical trial for the treatment of NHL in
low-grade and transformed low-grade patients refractory to chemotherapy. The
Company intends to file for U.S. Food and Drug Administration marketing approval
of its B-1 Therapy for this indication in the second half of 1998. The Company
believes that the B-1 Therapy, if successfully developed, could become the first
radioimmunotherapy approved in the United States for the treatment of people
with cancer. The Company has commenced and plans additional clinical trials to
broaden the label indication of the B-1 Therapy. The Company's TAP pro-drug
program is designed to broaden significantly the therapeutic windows of
conventional chemotherapies. The Company currently is developing a pro-drug
version of doxorubicin to treat certain solid tumor cancers with the objective
of commencing clinical trials in early 1998.

The Company was incorporated under the laws of Delaware in February 1995.
The Company's conjugated antibody program is based upon the antibody
therapeutics program which originated in the late 1970s at Coulter Corporation,
a recognized leader in the field of hematology. Upon its formation in February
1995, the Company acquired worldwide rights to the B-1 Therapy and related
intellectual property, know-how and other assets from Coulter Corporation.

BACKGROUND

Cancer: The Disease and Its Treatment

Cancer afflicts millions of people worldwide. It is currently the second
leading cause of death in the United States and is projected to account for more
than 550,000 deaths in 1996 alone. Some forty percent of Americans are expected
to develop cancer and, despite noteworthy success in the treatment of some
cancers, half of these cancer patients will die from the disease.

Cancer is a family of more than one hundred diseases that can be
categorized into two broad groups: (i) hematologic or blood-borne malignancies
(e.g., lymphomas and leukemias) and (ii) solid tumor cancers (e.g., lung,
prostate, breast and colon cancers). Both groups are generally characterized by
a breakdown of the cellular mechanisms that regulate cell growth and cell death
("apoptosis") in normal tissues.

Blood-borne cancers involve a disruption of the developmental processes of
blood cell formation, preventing these cells from functioning normally in the
blood and lymph systems. Death from blood-borne cancers ultimately is caused by
infection, organ failure or bleeding. While chemotherapy is the primary
treatment for blood-borne malignancies, many such malignancies are
radiosensitive and some localized lymphomas can be treated with radiation
therapy. Nonetheless, radiation therapy cannot be used in the treatment of most
blood-borne malignancies because the levels of radiation necessary to destroy
diseases that are widely disseminated within the body would result in severe
damage to the bone marrow of the patient, leading to life-threatening
suppression of the immune system, and other serious side effects.

In solid tumor cancers, malignant tumors invade and disrupt nearby tissues
and can also spread throughout the body or "metastasize." The impact of these
tumors on vital organs such as the lungs and the liver frequently leads to
death. Surgery is used to remove solid tumors that are accessible to

22
<PAGE> 24

the surgeon and can be effective if the cancer has not metastasized. Radiation
therapy also can be employed to irradiate a solid tumor and surrounding tissues
and is a first-line therapy for inoperable tumors, but side effects are a
limiting factor in treatment. Radiation therapy is used frequently in
conjunction with surgery either to reduce the tumor mass prior to surgery or to
destroy tumor cells that may remain at the tumor site after surgery. However,
radiation therapy cannot assure that all tumor cells will be destroyed and has
only limited utility for treating widespread metastases. While surgery and
radiation therapy are the primary treatments for solid tumors, chemotherapy and
hormonal treatments often are used as adjunctive therapies and also are used as
primary therapies for inoperable or metastatic cancers.

Chemotherapy, which typically involves the intravenous administration of
drugs designed to destroy malignant cells, is used for the treatment of both
solid tumors and blood-borne malignancies. Chemotherapeutic drugs generally
interfere with cell division and are therefore more toxic to rapidly dividing
cancer cells. Since cancer cells can often survive the effect of a single drug,
several different drugs usually are given in a combination therapy designed to
target overlapping mechanisms of cellular metabolism to overwhelm the ability of
cancer cells to develop resistance to chemotherapy. Combination chemotherapy is
used widely as first-line therapy for leukemias and lymphomas and has had
considerable success in the treatment of some forms of these cancers.
Nevertheless, partial and even complete remissions obtained through chemotherapy
often are not durable, and the cancer may reappear and/or resume its progression
within a few months or years of treatment. The relapsed patient's response
typically becomes shorter and shorter with each successive treatment regimen as
the cancer becomes resistant to the chemotherapy. Eventually, patients may
become "refractory" to chemotherapy, meaning that the length of their response,
if any, to treatment is so brief as to lead to the conclusion that further
chemotherapy regimens would be of little or no benefit.

Chemotherapeutic drugs are not sufficiently specific to cancer cells to
avoid affecting normal cells, especially those that are growing rapidly. As a
result, patients often experience debilitating side effects such as nausea,
vomiting, hair loss, anemia and fatigue, as well as life-threatening side
effects such as immune system suppression. Such side effects can limit the
effectiveness of therapy because the clinician must avoid exceeding the maximum
dose of drug that the patient can tolerate. Since dosages must be limited to
avoid unacceptable side effects, it may not be possible to administer
sufficiently high doses of chemotherapeutic drugs to overcome the natural
ability of cancer cells to become resistant. A number of chemotherapeutic agents
originally thought to have promise as cancer drugs have failed in the clinic
because the minimum effective dose exceeded the maximum tolerable dose. Ideally,
a chemotherapeutic agent would have a minimum effective dose well below the
maximum tolerable dose, thereby providing physicians with a wide "therapeutic
window" or a range of doses within which all patients could be treated
effectively.

In cases of certain severe blood-borne malignancies and metastatic solid
tumor cancers, bone marrow transplants ("BMT") may be performed to treat
patients who typically have exhausted all other treatment options. Transplants
generally are performed in connection with regimens of aggressive chemotherapy
and/or radiation therapy. While techniques are improving, BMTs are associated
with significant mortality and high rates of morbidity and remain a very
expensive alternative.

Emerging Methods of Treatment

Scientific progress in the elucidation of the underlying molecular biology
of cancer in recent years has yielded a number of promising treatment
approaches. These approaches generally are designed to enhance the specificity
and potency of cancer therapeutics, to improve overall efficacy and to reduce
side effects. The Company believes that two of the most promising of these
approaches are (i) monoclonal antibodies that bind to targeted cells to
stimulate the body's immune system and/or to deliver cytotoxic agents to destroy
malignant cells and (ii) modifications of conventional chemotherapeutic drugs
and drug formulations to improve efficacy by expanding their therapeutic
windows.

23
<PAGE> 25

Monoclonal Antibodies

The human immune system is composed of specialized cells, including B-cells
and T-cells, that function in the recognition, destruction and elimination of
disease-causing foreign substances and of virally infected or malignant cells.
Human antibodies, which are produced by the B-cells, play a vital role in the
proper functioning of the immune system. They have predetermined functions based
primarily upon their ability to recognize specific antigens, which are molecular
structures on the surface of disease-causing substances or diseased cells. Each
antigen serves as a binding site for the antibody specific to that antigen, and
each disease-causing substance or diseased cell can be identified by its
antigens.

The ability of specific antibodies to bind to specific antigens that are
expressed on the surface of targeted cells, and to trigger an immune system
attack on those cells, provides the theoretical basis for the development of
cancer immunotherapeutics. In the 1970s, researchers discovered techniques to
produce unlimited supplies of identical murine (mouse-derived) antibodies,
referred to as monoclonal antibodies, by cloning antibody producing cells that
were derived from hybridization of a single B-cell. These techniques provided
researchers with the tools to identify and study specific antigens and to
produce potential therapeutics. In principle, once an antigen expressed by
malignant cells has been identified, a monoclonal antibody specific to that
antigen can be created. If an antibody could be produced that binds to an
antigen expressed exclusively by human cancer cells, the antibody would be
specific to only those cells. As a result, the use of such a monoclonal antibody
as a therapeutic would have few, if any, side effects. However, the development
of such a therapy has proven to be more problematic than originally hoped.
Immunotherapies based solely upon monoclonal antibodies have had only limited
clinical effectiveness, particularly in solid tumors where the uneven supply of
blood throughout such tumors prevents adequate exposure of monoclonal antibodies
to malignant cells.

The effectiveness of a particular monoclonal antibody in the treatment of
cancer fundamentally is linked to the characteristics of the antigen to which it
binds. For example, while researchers have identified numerous antigens on
cancer cells that can be recognized by monoclonal antibodies, most of these
antigens are also expressed to some degree by other types of cells. An antibody
to such an antigen may not be sufficiently specific to the cancer cells to avoid
or minimize unintended side effects caused by damage to normal cells. Moreover,
the behavior of antigens following binding with an antibody is quite variable:
the bound antibody-antigen complex can remain on the cell surface, can be
internalized into the cell or can be released from the cell surface. Thus, the
identification of suitable antigens to serve as targets for therapeutic
monoclonal antibodies must account for these and other complexities.

Once a suitable antigen has been identified, researchers have found that
different antibodies binding to different sites on the antigen may not have the
same biological activity, introducing another element of variability. Antibodies
also differ in the degree to which they stimulate an immune system response and
in the extent to which they have other effects on the cell. Even the most
effective antibodies have limited biological activity. In addition, research
conducted since the late 1970s has revealed the importance of selecting the
proper type of antibody for use in the intended therapy. Murine antibodies are
appropriate in treatments involving a single dose or other short treatment
regimen where it is beneficial that the antibodies, together with any
therapeutic conjugate, are metabolized and cleared from the body fairly quickly.
Chimerized or humanized antibodies are desirable for multi-dose or chronic
treatment regimens as they reduce the risk of a human immune response to the
antibodies themselves. While these manipulations of the antibodies have
permitted more extended therapeutic regimens in some circumstances, they do not
overcome the inherent limitations in the biological activity of the underlying
antibodies. Thus, despite early expectations, no monoclonal antibody has yet
been shown to be effective as a stand-alone, first-line therapy in the treatment
of cancer.

Researchers have attempted to increase the effectiveness of antibodies by
attaching radioisotopes or other cytotoxic agents for use in
"radioimmunotherapy" or "chemoimmunotherapy," respectively.

24
<PAGE> 26

By using an antibody to deliver a radioisotope or other cytotoxic agent to the
targeted cells, the effect of the radiation or cytotoxic agent can be
concentrated in the immediate vicinity of malignant cells. Development of
effective radioimmunotherapies, however, presents an additional set of
challenges, including the need to select an appropriate radioisotope for the
intended therapy, to develop a reliable means of linking the radioisotope to the
antibody and to devise a therapeutic protocol that optimizes therapeutic effect
while minimizing undesirable side effects. The development of effective
chemoimmunotherapies presents similar challenges.

Enhancements of Conventional Chemotherapies

A number of organizations have explored methods of improving the delivery
of cytotoxic drugs to tumor cells, with the objective of expanding the
therapeutic window for these drugs in the treatment of cancer. Approaches that
have been commercialized include encapsulation of the drug in a liposome to
regulate the rate at which it is released and impregnation of an implantable
matrix with the drug to enable its delivery locally over time as the matrix
dissolves. Sustained release of cytotoxic drugs using liposomal formulations has
modestly enhanced the therapeutic window for these compounds, but instability of
the formulations and accumulations in the skin have produced undesirable side
effects. Surgical implantation of a matrix is limited inherently to the
treatment of localized tumor masses and is not applicable to blood-borne or
metastatic cancers.

Another approach, the development of pro-drugs, involves the chemical
modification of cytotoxic drugs to render them inactive until they are delivered
to, or into the proximity of, targeted cancer cells. The pro-drug is transformed
into its active form only in the presence of enzymes or other chemicals produced
by the tumor cells. The preferential activation of a pro-drug in the tumor
milieu increases its lethal effect on tumor cells while limiting side effects to
non-malignant tissues. Pro-drug versions of cytotoxic drugs offer the potential
to broaden significantly the therapeutic windows of such drugs beyond that which
can be achieved using existing approaches such as liposomal formulations.
Challenges that have constrained the development of effective pro-drugs to date
have included the inability to construct or identify suitable tumor-specific
activation mechanisms and difficulties in designing pro-drugs that will have
adequate stability in circulation.

COULTER PHARMACEUTICAL'S APPROACH

Coulter Pharmaceutical is developing a family of cancer therapeutics to
address the shortcomings of current therapies based upon two platform
technologies: (i) conjugated antibodies (primarily radioimmunotherapies) and
(ii) tumor-activated peptide pro-drugs.

The Company is developing conjugated antibody therapies to overcome the
inherent limitations of monoclonal antibodies when used as stand-alone
therapeutics and to provide advantages over current chemotherapy and radiation
therapy treatments. The Company believes that the B-1 Therapy, its first product
candidate, incorporates each of the principle attributes of an effective
radioimmunotherapy for the treatment of NHL: (i) an antigen specific to B-cells,
(ii) a therapeutically active monoclonal antibody, (iii) the radioisotope
appropriate for the disease profile and (iv) an optimized therapeutic protocol.
In a Phase I/II clinical trial conducted at the University of Michigan Medical
Center, 40 patients with low-grade and transformed low-grade NHL, who on average
had failed more than three prior treatment regimens with chemotherapy, achieved
an 82% overall response rate and a 45% complete response rate. The B-1 Therapy
is currently the subject of a pivotal Phase II/III trial for the treatment of
low-grade and transformed low-grade NHL patients refractory to chemotherapy as
its initial indication. To broaden this initial label indication, the Company
currently is planning to commence a Phase III/IV "post-approval" clinical trial
in patients in first or second relapse and also has commenced a Phase II
clinical trial of its B-1 Therapy in patients newly diagnosed with low-grade
NHL. The Company believes that this Phase II trial is the first clinical trial
of a radioimmunotherapy as a stand-alone, first-line treatment for people with
cancer. See " -- Clinical Results and Development Plan."

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<PAGE> 27

The Company believes that radioimmunotherapies will emerge as important
treatments for blood-borne cancers due to the radiosensitivity of these
malignancies and the ready accessibility of the blood and lymph systems to
monoclonal antibodies. Radioimmunotherapy also may become an important
adjunctive therapy for the treatment of certain solid tumor cancers following
surgery, radiation therapy or chemotherapy, where it may be useful in
eliminating circulating and other undetected malignant cells missed by primary
therapies. In the future, the Company intends to use its expertise in conjugated
antibodies to expand beyond radioimmunotherapy to develop effective
chemoimmunotherapies for the treatment of certain cancers.

The Company's second technology platform, its TAP pro-drug technology, has
the potential to broaden significantly the therapeutic windows of conventional
chemotherapies based on the Company's understanding of biochemical mechanisms
involved in metastasis and the identification of a potential means for
exploiting these mechanisms. TAP pro-drug versions of existing cytotoxic drugs
are designed to be activated preferentially in the proximity of metastatic
cancer cells, yet stable in circulation and in normal tissues. Accordingly,
relatively larger quantities of cytotoxic agents are expected to reach and enter
malignant cells as opposed to normal cells, which could permit a significant
increase in maximum tolerated dosages, potentially overcoming drug resistance in
cancer cells. The Company also believes that cytotoxic agents currently
considered too toxic to be used in their unmodified forms may be suitable
candidates to become TAP pro-drugs.

COULTER PHARMACEUTICAL'S STRATEGY

The Company's goal is to develop and commercialize novel drugs and drug
therapies for the treatment of people with cancer based on selected insights
from the emerging understanding of the molecular biology of malignant cells. The
Company's conjugated antibody program is based upon the antibody therapeutics
program which originated in the late 1970s at Coulter Corporation, a recognized
leader in the field of hematology. Upon its formation, Coulter Pharmaceutical
obtained worldwide rights to the B-1 Therapy and related intellectual property,
as well as a significant body of expertise pertaining to the selection and
development of suitable antibodies and appropriate radioisotopes (and other
cytotoxic agents) and methods for devising optimized therapies. The Company's
TAP pro-drug program is based upon technology that has been under development at
Catholique Universite de Louvain, Belgium, since 1986 and which was exclusively
licensed to the Company in 1996. Based on this foundation, the Company has
established a strategy comprised of the following primary elements:

Pursue Expedited Initial Approval of the B-1 Therapy. The Company intends
to seek expedited FDA marketing approval for its B-1 Therapy for the treatment
of low-grade and transformed low-grade NHL in patients who are refractory to
chemotherapy, while simultaneously pursuing studies to broaden the initial label
indication. The recently commenced pivotal Phase II/III clinical trial of the
B-1 Therapy has been designed to comply with the guidelines of the
Clinton-Kessler Cancer Initiative, which is intended to accelerate the testing,
review and approval of therapies for patients suffering from life-threatening or
disabling cancers who have limited treatment options. Based on this initiative
and on guidance from FDA staff, the Company is focusing on chemotherapy
refractory patients in this pivotal Phase II/III clinical trial. The trial will
include 60 patients and a post-treatment follow-up period of six months. The
Company intends to file for FDA marketing approval for this indication in the
second half of 1998. The Company also intends to seek approval for other NHL
indications and, accordingly, is currently planning to commence a Phase III/IV
"post-approval" clinical trial during the second half of 1997 in patients with
low-grade or transformed low-grade NHL in first or second relapse. The Company
also has commenced a Phase II clinical trial of the B-1 Therapy as a
stand-alone, first-line treatment for patients newly diagnosed with low-grade
NHL.

Establish Sales and Marketing Capability. The Company intends to market
and sell its products in the United States through a direct sales force and,
where appropriate, in collaboration with marketing partners. This strategy is
intended to enable the Company to establish a commercial presence in the cancer
therapeutics market with its B-1 Therapy, if approved, and to create the
capability to sell other products that it may develop or in-license. The Company
believes that an established sales and

26
<PAGE> 28

marketing capability will enable it to compete effectively for opportunities to
license or distribute later-stage product candidates and even approved products.
Internationally, the Company intends to distribute its products through
marketing partners.

Leverage Existing Technology Platforms. The Company intends to develop
additional products based on the lead compounds being generated in its TAP
pro-drug program and by leveraging its expertise in conjugated antibodies to
develop other immunotherapies. In its TAP pro-drug program, the Company
currently is engaged in preclinical development of Super-Leu-Dox, a pro-drug
version of doxorubicin, with the objective of commencing clinical trials in
early 1998. The Company also intends to apply its TAP pro-drug technology to
other classes of cytotoxic drugs, including the vinca alkaloids, to broaden
significantly the therapeutic windows of such agents. The Company is evaluating
potential conjugated antibody therapies for the treatment of other blood-borne
malignancies and selected solid tumor cancers.

Leverage Development Expertise. The Company believes that it has built
substantial product development capabilities and expertise in the cancer field
due in part to the advanced stage of the B-1 Therapy program at the time that it
was obtained from Coulter Corporation. The Company believes it can leverage this
development expertise to accelerate the development of other products in the
cancer therapeutics field. The Company intends to pursue other product
candidates derived from sponsored research or available for in-licensing in both
blood-borne malignancies and solid tumor cancers, particularly in areas that may
be complementary to its existing technology platforms.

Utilize Contract Manufacturers. The Company intends to manufacture its
commercial products through contract manufacturers. This strategy is expected to
(i) accelerate the scale-up of manufacturing processes to commercial scale, (ii)
reduce initial capital investment, (iii) result in competitive manufacturing
costs and (iv) provide access to a wide range of manufacturing technologies.

B-1 RADIOIMMUNOTHERAPY FOR NON-HODGKIN'S LYMPHOMA

The Company's first product candidate, the B-1 Therapy, is in clinical
trials for the treatment of NHL. The Company believes that the B-1 Therapy, if
successfully developed, could become the first radioimmunotherapy approved in
the United States for the treatment of people with cancer.

Non-Hodgkin's Lymphoma and Its Current Treatment

Non-Hodgkin's lymphomas are blood-borne cancers of the immune system, all
sharing the common feature of a proliferation of malignant B-cells. According to
statistics from the National Cancer Institute, approximately 270,000 people are
afflicted with NHL in the United States. More than 52,000 new cases are expected
to be diagnosed in 1996. NHL is currently the sixth leading cause of death among
cancers in the United States and has the second fastest growing mortality rate.

NHL is categorized by histology as either low-, intermediate- or high-grade
disease. These classifications differ significantly with respect to the speed of
disease progression, the pattern of response to and relapse after conventional
chemotherapy and the average life expectancy. In the United States, the Company
estimates that approximately 140,000 patients have low-grade or transformed
low-grade, 100,000 have intermediate-grade and 30,000 have high-grade NHL.
Initially, the Company is pursuing clinical development of its B-1 Therapy for
the treatment of patients with low-grade and transformed low-grade NHL. Patients
with low-grade NHL have a fairly long life expectancy from the time of diagnosis
with a median survival of more than six years. While patients with low-grade and
transformed low-grade NHL can often achieve one or more remissions with
chemotherapy, eventually these patients relapse. Relapsed patients are more
difficult to treat as remissions are harder to achieve and, if achieved, last
for shorter periods of time as the disease becomes more resistant to
chemotherapy and/or transforms to an intermediate- or high-grade histology.
Patients ultimately die from the disease or from complications of treatment.
Intermediate- and high-grade NHL are more rapidly growing forms of the disease.
However, approximately one-half of all intermediate- and high-grade cases can be
treated effectively with conventional chemotherapy.

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<PAGE> 29

Description of the B-1 Therapy

The Company's B-1 Therapy consists of a radioisotope, (131)I, combined
with a monoclonal antibody that recognizes and binds to the CD20 antigen, an
antigen commonly expressed on the surface of B-cells primarily during that stage
of their life cycle when NHL arises. The B-1 Therapy is administered to patients
in a proprietary therapeutic protocol consisting of a single, two-dose regimen.
The Company believes that the potential benefits of its B-1 Therapy result from
the following four constituent elements:

Proprietary Protocol

The B-1 Therapy is administered intravenously in a single, two-dose regimen
consisting of an imaging dose, three gamma camera scans and a therapeutic dose.
The proprietary protocol is flexible: the timing of the gamma camera scans and
of the therapeutic dose can be adjusted to some extent to accommodate the
schedules of clinicians and patients. The chart below depicts an example of the
B-1 Therapy protocol as proposed for use in the Company's current Phase II/III
pivotal trial. The imaging dose consists of 50 mg of B-1 Antibody trace-labeled
with 5 millicuries ("mCi") of (131)I. Immediately after the imaging dose, the
patient is scanned with a gamma camera to provide an image of the initial
distribution of radiolabeled antibody in the patient's body. The patient returns
for additional gamma camera scans on the third and eighth days of the therapy to
show how much of the radiolabeled antibody is bound to targeted cells and how
much has been eliminated from the body at each point in time. This information
is used to calculate the correct therapeutic dose to achieve a total body
radiation of 75 centigray ("cGy"). The amount of radiolabeled antibody needed to
achieve this optimal radiation level ranges from approximately 50 to 180 mCi of
(131)I due to wide patient-to-patient variability in the rates at which the
antibody is eliminated. Both the imaging dose and the therapeutic dose
immediately are preceded by a 450 mg dose of unlabeled B-1 Antibody to improve
the targeting of malignant B-cells by the radiolabeled B-1 Antibody. These
pre-doses of unlabeled B-1 Antibody serve to protect the spleen, liver and other
vital organs from excessive radiation exposure by binding to some of the CD20
antigens on circulating B-cells which naturally accumulate in these organs.
Additionally, the patient takes non-radioactive iodine drops orally during the
course of the therapy to prevent uptake of (131)I into the thyroid gland.

[DIAGRAM OF STEPS OF PROPRIETARY PROTOCOL]

Relying upon the imaging properties of (131)I to account for critical
patient-to-patient variability in the rate at which the antibody is cleared
makes it possible to deliver predictably a total body radiation dose that has
been determined to maximize therapeutic benefit with manageable side effects and
without the need for bone marrow rescue. Because the B-1 Therapy is administered
in a single, two-dose regimen and is well tolerated, it is expected to require
relatively little patient follow-up and physician intervention. In contrast,
chemotherapy requires administration of several cytotoxic agents in repeated
cycles of therapy over a six- to eight-month period during which the patient
must be monitored carefully and/or treated for side effects. Although patients
to date have been kept in the hospital to monitor radiation levels for up to
three days following the therapeutic dose, under recently

28
<PAGE> 30

enacted regulations of the Nuclear Regulatory Commission, the Company believes
that the B-1 Therapy can be administered primarily on an outpatient basis.
However, some hospitals may be required to administer the therapeutic dose on an
inpatient basis under their own or under applicable state or local regulations.
See "-- Radioactive and Other Hazardous Materials."

CD20 Antigen

The CD20 antigen is a highly selective cell surface marker found on
B-cells: expression of the CD20 antigen is limited to B-cells, is found on 95%
of such cells and occurs on B-cells primarily during that stage of their life
cycle when NHL arises. The CD20 antigen is not expressed by stem cells, B-cell
progenitor cells or plasma cells; thus, these cells are not targeted by the B-1
Therapy. As a result, while the B-1 Therapy targets and destroys both normal and
malignant B-cells, unaffected plasma cells continue to function in the immune
system and B-cell populations can be regenerated after therapy by unaffected
B-cell progenitor cells.

[DIAGRAM OF LIFE-CYCLE OF A B-CELL]

In addition, the CD20 antigen is neither internalized by the B-cell nor
released into circulation after it has been bound to the B-1 Antibody, ensuring
that the antibody-radioisotope conjugate will remain in place to destroy the
B-cell.

The B-1 Antibody

The B-1 Antibody exhibits very high specificity for the CD20 antigen and,
because it is a murine sub-class IgG(2)a antibody, is capable of recruiting an
immune response to those B-cells to which it binds. Further, the B-1 Antibody
directly affects cell function, triggering apoptosis in a portion of the B-cells
to which it binds. The use of a murine antibody promotes rapid clearance of
unbound radiolabeled antibody from circulation, which reduces radiotoxicity. Due
to the impaired state of the NHL patient's immune system and the short course of
therapy, the human immune response to the murine antibody ( the "HAMA response")
has been minimal to date and has not been a limiting factor in treatment under
the protocol.

The B-1 Antibody used in the Company's B-1 Therapy was generated in 1978 by
the Dana-Farber Cancer Institute in collaboration with Coulter Corporation. The
B-1 Antibody has been available commercially from Coulter Corporation as a
diagnostic reagent since 1982 and is generally accepted as the reference
standard for the identification of B-cells. Rights to the antibody for
therapeutic applications were transferred to Coulter Pharmaceutical from Coulter
Corporation in February 1995.

(131)Iodine Radioisotope

The (131)I radioisotope was selected over other radioisotopes for use in
the B-1 Therapy because it (i) produces both gamma emissions which permit
imaging for dose optimization and compact beta emissions for a concentrated
therapeutic effect, (ii) provides additional commercial and clinical benefits
based on its relatively long half-life, (iii) has characteristics which reduce
the risk of bone

29
<PAGE> 31

marrow damage without sacrificing efficacy and (iv) has long-established medical
uses in other cancer treatments.

Gamma emissions from (131)I permit dose optimization by enabling clinicians
to calculate the actual clearance rate of radiolabeled antibody for each
patient. Use of the same radioisotope for both the imaging and the therapeutic
dose provides assurance that the clearance rates observed in imaging also will
apply for the therapeutic dose. Having established the patient's actual
clearance rate, the clinician can determine reliably the therapeutic dose which
will deliver the optimized level of total body radiation.

The lower relative energy and short path length of the beta emission of
(131)I concentrate the destructive energy of the radioisotope on the B-cell to
which the antibody is bound and, in a so-called bystander effect, on adjacent
B-cells in the microscopic clusters of malignant cells which are common to NHL.
Moreover, (131)I causes minimal damage to nearby normal tissues in contrast to
other radioisotopes that have longer path length beta emissions which extend too
far beyond the targeted area.

The relatively long half-life of (131)I, approximately eight days, permits
radiolabeling at a centralized facility to ensure consistent quality, increase
the number of clinical sites capable of administering this radioimmunotherapy
and reduce overall manufacturing costs. The eight-day half-life also provides
the therapeutic advantage of exposing bound malignant cells to radiation over a
longer period of time.

When bound to a B-cell, (131)I's lower relative energy and short path
length, together with its relatively long half-life, minimize bone marrow damage
while optimizing the therapeutic effect of the radiation. Further, as the B-1
Antibody is metabolized, the released (131)I radioisotope is eliminated rapidly
and unlike other radioisotopes does not concentrate naturally in the bone
matrix.

(131)Iodine is an inexpensive radioisotope that has long-established
medical uses in other cancer treatments. Hence, medical facilities and
clinicians are accustomed to its handling, use and disposal and already have
developed the appropriate procedures and facilities for its safe therapeutic
application.

Clinical Results and Development Plan

The B-1 Therapy was developed in the course of an extended Phase I/II dose
escalation clinical trial at the University of Michigan Medical Center which
completed patient enrollment in early 1996. This trial was used to develop and
refine the proprietary therapeutic protocol, to determine the maximum tolerated
dose of total body radiation and to assess the safety and efficacy profile of
treatment with the radiolabeled B-1 Antibody in patients representing a full
range of NHL histologies. Based on the data generated in this clinical trial,
the Company has decided to pursue clinical development of the B-1 Therapy for
the treatment of low-grade and transformed low-grade NHL.

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<PAGE> 32

Phase I/II Trial Results

A total of 59 patients were enrolled in the Phase I/II dose escalation
clinical trial. Preliminary data from this clinical trial were first published
in August 1993 in the New England Journal of Medicine and updated, interim
clinical results were reported in July 1996 in the Journal of Clinical Oncology.

<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
RELAPSED AND REFRACTORY RELAPSED PATIENTS ONLY REFRACTORY PATIENTS ONLY
PATIENTS
- ------------------------------------------------------------------------------------------------------------------
LOW-GRADE AND
TRANSFORMED No. of Overall Complete No. of Overall Complete No. of Overall Complete
LOW-GRADE NHL PATIENTS Patients Response Response Patients Response Response Patients Response Response
- ------------------------------------------------------------------------------------------------------------------
- All Patients 40 82% 45% 17 94% 64% 23 73% 30%
- Treated Patients Only 36 86% 50% 14 100% 78% 22 77% 31%
- Treated Patients 28 92% 46% 9 100% 66% 19 89% 36%
Excluding Prior
BMT Recipients
- ------------------------------------------------------------------------------------------------------------------
</TABLE>

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

"Overall response" is the sum of complete and partial responses.

"Complete response" is defined as the disappearance of all detectable
disease and all signs and symptoms of the disease. A complete response
must be verified by two measurements no less than four weeks apart and
by a bone marrow biopsy. A complete response classification also
requires that the measurements detect no progression at any disease
site and no new sites of disease.

"Partial response" is defined as a 50% or greater reduction in
detectable disease, as verified by two measurements no less than four
weeks apart. A partial response classification also requires that the
measurements detect no progression at any disease site and no new
sites of disease.

"Relapsed patients" are patients who have failed previous regimens of
chemotherapy but who experienced a response duration that lasted six
months or longer after their last treatment regimen.

"Refractory patients" are patients who received two or more previous
regimens of chemotherapy and who experienced no response or a response
duration that lasted less than six months after their last treatment
regimen.

Of the 59 patients enrolled in this trial, 40 had low-grade or transformed
low-grade NHL, which are the histologies the Company is pursuing in its clinical
trials. These 40 patients had failed on average more than three prior treatment
regimens with chemotherapy. These patients exhibited an 82% overall response
rate and a 45% complete response rate. This 40-patient cohort included eight
patients who previously had received and failed an autologous bone marrow
transplant prior to participation in the clinical trial. The 40 patients in this
cohort received total body radiation doses of up to 85 cGy in this dose
escalation trial. Of these patients, 17 have been classified as relapsed and 23
as refractory to chemotherapy. The overall response rate in relapsed patients
was 94% and the complete response rate was 64%. The overall response rate in
refractory patients was 73% and the complete response rate was 30%. Four out of
the 40 patients did not receive the therapeutic dose of radiolabeled antibody
due to their rapidly deteriorating medical condition or the presence of a HAMA
response, which arose prior to May 1993 in the early stages of the Phase I/II
dose escalation clinical trial under a non-optimized treatment protocol. Of the
36 patients who received a therapeutic dose, 50% experienced a complete response
with an average duration of response of 18.1 months, with a range of two to 44
months as of October 1996. As of such date, nine of these patients were still in
complete response.

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<PAGE> 33

On an intent-to-treat basis, which includes all enrolled patients whether
treated or not, the 59 enrolled patients achieved an overall response rate of
71% and a complete response rate of 32%. Of the 19 patients who had
intermediate- or high-grade NHL, the overall response rate was 47% and the
complete response rate was 5%. While response rates in these histologies were
encouraging, the Company currently is pursuing clinical development of the B-1
Therapy in low-grade and transformed low-grade NHL patients.

The B-1 Therapy was generally well tolerated by patients. Dose limiting
side effects were hematologic, consisting primarily of reversible declines in
blood cell counts. These toxicities were generally mild to moderate, with no
patient requiring a bone marrow transplant. Other side effects observed were
mild and consisted primarily of temporary flu-like symptoms.

Results presented are based upon interim data which have been submitted to
the FDA, certain portions of which have not yet been published in a peer
reviewed publication. No assurance can be given that the Company's future
clinical results will be consistent with the results of the Phase I/II dose
escalation trial, which was conducted at a single site with a relatively small
number of patients per NHL histology and disease stage and had different
clinical objectives than the Company's current or planned clinical trials. See
"Risk Factors -- Uncertainties Related to Product Development."

Clinical Development of the B-1 Therapy

Based on the foregoing results of the Phase I/II clinical trial, the
Company is conducting three additional clinical trials to support an application
to the FDA for the initial marketing approval of the B-1 Therapy: (i) a pivotal
Phase II/III clinical trial for the treatment of patients refractory to
chemotherapy, (ii) a Phase II dosimetry validation clinical trial and (iii) a
Phase II clinical trial to evaluate the extent to which the therapeutic benefit
of the B-1 Therapy is derived from the combination of the B-1 Antibody and the
radioisotope, in comparison to the B-1 Antibody alone. To broaden the initial
label indication, the Company also has commenced a Phase II clinical trial of
its B-1 Therapy in patients newly diagnosed with low-grade NHL and plans to
commence a Phase III/IV "post-approval" clinical trial in patients with
low-grade or transformed low-grade NHL in first or second relapse.

Pivotal Phase II/III Clinical Trial. The Company's pivotal Phase II/III
clinical trial, which commenced in December 1996, is designed to enroll a total
of 60 patients who have low-grade and transformed low-grade NHL, who have proven
refractory to chemotherapy and who have not received prior bone marrow
transplants. This clinical trial, to be conducted at six to eight clinical
sites, is focused on the refractory segment of this NHL population in an effort
to qualify for expedited FDA approval of the B-1 Therapy under the
Clinton-Kessler Cancer Initiative. Based on this initiative and on guidance from
FDA staff, the Company designed this clinical trial with a relatively short
post-treatment follow-up period of six months. Because of the limited
alternative treatment options for refractory patients, each patient's response
to the B-1 Therapy will be measured against his or her own response to the
previous regimen of chemotherapy, rather than by comparison to patients in a
separate control arm.

Phase II Dosimetry Validation Clinical Trial. Prior to commencing the
pivotal Phase II/III clinical trial, the Company conducted a dosimetry
validation clinical trial in a total of 47 patients, designed to demonstrate
that the B-1 Therapy's treatment protocol could be implemented consistently at
multiple clinical sites. In connection with this clinical trial, the Company
also was able to refine its proprietary protocol to streamline the therapeutic
dose calculation, establishing that accurate antibody elimination rates could be
determined from three gamma camera scans. Based upon interim data from this
clinical trial showing consistent implementation of the treatment protocol, the
FDA agreed in September 1996 that this clinical trial could be ended. The
Company then was able to commence its pivotal Phase II/III clinical trial in
December 1996.

