VION PHARMACEUTICALS INC
S-3/A, 1999-07-19
BIOLOGICAL PRODUCTS, (NO DIAGNOSTIC SUBSTANCES)
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      As filed with the Securities and Exchange Commission on July 19, 1999
                                                 Registration No. 333-79939
- --------------------------------------------------------------------------------

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                               -------------------
                                AMENDMENT NO. 1
                                       TO
                                    FORM S-3
             REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

                               -------------------
                           VION PHARMACEUTICALS, INC.
             (Exact name of registrant as specified in its charter)

                               -------------------
             Delaware                                           13-3671221
  (State or other jurisdiction                               (I.R.S. Employer
of incorporation or organization)                           Identification No.)

                              ---------------------
          4 SCIENCE PARK, NEW HAVEN, CONNECTICUT 06511, (203) 498-4210
    (Address, including zip code, and telephone number, including area code,
                        of principal executive offices)

                              ---------------------
               ALAN KESSMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
 VION PHARMACEUTICALS, INC., 4 SCIENCE PARK, NEW HAVEN, CONNECTICUT 06511,
                                 (203) 498-4210
    (Name, address, including zip code, and telephone number, including area
                           code, of agent for service)

                              ---------------------
       Copies of all communications, including all communications sent to
                    the agent for service, should be sent to:
    PAUL JACOBS, ESQ., FULBRIGHT & JAWORSKI L.L.P., NEW YORK, NEW YORK 10103

                              ---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after the effective date of this Registration Statement.

If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box:[ ]

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, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: [X]

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. [ ]

                              --------------------
<TABLE>
<CAPTION>
                                                   CALCULATION OF REGISTRATION FEE


                                                                             PROPOSED            PROPOSED MAXIMUM
              TITLE OF EACH CLASS OF                     AMOUNT TO       MAXIMUM OFFERING       AGGREGATE OFFERING      AMOUNT OF
            SECURITIES TO BE REGISTERED                BE REGISTERED      PRICE PER SHARE             PRICE         REGISTRATION FEE
- - ---------------------------------------------------  -------------  -----------------------  -------------------- ----------------
<S>                                                     <C>                <C>                    <C>                  <C>
Common Stock, par value $.01 per share.............     893,915            $5.71875(1)            $5,112,077(1)        $1,422(2)

Common Stock, par value $.01 per share.............     760,000            $5.775(3)              $4,389,000(3)        $1,221

Common Stock, par value $.01 per share.............     220,000            $5.25(4)               $1,155,000(4)        $  322
- - ---------------------------------------------------  -------------  -----------------------  -------------------- ----------------
</TABLE>

(1)      Estimated solely for the purpose of calculating the registration fee.
         Such estimates have been calculated in accordance with Rule 457(c)
         under the Securities Act of 1933 and are based upon the average of the
         high and low prices per share of the Registrant's Common Stock on the
         Nasdaq SmallCap Market on May 27, 1999.


(2)      Previously paid.

(3)      Estimated solely for the purpose of calculating the registration fee
         pursuant to Rule 457(h) and based on an exercise price of $5.775 per
         share with respect to options granted to purchase 760,000 shares of
         Common Stock.

(4)      Estimated solely for the purpose of calculating the registration fee
         pursuant to Rule 457(h) and based on an exercise price of $5.25 per
         share with respect to options granted to purchase 220,000 shares of
         Common Stock.

                            -------------------------
         THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL
THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY 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 SECTION 8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
<PAGE>


PROSPECTUS
- ----------

                                1,873,915 SHARES


                           VION PHARMACEUTICALS, INC.

                                  COMMON STOCK


         Our stockholders listed in this prospectus are offering and selling
from time to time an aggregate of 1,873,915 shares of our common stock. The
shares may be offered through ordinary brokerage transactions, in negotiated
transactions or otherwise, at market prices prevailing at the time of sale or at
negotiated prices. Of this amount, 980,000 shares represent shares of our common
stock issuable upon exercise of options to purchase 980,000 shares of our common
stock granted to Alan Kessman, our President and Chief Executive Officer. Of
these options, 220,000 of the options have an exercise price of $5.25 per share.
The remaining 760,000 options have an exercise price of $5.775 per share.


                    OUR NASDAQ SMALLCAP MARKET SYMBOL -- VION


                     CLOSING PRICE (July 16, 1999) -- $5.72


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



         SEE "RISK FACTORS," WHICH BEGINS ON PAGE 8 OF THIS PROSPECTUS, FOR
CERTAIN INFORMATION THAT YOU SHOULD CONSIDER BEFORE YOU INVEST IN THE SHARES
BEING OFFERED PURSUANT TO THIS PROSPECTUS.



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


         NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.



                  THE DATE OF THIS PROSPECTUS IS JULY 19, 1999


<PAGE>

                                TABLE OF CONTENTS


                                                                           PAGE
                                                                           ----
About this Prospectus................................................        2
Summary of Vion's Business...........................................        3
Recent Developments..................................................        6
Risk Factors.........................................................        8
Use of Proceeds......................................................       16
Selling Stockholders ................................................       16
Plan of Distribution.................................................       18
Legal Matters........................................................       18
Experts..............................................................       19
Note Regarding Forward-Looking Statements............................       19
Where You Can Find More Information..................................       19



                              ABOUT THIS PROSPECTUS

         This prospectus is a part of a registration statement on Form S-3 filed
by us with the Securities and Exchange Commission to register 1,873,915 shares
of our common stock on behalf of the selling stockholders. This prospectus does
not contain all of the information set forth in the registration statement,
certain parts of which are omitted in accordance with the rules and regulations
of the SEC. Accordingly, you should refer to the registration statement and its
exhibits for further information about us and our common stock. Copies of the
registration statement and its exhibits are on file with the SEC. Statements
contained in this prospectus concerning the documents we have filed with the SEC
are not intended to be comprehensive, and in each instance we refer you to the
copy of the actual document filed as an exhibit to the registration statement or
otherwise filed with the SEC. Each such statement is qualified in its entirety
by such reference.

         You should rely only on the information provided or incorporated by
reference in this prospectus and the registration statement. We have not
authorized anyone to provide you with different information. The information
contained in this prospectus is accurate only as of the date of this prospectus,
regardless of the time of delivery of this prospectus or of any sale of common
stock.

                                       -2-

<PAGE>

                           SUMMARY OF VION'S BUSINESS


         Vion Pharmaceuticals, Inc. is a biopharmaceutical company engaged in
the research, development and commercialization of cancer therapeutics. Pursuant
to license agreements with Yale University, we have acquired the rights to
several patents and patent applications related to cancer treatment
technologies. Our product portfolio consists of a drug delivery platform and
three cancer therapeutics.

Drug Delivery Platform:  TAPET(R)

         We believe that our core technology, TAPET, or Tumor Amplified Protein
Expression Therapy, addresses one of the biggest challenges faced in treating
cancer: how to effectively deliver anticancer agents while having a minimal
effect on healthy, normal tissues. Administered systemically, most anticancer
drugs affect rapidly growing cells, both cancerous and normal, throughout the
body. Too often, the result is significant side effects that take a toll on
patient health, limiting the amount of treatment a patient may receive.
Therefore, a great need exists for new therapies and delivery mechanisms that
are able to deliver anticancer agents to tumors preferentially, safely and
efficiently. We believe that TAPET will meet this need.

         We believe that TAPET is the first and only drug delivery technology
that uses genetically altered strains of Salmonella as a bacterial vector, or
vehicle, for delivering cancer-fighting drugs preferentially to solid tumors.
The Salmonella utilized in the TAPET system has been genetically modified to
minimize the occurrence of septic shock. As an additional safety measure, TAPET
organisms have been designed to remain fully sensitive to antibiotics.
Therefore, if there is an adverse reaction, the bacteria can be treated with
antibiotics at any time during therapy. Preclinical studies have demonstrated
these safety measures to be effective.

         In preclinical studies, after injection into the body, TAPET organisms
migrated to and penetrated throughout tumors, including the deep, oxygen-starved
interior of solid tumors where other anticancer drugs do not generally reach.
These studies showed that TAPET organisms double in quantity every 30 to 45
minutes. The increase in the quantity of TAPET organisims improved their ability
to inhibit tumor growth and to enable the continuous delivery of anticancer
drugs to the tumor. We believe this growth occurs because the organisms utilize
components of DNA and proteins found in tumors and are "protected" within the
tumor from the body's immune system. We believe that bringing the "drug factory"
preferentially to the tumor will result in a cancer therapy that is more
concentrated, more effective and less toxic to normal tissue.

         Preclinical studies have demonstrated TAPET's ability to inhibit the
growth of a broad range of solid tumors, such as melanoma, colon, lung and
breast cancers. These types of solid



                                       -3-

<PAGE>

tumors represent more than 60% of all new cancer incidences in the world today.
Administration of TAPET vectors to mice bearing melanoma tumors inhibited the
growth of these tumors by 94% compared with untreated control animals. Moreover,
the treated mice survived more than twice as long as those that did not receive
TAPET treatment.

         We believe that TAPET's greatest potential application is the ability
to continuously deliver a large variety of anticancer drugs directly to the
tumor without the side effects associated with current chemotherapy. Through
genetic engineering, we intend to develop TAPET vectors which manufacture and
deliver Vion-developed anticancer drugs. Some of these drugs will be generic,
non proprietary that, when combined with the TAPET system could result in a
proprietary product for us. In addition, we intend to seek multiple strategic
partnerships with pharmaceutical companies to use TAPET to deliver their
proprietary anticancer drugs.