Phase II Unlabeled Versus Labeled Antibody Clinical Trial. In August 1996,
the Company commenced a Phase II clinical trial at a single site in 28 patients
with relapsed, low-grade NHL. One-

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<PAGE> 34

half of the patients will receive two 500 mg doses of unlabeled B-1 Antibody
eight days apart in a treatment regimen that is parallel to the B-1 Therapy; the
other half will receive the B-1 Therapy in a treatment protocol equivalent to
that used in the pivotal Phase II/III clinical trial. The objective of this
clinical trial is to assess the incremental clinical activity from radiolabeling
the B-1 Antibody as compared to the clinical activity of the unlabeled B-1
Antibody alone. Administration of the unlabeled B-1 Antibody has not been
designed for use as a stand-alone therapy, nor has the treatment regimen been
optimized for such use. The Company is evaluating the possibility of expanding
this study to other sites. The Company's objective is to complete enrollment of
patients in this clinical trial in the second half of 1997.

Phase III/IV "Post-Approval" Clinical Trial. To comply with the
Clinton-Kessler Cancer Initiative and to broaden the label indication, the
Company plans to carry out a randomized, controlled Phase III/IV"post-approval"
clinical trial in patients with low-grade or transformed low-grade NHL in first
or second relapse. To evaluate the efficacy and safety of the B-1 Therapy versus
conventional chemotherapy, the Phase III/IV clinical trial will be conducted
with a control arm in which a portion of the patients in the trial will be
treated with a further regimen of conventional chemotherapy. The Company
currently expects to commence this clinical trial during the second half of
1997.

Phase II First-Line, Stand-Alone Treatment Clinical Trial. In June 1996,
the Company has also commenced a 60-patient Phase II clinical trial at a single
site to evaluate the safety and efficacy of the B-1 Therapy as a first-line,
stand-alone treatment of patients with newly diagnosed low-grade NHL. This
single-arm clinical trial includes a planned interim analysis after 14 patients
have been treated. The Company's objective is to complete patient enrollment for
this clinical trial by early 1998.

The ability of the Company to conduct and complete its ongoing and planned
clinical trials in a timely manner is subject to a number of uncertainties and
risks, including the rate at which patients can be accrued in each clinical
trial, the Company's ability to obtain necessary regulatory approvals, the
capacity of the Company's contract manufacturers to supply unlabeled and
radiolabeled B-1 Antibody as needed for patient treatment and the occurrence of
unanticipated adverse events. Any suspension or delay of one or more of such
clinical trials could have a material adverse effect on the Company's business,
financial condition and results of operation. See "Risk Factors -- Uncertainties
Related to Product Development," "-- Government Regulation; No Assurance of
Regulatory Approvals," and "-- Dependence on Suppliers; Manufacturing and
Scale-up Risk."

Other Clinical Trials

The radiolabeled B-1 Antibody has been the subject of other clinical trials
to assess the efficacy of using the radiolabeled B-1 Antibody to deliver the
high levels of radiation necessary to prepare patients for autologous bone
marrow transplants. The conventional preparation for autologous bone marrow
transplants is chemotherapy and total body irradiation. These clinical trials
were designed to demonstrate improved tolerability, response rate and duration
of response.

The first of two clinical trials conducted at the University of Washington
Cancer Center and the Fred Hutchinson Cancer Research Center tested radiolabeled
B-1 Antibody as a single agent to prepare patients for an autologous bone marrow
transplant by achieving a total body radiation level of up to 570 cGy (over
seven times the B-1 Therapy's dose). As reported in The Lancet in August 1995,
of the 21 patients receiving the full radiotherapeutic regimen, the overall
response rate was 86% and the complete response rate was 73%. High incidences of
radiotoxicity-related side effects were reported due to the extreme dosages
employed. Interim data from this clinical trial were published in the New
England Journal of Medicine in October 1993.

The second clinical trial, currently ongoing, is designed to test the
combination of similarly high doses of radiolabeled B-1 Antibody and standard
doses of chemotherapy in preparation for autologous bone marrow transplant. This
clinical trial has enrolled 23 patients since its commencement in January 1995.
Data from this clinical trial have not yet appeared in a peer reviewed
publication.

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<PAGE> 35

The Company intends to commence a dose refinement clinical trial in the
second half of 1997 for the combined use of lower doses of radiolabeled B-1
Antibody and standard chemotherapy as preparation for autologous bone marrow
transplant.

TAP PRO-DRUG PLATFORM

The Company's second technology platform, its tumor-activated peptide
pro-drug technology, has the potential to broaden significantly the therapeutic
window of cytotoxic agents. The TAP pro-drug technology is based upon an
understanding of the biochemical mechanisms utilized by cancer cells to
metastasize and the identification of a potential means for exploiting these
mechanisms and is being developed in collaboration with the Catholique
Universite de Louvain, Belgium. TAP pro-drugs are designed to be (i) activated
preferentially at the tumor site by enzymes secreted by the tumor, (ii) stable
in circulation and in normal tissues and (iii) unable to penetrate normal cells
or malignant cells until activated. As a result, relatively larger quantities of
cytotoxic agents are expected to reach and enter malignant cells as opposed to
normal cells, which could permit a significant increase in maximum tolerated
dosages, potentially overcoming drug resistance in cancer cells.

The Company's lead preclinical pro-drug candidate is a pro-drug version of
doxorubicin known as Super-Leu-Dox. Doxorubicin is an off-patent
chemotherapeutic drug which currently is used in the treatment of a number of
solid tumor cancers, including breast, prostrate, ovarian and soft-tissue
sarcoma cancers. Super-Leu-Dox is based on a proprietary peptide of four amino
acids (a "tetrapeptide") that can be linked to doxorubicin's active site. In the
first step of a two-step activation process, the extracellular tumor enzyme
cleaves three amino acids from the tetrapeptide leaving a leucine amino
acid-doxorubicin conjugate that is able to penetrate cells. Since this first
activation step occurs in the immediate vicinity of tumor cells that are
secreting the enzyme, the probability that the cytotoxic drug will enter tumor
cells as opposed to normal cells is increased. Moreover, the conjugate remains
inactive inside the cell until the remaining leucine is removed from
doxorubicin's active site by an intracellular enzyme. Although it is expressed
in both normal and tumor cells, this intracellular enzyme is present in tumor
cells in concentrations three to five times higher than in normal cells. As a
result, the doxorubicin is activated to a greater extent in tumor cells relative
to normal cells.

This two-step activation process is designed to produce a significantly
higher ratio of active to inactive doxorubicin in cancer cells relative to
normal cells. In in vitro studies of Super-Leu-Dox, researchers have found that
the concentration of activated to inactivated doxorubicin in tumor cells was 40
times higher than in normal cells. These results, if confirmed in clinical
trials, offer the potential to improve significantly the therapeutic window of
doxorubicin. The Company currently plans to complete preclinical development of
Super-Leu-Dox during 1997 and to commence clinical trials during early 1998.

Prior to the licensing of the TAP pro-drug technology by Coulter
Pharmaceutical, an earlier generation leucine-doxorubicin conjugate was tested
as a stand-alone therapy for the treatment of solid tumors in two separate dose
escalation clinical trials in Europe. A total of 59 patients were enrolled in
these clinical trials, and patients safely tolerated doses well in excess of
those associated with unmodified doxorubicin. Results from these clinical
trials, along with data from preclinical studies, will be used by the Company to
select the initial indication to pursue in clinical trials of Super-Leu-Dox.
Selection of the particular indication or indications to be evaluated in such
clinical trials has not been finalized.

While the Company will focus initially on previously approved
chemotherapeutic drugs, it also plans to evaluate TAP pro-drug versions of
cytotoxic agents currently considered too toxic to be used in their unmodified
forms. The Company believes that the TAP pro-drug technology potentially can be
applied to several classes of cytotoxic agents, including the vinca alkaloids,
which are used commonly to treat blood-borne malignancies and some solid tumors.
The Company also plans to develop and evaluate other peptide structures for
possible use in pro-drug versions of cytotoxic agents and other cancer
therapeutics.

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<PAGE> 36

MANUFACTURING

The Company intends to utilize contract manufacturers for most of the
preclinical and clinical requirements for its potential products and for all of
its commercial needs. This strategy is expected to (i) accelerate the scale-up
of manufacturing processes to commercial scale, (ii) reduce initial capital
investment, (iii) result in competitive manufacturing costs, and (iv) provide
access to a wide range of manufacturing technologies. For its clinical trials of
the B-1 Therapy, the Company currently is supplying B-1 Antibody to clinical
trial sites from an existing, finite inventory of the antibody produced by
Coulter Corporation from the B-1 Antibody cell line originally developed by the
Dana-Farber Cancer Institute in 1978. Labeling with (131)I currently is
performed by radiopharmacies at the individual clinical trial sites.

Pursuant to a development contract with the Company, Lonza has re-cloned
the B-1 Antibody cell line to improve the productivity of the cell line in
intermediate-scale production and currently is preparing to supply the B-1
Antibody for use in ongoing clinical trials and to meet initial commercial
requirements. In order to begin using Lonza-produced material in clinical
trials, the Company must seek an FDA clearance of an IND supplement showing that
the Lonza-produced material is biologically equivalent to the material currently
in use in clinical trials. To date, Lonza has produced three batches of the B-1
Antibody under GMP conditions. Lonza-produced B-1 Antibody has been tested to
confirm biological equivalency to the existing inventory of B-1 Antibody.
Subject to clearance by the FDA, the Company plans to start using Lonza-produced
antibody in its clinical trials of the B-1 Therapy in early 1997. There can be
no assurance that the FDA will provide such clearance in a timely manner, if at
all, and that clinical trials will not be delayed or disrupted as a result of
the planned transition to Lonza-produced material.

While radiolabeling of the B-1 Antibody at the individual trial sites has
been sufficient to date to support clinical trials, the Company believes that
radiolabeling should be performed at a central site to supply clinics that do
not have requisite radiolabeling capability, to ensure consistency and to reduce
cost. To this end, the Company has contracted with Nordion to develop a process
for radiolabeling the B-1 Antibody centrally. Further, the Company is in
negotiations with Nordion to establish a centralized radiolabeling facility and
to supply radiolabeled B-1 Antibody, and the Company plans to switch to
centrally radiolabeled antibody from Nordion in mid-1997, for both completion of
clinical trials and commercial supplies. However, before using Nordion-labeled
material, an IND supplement must be cleared by the FDA. There can be no
assurance that contracts with Nordion will be entered into in a timely manner,
if at all, or that the FDA will provide such clearance in a timely manner, if at
all, and that clinical trials will not be delayed or disrupted as a result.

Thus, if the B-1 Therapy is developed successfully and is approved for
marketing by the FDA, the Company expects that production for commercialization
will consist of (i) production of bulk B-1 Antibody by Lonza, (ii) the filling
and labeling of individual product vials with B-1 Antibody by another
third-party supplier, and (iii) radiolabeling of B-1 Antibody at Nordion. While
the Company plans to develop additional suppliers of these services, it expects
to rely on its current suppliers for all or a significant portion of its
requirements for the B-1 Therapy for the foreseeable future. Radiolabeled
antibody cannot be stockpiled against future shortages due to the eight-day
half-life of the (131)I radioisotope. Accordingly, any change in the Company's
existing or planned contractual relationships with, or interruption in supply
from, its third-party suppliers could adversely affect the Company's ability to
complete its ongoing clinical trials and to market the B-1 Therapy, if approved.
Any such change or interruption would have a material adverse effect on the
Company's business, financial condition and results of operators. See "Risk
Factors -- Dependence on Suppliers; Manufacturing and Scale-up Risk."

The Company believes that the products it expects to develop in its TAP
pro-drug program can be produced with standard chemical synthesis processes and
expects to utilize third parties to meet clinical trial and any commercial
requirements for these products. The Company currently intends to produce these
products in Belgium in order to take advantage of local government research
grants that

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<PAGE> 37

are providing support for the TAP pro-drug program. The Company is in early
discussions with potential manufacturers of Super-Leu-Dox, its initial pro-drug
product candidate.

MARKETING AND SALES

The Company intends to market its products in the United States through its
own sales force and, where appropriate, in collaboration with marketing
partners. This strategy is intended to enable the Company to establish a
commercial presence in the cancer therapeutics market with its B-1 Therapy, if
approved, and to create the capability to sell other products that it may
develop or in-license. The sales force is expected to initially call upon
oncologists, hematologists and nuclear medicine physicians in connection with
the sale of the Company's B-1 Therapy. The Company initially will focus its
sales force on those physicians who treat the largest volume of NHL patients.
These physicians generally are concentrated in large metropolitan areas. Because
of the characteristics of the B-1 Therapy, the target physician must have access
to a facility with radiopharmaceutical and gamma camera scan capabilities. The
Company believes such facilities generally are available in large metropolitan
areas such that a significant portion of physicians who treat NHL patients will
be able to prescribe the B-1 Therapy. The Company intends to distribute its
products internationally through marketing partners. The Company has not yet
identified or entered into any agreements with any such partners, and there is
no assurance that it will be able to do so in a timely manner, if at all. The
Company has not yet established a sales and marketing capability in North
America, and there is no assurance that it will be able to do so in a timely or
cost effective manner, if at all.

The current purchasers of cancer therapeutics are hospitals, clinics,
physicians, pharmacies, large HMOs and state and federal governments.
Historically, physicians made treatment decisions and prescribed therapeutics
which then were dispensed through the clinic, hospital or pharmacy. However, the
United States health care system is undergoing significant changes and the
decision-making authority of the physician varies. These changes may make it
necessary for the Company to alter its strategy prior to launch of the B-1
Therapy or even after launch and could affect adversely the ability of the
Company to generate revenues.

The Company's ability to market effectively the B-1 Therapy may be affected
adversely by a number of factors including physicians' resistance to change from
established methods of treatment such as chemotherapy or radiation therapy and
the special handling and administration requirements of a radioimmunotherapy.
Further, the Company can provide no assurance as to whether its B-1 Therapy will
be priced competitively compared to existing methods of treatment such as
chemotherapy and radiation therapy. See "Risk Factors -- Uncertainty of Market
Acceptance of the B-1 Therapy."

PHARMACEUTICAL PRICING AND REIMBURSEMENT

Political, economic and regulatory influences are subjecting the health
care industry in the United States to fundamental change. Recent initiatives to
reduce the federal deficit and to reform health care delivery are increasing
cost-containment efforts. The Company anticipates that Congress, state
legislatures and the private sector will continue to review and assess
alternative benefits, controls on health care spending through limitations on
the growth of private health insurance premiums and Medicare and Medicaid
spending, the creation of large insurance purchasing groups, price controls on
pharmaceuticals and other fundamental changes to the health care delivery
system. Any such proposed or actual changes could cause the Company to limit or
eliminate spending on development projects and affect the Company's ultimate
profitability. Legislative debate is expected to continue in the future, and
market forces are expected to drive reductions of health care costs. The Company
cannot predict what impact that adoption of any federal or state health care
reform measures or future private sector reforms may have on its business.

In both domestic and foreign markets, sales of the Company's proposed
products will depend in part upon the availability of reimbursement from
third-party payors, such as government health

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<PAGE> 38

administration authorities, managed care providers, private health insurers and
other organizations. In addition, other third-party payors increasingly are
challenging the price and cost effectiveness of medical products and services.
Significant uncertainty exists as to the reimbursement status of newly approved
health care products. The Company's B-1 Therapy, as potentially the first
radioimmunotherapy for cancer, faces particular uncertainties due to the absence
of a comparable, approved therapy to serve as a model for pricing and
reimbursement decisions. There can be no assurance that the Company's product
candidates will be considered cost effective or that adequate third-party
reimbursement will be available to enable the Company to maintain price levels
sufficient to realize an appropriate return on its investment in product
development. Further, there can be no assurance that products can be
manufactured on a commercial scale, for a cost that will enable the Company to
price its products within reimbursable rates. Legislation and regulations
affecting the pricing of pharmaceuticals may change before the Company's
proposed products are approved for marketing. Adoption of such legislation could
further limit reimbursement for medical products. If adequate coverage and
reimbursement rates are not provided by the government and third-party payors
for the Company's products, the market acceptance of these products would be
adversely affected, which would have a material adverse effect on the Company's
business, financial condition and results of operations.

GOVERNMENT REGULATION

The testing, manufacturing, labeling, advertising, promotion, export and
marketing, among other things, of the Company's proposed products are subject to
extensive regulation by governmental authorities in the United States and other
countries. In the United States, pharmaceutical products are regulated by the
Food and Drug Administration under the Federal Food, Drug and Cosmetic Act and
other laws, including, in the case of biologics, the Public Health Service Act.
At the present time, the Company believes that its B-1 Therapy and other
immunotherapeutics that it may develop will be regulated by the FDA as biologics
and that other products to be developed by the Company, including Super-Leu-Dox
and other TAP pro-drugs, are likely to be regulated as drugs.

The steps required before a drug or biologic may be approved for marketing
in the United States generally include (i) preclinical laboratory tests and
animal tests, (ii) the submission to the FDA of an IND for human clinical
testing, which must become effective before human clinical trials may commence,
(iii) adequate and well-controlled human clinical trials to establish the safety
and efficacy of the product, (iv) in the case of a biologic, the submission to
the FDA of a biologic license application ("BLA"), or in the alternative a
Product License Application ("PLA") for the product and an Establishment License
Application ("ELA") for the facility at which the product is manufactured, or in
the case of a drug, a New Drug Application ("NDA"), (v) FDA review of the BLA
(or PLA/ELA) or NDA and (vi) satisfactory completion of an FDA inspection of the
manufacturing facilities at which the product is made to assess compliance with
GMP. The testing and approval process requires substantial time, effort and
financial resources, and there can be no assurance that any approval will be
granted on a timely basis, if at all.

Preclinical studies include laboratory evaluation of the product, as well
as animal studies to assess the potential safety and efficacy of the product.
The results of the preclinical studies, together with manufacturing information
and analytical data, are submitted to the FDA as part of the IND, which must
become effective before clinical trials may be commenced. The IND automatically
will become effective thirty days after receipt by the FDA, unless the FDA
before that time raises concerns or questions about the conduct of the trials as
outlined in the IND. In such case, the IND sponsor and the FDA must resolve any
outstanding concerns before clinical trials can proceed. There can be no
assurance that submission of an IND will result in FDA authorization to commence
clinical trials.

Clinical trials involve the administration of the investigational products
to healthy volunteers or patients under the supervision of a qualified principal
investigator. Further, each clinical trial must be reviewed and approved by an
independent Institutional Review Board ("IRB") at each institution at

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<PAGE> 39

which the study will be conducted. The IRB will consider, among other things,
ethical factors, the safety of human subjects and the possible liability of the
institution.

Clinical trials typically are conducted in three sequential phases, but the
phases may overlap. In Phase I, the initial introduction of the drug into human
subjects, the drug is usually tested for safety (adverse effects), dosage
tolerance, absorption, metabolism, distribution, excretion and pharmacodynamics.
Phase II clinical trials usually involve studies in a limited patient population
to (i) evaluate the efficacy of the drug for specific, targeted indications,
(ii) determine dosage tolerance and optimal dosage and (iii) identify possible
adverse effects and safety risks. Phase III clinical trials generally further
evaluate clinical efficacy and test further for safety within an expanded
patient population. Phase IV clinical trials are conducted after approval to
gain additional experience from the treatment of patients in the intended
therapeutic indication and to document a clinical benefit in the case of drugs
approved under accelerated approval regulations. If the FDA approves a product
while a company has ongoing clinical trials that were not necessary for
approval, a company may be able to use the data from these clinical trials to
meet all or part of any Phase IV clinical trial requirement. These clinical
trials are often referred to as "Phase III/IV post-approval clinical trials."
Failure to conduct promptly Phase IV clinical trials could result in withdrawal
of approval for products approved under accelerated approval regulations.

In the case of products for severe or life-threatening diseases, the
initial clinical trials are sometimes done in patients rather than in healthy
volunteers. Since these patients are afflicted already with the target disease,
it is possible that such clinical trials may provide evidence of efficacy
traditionally obtained in Phase II clinical trials. These trials are referred to
frequently as Phase I/II trials. There can be no assurance that Phase I, Phase
II or Phase III testing will be completed successfully within any specific time
period, if at all, with respect to any of the Company's product candidates.
Furthermore, the FDA may suspend clinical trials at any time on various grounds,
including a finding that the subjects or patients are being exposed to an
unacceptable health risk.

The results of the preclinical studies and clinical trials, together with
detailed information on the manufacture and composition of the product, are
submitted to the FDA in the form of a BLA requesting approval to market the
product. Before approving a BLA or NDA, the FDA will inspect the facilities at
which the product is manufactured and will not approve the product unless the
manufacturing facility is in GMP compliance. The FDA may delay a BLA or NDA if
applicable regulatory criteria are not satisfied, require additional testing or
information, and/or require postmarketing testing and surveillance to monitor
safety or efficacy of a product. There can be no assurance that FDA approval of
any BLA or NDA submitted by the Company will be granted on a timely basis, if at
all. Also, if regulatory approval of a product is granted, such approval may
entail limitations on the indicated uses for which such product may be marketed.

The Company also will be subject to a variety of foreign regulations
governing clinical trials and sales of its products. Whether or not FDA approval
has been obtained, approval of a product by the comparable regulatory
authorities of foreign countries must be obtained prior to the commencement of
marketing of the product in those countries. The approval process varies from
country to country and the time needed to secure approval may be longer or
shorter than that required for FDA approval.

Clinton-Kessler Cancer Initiative

In March 1996, the FDA announced a new policy intended to accelerate the
approval process for cancer therapies addressing disease conditions in which
patients have limited treatment options. The Company believes that the B-1
Therapy may qualify for this accelerated approval process and designed its Phase
II/III clinical trial of the B-1 Therapy with the objective of securing
accelerated approval. Significant uncertainty exists as to the extent to which
such initiative will result in accelerated review and approval. Further, the FDA
has not made available comprehensive guidelines with respect to this initiative,
and it retains considerable discretion in determining eligibility for
accelerated review and approval and is not bound by discussions that an
applicant may have with FDA staff. Accordingly, the

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<PAGE> 40

FDA could employ such discretion to deny eligibility of the B-1 Therapy as a
candidate for accelerated review or require additional clinical trials or other
information before approving the B-1 Therapy. The Company cannot predict the
ultimate impact, if any, of the new approval process on the timing or likelihood
of FDA approval of its B-1 Therapy or any of its other potential products.

Orphan Drug Designation

Under the Orphan Drug Act, the FDA may grant orphan drug designation to
drugs intended to treat a "rare disease or condition," which is generally a
disease or condition that affects fewer than 200,000 individuals in the United
States. Orphan drug designation must be requested before submitting a BLA. After
the FDA grants orphan drug designation, the generic identity of the therapeutic
agent and its potential orphan use are disclosed publicly by the FDA. Orphan
drug designation does not convey any advantage in, or shorten the duration of,
the regulatory review and approval process. If a product that has orphan drug
designation subsequently receives FDA approval for the indication for which it
has such designation, the product is entitled to orphan exclusivity, i.e., the
FDA may not approve any other applications to market the same drug for the same
indication, except in very limited circumstances, for seven years. The Company's
B-1 Therapy has received orphan drug designation from the FDA. Although the FDA
recently decided to remove NHL from the list of diseases for which orphan drug
designation may be obtained, the previous designation of the Company's B-1
Therapy will not be affected. In any event, there can be no assurance that
competitors will not receive approval of other, different drugs or biologics for
low-grade NHL. Thus, although obtaining FDA approval to market a product with
orphan drug exclusivity can be advantageous, there can be no assurance that it
would provide the Company with a material commercial benefit.

RADIOACTIVE AND OTHER HAZARDOUS MATERIALS

The manufacturing and use of the Company's B-1 Therapy requires the
handling and disposal of 131)I, a radioactive isotope of iodine. The
radiolabeling of the B-1 Antibody currently is performed by radiopharmacies at
the individual clinical trial sites. These sites must comply with various state
and federal regulations regarding the handling and use of radioactive materials.
Violation of these state and federal regulations by a clinical trial site could
significantly delay completion of such trials. For the continuation of its
ongoing clinical trials and for commercial-scale production, the Company plans
to rely on a contract manufacturer, Nordion, to radiolabel the B-1 Antibody with
(131)I, initially at a single location in Canada. Although this vendor is
experienced in the handling and use of radioactive materials, violation of
safety regulations could occur and the risk of accidental contamination or
injury cannot be eliminated completely. In the event of any such noncompliance
or accident, the supply of radiolabeled B-1 Antibody for use in clinical trials
or commercially could be interrupted, which could have a material adverse effect
on the Company's business, financial condition and results of operations. See
"-- Manufacturing."

The administration of the B-1 Therapy entails the introduction of
radioactive materials into patients. These patients emit radioactivity at levels
that pose a safety concern to others around them, especially healthcare workers
for whom the cumulative effect of repeated exposure to radioactivity is of
particular concern. These concerns are addressed in regulations promulgated by
the Nuclear Regulatory Commission, as well as by various state and local
governments and individual hospitals. Generally, patients who emit radioactivity
above specified levels must be admitted to the hospital, where they can be
isolated from others, until radiation falls to acceptable levels. The NRC
recently enacted revised regulations that are likely to make it easier for
hospitals to treat patients with radioactive materials on an outpatient basis.
Under these regulations, the Company believes that its B-1 Therapy could be
administered on an outpatient basis in most cases. Although state and local
governments often follow the lead of the NRC, there can be no assurance that
they will do so or that patients receiving the B-1 Therapy will not have to
remain in the hospital for one to three days following administration of the
therapeutic dose, adding to the overall cost of the therapy.

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<PAGE> 41

The Company also expects to use hazardous chemicals and radioactive
compounds in its ongoing research activities. Although the Company believes that
safety procedures for handling and disposing of such materials will comply with
the standards prescribed by state and federal regulations, the risk of
accidental contamination or injury from these materials cannot be completely
eliminated. The Company could be held liable for any damages that result from
such an accident, as well as for unexpected remedial costs and penalties that
may result from any violation of applicable regulations, which could result in a
material adverse effect on the Company's business, financial condition and
results of operations. In addition, the Company may incur substantial costs to
comply with environmental regulations.

PATENTS AND OTHER INTELLECTUAL PROPERTY

The Company believes that patent and trade secret protection is important
to its business and that its future will depend in part on its ability to
maintain its technology licenses, protect its trade secrets, secure additional
patents and operate without infringing the proprietary rights of others. The
Company currently holds exclusive rights to an allowed United States patent
application that relates to a therapeutic protocol used in the B-1 Therapy. The
Company also holds an exclusive license to patent applications filed in Europe
relating to its TAP pro-drug program.

The pharmaceutical and biotechnology fields are characterized by a large
number of patent filings. A substantial number of patents have already been
issued to other pharmaceutical and biotechnology companies. Research has been
conducted for many years in the monoclonal antibody field by pharmaceutical and
biotechnology companies and other organizations. Competitors may have filed
applications for or have been issued patents and may obtain additional patents
and proprietary rights related to products or processes competitive with or
similar to those of the Company. Patent applications are maintained in secrecy
for a period after filing. Publication of discoveries in the scientific or
patent literature tends to lag behind actual discoveries and the filing of
related patent applications. The Company may not be aware of all of the patents
potentially adverse to the Company's interest that may have been issued to other
companies, research or academic institutions, or others. No assurances can be
given that such patents do not exist, have not been filed, or could not be filed
or issued, which contain claims relating to the Company's technology, products
or processes.

To date, no consistent policy has emerged regarding the breadth of claims
allowed in pharmaceutical and biotechnology patents. If patents have been or are
issued to others containing preclusive or conflicting claims and such claims are
ultimately determined to be valid, the Company may be required to obtain
licenses to one or more patents or to develop or obtain alternative technology.
The Company is aware of certain patents that have been issued to others that
pertain to a portion of the Company's prospective business; however, the Company
believes based on the advice of counsel that it does not infringe any patents
that ultimately would be determined to be valid. There can be no assurance that
patents do not exist in the United States or in other foreign countries or that
patents will not be issued to third parties that contain preclusive or
conflicting claims with respect to the B-1 Therapy or any of the Company's other
product candidates or programs. Commercialization of monoclonal antibody-based
products may require licensing and/or cross-licensing of one or more patents
with other organizations in the field. There can be no assurance that the
licenses that might be required for the Company's processes or products would be
available on commercially acceptable terms, if at all.

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<PAGE> 42

Company, even if the eventual outcome is favorable to the Company. An adverse
outcome could subject the Company to significant liabilities to third parties
and require the Company to license disputed rights from third parties or to
cease using such technology.

Patents issued and patent applications filed internationally relating to
biologics are numerous and there can be no assurance that current and potential
competitors and other third parties have not filed or in the future will not
file applications for, or have not received or in the future will not receive,
patents or obtain additional proprietary rights relating to products or
processes used or proposed to be used by the Company. Moreover, there is certain
subject matter which is patentable in the United States and not generally
patentable outside of the United States. Statutory differences in patentable
subject matter may limit the protection the Company can obtain on some of its
inventions outside of the United States. For example, methods of treating humans
are not patentable in many countries outside of the United States. These and/or
other issues may prevent the Company from obtaining patent protection outside of
the United States which would have a material adverse effect on the Company's
business, financial condition and results of operations.

Rights to use the name "Coulter Pharmaceutical, Inc." are licensed from
Coulter Corporation.

COMPETITION

The pharmaceutical and biotechnology industries are intensely competitive.
Any product candidate developed by the Company would compete with existing drugs
and therapies. There are many pharmaceutical companies, biotechnology companies,
public and private universities and research organizations actively engaged in
research and development of products for the treatment of people with cancer.
Many of these organizations have financial, technical, manufacturing and
marketing resources greater than those of the Company. Several of them have
developed or are developing therapies that could be used for treatment of the
same diseases targeted by the Company. One competitor known to the Company is
currently conducting Phase III clinical trials of a chimeric antibody treatment
for NHL. If a competing company were to develop or acquire rights to a more
efficient or safer cancer therapy for treatment of the same diseases targeted by
the Company, or one which offers significantly lower costs of treatment, the
Company's business, financial condition and results of operations could be
materially adversely affected.

The Company believes that competition in the development and marketing of
new cancer therapies will be based primarily on product efficacy and safety,
time to market and price. To the extent the Company's product programs are
successful, it also intends to rely to some degree on patents and other
intellectual property and orphan drug designations to protect its products from
competition.

The Company believes that its product development programs will be subject
to significant competition from companies utilizing alternative technologies as
well as to increasing competition from companies that develop and apply
technologies similar to the Company's technologies. Other companies may succeed
in developing products earlier than the Company, obtaining approvals for such
products from the FDA more rapidly than the Company or developing products that
are safer and more effective than those under development or proposed to be
developed by the Company. There can be no assurance that research and
development by others will not render the Company's technology or potential
products obsolete or non-competitive or result in treatments superior to any

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<PAGE> 43

therapy developed by the Company, or that any therapy developed by the Company
will be preferred to any existing or newly developed technologies.

PRODUCT LIABILITY AND INSURANCE

The manufacture and sale of human therapeutic products involve an inherent
risk of product liability claims and associated adverse publicity. The Company
has only limited product liability insurance for clinical trials and no
commercial product liability insurance. There can be no assurance that the
Company will be able to maintain existing insurance or obtain additional product
liability insurance on acceptable terms or with adequate coverage against
potential liabilities. Such insurance is expensive, difficult to obtain and may
not be available in the future on acceptable terms, if at all. An inability to
obtain sufficient insurance coverage on reasonable terms or to otherwise protect
against potential product liability claims brought against the Company in excess
of its insurance coverage, if any, or a product recall could have a material
adverse effect upon the Company's business, financial condition and results of
operations.

HUMAN RESOURCES

The Company currently has 27 employees, 17 of whom are engaged in product
development activities. Fourteen of the Company's current employees hold
post-graduate degrees, including four with medical degrees and eight with
Ph.D.s. The Company's employees are not represented by a collective bargaining
agreement. The Company believes its relations with its employees are good.

FACILITIES

The Company currently leases approximately 9,000 square feet of office
space located in Palo Alto, California, under a short-term lease agreement.
Management is looking currently for a larger facility and expects to relocate
during 1997.

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MANAGEMENT

EXECUTIVE OFFICERS, DIRECTORS AND KEY EMPLOYEES

The executive officers, directors and key employees of the Company, and
their ages as of December 6, 1996, are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ---------------------------------- --- -------------------------------------------
<S> <C> <C>
Michael F. Bigham................. 39 President, Chief Executive Officer and
Director
William G. Harris................. 38 Vice President and Chief Financial Officer
Peter J. Langecker, M.D., 45 Vice President, Clinical Research
Ph.D.(1)........................
Arlene M. Morris(1)............... 44 Vice President, Business Development
Linda L. Nardone, Ph.D.(1)........ 51 Vice President, Regulatory Affairs
Dan Shochat, Ph.D. ............... 56 Vice President, Research and Development
Bobbie F. Wallace(1).............. 64 Vice President, Operations
James C. Kitch, J.D.(1)........... 49 Secretary
Arnold Oronsky, Ph.D.(2).......... 56 Chairman of the Board
Brian G. Atwood(3)................ 44 Director
Joseph R. Coulter, III............ 37 Director
Donald L. Lucas(2)(3)............. 66 Director
Robert Momsen(2).................. 49 Director
George J. Sella, Jr............... 68 Director
Sue Van(2)(3)..................... 50 Director
</TABLE>

- ------------------------------
(1) Non-executive officer or key employee.
(2) Member of the Compensation Committee.
(3) Member of the Audit Committee.

Michael F. Bigham has served as President, Chief Executive Officer and a
director of the Company since July 1996. During June 1996, Mr. Bigham provided
consulting services to the Company. Mr. Bigham served as Executive Vice
President of Operations from April 1994 to June 1996 and Chief Financial Officer
from April 1989 to June 1996 at Gilead Sciences, Inc., a biotechnology company.
While at Gilead, he also served as Vice President of Corporate Development from
July 1988 to March 1992. Mr. Bigham was Co-head of Healthcare Investment Banking
for Hambrecht & Quist LLC, an investment banking firm where he was employed from
1984 to 1988. Mr. Bigham is a member of the Board of Directors of Datron
Systems, Inc., a publicly-held electronics company, and two privately-held
companies. Mr. Bigham received a B.S. degree in Commerce with distinction from
the University of Virginia and an M.B.A. from the Stanford University Graduate
School of Business.

William G. Harris has served as Vice President, Finance and Chief Financial
Officer of the Company since July 1996. From July 1992 to July 1996, Mr. Harris
served as Director of Finance at Gilead Sciences, Inc., a biotechnology company.
While at Gilead, Mr. Harris also served as Controller and Manager of
Administration from July 1991 to July 1992, and as Assistant Controller and
Manager of Administration from October 1990 to July 1992. From July 1988 to
October 1990, he was a Staff Accountant at Ernst & Young, LLP. Mr. Harris
received a B.A. degree in Economics from the University of California, San
Diego, and an M.B.A. from the University of Santa Clara Leavey School of
Business and Administration.

Peter J. Langecker, M.D., Ph.D. has served as Vice President, Clinical
Research of the Company since August 1995. From March 1992 to July 1995, Dr.
Langecker served as Director of Clinical Research in Oncology at Schering-Plough
Corp., a pharmaceutical and biologics company, where he was responsible for the
worldwide clinical program for several oncology products. From July 1988 to
February 1992, Dr. Langecker served as Central Medical Adviser in Clinical
Research and Development, Oncology at Ciba-Geigy Corporation, a Swiss chemical
and pharmaceutical company, where he was responsible for the clinical
development of several oncology products. From March 1984 to

43
<PAGE> 45

June 1988, he served as a physician in the Oncology Department at the University
of Munich Hospital. Dr. Langecker received M.D. and Ph.D. degrees from the
University of Munich in Germany and is the author of more than 30 scientific
papers on clinical drug development in oncology.

Arlene M. Morris has served as Vice President, Business Development of the
Company since October 1996. From April 1993 to October 1996, Ms. Morris served
as Vice President, Business Development at Scios, Inc., a biotechnology company.
From November 1988 to April 1993, she served as Vice President, Business
Development at McNeil Pharmaceutical, a subsidiary of Johnson & Johnson, where
she was responsible for new product planning and business development. Ms.
Morris received a B.A. degree from Carlow College.

Linda L. Nardone, Ph.D. has served as Vice President, Regulatory Affairs of
the Company since August 1995. From September 1989 to July 1995, Dr. Nardone
served as Vice President of Drug Regulatory Affairs at Sterling
Winthrop/Nycomed, a pharmaceutical company, where she was responsible for
strategy, operations and FDA interactions for drugs in development and marketed
drugs including three new drug applications and multiple supplemental approvals.
From 1986 to 1989, Dr. Nardone worked for Immunomedics, Inc., a biotechnology
company, where she had regulatory responsibility for three monoclonal
antibody-based diagnostic and therapeutic agents for cancer, and held various
positions, including Vice President, Regulatory Affairs. Dr. Nardone received a
B.S. degree from Fairleigh Dickinson University, M.S. and Ph.D. degrees from
Pennsylvania State University and held a post-doctoral fellowship at Yale
University School of Medicine.

Dan Shochat, Ph.D. has served as Vice President, Research and Development
of the Company since March 1995. From July 1988 to April 1995, Dr. Shochat
served as Director of Biotechnology Development at Lederle Laboratories, a
pharmaceutical division of American Cyanamid, Inc., where he was responsible for
the worldwide program in monoclonal antibodies for the treatment of cancer. He
received B.S. and M.S. degrees from Hebrew University in Israel and a Ph.D. in
Biochemistry from L.S.U. Medical School in New Orleans. Dr. Shochat is the
author of 25 scientific papers on tumor antigens and on antibodies for
diagnostic and therapeutic use in cancer.

Bobbie F. Wallace has served as Vice President, Operations for the Company
since its inception in February 1995. From February 1995 to December 1996, she
served as a director of the Company. Ms. Wallace is an employee of Coulter
Corporation, a research, development and manufacturing company of precision
medical devices, and has served as a liaison between the Company and Coulter
Corporation. Since 1982, Ms. Wallace has served as Director of Pharmaceutical
Programs and Immunology Research at Coulter Corporation where she was
responsible for the Anti-B1 research and development. Ms. Wallace received a
B.A. in Pre-Med and completed specialized post-graduate courses in hematology at
the University of Texas in Denton.

James C. Kitch, J.D. has served as the Secretary of the Company since
December 1996. He has been a partner for more than ten years of Cooley Godward
LLP, a law firm which has provided legal services to the Company. Mr. Kitch is a
director of Lynx Therapeutics, Inc., a life sciences company.

Arnold Oronsky, Ph.D. has served as Chairman of the Board of Directors of
the Company since its inception in February 1995. From February 1995 to July
1996, Dr. Oronsky also served as President and Chief Executive Officer of the
Company. Since March 1994, Dr. Oronsky has been a general partner at InterWest
Partners, a private venture capital firm. From 1984 to 1994, Dr. Oronsky served
as Vice President for Discovery Research at Lederle Laboratories, a
pharmaceutical division of American Cyanamid, Inc., where he was responsible for
the research of new drugs. Dr. Oronsky has won numerous grants and awards and
has published over 125 scientific articles. Since 1988, Dr. Oronsky has served
as a senior lecturer in the Department of Medicine at John Hopkins Medical
School.

Brian Atwood has served as a director of the Company since April 1996. From
March to December 1995, Mr. Atwood was a consultant on business development to
the Company. Since November 1995, Mr. Atwood has been a Venture Partner of
Brentwood Venture Capital, a private venture capital firm, and since June 1995
has served as the acting President and Chief Executive Officer of gene/Networks,
Inc., a genomics company. He was a founder and served as President and Chief
Executive Officer from

44
<PAGE> 46

December 1993 to May 1995 and Vice President, Operations from July 1988 to
November 1993 of Glycomed Incorporated, a company dedicated to the discovery and
development of novel drugs based on complex carbohydrates. From January 1986 to
June 1987, Mr. Atwood was a Director at Perkin-Elmer/Cetus Instrument Systems, a
joint venture formed by Perkin-Elmer Corp. and Cetus Corporation, where he
oversaw the development and launch of three biotechnology instrument research
systems.

Joseph R. Coulter, III has served as a director of the Company since
December 1996. Mr. Coulter has been employed by Coulter Corporation, a research,
development and manufacturing company of precision medical devices, since 1979.
Since November 1996, he has been Executive Vice President. Since February 1995,
he has served as Director of Information Systems. From June 1992 to January
1995, Mr. Coulter served as Director of Operations, and from January 1988 to
June 1992, he served as Program Manager for Research and Development. Mr.
Coulter currently serves as a director of Coulter Corporation.

Donald L. Lucas has served as a director of the Company since April 1996.
Since 1967, Mr. Lucas has been actively engaged in venture capital activities as
a private individual. Mr. Lucas currently serves as a board member of Amati
Communications Corporation, Cadence Design Systems, Inc., Macromedia, Inc.,
Oracle Corporation, Racotek, Inc., Transcend Services, Inc. and Tricord Systems,
Inc.

Robert Momsen has served as a director of the Company since its inception
in February 1995. Since August 1982, Mr. Momsen has been a General Partner at
InterWest Partners, a private venture capital firm. From 1977 to 1981, Mr.
Momsen served as General Manager and Chief Financial Officer of Life Instruments
Corporation, a medical diagnostic imaging company that he co-founded. Mr. Momsen
currently serves as a director of ArthroCare Corp., COR Therapeutics, Inc.,
Cornerstone Physicians Corp., Employee Managed Care Corp., First Medical, Inc.,
Innovasive Devices, Inc., Integ, Inc., Interventional Technologies, Inc.,
Mercator Genetics, Inc., Urologix, Inc. and Ventritex, Inc.

George J. Sella, Jr. has served as a director of the Company since December
1996. From January 1983 to his retirement in April 1993, Mr. Sella served as
Chief Executive Officer of American Cyanamid Company, a chemical, agricultural
and medical products company. From September 1979 to January 1991, Mr. Sella
served as President of American Cyanamid. From May 1984 to April 1993, he served
as Chairman of the Board of Directors of American Cyanamid Company. Mr. Sella
currently serves as a director of Union Camp Corporation, the Equitable
Companies Incorporated and Bush Boake Allen, Inc.

Sue Van has served as a director of the Company since its inception in
February 1995. Since November 1996, she has been Executive Vice President of
Coulter Corporation, a research, development and manufacturing company of
precision medical devices. Since May 1992, Ms. Van has served as the Chief
Financial Officer of Coulter Corporation and since January 1984, Ms. Van has
served as the Corporate Treasurer of Coulter Corporation.

Certain of the current directors of the Company were nominated and elected
in accordance with voting rights which terminate upon the closing of this
offering.

45
<PAGE> 47

BOARD COMMITTEES

The Audit Committee of the Board of Directors was formed in October 1996 to
review the internal accounting procedures of the Company and consult with and
review the services provided by the Company's independent auditors. The
Compensation Committee of the Board of Directors was formed in October 1996 to
establish salaries, incentives and other forms of compensation paid to officers
and employees of the Company. The Compensation Committee also administers the
issuance of stock options and other awards under the Company's stock plans.

DIRECTOR COMPENSATION

Directors currently do not receive any cash compensation from the Company
for their services as members of the Board of Directors, although they are
reimbursed for certain expenses in connection with attendance at Board and
Committee meetings. Upon completion of the offering, directors will be eligible
to participate in the 1996 Equity Incentive Plan. See "-- Equity Incentive
Plans."

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Prior to the formation of the Compensation Committee in October 1996, the
Board of Directors made all determinations with respect to executive officer
compensation. Of the directors who participated in deliberations concerning
executive officer compensation, either prior to the formation of the
Compensation Committee or in their capacity as a member of the Compensation
Committee, Dr. Oronsky served as acting President and Chief Executive Officer of
the Company from February 1995 to June 1996, Ms. Wallace has served as Vice
President, Operations of the Company since February 1995 and Mr. Bigham has
served as President and Chief Executive Officer of the Company since July 1996.
Each of the Company's directors has purchased securities of the Company
individually or through an affiliated entity. See "Certain Transactions" and
"Principal Stockholders."

EXECUTIVE COMPENSATION

Summary Compensation Table. The following table sets forth the
compensation earned by the Company's Chief Executive Officer and the other
executive officer who earned in excess of $100,000 during the fiscal year ended
December 31, 1996, based on anticipated compensation as of December 23, 1996,
(collectively, the "Named Executive Officers") and the compensation of the Named
Executive Officers during the fiscal year ended December 31, 1995:

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION ------------
SECURITIES
-------------------- OTHER ANNUAL UNDERLYING
NAME AND PRINCIPAL POSITION SALARY($) BONUS($) COMPENSATION($) OPTIONS(#)
- ----------------------------------------- --------- -------- --------------- ------------
<S> <C> <C> <C> <C> <C>
Michael F. Bigham(1)..................... 1995 -- -- -- --
President and Chief Executive Officer 1996 150,000 50,000 57,000(1) 0
Arnold Oronsky, Ph.D.(2) ................ 1995 0 0 0 0
President and Chief Executive Officer 1996 0 0 0 0
Dan Shochat, Ph.D. ...................... 1995 138,721 26,250 13,332(3) 58,333
Vice President, Research and
Development 1996 160,008 8,750 11,084(3) 41,666
</TABLE>

- ---------------
(1) Mr. Bigham joined the Company as its President and Chief Executive Officer
in July 1996. During June 1996, Mr. Bigham provided consulting services to
the Company and received compensation for those services.

46
<PAGE> 48

(2) Dr. Oronsky, Chairman of the Company's Board of Directors, served as acting
President and Chief Executive Officer from February 1995 to June 1996.

(3) Represents reimbursement for moving expenses.

EQUITY INCENTIVE PLANS

Equity Incentive Plans. In March 1995, the Company adopted the 1995 Equity
Incentive Plan (the "1995 Plan") under which an aggregate of 866,666 shares of
Common Stock have been reserved for issuance upon exercise of options granted to
employees, directors of and consultants to the Company. As of December 6, 1996,
options to purchase an aggregate of 802,305 shares of Common Stock were
outstanding under the 1995 Plan. In December 1996, the Board of Directors
determined that upon the closing of the offering, no additional options would be
granted under the 1995 Plan and the 1995 Plan would be terminated.

In December 1996, the Company adopted the 1996 Equity Incentive Plan,
subject to stockholder approval (the "1996 Plan" and, together with the 1995
Plan, the "Incentive Plans"). A total of 1,400,000 shares of Common Stock have
been reserved under the 1996 Plan. As of December 6, 1996, no options have been
granted under the 1996 Plan. The 1996 Plan will terminate in December 2006,
unless sooner terminated by the Board of Directors.

The Incentive Plans provide for the granting to employees (including
officers and employee directors) of incentive stock options within the meaning
of Section 422 of the Internal Revenue Code, as amended (the "Code"), and for
the granting of nonstatutory stock options, restricted stock purchase awards,
and stock bonuses (collectively, "Stock Awards") to employees, directors of and
consultants to the Company. The Company's Board of Directors has delegated
administration of the Incentive Plans to the Compensation Committee (the
"Committee"). The Committee membership is intended to satisfy the provisions of
Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended,
and Code section 162(m), in each case to the extent applicable. The Committee
has the authority, subject to the terms of the Incentive Plans, to determine the
recipients and types of awards to be granted, the terms of the awards granted,
including the exercise price, number of shares subject to the award the
exercisability thereof, and the form of consideration payable upon exercise.

The terms of stock options granted under the Incentive Plans generally may
not exceed 10 years. The exercise price of options granted under the Incentive
Plans is determined by the Board of Directors, provided that the exercise price
for an incentive stock option cannot be less than 100% of the fair market value
of the Common Stock on the date of the option grant and the exercise price for a
nonstatutory stock option cannot be less than 85% of the fair market value of
the Common Stock on the date of option grant. The exercise price of options
under the 1995 Plan or incentive stock options under the 1996 Plan granted to
any person who at the time of grant owns stock possessing more than 10% of the
total combined voting power of all classes of stock must be at least 110% of the
fair market value of such stock on the date of grant and the terms of these
options cannot exceed five years. The aggregate fair market value, determined at
the time of grant, of the shares of Common Stock with respect to which incentive
stock option are exercisable for the first time by an optionee during any
calendar year (under all such plans of the Company and its affiliates) may not
exceed $100,000. No optionee shall be eligible for option grants under the 1996
Plan covering more than 280,000 shares of Common Stock in any calendar year at
such time as Section 162(m) of the Code becomes applicable to the Plan.

Options granted under the Incentive Plans vest at the rate specified in the
option agreement; provided, however, that options granted under the 1995 must
vest at least 20% per year. No stock option granted under the Incentive Plans
may be transferred by the optionee other than by will or the laws of descent or
distribution or, for a nonstatutory option, pursuant to a domestic relations
order, provided that an optionee may designate a beneficiary who may exercise
the option following the optionee's death, and, provided further, that the
Compensation Committee may grant a nonstatutory stock option that is
transferable under the 1996 Plan.

47
<PAGE> 49

An optionee under the 1995 Plan whose relationship with the Company or any
affiliate ceases for any reason (other than by death or disability) may exercise
options in the thirty-day period following such cessation (unless such options
terminate or expire sooner or later by their terms). An optionee under the 1996
Plan whose relationship with the Company or any affiliate ceases for any reason
(other than by death or disability) may exercise options in the three-month
period following such cessation (unless such options terminate or expire sooner
or later by their terms). Options granted under the Incentive Plans may be
exercised for up to twelve months after an Optionee's relationship with the
Company and its affiliates ceases due to disability and for up to eighteen
months after an Optionee's relationship with the Company and its affiliates
ceases due to death (unless such options expire sooner or later by their terms).

Shares subject to stock options under the 1996 Plan that have expired or
otherwise terminated without having been exercised in full become available for
the grant of options under the 1996 Plan. Furthermore, the Board of Directors
may offer to exchange new options for existing options under the 1996 Plan, with
the shares subject to the existing options again becoming available for grant
under the 1996 Plan. The Board of Directors has the authority to reprice
outstanding options and to offer optionees the opportunity to replace
outstanding options with new options for the same or a different number of
shares.

Restricted stock purchase awards granted under the 1996 Plan may be granted
pursuant to a repurchase option in favor of the Company in accordance with a
service vesting schedule determined by the Board. The purchase price of such
awards will be at least 85% of the fair market value of the Common Stock on the
date of grant. Stock bonuses may be awarded in consideration for past services
without a purchase payment.

Upon certain changes in control of the Company, all outstanding awards
under the Incentive Plans shall be continued, assumed or substituted by the
surviving entity. If the surviving entity determines not to continue, assume or
substitute such awards, then the vesting of such awards shall be accelerated and
shall be terminated if not exercised prior to such event. In the event of a
dissolution or liquidation of the Company, outstanding, unexercised awards shall
be terminated.

Employee Stock Purchase Plan. In December 1996, the Company's Board of
Directors adopted the Employee Stock Purchase Plan (the "Purchase Plan"),
subject to stockholder approval, covering an aggregate of 350,000 shares of
Common Stock. The Purchase Plan is intended to qualify as an employee stock
purchase plan within the meaning of Section 423 of the Code. Under the Purchase
Plan, the Board of Directors may authorize participation by eligible employees,
including officers, in periodic offerings following the adoption of the Purchase
Plan. The offering period for any offering will be no more than 27 months. The
Board has currently authorized an offering period to begin with the
effectiveness of this offering and ending December 31, 1998 and additional
24-month offering periods to begin each July 1 and January 1 thereafter.

Employees are eligible to participate if they are employed by the Company
or an affiliate of the Company designated by the Board of Directors, provided
that under the currently authorized offerings an employee's customary employment
must be for at least 20 hours per week and five months per calendar year.
Employees who participate in an offering can have up to 15% of their earnings
withheld pursuant to the Purchase Plan and applied, on specified dates
determined by the Board of Directors, to the purchase of shares of Common Stock.
Under the currently authorized offerings, the purchase dates are each June 30
and December 31. The price of Common Stock purchased under the Purchase Plan
will be equal to 85% of the lower of the fair market value of the Common Stock
on the commencement date of each offering or the relevant purchase date.
Employees may end their participation in an offering at any time during the
offering, and participation ends automatically on termination of employment with
the Company or, under the currently authorized offerings, when the employee
elects to enroll in another offering.

In the event of certain changes of control, the Board of Directors has
discretion to provide that each right to purchase Common Stock may be assumed or
an equivalent right substituted by the

48
<PAGE> 50

successor corporation, or the Board may shorten the offering period and provide
for all sums collected by payroll deductions to be applied to purchase stock
immediately prior to the change in control. The Board has the authority to amend
or terminate the Purchase Plan, subject to the limitation that no such action
may adversely affect any outstanding rights to purchase Common Stock.

401(k) Plan. As of October 31, 1996, the Company adopted a tax-qualified
employee savings and retirement plan (the "401(k) Plan") covering the Company's
employees. Pursuant to the 401(k) Plan, eligible employees may elect to reduce
their current compensation by up to the lesser of 20% of their annual
compensation or the statutorily prescribed annual limit ($9,500 in 1996 and
1997) and have the amount of such reduction contributed to the 401(k) Plan.
Although the Company does not currently match contributions by employees, the
401(k) Plan allows for matching contributions to be made by the Company in an
amount determined by the Company. The trustees under the 401(k) Plan, at the
direction of each participant, invest the assets of the 401(k) Plan in
designated investment options. The 401(k) Plan is intended to qualify under
Section 401 of the Internal Revenue Code of 1986, as amended (the "Code"), so
that contributions to the 401(k) Plan, and income earned on the 401(k) Plan
contributions, are not taxable until withdrawn, and so that the contributions by
the Company will be deductible when made.

OPTION GRANTS IN LAST FISCAL YEAR

The following table sets forth for each of the Named Executive Officers
each grant of stock options granted during the fiscal year ended December 31,
1995:

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------
PERCENTAGE
OF TOTAL POTENTIAL REALIZABLE
NUMBER OF OPTIONS VALUE AT ASSUMED
SECURITIES GRANTED ANNUAL RATES OF STOCK
UNDERLYING IN FISCAL EXERCISE PRICE APPRECIATION
OPTIONS 1995 PRICE EXPIRATION FOR OPTION TERM(4)
NAME GRANTED(1) (%)(2) ($/SH)(3) DATE 5% $ 10% $
- ------------------------------------ ---------- ---------- --------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Michael F. Bigham................... -- -- -- -- -- --
Arnold Oronsky, Ph.D. .............. -- -- -- -- -- --
Dan Shochat, Ph.D. ................. 58,333 26.4% $ .30 07/31/05 $11,006 $27,890
</TABLE>

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

(1) Options granted in 1995 generally vest over four years, with 25% of the
option shares becoming fully vested one year from the grant date and 1/48th
vesting in each successive month, with full vesting occurring on the fourth
anniversary date. As of December 1, 1996, the only Named Executive Officer
granted stock options in 1996 was Dan Shochat, who was granted options to
purchase 25,000 and 16,666 shares of Common Stock at exercise prices of
$0.75 and $2.25, respectively.

(2) Based on an aggregate of 220,756 options granted to employees and directors
of and consultants to the Company in 1995, including the Named Executive
Officers.

(3) The exercise price per share of each option was equal to the fair market
value of the Common Stock on the date of grant, as determined by the Board
of Directors.

(4) The potential realizable value is calculated by assuming that the stock
price on the date of grant as determined by the Board of Directors
appreciates at the indicated annual rate compounded annually for the entire
term of the option (ten years) and the option is exercised and sold on the
last day of its term for the appreciated stock price. The 5% and 10% assumed
rates of appreciation are mandated by the rules of the Securities and
Exchange Commission and do not represent the Company's estimate or
projection of the future Common Stock price.

49
<PAGE> 51

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

The following table sets forth for each of the Named Executive Officers the
shares acquired and the value realized on the exercise of stock options during
the fiscal year ended December 31, 1995 and the number and value of securities
underlying unexercised options held by the Named Executive Officers at December
31, 1995:

<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES VALUE DECEMBER 31, 1995(#) DECEMBER 31, 1995($)(1)
ACQUIRED ON REALIZED -------------------------- --------------------------
NAME EXERCISE(#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------------- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Michael F. Bigham................. -- -- -- -- -- --
Arnold Oronsky, Ph.D. ............ -- -- -- -- -- --
Dan Shochat, Ph.D. ............... -- -- 0 58,333 0 8,750
</TABLE>

- ---------------
(1) Based on the fair market value of $0.45 per share on December 31, 1995, as
determined by the Company's Board of Directors minus the exercise price
multiplied by the number of shares underlying the option.

LIMITATION OF LIABILITY AND INDEMNIFICATION

As permitted by the Delaware General Corporation Law (the "Delaware Law"),
the Company's Certificate of Incorporation provides that no director of the
Company will be personally liable to the Company or its stockholders for
monetary damages for breach of fiduciary duty as a director, except (i) for any
breach of the directors' duty of loyalty to the Company or its stockholders,
(ii) for acts or omissions not in good faith or involving intentional misconduct
or a knowing violation of law, (iii) unlawful payments of dividends or unlawful
stock repurchases or redemptions, or (iv) for any transaction from which the
director derives any improper personal benefit. In addition, the Company's
Bylaws provide that the Company shall indemnify any director and may indemnify
any officer, to the fullest extent permitted by the Delaware Law, who was or is
a party or is threatened to be made a party to any action or proceeding by
reason of his or her services to the Company.

The Company has entered into indemnification agreements with each of its
directors and executive officers pursuant to which the Company has indemnified
each of them against expenses and losses incurred for claims brought against
them by reason of their being a director or executive officer of the Company. In
addition, the Company intends to purchase directors' and officers' liability
insurance.

There is no pending litigation or proceeding involving a director or
officer of the Company as to which indemnification is being sought, nor is the
Company aware of any pending or threatened litigation that may result in claims
for indemnification by any director or executive officer.

50
<PAGE> 52

CERTAIN TRANSACTIONS

The Company was incorporated in February 1995. In connection with its
formation, the Company issued 5,000,000 shares of its Series A Preferred Stock
(the "Series A Stock") to Coulter Corporation in exchange for rights to certain
intellectual property, know-how, contractual rights and other assets pertaining
to the Company's B-1 Therapy pursuant to an assignment agreement dated February
24, 1995, and issued 2,500,000 shares of Series A Stock to InterWest Partners V,
L.P. ("InterWest") and certain parties related thereto in exchange for
$2,500,000 in cash. In connection with such transaction, the Company assumed
certain obligations to pay minimum annual license fees and royalties due upon
sales of the B-1 Therapy.

Coulter Corporation has also supplied B-1 Antibody and certain services at
its cost to support the Company's ongoing development of the B-1 Therapy. See
Note 7 of Notes to Financial Statements. The need for such services is
declining, and the Company believes that this arrangement will be ended during
1997. In addition, the Company has agreed to reimburse Coulter Corporation for
royalties (payable upon sales of the B-1 Therapy, if any) due to a third party
for certain intellectual property rights sublicensed to the Company. Coulter
Corporation has the right to convert the initial reimbursements of royalties, up
to a maximum of $4,500,000, into Common Stock of the Company at the fair market
value thereof at the time such reimbursements are due. Additionally, in April
1995, the Company reimbursed Coulter Corporation $100,000 for a one-time license
issue fee previously paid by Coulter Corporation in connection with certain
intellectual property rights assigned to the Company. Joseph Coulter, III and
Sue Van, directors of the Company, are executive officers of Coulter Corporation
and Mr. Coulter is a director of and beneficial stockholder of Coulter
Corporation.

In August and September 1995, the Company issued 2,333,333 shares of its
Series B Preferred Stock (the "Series B Stock") for aggregate consideration of
$3,500,000 in cash, including: (i) 2,266,667 shares of Series B Stock to
InterWest and certain parties related thereto, (ii) 16,667 shares of Series B
Stock to the Richard M. Lucas Foundation, of which Donald L. Lucas, a director
of the Company, is the Chairman of the Board and (iii) 16,666 shares of Series B
Stock to the Donald L. Lucas Profit Sharing Trust of which Mr. Lucas is the
successor trustee.

In April 1996, the Company issued 9,964,607 shares of its Series C
Preferred Stock (the "Series C Stock") and warrants to purchase 498,705 shares
of its Common Stock (after giving effect to the one-for-three reverse stock
split), at an exercise price of $9.00 per share (the "Warrants") for aggregate
consideration of $22,420,366 in cash, including: (i) 888,889 shares of Series C
Stock and Warrants to purchase 44,488 shares of Common Stock to InterWest and
certain parties related thereto, (ii) 1,111,111 shares of Series C Stock and
Warrants to purchase 55,611 shares of Common Stock to BankAmerica Ventures and
certain parties related thereto, (iii) 1,122,222 shares of Series C Stock and
Warrants to purchase 56,167 shares of Common Stock to Brentwood Associates VII,
L.P. ("Brentwood") and certain parties related thereto, (iv) 948,884 shares of
Series C Stock and Warrants to purchase 47,490 shares of Common Stock to certain
entities affiliated with Donald L. Lucas, a director of the Company, (v) 102,222
shares of Series C Stock and Warrants to purchase 5,116 shares of Common Stock
to a charitable trust formed by Michael F. Bigham, Chief Executive Officer,
President and a Director of the Company, (vi) 100,000 shares of Series C Stock
and Warrants to purchase 5,005 shares of Common Stock to Sue Van, a director of
the Company, (vii) 11,111 shares of Series C Stock and Warrants to purchase 566
shares of Common Stock to Brian Atwood, a director of the Company and (viii)
11,111 shares of Series C Stock and Warrants to purchase 1,668 shares of Common
Stock to Joseph R. Coulter, III, a director of the Company.

Each share of Preferred Stock will automatically convert into one-third of
a share of Common Stock upon completion of this offering.

Pursuant to a letter dated March 9, 1995 from the Company to Dr. Dan
Shochat, Vice President, Research and Development of the Company, if the Company
terminates Dr. Shochat's employment for any reason prior to March 1997, the
Company will pay Dr. Shochat, a sum equal to six months annual salary.

51
<PAGE> 53

In August 1995 and February 1996, in connection with consulting services
provided to the Company, the Company granted Mr. Atwood, a director of the
Company, options to purchase 2,059 and 4,021 shares of Common Stock,
respectively, at an exercise price of $.30 per share. Such options were
immediately exercisable and fully vested. Mr. Atwood received compensation of
$94,863 for such consulting services.

In March 1996, Michael F. Bigham, Chief Executive Officer and President of
the Company, purchased 400,000 shares of Common Stock at $0.45, the fair market
value of such shares, and purchased the shares by delivering a promissory note
in the amount of $180,000. The Company has a right to repurchase these shares in
the event Mr. Bigham's employment is terminated. Such repurchase right lapses
over a four year period which may be accelerated if Mr. Bigham's employment is
involuntarily terminated for a reason other than gross misconduct. If the
Company terminates Mr. Bigham's employment for any reason, other than gross
misconduct, the Company will continue to pay his salary and provide full
benefits for one year after such termination and the Company's stock repurchase
rights will continue to expire during such period. In the event of a change in
control of the Company, Mr. Bigham will receive severance equal to at least two
years salary plus a 30% bonus and full benefits for two years. In addition, all
repurchase right expirations will be accelerated in full. During June 1996, Mr.
Bigham provided consulting services to the Company for which he was paid
$57,000. In July 1996, the Company entered into an agreement with Mr. Bigham
pursuant to which he repaid an outstanding loan to the Company in the amount of
$180,000 and obtained from the Company a home loan in the amount of $280,000,
which new loan is secured by a second deed of trust on his principal residence.
This loan will be forgiven semiannually at the rate of 12.5% per semiannual
period so long as Mr. Bigham remains employed by the Company. If Mr. Bigham's
employment is terminated, interest shall commence and begin to accrue at the
prime rate plus two percentage points and will become due and payable within 60
days of his termination. If Mr. Bigham's employment is terminated for other than
gross misconduct or death, the principal of such loan shall become due upon the
earlier of Mr. Bigham securing other employment or the date 60 days from the
date of his termination. In the event of a change in control of the Company, the
remaining balance on the home loan will be forgiven.

In June 1996 and October 1996, the Company granted Mr. Harris, Vice
President and Chief Financial Officer of the Company, options to purchase 58,333
shares of Common Stock at $0.75 per share and 8,333 shares of Common Stock at
$2.25 per share, respectively. Such options vest over a four-year period. In
October, the Company also granted Mr. Harris an option to purchase 16,666 shares
of Common Stock at $2.25 per share which will begin vesting in October 2000. If
the Company terminates Mr. Harris' employment for any reason other than good
cause prior to July 1997, the Company will continue to pay his salary for six
months after such termination.

52
<PAGE> 54

PRINCIPAL STOCKHOLDERS

The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of December 6, 1996 for (i) each
stockholder who is known by the Company to own beneficially more than five
percent of the Company's Common Stock; (ii) each Named Executive Officer; (iii)
each director of the Company and (iv) all executive officers and directors of
the Company as a group. Except as otherwise provided below, the address of each
person listed is c/o the Company, 550 California Avenue, Suite 200, Palo Alto,
California 94306.

<TABLE>
<CAPTION>
PERCENTAGE OF SHARES
NUMBER OF BENEFICIALLY OWNED(1)
SHARES -----------------------
BENEFICIALLY BEFORE AFTER
BENEFICIAL OWNER OWNED(1) OFFERING OFFERING
- ------------------------------------------------------------- --------------------- -------- --------
<S> <C> <C> <C>
Entities Affiliated with InterWest Partners(2)............... 1,811,143 24.0% 18.0%
3000 Sand Hill Road
Building 3, Suite 255
Menlo Park, CA 94025
Robert Momsen(2)............................................. 1,811,143 24.0 18.0
Arnold Oronsky(2)............................................ 1,799,824 23.9 17.9
Joseph R. Coulter, III(3).................................... 1,675,184 22.2 16.7
Coulter Corporation.......................................... 1,666,666 22.1 16.6
Coulter Technology Center
11800 SW 147th Avenue
Miami, FL 33196
Michael F. Bigham(4)......................................... 439,190 5.8 4.4
Brian G. Atwood(5)........................................... 436,320 5.8 4.3
Brentwood Associates VII, L.P.(6)............................ 430,240 5.7 4.3
3000 Sand Hill Road
Building 1, Suite 260
Menlo Park, CA 94025
Entities Affiliated with BankAmerica Ventures(7)............. 425,981 5.7 4.2
950 Tower Lane, #700
Foster City, CA 94404
Donald L. Lucas(8)........................................... 374,894 5.0 3.7
Sue Van(9)................................................... 38,338 * *
Dan Shochat(10).............................................. 26,736 * *
George J. Sella, Jr. ........................................ 0 * *
All executive officers and directors as a
group (8 persons)(11)...................................... 4,801,805 63.7 47.8
</TABLE>

- ---------------
* Represents beneficial ownership of less than 1% of the outstanding shares
of the Company's Common Stock.

(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Except as indicated by
footnote, and subject to community property laws where applicable, the
Company believes, based on information furnished by such persons, that the
persons named in the table above have sole voting and investment power with
respect to all shares of Common Stock shown as beneficially owned by them.
Percentage of beneficial ownership is based on 7,535,604 shares of Common
Stock outstanding as of December 6, 1996 (including 498,705 shares to be
issued upon the exercise of outstanding warrants prior to the closing of
this offering), and 10,035,604 shares of Common Stock outstanding after
completion of this offering. Beneficial ownership of Common Stock issuable
pursuant to outstanding warrants is calculated on a cash exercise basis.

(2) Includes 1,766,666 shares held by InterWest Partners V, L.P., 11,111 shares
held by InterWest Investors V, 33,158 shares to be issued to InterWest
Partners V, L.P. upon the exercise of an outstanding warrant prior to the
closing of this offering and 208 shares to be issued to InterWest Investors
V upon the exercise of an outstanding warrant prior to the closing of this
offering; provided that shares attributable to Dr. Oronsky do not include
any shares owned or warrants held by InterWest Investors V. Mr. Momsen and
Dr. Oronsky,

53
<PAGE> 55

directors of the Company, are general partners of InterWest Management Partners
V, L.P. which is the general partner of InterWest Partners V, L.P. Mr. Momsen is
a general partner of InterWest Investors V. Mr. Momsen and Dr. Oronsky disclaim
beneficial ownership of the shares held by InterWest Partners V, L.P. and
InterWest Investors V, except to the extent of their respective pecuniary
interest therein.

(3) Includes 1,666,666 shares held by Coulter Corporation, 3,703 shares held by
his wife Susan Sekman Coulter, 556 shares to be issued to Mr. Coulter upon
the exercise of an outstanding warrant prior to the closing of this
offering and 556 shares to be issued to Ms. Coulter upon the exercise of an
outstanding warrant prior to the closing of this offering. Mr. Coulter is a
director, officer and beneficial stockholder of Coulter Corporation.

(4) Includes 375,000 shares that were issued pursuant to a restricted stock
purchase agreement 341,666 of which will be subject to repurchase by the
Company as of February 6, 1996. Also includes 34,074 shares held by a
charitable trust formed by Michael F. Bigham and 5,116 shares to be issued
to such trust upon the exercise of an outstanding warrant prior to the
closing of this offering and 25,000 shares held by an irrevocable trust
formed for members of Mr. Bigham's family. Mr. Bigham disclaims beneficial
ownership of the shares held in each such trust except to the extent of his
pecuniary interest therein.

(5) Includes 556 shares to be issued to Mr. Atwood upon the exercise of an
outstanding warrant prior to the closing of this offering. Also includes
the shares owned and a warrant held by Brentwood Associates VII, L.P.
identified in footnote (6) below. Mr. Atwood, a director of the Company, is
a venture partner of Brentwood VII Ventures, L.P., which is the general
partner of Brentwood Associates VII, L.P. Mr. Atwood disclaims beneficial
ownership of the shares held by Brentwood Associates VII, L.P., except to
the extent of his pecuniary interest therein.

(6) Includes 370,370 shares held by Brentwood Associates VII, L.P., 3,703
shares held by the Brentwood Associates Venture Capital 1982 Profit Sharing
Trust (the "BAVC Profit Sharing Trust"), 55,611 shares to be issued to
Brentwood Associates VII, L.P. upon the exercise of an outstanding warrant
prior to the closing of this offering and 556 shares to be issued to the
BAVC Profit Sharing Trust upon the exercise of an outstanding warrant prior
to the closing of this offering.

(7) Includes 333,333 shares held by BankAmerica Ventures, 37,037 shares held by
BA Venture Partners II, 50,050 shares to be issued to BankAmerica Ventures
upon the exercise of an outstanding warrant prior to the closing of this
offering and 5,561 shares to be issued to BA Venture Partners II upon the
exercise of an outstanding warrant prior to the closing of this offering.

(8) Includes 5,555 shares held by the Donald Lucas Profit Sharing Trust, 31,850
shares held by the Donald L. Lucas & Lygia S. Lucas Trust, 37,407 shares
held by the Richard M. Lucas Foundation, 74,074 shares held by Sand Hill
Financial Company, and 178,519 shares held by Teton Capital Company. Also
includes 4,782 shares to be issued to the Donald L. Lucas & Lygia S. Lucas
Trust upon the exercise of an outstanding warrant prior to the closing of
this offering, 4,782 shares to be issued to the Richard M. Lucas Foundation
upon the exercise of an outstanding warrant prior to the closing of this
offering, 11,122 shares to be issued to Sand Hill Financial Company upon
the exercise of an outstanding warrant prior to the closing of this
offering and 26,804 shares to be issued to Teton Capital Company upon the
exercise of an outstanding warrant prior to the closing of this offering.
Donald L. Lucas, a director of the Company, is trustee of the Donald Lucas
Profit Sharing Trust, trustee of the Donald L. Lucas & Lygia S. Lucas
Trust, Chairman of the Board of the Richard M. Lucas Foundation, a general
partner of the Sand Hill Financial Company and the general partner of Teton
Capital Company. Mr. Lucas disclaims beneficial ownership of the shares,
except to the extent of his pecuniary interest therein.