         Following the submission of an investigational new drug, or IND,
application to the U.S. Food and Drug Administration, we are now working under
an open IND status to prepare for and initiate Phase I intratumoral safety
studies in human patients in the third quarter of 1999 using an unarmed, or
without a drug attached, TAPET organism. If successful, these safety measures
will soon be followed by additional Phase I studies of TAPET organisms delivered
intravenously, as well as by an armed vector, or with a drug attached, to
manufacture and express an anticancer drug.

Anticancer Cell Therapeutics

          Promycin(R). Promycin, which is currently being evaluated in a
multicenter Phase III clinical trial for treatment of head and neck cancer, is
designed to improve the treatment of solid tumors by attacking the hypoxic, or
oxygen-depleted, cancer cells that are often resistant to traditional radiation
therapy. Small quantities of hypoxic cells within a tumor often survive and
proliferate after most of the non-hypoxic malignant cells in the tumor have been
eradicated by radiation treatment. Because radiation therapy requires
oxygenation of the tissue in order to be effective, oxygen depleted cells are
less susceptible to radiation therapy and tend to form a therapeutically
resistant group within solid tumors. Preclinical studies have shown that
Promycin, in conjunction with radiation, is effective in eradicating
oxygen-depleted cells.

         A Phase I/II trial was conducted on 21 patients who were treated with
radiation, and in some cases, surgery, in conjunction with Promycin for certain
types of cancer of the head and neck. In this study, there was a 33% cancer-free
survival rate at five years versus the clinical expectation of 15% for radiation
therapy alone. Based on these findings, Vion and Boerhinger Ingelheim
International GmbH collaborated to initiate a Phase III trial of Promycin in
patients with head and neck cancer at 44 centers worldwide. The trial is
designed to determine the efficacy of Promycin as an adjunct to radiation
therapy for these conditions. We expect to begin evaluating Promycin in other
tumor types by the first quarter of 2000.

         Triapine(R) is designed to prevent the replication of tumor cells by
blocking a critical step in the synthesis of DNA. In preclinical trials,
Triapine has shown a broad spectrum of activity against human tumors "grafted"
onto another species and mouse tumors. We filed an IND


                                      -4-

<PAGE>


application with the U.S. Food and Drug Administration for Triapine in December
1997 and received clearance one month later to proceed with a Phase I human
clinical trial. Both single dose and multiple dose regiments are currently being
evaluated in patients with solid tumors.

         Sulfonyl hydrazine prodrugs represent compounds that are designed to be
converted to unique, potent alkylating agents. Alkylating agents, as a class,
are highly effective against tumors, but lack selectivity and affect many normal
tissues as well as cancer cells, causing toxic side- effects. Synthesizing the
sulfonyl hydrazine alkylating agent as a prodrug form, a non-toxic drug form
that is converted into the active drug once it is in the body, blocks the
reactivity of these compounds in normal tissues, allowing them to exploit a
property of tumor cells for conversion into powerful cancer-fighting drugs.

         Our executive offices are located at 4 Science Park, New Haven,
Connecticut 06511, and our telephone number is (203) 498-4210.


                                      -5-
<PAGE>

                               RECENT DEVELOPMENTS

PRIVATE PLACEMENT

         In April 1999, we completed a private placement of 893,915 shares of
our common stock to the selling stockholders at a price of approximately $4.47
per share, which was 90% of the average closing price of the common stock on the
Nasdaq SmallCap Market for the 10 consecutive trading days immediately prior to
April 8, 1999, for aggregate proceeds of $4,000,000. Shares were sold to the
selling stockholders on April 8, April 13 and April 19.

         In connection with the private placement, we agreed with the selling
stockholders as follows:

         o        If we issue or agree to issue any common stock at a price less
                  than $4.47 per share during the 12 months following the
                  closing of the private placement, we must immediately issue
                  additional shares of common stock to the selling stockholders.
                  We will issue that number of additional shares of common stock
                  so that the selling stockholders will have obtained a total
                  number of shares equal to $4,000,000 divided by the lower
                  price per share. There are exceptions to this obligation for
                  shares issued by us upon the exercise of employee stock
                  options and upon the exercise or conversion of currently
                  outstanding options, warrants or preferred stock. Our
                  obligation will terminate after we complete a private
                  placement or public offering of our common stock at a price
                  per share greater than $4.47 where the gross proceeds to us
                  are at least $11,000,000.

         o        If any of the following events occurs, we must pay to the
                  selling stockholders 3% of the amount of their investment for
                  each 30-day period, or portion of a 30-day period, during
                  which the event continues:

                  o       this registration statement has not been declared
                          effective within 120 days after the closing of the
                          private placement, unless at that time Vion is
                          actively engaged in completing an underwritten public
                          offering;

                  o       the common stock issued in the private placement fails
                          to be listed on any principal securities exchange or
                          market on which our common stock is traded; or

                  o       the selling stockholders are unable to use this
                          registration statement in connection with the sale of
                          their shares for more than 90 days in any 12- month
                          period, unless the reason for the inability is because
                          of the need to update disclosures regarding regulatory
                          developments with respect to our products.

                                       -6-

<PAGE>

         o        If we fail or refuse to make any payment described above, at
                  the request of any selling stockholder we must purchase all or
                  a portion of the shares of common stock purchased in the
                  private placement by the selling stockholder at a purchase
                  price per share of $4.9222. The amount of default payments to
                  any selling stockholder for any one month may not exceed 3% of
                  the amount invested by the selling stockholder in the private
                  placement.

EPTTCO COLLABORATION

         In April 1999, we entered into a collaboration with EPTTCO Limited, a
newly formed drug delivery company based in the United Kingdom. Through the
collaboration, we will seek to "arm" our TAPET(R) vectors with EPTTCO's prodrug
activation technology, which uses enzymes to convert inactive prodrugs into
cytotoxic anticancer agents, and to create new cancer treatments that may be
systematically delivered and may potentially be more effective against solid
tumors and less toxic to normal tissues than current anticancer drugs. EPTTCO's
technology is a drug activating system that selectively releases prodrugs within
tumors, resulting in local killing of tumor cells while sparing normal tissues
from toxic effects. Under the terms of the collaboration agreement, Vion and
EPTTCO will equally contribute technology and manpower to establish and test the
combined therapeutic system. If a specific combination of the two technologies
proves successful, Vion and EPTTCO will seek a corporate partner to clinically
develop and commercialize the combined system.


                                       -7-

<PAGE>
                                  RISK FACTORS

         In addition to the other information in this prospectus, you should
carefully consider the following factors in evaluating us and our business
before purchasing the shares of common stock offered hereby. This prospectus
contains, in addition to historical information, forward-looking statements that
involve risks and uncertainties. Our actual results could differ materially.
Factors that could cause or contribute to such differences include, but are not
limited to, those discussed below, as well as those discussed elsewhere in this
prospectus, including the documents incorporated by reference.


         WE DO NOT HAVE A LONG OPERATING HISTORY AND ARE VULNERABLE TO THE
UNCERTAINTIES AND DIFFICULTIES FREQUENTLY ENCOUNTERED BY EARLY STAGE COMPANIES

         To date, our activities have consisted primarily of research and
development and we have generated minimal revenues from product sales.
Therefore, we are vulnerable to the uncertainties and difficulties encountered
by early stage companies, such as our ability to:

         o  implement sales and marketing initiatives;
         o  attain, retain and motivate qualified personnel;
         o  respond to actions taken by our competitors;
         o  effectively manage our growth by building a solid base of operations
            and technologies; and
         o  move from the product development stage to the commercialization
            stage.

         Our failure to address these risks and uncertainties could have a
material adverse effect on our business, results of operations and financial
condition.

         WE DO NOT HAVE MANUFACTURING OR MARKETING CAPABILITIES OF OUR OWN

         We have no experience in manufacturing or marketing any therapeutic
products. We currently do not have the resources to manufacture or market
independently on a commercial scale any products that we may develop. We
currently intend to outsource some or all manufacturing requirements we may
have. We may not be able to enter into suitable arrangements for manufacturing.
If, alternatively, we decide to establish a manufacturing facility, we will
require substantial additional funds and will be required to hire significant
additional personnel and comply with the extensive FDA-mandated good
manufacturing practices that would apply to such a facility. Additionally, we
currently have no marketing or sales staff.

         WE DEPEND ON OUTSIDE PARTIES FOR ASPECTS OF OUR PRODUCT DEVELOPMENT
EFFORTS

         Our strategy for the research, development and commercialization of our
products entails entering into various arrangements with corporate partners,
licensors, licensees, collaborators at research institutions and others. We are
dependent, therefore, upon the actions of these third parties in performing
their responsibilities. We also rely on our collaborative partners to conduct
research efforts and clinical trials, to obtain regulatory approvals and to
manufacture and market our products. In particular, we have contracted a
research organization to conduct the Phase III clinical studies of Promycin. As
a result, the amount and timing of resources to be devoted to these activities
by these other parties may not be within our control.

                                       -8-

<PAGE>

         WE HAVE AN ACCUMULATED DEFICIT, WE ANTICIPATE OUR LOSSES WILL CONTINUE
AND WE RECEIVED A GOING CONCERN OPINION FROM OUR AUDITORS

         We are in the development stage and at March 31, 1999, we had an
accumulated deficit of approximately $53.1 million. Since then we have
experienced significant losses which we expect to continue for the foreseeable
future. We have incurred a substantial portion of our losses in connection with
research we sponsored on several product candidates pursuant to an agreement
with Yale University. We continue to have substantial financial commitments to
Yale pursuant to the agreement with them. We will continue to conduct
significant research, development, testing and regulatory compliance activities
which, together with administrative expenses, are expected to result in
operating losses for at least the next several years. We also received an
opinion from our independent auditors for the fiscal year ended December 31,
1998 expressing substantial doubt as to our ability to continue as a going
concern as a result of our recurring operating losses and need for substantial
amounts of additional funding to continue our operations.