(9) Includes 14,333 shares held by the Sue Van Revocable Trust, 2,853 shares to
be issued to Ms. Van upon the exercise of an outstanding warrant prior to
the closing of this offering and 2,152 shares to be issued to the Sue Van
Revocable Trust upon the exercise of an outstanding warrant prior to the
closing of this offering.

(10) Includes 4,861 shares of Common Stock subject to options exercisable within
60 days of December 1, 1996.

(11) Includes 4,219,328 shares held by entities and persons affiliated with
certain directors and executive officers as described above, 148,256 shares
to be issued upon the exercise of outstanding warrants prior to the closing
of this offering and 4,861 shares of Common Stock subject to options
exercisable within 60 days of December 6, 1996.

54
<PAGE> 56

DESCRIPTION OF CAPITAL STOCK

Upon the completion of this offering, the authorized capital stock of the
Company will consist of 30,000,000 shares of Common Stock, $.001 par value, and
3,000,000 shares of Preferred Stock, $.001 par value.

COMMON STOCK

As of December 6, 1996, there were 7,535,604 shares of Common Stock
outstanding (after giving effect to the conversion of all Preferred Stock and
the one-for-three reverse stock split and the exercise of all warrants that
would otherwise terminate upon completion of the offering) held of record by 80
stockholders. The holders of Common Stock are entitled to one vote per share on
all matters to be voted on by the stockholders. Subject to preferences that may
be applicable to outstanding shares of Preferred Stock, if any, the holders of
Common Stock are entitled to receive ratably such dividends as may be declared
from time to time by the Board of Directors out of funds legally available
therefor. See "Dividend Policy". In the event of the liquidation, dissolution of
winding up of the Company, the holders of Common Stock are entitled to share
ratably in all assets remaining after payment of liabilities, subject to prior
liquidation rights of Preferred Stock, if any, then outstanding. The Common
Stock has no preemptive conversion rights or other subscription rights. There
are no redemption or sinking funds provisions applicable to the Common Stock.
All outstanding shares of Common Stock are fully paid and non-assessable, and
the shares of Common Stock to be outstanding upon completion of this offering
will be fully paid and non-assessable.

PREFERRED STOCK

Upon completion of this offering, no shares of Preferred Stock will be
outstanding. The Board of Directors will have the authority to issue up to
3,000,000 shares of Preferred Stock in one or more series and to fix the rights,
preferences, privileges and restrictions granted to or imposed upon such
Preferred Stock, including dividend rights, conversion rights, terms of
redemption, liquidation preference sinking fund terms and the number of shares
constituting any series or the designation of such series, without any further
vote or action by the stockholders. The Board of Directors, without stockholder
approval, can issue Preferred Stock with voting and conversion rights which
could adversely affect the voting power of the holders of Common Stock. The
issuance of Preferred Stock could have the effect of delaying, deferring or
preventing a change in control of the Company. The Company has no present plan
to issue any shares of Preferred Stock.

WARRANTS

Upon the completion of this offering, the Company will have a warrant
outstanding to purchase 24,666 shares of the Company's Common Stock at a
purchase price of $9.75 per share, subject to adjustment in certain
circumstances. This warrant expires in December 2002.

REGISTRATION RIGHTS

The holders (or their permitted transferees) of approximately 7,097,994
shares of Common Stock ("Holders") are entitled to certain rights with respect
to the registration of such shares under the Securities Act of 1933, as amended
(the "Securities Act"). Under the terms of an agreement between the Company and
such holders, if the Company proposes to register any of its Common Stock,
subject to certain exceptions, under the Securities Act, the Holders are
entitled to notice of the registration and are entitled to include, at the
Company's expense, shares of such Common Stock therein. The Holders have waived
their registration right with respect to this offering. In addition, the Holders
of sufficient shares with registration rights may require the Company at its
expense on no more than two occasions to file a registration statement under the
Securities Act with respect to their shares of Common Stock. Such rights may not
be exercised until 180 days after the effective date of this offering. Further,
Holders of sufficient shares with registration rights may require the Company to
register their

55
<PAGE> 57

shares on Form S-3 when such form becomes available to the Company, subject to
certain conditions and limitations. Such registration rights expire seven years
after the completion of this offering.

DELAWARE ANTI-TAKEOVER LAW AND CERTAIN CHARTER PROVISIONS

The Company is subject to the provisions of Section 203 of the Delaware
Law. In general, Section 203 prohibits a public Delaware corporation from
engaging in a "business combination" with an "interested stockholder" for a
period of three years after the date of the transaction in which the person
became an interested stockholder, unless the business combination is approved in
a prescribed manner. Generally, a "business combination" includes mergers, asset
sales and other transactions resulting in a financial benefit to the
stockholder. An "interested stockholder" is a person who, together with
affiliates and associates, owns (or within three years, did own) 15% or more of
a corporation's voting stock. The statute could have the effect of delaying,
deferring or preventing a change in control of the Company.

The Company's Certificate of Incorporation and Bylaws which will become
effective upon the closing of this offering also require that any action
required or permitted to be taken by stockholders of the Company must be
effected at a duly called annual or special meeting of the stockholders and may
not be effected by a consent in writing. In addition, special meetings of the
stockholders of the Company may be called only by the Board of Directors, the
Chairman of the Board or the Chief Executive Officer of the Company. The
Company's Certificate of Incorporation also specifies that the authorized number
of directors may be changed only by resolution of the Board of Directors. These
provisions may have the effect of deterring hostile takeovers or delaying
changes in control or management of the Company.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Company's Common Stock is
ChaseMellon Shareholder Services.

56
<PAGE> 58

SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering, there has been no public market for the Common
Stock of the Company. Future sales of substantial amounts of Common Stock in the
public market could adversely affect the market price of the Common Stock
prevailing from time to time. Furthermore, since only a limited number of shares
will be available for sale shortly after this offering because of certain
contractual and legal restrictions on resale described below, sales of
substantial amounts of Common Stock of the Company in the public market after
the restrictions lapse could adversely affect the prevailing market price and
the ability of the Company to raise equity capital in the future.

Upon completion of this offering, the Company will have outstanding an
aggregate of 10,035,604 shares of Common Stock, assuming no exercise of the
Underwriters' over-allotment option and no exercise of options outstanding as of
December 6, 1996. Of these shares, the 2,500,000 shares of Common Stock sold in
this offering will be freely tradable without restriction or further
registration under the Securities Act, unless held by Affiliates of the Company.
The remaining 7,535,604 shares of Common Stock held by existing stockholders are
Restricted Shares. Restricted Shares may be sold in the public market only if
registered or if they qualify for an exemption from registration under Rules 144
or 701 promulgated under the Securities Act, which rules are summarized below.
As a result of Lock-up Agreements and the provisions of Rules 144 and 701,
additional shares will be available for sale in the public market as follows:
(i) no Restricted Shares will be eligible for immediate sale on the effective
date of this offering; (ii) 2,937,608 Restricted Shares (plus 154,794 shares of
Common Stock issuable to employees and consultants pursuant to stock options
that are then vested) will be eligible for sale upon expiration of the Lock-up
Agreements 180 days after the date of this Prospectus; and (iii) the remainder
of the Restricted Shares will be eligible for sale from time to time thereafter
upon expiration of their respective two-year holding periods.

Upon completion of this offering, the holders of 7,097,994 shares of Common
Stock, or their transferees, will be entitled to certain rights with respect to
the registration of such shares under the Securities Act. See "Description of
Capital Stock -- Registration Rights." Registration of such shares under the
Securities Act would result in such shares becoming freely tradeable without
restriction under the Securities Act (except for shares purchased by Affiliates,
if any) immediately upon the effectiveness of such registration.

The Company's officers, directors and certain stockholders, who will own in
the aggregate 7,480,228 shares of Common Stock after the offering, have agreed
that they will not, without the prior written consent of Hambrecht & Quist LLC,
offer, sell, or otherwise dispose of any shares of Common Stock, options or
warrants to acquire shares of Common Stock or securities exchangeable for or
convertible into Shares of Common Stock owned by them during the 180-day period
following the date of this Prospectus. The Company has agreed that it will not,
without the prior written consent of Hambrecht & Quist LLC, offer, sell or
otherwise dispose of any shares of Common Stock, options or warrants to acquire
shares of Common Stock or securities exchangeable for or convertible into shares
of Common Stock during the 180-day period following the date of this Prospectus,
except that the Company may issue shares upon the exercise of options granted
and warrants outstanding prior to the date hereof, and may grant additional
options under its stock option plans, provided that, without the prior written
consent of Hambrecht & Quist LLC, such additional options shall not be
exercisable during such period. Any shares subject to the Lock-up Agreements may
by released at any time without notice by Hambrecht & Quist LLC.

In general, under Rule 144 as currently in effect, beginning 90 days after
the date of this Prospectus, an Affiliate of the Company, or person (or persons
whose shares are aggregated) who has beneficially owned Restricted Shares for at
least two years will be entitled to sell in any three-month period a number of
shares that does not exceed the greater of (i) one percent of the then
outstanding shares of the Company's Common Stock (approximately 100,356 shares
immediately after the offering) or (ii) the average weekly trading volume of the
Company's Common Stock in the Nasdaq National Market during the four calendar
weeks immediately preceding the date on which notice of

57
<PAGE> 59

the sale is filed with the SEC. Sales pursuant to Rule 144 are subject to
certain requirements relating to manner of sale, notice and availability of
current public information about the Company. A person (or persons whose shares
are aggregated) who is not deemed to have been an Affiliate of the Company at
any time during the 90 days immediately preceding the sale and who has
beneficially owned the shares proposed to be sold for at least three years is
entitled to sell such shares under Rule 144(k) without regard to the limitations
described above.

The SEC is currently considering a proposal to reduce the initial Rule 144
holding period to one year and the Rule 144(k) holding period to two years. This
proposal, if adopted, would substantially increase the number of shares of
Restricted Shares eligible for sale upon expiration of the Lock-up Agreements.
No assurance can be given concerning whether or when the proposal will be
adopted by the SEC.

An employee, officer or director of or consultant to the Company who
purchased shares or was granted options to purchase shares pursuant to a written
compensatory plan or contract is entitled to rely on the resale provisions of
Rule 701 under the Securities Act, which permits Affiliates and non-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 this
Prospectus. In addition, non-Affiliates may sell Rule 701 shares without
complying with the public information, volume and notice provisions of Rule 144.

The Company intends to file a registration statement under the Securities
Act covering shares of Common Stock reserved for issuance under the Company's
1995 Plan, 1996 Plan and Purchase Plan. Based on the number of options
outstanding and options and shares reserved for issuance at December 6, 1996,
such registration statement would cover approximately 2,579,057 shares. Such
registration statement is expected to be filed and to become effective as soon
as practicable after the closing of this offering. Shares registered under such
registration statement will, subject to Rule 144 volume limitations applicable
to Affiliates, be available for sale in the open market upon expiration of the
Lock-up agreements or contractual restrictions and any vesting restrictions. As
of December 6, 1996, options to purchase 802,306 shares of Common Stock were
issued and outstanding under the 1995 Plan, and no options to purchase shares
had been granted under the 1996 Plan and Purchase Plan. See
"Management -- Equity Incentive Plans."

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<PAGE> 60

UNDERWRITING

Subject to the terms and conditions of the Underwriting Agreement, the
Underwriters named below, through their Representatives, Hambrecht & Quist LLC,
Alex. Brown & Sons Incorporated and Pacific Growth Equities, Inc., have
severally agreed to purchase from the Company the following respective number of
shares of Common Stock:

<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES
------------------------------------------------------------------ ---------
<S> <C>
Hambrecht & Quist LLC.............................................
Alex. Brown & Sons Incorporated...................................
Pacific Growth Equities, Inc......................................

---------
Total............................................................. 2,500,000
========
</TABLE>

The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent, including the absence
of any material adverse change in the Company's business and the receipt of
certain certificates, opinions and letters from the Company, its counsel and
independent auditors. The nature of the Underwriters' obligation is such that
they are committed to purchase all shares of Common Stock offered hereby if any
of such shares are purchased.

The Underwriters propose to offer the shares of Common Stock directly to
the public at the initial public offering price set forth on the cover page of
this Prospectus and to certain dealers at such price less a concession not in
excess of $ per share. The Underwriters may allow and such dealers may
reallow a concession not in excess of $ per share to certain other
dealers. After the initial public offering of the shares, the offering price and
other selling terms may be changed by the Representatives of the Underwriters.
The Representatives have informed the Company that the Underwriters do not
intend to confirm sales to accounts over which they exercise discretionary
authority.

The Company has granted to the Underwriters an option, exercisable no later
than 30 days after the date of this Prospectus, to purchase up to 375,000
additional shares of Common Stock at the initial public offering price, less the
underwriting discount, set forth on the cover page of this Prospectus. To the
extent that the Underwriters exercise this option, each of the Underwriters will
have a firm commitment to purchase approximately the same percentage thereof
which the number of shares of Common Stock to be purchased by it shown in the
above table bears to the total number of shares of Common Stock offered hereby.
The Company will be obligated, pursuant to the option, to sell shares to the
Underwriters to the extent the option is exercised. The Underwriters may
exercise such option only to cover over-allotments made in connection with the
sale of shares of Common Stock offered hereby.

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 shares in whole or in part.

The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act, and to contribute
to payments the Underwriters may be required to make in respect thereof.

59
<PAGE> 61

The Company's officers, directors and certain stockholders, who will own in
the aggregate 7,480,228 shares of Common Stock after the offering, have agreed
that they will not, without the prior written consent of Hambrecht & Quist LLC,
offer, sell or otherwise dispose of any shares of Common Stock, options or
warrants to acquire shares of Common Stock or securities exchangeable for or
convertible into Shares of Common Stock owned by them during the 180-day period
following the date of this Prospectus. The Company has agreed that it will not,
without the prior written consent of Hambrecht & Quist LLC, offer, sell or
otherwise dispose of any shares of Common Stock, options or warrants to acquire
shares of Common Stock or securities exchangeable for or convertible into shares
of Common Stock during the 180-day period following the date of this Prospectus,
except that the Company may issue shares upon the exercise of options granted
and warrants outstanding prior to the date hereof, and may grant additional
options under its stock option plans, provided that, without the prior written
consent of Hambrecht & Quist LLC, such additional options shall not be
exercisable during such period.

Prior to this offering, there has been no public market for the Common
Stock. The initial public offering price for the Common Stock will be determined
by negotiation among the Company and the Representatives. Among the factors to
be considered in determining the initial public offering price are prevailing
market and economic conditions, revenues and earnings of the Company, market
valuations of other companies engaged in activities similar to the Company,
estimates of the business potential and prospects of the Company, the present
state of the Company's business operations, the Company's management and other
factors deemed relevant. The estimated initial public offering price range set
forth on the cover of this preliminary prospectus is subject to change as a
result of market conditions and other factors.

LEGAL MATTERS

The legality of the Common Stock offered hereby will be passed upon for the
Company by Cooley Godward LLP, Palo Alto, California ("Cooley Godward"). Certain
legal matters will be passed upon for the Underwriters by Wilson Sonsini
Goodrich & Rosati, Palo Alto, California. As of the date of this Prospectus, a
total of 4,444 shares of Common Stock and a warrant to purchase 667 shares of
Common Stock were beneficially owned by Cooley Godward.

EXPERTS

The Consolidated Financial Statements of Coulter Pharmaceutical, Inc. at
December 31, 1995 and September 30, 1996, and for the period from inception
(February 16, 1995) to September 30, 1996 appearing in this Prospectus and
Registration Statement have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon appearing elsewhere herein, and
are included in reliance upon such report given upon the authority of such firm
as experts in accounting and auditing.

The Financial Statements of the Antibody Therapeutics Business Operations
of Coulter Corporation at December 31, 1993 and 1994, and for each of the two
years in the period ended December 31, 1994 and for the period from January 1,
1995 to February 15, 1995, appearing in this Prospectus and Registration
Statement have been audited by Ernst & Young LLP, independent auditors, as set
forth in their report thereon appearing elsewhere herein, and are included in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.

60
<PAGE> 62

ADDITIONAL INFORMATION

A Registration Statement on Form S-1, including amendments thereto,
relating to the Common Stock offered by the Company has been filed with the SEC,
Washington, D.C. 20549. This Prospectus does not contain all of the information
set forth in the Registration Statement and the exhibits and schedules thereto.
Statements contained in this Prospectus as to the contents of any contract or
any other document referred to are not necessarily complete, and in each
instance reference is made to the copy of such contract or other document filed
as an exhibit to the Registration Statement, each such statement being qualified
in all respects by such reference. For further information with respect to the
Company and the Common Stock offered hereby, reference is made to the
Registration Statement and the exhibits and schedules thereto. A copy of the
Registration Statement may be inspected by anyone without charge at the public
reference facilities maintained by the SEC in Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the SEC's regional offices located at the
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661 and Seven World Trade Center, 13th Floor, New York, New York
10048, and copies of all or any part thereof may be obtained from such offices,
upon payment of certain fees prescribed by the SEC. The SEC maintains a World
Wide Web site that contains reports, proxy and information statements and other
information filed electronically with the SEC. The address of the SEC's World
Wide Website is http://www.sec.gov.

61
<PAGE> 63

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
COULTER PHARMACEUTICAL, INC. CONSOLIDATED FINANCIAL STATEMENTS
Report of Ernst & Young LLP, Independent Auditors..................................... F-2
Consolidated Balance Sheets........................................................... F-3
Consolidated Statements of Operations................................................. F-4
Consolidated Statement of Stockholders' Equity........................................ F-5
Consolidated Statements of Cash Flows................................................. F-6
Notes to Consolidated Financial Statements............................................ F-7
ANTIBODY THERAPEUTICS BUSINESS OPERATIONS OF COULTER CORPORATION
Report of Ernst & Young LLP, Independent Auditors..................................... F-15
Balance Sheets........................................................................ F-16
Statements of Operations.............................................................. F-17
Statements of Cash Flows.............................................................. F-18
Notes to Financial Statements......................................................... F-19
</TABLE>

F-1
<PAGE> 64

REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

The Board of Directors and Stockholders
Coulter Pharmaceutical, Inc.

We have audited the accompanying consolidated balance sheets of Coulter
Pharmaceutical, Inc. (a development stage company) (the "Company") as of
December 31, 1995 and September 30, 1996, and the related consolidated
statements of operations and cash flows for the periods from inception (February
16, 1995) to December 31, 1995 and September 30, 1996 and for the nine months
ended September 30, 1996, and the related consolidated statement of
stockholders' equity for the period from inception (February 16, 1995) to
September 30, 1996. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Coulter
Pharmaceutical, Inc. at December 31, 1995 and September 30, 1996, and the
consolidated results of its operations and its cash flows for the periods from
inception (February 16, 1995) to December 31, 1995 and September 30, 1996 and
for the nine months ended September 30, 1996, in conformity with generally
accepted accounting principles.

Palo Alto, California
October 31, 1996, except
for Note 10, as to which

the date is January , 1997

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

The foregoing report is in the form that will be signed upon completion of the
one-for-three reverse common stock split described in Note 10 to the
consolidated financial statements.

Palo Alto, California

December 20, 1996

F-2
<PAGE> 65

COULTER PHARMACEUTICAL, INC.
(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
UNAUDITED PRO
FORMA
STOCKHOLDERS'
EQUITY AT
DECEMBER 31, SEPTEMBER 30, SEPTEMBER 30,
1995 1996 1996
------------ ------------- -------------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................ $ 3,438 $ 15,101
Short-term investments............................... -- 3,734
Prepaid expenses and other current assets............ 40 285
Current portion of employee loans receivable......... 31 55
------- --------
Total current assets......................... 3,509 19,175
Property and equipment, net............................ 93 900
Other assets........................................... 26 115
Employee loans receivable.............................. -- 294
------- --------
$ 3,628 $ 20,484
======= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable..................................... $ 341 $ 1,485
Payable to Coulter Corporation....................... 25 63
Accrued liabilities.................................. 265 4,130
------- --------
Total current liabilities.................... 631 5,678
Commitments
Stockholders' equity:
Preferred stock, issuable in series, $.001 par value,
20,000,000 shares authorized: 9,833,333 and
19,797,940 shares issued and outstanding at
December 31, 1995 and September 30, 1996,
respectively; at amounts paid in; aggregate
liquidation preference of $33,420 at September 30,
1996 (pro forma: $.001 par value, 3,000,000 shares
authorized, none outstanding)..................... 5,989 28,355 $ --
Common stock, $.001 par value: 25,000,000 shares
authorized; 2,059 and 412,274 shares issued and
outstanding at December 31, 1995 and September 30,
1996, respectively (pro forma: $.001 par value,
30,000,000 shares authorized, 7,011,563 shares
issued and outstanding at September 30, 1996)..... -- 1 7
Additional paid-in capital........................... 1 786 29,135
Net unrealized loss on securities
available-for-sale................................ -- (24) (24)
Deferred compensation................................ -- (498) (498)
Deficit accumulated during the development stage..... (2,993) (13,814) (13,814)
------- -------- --------
Total stockholders' equity................... 2,997 14,806 $ 14,806
======= ======== ========
$ 3,628 $ 20,484
======= ========
</TABLE>

See accompanying notes.

F-3
<PAGE> 66

COULTER PHARMACEUTICAL, INC.
(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
FOR THE PERIODS FROM FOR THE PERIOD
INCEPTION FROM INCEPTION
(FEBRUARY 16, 1995) TO NINE MONTHS (FEBRUARY 16,
---------------------------- ENDED 1995) TO
DECEMBER 31, SEPTEMBER 30, SEPTEMBER 30,
1995 1996 1996
------------ SEPTEMBER 30, ------------- --------------
1995
-------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Operating expenses:
Research and development................ $ 2,539 $ 1,488 $ 9,896 $ 12,435
General and administrative.............. 581 380 1,453 2,034
------- ------- -------- --------
Total operating expenses........ 3,120 1,868 11,349 14,469
Interest income........................... 127 73 528 655
------- ------- -------- --------
Net loss.................................. $ (2,993) $(1,795) $ (10,821) $(13,814)
======= ======= ======== ========
Pro forma net loss per share.............. $ (0.44) $ (1.40)
------- --------
Shares used in computing pro forma net
loss per share.......................... 6,798 7,736
======= ========
</TABLE>

See accompanying notes.

F-4
<PAGE> 67

COULTER PHARMACEUTICAL, INC.
(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
NET DEFICIT
CONVERTIBLE UNREALIZED LOSS ACCUMULATED
PREFERRED STOCK COMMON STOCK ADDITIONAL ON SECURITIES DURING THE TOTAL
-------------------- ------------------ PAID-IN AVAILABLE-FOR- DEFERRED DEVELOPMENT STOCKHOLDERS'
SHARES AMOUNT SHARES AMOUNT CAPITAL SALE COMPENSATION STAGE EQUITY
---------- ------- --------- ------ ---------- --------------- ------------ ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Issuance
of
Series A
convertible
preferred
stock to
founders
at $1.00
per
share
for cash
and
technology
in
February
1995.... 7,500,000 $ 2,500 -- $-- $ -- $ -- $ -- $ -- $ 2,500
Issuance
of
Series B
convertible
preferred
stock to
a
founder
at $1.50
per
share
for cash
in
August
and
October
1995,
less
issuance
costs of
$11..... 2,333,333 3,489 -- -- -- -- -- -- 3,489
Exercise
of
common
stock
options
by a
consultant
at $0.30
per
share
for cash
in
November
1995.... -- -- 2,059 -- 1 -- -- -- 1
Net loss.. -- -- -- -- -- -- -- (2,993) (2,993)
---------- ------- --------- --- ---- ---- ----- -------- --------
BALANCES
AT
DECEMBER
31,
1995.... 9,833,333 5,989 2,059 -- 1 -- -- (2,993) 2,997
Issuance
of
Series C
convertible
preferred
stock
and
warrants
for
498,705
shares
of
common
stock to
investors
at $2.25
per
share
for cash
in April
1996,
less
issuance
costs of
$55..... 9,964,607 22,366 -- -- -- -- -- -- 22,366
Issuance
of
common
stock to
a
prospective
officer at
$0.45 per
share
for cash
in March
1996.... -- -- 400,000 1 179 -- -- -- 180
Exercise
of
common
stock
options
by a
director
and a
consultant
at $0.30
and
$0.75
per
share
for cash
in March
1996 and
August
1996.... -- -- 10,215 -- 4 -- -- -- 4
Unrealized
loss on
securities
available-for-sale,
net..... -- -- -- -- -- (24) -- -- (24)
Deferred
compensation
related to
grants
of
certain
stock
options... -- -- -- -- 602 -- (602) -- --
Amortization
of
deferred
compensation... -- -- -- -- -- -- 104 -- 104
Net
loss.... -- -- -- -- -- -- -- (10,821) (10,821)
---------- ------- --------- --- ---- ---- ----- -------- --------
BALANCES
AT
SEPTEMBER
30,
1996.... 19,797,940 $28,355 412,274 $1 $786 $ (24) $ (498) $ (13,814) $ 14,806
========== ======= ========= === ==== ==== ===== ======== ========
</TABLE>

See accompanying notes.

F-5
<PAGE> 68

COULTER PHARMACEUTICAL, INC.
(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED STATEMENT OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(IN THOUSANDS)

<TABLE>
<CAPTION>
FOR THE PERIODS FROM FOR THE PERIOD
INCEPTION (FEBRUARY 16, FROM INCEPTION
1995) TO NINE MONTHS (FEBRUARY 16,
---------------------------- ENDED 1995) TO
DECEMBER 31, SEPTEMBER 30, SEPTEMBER 30,
1995 1996 1996
------------ SEPTEMBER 30, ------------- --------------
1995
-------------
(UNAUDITED)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss.................................. $ (2,993) $(1,795) $ (10,821) $(13,814)
Adjustments to reconcile net loss to net
cash provided by (used in) operating
activities:
Depreciation and amortization........... 15 8 34 49
Amortization of deferred compensation... -- -- 104 104
Changes in operating assets and
liabilities:
Prepaid expenses and other current
assets............................. (40) (95) (245) (285)
Employee loans receivable............ (31) (30) (318) (349)
Other assets......................... (29) (26) (92) (121)
Accounts payable..................... 341 417 1,144 1,485
Payable to Coulter Corporation....... 25 41 38 63
Accrued liabilities.................. 265 232 3,865 4,130
------- ------- -------- --------
Net cash used in operating activities..... (2,447) (1,248) (6,291) (8,738)
------- ------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of short-term investments........ -- -- (3,758) (3,758)
Purchases of property and equipment....... (105) (74) (838) (943)
------- ------- -------- --------
Net cash used in investing activities..... (105) (74) (4,596) (4,701)
------- ------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuances of convertible
preferred stock, net.................... 5,989 5,942 22,366 28,355
Proceeds from issuance of common stock.... 1 -- 184 185
------- ------- -------- --------
Net cash provided by financing
activities.............................. 5,990 5,942 22,550 28,540
------- ------- -------- --------
Net increase in cash and cash
equivalents............................. 3,438 4,620 11,663 15,101
Cash and cash equivalents at beginning of
period.................................. -- -- 3,438 --
------- ------- -------- --------
Cash and cash equivalents at end of
period.................................. $ 3,438 $ 4,620 $ 15,101 $ 15,101
======= ======= ======== ========
</TABLE>

See accompanying notes.

F-6
<PAGE> 69

COULTER PHARMACEUTICAL, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION FOR THE PERIOD FROM INCEPTION (FEBRUARY 16, 1995) TO
SEPTEMBER 30, 1995 IS UNAUDITED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION AND PRINCIPLES OF CONSOLIDATION

Coulter Pharmaceutical, Inc. (the "Company" or "Coulter") was incorporated
in the State of Delaware on February 16, 1995 to engage in the research and
development of products for the treatment of cancer. The Company's principal
activities to date have involved conducting research and development, recruiting
management and technical personnel, obtaining financing and securing operating
facilities. Therefore, the Company is classified as a development stage company.

In the course of its development activities, the Company has sustained
continuing operating losses and expects such losses to continue over the next
several years. The Company plans to continue to finance the Company with a
combination of stock sales, such as the initial public offering contemplated by
this Prospectus and, in the longer term, revenues from product sales and
technology licenses. The Company's ability to continue as a going concern is
dependent upon successful execution of financings and, ultimately, upon
achieving profitable operations. If the public offering contemplated herein is
not consummated, the Company will have to seek other sources of capital or
adjust its operating plans.

The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiary, Coulter Pharma Belgium, SA which was formed
under the laws of Belgium in June 1996. Intercompany balances and transactions
have been eliminated.

In connection with its formation, the Company issued 5,000,000 shares of
its Series A preferred stock to Coulter Corporation in exchange for rights to
certain intellectual property, contractual rights and other assets pertaining to
the Company's B-1 Therapy (convertible into 1,666,666 shares of common stock).
Under the terms of this assignment agreement, royalties are payable to Coulter
Corporation upon commercial sale of product, if any, derived from these
licenses. Coulter Corporation also has the right, in lieu of receiving cash, to
purchase additional shares of the Company's equity securities at the then
current fair market value of such securities with respect to the first $4.5
million payable to Coulter Corporation under this assignment agreement. This
transaction was accounted for as an acquisition of assets from an affiliate with
the amounts brought over at their historical basis of $0.

INTERIM FINANCIAL DATA

The interim financial data for the period from inception (February 16,
1995) to September 30, 1995 is unaudited; however, in the opinion of management,
the interim data includes all adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation of the results for the interim
period ended September 30, 1995.

The consolidated financial statements and related notes for the nine months
ended September 30, 1996 are audited. The results of operations for the nine
months ended September 30, 1996 are not necessarily indicative of the results
that may be expected for the entire year ending December 31, 1996.

NET LOSS PER SHARE

Except as noted below, historical net loss per share is computed using the
weighted average number of common shares outstanding. Common equivalent shares
from outstanding stock options, convertible preferred stock and warrants are
excluded from the computation as their effect is antidilutive, except that,
pursuant to the Securities and Exchange Commission Staff Accounting Bulletins,
common and common equivalent shares issued during the period beginning 12 months
prior

F-7
<PAGE> 70

COULTER PHARMACEUTICAL, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

to the proposed initial filing of the Company's Registration Statement at prices
below the assumed public offering price have been included in the calculation as
if they were outstanding for all periods presented (using the treasury stock
method and the assumed public offering price for stock options and warrants and
the if-converted method for convertible preferred stock).

Historical net loss per share information is as follows:

<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION NINE MONTHS
(FEBRUARY 16, 1995) ENDED
TO DECEMBER 31, SEPTEMBER 30,
1995 1996
------------------- -------------
<S> <C> <C>
Net loss per share..................................... $ (0.67) $ (2.43)
Share used in computing historical net loss per share
(in thousands)....................................... 4,456 4,458
</TABLE>

Pro forma net loss per share has been computed as described above and also
gives effect to the conversion of convertible preferred shares not included
above that will automatically convert upon completion of the Company's initial
public offering (using the if-converted method). Such shares are included from
the original date of issuance.

USE OF ESTIMATES

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

CURRENT VULNERABILITY TO CERTAIN CONCENTRATIONS

The Company is supplying the B-1 Antibody to clinical trial sites from an
existing, finite inventory produced by Coulter Corporation, a related party.
This inventory is not sufficient to meet most of the Company's clinical trial
requirements in 1997. To achieve the levels of production necessary to support
on-going clinical trials of its B-1 Therapy, the Company has contracted with a
third-party manufacturer, LONZA Biologics plc ("Lonza"), to produce the B-1
Antibody. To date, Lonza has completed the production of three batches of the
B-1 Antibody; however, the Company must seek FDA clearance to use Lonza-produced
material and should such clearance not be obtained in a timely manner, certain
research and development activities may be delayed.

CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS

The Company considers all highly liquid investments with maturities of
three months or less from the date of purchase to be cash equivalents.
Short-term investments consist of investments with original maturities greater
than three months, but less than one year.

The Company accounts for its cash equivalents and short-term investments
under Statement of Financial Accounting Standards No. 115 "Accounting for
Certain Investments in Debt and Equity Securities" ("SFAS No. 115"). Under the
provisions of SFAS No. 115, the Company has classified its cash equivalents and
short-term investments as "available-for-sale." Such investments are recorded at
fair value and unrealized gains and losses, which are considered to be
temporary, are recorded as a separate component of Stockholders' equity until
realized. The Company classifies all investments in its available-for-sale
portfolio as current assets.

F-8
<PAGE> 71

COULTER PHARMACEUTICAL, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

FOREIGN CURRENCY TRANSLATION

The functional currency of Coulter Pharma Belgium, SA is the U.S. Dollar.
Assets and liabilities of Coulter Pharma Belgium, SA are translated at current
exchange rates, and the related revenues and expenses are translated at average
exchange rates in effect during the period. The resulting translation adjustment
is recorded in other (income) expense in the accompanying consolidated
statements of operations.

PROPERTY AND EQUIPMENT

Purchased property and equipment are stated at cost less accumulated
depreciation which is calculated using the straight-line method over the
estimated useful lives of the respective assets of three to five years.

SPONSORED RESEARCH AND LICENSE FEES

Research and development expenses paid to third parties under sponsored
research arrangements are recognized as the related services are performed,
generally ratably over the period of service. Payments for license fees are
expensed when paid.

STOCK-BASED COMPENSATION

In accordance with the provisions of Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"), the
Company has elected to follow Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" ("APB 25") and related
interpretations in accounting for its employee stock option plans. Under APB 25,
if the exercise price of the Company's employee stock options equals or exceeds
the fair value of the underlying stock on the date of grant as determined by the
Company's Board of Directors, no compensation expense is recognized.

2. CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS

As of December 31, 1995, the Company had no short-term investments and all
cash equivalents were invested in a money market mutual fund with a single
institution. The difference between cost and fair value was immaterial at
December 31, 1995. The Company's cash equivalents and short-term investments as
of September 30, 1996 are as follows (in thousands):

<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED ESTIMATED
COST GAINS LOSSES FAIR VALUE
--------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Money market funds..................... $ 1,624 $ -- $ -- $ 1,624
U.S. government and federal agency
bonds................................ 1,892 -- (3) 1,889
Commercial paper....................... 14,378 -- (21) 14,357
------- ---- -------
--
Total........................ 17,894 (24) 17,870
--
Less amounts classified as cash
equivalents.......................... (14,136 ) -- (14,136)
--
------- ---- -------
--
Total short-term
investments................ $ 3,758 $ -- $ (24) $ 3,734
======= ==== ==== =======

</TABLE>

Realized gains or losses on sales of available-for-sale securities in the
nine months ended September 30, 1996 were not significant. There were no
realized gains or losses in 1995.

F-9
<PAGE> 72

COULTER PHARMACEUTICAL, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

3. PROPERTY AND EQUIPMENT

Property and equipment consists of the following (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1995 1996
------------ -------------
<S> <C> <C>
Machinery and equipment.................................... $ 66 $ 125
Furniture and fixtures..................................... 39 75
Construction in process.................................... -- 743
---- ----
105 943
Less accumulated depreciation.............................. (12) (43)
---- ----
Property and equipment, net................................ $ 93 $ 900
==== ====
</TABLE>

4. SPONSORED RESEARCH AND LICENSE AGREEMENTS

The Company has entered into numerous agreements with research
institutions, universities, and other entities for the performance of research
and development activities and for the acquisition of licenses related to those
activities. As of September 30, 1996, noncancelable commitments under these
arrangements were not material. In order to maintain certain of these licenses,
the Company must pay specified annual license fees. Certain of the licenses
provide for the payment of royalties by the Company on future product sales, if
any.