         WE ARE IN THE EARLY STAGES OF PRODUCT DEVELOPMENT AND OUR PRODUCT
CANDIDATES MAY NOT BE SUCCESSFULLY DEVELOPED

         Some of our proposed products are in the early development stage and
require significant further research and development. We have not yet selected
lead drugs to use with our proposed drug delivery platform and one of our
proposed products is just beginning clinical trials. We expect that our products
will not be commercially available for a significant period of time, if ever.
Results obtained in research and testing conducted to date are not conclusive as
to whether products we are investigating will be effective or safe for their
proposed uses. Our successful development of any product is subject to the risks
of failure inherent in the development of products or therapeutic procedures
based on innovative technologies. These risks include the possibilities that:

         o  the proposed products are found to be ineffective or unsafe, or
            otherwise fail to receive necessary regulatory clearances or
            approvals;
         o  the proposed products are uneconomical to market or do not achieve
            broad market acceptance;
         o  third parties hold proprietary rights that preclude us from
            marketing proposed products; or
         o  third parties market a superior or equivalent product.

         THE EFFICACY AND SAFETY OF OUR TAPET TECHNOLOGY IS UNCERTAIN

         TAPET uses genetically altered Salmonella bacteria for delivery of
genes or gene products to tumors. The use of bacteria in general, and Salmonella
in particular, to deliver genes or gene products is a new technology, and
existing preclinical and clinical data on the safety and efficacy of this
technology are very limited. Unacceptable side effects may be discovered during
preclinical and clinical testing of our potential products utilizing the TAPET
technology. Products utilizing the TAPET technology are not yet in human
clinical trials, and the results of preclinical studies do not always predict
safety or efficacy in humans. Possible serious side effects


                                       -9-

<PAGE>
of TAPET include bacterial infections, particularly the risk of septic shock, a
serious and often fatal bacterial infection of the blood.

         WE ARE LIKELY TO REQUIRE ADDITIONAL CAPITAL TO CONTINUE OUR OPERATIONS,
WHICH MIGHT NOT BE AVAILABLE WHEN NEEDED

         Our strategy is to continue to test our current anticancer therapeutics
and technologies and to discover, develop and commercialize other products for
the treatment of cancer. In order to implement our strategy, we expect to spend
significant amounts of money to:

o pay our financial commitments to our current academic collaborators; o fund
our research and product development programs; o enter into additional
strategic/collaborative partnerships with academic institutions; o sponsor the
performance of clinical trials and other tests on our products; o market our
products; and o fund operating losses and working capital.

         We will likely require additional capital from public or private equity
or debt sources. We may not be able to raise additional capital in the future on
terms acceptable to us or at all. Moreover, future equity financings may be
dilutive to our stockholders. If alternative sources of financing are
insufficient or unavailable, we will be required to delay, scale back or
eliminate our research and product development programs or to license third
parties to commercialize products or technologies that we would otherwise seek
to develop alone. In addition, we may be unable to meet our obligations under
license agreements, research agreements or other collaborative agreements. If we
fail to make any payments required to academic collaborators or licensors, or
otherwise default under any agreement with such parties, they will have the
right to terminate their agreements with us. As a result, we would be unable to
continue development of or to commercialize all or a portion of our product
candidates licensed under these agreements.

         WE DEPEND HEAVILY ON PATENTS AND TRADE SECRETS WHICH MAY NOT ADEQUATELY
PROTECT OUR TECHNOLOGIES FROM USE BY OTHERS

         Our success will depend on our ability, or the ability of our
licensors, to obtain and maintain patent protection on technologies and
products, to preserve trade secrets and to operate without infringing the
proprietary rights of others. Patent applications filed by us or on our behalf
may not result in patents being issued or that, if issued, the patents may not
afford protection against competitors with similar technology. Furthermore,
others may independently develop similar technologies or duplicate any
technology developed by us. It is possible that before any of our potential
products can be commercialized, their related patents may expire, or remain in
existence for only a short period following commercialization, thus reducing any
advantage of the patent. Moreover, composition of matter patent protection,
which gives patent protection for the structure of a compound, may not be
available for some of our product candidates. Specifically, we do not expect
composition of matter patent protection to be available for Promycin.

                                      -10-

<PAGE>

         Our processes and potential products may conflict with patents that
have been or may be granted to competitors, universities or others. As the
biopharmaceutical industry expands and more patents are issued, the risk
increases that our processes and potential products may give rise to claims that
they infringe the patents of others. These other persons could bring legal
actions against us claiming damages and seeking to enjoin clinical testing,
manufacturing and marketing of the affected product or process. If any of these
actions are successful, in addition to any potential liability for damages, we
could be required to obtain a license in order to continue to conduct clinical
tests, manufacture or market the affected product or use the affected process.
Required licenses may not be available on acceptable terms, if at all and the
results of litigation are uncertain. If we become involved in litigation, it
could consume a substantial portion of our financial resources and the efforts
of our personnel. In addition, we may have to expend resources to protect our
interests from possible infringement by others.

         WE RELY ON CONFIDENTIALITY AGREEMENTS TO PROTECT OUR TRADE SECRETS

         We also rely on trade secrets that we may seek to protect through
confidentiality agreements with employees and other parties. These agreements
may be breached, adequate remedies for any breach may not be available or
adequate and our trade secrets may otherwise become known to competitors. To the
extent that our consultants, key employees or other third parties apply
technological information independently developed by them or by others to our
proposed projects, third parties may own all or part of the proprietary rights
to such information, and disputes may arise as to the ownership of the
proprietary rights to such information which may not be resolved in our favor.

         WE HAVE PAID AND MUST CONTINUE TO PAY SIGNIFICANT AMOUNTS OF MONEY TO
YALE BUT WE MAY NEVER REALIZE ANY BENEFITS FROM OUR AGREEMENTS WITH YALE

         We have significant financial commitments to academic collaborators in
connection with licenses and sponsored research agreements. In particular,
through March 31, 1999, we have paid in total to Yale approximately $6.4
million, and we continue to have substantial funding commitments to Yale whether
or not the research results in suitable product candidates. Moreover, we
generally do not have the right to control the research that Yale is conducting
pursuant to the sponsored research agreements, and the funds may not be used to
conduct research relating to products that we would like to pursue.
Additionally, if the research being conducted by Yale results in technologies
that Yale has not already licensed or agreed to license to us, we may need to
negotiate additional license agreements or we may be unable to utilize those
technologies.

         WE DEPEND HEAVILY ON KEY PERSONNEL

         Because of the specialized scientific nature of our business, we are
dependent upon the continued efforts of our management and scientific and
technical personnel. We are also dependent upon key employees and our scientific
advisors. Competition among biopharmaceutical and biotechnology companies for
qualified employees is intense. We may not be able to attract, retain and
motivate any additional highly skilled employees required for the

                                      -11-

<PAGE>

expansion of our activities. In addition, the hiring process will be time
consuming and will divert the efforts and attention of our management from our
operations. We may not be able to retain and continue to attract qualified
employees.

         THE FDA AND COMPARABLE FOREIGN REGULATORY AUTHORITIES MAY NOT APPROVE
OUR FUTURE PRODUCTS

         The FDA and comparable foreign regulatory authorities require rigorous
preclinical testing, clinical trials and other approval procedures for human
pharmaceutical products. Numerous regulations also govern the manufacturing,
safety, labeling, storage, record keeping, reporting and marketing of
pharmaceutical products. Governmental regulation may significantly delay the
marketing of our products, prevent marketing of products altogether or impose
costly requirements on our activities. A delay in obtaining or a failure to
obtain regulatory approvals for any of our drug candidates will have an adverse
effect on our business.

         Government regulatory requirements vary widely from country to country,
and the time required to complete preclinical testing and clinical trials and to
obtain regulatory approvals is typically several years. The process of obtaining
approvals and complying with appropriate government regulations is time
consuming and expensive. Changes in regulatory policy or additional regulations
adopted during product development and regulatory review of information we
submit could also result in added cost, delays or rejections. Our success
substantially depends upon our ability to demonstrate the safety and
effectiveness of our drug candidates to the satisfaction of government
authorities.

         We have obtained Orphan Drug status from the FDA for Promycin for
several indications. This gives us a seven year marketing exclusivity from the
date the FDA gives marketing approval. We intend to seek Orphan Drug designation
for products where appropriate and where no patent protection is feasible.

         EVEN IF OUR PRODUCTS RECEIVE REGULATORY APPROVAL, WE MAY STILL FACE
DIFFICULTIES IN MARKETING AND MANUFACTURING THOSE PRODUCTS

         If we receive regulatory approval of any of our drug candidates, the
FDA or comparable foreign regulatory agency may, nevertheless, limit the
indicated uses of the drug candidate. A marketed product, its manufacturer and
the manufacturer's facilities are subject to continual review and periodic
inspections. The discovery of previously unknown problems with a product,
manufacturer or facility may result in restrictions on the product or
manufacturer, including withdrawal of the product from the market. The failure
to comply with applicable regulatory requirements can, among other things,
result in:

         o  fines;
         o  suspended regulatory approvals;
         o  refusal to approve pending applications;
         o  refusal to permit exports from the United States;
         o  product recalls;

                                      -12-

<PAGE>

         o  seizure of products;
         o  injunctions;
         o  operating restrictions; and
         o  criminal prosecutions.