5. ACCRUED LIABILITIES

Accrued liabilities consists of the following (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1995 1996
------------ -------------
<S> <C> <C>
Accrued research and development expenses.................. $ 83 $ 3,309
Accrued clinical trial costs............................... 21 515
Other...................................................... 161 306
---- ----
Total...................................................... $265 $ 4,130
==== ====
</TABLE>

6. LEASE COMMITMENTS

The Company leases its offices under operating leases which expire on
December 31, 2000. Future minimum lease payments under all noncancelable leases
are as follows: (in thousands)

<TABLE>
<CAPTION>
OPERATING LEASES
----------------
<S> <C>
Year ending December 31, 1996 (remaining 3 months)................... $ 72
1997............................................................... 285
1998............................................................... 285
1999............................................................... 158
2000............................................................... 68
----
Total................................................................ $868
====
</TABLE>

F-10
<PAGE> 73

COULTER PHARMACEUTICAL, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The above minimum payments include a lease executed in October 1996 for
additional office space.

Rent expense for the period from inception (February 16, 1995) to December
31, 1995 and for the nine months ended September 30, 1996 was $71,000 and
$122,000, respectively.

7. RELATED PARTY TRANSACTIONS

During 1995 and 1996, the Company issued loans to employees totaling
$30,000 and $455,000, respectively. Interest rates on these loans range from
6.0% to prime plus 2.0% (10.25% at September 30, 1996). The total loan amount
issued during 1996 includes imputed interest of $106,000. At December 31, 1995
and September 30, 1996, the receivable due from employee loans outstanding was
$31,000 and $349,000, respectively. These loans plus accrued interest are to be
repaid (less any amounts forgiven) at the end of their respective terms. The
loans mature at dates ranging from December 1996 to December 2000.

The Company has a continuing relationship with Coulter Corporation, an
affiliate. Coulter Corporation has supplied the B-1 antibody and certain other
services at its cost in support of the Company's ongoing development of the B-1
therapy. In addition, pursuant to a sublicense assignment agreement, the Company
has agreed to reimburse Coulter Corporation for royalties due to third parties
with respect to certain intellectual property rights sublicensed to the Company.
Coulter Corporation also has the right, in lieu of receiving cash, to purchase
additional shares of the Company's equity securities at the then current market
value of such securities with respect to the first $4.5 million payable under
the assignment agreement for royalties due upon commercial sale of product, if
any, derived from these licenses. Further, Coulter Corporation has nominated and
elected two of the Company's Board of Directors members in accordance with a
voting rights agreement which terminates upon closing of the Company's Series C
preferred stock offering. Included in research and development expense is
$291,000 and $206,000 for the period from inception (February 16, 1995) to
December 31, 1995 and for the nine months ended September 30, 1996,
respectively, related to services provided by Coulter Corporation and
reimbursements to Coulter Corporation for license fees and supplies.

8. STOCKHOLDERS' EQUITY

PREFERRED STOCK

Preferred stock authorized and outstanding at September 30, 1996 is as
follows:

<TABLE>
<CAPTION>
NUMBER OF SHARES
-------------------------- SHARES OF COMMON AGGREGATE
ISSUED AND STOCK ISSUABLE LIQUIDATION
AUTHORIZED OUTSTANDING UPON CONVERSION AMOUNT PREFERENCE
---------- ----------- ---------------- ------- -----------
(IN THOUSANDS, EXCEPT SHARES)
<S> <C> <C> <C> <C> <C>
Designated:
Series A...... 7,500,000 7,500,000 2,499,999 $ 2,500 $ 7,500
Series B...... 2,500,000 2,333,333 777,776 3,489 3,500
Series C...... 10,000,000 9,964,607 3,321,514 22,366 22,420
---------- ---------- ------- -------
20,000,000 19,797,940 6,599,289 $28,355 $33,420
========== ========== ======= =======
</TABLE>

All currently designated series of preferred stock are convertible at the
stockholders' option at any time into common stock on a three-for-one (preferred
shares-for-common shares) basis, subject to adjustment for antidilution.
Conversion is automatic immediately upon the closing of a firm commit-

F-11
<PAGE> 74

COULTER PHARMACEUTICAL, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

ment underwritten public offering with gross proceeds of at least $5,000,000 and
an offering price of at least $9.00 per share (appropriately adjusted for any
stock splits, stock dividends, recapitalization or similar events) or upon the
written election of more than three-fifths of the holders of outstanding shares
of the Series A, B and C preferred stock. Each outstanding share of preferred
stock has voting rights equal to the voting rights of the common stock
obtainable upon conversion.

Holders of Series A, B and C preferred stock are entitled to noncumulative
cash dividends at the rate of 8% of the "Original Purchase Price" per annum on
each outstanding share, as adjusted, if and when declared by the Board of
Directors. The Original Issue Price of the Series A preferred stock is $1.00 and
the Series B preferred stock is $1.50 and the Series C preferred stock is $2.25.
These dividends are to be paid in advance of any distributions to common
stockholders. No dividends have been declared through September 30, 1996.

In the event of a liquidation or winding up of the Company, holders of
Series A, B and C preferred stock shall have a liquidation preference of $1.00
and $1.50 and $2.25 per share respectively, together with any declared but
unpaid dividends, over holders of common shares.

1995 EQUITY INCENTIVE PLAN

The 1995 Equity Incentive Plan (the "Plan") was adopted in 1995 by the
Board of Directors and allows for the granting of options for up to 733,333
shares of common stock to employees, consultants and directors.

Stock options granted under the Plan may be either incentive stock options
or nonqualified stock options. Incentive stock options may be granted to
employees with exercise prices not less than the fair market value at the date
of grant and nonqualified stock options may be granted at exercise prices of no
less than 85% of the fair market value of the common stock on the date of grant,
as determined by the Board of Directors. All options are to have a term not
greater than 10 years from the date of grant. Options vest as determined by the
Board of Directors, generally at the rate of 25% at the end of the first year
with the remaining balance vesting ratably over the next three years (but not
less than 20% of the total number of shares granted per year).

Activity under the Plan was as follows:

<TABLE>
<CAPTION>
OPTIONS OUTSTANDING
OPTIONS ----------------------------
AVAILABLE NUMBER OF EXERCISE PRICE
FOR GRANT SHARES PER SHARE
---------- --------- --------------
<S> <C> <C> <C>
Shares authorized............................. 333,333 -- $ --
Options granted............................... ( 220,756) 220,756 $ 0.30
Options exercised............................. -- (2,059) $ 0.30
---------- --------- --------------
Balance at December 31, 1995.................. 112,577 218,697 $ 0.30
Additional shares authorized.................. 400,000 -- $ --
Options granted............................... ( 341,121) 341,121 $ 0.30-$1.20
Options exercised............................. -- (10,215) $ 0.30-$0.75
Option canceled............................... 999 (999) $ 0.30
---------- --------- --------------
Balance at September 30, 1996................. 172,455 548,604 $ 0.30-$1.20
========= ======== ===========
</TABLE>

At September 30, 1996, options to purchase 65,148 shares were exercisable.

F-12
<PAGE> 75

COULTER PHARMACEUTICAL, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Company has reserved sufficient shares of its common stock for issuance
upon conversion of the Series A, B and C preferred stock and options to purchase
common shares which may be issued under the Plan.

The Company recorded deferred compensation expense for the difference
between the exercise price and the deemed fair value for financial statement
presentation purposes of the Company's common stock, as determined by the Board
of Directors, for common stock issued and common stock options granted in 1996.
Through September 30, 1996, such shares and options were granted at exercise
prices ranging from $0.30 to $1.20 per share. The compensation expense
aggregates to a maximum of $602,000, and is being amortized over the
corresponding vesting period of each respective share purchase or option,
generally four years. In October 1996, options to purchase an additional 225,707
shares were granted at exercise prices of $2.25 per share, resulting in
approximately $1,200,000 of additional deferred compensation.

Pro forma information regarding net income and earnings per share is
required by SFAS 123, and has been determined as if the Company had accounted
for its employee stock options under the fair value method of that Statement.
The fair value of these options was estimated at the date of grant using the
minimum value method with weighted average risk-free assumptions for 1995 and
1996 of 5.94% and 5.92%, respectively. The weighted average expected life of the
options was approximately 56 months for both periods.

For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the vesting period of the options. The
Company's pro forma information follows (in thousands, except for earnings per
share information):

<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION NINE MONTHS
(FEBRUARY 16, 1995) ENDED
TO DECEMBER 31, SEPTEMBER 30,
1995 1996
------------------- -------------
<S> <C> <C>
Pro forma net loss..................................... $ (2,994) $ (10,836)
Pro forma net loss per share........................... $ (0.67) $ (2.43)
</TABLE>

WARRANTS

As of September 30, 1996, warrants to purchase 498,705 shares of common
stock were outstanding at an exercise price of $9.00 per share. At September 30,
1996, the Company has reserved 498,705 shares of authorized common stock
pursuant to these warrants. All warrants are exercisable at the option of the
holders on or before dates ranging from April 19, 1996 through April 30, 2001,
or earlier upon effectiveness of an initial public offering.

9. INCOME TAXES

As of September 30, 1996, the Company had federal and state net operating
loss carryforwards of approximately $13,300,000 and $1,400,000, respectively.
The federal net operating loss carryforwards will expire at various dates
beginning on 2010 through 2011.

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amount used for income tax purposes.

F-13
<PAGE> 76

COULTER PHARMACEUTICAL, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Significant components of the Company's deferred tax assets are as follows
(in thousands):

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1995 1996
------------ -------------
<S> <C> <C>
Net operating loss carryforwards........................... $ 1,000 $ 4,600
Capitalized research and development....................... 100 400
------- -------
Total deferred tax assets.................................. 1,100 5,000
Valuation allowance for deferred tax assets................ (1,100) (5,000)
------- -------
Net deferred tax assets.................................... $ -- $ --
======= =======
</TABLE>

Because of the Company's lack of earnings history, the deferred tax assets
have been fully offset by a valuation allowance. The valuation allowance
increased by $1,100,000 and $3,900,000 for the period from inception (February
16, 1995) to December 31, 1995 and for the nine months ended September 30, 1996,
respectively.

Utilization of the net operating loss may be subject to an annual
limitation due to the ownership change limitations provided by the Internal
Revenue Code of 1986. The annual limitation may result in the expiration of net
operating losses before utilization.

10. SUBSEQUENT EVENTS

On October 31, 1996, the Board of Directors approved, subject to
stockholder approval, an increase of 133,333 shares of common stock available
for grant under the 1995 Equity Incentive Plan.

In December 1996, the Company entered into a $3,827,000 equipment lease
financing facility with a financing company. The Company will make monthly
payments plus interest on amounts borrowed over the 48-month term. In connection
with this arrangement the Company issued the lender a warrant to purchase 24,666
shares of the Company's common stock at an exercise price of the lower of $9.75
per share or the per-share price of the Company's next round of equity
financing.

Subsequent to September 30, 1996 and through December 5, 1996, in addition
to the October 1996 option grants, the Company granted options to purchase
71,664 shares of common stock at $4.50 per share, resulting in approximately
$506,500 of additional deferred compensation.

Subsequent to September 30, 1996 and through December 5, 1996 options were
exercised for 25,070 shares of common stock at prices from $0.30 to $1.20. One
option for 18,333 shares of common stock at an exercise price of $0.75 was
cancelled.

On December 5, 1996, the Board of Directors approved the following actions:

- - A one-for-three reverse common stock split, subject to stockholder approval,
to become effective prior to the commencement of the offering contemplated by
this Prospectus. All common share and per share amounts have been
retroactively restated to reflect the reverse stock split.

- - The filing of a registration statement with the Securities and Exchange
Commission permitting the Company to sell shares of its common stock to the
public. If the offering is consummated under terms presently anticipated,
19,797,940 shares of currently outstanding preferred stock will automatically
convert to shares of common stock on a one-for-three basis. The pro forma
effect of these conversions has been reflected in the accompanying unaudited
pro forma balance sheet assuming they had occurred at September 30, 1996.

- - The adoption of the 1996 Employee Stock Purchase Plan under which a total of
350,000 shares of the Company's authorized but unissued common stock has been
reserved for issuance thereunder.

- - The adoption of the 1996 Equity Incentive Plan under which a total of
1,400,000 shares of the Company's authorized but unissued common stock has
been reserved for issuance thereunder. At the same meeting, the Board of
Directors determined that upon closing of the offering contemplated by this
Prospectus the 1995 Equity Incentive Plan would be terminated.

F-14
<PAGE> 77

REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

The Board of Directors
Coulter Pharmaceutical, Inc.

We have audited the accompanying balance sheets of the Antibody
Therapeutics Business Operations of Coulter Corporation (the "Business") as of
December 31, 1993 and 1994, and the related statements of operations and cash
flows for the years ended December 31, 1993 and 1994 and for the period from
January 1, 1995 to February 15, 1995. These financial statements are the
responsibility of the management of the Business. Our responsibility is to
express an opinion on these financial statements based on our audits.

Certain costs and expenses presented in the accompanying financial
statements represent allocations of the estimated cost of services provided to
the Antibody Therapeutics Business by Coulter Corporation. As a result, the
financial statements presented may not be indicative of the financial position
or results of operations that would have been reported had the Antibody
Therapeutics Business Operations of Coulter Corporation operated as an
independent entity.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the Antibody Therapeutics
Business Operations of Coulter Corporation at December 31, 1993 and 1994, and
the results of its operations and its cash flows for the years ended December
31, 1993 and 1994 and for the period from January 1, 1995 to February 15, 1995,
in conformity with generally accepted accounting principles.

Palo Alto, California
November 27, 1996

F-15
<PAGE> 78

ANTIBODY THERAPEUTICS BUSINESS OPERATIONS OF
COULTER CORPORATION

BALANCE SHEETS
(IN THOUSANDS)

<TABLE>
<CAPTION>
DECEMBER 31,
-------------
1993 1994
---- ----
<S> <C> <C>
ASSETS
Property and equipment, net................................................... $109 $135
---- ----
$109 $135
==== ====
LIABILITIES AND NET INVESTMENT
Current liabilities -- Accounts payable....................................... $124 $ 50
Commitments
Coulter Corporation's net investment in the Antibody Therapeutics (15) 85
Business Operations.........................................................
---- ----
$109 $135
==== ====
</TABLE>

See accompanying notes.

F-16
<PAGE> 79

ANTIBODY THERAPEUTICS BUSINESS OPERATIONS OF
COULTER CORPORATION

STATEMENTS OF OPERATIONS
(IN THOUSANDS)

<TABLE>
<CAPTION>
FOR THE PERIOD
YEARS ENDED FROM JANUARY 1,
DECEMBER 31, 1995 TO
------------------- FEBRUARY 15,
1993 1994 1995
------- ------- ---------------
<S> <C> <C> <C>
Operating expenses:
Research and development............................... $ 1,838 $ 2,798 $ 200
General and administrative............................. 178 288 36
------- ------- -------
Total operating expenses................................. 2,016 3,086 236
------- ------- -------
Net loss................................................. $(2,016) $(3,086) $(236)
======= ======= ============
</TABLE>

See accompanying notes.

F-17
<PAGE> 80

ANTIBODY THERAPEUTICS BUSINESS OPERATIONS OF
COULTER CORPORATION

STATEMENT OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(IN THOUSANDS)

<TABLE>
<CAPTION>
YEARS ENDED FOR THE PERIOD
DECEMBER 31, FROM
------------------- JANUARY 1, 1995 TO
1993 1994 FEBRUARY 15, 1995
------- ------- ------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss................................................ $(2,016) $(3,086) $ (236)
Adjustments to reconcile net loss to net cash provided
by (used in) operating activities:
Depreciation and amortization......................... 11 27 5
Changes in operating assets and liabilities:
Accounts payable................................... 98 (74) 62
----- ------- -----
Net cash used in operating activities................... (1,907) (3,153) (169)
----- ------- -----
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment..................... (96) (66) --
----- ------- -----
Net cash used in investing activities................... (96) (66) --
----- ------- -----
CASH FLOWS FROM FINANCING ACTIVITIES
Coulter Corporation's investment in the Antibody
Therapeutics Business................................. 2,003 3,199 169
----- ------- -----
Net cash provided by financing activities............... 2,003 3,199 169
----- ------- -----
Net increase in cash and cash equivalents............... -- -- --
Cash and cash equivalents at beginning of period........ -- -- --
----- ------- -----
Cash and cash equivalents at end of period.............. $ -- $ -- $ --
===== ======= =====
</TABLE>

See accompanying notes.

F-18
<PAGE> 81

ANTIBODY THERAPEUTICS BUSINESS OPERATIONS
OF COULTER CORPORATION

NOTES TO FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION AND BASIS OF PRESENTATION

Coulter Corporation (the "Corporation" or "Coulter") is incorporated in the
State of Delaware and is engaged in the business of manufacturing, distributing,
financing, and servicing certain medical equipment (predominantly hematology
instruments) and related consumable products used in the health care industry,
research centers and universities. The Company's principal markets are North
American, Europe and the Far East. The Corporation has also conducted extensive
research and development programs in the area of human therapeutics as discussed
in Note 3. The antibody therapeutics research and development activities,
including various license agreements, were acquired by Coulter Pharmaceutical,
Inc. in exchange for preferred stock on February 24, 1995, pursuant to an
assignment agreement between the two parties.

The financial statements of the Antibody Therapeutics Business Operations
of Coulter Corporation (the "Business") include all direct materials and
personnel costs in addition to pro rata allocations of overhead costs from
Coulter to the Business on a basis which management believes represents a
reasonable allocation of such costs. These charges comprise Coulter's net
investment in the Business. Coulter has been performing research and development
activities under its antibody therapeutics programs for several years.

PROPERTY AND EQUIPMENT

Purchased property and equipment are stated at cost less accumulated
depreciation and amortization which is calculated using the straight-line method
over the estimated useful lives of the respective assets of three to eight
years.

INCOME TAXES

The Business operations have historically been included in the consolidated
income tax returns filed by Coulter. Income taxes in the accompanying financial
statements have been computed based on the stand-alone operations of the
Business as if such operations had filed separate income tax returns. Any net
operating loss carryforwards from the Business would not be available for use by
the Business for federal or state income tax purposes.

2. PROPERTY AND EQUIPMENT

Property and equipment consists of the following at December 31 (in
thousands):

<TABLE>
<CAPTION>
1993 1994
----- -----
<S> <C> <C>
Equipment............................................................. $ 511 $ 561
Leasehold improvements................................................ 379 289
----- -----
890 850
Less accumulated depreciation and amortization........................ (781) (715)
----- -----
Property and equipment, net........................................... $ 109 $ 135
===== =====
</TABLE>

3. SUBSEQUENT EVENT

On February 24, 1995, Coulter and Coulter Pharmaceutical, Inc. entered into
an assignment agreement. Pursuant to this agreement, Coulter received 5,000,000
shares of Series A preferred stock from Coulter Pharmaceutical, Inc.
(convertible into 1,666,666 shares of common stock) in exchange for sublicensed
rights to various license agreements and patents and confidential information
relating to the Business.

F-19
<PAGE> 82

TUMOR-ACTIVATED PEPTIDE ("TAP") PRO-DRUG

Super-Leu-Dox, a TAP pro-drug version of the approved chemotherapeutic drug
doxorubicin, consists of a proprietary peptide of four amino acids, a
"tetrapeptide", linked to the active site on doxorubicin. Stable in circulation
and in normal tissues, Super-Leu-Dox undergoes its first activation step when
(1) an enzyme secreted by metastatic tumor cells cleaves three of the amino
acids leaving a leucine doxorubicin conjugate that is able to penetrate cells.
This activation step occurs in the immediate vicinity of tumor cells, increasing
the probability that the doxorubicin will (2) enter tumor cells as opposed to
normal cells. Once inside the cell, the leuncine-doxorubicin conjugate undergoes
the second activation step when (3) the leucine is cleaved from the doxorubicin
by an intracellular enzyme found in much higher concentrations in tumor cells
than in normal cells. Once the leucine is cleaved, the doxorubicin is (4)
activated within the cell. This two-step activation process leads to a
significantly higher concentration of activated doxorubicin in tumor cells than
in normal cells. Super-Leu-Dox is in preclinical development. The Company will
be required to conduct clinical trials prior to submitting Super-Leu-Dox to
regulatory authorities for marketing approval. See "TAP Pro-drug Platform."
<PAGE> 83
APPENDIX

DESCRIPTION OF GRAPHICS

INSIDE FRONT COVER GRAPHIC DESCRIPTION

[Photograph of a computer screen displaying four medical images of a tumor,
representing a time-sequence response of a non-Hodgkin's lymphoma patient
treated with the Company's B-1 Therapy.]

INSIDE BACK COVER GRAPHIC DESCRIPTION

[Illustration of the steps involved in the activation of the Company's
Super-Leu-Dox product candidate as it moves from the blood stream into the
vicinity of, and then into, a metastatic tumor cell where doxorubicin, an
approved cytotoxic agent, is activated to destroy the tumor cell.]

<PAGE> 84

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

NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE
UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY TO ANY PERSON IN ANY JURISDICTION IN WHICH
SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL OR TO ANY PERSON TO WHOM IT IS
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY OFFER OR SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE
HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY OR THAT THE INFORMATION
CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary................ 3
Risk Factors...................... 6
Use of Proceeds................... 15
Dividend Policy................... 15
Capitalization.................... 16
Dilution.......................... 17
Selected Consolidated Financial
Data............................ 18
Management's Discussion and
Analysis of Financial Condition
and Results of Operations........ 19
Business.......................... 22
Management........................ 43
Certain Transactions.............. 51
Principal Stockholders............ 53
Description of Capital Stock...... 55
Shares Eligible for Future Sale... 57
Underwriting...................... 59
Legal Matters..................... 60
Experts........................... 60
Additional Information............ 61
Index to Consolidated Financial
Statements...................... F-1
</TABLE>

------------------
UNTIL , 1997 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS),
ALL DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATIONS OF DEALERS TO DELIVER A PROSPECTUS
WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.

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

2,500,000 SHARES

LOGO

COMMON STOCK

-----------------------
PROSPECTUS
-----------------------
HAMBRECHT & QUIST

ALEX.BROWN & SONS
INCORPORATED

PACIFIC GROWTH EQUITIES, INC.
, 1997
- ------------------------------------------------------------
- ------------------------------------------------------------
<PAGE> 85

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth all expenses, other than the underwriting
discounts and commissions, payable by the Registrant in connection with the sale
of the Common Stock being registered. All the amounts shown are estimates except
for the registration fee, the NASD filing fee and the Nasdaq National Market
application fee.

<TABLE>
<S> <C>
SEC Registration fee...................................................... $ 12,197
NASD filing fee........................................................... 4,525
Nasdaq National Market application fee.................................... 46,028
Blue sky qualification fee and expenses................................... 1,000
Printing and engraving expenses........................................... 140,000
Legal fees and expenses................................................... 300,000
Accounting fees and expenses.............................................. 150,000
Transfer agent and registrar fees......................................... 4,500
Miscellaneous fees........................................................ 6,750
----------
Total........................................................... $665,000
==========
</TABLE>

ITEM 14. INDEMNIFICATION OF OFFICERS AND DIRECTORS.

Under Section 145 of the Delaware General Corporation Law, the Registrant
has broad powers to indemnify its directors and officers against liabilities
they may incur in such capacities, including liabilities under the Securities
Act of 1933, as amended (the "Securities Act"). The Registrant's Bylaws also
provide that the Registrant will indemnify its directors and executive officers
and may indemnify its other officers, employees and other agents to the fullest
extent not prohibited by Delaware law.

The Registrant's Certificate of Incorporation provides for the elimination
of liability for monetary damages for breach of the directors' fiduciary duty of
care to the Registrant and its stockholders. These provisions do not eliminate
the directors' duty of care and, in appropriate circumstances, equitable
remedies such as injunctive or other forms of non-monetary relief will remain
available under Delaware law. In addition, each director will continue to be
subject to liability for breach of the director's duty of loyalty to the
Registrant, for acts or omissions not in good faith or involving intentional
misconduct, for knowing violations of law, for any transaction from which the
director derived an improper personal benefit, and for payment of dividends or
approval of stock repurchases or redemptions that are unlawful under Delaware
law. The provision does not affect a director's responsibilities under any other
laws, such as the federal securities laws or state or federal environmental
laws.

The Registrant has entered into agreements with its directors and executive
officers that require the Registrant to indemnify such persons against expenses,
judgments, fines, settlements and other amounts actually and reasonably incurred
(including expenses of a derivative action) in connection with any proceeding,
whether actual or threatened, to which any such person may be made a party by
reason of the fact that such person is or was a director or officer of the
Registrant or any of its affiliated enterprises, provided 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 Registrant and, with respect to any
criminal proceeding, had no reasonable cause to believe his or her conduct was
unlawful. The indemnification agreements also set forth certain procedures that
will apply in the event of a claim for indemnification thereunder.

II-1
<PAGE> 86

The Underwriting Agreement filed as Exhibit 1.1 to this Registration
Statement provides for indemnification by the Underwriters of the Registrant and
its officers and directors for certain liabilities arising under the Securities
Act or otherwise.

The Registrant intends to purchase a general liability insurance policy
which covers certain liabilities of directors and officers of the Registrant
arising out of claims based on acts or omissions in their capacity as directors
or officers.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

Since its inception in February 1995, the Registrant has sold and issued
the following unregistered securities:

(1) In February 1995, the Registrant sold and issued an aggregate of
7,500,000 shares of Series A Preferred Stock to two accredited investors
for cash in the aggregate amount of $2,500,000 and the assignment of
certain intellectual property rights.

(2) In August 1995, the Registrant sold and issued an aggregate of
2,333,333 shares of Series B Preferred Stock to six accredited investors
for cash in the aggregate amount of $3,500,000.

(3) In March 1996, the Registrant sold and issued 1,200,000 shares of
Common Stock to one accredited investor in exchange for a promissory note
in the amount of $180,000.

(4) In April 1996, the Registrant sold and issued an aggregate of
9,964,607 shares of Series C Preferred Stock and Warrants to purchase
1,496,182 shares of Common Stock to a group of accredited investors for
$22,420,363.74.

(5) From March 1995 to December 6, 1996, the Registrant granted
incentive stock options and nonstatutory stock options to employees,
directors and consultants covering an aggregate of 2,362,803 shares of the
Registrant's Common Stock, at a weighted average exercise price of $.36 per
share. As of December 6, 1996, the Registrant has sold 112,038 shares of
its Common Stock to employees, directors and consultants pursuant to
exercise of stock options.

(6) In December 1996, the Registrant issued a warrant to purchase
74,000 shares of Common Stock to one accredited investor in connection with
an equipment lease financing.

The share amounts set forth above do not take into account the
one-for-three reverse stock split that will be effected prior to the closing of
this offering.

The sale and issuance of securities in the transactions described in
paragraphs (1), (2), (4) and (6) above were deemed to be exempt from
registration under the Securities Act by virtue of Section 4(2) adopted
thereunder. The purchasers in each case represented their intention to acquire
the securities for investment only and not with a view to distribution thereof.
Appropriate legends are affixed to the stock certificates or warrants issued in
such transactions. All recipients either received adequate information about the
Registrant or had access, through employment or other relationships, to such
information.

The sale and issuance of securities in the transactions described in
paragraph (3) and (5) above were deemed to be exempt from registration under the
Securities Act by virtue of Rule 701 promulgated thereunder, in that they were
issued either pursuant to written compensatory benefit plans or pursuant to a
written contract relating to compensation, as provided by Rule 701.

II-2
<PAGE> 87

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) EXHIBITS.

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------- ---------------------------------------------------------------------------------
<C> <S>
1.1* Form of Underwriting Agreement.
3.1** Amended and Restated Certificate of Incorporation of the Registrant.
3.2** Form of Amendment to Certificate of Incorporation to be filed prior to the
offering.
3.3** Form of Amended and Restated Certificate of Incorporation of the Registrant to be
filed upon the closing of the offering.
3.4** Bylaws of the Registrant.
3.5** Bylaws of the Registrant to be effective upon the closing of the offering.
4.1 Reference is made to Exhibits 3.1 through 3.5.
4.2 Specimen stock certificate.
4.3** Amended and Restated Investors' Rights Agreement, dated April 18, 1996, between
the Registrant and certain investors.
4.4** Warrant Agreement to purchase Common Stock, dated December 6, 1996, between the
Registrant and Lease Management Services, Inc..
5.1* Opinion of Cooley Godward LLP.
10.1** Form of Indemnity Agreement to be entered into between the Registrant and its
officers and directors.
10.2** 1996 Equity Incentive Stock Option Plan.
10.3** Form of Equity Incentive Stock Option.
10.4** Form of Nonstatutory Stock Option.
10.5** 1996 Employee Stock Purchase Plan.
10.6 +** Assignment Agreement, dated February 24, 1995, between the Registrant, Coulter
Corporation and certain investors.
10.7 +** Manufacturing Agreement, dated August 20, 1996, between Lonza Biologics PLC and
the Registrant.
10.8** Equipment Lease Financing Agreement, dated December 6, 1996, between the
Registrant and Lease Management Services, Inc..
10.9 + First Amendment to Manufacturing Agreement, dated November 21, 1996, by and
between Lonza Biologics PLC and the Registrant.
10.10+ Development Agreement, dated November 15, 1995, by and between Nordion
International, Inc. and the Registrant.
10.11+ Patent License Agreement, dated March 15, 1996, by and between the Region
Wallone, the Universite Catholoique de Louvain and Coulter Pharma Belgium, SA.
11.1 Statement regarding computation of loss per share.
21.1** Subsidiaries of the Registrant.
23.1 Consent of Ernst & Young LLP. Reference is made to page II-6.
23.2* Consent of Cooley Godward LLP. Reference is made to Exhibit 5.1.
24.1 Power of Attorney. Reference is made to page II-5.
27.1** Financial Data Schedule.
</TABLE>

- ------------------------------
* To be filed by amendment.

** Previously filed.

+ Portions omitted pursuant to a request of confidentiality filed separately
with the Commission.

(b) FINANCIAL STATEMENT SCHEDULES.

All other schedules are omitted because they are not required, they are not
applicable or the information is already included in the financial statements or
notes thereto.

II-3
<PAGE> 88

ITEM 17. UNDERTAKINGS.

The undersigned Registrant hereby undertakes to provide the Underwriters at
the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers, and controlling persons of the
Registrant pursuant to the provisions described in Item 14 or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities 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 Securities
Act and will be governed by the final adjudication of such issue.

The undersigned Registrant hereby undertakes that: (1) for purposes of
determining any liability under the Securities Act, the information omitted from
the form of prospectus as filed as part of the registration statement in
reliance upon Rule 430A and contained in the 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 the registration statement as of the time it was
declared effective, and (2) for the purpose of determining any liability under
the Securities 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 this offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.

II-4
<PAGE> 89

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has caused this Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Palo Alto,
County of Santa Clara, State of California, on the twenty-third day of December,
1996.

COULTER PHARMACEUTICAL, INC.

By: /s/ MICHAEL F. BIGHAM

------------------------------------
Michael F. Bigham
President and Chief Executive
Officer
(Principal Executive Officer)

POWER OF ATTORNEY

Each person whose signature appears below constitutes and appoints Michael
F. Bigham and William G. Harris as his or her true and lawful attorney-in-fact
and agent, each acting alone, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign any or all amendments (including post-effective
amendments) to the Registration Statement on Form S-1 and any Registration
Statements filed pursuant to Rule 462(b), and to file the same, with all
exhibits thereto, and all documents in connection therewith, with the Securities
and Exchange Commission, granting unto said attorney-in-fact and agent, full
power and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent, or his or her substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.

II-5
<PAGE> 90

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------- ---------------------------------- ------------------
<C> <S> <C>
/s/ MICHAEL F. BIGHAM President, Chief Executive Officer December 23, 1996
- ------------------------------------- and Director (Principal
Michael F. Bigham Executive Officer)
/s/ WILLIAM G. Vice President and Chief Financial December 23, 1996
HARRIS* Officer (Principal Financial and
- ------------------------------------- Accounting Officer)
William G. Harris
/s/ BRIAN ATWOOD* Director December 23, 1996
- -------------------------------------
Brian Atwood
/s/ DONALD L. Director December 23, 1996
LUCAS*
- -------------------------------------
Donald L. Lucas
/s/ ROBERT Director December 23, 1996
MOMSEN*
- -------------------------------------
Robert Momsen
/s/ ARNOLD ORONSKY* Director December 23, 1996
- -------------------------------------
Arnold Oronsky
/s/ SUE Director December 23, 1996
VAN*
- -------------------------------------
Sue Van
/s/ GEORGE J. SELLA, Director December 23, 1996
JR.
- -------------------------------------
George J. Sella, Jr.
/s/ JOSEPH R. Director December 23, 1996
COULTER
- -------------------------------------
Joseph R. Coulter, III
*By: MICHAEL F. BIGHAM
- -------------------------------------
Michael F. Bigham
Attorney-in-Fact
</TABLE>

II-6
<PAGE> 91

EXHIBIT 23.1

CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

We consent to the reference to our firm under the captions "Selected
Consolidated Financial Data" and "Experts" and to the use of our report dated
October 31, 1996 (except for Note 10, as to which the date is January , 1997)
with respect to the consolidated financial statements of Coulter Pharmaceutical,
Inc. and our report dated November 27, 1996 with respect to the Antibody
Therapeutics Business Operations of Coulter Corporation, in Amendment No. to
the Registration Statement (Form S-1) and related Prospectus of Coulter
Pharmaceutical, Inc. for the registration of 2,875,000 shares of its common
stock.

Ernst & Young LLP

Palo Alto, California

January , 1997

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

The foregoing consent is in the form that will be signed upon completion of
the one-for-three reverse common stock split as described in Note 10 to the
consolidated financial statements of Coulter Pharmaceutical, Inc.

Palo Alto, California

December 20, 1996

II-7
<PAGE> 92

INDEX TO EXHIBITS

<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION OF DOCUMENT PAGE
- ------- ----------------------------------------------------------------------
<C> <S> <C>
1.1* Form of Underwriting Agreement........................................
3.1** Amended and Restated Certificate of Incorporation of the Registrant...
3.2** Form of Amendment to Certificate of Incorporation to be filed prior to
the offering..........................................................
3.3** Form of Amended and Restated Certificate of Incorporation of the
Registrant to be filed upon the closing of the offering...............
3.4** Bylaws of the Registrant..............................................
3.5** Bylaws of the Registrant to be effective upon the closing of the
offering..............................................................
4.1 Reference is made to Exhibits 3.1 through 3.5.........................
4.2 Specimen stock certificate............................................
4.3** Amended and Restated Investors' Rights Agreement, dated April 18,
1996, between the Registrant and certain investors....................
4.4** Warrant Agreement to purchase Common Stock, dated December 6, 1996,
between the Registrant and Lease Management Services, Inc.............
5.1* Opinion of Cooley Godward LLP.........................................
10.1** Form of Indemnity Agreement to be entered into between the Registrant
and its officers and directors........................................
10.2** 1996 Equity Incentive Stock Option Plan...............................
10.3** Form of Equity Incentive Stock Option.................................
10.4** Form of Nonstatutory Stock Option.....................................
10.5** 1996 Employee Stock Purchase Plan.....................................
10.6 +** Assignment Agreement, dated February 24, 1995, between the Registrant,
Coulter Corporation and certain investors.............................
10.7 +** Manufacturing Agreement, dated August 20, 1996, between Lonza
Biologics PLC and the Registrant......................................
10.8** Equipment Lease Financing Agreement, dated December 6, 1996, between
the Registrant and Lease Management Services, Inc.....................
10.9 + First Amendment to Manufacturing Agreement, dated November 21, 1996,
by and between Lonza Biologics PLC and the Registrant.................
10.10+ Development Agreement, dated November 15, 1995, by and between Nordion
International, Inc. and the Registrant................................
10.11+ Patent License Agreement, dated March 15, 1996, by and between the
Region Wallone, the Universite Catholoique de Louvain and Coulter
Pharma Belgium, SA....................................................
11.1 Statement regarding computation of loss per share.....................
21.1** Subsidiaries of the Registrant........................................
23.1 Consent of Ernst & Young LLP. Reference is made to page II-6..........
23.2* Consent of Cooley Godward LLP. Reference is made to Exhibit 5.1.......
24.1 Power of Attorney. Reference is made to page II-5.....................
27.1** Financial Data Schedule...............................................
</TABLE>

- ------------------------------
* To be filed by amendment.