         THERE IS UNCERTAINTY RELATED TO HEALTHCARE REIMBURSEMENT AND REFORM
MEASURES THAT COULD AFFECT THE COMMERCIAL VIABILITY OF ANY PRODUCTS DEVELOPED BY
US

         Our success in generating revenue from sales of therapeutic products
may depend on the extent to which reimbursement for the cost of those products
will be available from government health administration authorities, private
health insurers and other organizations. Significant uncertainty exists as to
the reimbursement status of newly-approved healthcare products. If government
and third-party payors do not provide adequate coverage and reimbursement levels
for uses of our therapeutic products, the market acceptance of these products
could be adversely affected. Further, third-party insurance coverage may not
reimburse us at price levels sufficient for realization of an appropriate return
on our investment in developing new therapies or products.

          Government and other third-party payors are increasingly attempting to
contain healthcare costs by limiting both coverage and the level of
reimbursement of new therapeutic products approved for marketing by the FDA and
by refusing, in some cases, to provide any coverage of uses of approved products
for disease indications other than those for which the FDA has granted marketing
approval. In addition, Congress regularly considers numerous proposals relating
to healthcare reform which, if adopted, could affect the amount paid for
pharmaceutical products and medical procedures.

         WE FACE INTENSE COMPETITION IN THE MARKET FOR ANTICANCER PRODUCTS

         The market for anticancer products is large and growing rapidly and
will attract new entrants. We are in competition with other pharmaceutical
companies, biotechnology companies and research and academic institutions. Many
of these companies have substantially greater financial and other resources and
development capabilities than us and have substantially greater experience in
undertaking preclinical and clinical testing of products, obtaining regulatory
approvals and manufacturing and marketing pharmaceutical products. In addition,
our competitors may succeed in obtaining approval for products more rapidly than
us and in developing and commercializing products that are safer and more
effective than those that we propose to develop. The existence of these
products, other products or treatments of which we are not aware, or products or
treatments that may be developed in the future, may adversely affect the
marketability of our products.

         In addition to competing with universities and other research
institutions in the development of products, technologies and processes, we may
compete with other companies in acquiring rights to products or technologies
from universities. We may not be able to develop products that are more
effective or achieve greater market acceptance than our competitors' products,
and our competitors may succeed in developing products and technologies that are

                                      -13-

<PAGE>

more effective than those that we are developing or that would render our
products and technologies less competitive or obsolete.

         THE TESTING AND MARKETING OF OUR POTENTIAL PRODUCTS WILL PRESENT
LIABILITY RISKS

         Our business exposes us to potential product liability risks that are
inherent in the testing, manufacturing and marketing of drug products including,
but not limited to, unacceptable side effects. Such side effects and other
liability risks could give rise to viable product liability claims against us.
We do not currently have any product liability insurance. When we seek to obtain
product liability insurance, we may not be able to obtain or maintain product
liability insurance on acceptable terms and insurance may not provide adequate
coverage against potential liabilities. As a result, if we are subject to
product liability claims, we may incur significant expense defending such
claims.

         OUR COMPLIANCE WITH ENVIRONMENTAL LAWS MAY NECESSITATE UNCERTAIN
EXPENDITURES IN THE FUTURE

         We cannot accurately predict the outcome or timing of future
expenditures that we may be required to pay in order to comply with
comprehensive federal, state and local environmental laws and regulations. We
must comply with environmental laws that govern, among other things, all
emissions, waste water discharge and solid and hazardous waste disposal, and the
remediation of contamination associated with generation, handling and disposal
activities. Environmental laws have changed in recent years and we may become
subject to stricter environmental standards in the future and face larger
capital expenditures in order to comply with environmental laws. Our limited
capital makes it uncertain whether we will be able to pay for these larger than
expected capital expenditures. Also, future developments, administrative actions
or liabilities relating to environmental matters may have a material adverse
effect on our financial condition or results of operations.

         All of our operations are performed under strict environmental and
health safety controls consistent with the Occupational Safety and Health
Administration, or OSHA, the Environmental Protection Agency, or EPA, and the
Nuclear Regulatory Commission, or NRC, regulations. We cannot be certain that we
will be able to control all health and safety problems. We may be held liable
and may be required to pay the costs of remedying any such problems. The amount
of any such liability and costs could be material.


                                      -14-

<PAGE>

         EFFECTS OF ANTI-TAKEOVER PROVISIONS COULD INHIBIT THE ACQUISITION OF
VION

         Some of the provisions of our certificate of incorporation, bylaws and
Delaware law could, together or separately:

         o  discourage potential acquisitions;
         o  delay or prevent a change in control; and
         o  limit the price that investors might be willing to pay in the future
            for shares of our common stock.

         In particular, our certificate of incorporation provides that our board
may issue from time to time, without stockholder approval, additional shares of
preferred stock. The issuance of preferred stock may make it more difficult for
a third party to acquire, or may discourage a third party from acquiring, voting
control of our stock. This provision could also discourage, hinder or preclude
an unsolicited acquisition, even if such acquisition is beneficial to us, and
could make it less likely that stockholders receive a premium for their shares
as a result of any such attempt. Furthermore, we are subject to Section 203 of
the Delaware General Corporation Law which generally prohibits a Delaware
corporation from engaging in any of a broad range of business combinations with
any interested stockholder for a period of three years following the date on
which the stockholder became an interested stockholder.

         WE MAY ISSUE PREFERRED STOCK ON TERMS THAT MAY DISADVANTAGE OUR COMMON
STOCKHOLDERS

         The issuance of additional shares of preferred stock by our board could
decrease the amount of earnings and assets available for distribution to our
common stockholders. Preferred stockholders could receive voting rights and
rights to payments on liquidation or of dividends or other rights that are
greater than the rights of the common stockholders. We currently have 559,077
shares of Class A Preferred Stock and 5,000 shares of 5% redeemable preferred
stock outstanding, and the board may issue additional preferred stock without
stockholder approval.

         FAILURE TO OBTAIN YEAR 2000 COMPLIANCE MAY HAVE ADVERSE EFFECTS ON OUR
BUSINESS
AND RESULTS OF OPERATIONS

          In the event that we do not implement adequate plans to address Year
2000 compliance, our operations could be affected in several adverse ways.
Failure of a scientific instrument or laboratory facility or by any of our
suppliers could result, among other things, in the loss of experiments that
would take weeks to set up and repeat. Such delays in the progress of research
could have an adverse impact on our stock price and on our ability to raise
capital, and the cost of repeating lost experiments cannot reasonably be
estimated at this time. In addition, research delays could occur due to the
impact of Year 2000 problems at major vendors, government research funding
agencies, or development partners.

                                      -15-
<PAGE>

         THERE MAY BE AN ADVERSE EFFECT ON THE MARKET PRICE OF OUR STOCK AS A
RESULT OF SHARES BEING AVAILABLE FOR SALE IN THE FUTURE

         Sales of a substantial amount of common stock in the public market, or
the perception that these sales may occur, could adversely affect the market
price of our common stock prevailing from time to time. This could also impair
our ability to raise additional capital through the sale of our equity
securities.

         Further, there are options and warrants outstanding that are
exercisable for an aggregate of 7,645,286 shares of common stock. Options and
warrants to purchase 6,884,794 shares are currently exercisable, and the
remainder become exercisable at various times through 2003. Additionally, the
standstill agreement with Boehringer Ingelheim terminates in November 1999, upon
which Boehringer Ingelheim will be free to sell up to 448,336 shares in the
public market, subject to the limitations of Rule 144.


                                 USE OF PROCEEDS

         We will not receive any proceeds from the sale of common stock by the
selling stockholders.

                              SELLING STOCKHOLDERS


         The following table sets forth the common stock ownership of the
selling stockholders as of July 1, 1999, as adjusted to reflect the sale of the
common stock in this offering. Except as set forth below, none of the selling
stockholders has held any position or office or had any other material
relationship with us or any of our predecessors or affiliates within the past
three years.


                                      -16-

<PAGE>

<TABLE>
<CAPTION>
                                                     SHARES OF                          SHARES OF        PERCENTAGE OF
                                                      COMMON                          COMMON STOCK       COMMON STOCK
                                                STOCK BENEFICIALLY                    BENEFICIALLY       BENEFICIALLY
                                                    OWNED PRIOR         SHARES            OWNED              OWNED
                                                    TO OFFERING       BEING SOLD     AFTER OFFERING     AFTER OFFERING
                                                    -----------       ----------     --------------     --------------
<S>                                                     <C>                <C>             <C>                <C>

Alan Kessman(1)                                        984,000         980,000              4,000             --*

Elliott Associates, L.P. (2)(3)                      1,503,927         223,479          1,280,448             7.93%

Kleinwort Benson Limited                               --              150,848             --                 --*

United Equities Commodities Company                    --              223,479             --                 --*

Wechsler & Co., Inc.                                   --               55,870             --                 --*

Westgate International, L.P. (3)(4)                  1,506,352         223,478          1,282,874             7.95%

Winchester Capital Healthcare Partners, LLC            --               16,761             --                 --*
- - ------------------
</TABLE>
* Less than 1.0%

(1) The 980,000 shares that are being registered are issuable upon exercise of
options granted to either Mr. Kessman or CBK Associates, LLC of which Mr.
Kessman is President. 220,000 of the options have an exercise price of $5.25 per
share and became fully vested on July 11, 1999. The remaining 760,000 options
have an exercise price of $5.775 per share and will vest in 25% increments on
July 11, 2000, July 11, 2001, July 11, 2002 and July 11, 2003, respectively.

(2) The number of shares of common stock beneficially owned by Elliott
Associates, L.P. includes (a) 78,132 shares of common stock issuable upon the
exercise of Class A Warrants, (b) 78,132 shares of common stock issuable upon
the exercise of Class B Warrants and (c) 722,195 shares of common stock issuable
upon conversion of shares of 5% Convertible Preferred Stock Series 1998. The
shares beneficially owned by Elliott Associates, L.P. represent 9.32% of
outstanding shares of common stock prior to the offering. On August 27, 1998,
Elliott Associates, L.P., together with Westgate International, L.P., exercised
their rights as holders of the 5% Convertible Preferred Stock Series 1998, to
nominate a candidate for election to the company's board of directors. That
candidate, Alan Kessman, is now the President and Chief Executive Officer, as
well as a director, of the company. The foregoing information is compiled from a
Schedule 13D filed August 14, 1998, as amended by Amendment No. 1 and Amendment
No. 2, dated September 3, 1998 and April 16, 1999, respectively.

(3) The number of shares of common stock beneficially owned by Westgate
International, L.P. includes (a) 77,724 shares of common stock issuable upon the
exercise of Class A Warrants, (b) 77,724 shares of common stock issuable upon
the exercise of Class B Warrants and (c) 722,195 shares of common stock issuable
upon conversion of shares of 5% Convertible Preferred Stock Series 1998. The
shares beneficially owned by Westgate International, L.P. represent 9.33% of
outstanding shares of common stock prior to the offering. On August 27, 1998,
Westgate International, L.P., together with Elliott Associates, L.P., exercised
their rights as holders of the 5% Convertible Preferred Stock Series 1998, to
nominate a candidate for election to the company's board of directors. That
candidate, Alan Kessman, is now the President and Chief Executive Officer, as
well as a director, of the company. The foregoing information is compiled from a
Schedule 13D filed August 14, 1998, as amended by Amendment No. 1 and Amendment
No. 2, dated September 3, 1998 and April 16, 1999, respectively.

(4) Elliott Associates, L.P., Westgate International, L.P. and Martley
International, Inc. have acted as a group (within the meaning of Rule 13D-1
under the Federal securities laws) for the purpose of acquiring securities of
the company. Martley International, Inc. is the investment advisor for Westgate
International, L.P. and Martley expressly disclaims equitable ownership of and
pecuniary interest in any common stock.


                                      -17-

<PAGE>
                              PLAN OF DISTRIBUTION

         We are registering the shares of common stock on behalf of the selling
stockholders. We are paying all costs, expenses and fees in connection with the
registration of the shares offered by this prospectus. Brokerage commissions, if
any, attributable to the sale of shares will be borne by the selling
stockholders.

         Sales or dispositions of shares of common stock may be effected from
time to time in transactions permitted by the Securities Act of 1933, including
block transactions, on the Nasdaq SmallCap Market, in negotiated transactions,
or a combination of these methods, at fixed prices which may be changed, at
market prices prevailing at the time of sale, or at negotiated prices. The
selling stockholders have advised us that they have not entered into any
agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of their shares of common stock. The selling
stockholders may effect transactions by selling common stock directly to
purchasers or to or through broker-dealers which may act as agents or
principals. Broker-dealers may receive compensation in the form of discounts,
concessions or commissions from the selling stockholders and/or the purchasers
of common stock for whom the broker-dealers may act as agents or to whom they
sell as principal, or both. The compensation paid to a particular broker-dealer
might be in excess of customary commissions.

         The selling stockholders and any broker-dealers that act in connection
with the sale of the common stock might be deemed to be "underwriters" within
the meaning of Section 2(11) of the Securities Act of 1933, and any commission
received by them and any profit on the resale of the shares of common stock as
principal might be deemed to be underwriting discounts and commissions under the
Securities Act of 1933. The selling stockholders may agree to indemnify any
agent, dealer or broker-dealer that participates in transactions involving sales
of the shares against some liabilities, including liabilities arising under the
Securities Act of 1933. Liabilities under the federal securities laws cannot be
waived.

         Because the selling stockholders may be deemed to be "underwriters"
within the meaning of Section 2(11) of the Securities Act of 1933, the selling
stockholders will be subject to prospectus delivery requirements under the
Securities Act of 1933. Furthermore, in the event of a "distribution" of shares
by a selling stockholder, the selling stockholder, any selling broker or dealer
and any "affiliated purchasers" may be subject to Regulation M under the
Securities Exchange Act of 1934, which would generally prohibit these persons
from bidding for or purchasing any security that is the subject of the
distribution until his or her participation in that distribution is completed.
In addition, Regulation M generally prohibits any "stabilizing bid" or
"stabilizing purchase" for the purpose of pegging, fixing or stabilizing the
price of common stock in connection with this offering.

         The selling stockholders may be entitled under agreements entered into
with us to indemnification against liabilities under the Securities Act of 1933.

                                 LEGAL MATTERS

         The validity of the shares of common stock offered by this prospectus
have been passed upon for us by Fulbright & Jaworski L.L.P., New York, New York.

                                      -18-

<PAGE>
                                     EXPERTS


         The financial statements of Vion Pharmaceuticals, Inc. appearing in
Vion Pharmaceuticals, Inc.'s Annual Report (Form 10-KSB/A Amendment No.1) for
the year ended December 31, 1998, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon (which contains an
explanatory paragraph describing conditions that raise substantial doubt about
the Company's ability to continue as a going concern as described in Note 1 to
the financial statements) included therein and incorporated herein by reference.
Such financial statements are incorporated herein by reference in reliance upon
such report given upon the authority of such firm as experts in accounting and
auditing.


                    NOTE REGARDING FORWARD-LOOKING STATEMENTS

         This prospectus (including the documents incorporated by reference in
this prospectus) contains forward-looking statements (as that term is defined in
the Private Securities Litigation Reform Act of 1995) and information about our
financial condition, results of operations and business that are based on our
current and future expectations. You can find many of these statements by
looking for words such as "estimate," "project," "believe," "anticipate,"
"intend," "expect" and similar expressions. These statements reflect our current
views with respect to future events and are subject to risks and uncertainties,
including those discussed under "Risk Factors," that could cause our actual
results to differ materially from those contemplated in the forward-looking
statements. We caution you that no forward-looking statement is a guarantee of
future performance. You should not place undue reliance on these forward-looking
statements, which speak only as of the date of this prospectus. We do not
undertake any obligation to publicly release any revisions to these
forward-looking statements to reflect events or circumstances after the date of
this prospectus or to reflect the occurrence of unanticipated events which may
cause our actual results to differ from those expressed or implied by the
forward-looking statements contained in this prospectus.

                       WHERE YOU CAN FIND MORE INFORMATION

         We are subject to the informational requirements of the Securities
Exchange Act of 1934. Therefore, we file reports, proxy statements and other
information with the SEC. You can read and copy all of our filings at the SEC's
public reference facilities in Washington, D.C., New York, New York and Chicago,
Illinois. You may obtain information on the operation of the SEC's public
reference facilities by calling the SEC at 1-800-SEC-0300. You can also read and
copy all of our filings at the offices of the Nasdaq Stock Market, 1735 K Street
N.W., Washington, D.C. 20006. You may also obtain our SEC filings from the SEC's
Web site on the Internet that is located at http://www.sec.gov.

         The SEC allows us to "incorporate by reference" much of the information
we file with them (File No. 0-26534), which means that we can disclose important
information to you by referring you to those publicly available documents. The
information that we incorporate by reference is considered to be part of this
prospectus. Because we are incorporating by reference our future filings with
the SEC, this prospectus is continually updated and those future filings may
modify or supersede some or all of the information included or incorporated in
this prospectus. This means that you must look at all of the SEC filings that we
incorporate by reference to determine if any of the statements in this
prospectus or in any document previously incorporated by reference have been
modified or superseded. This prospectus incorporates by reference the documents
listed below and any future filings we will make with the SEC under Sections
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until the
selling stockholders sell all their shares of common stock:

                                      -19-

<PAGE>
         (a) Our Annual Report on Form 10-KSB/A Amendment No. 1 for the year
ended December 31, 1998;


         (b) Our Current Report on Form 8-K filed July 13, 1999;


         (c) Our Current Report on Form 8-K filed April 28, 1999;

         (d) The description of our common stock contained in Item 1 of our
Registration Statement on Form 8-A dated July 31, 1995; and

         (e) Our Quarterly Report on Form 10-QSB for the three months ended
March 31, 1999.

         The information about us contained in this prospectus should be read
together with the information in the documents incorporated by reference. You
may request a copy of any or all of these filings, at no cost, by writing or
telephoning us at Vion Pharmaceuticals, Inc., 4 Science Park, New Haven,
Connecticut 06511, Attention: Thomas E. Klein, Vice President -- Finance and
Chief Financial Officer, Telephone: (203) 498-4210.


                                      -20-

<PAGE>

                                     PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14.  OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

         The expenses payable by the registrant in connection with the issuance
and distribution of the securities being registered hereby are as follows:


                                                              AMOUNT


SEC Registration Fee..................................   $     2,965.00
Legal, Accounting and Printing Expenses...............   $    31,500.00*
Miscellaneous Expenses................................   $     1,535.00*
                                                          --------------
Total.................................................   $    36,000.00*


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

* Estimated.