** Previously filed.

+ Portions omitted pursuant to a request of confidentiality filed separately
with the Commission.

<PAGE> 1
COMMON STOCK COMMON STOCK

COULTER
-------
PHARMACEUTICAL

SEE REVERSE FOR CERTAIN DEFINITIONS AND A
STATEMENT AS TO THE RIGHTS, PREFERENCES
PRIVILEGES AND RESTRICTIONS ON SHARES

INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE

THIS CERTIFIES THAT

IS THE OWNER OF

FULLY PAID AND NONASSESSABLE SHARES OF THE COMMON STOCK,
$.001 PAR VALUE PER SHARE, OF

COULTER PHARMACEUTICAL, INC.

transferable on the books of the Corporation by the holder hereof in person or
by duly authorized attorney upon surrender of this certificate properly
endorsed. This certificate is not valid until countersigned and registered by
the Transfer Agent and Registrar. WITNESS the facsimile seal of the Corporation
and the facsimile signatures of its duly authorized officers.

Dated:

AUTHORIZED SIGNATURE

/s/ ______________________ /s/ _____________________________________
SECRETARY PRESIDENT AND CHIEF EXECUTIVE OFFICER

[SEAL OF COULTER PHARMACEUTICAL, INC.]

COUNTERSIGNED AND REGISTERED:
CHASEMELLON SHAREHOLDER SERVICE, L.L.C.
TRANSFER AGENT AND REGISTRAR

<PAGE> 2
A statement of the powers, designations, preferences and relative,
participating, optional or other special rights of each class of stock or
series thereof and the qualifications, limitations or restrictions of such
preferences and/or rights as established, from time to time, by the Certificate
of Incorporation of the Corporation and by any certificate of determination,
the number of shares constituting each class and series, and the designations
thereof, may be obtained by the holder hereof upon request and without charge
at the principal office of the Corporation.

The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:

<TABLE>
<S> <C>
TEN COM -- as tenants in common UNIF GIFT MIN ACT -- ______ Custodian _______
TEN ENT -- as tenants by the entireties (Cust) (Minor)
JT TEN -- as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act _________________________
in common (State)
UNIF TRF MIN ACT -- ______ Custodian (until age _______)
(Cust)

______ under Uniform Transfers
(Minor)

to Minors Act _____________________
(State)

</TABLE>

Additional abbreviations may also be used though not in the above list.

FOR VALUE RECEIVED. _________________________ hereby sell(s), assign(s) and
transfer(s) unto

PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
/ /
/ /

________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)

________________________________________________________________________________

_________________________________________________________________________ Shares
of the capital stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint

_______________________________________________________________________ Attorney
to transfer the said stock on the books of the within named Corporation with
full power of substitution in the premises.

Dated ________________________________

X ______________________________________

NOTE: THE SIGNATURE(S) TO THIS ASSIGNMENT
MUST CORRESPOND WITH THE NAME(S) AS
WRITTEN UPON THE FACE OF THE
CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT OR
ANY CHANGE WHATEVER.
Signature(s) Guaranteed

By ______________________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN
ELIGIBLE GUARANTOR INSTITUTION (BANKS,
STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND
CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED
SIGNATURE GUARANTEE MEDALLION PROGRAM),
PURSUANT TO S.E.C. RULE 17Ad-15.

<PAGE> 1
EXHIBIT 10.6
EXHIBIT C

ASSIGNMENT AGREEMENT

THIS ASSIGNMENT AGREEMENT ("Agreement") is entered into as of February
24, 1995, by and among COULTER PHARMACEUTICAL, INC. a Delaware corporation
("Company"), COULTER CORPORATION, a Delaware corporation ("Coulter") and
INTERWEST PARTNERS V, L.P. and INTERWEST INVESTORS V (collectively, "InterWest")
as follows:

1. BACKGROUND

1.1 The Company is issuing five million (5,000,000) shares of its
Series A Preferred Stock (the "Shares") to Coulter pursuant to that certain
Series A Stock Preferred Stock Purchase Agreement of even date herewith (the
"Purchase Agreement"), to which this Agreement is attached as Exhibit C.

1.2 As consideration for the Shares, Coulter has agreed to execute and
deliver this Agreement by which it will transfer intellectual property rights,
contractual rights, related to the anti-CD20 monoclonal antibody known as the
anti-B1 antibody. These rights shall include methods for using such an antibody
in therapeutic applications and diagnostic applications which are necessary for
the enjoyment of the therapeutic applications, as more fully described below,
which rights provide the basis for a development program (the "Program") that
has previously been conducted by Coulter and which will hereafter be conducted
by the Company.

1.3 Certain of the intellectual property rights will be assigned from
Coulter to Company and other intellectual property rights will be sublicensed to
Company, it being the intent of the parties that Company shall enjoy the benefit
of all technology reasonably necessary to continue the Program.

2. TRANSFER OF RIGHTS

2.1 ASSIGNMENT. Coulter assigns, transfers and sets over unto the
Company all of Coulter's rights, title and interest in the following listed
properties. The Company hereby assumes and covenants to perform all obligations
of Coulter in connection with such property and guarantees to hold Coulter
harmless from any claim or demand made thereunder. The Company shall have no
liability to Coulter or any other party as a result of the foregoing obligation
with respect to any breach or obligation attributable to any events occurring
prior to the date of this Agreement.

<PAGE> 2

A. Commercialization Agreement by and between Coulter Corporation and
the University of Michigan, dated November 1, 1994 (the "Michigan Agreement"), a
copy of which is acknowledge as having been previously given to the parties
hereto.

B. Orphan Drug Application [*] for the designation of (131)Iodine-
radiolabeled B1 monoclonal antibody as an orphan drug; and

C. Investigation New Drug Applications [*] conducted at the University
of Michigan, [*] conducted at Dana-Farber Cancer Institute and St. Bartholomews
Hospital, [*] conducted at Stanford University and Dana-Farber Cancer Institute;
[*] conducted at the University of Washington; and

D. Coulter's interest in United States Patent Application Serial No.
08/121,532 to Kaminski et al. and any continuation, divisional, reexamination,
reissue or renewal applications and all U.S. patents issuing therefrom or
extension terms thereof; and

E. Research Agreement with the University of Washington for the
employment of a data manager.

F. Roundtable Research Agreement dated September 1, 1994 with the
University of Michigan for the employment of a dosimetrist.

G. Subject to any consents necessary from the individual contractor,
the individual consulting agreements with [*] and [*].

2.2 SUBLICENSES. Coulter sublicenses to the Company the following
listed technologies and rights on the same terms and conditions for which
Coulter obtained a license:

A. Therapeutic rights of B1 and diagnostic rights of B1 which
are reasonably necessary for the enjoyment and development of the therapeutic
rights of B1, which rights have provided the basis for the Program that has
previously been conducted by Coulter and which will hereafter be conducted by
the Company. Coulter grants such therapeutic rights exclusively to Company and
Coulter grants such diagnostic rights non- exclusively to Company.

1. The rights that have been derived from agreements
between Coulter Corporation and Dana-Farber Cancer Institute (DFCI), which
include the following Agreements, a copy of which is acknowledged as having been
previously given to the parties hereto:

* Certain confidential information contained in this document, marked by
brackets, has been omitted and filed with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.

2.
<PAGE> 3

a. An Agreement dated July 23, 1981;
and

b. A Modification Agreement dated
March 1, 1983; and

c. An Agreement dated April 28, 1983;
and

d. A Modification Agreement No. 2,
dated April 1, 1987; and

e. An Agreement dated April 1, 1994.

2. Coulter's license rights under United States
Patent Application Serial No. 07/799,087 to Schlossman et al. and any
continuation, continuation-in-part, divisional, reexamination, reissue or
renewal applications and all U.S. patents issuing therefrom or extension terms
thereof and any corresponding foreign patent applications filed or patents
issued therefrom.

3. All other discoveries, inventions and know-how
owned or controlled by Coulter that is reasonably necessary to enable the
Company to use the B1 hybridoma cell line for the purposes of developing an in
vivo therapeutic application.

B. License Agreement by and between Coulter Corporation and
the National Technical Information Service (NTIS), a primary operating unit of
the United States Department of Commerce (whose operations as they pertain to
such agreement have been subsequently transferred to the Office of Technology
transfer within the Department of Health and Human Services), with an effective
date of March 1, 1989, pertaining to U.S. Patent No. 4,831,175 (the "NTIS
Agreement"), non-exclusively for therapeutic and diagnostic applications, with
rights to sublicense only for use with B-1, a copy of which is acknowledged as
having been previously given to the parties hereto; and

C. License Agreement by and between Otto A. Gansow and Martin
W. Brechbiel (collectively called "Licensor") and Coulter Corporation, dated May
1, 1988 pertaining to corresponding foreign rights to U.S. Patent No. 4,831,175,
non-exclusively for therapeutic and diagnostic applications, with rights to
sublicense only for use with B-1, a copy of which is acknowledged as having been
previously given to the parties hereto.

3. WARRANTIES, REPRESENTATIONS AND DISCLAIMERS

3.1 COULTER MAKES NO WARRANTY OR REPRESENTATION THAT THE B1 MATERIALS
OR METHODS USED IN MAKING OR USING SUCH MATERIALS ARE FREE FROM LIABILITY FOR
PATENT INFRINGEMENT.

<PAGE> 4
3.2 COULTER MAKES NO WARRANTY, EXPRESS OR IMPLIED, INCLUDING WITHOUT
LIMITATION, ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR OF FITNESS FOR A
PARTICULAR PURPOSE WITH RESPECT TO ANY MATERIALS SUPPLIED HEREUNDER AND HEREBY
DISCLAIMS THE SAME.

3.3 COULTER HAS NO KNOWLEDGE OF ANY THIRD PARTY RIGHTS IN THE PROPERTY
THAT IS BEING ASSIGNED AND SUBLICENSED HEREUNDER, INCLUDING PATENT INFRINGEMENT
AND TRADE SECRET CLAIMS OF OTHERS, WHICH HAVE NOT HERETOFORE BEEN DISCLOSED.

3.4 COULTER REPRESENTS THAT IT HAS GOOD TITLE TO THE RIGHTS GRANTED
HEREIN SUBJECT ONLY TO THE RESERVATIONS CONTAINED IN THE AGREEMENTS UNDER WHICH
COULTER OBTAINED TITLE.

4. ROYALTIES. Without limiting any other royalties which may be payable by the
Company as a result of any assignment or sublicense hereunder, the Company
agrees to pay to Coulter any amounts which Coulter becomes obligated to pay to
DFCI (including the amount by which Coulter's advanced royalty balance with DFCI
is reduced) as a result of sales by the Company pursuant to the sublicense set
forth in this Agreement. With respect to the first $4,500,000 payable to
Coulter pursuant to the foregoing sentence, Coulter shall have the election, in
lieu of receiving cash to purchase additional shares of the Company's equity
securities at the then current fair market value of such securities.

5. INJUNCTIVE RELIEF. Each party agrees that in the event of any breach of this
Agreement the other party will suffer irreparable injury such that no remedy at
law will adequately compensate the injured party. Accordingly, in addition to
any remedy or relief available at law or in equity, the parties agree that each
shall be entitled to specific performance under this Agreement, as well as such
further interim and final injunctive relief (without the necessity of posting a
bond) as may be granted by a court.

6. ABANDONMENT. In the event that the Company determines to discontinue its
present plans to commercialize the anti-B1 antibody technology acquired pursuant
to this Agreement, the Company shall give prompt written notice to Coulter and
Coulter shall have a right of first offer to reacquire the Property Rights at
fair market value and upon such other terms and conditions as may be agreed upon
by the parties.

7. MISCELLANEOUS

7.1 GOVERNING LAW. This Agreement shall be governed in all respects by
the laws of the State of Delaware as such laws are applied to agreements between
Delaware residents entered into and performed entirely in Delaware.

4.
<PAGE> 5
7.2 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto.

7.3 ENTIRE AGREEMENT. This Agreement constitutes the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and no party shall be liable or bound to any other in any manner by an
representations, warranties, covenants and agreements except as specifically set
forth herein and therein.

7.4 SEPARABILITY. In case any provision of the Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.

7.5 AMENDMENT. This Agreement may be amended or modified only upon the
written consent of each of the parties hereto.

7.6 NOTICES. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (i) upon personal delivery to the
party to be notified; (ii) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient, if not, then on the next business
day; (iii) five (5) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid; or (iv) one (1) day after deposit
with a nationally recognized overnight courier, specifying next day delivery,
with written verification of receipt. All communications shall be sent to the
parties at their respective addresses as set forth on the signature page hereof.

7.7 ATTORNEYS' FEES. In the event that any dispute among the parties to
this Agreement should result in litigation, the prevailing party in such dispute
shall be entitled to recover from the losing party all fees, costs and expenses
of enforcing any right of such prevailing party under or with respect to this
Agreement, including without limitation, such reasonable fees and expenses of
attorneys and accountants, which shall include, without limitation, all fees,
costs and expenses of appeals.

7.8 FURTHER ASSURANCES. The parties agree (i) to furnish upon request
to each other such further information, (ii) to execute and deliver to each
other such other documents, and (iii) to do such other acts and things as may be
required to carry out the purposes of this Agreement, including any further acts
which may be required in order for the Company to enjoy the full and exclusive
benefit of any Food and Drug Administration filings made by Coulter in
connection with the Property Rights.

7.9 TITLES AND SUBTITLES. The titles of the sections and subsections of
the Agreement are for convenience of reference only and are not to be considered
in construing this Agreement.

5.
<PAGE> 6
7.10 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.

IN WITNESS WHEREOF, the parties have executed the Agreement as of the
date set forth in the first paragraph hereof.

COULTER PHARMACEUTICAL, INC. COULTER CORPORATION
3000 Sand Hill Road Coulter Technology Center
Building 3, Suite 255 Building 3, Suite 255
Menlo Park, CA 94025 Menlo Park, CA 94025

By: /s/ Arnold Oronsky By: /s/ Joseph R. Coulter, Jr.
------------------------------ --------------------------
Chief Executive Officer Joseph R. Coulter, Jr.
President

INTERWEST PARTNERS V, L.P. INTERWEST PARTNERS V
3000 Sand Hill Road 3000 Sand Hill Road
Building 3, Suite 255 Building 3, Suite 255
Menlo Park, CA 94025 Menlo Park, CA 94025

By: InterWest Management
Partners V, L.P.,
its general partner

By: /s/ Robert Momsen By: /s/ Robert Momsen
------------------------------ ---------------------------
General Partner General Partner

<PAGE> 1
EXHIBIT 10.7

THIS AGREEMENT IS MADE THE 20th day of August 1996

BETWEEN

LONZA BIOLOGICS PLC (formerly known as Celltech Biologics plc) of 228 Bath Road,
Slough, Berkshire SL 1 4DY, England (hereinafter referred to as "Lonza"),

AND

COULTER PHARMACEUTICAL, INC. of 550, California Avenue, Suite 200, Palo Alto, CA
94306-1440, USA (hereinafter referred to as the "Customer").

WHEREAS

A. Customer is the proprietor of a murine hybridoma cell line known as
Bl, which produces IgG2a Anti-CD20 murine monoclonal antibody; and

B. Lonza has expertise in the development of manufacturing processes using
such cell lines; and

C. Customer and Lonza have entered into an agreement dated 28 April 1995
which, as subsequently amended, is herein referred to as the
"Evaluation Agreement" to carry out a programme of work to evaluate the
growth and productivity of cell line B1 in Lonza's proprietary
hybridoma media and develop a cell culture process for the cell line ;
and

D. Under the Evaluation Agreement, a sub-clone of cell line B1 known as
B1R1 was developed, and the parties agreed that this sub-clone be used
for completion of services under the Evaluation Agreement; and

E. Customer now requires Lonza to perform further Services relating to the
Cell Line as described in this Agreement.

NOW THEREFORE it is hereby agreed by and between the parties as follows:

1. In this agreement, its recitals and Schedules hereto, words and phrases
defined in the Standard Terms for Contract Services set out in Schedule
5 hereto shall have the meanings set out therein.

2. Subject to the Standard Terms for Contract Services set out in Schedule
5 hereto and the Special Terms set out in Schedule 4 Lonza agrees to
carry out the Services and the Customer agrees to pay the Price as
provided in Schedule 3 together with any additional costs and expenses
that fall due hereunder.

1.
<PAGE> 2

3. 3.1 Any notice or other communication to be given under this Agreement
shall be delivered personally or sent by first class pre-paid post or
facsimile transmission addressed as follows:

If to the Customer to Coulter Pharmaceutical, Inc.

550 California Avenue
Suite 200
Palo Alto
CA 94306-1440
USA
For the attention of: Vice President, R&D
Facsimile: 415 842 7303

If to Lonza to Lonza Biologics plc
228 Bath Road
Slough
Berkshire SLI 4DY
England
For the attention of: Chief Executive
Facsimile: 01753 777001

or to such other destination as either party hereto may
hereafter notify to the other in accordance with the
provisions of this clause.

3.2 All such notices or other communications shall be deemed to have been
served as follows:

3.2.1 if delivered personally, at the time of such delivery;

3.2.2 if sent by first class pre-paid post, five (5) business days
(Saturdays, Sundays and Bank or other public holidays
excluded) after being placed in the post;

3.2.3 if sent by first class pre-paid post, five (5) business days
(Saturdays, Sundays and Bank or other public holidays
excluded) after being placed in the post;

3.2.4 if sent by facsimile upon receipt of the transmission
confirmation slip showing completion of the transmission

3.2.5 if by express mail or by courier within two (2) days after
being despatched.

2.
<PAGE> 3

AS WITNESS the hands of the duly authorised representatives of the parties
hereto the day and year first before written

Signed for and on behalf of /s/ SIMON STURGE
LONZA BIOLOGICS PLC ------------------------------

CEO
------------------------------
Title

Signed for and on behalf of /s/ MICHAEL F. BIGHAM
COULTER PHARMACEUTICAL, INC. ------------------------------

President and CEO
------------------------------
Title

3.
<PAGE> 4

SCHEDULE 1

For the purposes of this Agreement:

"Cell Line" shall mean the mouse hybridoma cell line referred to as B1R1
recloned by Lonza from cell line B1 supplied by Customer.

"Product" shall mean the IgG2a anti-CD20 murine monoclonal antibody produced by
the Cell Line.

A. SPECIFICATION FOR BULK PURIFIED PRODUCT

[*]

<PAGE> 5
[*]

5.
<PAGE> 6
[*]

6.
<PAGE> 7
[*]

*Certain confidential information contained in this document, marked by
brackets, has been omitted and filed with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.

7.
<PAGE> 8

B. SPECIFICATION FOR A MASTER OR WORKING CELL BANK

[*]

8.
<PAGE> 9

SCHEDULE 2

SERVICES

1. Supply of Customer Materials and Customer Information.

2. Activities to be undertaken by Lonza:

Stage 1 Master, Working and Extended Cell Bank Creation and Analysis

Stage 2 Purification Development

Stage 3 Production of Product at Pilot Scale

Stage 4 GMP Documentation

Stage 5 Production of Product to GMP at 2000 litre scale

Stage 6 Manufacturing and Control Data Packages

1. SUPPLY OF CUSTOMER MATERIALS AND CUSTOMER INFORMATION

(a) The Customer has supplied to Lonza the following:

i At least [*] containing approximately
[*].

ii A reference standard of Product for Process
development studies and for bulk purified Product
release testing.

(b) The Customer shall supply to Lonza the following:

i Information and materials including standards and a
typical [*].

9.
<PAGE> 10

2. ACTIVITIES TO BE UNDERTAKEN BY LONZA.

1. Stage 1 Master, Working and Extended Cell Bank Creation and
Analysis.

1.1 Objective

To create and characterise a master cell bank (MCB), working
cell bank (WCB), and an extended cell bank (ECB) from cells
grown on from the WCB.

1.2 Activities

1.2.1 Send ampoules of the [*] to Testing Laboratories,
for [*] testing [*] testing and [*] analysis.

1.2.2 Prepare documentation, as approved by Lonza's QA
Department for the preparation of the cell banks.
Establish a [*] and [*] according to the principles
of GMP. The MCB will be derived from [*] and the WCB
will be derived from [*]. The cell banking system
was designed to meet the requirements of the [*] and
the [*].

1.2.3 Establish standard maintenance, storage and release
procedures for the MCB and WCB on and off the Lonza
site.

1.2.4 Characterise the MCB and WCB:

- Assess [*].

- For each cell bank, assess cell bank
viability from [*] distributed
throughout the bank.

- Assess [*]

*Certain confidential information contained in this document, marked by
brackets, has been omitted and filed with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.

10.
<PAGE> 11

- Practice following the guidelines of the UK
GLP Compliance Programme).

- Characterise the Product following [*].

- Evaluate growth of cells from the MCB and
WCB following Lonza's [*].

- Prepare an [*].

1.2.5 Issue report of activities to the Customer. The
report shall include:

- a description of preparation of the cell
banks;

- a history of the Cell Line at Lonza;

- [*];

- an assessment of stability of Product [*];

- details of cell growth characteristics for
the Cell Line i.e. [*];

- details of materials and methods used for
activities under sections 1.2.2, 1.2.3 and
1.2.4;

- a summary of Lonza's storage and control
procedures for the cell banks.

- Testing Laboratory Reports (as described in
section 1.2. 1).

1.3 Cell Bank Characterisation

Additional cell bank characterisation will be required in order to
support regulatory applications to conduct clinical trials, or market
Product. Lonza can arrange for such testing at Lonza's approved
contractors on the Customer's behalf on terms to be agreed or
alternatively deliver ampoules of the Cell Line to the Customer so that
the Customer can have the appropriate tests completed.

*Certain confidential information contained in this document, marked by
brackets, has been omitted and filed with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.

11.
<PAGE> 12
1.4 Timescale

Stage 1 may commence as soon as the [*]. Therefore, if requested by the
Customer, Stage 1 can commence before completion of the stability tests
undertaken in activity 1.2.5 of the Evaluation Agreement, on the
understanding that the Customer will pay for all work undertaken by
Lonza under Stage 1 in the event that the Cell Line is shown
subsequently to be unstable and the Customer decides to terminate the
Contract in accordance with Schedule 5 Clause 9.1.

Stage 1 shall be complete with the issue of the report of activities
and it is estimated that this [*] from the start of Stage 1. It is
estimated that the [*] will be established [*] from the start of
Stage 1, the [*] will be established [*] from the start of Stage 1 and
the ECB will be established [*] from the start of Stage 1.

2. Stage 2 Purification Development

2.1 Objective

To establish a purification process suitable for manufacture of the
Product.

2.2 Activities

2.2.1 Either carry out a [*], or use [*].

2.2.2 [*].

2.2.3 Determine the [*].

2.2.4 Evaluate [*].

2.2.5 [*].

*Certain confidential information contained in this document, marked by
brackets, has been omitted and filed with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.

12.
<PAGE> 13

2.2.6 For each [*].

2.2.7 [*].

2.2.8 [*].

2.2.9 Deliver a sample of Product produced at laboratory scale to
the Customer for evaluation.

2.2.10 Issue a report of activities to the Customer. This report will
include the following information:

- step yields for each chromatography and buffer exchange
operation;

- copies of SDS-PAGE, IEF and HPLC analysis results;

- materials and methods used for activities under Stage
2;

- an outline of the recommended manufacturing process
including an estimate of the expected yield for the
Product at the chosen production scale.

2.3 Timescale

Stage 2 shall be complete with the issue of the report of activities
(section 2.2.10) and it is estimated that this report will be issued
[*] from the start of Stage 2.

Stage 2 may commence as soon as the [*] is available (activity 1.2.4
of the Evaluation Agreement).

3. Stage 3 Production of Product at Pilot Scale.

3.1 Objective

3.1.1 To [*].

*Certain confidential information contained in this document, marked by
brackets, has been omitted and filed with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.

13.

<PAGE> 14

3.1.2 To evaluate the ability of the Process to produce Product
that meets key parameters of the draft Specification.

3.2 Activities

3.2.1 [*].

3.2.2 [*].

3.2.3 [*].

3.2.4 [*].

3.2.5 Test Product against the following aspects of the draft
Specification:

[*].

3.2.6 Review requirements (if any) for Process modifications in
order to meet Specification for GMP manufacture of subsequent
batches and advise Customer of any proposed modifications.

3.2.7 Deliver Product to Customer. Quantities available depend on
the amount of Product required for activities 3.2.3-3.2.5.

3.3 Timescale

Stage 3 shall be complete upon delivery of Product to the Customer. It
is estimated that Product will be delivered [*] from commencement of
Stage 3.

4. Stage 4 GMP Documentation.

4.1 Objective

To prepare GMP documentation for use in manufacture of Product for
Phase II/III clinical trials.

Note: The process cannot be considered as fully optimised.

4.2 Activities

*Certain confidential information contained in this document, marked by
brackets, has been omitted and filed with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.

14.
<PAGE> 15

4.2.1 Prepare documentation approved by Lonza's QA department. The
documentation shall cover:

- Cell Banking.

[*].

- Materials specifications (as required).

- Sampling protocols.

- Product specifications.

4.3 Timescale

It is estimated that Stage 4 will take [*] from the commencement of
work and shall be complete on notification by Lonza to the Customer
that the documentation has been approved by Lonza's QA department.
Stage 4 will commence on the establishment of the MCB (Stage 1, section
1.2.2).

5. Stage 5 Production of Product to GMP at 2000 litre scale.

5.1 Objectives

5.1.1 To manufacture [*] batches of Product at 2000 litre scale in
an airlift fermenter in accordance with the principles of Good
Manufacturing Practice (GMP) it being understood and
acknowledged that the Customer intends that these batches
serves as manufacturing consistency batches to support a
Biologics Licence Application and/or an EMEA marketing
authorisation request.

5.1.2 To evaluate further the ability of the Process to produce
Product meeting the draft Specification.

5.2 Activities

Subject to first agreeing with the Customer any Process modifications
advised by Lonza under Stage 3 activity 3.2.6, Lonza shall carry out
the following activities for each of the [*] batches:

15.
<PAGE> 16

5.2.1 After receiving adequate [*].

5.2.2 [*].

5.2.3 [*].

5.2.4 [*].

5.2.5 [*].

5.2.6 Test Product against the draft Specification.

5.2.7 Undertake Quality Assurance review of lot documentation.

5.2.8 Review requirements (if any) for Process modifications in
order to meet Specification for manufacture of subsequent
batches. Any such Process modifications are subject to
agreement prior to implementation.

5.2.9 Issue lot release for Product.

5.2.10 Deliver Product to Customer.

5.3 Timescale

Stage 5 shall be complete upon delivery of the [*] batch of Product
to the Customer. It is estimated that Product from the first batch will
be delivered six (6) months from commencement of Stage 5.

6. Stage 6 Manufacturing and Control Data Packages.

6.1 Objective

To prepare Manufacturing and Control Data Packages ("data packages")
covering the work carried out in the Evaluation Agreement and in Stages
1-5 of this Agreement for submission to the Customer as an amendment to
the appropriate sections of the Customer's existing IND and CTX
documents.

6.2 Activities

16.
<PAGE> 17

6.2.1 Prepare data packages, as required by the Customer, for the
purpose of submission as amendments to the appropriate
sections of the Customers' existing IND and CTX documents.

The data packages will cover the items detailed in Appendices
1 and of this schedule.

For Product Licence, specific DNA and virus clearance
studies, plus bulk Product stability studies will be required,
which are outside the scope of this Agreement.

6.2.2 Submit amendments to the Customer.

6.3 Timescale

Stage 6 shall be complete with the submission of amendments to the
Customer, and that activity will be complete [*] from the
commencement of Stage 6.

Note: Additional cell bank characterisation is in addition to Stage 1
of the Services and to be agreed between Lonza and Customer.

17.
<PAGE> 18

APPENDIX 1 TO SCHEDULE 2

Manufacturing and Control Data Packages
(USA - Type II Drug Master File)

INDEX

1. Production and Control Information

1.1 Facilities: refer to BB-MF 2500

1.2 Flow diagram of production process

1.3 Starting Materials

1.3.1 Raw Materials

1.3.2 Preparation and testing of cell banks

1.3.2.1 Construction and serum free adaptation of cell
lines

1.3.2.2 Preparation, derivation and description of cell
banks

1.3.2.3 Cell bank testing

1.4 Manufacture of bulk product

[*]

2. Product Testing and Final Release

2.1 In process testing procedures

2.2 Final product testing and release

2.2.1 Final product specification

2.2.2 Test methods

2.2.3 Lot release

2.2.4 Photographs: IEF, SDS-PAGE and HPLC scans

2.3 Environmental monitoring

18.
<PAGE> 19
3. Process Development

3.1 Development of cell lines

3.2 Development of fermentation process

3.3 Development of purification process

4. Process Validation

4.1 DNA and virus clearance

4.2 Removal of protein contaminants

5. Stability and Expiration (if available)

6. Attachments

6.1 Construction of the cell line and serum free adaptation

6.2 Preparation and analysis of cell banks

6.3 DNA and virus clearance reports

6.4 Lot analysis

6.5 Environmental impact policy

6.6 Index to DMF Type 1 BB-MF 2500

6.7 Letter of authorisation to reference BB-MF 2500

19.
<PAGE> 20

APPENDIX 2 TO SCHEDULE 2

Manufacturing and Control Data Packages
(Europe - CTX APPLICATION)

Part II C. Control of Starting Materials

1. Active Ingredient

1.1 Specifications and routine tests

1.1.1 Specifications

1.1.2 Routine test methods

1.2 Nomenclature

1.3 Development Genetics

1.3.1 Fusion and cloning of the cell line.

1.3.2 Stability of cell line

1.4 Cell Bank System

1.4.1 Preparation and description of the cell banks

[*]

1.5 Manufacture

1.5.1 Manufacture site

1.5.2 Flow diagram of process

1.5.3 Process description

1.5.4 Quality Control during manufacture

1.5.4.1 Control of starting materials

1.5.4.2 In process controls

20.
<PAGE> 21
1.5.4.3 Environmental monitoring

1.6 Description and proof of structure

1.7 Analytical Development

1.7.1 Validation of relevant methods using during development

1.7.2 Validation and comments on the choice of routine tests

1.7.3 Characterisation of the reference material

1.8 Process validation

1.8.1 Viral clearance data

1.8.2 DNA clearance data

1.9 Impurities

1.9.1 Recognised potential impurities arising from the cell line
or during the manufacturing process

1.9.2 Analytical methods used to detect impurities and their
limits of detection

1.9.3 Consistency of the impurity profile

1.10 Batch Analysis
(Stability in part II-F)

21.
<PAGE> 22

SCHEDULE 3

PRICE AND TERMS OF PAYMENT

1. Price

In consideration for Lonza carrying out the Services as detailed in
Schedule 2 the Customer shall pay Lonza as follows:

Stage Price ((pound) Sterling)
----------------------------------------------------------------------

Stage 1 Master, Working and Extended Cell [*]
Bank Creation and Analysis

External Testing of Pre-Seed Stock [*]

Stage 2 Purification Process Development [*]

Stage 3 Production of Product at Pilot Scale [*]

Stage 4 GMP Documentation [*]

Stage 5 Production of Product to GMP at [*]
2000 litre scale x [*] batches

Stage 6 Manufacturing and Control Data
Packages [*]
---------

TOTAL PRICE [*]

Note:

1 These prices do not include testing of the cell banks. Lonza can
arrange testing of cell banks at an additional price comprising the
cost charged to Lonza by the Testing Laboratories plus a [*]
administration charge.

2 The price for Stage 5 does not include specific virus or DNA clearance
studies on the GMP batch. A list of the recommended further work
required for BLA submission is available from Lonza.

3 (a) Without prejudice to Clause 4 of Schedule 5 hereto, and
subject to the

22.
<PAGE> 23

provisions set out below Lonza shall be entitled to receive an
additional payment for Services performed pursuant to Stage 3
of the Services as follows:

i. the event that Lonza notifies the Customer that
Product deliverable pursuant to Stage 3.2.7 of the
Services is ready for delivery to Customer on or
before 21 March 1996, the Price for Stage 3 of the
Services shall be increased by [*], which additional
sum shall be due to Lonza concurrently with the
payment due pursuant to Clause 2.1.3 of this
Schedule 3.

ii. In the event that Lonza notifies the Customer that
Product deliverable pursuant to Stage 3.2.7 of the
Services is ready for delivery to Customer after 21
March 1996 but before 19 April 1996, the Price for
Stage 3 of the Services shall be increased by [*],
which additional sum shall be due to Lonza
concurrently with the payment due pursuant to
Clause 2.1.3 of this Schedule 3.

(b) Without prejudice to Clause 4 of Schedule 5 hereto and subject
to the provisions set out below Customer shall be entitled to
a credit against the sums due to Lonza for performance of
Stage 3 of the Services as follows:

i. In the event that Lonza notifies the Customer that
Product deliverable pursuant to Stage 3.2.7 of the
Services is ready for delivery to Customer after 13
June 1996 but before 13 July 1996, the credit against
the Price of Stage 3 of the Services to which
Customer shall be entitled shall be [*].

ii. In the event that Lonza notifies the Customer that
Product deliverable pursuant to Stage 3.2.7 of the
Services is ready for delivery to Customer on or
after 13 July 1996, the credit against the Price of
Stage 3 of the Services to which Customer shall be
entitled shall be [*].

4. (a) Without prejudice to Clause 4 of Schedule 5 hereto, and
subject to the provisions set out below Lonza shall be
entitled to receive an additional payment for Services
performed pursuant to Stage 5 of the Services as follows:

i. In the event that Lonza notifies the Customer that
Product deliverable from the first batch to be
delivered pursuant to Stage 5.2.9 of the Services is
ready for delivery to Customer on or before 11 July
1996, the Price for Stage 5 of the Services for the
first batch

23.
<PAGE> 24

to be delivered shall be increased by [*], which
additional sum shall be due to Lonza concurrently
with the payment due pursuant to Clause 2.1.5(a)
of this Schedule 3.

ii. In the event that Lonza notifies the Customer that
Product deliverable from the first batch to be
delivered pursuant to Stage 5.2.9 of the Services for
the first batch to be delivered is ready for delivery
to Customer after 11 July 1996 but before 9 August
1996, the Price for Stage 5 of the Services shall be
increased by [*], which additional sum shall be due
to Lonza concurrently with the payment due pursuant
to Clause 2.1.5(a) of this Schedule 3.