ITEM 15.  INDEMNIFICATION OF DIRECTORS AND OFFICERS

         Under the General Corporation Law of the State of Delaware ("DGCL"), a
corporation may include provisions in its certificate of incorporation that will
relieve its directors of monetary liability for breaches of their fiduciary duty
to the corporation, except under certain circumstances, including a breach of
the director's duty of loyalty, acts or omissions of the director not in good
faith or which involve intentional misconduct or a knowing violation of law, the
approval of an improper payment of a dividend or an improper purchase by the
corporation of stock or any transaction from which the director derived an
improper personal benefit. The registrant's Restated Certificate of
Incorporation, as amended, eliminates the personal liability of directors to the
registrant or its stockholders for monetary damages for breach of fiduciary duty
as a director with certain limited exceptions set forth in the DGCL.

         Section 145 of the DGCL grants to corporations the power to indemnify
each officer and director against liabilities and expenses incurred by reason of
the fact that he or she is or was an officer or director of the corporation if
he or she acted in good faith and in a manner he or she reasonably believed to
be in or not opposed to the best interests of the corporation and, with respect
to any criminal action or proceeding, had no reasonable cause to believe his or
her conduct was unlawful. The registrant's Restated Certificate of
Incorporation, as amended, and Bylaws provide for indemnification of each
officer and director of the registrant to the fullest extent permitted by the
DGCL. Section 145 of the DGCL also empowers corporations to purchase and
maintain insurance on behalf of any person who is or was an officer or director
of the corporation against liability asserted against or incurred by him in any
such capacity, whether or not the corporation would have the power to indemnify
such officer or director against such liability under the provisions of Section
145. The registrant has purchased and maintains a directors' and officers'
liability policy for such purposes.



                                      II-1

<PAGE>

ITEM 16. EXHIBITS

  4.1 -- Restated Certificate of Incorporation of the Registrant, as amended.(2)

  4.2 -- By-Laws of the Registrant.(3)


  4.3 -- Form of Common Stock Investment Agreement.(4)

  5.1 -- Opinion of Fulbright & Jaworski L.L.P.

 10.1 -- Non-Qualified Stock Option Agreement (700,000 shares) between the
         Registrant and Alan Kessman, dated January 11, 1999.

 10.2 -- Non-Qualified Stock Option Agreement (120,000 shares) between the
         Registrant and Alan Kessman, dated January 11, 1999.

 10.3 -- Non-Qualified Stock Option Agreement ($5.775 per share) between the
         Registrant and CBK Associates, LLC, dated January 11, 1999.

 10.4 -- Non-Qualified Stock Option Agreement ($5.25 per share) between the
         Registrant and CBK Associates, LLC, dated January 11, 1999.

 10.5 -- Non-Qualified Stock Option Agreement (40,000 shares) between the
         Registrant and Alan Kessman, dated January 11, 1999.

 10.6 -- Senior Executive Stock Option Plan. (1)

 23.1 -- Consent of Ernst & Young L.L.P.

 23.2 -- Consent of Fulbright & Jaworski L.L.P. (included in Exhibit 5.1)

 24.1 -- Power of Attorney.(4)

 99.1 -- Form of Registration Rights Agreement.(4)

- - ------------------
(1)  Incorporated by reference to the registrant's Quarterly Report on Form
     10-QSB for the quarter ended March 31, 1999.

(2)  Incorporated by reference to the registrant's Quarterly Report on Form
     10-QSB for the quarter ended June 30, 1998.

(3)  Incorporated by reference to the registrant's Registration Statement on
     Form SB-2 (File No. 33-93468), effective August 14, 1995.

(4)  Previously filed.


ITEM 17.  UNDERTAKINGS

(a)      The undersigned registrant hereby undertakes:

         (1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:

                  (i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;


                                      II-2
<PAGE>

                  (ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or together, represent a
fundamental change in the information in the registration statement;

                  (iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;

provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 that are incorporated
by reference in the registration statement.

         (2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

         (3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.

(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.

(c) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described under Item 15 above, 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 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 of 1933 and will be governed by the final adjudication of such issue.


                                      II-3

<PAGE>

                                   SIGNATURES

         Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New Haven, State of Connecticut, on July 15, 1999.


                                        VION PHARMACEUTICALS, INC.
                                        (Registrant)



                                        By:   /s/ Alan Kessman
                                           ------------------------------------
                                              Alan Kessman, President and Chief
                                              Executive Officer



         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.


<TABLE>
<CAPTION>

         SIGNATURE                           TITLE                                  DATE
         ---------                           -----                                  ----
<S>                                 <C>                                          <C>
           *                        Chairman of the Board                        July 15, 1999
- -----------------------
William R. Miller


           *                        President, Chief Executive                   July 15, 1999
- -----------------------             Officer and Director (Principal
Alan Kessman                        Executive Officer)


</TABLE>

                                               II-4

<PAGE>

<TABLE>

<S>                                 <C>                                          <C>

           *                        Vice President -- Finance                    July 15, 1999
- -----------------------             and Chief Financial Officer
Thomas E. Klein                     (Principal Financial and
                                    Accounting Officer)



           *                        Director                                     July 15, 1999
- -----------------------
Michel C. Bergerac


           *                        Director                                     July 15, 1999
- -----------------------
Frank T. Cary


           *                        Director                                     July 15, 1999
- -----------------------
James Ferguson


           *                        Director                                     July 15, 1999
- -----------------------
Michael C. Kent


           *                        Director                                     July 15, 1999
- -----------------------
Alan C. Sartorelli


           *                        Director                                     July 15, 1999
- -----------------------
Walter B. Wriston


*By /s/ Alan Kessman
    -----------------------
    Alan Kessman
    as Attorney-in-fact

</TABLE>

                                      II-5



                                                                     EXHIBIT 5.1

                          Fulbright & Jaworski L.L.P.
                   A Registered Limited Liability Partnership
                                666 Fifth Avenue
                         New York, New York 10103-3198


telephone:212/318/3000                                              houston
facsimile:212/752-5958                                          washington, d.c.
                                                                     austin
                                                                   san antonio
                                                                     dallas
                                                                    new york
                                                                   los angeles
                                                                     london
                                                                    hong kong



July 16, 1999


The Board of Directors
Vion Pharmaceuticals, Inc.
Four Science Park
New Haven, Connecticut 06511

Dear Sirs:


         We refer to Amendment No. 1 to the Registration Statement on Form S-3
(the "Registration Statement"), filed by Vion Pharmaceuticals, Inc. (the
"Company") on behalf of the selling stockholders (the "Selling Stockholders")
with the Securities and Exchange Commission under the Securities Act of 1933, as
amended, relating to 1,873,915 shares of the Company's common Stock, $.01 par
value (the "Shares"), to be sold by the Selling Shareholders named therein.


         As counsel for the company, we have examined such corporate records,
documents and such questions of law as we have considered necessary or
appropriate for purposes of this opinion and, upon the basis of such
examination, advise you that in our opinion the Shares have been duly and
validly authorized and are legally issued, fully paid and non-assessable.

         We consent to the filing of this opinion as an exhibit to the
Registration Statement and the reference to this firm under the caption "Legal
Matters" in the prospectus contained therein and elsewhere in the Registration
Statement and prospectus. This consent is not to be construed as an admission
that we are a party whose consent is required to be filed with the Registration
Statement under the provisions of the Securities Act of 1933, as amended.

                                               Very truly yours,

                                               /s/ Fulbright & Jaworski L.L.P.


                                                                    EXHIBIT 10.1




                           VION PHARMACEUTICALS, INC.

                      NON-QUALIFIED STOCK OPTION AGREEMENT
                      ------------------------------------
                  UNDER THE SENIOR EXECUTIVE STOCK OPTION PLAN
                  --------------------------------------------


         Vion Pharmaceuticals, Inc., a Delaware corporation (the "Company"),
hereby grants as of the 11th day of January 1999, to Alan Kessman (the
"Optionee"), a non-qualified stock option to purchase 700,000 shares (the
"Option Shares") of its Common Stock, $0.01 par value (the "Common Stock"), at
the price of $5.775 per share, on the following terms and conditions:

         1. Grant Under Senior Executive Stock Option Plan. This option is
granted pursuant to and is governed by the Company's Senior Executive Stock
Option Plan (the "Plan"), which is attached hereto as Exhibit A and incorporated
herein by reference. Unless the context otherwise requires, terms used herein
shall have the same meaning as in the Plan. Determinations made in connection
with this option pursuant to the Plan shall be governed by the Plan as it exists
on this date.

         2. Grant as Non-Qualified Stock Option; Other Options. This option
shall be treated for Federal income tax purposes as a non-qualified stock
option, and the Board of Directors will take appropriate action, if necessary,
to achieve this result. This option is in addition to any other options
hereafter granted to the Optionee by the Company, but a duplicate original of
this instrument shall not affect the grant of another option.

         3. Vesting. If the Optionee has continued to serve the Company in the
capacity of an employee or officer, or with the approval of the Board of
Directors, as a consultant (such service is described herein as maintaining or
being involved in a "Business Relationship" with the Company) on the following
dates, the Optionee may exercise this option for the percentage of Option Shares
set opposite the applicable date on or after such date:

                               July 11, 2000 - 25%
                               July 11, 2001 - 50%
                               July 11, 2002 - 75%
                               July 11, 2003 - 100%;

provided, that the option may be exercised in full at any time upon a "Change in
Control" (as defined below).