(b) Without prejudice to Clause 4 of Schedule 15 hereto and
subject to the provisions set out below Customer shall be
entitled to a credit against the sums due to Lonza for
performance of Stage 5 of the Services as follows:

i. In the event that Lonza notifies the Customer that
Product deliverable from the first batch to be
delivered pursuant to Stage 5.2.9 of the Services is
ready for delivery to Customer after 3 October 1996
but before 1st November 1996, the credit against the
Price of Stage 5 of the Services to which Customer
shall be entitled for the first batch to be delivered
shall be [*].

ii. In the event that Lonza notifies the Customer that
Product deliverable from the first batch to be
delivered pursuant to Stage 5.2.9 of the Services is
ready for delivery to Customer on or after 1st
November 1996, the credit against the Price of Stage
5 of the Services to which Customer shall be entitled
for the first batch to be delivered shall be [*].

2. Payment

2.1 Payment by the Customer of the Price for each stage shall be
made against Lonza's invoices to be dated as of the first date
Lonza is entitled to payment in each case, as follows:

2.1.1 For Stage 1

[*] upon commencement of Stage 1.

[*] upon completion of Stage 1.

2.1.2 For Stage 2

24.
<PAGE> 25

[*] upon commencement of Stage 2.

[*] upon completion of Stage 2.

2.1.3 For Stage 3

[*] upon delivery of Product.

2.1.4 For Stage 4

[*] on completion of Stage 4.

2.1.5 For Stage 5

(a) [*] on lot release of the first batch of
Product from 2000 litre fermenter;

(b) [*] on lot release of the [*] batch of
Product from 2000 litre fermenter,

2.1.6 For Stage 6

[*] on issue of Manufacturing Data Packages.

2.2 Payment or credit of any amounts due pursuant to Notes 3 and 4
of Clause 1 of this Schedule 3 shall be made as therein
provided.

2.3 For any payment due and made by the Customer before 31 March
1997, the Customer may, at its option, make payment to Lonza
in US Dollars, such amount to be calculated at a currency
exchange rate of US$1.55: 1.00 pounds sterling. All payments
made after 31 March 1997 shall be made in Pounds Sterling
unless otherwise agreed.

For the avoidance of doubt, where any additional payment or
credit is due pursuant to Notes 3 and 4 of Clause 1 of this
Schedule 3 at the same time as any payment is made pursuant to
Clause 2.1 of this Schedule 3, the said additional payment or
credit shall be accounted for in the same currency as for the
payment made pursuant to the said Clause 2.1.

25.
<PAGE> 26

SCHEDULE 4

SPECIAL TERMS

1. Definitions of GMP and GLP

1.1 Definition of GMP

For the purposes of this document, Good Manufacturing Practice
(GMP) will mean Good Manufacturing Practices and General
Biological Products Standards as promulgated under the US
Federal Food and Drug and Cosmetic Act at 21CFR, (chapters
210, 211, 600 and 610) and the Commission of the European
Communities Rules Governing Medicinal Products in the European
Community (Volume IV : Good Manufacturing Practice for
Medicinal Products, 1992) as the same may be amended or
re-enacted from time to time. Lonza's operational quality
standards are defined in internal GMP policy documents and are
based on Lonza's interpretation of the GMP legislation for
bulk clinical grade Biologicals. Additional product-specific
development, documentation and validation work may be required
to support regulatory applications to conduct clinical trials,
or market a product.

1.2 Definition of GLP

For the purposes of this document Good Laboratory Practice
(GLP) will mean practices as recommended in the guidelines of
the UK Compliance Programme.

2. Cell-Bank Access

Always provided Lonza's ability to perform the Services is not
prejudiced thereby, the Customer's authorised representative may have
access at times to be reasonably agreed to the banks containing the
Cell Line at Lonza's premises and may remove all or part of said cell
banks, as required.

3. Technology Transfer

At the Customer's request, Lonza agrees to enter into good faith
negotiations for the grant of a non-exclusive licence to the Customer
on commercially reasonable terms to manufacture Product under certain
Patent Rights and Lonza Know-How. Such grant shall be subject to
agreement on applicable terms and conditions and shall apply only to
Patent Rights and Lonza Know-How used by Lonza in the

26.
<PAGE> 27

operation of the Process for production of Product to GMP (Schedule 2
Stage 5) and only to the extent Lonza is able to grant a licence
thereto at the time of signature of such agreement.

For the avoidance of doubt the Patent Rights and Lonza Know-How which
may be the subject of any such licence grant shall be limited to the
Patent Rights and Lonza Know-How used by Lonza in the operation of the
Process for production of Product to GMP (Schedule 2 Stage 5) and
relating to [*].

27.
<PAGE> 28

SCHEDULE 5

STANDARD TERMS FOR CONTRACT SERVICES
COULTER PHARMACEUTICAL, INC.

1. Interpretation

1.1 In these Standard Terms, unless the context requires
otherwise:

1.1.1 "Affiliate" means any Company, partnership or other
entity which directly or indirectly controls, is
controlled by or is under common control with the
relevant party to this Agreement. "Control" means the
ownership of more than 50% of the issued share
capital or the legal power to direct or cause the
direction of the general management and policies of
the party in question.

1.1.2 "Agreement" means this agreement as herein dated
between Lonza and a Customer incorporating these
Standard Terms.

1.1.3 "Cell Line" has the meaning set forth in Schedule 1.

1.1.4 "Customer" means Coulter Pharmaceutical, Inc. of 550,
California Avenue, Suite 200, Palo Alto, CA
94306-1440, USA.

1.1.5 "Customer Information" means all technical and other
information, relating to the Cell Line, the Process
and the Product disclosed by the Customer to Lonza,
and not known to Lonza prior to disclosure by the
Customer.

1.1.6 "Customer Tests" means the tests to be carried out on
the Product following receipt of the Product by the
Customer, particulars of which are set out in
Schedule 1.

1.1.7 "Lonza Know-How" means all technical and other
information relating to the Process known to Lonza
from time to time other than Customer Information.

1.1.8 "Patent Rights" means all patents and patent
applications of any kind throughout the world
relating to the Process which from time to time Lonza
is the owner of or (except for any patents and patent
applications owned by the Customer or licensed to the
Customer by third party and licensed to Lonza
hereunder) is entitled to use.

28.
<PAGE> 29

1.1.9 "Price" means the price specified in Schedule 3 for
the Services.

1.1.10 "Process" means the process developed or utilized by
Lonza under this Agreement for the production of the
Product from the Cell Line, including any
improvements thereto from time to time.

1.1.11 "Product" has the meaning set forth in Schedule 1.

1.1.12 "Services" means all or any part of the services the
subject of the Agreement (including, without
limitation, cell culture evaluation, purification
evaluation, master, working and extended cell bank
creation, and sample and bulk production),
particulars of which are set out in Schedule 2.

1.1.13 "Special Term" means any term additional or
supplemental to these Standard Terms from time to
time agreed in writing between Lonza and the
Customer. Particulars of any Special Terms at the
date of the Agreement are set out in Schedule 4.

1.1.14 "Specification" means the specification for Product,
particulars of which are set out in Schedule 1.

1.1.15 "Terms of Payment" means the terms of payment
specified in Schedule 3.

1.1.16 "Testing Laboratories" means any third party
instructed by Lonza to carry out tests on the
Cell Line or the Product.

1.2 Unless the context requires otherwise, words and phrases
defined in any other part of the Agreement shall bear the same
meanings in these Standard Terms, references to the singular
number include the plural and vice versa, references to
Schedules are references to schedules to the Agreement, and
references to Clauses are references to clauses of these
Standard Terms.

1.3 In the event of a conflict between any of the terms of
Schedules 1-4 and these Standard Terms, the terms of Schedules
1-4 shall prevail.

2. Applicability of Standard Terms

No variation of or addition to these Standard Terms and the Special
Terms or any other term of an Agreement shall be effective unless in
writing and signed for and on behalf of Lonza and the Customer.

29.
<PAGE> 30

3. Supply of the Cell Line

3.1 Prior to the date of the Agreement the Customer supplied to
Lonza the Customer Information, together with cell line B1 and
full details of any hazards known to Customer and relating to
cell line B1, its storage and use. Property in the cell Line
B1 and the Cell Line supplied to Lonza shall remain vested in
the Customer.

3.2 The Customer hereby grants Lonza the non-exclusive right to
use the Cell Line, the Product and the Customer Information
for the purpose of the Agreement. Lonza hereby undertakes not
to use the Cell Line, the Product or the Customer Information
(or any part thereof) for any other purpose.

3.3 Lonza shall :

3.3.1 at all times keep the Cell Line secure and safe from
loss and damage in such manner as Lonza shall in its
sole discretion determine:

3.3.2 not part with possession of the Cell Line or the
Product, save for the purpose of tests at the Testing
Laboratories; and

3.3.3 procure that all Testing Laboratories are subject to
obligations of confidence substantially in the form
of those obligations of confidence imposed on Lonza
under these Standard Terms.

3.4 Lonza shall not be liable for any loss, damages, costs or
expenses of any nature, whether direct or consequential,
occasioned by the carrying out (in whole or in part) of tests
or the failure to carry out tests by Testing Laboratories (A
"Testing Laboratory Breach"). Lonza agrees to use commercially
reasonable efforts to enforce any rights Lonza may have
against a Testing Laboratory in the event that either Lonza or
the Customer supers any loss, damage, costs or expenses of any
nature occasioned by a Testing Laboratory Breach. In the event
Lonza recovers damages against a Testing Laboratory Lonza
shall pay to the Customer after deduction of any out-of-pocket
legal expenses such proportion of the amount of damages as the
parties shall agree and such agreement shall take account of
the loss suffered by both Lonza and the Customer.

3.5 The Customer warrants to Lonza that:

3.5.1 the Customer is and shall at all times throughout the
duration of the Agreement remain entitled to supply
the Cell Line and Customer Information to Lonza; and

30.
<PAGE> 31

3.5.2 the use by Lonza of the Cell Line and the Customer
Information in accordance with this Agreement will
not infringe any rights (including, without
limitation, any intellectual or industrial property
rights) vested in any third party.

Lonza warrants that as of the date of this Agreement Lonza's
legal or corporate departments have not received notice of nor
are aware of any claim or demand and Lonza is not party to any
court proceedings in which a third party is claiming
infringement of its intellectual property rights by Lonza's
use of the Process and Lonza agrees to notify the Customer at
any time during the term of this Agreement if it receives any
such notice or demand and of the steps it intends to take as a
result of such notice or demand.

3.6 The Customer undertakes to indemnify and to maintain Lonza
promptly indemnified against any loss, damages, costs and
expenses of any nature (including court costs and legal fees
on a full indemnity basis), whether direct or consequential,
and whether or not foreseeable or in the contemplation of
Lonza or the Customer, that Lonza may suffer arising out of or
incidental to any breach of the warranties given by the
Customer under Clause 3.5 above.

3.7 The obligations of the Customer and Lonza under Clauses 3.3,
and 3.6 shall survive the termination for whatever reason of
the Agreement.

4. Provision of the Services

4.1 Lonza shall carry out the Services as provided in Schedule 2.

4.2 The timescales set down for the performance of the Services
(including without limitation the dates for production and
delivery of Product) and the quantities of Product for
delivery set out in Schedule 2 are estimated only.

4.3 The Customer shall not be entitled to cancel any unfulfilled
part of the Services or to refuses to accept the Services on
grounds of late performance, late delivery or failure to
produce the estimated quantities of Product for delivery.
Lonza shall not be liable for any loss, damage, costs or
expenses of any nature, whether direct or consequential,
occasioned by:

4.3.1 any delay in performance or delivery howsoever
caused; or

4.3.2 any failure to produce the estimated quantities of
Product for delivery.

31.
<PAGE> 32

4.4 Lonza shall comply with all statutory, regulatory and similar
legislative requirements from time to time applicable to the
Services under the laws of European Union, United Kingdom and
USA. If the Customer requests Lonza to comply with any other
statutory, regulatory or similar legislative requirements (the
Foreign Requirements") Lonza shall use reasonable commercial
endeavours to do so provided that:

4.4.1 the Customer shall be responsible for informing Lonza
in writing of the precise Foreign Requirements which
the Customer is requesting Lonza to observe;

4.4.2 such Foreign Requirements do not conflict with any
mandatory requirements under the laws of England;

4.4.3 Lonza shall be under no obligation to ensure that
such written information complies with the applicable
Foreign Requirements; and

4.4.4 all costs and expenses incurred by Lonza in complying
with such Foreign Requirements shall be charged to
the Customer in addition to the Price.

4.5 Delivery of Product shall be ex-works. Risk in and title to
Product shall pass on delivery. Transportation of Product,
whether or not under any arrangements made by Lonza on behalf
of the Customer, shall be made at the sole risk and expense of
the Customer.

4.6 Unless otherwise agreed Lonza shall package and label Product
for delivery ex-works. It shall be the responsibility of the
Customer to inform Lonza in writing in advance of any special
packaging and labelling requirements for Product. All
reasonable additional costs and expenses of whatever nature
incurred by Lonza in complying with such special requirements
shall be charged to the Customer in addition to the Price.

5. Transportation of Product and Customer Tests

5.1 If requested by the Customer, Lonza will (acting as agent of
the Customer for such purpose) arrange the transportation of
Product from Lonza's premises to the destination indicated by
the Customer together with insurance cover for Product in
transit at its invoiced value. All additional costs and
expenses of whatever nature incurred by Lonza in arranging
such transportation and insurance shall be charged to the
Customer in addition to the Price.

32.
<PAGE> 33

5.2 Where Lonza has made arrangements for the transportation of
Product, the Customer or its designee shall diligently examine
the Product as soon as practicable after receipt. Notice of
all claims (time being of the essence) arising out of:

5.2.1 damage to or total or partial loss of Product in
transit shall be given in writing to Lonza and the
carrier within three (3) days of delivery; or

5.2.2 non-delivery shall be given in writing to Lonza
within ten (10) days after the date of Lonza's
despatch notice.

5.3 The Customer shall make damaged Product available for
inspection and shall comply with the requirements of any
insurance policy covering the Product notified by Lonza to the
Customer. Lonza shall offer the Customer all reasonable
assistance (at the cost and expense of the Customer) in
pursuing any claims arising out of the transportation of
Product. At any time, if requested by the Customer, Lonza
shall supply the Customer with Product samples retained by
Lonza prior to shipment of Product for use by the Customer in
confirming whether Product meets the Specification (always
provided that such supply of Product samples does not
prejudice Lonza's ability to meet GMP or regulatory
requirements regarding retention of Product samples).

5.4 Immediately upon receipt of Product or Product samples, the
Customer or its appointed agent shall carry out the Customer
Tests. If the Customer Tests show that the Product fails to
meet Specification, the Customer shall give Lonza written
notice thereof within sixty (60) days from the date of
delivery of the Product ex-works, and shall return such
Product to Lonza's premises for further testing. In the
absence of such written notice Product shall be deemed to have
been accepted by the Customer as meeting Specification. If
Lonza is satisfied that Product returned to Lonza fails to
meet Specification and that such failure is not due (in whole
or in pan) to acts, or omissions of the Customer or any third
party after delivery, of such Product ex-works, Lonza shall in
its sole discretion refund that part of the Price that relates
to the production of such Product or replace such Product at
its own cost and expense. Notwithstanding the foregoing, if
the Customer determines following acceptance of the Product
from Lonza that the Product has been adulterated within the
meaning of the United States Federal Food, Drug and Cosmetic
Act by Lonza, then, subject to the Customer providing Lonza
evidence of its determination and samples of adulterated
Product and subject to Lonza's right to dispute such

33.
<PAGE> 34

determination in accordance with Clause 5.5, Lonza shall in
its sole discretion refund that part of the Price that relates
to the production of such Product or replace such Product at
its own cost and expense.

5.5 If there is any dispute concerning whether Product returned to
Lonza fails to meet Specification or whether such failure is
due (in whole or in part) to acts or omissions of the
Customer or any third party after delivery of such Product
ex-works, such dispute shall be referred for decision to an
independent expert (acting as an expert and not as an
arbitrator) to be appointed by agreement between Lonza and the
Customer or, in the absence of agreement by the President for
the time being of the Association of the British
Pharmaceutical Industry. The costs of such independent expert
shall be borne equally between Lonza and the Customer. The
decision of such independent expert shall be in writing and,
save for manifest error on the face of the decision, shall be
binding on both Lonza and the Customer.

5.6 The provisions of Clauses 5.4 and 5.5 shall be the sole remedy
available to the Customer in respect of Product that fails to
meet Specification or that is adulterated.

6. Price and Terms of Payment

6.1 The Customer shall pay the Price in accordance with the Terms
of Payment.

6.2 Unless otherwise indicated in writing by Lonza, all prices and
charges are exclusive of value added tax or of any other
applicable taxes, levies, imports, duties and fees of whatever
nature imposed by or under the authority of any government or
public authority, which shall be paid by the Customer. All
invoices are strictly net and payment must be made within
thirty (30) days of date of invoice. Payment shall be made
without deduction, deferment, set-off, lien or counterclaim of
any nature.

6.3 Time for payment shall be of the essence. In default of
payment on due date:

6.3.1 interest shall accrue on any amount overdue at the
rate of 2% above the Base Rate from time to time of
Midland Bank plc, interest to accrue on a day to day
basis both before and after judgement; and

6.3.2 Lonza shall, at its sole discretion, and without
prejudice to any other of its accrued rights be
entitled to suspend the provision of the Services or
if the default of payment continues for One hundred
and fifty (150) days after the date of invoice to
treat the Agreement as

34.
<PAGE> 35

repudiated by notice in writing to the Customer
exercised at any time thereafter provided that such
right to suspend Services or treat the Agreement as
repudiated shall not apply in circumstances where the
Customer has withheld payment for amounts disputed in
good faith (it being agreed that this proviso shall
apply to disputed amounts and not to any other
amounts due for payment forming part of the same or
another invoice).

7. Warranty and Limitation of Liability

7.1 Lonza warrants that:

7.1.1 the Services shall be performed in accordance with
Clause 4.1; and

7.1.2 the Product shall meet Specification, save with
respect to the first batch of Product delivered
pursuant to Schedule 5 Stage 5 where Lonza shall be
obliged only to use its reasonable endeavours to
produce Product that meets Specification.

7.2 Clause 7.1 is in lieu of all conditions, warranties and
statements in respect of the Services and/or the Product
whether expressed or implied by statute, custom of the trade
or otherwise (including but without limitation any such
condition, warranty or statement relating to the description
or quality of the Product, its fitness for a particular
purpose or use under any conditions whether or not known to
Lonza) and any such condition, warranty or statement is hereby
excluded.

7.3 Without prejudice to the terms of Clauses 3.4, 5.6, 7.1, 7.2
and 7.4 and, subject to Clause 7.6, the liability of Lonza for
any loss or damage suffered by the Customer as a direct result
of any breach of the Agreement or of any other liability of
Lonza (including misrepresentation and negligence) in respect
of the Services (including without limitation the production
and/or supply of the Product) shall be limited to the payment
by Lonza of damages which shall not exceed [*]. The
limitation of liability set forth in the preceding sentence
shall not apply to any breach by Lonza of Clauses 3.2, 8.1,
8.2 and 8.3 of this Schedule 5.

7.4 Subject to Clause 7.6, Lonza shall not be liable for the
following loss or damage howsoever caused (even if foreseeable
or in the contemplation of Lonza or the Customer):

7.4.1 loss of profits, business or revenue whether suffered
by the Customer or any other person; or

35.
<PAGE> 36

7.4.2 indirect or consequential lost whether suffered by
the Customer or any other person.

7.5 The Customer shall indemnify and maintain Lonza promptly
indemnified against all claims, actions, costs, expenses
(including court costs and legal fees on a full indemnity
basis) or other liabilities whatsoever in respect of:

7.5.1 any liability under the Consumer Protection Act 1987,
unless, such liability is caused by the negligent act
or omission of Lonza in the production and/or supply
of the Product; and

7.5.2 any product liability (other than that referred to in
Clause 7.5.1) in respect of Product, unless such
liability is caused by the negligent act or omission
of Lonza in the production and/or supply of Product;
and

7.5.3 any negligent or wilful act or omission of the
Customer in relation to the use, processing, storage
or sale of the Product

7.6 Nothing contained in these Standard Terms shall purport to
exclude or restrict any liability for death or personal injury
resulting directly from negligence by Lonza in carrying out
the Services or any liability for breach of the implied
undertakings of Lonza as to title.

7.7 The obligations of the Customer and Lonza under this Clause 7
shall survive the termination for whatever reason of the
Agreement.

8. Customer Information, Lonza Know-How and Patent Rights

8.1 The Customer acknowledges that Lonza Know-How and Lonza
acknowledges that Customer Information with which it is
supplied by the other pursuant to the Agreement is supplied,
subject to Clause 8.4, in circumstances imparting an
obligation of confidence and each agrees to keep such Lonza
Know-How or such Customer Information secret and confidential
and to respect the other's proprietary rights therein and not
at any time for any reason whatsoever to disclose or permit
such Lonza Know-How or such Customer Information to be
disclosed to any third party.

8.2 The Customer and Lonza shall each procure that all their
respective employees, consultants and contractors having
access to confidential Lonza Know-How or confidential Customer
Information shall be subject to the same obligations of
confidence as the principals pursuant to Clause 8.1 and shall
enter into secrecy agreements in support of such obligations.
Insofar as this is not reasonably practicable, the principals
shall take all reasonable

36.
<PAGE> 37

steps to ensure that any such employees, consultants and
contractors are made aware of such obligations.

8.3 Lonza and the Customer each undertake not to disclose or
permit to be disclosed to any third party, or otherwise make
use of or permit to be made use of, any trade secrets or
confidential information relating to the technology, business
affairs or finances of the other, any subsidiary, holding
company or subsidiary or any such holding company of the
other, or of any suppliers, agents distributors, licensees or
other customers of the other which comes into its possession
under this Agreement.

8.4 The obligations of confidence referred to in this Clause 8
shall not extend to any information which :

8.4.1 is or becomes generally available to the public
otherwise than by reason of a breach by the recipient
party of the provisions of this Clause 8;

8.4.2 is known to the recipient party and is at its free
disposal prior to its receipt from the other,

8.4.3 is subsequently disclosed to the recipient party, as
a matter of right without being made subject to an
obligation of confidence by a third party;

8.4.4 Lonza or the Customer may be required to disclose
under any statutory, regulatory, or similar
legislative requirement, subject to the imposition of
obligations of secrecy whether possible in that
relation provided that the party required to make the
disclosure shall first notify the other party who
shall be allowed to take what action he considers
necessary with respect to the proposed disclosure; or

8.4.5 is developed by an employee of the recipient party,
independently and without access to or use or
knowledge of the information supplied by the
disclosing party.

8.5 The Customer acknowledges that:

8.5.1 Lonza Know-How and the Patent Rights are vested in
Lonza or Lonza is otherwise entitled thereto: and

8.5.2 the Customer shall not at any time have any right,
title, licence or interest in or to Lonza Know-How,
the Patent Rights or any other

37.
<PAGE> 38

intellectual property rights relating to the Process
which are vested in Lonza or to which Lonza is
otherwise entitled.

8.6 Lonza acknowledges that, subject to Clause 4.5 above and save
as expressly stated herein. Lonza shall not by virtue of this
Agreement be granted any right, title or interest in the Cell
Line or the Product expressed by the Cell Line.

8.7 The Customer shall not represent that it has any right, title,
or interest in or to Lonza Know-How, the Patent Rights or any
other intellectual property rights vested in Lonza or its
Affiliates and shall not seek or apply to register in its own
name any such rights. The Customer shall do all such acts and
things and sign all such deeds and documents as Lonza may in
its sole discretion reasonably require in respect of any
registration being made by Lonza or its Affiliates in
connection with such rights.

8.8 The obligations of Lonza and the Customer under this Clause 8
shall survive the termination for whatever reason of the
Agreement.

9. Termination

9.1 If it becomes apparent to either Lonza or the Customer at any
stage in the provision of the Services that it will not be
possible to complete the Services for scientific or technical
reasons, a sixty (60) day period shall be allowed for
discussion to resolve such problems. If such problems are not
resolved within such period, Lonza and the Customer shall each
have the right to terminate the Agreement forthwith by notice
in writing.

9.2 Lonza and the Customer may each terminate the Agreement
forthwith by notice in writing to the other upon the
occurrence of any of the following events:

9.2.1 if the other commits a material breach of the
Agreement which (in the case of a breach capable of
remedy) is not remedied within the time permitted
within Clause 6.3.2 for default of payment by the
Customer or otherwise within thirty (30) days of the
receipt by the other of notice identifying the breach
and requiring its remedy; or

9.2.2 if the other ceases for any reason to carry on
business or compounds with or convenes a meeting of
its creditors or has a receiver or manager appointed
in respect of all or any part of its assets or is the
subject of an application for an administration order
or of any proposal for a voluntary arrangement or
enters into liquidation

38.

<PAGE> 39

(whether compulsorily or voluntarily) or undergoes
any analogous act or proceedings under foreign law.

9.3 Notwithstanding the provisions of Clause 4.3 and Clause 10 of
this Schedule 5, if the Services listed in Stages 1-6 of
Schedule 2 as of the date of this Agreement have not been
completed by [*] the Customer may terminate the
Agreement at any time thereafter by written notice to Lonza.

9.4 In the event of termination of the Agreement by either party
under Clause 9 or by the Customer under Clause 9.3 and
provided that Lonza is not also in material breach of the
Agreement at the same time whereby the Customer exercises his
right to termination the Agreement pursuant to Clause 9.2.1
then:

(a) Customer shall pay to Lonza all amounts outstanding
and remaining to be paid for every stage of the
Services completed prior to termination and, for any
stage of the Services which remains incomplete upon
termination, a termination sum calculated by
reference to all costs incurred by Lonza (including
a reasonable profit) in carrying out activities for
any such stage of the Services and all expenses
reasonably incurred by Lonza in giving, effect to
such termination, including the costs of terminating
any commitments made pursuant to this Agreement (such
termination sum not to exceed the Price for each such
stage of the Services), and

(b) Lonza shall deliver to the Customer any Product made
in accordance with the terms of this Agreement and a
report of all activities completed prior to
termination, and

(c) Lonza shall be entitled to retain all amounts paid by
the Customer for every stage of the Services
completed prior to termination and any amount paid
for any stage of the Services which remains
incomplete upon termination.

9.5 Upon the termination of the Agreement:

9.5.1 for whatever reason Lonza shall promptly return all
Customer Information to the Customer and shall
dispose of or return to the Customer the Cell Line
and any materials therefrom, as directed by the
Customer,

39.
<PAGE> 40

9.5.2 by Lonza pursuant to Clause 9.2 the Customer shall
promptly return to Lonza all Lonza Know-How it has
received from Lonza;

9.5.3 for whatever reason the Customer shall not thereafter
use or exploit the Patent Rights or the Lonza
Know-How in any way whatsoever other than for its own
internal purposes to meet regulatory requirements for
the Product (save in circumstances where Lonza
terminates the Agreement pursuant to Clause 9.2 when
no such use or exploitation is permitted);

9.5.4 for whatever reason Lonza may thereafter use or
exploit the Patent Rights or the Lonza Know-How in
any way whatsoever without restriction; and

9.5.5 for whatever reason Lonza and the Customer shall do
all such acts and things and shall sign and execute
all such deeds and documents as the other may
reasonably require to evidence compliance with this
Clause 9.5.

9.6 Termination of the Agreement for whatever reason shall not
affect the accrued rights of either Lonza or the Customer
arising under or out of this Agreement and all provisions
which are expressed to survive the Agreement shall remain in
full force and effect.

10. Force Majeure

10.1 If Lonza is prevented or delayed in the performance of any of
its obligations under the Agreement by Force Majeure and shall
give written notice thereof to the Customer specifying the
matters constituting Force Majeure together with such evidence
as Lonza reasonably can give and specifying the period for
which it is estimated that such prevention or delay will
continue, Lonza shall be excused from the performance or the
punctual performance of such obligations as the case may be
from the date of such notice for so long as such cause of
prevention or delay shall continue and Lonza shall use its
reasonable efforts, so far as it is able, to stop the Force
Majeure. It is agreed that in the event of any delay in the
performance of Lonza's obligations for reasons of Force
Majeure under this clause, the dates applicable for the
payment of any additional sums for Lonza's Services under
Notes 3 and 4 to Clause 1 of Schedule 3 shall not change but
the dates applicable for the allowance of any credit against
the Price for Stages 3 and 5 of Schedule 2 as provided in
Notes 3 and 4, to Clause 1 of Schedule 3 shall be revised to

40.
<PAGE> 41

allow for each day's delay for reasons of Force Majeure under
this Clause 10.

10.2 The expression "Force Majeure" shall be deemed to include any
cause affecting the performance by Lonza of the Agreement
arising from or attributable to acts, events, non-happenings,
omissions or accidents beyond the reasonable control of Lonza.

11. Governing Law, Jurisdiction and Enforceability

11.1 The construction, validity and performance of the Agreement
shall be governed by the laws of England, to the jurisdiction
of whose courts Lonza and the Customer submit.

11.2 No failure or delay on the part of either Lonza or the
Customer to exercise or enforce any rights conferred on it by
the Agreement shall be construed or operate as a waiver
thereof nor shall any single or partial exercise of any
rights, power or privilege or further exercise thereof operate
so as to bar the exercise or enforcement thereof at any time
or times thereafter.

11.3 The illegality or invalidity of any provision (or any part
thereof) of the Agreement or these Standard Terms shall not
affect the legality, validity or enforceability of the
remainder of its provisions or the other pans of such
provision as the case may be.

12. Miscellaneous

12.1 Neither party shall be entitled to assign, transfer, charge or
in any way make over the benefit and/or the burden of this
Agreement without the prior written consent of the other which
consent shall not be unreasonably withheld or delayed.

12.2 The text of any press release or other communication to be
published by or in the media concerning the subject matter of
the Agreement shall require the written approval of Lonza and
the Customer.

12.3 The Agreement embodies the entire understanding of Lonza and
the Customer and there are no promises, terms, conditions or
obligations, oral or written, expressed on implied, other than
those contained in the Agreement. The terms of the Agreement
shall supersede previous agreements (if any) which may exist
or have existed between Lonza and the Customer relating to the
Services.

41.

<PAGE> 1
EXHIBIT 10.9

FIRST AMENDMENT TO AGREEMENT

THIS FIRST AMENDMENT is made the 21st day of November 1996 to an
agreement dated 20 August 1996 ("the Agreement") between COULTER PHARMACEUTICAL
INC., of 550 California Avenue, Suite 200, Palo Alto, CA 94306, USA, ("the
Customer") and LONZA BIOLOGICS PLC of 228 Bath Road, Slough, Berkshire SLI 4DY,
England, ("Lonza").

WHEREAS:

A. The parties entered into the Agreement pursuant to which Lonza
agreed to provide services to the Customer to develop a Process for production
of Product in accordance with GMP; and

B. Customer now wishes Lonza to perform certain additional services
in association with the above mentioned development and manufacture of Product;
and

C. Lonza is prepared to provide such additional services on the terms
and conditions set out herein.

NOW THEREFORE, it is hereby agreed by to amend the terms of the
Agreement as follows:

1. The following shall be added to Schedule 1:

"The Customer and Lonza may make changes to the Product Specification
by mutual agreement."

2. A new Stage 7 shall be added to Schedule 2 as follows:

"Stage 7 Product Equivalence Studies

7.1 Objectives

7.1.1 To characterize Product produced at Lonza and compare it
with a sample of Product produced by the Customer. The samples to be used are
from the following sources:

- [*] development pilot batch produced at Lonza under Stage
3 of the Services;
- 2000 litre GMP lot produced at Lonza under Stage 5 of the
Services;
- reference lot number [*] produced by the Customer.

1.
<PAGE> 2
7.1.2 To investigate the formation of a [*] from a batch of
Product made at Lonza.

7.1.3 To provide reference material for release of GMP batches of
Product.

7.2 Activities

7.2.1 Analyze the three samples detailed in Stage 7.1.1 above,
using assays as described in the Specification for Product detailed in
Schedule 1 of this Agreement, namely:

[*].

7.2.2 Analyse the three samples using additional techniques,
namely:

[*].

7.2.3 Prepare reference standard material for use in subsequent
Product release from both the [*] pilot batch and the first 2000 litre GMP
batch of Product (Stage 5 of Schedule 2). Reference standard from the [*]
pilot batch (Stage 3 of Schedule 2) will be used for release of the first 2000
litre GMP batch. Reference standard from the first 2000 litre GMP batch will be
used for release of subsequent GMP lots.

2.
<PAGE> 3
7.2.4 Issue Report of Activities to Customer.

7.3 Timescale

Stage 7 shall be complete upon issue of the report (Stage 7.2.4)
of activities to the Customer. It is estimated that this report will be issued
[*] from commencement of activities under Stage 7."

3. A new Stage 8 shall be added to Schedule 2 as follows:

"Stage 8 Determination of Extinction Coefficient

8.1. Objective

To determine an extinction coefficient for purified Product [*].

8.2 Activities

8.2.1 Receive material from the Customer (purified batch number
[*]). [*] method.

8.2.2 [*] compared to a calibration standard.

8.2.3 Estimate the [*] from the value obtained for [*] and the
theoretical relative composition. Calculate a mean value for [*].

8.2.4 Repeat Stages 8.2.1-8.2.3 on two further occasions.
Calculate an overall mean [*].

8.2.5 Measure the [*].

8.2.6 Determine the extinction coefficient of the [*] under
Stages 8.2.4 and 8.2.5.

8.2.7 Issue a report of activities to the Customer.

3.
<PAGE> 4
8.3 Timescale

Stage 8 shall be complete upon issue of the report (Stage 8.2.7) of
activities to the Customer. It is estimated that this report will be issued [*]
from commencement of activities under Stage 8."

4. A new Stage 9 will be added to Schedule 2 as follows:

"Stage 9 Establishment of a [*] Assay

Background

[*].

9.1 Objectives

To establish an assay for [*].

9.2 Activities

9.2.1 Select the optimum [*].

9.2.2 Develop [*].

9.2.3 Optimize the assay for use with the Product and establish
assay performance criteria.

9.2.4 [*].

9.2.5 Issue report of activities with the GMP standard operating
procedure (SOP) for the assay procedure to the Customer.

9.3 Timescale

Stage 9 shall be complete upon issue of the report (Stage 9.2.5) of
activities to the Customer. It is estimated that this report will be issued [*]
from commencement of activities under Stage 9".

5. A new Stage 10 will be added to Schedule 2 as follows:

4.
<PAGE> 5
"Stage 10 Evaluation of Retrovirus Clearance

10.1 Objective

To establish virus clearance data for [*].

10.2 Activities

10.2.1 Design a [*]. Prepare a GLP study protocol.

10.2.2 Collect samples from a manufacturing run [*].

10.2.3 Carry out the [*] for each of the [*].

10.2.4 Repeat the [*].

10.2.5 [*].

10.2.6 [*].

10.2.7 Issue a report of activities to the Customer.

10.3 Timescale

Stage 10 will be complete on issue of the report of activities (Stage
10.2.7) and it is estimated that this will be issued [*] from commencement
of Stage 10".

6. A new Stage 11 will be added to Schedule 2 as follows:

5.
<PAGE> 6
"Stage 11 Stability Studies on [*]

11.1 Objective

To test the stability of [*].

11.2 Activities

11.2.1 Devise protocols for the stability studies according to the
principles of GLP and supply the protocols to the Customer for review.

11.2.2 Take [*].

11.2.3 Assay [*].

11.2.4 Measure [*].

11.2.5 Deliver samples [*].

11.2.6 Issue a report of activities to the Customer.

6.
<PAGE> 7
11.3 Timescale

Stage 11 shall be complete on the report of activities to the Customer.
It is estimated that this report will be issued [*] from commencement of
Stage 11. Interim reports can be supplied (e.g. for IND submission) at the
Customer's request".