         While the Optionee continues to maintain a Business Relationship with
the Company this option may be exercised up to and including the date which is
ten (10) years from the date this

<PAGE>

option is granted. All of the foregoing rights are subject to Article 10 of the
Plan, if the Optionee ceases to maintain a Business Relationship with the
Company or dies or becomes disabled while involved in a Business Relationship
with the Company.

A "Change in Control" of the Company shall be deemed to have occurred if:

                  (i) any "person" (as such term is defined in Section 3(a)(9)
         of the Securities Exchange Act of 1934, as amended (the "Exchange Act")
         and as modified and used in Sections 13(d) and 14(d) of the Exchange
         Act) other than (A) the Company or any of its subsidiaries, (B) any
         trustee or other fiduciary holding securities under an employee benefit
         plan of the Company or any of its subsidiaries, (C) an underwriter
         temporarily holding securities pursuant to an offering of such
         securities, or (D) any corporation, owned, directly or indirectly, by
         the stockholders of the Company in substantially the same proportions
         as their ownership of stock of the Company (a "Person"), is or becomes
         the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
         Act), directly or indirectly, of securities of the Company representing
         40% or more of the combined voting power of the Company's then
         outstanding securities;

                  (ii) during any period of two consecutive years (not including
         any period prior to the execution of this Agreement), individuals who
         at the beginning of such period constitute the Board of Directors of
         the Company, and any new director (other than a director designated by
         a person who has entered into an agreement with the Company to effect a
         transaction described in clause (i), (iii) or (iv) of this Section)
         whose election by the Board of Directors of the Company or nomination
         for election by the Company's stockholders was approved by a vote of at
         least two-thirds (2/3) of the directors then still in office who either
         were directors at the beginning of the period or whose election or
         nomination for election was previously approved, cease for any reason
         to constitute at least a majority of the Company's Board of Directors;

                  (iii) the stockholders of the Company approve a merger or
         consolidation of the Company with any other corporation, other than (A)
         a merger or consolidation that would result in the voting securities of
         the Company outstanding immediately prior thereto continuing to
         represent (either by remaining outstanding or by being converted into
         voting securities of the surviving entity), in combination with the
         ownership of any trustee or other fiduciary holding securities under an
         employee benefit plan of the Company, at least 60% of the combined
         voting power of the voting securities of the Company or such surviving
         entity outstanding immediately after such merger or consolidation, or
         (B) merger or consolidation effected to implement a recapitalization of
         the Company (or similar transaction) in which no Person acquires more
         than 50% of the combined voting power of the Company's then outstanding
         securities; or

                                       2
<PAGE>

                  (iv) the stockholders of the Company approve a plan of
         complete liquidation of the Company or an agreement for the sale or
         disposition of the Company or all or substantially all of the Company's
         assets.

         4. Partial Exercise. Exercise of this option up to the extent vested as
stated above may be made in part at any time and from time to time within the
above limits, except that this option may not be exercised for a fraction of a
share unless such exercise is with respect to the final installment of stock
subject to this option and a fractional share (or cash in lieu thereof) must be
issued to permit the Optionee to exercise completely such final installment. Any
fractional share with respect to which an installment of this option cannot be
exercised because of the limitation contained in the proceeding sentence shall
remain subject to this option and shall be available for later purchase by the
Optionee in accordance with the terms hereof.

         5. Payment of Price. The option price is payable in United States
dollars and may be paid in cash or by check, or any combination of the
foregoing, equal in amount to the option price. The Board of Directors, in its
sole discretion, may permit the option price to be paid by delivery of shares of
the Company's Common Stock having an aggregate fair market value (as determined
in accordance with the Plan) equal as of the date of exercise to the option
price. The Board of Directors, in its sole discretion, may permit the option
price to be paid by delivery of the Optionee's personal recourse note bearing
interest payable not less than annually at no less than 100% of the lowest
Applicable Federal Rate, as defined in Section 1274(d) of the Code, or by any
combination of the foregoing equal in amount to the option price.

         6. Method of Exercising Option. Subject to the terms and conditions of
this Agreement, this option may be exercised by written notice to the Company,
at the principal executive office of the Company, or to such transfer agent as
the Company shall designate. Such notice shall state the election to exercise
this option and the number of shares in respect of which it is being exercised
and shall be signed by the person or persons so exercising this option. Such
notice shall be accompanied by payment of the full purchase price of such
shares, or such other documents as is necessary to effect payment of the
exercise price as set forth herein and the Company shall deliver a certificate
or certificates representing such shares as soon as practicable after the notice
shall be received. The certificate or certificates for the shares as to which
this option shall have been so exercised shall be registered in the name of the
person or persons so exercising this option and shall be delivered as provided
above to or upon the written order of the person or persons exercising this
option. In the event this option shall be exercised, pursuant to the terms
hereof, by any person or persons other than the Optionee, such notice shall be
accompanied by appropriate proof of the right of such person or persons to
exercise this option. All shares that shall be purchased upon the exercise of
this option as provided herein shall be fully paid and non-assessable.

         7. No Obligation to Exercise Option. The grant and acceptance of this
option imposes no obligation on the Optionee to exercise it.

                                       3
<PAGE>

         8. No Obligation to Continue Business Relationship. The Company is not
by the Plan or this option obligated to continue to maintain a Business
Relationship with the Optionee, nor is the Optionee required to maintain a
Business Relationship with the Company.

         9. No Rights as Stockholder until Exercise. The Optionee shall have no
rights as a stockholder with respect to shares subject to this Agreement until a
stock certificate therefor has been issued to the Optionee and is fully paid
for. Except as is expressly provided in the Plan with respect to certain changes
in the capitalization of the Company, no adjustment shall be made for dividends
or similar rights for which the record date is prior to the date such stock
certificate is issued.

         10. Capital Changes and Business Successions. The Plan contains
provisions covering the treatment of options in a number of contingencies such
as stock splits and mergers. Provisions in the Plan for adjustment with respect
to stock subject to options and the related provisions with respect to
successors to the business of the Company are hereby made applicable hereunder
and are incorporated herein by reference.

         11. Governing Law. This Agreement shall be governed by and interpreted
in accordance with the internal laws of the State of Delaware without giving
effect to its conflicts of laws principles.

                                       4
<PAGE>


         IN WITNESS WHEREOF the Company and the Optionee have caused this
instrument to be executed, and the Optionee whose signature appears below
acknowledges receipt of a copy of the Plan and acceptance of an original copy of
this Agreement.

                                            VION PHARMACEUTICALS, INC.



                                            By:/s/ Alan Kessman
                                               ---------------------------
                                            Name: Alan Kessman
                                    `       Title: Chief Executive Officer


                                            OPTIONEE:



                                            /s/ Alan Kessman
                                            ---------------------------
                                            Name: Alan Kessman

                                       5

                                                                    EXHIBIT 10.2



                           VION PHARMACEUTICALS, INC.

                      NON-QUALIFIED STOCK OPTION AGREEMENT
                      ------------------------------------
                  UNDER THE SENIOR EXECUTIVE STOCK OPTION PLAN
                  --------------------------------------------


         Vion Pharmaceuticals, Inc., a Delaware corporation (the "Company"),
hereby grants as of the 11th day of January 1999, to Alan Kessman (the
"Optionee"), a non-qualified stock option to purchase 120,000 shares (the
"Option Shares") of its Common Stock, $0.01 par value (the "Common Stock"), at
the price of $5.25 per share, on the following terms and conditions:

         1. Grant Under Senior Executive Stock Option Plan. This option is
granted pursuant to and is governed by the Company's Senior Executive Stock
Option Plan (the "Plan"), which is attached hereto as Exhibit A and incorporated
herein by reference. Unless the context otherwise requires, terms used herein
shall have the same meaning as in the Plan. Determinations made in connection
with this option pursuant to the Plan shall be governed by the Plan as it exists
on this date.

         2. Grant as Non-Qualified Stock Option; Other Options. This option
shall be treated for Federal income tax purposes as a non-qualified stock
option, and the Board of Directors will take appropriate action, if necessary,
to achieve this result. This option is in addition to any other options
hereafter granted to the Optionee by the Company, but a duplicate original of
this instrument shall not affect the grant of another option.

         3. Vesting. The Optionee may exercise this option for the percentage of
Option Shares set opposite the applicable date on or after such date:

                              July 11, 1999 - 100%.

         Notwithstanding the terms of Article 10 of the Plan, this option may be
exercised up to and including the date which is ten (10) years from the date
this option is granted, regardless of whether or not the Optionee has continued
to serve the Company in the capacity of an employee, officer, director,
consultant or otherwise prior to the expiration of this option.

         4. Partial Exercise. Exercise of this option up to the extent vested as
stated above may be made in part at any time and from time to time within the
above limits, except that this option may not be exercised for a fraction of a
share unless such exercise is with respect to the final installment of stock
subject to this option and a fractional share (or cash in lieu thereof) must be
issued to permit the Optionee to exercise completely such final installment. Any
fractional share with respect to which an installment of this option cannot be
exercised because of the


<PAGE>

limitation contained in the proceeding sentence shall remain subject to this
option and shall be available for later purchase by the Optionee in accordance
with the terms hereof.

         5. Payment of Price. The option price is payable in United States
dollars and may be paid in cash or by check, or any combination of the
foregoing, equal in amount to the option price. The Board of Directors, in its
sole discretion, may permit the option price to be paid by delivery of shares of
the Company's Common Stock having an aggregate fair market value (as determined
in accordance with the Plan) equal as of the date of exercise to the option
price. The Board of Directors, in its sole discretion, may permit the option
price to be paid by delivery of the Optionee's personal recourse note bearing
interest payable not less than annually at no less than 100% of the lowest
Applicable Federal Rate, as defined in Section 1274(d) of the Code, or by any
combination of the foregoing equal in amount to the option price.