7. The following shall be added to Clauses 1 and 2 of Schedule 3:

"1. Price

In consideration for Lonza carrying out the Services as detailed in
Schedule 2 (Stages 7 to 11) the Customer shall pay Lonza as follows:

- --------------------------------------------------------------------------------
STAGE PRICE
(UK
STERLING)
- --------------------------------------------------------------------------------
Stage 7 Product Equivalence Studies. pound sterling [*]
Stage 8 Determination of Extinction coefficient. pound sterling [*]
Stage 9 Establishment of [*] Assay. pound sterling [*]
Stage 10 Evaluation of Retrovirus Clearance. pound sterling [*]
Stage 11 Stability Study [*]. pound sterling [*]
- --------------------------------------------------------------------------------

* Does not include Testing Laboratory charges which will be charged
in addition at the price invoiced to Lonza.

2. Payment

Payment by the Customer of the Price for Stages 7 to 11 shall be made
against Lonza's invoices as follows:

2.1 For Stage 7

50% (pound sterling [*]) upon commencement of Stage 7
50% (pound sterling [*]) upon completion of Stage 7.

2.2 For Stage 8

50% (pound sterling [*]) upon commencement of Stage 8
50% (pound sterling [*]) upon completion of Stage 8.

2.3 For Stage 9

50% (pound sterling [*]) upon commencement of Stage 9
50% (pound sterling [*]) upon completion of Stage 9.

7.
<PAGE> 8
2.4 For Stage 10

pound sterling [*] upon commencement of Stage 10
pound sterling [*] upon completion of Stage 10

Testing House charges will be charged on completion of Stage 10.

2.5 For Stage 11

50% (pound sterling [*]) upon commencement of Stage 11
50% (pound sterling [*]) upon completion of Stage 11".

8. Save as expressly provided herein, the terms and conditions of the
Agreement shall continue in full force and effect.

AS WITNESS the hands of the duly authorised representatives of the
parties hereto the day and year first above written.

Signed for and on behalf of _____________________________
Lonza Biologics PLC _____________________________
Title

Signed for and on behalf of
COULTER PHARMACEUTICAL INC _____________________________
_____________________________
Title

<PAGE> 1
EXHIBIT 10.10

THIS AGREEMENT made in duplicate this 15th day of November, 1995,

BETWEEN: NORDION INTERNATIONAL, INC.
a corporation incorporated under the laws of Canada
having a place of business at
447 March Road, Kanata, Ontario, Canada, K2K 1X8

("Nordion")

AND: COULTER PHARMACEUTICAL, INC.
a corporation incorporated under the laws of Delaware
having a place of business at
550 California Avenue, Suite 200, Palo Alto,
California, U.S.A.

("Coulter").

WHEREAS:
I Coulter is the owner of certain data, information and technology
related to labelling of pharmaceutical compounds;

II Nordion has expertise in the development of pharmaceutical processes
and radiolabelling;

III The parties desire to jointly carry out the development of
radiolabelling of B1 antibody with iodine-131 (I-131) radiochemical in
accordance with the terms and conditions set out herein;

IV Coulter desires to have a clinical supply of I-131 labelled B1 antibody
prepared to support Phase III clinical trials and for commercialization
thereafter. Nordion desires to manufacture and distribute I-131 B1
antibody both for the Phase III clinical trials and for commercial sale
after regulatory approval.

NOW THEREFORE, in consideration of the mutual covenants and agreements herein
contained, and subject to the terms and conditions hereinafter set out, the
parties hereto agree as follows:

1.
<PAGE> 2
1. Scope and Object

The scope and object of this Agreement is to carry out the joint
development of a pharmaceutical process for I-131 B1 antibody (the
"Project") in accordance with the development responsibilities and
obligations attributed to each of the parties as set out in Schedule A,
which shall serve as a guideline in carrying out this Agreement.

2. Term

The Project and this Agreement shall be deemed to have commenced on
July 10, 1995, which Project may be terminated by either party at any
time upon fifteen (15) days prior written notice.

It is understood and acknowledged that the time for completion and
sequence for carrying out the Project as set out in Schedule A shall
serve only as a guide to achieving the milestones set out in said
schedule.

3. Development and Facility Phases

The Project shall be divided into the following two phases, both of
which are anticipated to be completed within [*] ([*]) months
of the date of commencement of the Project:

(i) Development Phase: Items 2-22, as set out on Schedule A; and

(ii) Facility Phase: Items 23-30, as set out on Schedule A.

This Agreement shall only concern itself with the carrying out of the
Development Phase of the Project. It is anticipated that the Facility
Phase of the Project will cost approximately [*] United States
dollars ($US [*] ), subject however, to any new information acquired
during the Development Phase. The

2.
<PAGE> 3
terms and conditions upon which the Facility Phase will be carried out
will be agreed by the parties under separate contract, to be prepared
and negotiated during the term of the Development Phase.

Nordion shall have a single right of first negotiation for the right to
carry out the Facility Phase and to provide commercial supply of
radiolabelled I-131 B1 antibody. Such negotiations shall be initiated
by Coulter in writing and shall be ongoing for a period of at least
sixty (60) days. Coulter shall not, subsequent to successful or
unsuccessful negotiations with Nordion, offer to any third party,
rights to carry out the Facility Phase and to supply for clinical
trials and/or commercial supply, on terms less favorable to Coulter
than those offered by Nordion. Nordion's right of first negotiation and
this paragraph shall survive termination or completion of this
Agreement for a period of two (2) years.

Clinical trial sites carrying out the radiolabelling of I-131 B1
antibody for the limited purpose of their own in-house use during
clinical trials shall not be a contravention of Nordion's right of
first refusal.

4. Development Activities

Nordion and Coulter shall respectively carry out their obligations
described and attributed in Schedule A, it being understood that some
development activities may be delayed to the extent that such activity
is premised on the work or provision of data, information or technology
by the other party.

3.
<PAGE> 4
5. Payments

In consideration of Nordion performing the development services under
the Project, Coulter shall pay Nordion in accordance with the rates set
out in Schedule B, within thirty (30) days of receipt of an invoice
from Nordion. Such invoice shall, unless otherwise agreed, be payable
in United States currency.

In addition to the rates charged to carry out the development services,
Nordion shall invoice Coulter on a monthly basis, during the term of
this Agreement, for all equipment purchased and materials consumed in
carrying out the development activities, on the basis of invoice
price plus 5% administration.

Nordion shall keep proper records of the time spent, expenses incurred
and materials consumed in performance of the Project. Subject to
reasonable notice, such records shall be open to audit and inspection
by Coulter. Nordion shall furnish to Coulter all additional information
about such records as Coulter may reasonably require.

6. License

Coulter hereby provides to Nordion a non-exclusive, non-transferable,
royalty-free license during the Project to use the data, information
and technology, provided by Coulter related to B1 antibody labelling
for the limited purpose of assisting Nordion in carrying out its
obligations set out in this Agreement.

Coulter represents, warrants and covenants that (i) it is the owner of
such data, information and technology, (ii) the data, information and
technology do not, to Coulter's best information and belief, infringe
any patents, copyright or other industrial or intellectual property
rights of third parties, (iii) it has the right to provide the license
and right to permit Nordion to use the data, information and

4.
<PAGE> 5
technology to carry out the Project as contemplated herein; and (iv)
has not received any notice of adverse claim or infringement of any
patent.

Coulter shall indemnify and hold Nordion harmless, from and against,
any allegations, claims, actions or damages arising from infringement
of third party copyright, patents, technology, or other intellectual
property rights, resulting from Nordion's use of any data, information
or technology, as provided by Coulter hereunder. This indemnity shall
survive termination or completion of this Agreement.

7. Ownership of Work Performed

a) For purposes of this section, "Background Technology" shall mean all
Nordion proprietary technology, including patents, know-how,
techniques, methods, processes and trade secrets which Nordion owns or
uses in performing under this Agreement, or which is licensed to
Nordion and which is in existence in the form of a writing, prototype
or can otherwise be demonstrated to be the property of Nordion, prior
to the effective date of this Agreement.

b) Nordion agrees and Coulter acknowledges, that any and all ideas,
improvements, inventions and works of authorship conceived, written
created or first reduced to practice in the performance of the Project,
except to the extent that it relates to or embodies the Background
Technology or improvements to the Background Technology, shall be the
sole and exclusive property of Coulter and Nordion hereby assigns to
Coulter all right, title and interest in and to any and all such ideas,
improvements, inventions and works of authorship.

c) Nordion further agrees that, except for Nordion's rights in
Background Technology which rights shall remain the sole property of
Nordion, Coulter is and

5.
<PAGE> 6
shall be vested with all right, title and interest, including patent,
copyright and trade secret rights in all of Nordion's work produced in
carrying out the Project.

d) [*].

This section shall survive the termination of this Agreement for any
reason including expiration of term.

8. Coulter Proprietary Information

All data, information, or technology supplied to Nordion by Coulter to
assist Nordion in carrying out its obligations hereunder, shall remain
the property of Coulter and shall be returned by Nordion to Coulter
upon completion or termination of the Project.

9. Patent Applications

a) Nordion shall execute all papers, including patent applications,
invention assignments and copyright assignments, and otherwise shall
assist Coulter as reasonably required to perfect in Coulter the rights,
title and other interests in Nordion's work product expressly granted
to Coulter under this Agreement. Costs related to such assistance, if
required, shall be paid by Coulter.

b) Notwithstanding any other provision of this Agreement, in the event
that Nordion requests in writing that Coulter file, maintain and
prosecute a patent application pertaining to rights granted to Nordion
pursuant to Section 7. d) hereof, then Coulter shall have thirty
(30) days to inform Nordion whether or not such

6.
<PAGE> 7
application will be made. In the event that Coulter fails to inform
Nordion of its intent to proceed with the requested patent application
within such thirty (30) day period, then Nordion shall have the sole
right to proceed with the filing, prosecution and maintenance of such
patent application, at its sole expense. Any patent resulting therefrom
shall be the sole property of Nordion, subject only to Coulter's
non-exclusive, royalty-free and world-wide right to use and sublicense
the use of such patent in connection with products based on the B-1
antibody radiolabelled with 1-131. Coulter shall execute all papers,
including patent applications and invention assignments, and otherwise
shall assist Nordion as reasonably required to perfect in Nordion the
patent rights described in this section 9.b).

c) This section 9 shall survive the termination of this Agreement for
any reason, including expiration of term.

10. Disclosure of Technology

It is agreed that disclosure of data, information or technology by
Nordion or Coulter, to the other, during the Project shall not, except
to the extent granted herein, constitute any grant, option or license
under any patent, technology or other rights, held by Nordion or
Coulter.

7.
<PAGE> 8
11. Progress Reports

Nordion will provide written reports to Coulter, on a monthly basis
(prior to the 21st day of the following month), setting out the
progress against milestones as set out in Schedule A.

12. Project Completion Costs

Any expense related to labor or materials which exceed the proposed
estimated project costs of $US[*] will be subject to the prior written
approval of Coulter.

13. Confidentiality

Except as regards rights in work product obtained by Coulter in Section
7(b) and 7(c) during the term of this Agreement and for a period of ten
(10) years thereafter, each party hereto shall maintain in confidence
all technology including Background Technology, know-how, data,
processes, methods, techniques, formulas, test data and other
information ("Confidential Information") disclosed to such party by the
other party which, if written, is marked as "Confidential" by the
disclosing party or, if verbal, is reduced to writing and marked
"Confidential" by the disclosing party, within fifteen (15) days of
verbal disclosure. This obligation of confidentiality shall not apply
to the extent that it can be established by the party in receipt of
such information, that the information:

i) was already known to the receiving party 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;

8.
<PAGE> 9
iii) became generally available to the public or otherwise part of the
public domain after its disclosure to the receiving party through
no act or omission of the receiving party;

iv) was disclosed to the receiving party by a third party who had no
obligation to restrict disclosure of such information; or

v) was independently developed by the receiving party without any use
of Confidential Information of the disclosing party.

This section shall survive termination or completion of this
Agreement in accordance with its terms.

14. Indemnity

Nordion and Coulter, as the case may be, shall indemnify and hold
harmless the other from and against any and all costs, claims,
judgments or other expenses, including reasonable attorney fees,
arising as a result of damages claimed by third parties, in tort,
contract or other legal theory, occasioned by Nordion's or Coulter's
negligence or that of their respective employees or agents, in carrying
out their obligations hereunder. This section shall survive termination
or completion of this Agreement.

9.
<PAGE> 10
15. Termination

Upon termination of this Agreement, Nordion shall forthwith discontinue
its development activities under the Project and shall cancel all
commitments pertaining thereto in an orderly and economic manner. If
this Agreement is so terminated, Coulter shall be liable to pay to
Nordion for development services rendered, equipment purchased (or
committed to be purchased) and materials consumed, prior to the
effective date of termination. In the event of such termination neither
Nordion nor Coulter shall have any other right of action on account of
such termination.

16. Notice

Any notice to be sent to a party hereunder shall be forwarded to:

Nordion at: 447 March Road

Kanata, Ontario, Canada

K2K 1X8

Attention: Vice-President

Technology and Business Development

Coulter at: 550 California Avenue, Suite 200, Palo Alto

California, U.S.A.

Attention: Vice President, Business Development

Any notice required or authorized to be given by a party to the other
in accordance with the provisions of this Agreement shall, unless
otherwise specifically stipulated, be in writing and delivered
personally, by telegram or electronic facsimile and confirmed by
registered mail.

10.
<PAGE> 11
17. Assignment

Neither Nordion nor Coulter shall assign any portion of this Agreement
without the written approval of the other party, which approval shall
not be unreasonably withheld. Nordion shall be entitled to subcontract
to third parties any of its obligations set out in this Agreement in
order to carry out the Project; provided, however, that Nordion may not
subcontract any portion of this Agreement unless such subcontractor
shall agree to be bound by the provisions hereof pertaining to
ownership of work performed and confidentiality.

18. Compliance

The Project shall be carried out in compliance with all applicable
laws, by-laws, rules, regulations and orders of federal, provincial or
municipal governments or manifestations thereof.

19. Non-Waiver

Failure by either party to enforce at any time any of the provisions of
this Agreement shall not be construed as a waiver of its rights
hereunder. Any waiver of a breach of any provision hereof shall not
affect either party's rights in the event of any additional breach.

20. Force Majeure

Neither party hereto shall incur any liability to the other in the
event that it is delayed in the performance of its obligations
hereunder solely by force majeure. For the purpose of this Agreement,
"force majeure" shall mean any cause of delay beyond the reasonable
control of the party liable to perform unless conclusive evidence to
the contrary is provided and shall include, but not by way of
limitation, strikes, lockouts, dots, sabotage, acts of war or piracy,
destruction of essential

11.
<PAGE> 12
equipment by fire, explosion, storm, flood, earthquake, or delay caused
by failure of power supplies or transport facilities.

21. Applicable Law

This Agreement shall be governed and construed in accordance with the
laws of the Province of Ontario, Canada, without reference to its
conflicts of laws. The venue for any legal proceeding arising out of
this Agreement shall be in the Province of Ontario, Canada.

IN WITNESS WHEREOF the parties hereto have executed this Agreement on the date
first hereinabove written.

NORDION INTERNATIONAL INC.

By: /s/ David Evans
--------------------------------------
David Evans, Vice President,
Business Development and Technology

COULTER PHARMACEUTICAL, INC.

By: /s/ Bobbie F. Wallace
--------------------------------------
Bobbie F. Wallace
Vice President, Operations

12.
<PAGE> 13
SCHEDULE A

[*]

i
<PAGE> 14
SCHEDULE A

[*]

ii
<PAGE> 15
SCHEDULE B

RATES

Management and documentation $US [*] per hour

Engineering design and laboratory work $US [*] per hour

iii

<PAGE> 1
EXHIBIT 10.11

ENGLISH TRANSLATION (the French text shall prevail)

================================================================================

PATENT LICENSE AGREEMENT

================================================================================

BETWEEN

THE REGION WALLONNE

Represented by Mr. Jean-Pierre GRAFE Secretary of Research, Technological
development, Sport and International relations, Rue de la Loi, 38 - 1040-
BRUSSELS,

Hereafter the "REGION",

THE UNIVERSITE CATHOLOIQUE DE LOUVAIN

Represented by Mr. Marcel CROCHET, Rector and by the Lecturer Andre TROUET,
Place de l'Universite, 1 - 1348 - LOUVAIN-LA-NEUVE,

Hereafter the "UNIVERSITY",

AND

The societe anonyme COULTER PHARMACEUTICAL BELGIUM to be incorporated

Represented by Dr. Arnold L. ORONSKY, President and Chief executive Officer of
the American company COULTER PHARMACEUTICAL, 550, California Avenue, suite 200,
PALO ALTO, CA 94306-1440, future member of the board of directors of the societe
anonyme COULTER PHARMACEUTICAL BELGIUM to be incorporated and which shall have
its registered office, Carnoy Building C 461, place Croix du Sud, 5 - 1538 -
LOUVAIN-LA-NEUVE.

Hereafter the "COMPANY",

WHEREAS:

1. The REGION has filed a belgian patent application n(Degree) 09400752 on
August 19, 1994.

2. The UNIVERSITY has filed a Belgian patent application n(Degree)
09400751 on August 19, 1994.

3. The REGION and UNIVERSITY have filed a P.C.T. patent application
n(Degree) PCT/BE95/00076, on August 21, 1995, for the above mentioned
patents and for the following countries: Kenya, Malawi, Soudan,
Swaziland et Ouganda, Autriche, Belgique, Suisse + Liechtenstein,
Allemagne, Danemark, Espagne, France, Grande-Bretagne, Grece,

1.
<PAGE> 2
Irlande, Italie, Luxembourg, Monaco, Pays-Bas, Portugal, Suede,
Burkina-Faso, Benin, Republique Centrafricaine, Congo, Cote d'Ivoire,
Cameroun, Gabon, Guinee, Mali, Mauritanie, Niger, Senegal, Tchad, Togo,
Armenie, Australie, Barbade, Bulgarie, Bresil, Belarus, Canada, Chine,
Republique Tcheque, Estonie, Finlande, Georgie, Hongrie, Islande,
Japon, Kenya Kirghizistan, Republique Populaire Democratique de Coree,
Republique de Coree, Kazakhstan, Sri-Lanka, Liberia, Lituanie,
Lettonie, Republique de Moldova, Madagascar, Mongolie, Mexique,
Norvege, Nouvelle-Zelande, Pologne, Roumanie, Federation de Russie,
Singapour, slovenie, Slovaquie, Tadjikistan, Turkmenistan, Trinite et
Tobago, Ukraine, Etats-Unis d'Amerique, Ouzbekistan, Viet-nam et
Republique de Macedoine.

4. The COMPANY wishes to establish itself on the territory of the REGION
WALLONNE to undertake the research and the manufacturing of SUPERLEUDOX
and other products.

CONSEQUENTLY IT IS HEREBY AGREED AS FOLLOWS:

ARTICLE 1: DEFINITIONS

In this agreement, the following words shall bear the following meanings:

1.1. PATENTS: The patents applications n(Degree) 09400751
and n(Degree) 09400752, filed respectively
by the UNIVERSITY and the REGION.

1.2. THE EXTENSION: The PCT extension application for Belgian
patents n(Degree) 09400751 and 09400752,
filed on August 21, 1995, with n(Degree)
PCT/BE95/00076 for the countries mentioned
in the 3rd point of the preamble of the
present agreement.

1.3. SUPERLEUDOX: A "prodrogue" of the DOXORUBICINE which
requires, for a therapeutic and/or
diagnostic application, the implementation
of the PATENTS and the EXTENSION.

1.4. OTHER PRODUCTS: All antitumour "prodrogues", which
properties are initiated by cancerous cells
and which requires, for therapeutic and/or
diagnostic application, the implementation
of the PATENTS and the EXTENSION.

1.5. TURNOVER: Any gross receipt received by the COMPANY or
by a sub-licensee less the reimbursements
for returned goods, commercial discount, VAT
and other taxes on sale and less
commissions, insurance costs, freight

2.
<PAGE> 3
and clearance charges, or any other costs
directly linked to the sales taken into
account.

1.6. TRADE SECRETS: All trade secrets, commercial know how and
similar information owned or controlled by
the UNIVERSITY or the REGION pertaining to
the PATENTS or to the EXTENSION or the
production or sale of SUPERLEUDOX or the
other PRODUCTS.

1.7. PRE COMMERCIALIZATION: Stage preceeding the commercialization of
SUPERLEUDOX and/or of the other products
after release from laboratory and enabling
to define the parameters to be taken into
consideration for the manufacturing and
commercialization of these products on a
wide scale.

ARTICLE 2: OWNERSHIP OF THE PATENTS

The REGION and the UNIVERSITY are the owners of the PATENTS and the EXTENSION
defined in articles 1.1 and 1.2..

No license has yet been granted on these PATENTS which are clear of any
security, pledge or charge whatsoever.

ARTICLE 3: LICENSE

The REGION and the UNIVERSITY grant the company an exclusive world license to
produce, have produced, use and sell SUPERLEUDOX and other products.

This exclusivity can be opposed to the REGION and the UNIVERSITY.

The license applies to all the applications of the invention described in the
PATENTS and the EXTENSION which on the object of this contract and to the
applications implicitly connected with the PATENTS and the EXTENSION, on a
therapeutic as well as on a diagnostic level.

The REGION and the UNIVERSITY grant the COMPANY the exclusive use of the rights
deriving form the PATENTS and the EXTENSION, i.e., among others, trade secrets
mentioned in article 1.6, manufacturing secrets and results of the experiences
made during the elaboration of the PATENTS and the know-how related to them.

ARTICLE 4: CONTRIBUTION, ASSIGNMENT AND SUBLICENSE

4.1. The COMPANY shall refrain from bringing the license to a company or to
substitute a third party in its rights and obligations or to undertake
any assignment which would have the

3.
<PAGE> 4
effect of transferring the whole of its rights and obligations to a
third party, without previous consent of the REGION and the UNIVERSITY.

4.2. The COMPANY is authorised to grant sub-licenses limited to the
commercialization or pre-commercialization of SUPERLEUDOX and OTHER
PRODUCTS.

4.3. In the same way, the COMPANY shall be authorized to grant sub-licenses
to subsidiaries or its parent company as long as this granting of
sub-licenses does not infringe any provision of the present contract
and that the company, benefiting from the sub-license, undertakes, in
writing, to respect the entirety of the commitments contained in the
present contract.

ARTICLE 5: OBLIGATIONS OF THE COMPANY TOWARDS THE REGION

The COMPANY undertakes, towards the region, to respect the following
obligations:

5.1. Operate or have operated, exclusively on the territory of the Region
Wallonne (provinces du Brabant wallon, du Hainaut, de Liege, de
Luxembourg et de Namur), the pre-clinical research and the clinical
research related to SUPERLEUDOX and OTHER PRODUCTS, except if the
company proves it impossible for technical and/or scientific reasons.

Operate or have operated, exclusively on the territory of the REGION
WALLONNE, the manufacturing of SUPERLEUDOX and other products.

Within the limits here above described, the COMPANY undertakes to
operate, on this territory, activities of a high technological level
and to employ to this effect local workforce.

The breach of these obligations entails the immediate payment, by the
company to the region, of an amount equal to the difference between
[ * ] BEF and the total of the amounts already paid in
accordance with articles 5.2 or 5.3.

The obligations described here above and at article 4, will come to an
end as soon as the company pays the REGION an overall amount of
[ * ], as provided in articles 5.2 and 5.3.

5.2. If the clinical tests on SUPERLEUDOX are positive, that is if a
medicine for human use can be finalized, the COMPANY undertakes:

5.2.1 to pay to the REGION the amount of [ * ] BEF, after a
delay of five years calculated from the date the present
agreement becomes effective.

5.2.2 to pay to the REGION annual royalties amounting to [ * ] of
the worldwide turnover pertaining to SUPERLEUDOX and other
PRODUCTS. These royalties are limited to a global amount of
[ * ] BEF.

4.
<PAGE> 5
5.3. If the clinical tests of SUPERLEUDOX cannot be realized or are
negative, which means that a medicine for human use cannot be
finalized, the COMPANY undertakes:

5.3.1. to pay to the REGION the amount of [ * ] BEF, after
a delay of five years calculated from the date the present
contract becomes effective.

5.3.2. to pay to the REGION annual royalties amounting to [*] of
the worldwide turnover pertaining to OTHER PRODUCTS. These
royalties are limited to a global amount of [ * ]
BEF.

5.4. The COMPANY shall make the payment mentioned in articles 5.2.2. and
5.3.2. after having received from the "Receveur Regional de la Region
wallonne" an "invitation to pay".

The latter is sent each year, two months after the end of the financial
year of the COMPANY.

The COMPANY has to pay within a delay of fifteen days after the sending
by registered mail of the invitation to pay.

Any delay in payment renders automatically the COMPANY debtor of an
interest calculated on the legal rate increased by [ * ] per year, the
maturity of payment constituting notice.

ARTICLE 6: OBLIGATIONS OF THE COMPANY TOWARDS THE UNIVERSITY

The COMPANY undertakes, towards the UNIVERSITY, to respect the following
obligations:

6.1. to finance the future pharmacological research and future pre-clinical
tests pertaining to SUPERLEUDOX an OTHER PRODUCTS which should be
realized by Lecturer A. TROUET.

This obligation is submitted to the condition that a public aid on
these activities be granted to the UNIVERSITY. Nevertheless, the
present agreement does not form, in any way, a right to a public aid of
the REGION towards the UNIVERSITY or towards the COMPANY.

6.2. To pay to the UNIVERSITY annual royalties calculated on the turnover
pertaining to SUPERLEUDOX and OTHER PRODUCTS:

- [ * ] on the turnover realized in Europe;

- [ * ] on the turnover realized in United States, Canada and
Japan;

- a percentage to be defined in an agreement to be concluded
between the COMPANY and the UNIVERSITY for the turnover
realized elsewhere and which cannot exceed [ * ].

5.
<PAGE> 6
These royalties have to be paid on the following bank account: [*].

The UNIVERSITY and the COMPANY shall precise their contractual relations in a
separate document.

Nevertheless, the clauses of the present agreement shall prevail on any other
stipulation if there is no written agreement on an eventual derogation.

ARTICLE 7: MAINTENANCE OF THE PATENT

The COMPANY undertakes towards the REGION and the UNIVERSITY to respect the
following obligations:

7.1. pay the annuities on the patents pertaining to SUPERLEUDOX and other
PRODUCTS;

7.2. pay the expenses related to the EXTENSION;

7.3. do the necessary formalities for the maintenance of the patents and
completion of the EXTENSION;

ARTICLE 8: PROTECTION OF THE PATENT

8.1 Each party will immediately inform the other parties of any
infringement or breach by third parties to the PATENTS or the EXTENSION
of which it would be informed.

The REGION, the UNIVERSITY and the COMPANY will decide together of the
judicial or extra judicial measures to be taken.

In case of inaction of the REGION or the UNIVERSITY, the COMPANY may
bring an action against the counterfeiter or any other proceeding
judged necessary.

8.2 The UNIVERSITY and the REGION undertake to assist the COMPANY, among
others, by informing the COMPANY of any element or information useful
to reinforce its means of defense. They shall join, by way of voluntary
intervention, the action brought by the COMPANY or shall take part in
the negotiation if the COMPANY asks them to do so.

8.3 Any costs or fees payed during a procedure against the COMPANY or a
negotiation, aiming to protect the PATENTS or the EXTENSION against any
breach whatsoever, shall be borne by the COMPANY.

The same shall apply to the costs linked to an eventual procedure of
voluntary intervention requested by the COMPANY.

Any damages obtained shall only benefit to the COMPANY.

Any damages to be paid shall entirely be paid by the COMPANY.

6.
<PAGE> 7
ARTICLE 9: GUARANTEE AGAINST THIRD PARTIES

9.1 The REGION and the UNIVERSITY guarantee the COMPANY that no
counterfeiting action against the EXTENSION and the PATENTS is
currently pending.

9.2 If the use of the PATENTS or the EXTENSION should lead the COMPANY or
the sub-licencees to be sued as counterfeiters, the costs and fees
exposed for their defense and the payment of eventual damages shall be
borne by the COMPANY and the sub-licencees.

The same shall apply to costs and fees linked to a counterclaim or a
compromise, the sums eventually obtained in these last two cases shall
only benefit to the COMPANY and the sub-licencees.

9.3 The COMPANY shall immediately inform the REGION and the UNIVERSITY of
any lawsuit or notice filed against it and shall then give them the
possibility to intervene in the dispute and/or in the lawsuit in which
it would be implied for whatever reason.

9.4 The COMPANY shall be free - if no amicable settlement is found between
the parties - to put an end to the contract if no judicial decision is
rendered as long as two patent attorneys - one being chosen by the
COMPANY and the other by the REGION and the UNIVERSITY - give a joint
advice according to which the use of the PATENTS or the EXTENSION
constitutes an infringement of the patent rights of a third party.

ARTICLE 10: IMPROVEMENTS

10.1. The REGION and the UNIVERSITY undertake to communicate to the COMPANY
and to put at its disposal any modification or improvement brought to
the PATENTS or the EXTENSION during the length of the present
agreement, without it resulting, for the COMPANY in an increase of the
royalties and to grant, if need be, a license free of charge to the
COMPANY.

10.2. The modifications and improvements brought by the COMPANY do not
require any authorization. The company shall, however, inform the
UNIVERSITY and the REGION.

If inventions of applications or improvements realised by the COMPANY
are patentable and are, according to the applicable law, likely to be
patented because they are sufficiently different from the PATENTS, the
COMPANY shall patent them in accordance with the international
conventions applicable in the field of patents.

The COMPANY is under no obligation whatsoever to assign, neither in
whole nor in part, to the UNIVERSITY or the REGION neither its rights
pertaining to patents mentioned in the previous paragraph, nor its
right to such patents.

The COMPANY shall nevertheless grant the UNIVERSITY a non-exclusive
licence on these patents, free of charge, in order to enable the latter
to carry on its scientific research.

7.
<PAGE> 8
The UNIVERSITY shall however refrain from publishing or evaluating the
patents in a way that could harm the patents filed by the COMPANY.

10.3. The parties will exchange the experience acquired through the research
and the exploitation linked to the license and shall grant each other
licenses for the inventions resulting from the improvements or from the
application of the patents and the EXTENSION.

ARTICLE 11: VERIFICATION OF THE ACCOUNTS

The COMPANY undertakes to keep special account books on which it mentions the
number and the prices of the sales linked to SUPERLEUDOX and OTHER PRODUCTS, as
well as any other indication of interest for the calculation of the royalties.

The REGION and the UNIVERSITY are authorized to have these account books
verified by a chartered accountant of their choice, approved by the COMPANY.

The detailed account of the royalties shall be drawn up yearly.

ARTICLE 12; REGISTRATION OF THE LICENSE

The REGION and the UNIVERSITY shall register the license and pay the costs
resulting form this registration.

ARTICLE 13: OBLIGATIONS OF THE REGION AND THE UNIVERSITY

13.1. The REGION and the UNIVERSITY garantee:

- that the result of the PATENTS and the EXTENSION can be
obtained with the means and process described;

- the COMPANY against conception defects of the invention that
would make the PATENTS and the EXTENSION impossible to use;

On the contrary, the REGION and the UNIVERSITY guarantee neither the
result of the pre-clinical and clinical research nor the technical and
commercial value of the PATENTS and the EXTENSION.

The results and risks of the industrial and commercial exploitation of
the results of the research are exclusively borne by the COMPANY.

13.2. The REGION and the UNIVERSITY shall provide the COMPANY with any
document and information necessary to use the PATENTS and the
EXTENSION.

They shall also provide the COMPANY with the technical assistance
requested, the necessary and useful advise and shall transfer to it the
know how linked to the PATENTS and the EXTENSION.

8.
<PAGE> 9
ARTICLE 14: LENGTH OF THE AGREEMENT

The present agreement shall only come into force when the suspensive condition
mentioned in article 15 is completed.

The agreement shall terminate after the expiration of the protection of the
PATENTS, the EXTENSION and the patents filed in application of article 10 of the
present contract.

ARTICLE 15: SUSPENSIVE CONDITION

The present agreement is submitted to the following suspensive condition:

- incorporation of a Belgian societe anonyme, subsidiary of the
American company COULTER PHARMACEUTICAL. This incorporation depends on
investments to be made by third parties to COULTER PHARMACEUTICAL.

If this condition is not fulfilled within three months of the signature of the
present agreement, the latter shall be considered as void and non existent,
without any costs for the parties.

ARTICLE 16: TERMINATION

16.1. The present agreement is automatically terminated and without prior
notice in case of bankruptcy, liquidation or bankrupt's certificate.

16.2. The present agreement can also be terminated by the REGION or the
UNIVERSITY in case of non commercialization of the licence by the
COMPANY or insufficient commercialization, after a first
commercialization.

By non commercialization of the license is meant: stoppage of all
pre-clinical or clinical research related to SUPERLEUDOX and other
products except if this research has been brought to an end and that
the commercialization of the products is about to be set up.

By insufficient commercialization is meant: a commercialisation which,
during the first five years following the beginning of the
commercialization of SUPERLEUDOX or other products, would give rise to
payments of amounts inferior to [ * ] BEF, for the royalties
provided for in points 5.2 and 5.3 to be paid to the REGION and to the
payment of amounts inferior to [ * ] BEF for royalties provided
for in point 6.2, to be paid to the UNIVERSITY. This termination does
not give, in any case, a right to reimbursement of the amounts already
paid by the COMPANY.

16.3. The COMPANY can terminate the present agreement by sending a registered
mail if the PATENT or the EXTENSION are not granted, are declared void
or depend on a previous invention already patented.

The royalties already paid nevertheless remain the property of the
REGION and the UNIVERSITY.

9.
<PAGE> 10
16.4. After an end has been put to the present agreement, the REGION and the
UNIVERSITY are free to grant to anyone a license relating to the
PATENTS and the EXTENSION.

ARTICLE 17: NOTICES

Any mail exchanged within the framework of the present agreement is to be sent:

- For the REGION:

DIRECTION GENERALE DES TECHNOLOGIES, DE LA RECHERCHE ET DE L'ENERGIE
Avenue Prince de LIEGE, 7,
5100 JAMBES.

- For the UNIVERSITY:

UNIVERSITE CATHOLIQUE DE LOUVAIN
Place de l'Universite, 1,
1348 LOUVAIN-LA-NEUVE.

- For the COMPANY:

COULTER PHARMACEUTICAL, 550 California Avenue, suite 200, PALO ALTO-CA
94306-1440 and as soon as the company is incorporated, to its registered office.

ARTICLE 18: CONFIDENTIALITY

The parties undertake to maintain confidential any information or document
exchanged during the present agreement and this for the whole duration of the
agreement.

ARTICLE 19: ENTIRE AGREEMENT

The present agreement constitutes the entire agreement between the parties.

It supersedes and cancels all previous undertakings, written or verbal
agreements having the same object.

It cannot be modified except by a written agreement signed by the parties.

ARTICLE 20: INVALIDITY

Any article of the present agreement that threatens public order or infringes a
mandatory statute or regulation shall be considered as non written. Its nullity
shall however not affect the validity of the agreement as a whole.

On the contrary, the parties shall endeavour to replace the void article by a
clause with equivalent economical effect.

10.
<PAGE> 11
ARTICLE 21: DISPUTES

This agreement shall be governed by the laws of Belgium.

Any claim arising from or in connection with this agreement shall be submitted
to the exclusive jurisdiction of the Courts of Brussels.

Signed on ... (date), in ... (place), in six copies.

POUR LA REGION

Menslem Jean-Pierre GRAFE,
Ministre de la Recherche, du Developpement technologique,
du Sport et des Relations internationales

POUR L'UNIVERSITE

Monsieur Marcel CROCHET Monsieur Andre TROUET
Recteur Professeur

POUR L'ENTREPRISE

Dr. Arnold L. ORONSKY
future member of the board of directors of the company

* Signatures are found on the French version of this Agreement,
dated March 15, 1996.

11.