         6. Method of Exercising Option. Subject to the terms and conditions of
this Agreement, this option may be exercised by written notice to the Company,
at the principal executive office of the Company, or to such transfer agent as
the Company shall designate. Such notice shall state the election to exercise
this option and the number of shares in respect of which it is being exercised
and shall be signed by the person or persons so exercising this option. Such
notice shall be accompanied by payment of the full purchase price of such
shares, or such other documents as is necessary to effect payment of the
exercise price as set forth herein and the Company shall deliver a certificate
or certificates representing such shares as soon as practicable after the notice
shall be received. The certificate or certificates for the shares as to which
this option shall have been so exercised shall be registered in the name of the
person or persons so exercising this option and shall be delivered as provided
above to or upon the written order of the person or persons exercising this
option. In the event this option shall be exercised, pursuant to the terms
hereof, by any person or persons other than the Optionee, such notice shall be
accompanied by appropriate proof of the right of such person or persons to
exercise this option. All shares that shall be purchased upon the exercise of
this option as provided herein shall be fully paid and non-assessable.

         7. No Obligation to Exercise Option. The grant and acceptance of this
option imposes no obligation on the Optionee to exercise it.

                                       2
<PAGE>

         8. No Obligation to Continue Business Relationship. The Company is not
by the Plan or this option obligated to continue to maintain a Business
Relationship with the Optionee, nor is the Optionee required to maintain a
Business Relationship with the Company.

         9. No Rights as Stockholder until Exercise. The Optionee shall have no
rights as a stockholder with respect to shares subject to this Agreement until a
stock certificate therefor has been issued to the Optionee and is fully paid
for. Except as is expressly provided in the Plan with respect to certain changes
in the capitalization of the Company, no adjustment shall be made for dividends
or similar rights for which the record date is prior to the date such stock
certificate is issued.

         10. Capital Changes and Business Successions. The Plan contains
provisions covering the treatment of options in a number of contingencies such
as stock splits and mergers. Provisions in the Plan for adjustment with respect
to stock subject to options and the related provisions with respect to
successors to the business of the Company are hereby made applicable hereunder
and are incorporated herein by reference.

         11. Governing Law. This Agreement shall be governed by and interpreted
in accordance with the internal laws of the State of Delaware without giving
effect to its conflicts of laws principles.


         IN WITNESS WHEREOF the Company and the Optionee have caused this
instrument to be executed, and the Optionee whose signature appears below
acknowledges receipt of a copy of the Plan and acceptance of an original copy of
this Agreement.

                           VION PHARMACEUTICALS, INC.


                                            By: /s/ Alan Kessman
                                                --------------------------
                                            Name: Alan Kessman
                                            Title: Chief Executive Officer


                                            OPTIONEE:


                                            /s/ Alan Kessman
                                            --------------------------
                                            Name: Alan Kessman



                                       3

                                                                    EXHIBIT 10.3




                           VION PHARMACEUTICALS, INC.

                      NON-QUALIFIED STOCK OPTION AGREEMENT
                      ------------------------------------
                  UNDER THE SENIOR EXECUTIVE STOCK OPTION PLAN
                  --------------------------------------------


         Vion Pharmaceuticals, Inc., a Delaware corporation (the "Company"),
hereby grants as of the 11th day of January 1999, to CBK Associates, LLC (the
"Optionee"), a non-qualified stock option to purchase 60,000 shares (the "Option
Shares") of its Common Stock, $0.01 par value (the "Common Stock"), at the price
of $5.775 per share, on the following terms and conditions:

         1. Grant Under Senior Executive Stock Option Plan. This option is
granted pursuant to and is governed by the Company's Senior Executive Stock
Option Plan (the "Plan"), which is attached hereto as Exhibit A and incorporated
herein by reference. Unless the context otherwise requires, terms used herein
shall have the same meaning as in the Plan. Determinations made in connection
with this option pursuant to the Plan shall be governed by the Plan as it exists
on this date.

         2. Grant as Non-Qualified Stock Option; Other Options. This option
shall be treated for Federal income tax purposes as a non-qualified stock
option, and the Board of Directors will take appropriate action, if necessary,
to achieve this result. This option is in addition to any other options
hereafter granted to the Optionee by the Company, but a duplicate original of
this instrument shall not affect the grant of another option.

         3. Vesting. If the Optionee has continued to serve the Company in the
capacity of an employee or officer, or with the approval of the Board of
Directors, as a consultant (such service is described herein as maintaining or
being involved in a "Business Relationship" with the Company) on the following
dates, the Optionee may exercise this option for the percentage of Option Shares
set opposite the applicable date on or after such date:

                               July 11, 2000 - 25%
                               July 11, 2001 - 50%
                               July 11, 2002 - 75%
                               July 11, 2003 - 100%;

provided, that the option may be exercised in full at any time upon a "Change in
Control" (as defined below).

         While the Optionee continues to maintain a Business Relationship with
the Company this option may be exercised up to and including the date which is
ten (10) years from the date this


<PAGE>

option is granted. All of the foregoing rights are subject to Article 10 of the
Plan, if the Optionee ceases to maintain a Business Relationship with the
Company or dies or becomes disabled while involved in a Business Relationship
with the Company.


A "Change in Control" of the Company shall be deemed to have occurred if:

                  (i) any "person" (as such term is defined in Section 3(a)(9)
         of the Securities Exchange Act of 1934, as amended (the "Exchange Act")
         and as modified and used in Sections 13(d) and 14(d) of the Exchange
         Act) other than (A) the Company or any of its subsidiaries, (B) any
         trustee or other fiduciary holding securities under an employee benefit
         plan of the Company or any of its subsidiaries, (C) an underwriter
         temporarily holding securities pursuant to an offering of such
         securities, or (D) any corporation, owned, directly or indirectly, by
         the stockholders of the Company in substantially the same proportions
         as their ownership of stock of the Company (a "Person"), is or becomes
         the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
         Act), directly or indirectly, of securities of the Company representing
         40% or more of the combined voting power of the Company's then
         outstanding securities;

                  (ii) during any period of two consecutive years (not including
         any period prior to the execution of this Agreement), individuals who
         at the beginning of such period constitute the Board of Directors of
         the Company, and any new director (other than a director designated by
         a person who has entered into an agreement with the Company to effect a
         transaction described in clause (i), (iii) or (iv) of this Section)
         whose election by the Board of Directors of the Company or nomination
         for election by the Company's stockholders was approved by a vote of at
         least two-thirds (2/3) of the directors then still in office who either
         were directors at the beginning of the period or whose election or
         nomination for election was previously approved, cease for any reason
         to constitute at least a majority of the Company's Board of Directors;

                  (iii) the stockholders of the Company approve a merger or
         consolidation of the Company with any other corporation, other than (A)
         a merger or consolidation that would result in the voting securities of
         the Company outstanding immediately prior thereto continuing to
         represent (either by remaining outstanding or by being converted into
         voting securities of the surviving entity), in combination with the
         ownership of any trustee or other fiduciary holding securities under an
         employee benefit plan of the Company, at least 60% of the combined
         voting power of the voting securities of the Company or such surviving
         entity outstanding immediately after such merger or consolidation, or
         (B) merger or consolidation effected to implement a recapitalization of
         the Company (or similar transaction) in which no Person acquires more
         than 50% of the combined voting power of the Company's then outstanding
         securities; or

                                       2
<PAGE>

                  (iv) the stockholders of the Company approve a plan of
         complete liquidation of the Company or an agreement for the sale or
         disposition of the Company or all or substantially all of the Company's
         assets.

         4. Partial Exercise. Exercise of this option up to the extent vested as
stated above may be made in part at any time and from time to time within the
above limits, except that this option may not be exercised for a fraction of a
share unless such exercise is with respect to the final installment of stock
subject to this option and a fractional share (or cash in lieu thereof) must be
issued to permit the Optionee to exercise completely such final installment. Any
fractional share with respect to which an installment of this option cannot be
exercised because of the limitation contained in the proceeding sentence shall
remain subject to this option and shall be available for later purchase by the
Optionee in accordance with the terms hereof.

         5. Payment of Price. The option price is payable in United States
dollars and may be paid in cash or by check, or any combination of the
foregoing, equal in amount to the option price. The Board of Directors, in its
sole discretion, may permit the option price to be paid by delivery of shares of
the Company's Common Stock having an aggregate fair market value (as determined
in accordance with the Plan) equal as of the date of exercise to the option
price. The Board of Directors, in its sole discretion, may permit the option
price to be paid by delivery of the Optionee's personal recourse note bearing
interest payable not less than annually at no less than 100% of the lowest
Applicable Federal Rate, as defined in Section 1274(d) of the Code, or by any
combination of the foregoing equal in amount to the option price.

         6. Method of Exercising Option. Subject to the terms and conditions of
this Agreement, this option may be exercised by written notice to the Company,
at the principal executive office of the Company, or to such transfer agent as
the Company shall designate. Such notice shall state the election to exercise
this option and the number of shares in respect of which it is being exercised
and shall be signed by the person or persons so exercising this option. Such
notice shall be accompanied by payment of the full purchase price of such
shares, or such other documents as is necessary to effect payment of the
exercise price as set forth herein and the Company shall deliver a certificate
or certificates representing such shares as soon as practicable after the notice
shall be received. The certificate or certificates for the shares as to which
this option shall have been so exercised shall be registered in the name of the
person or persons so exercising this option and shall be delivered as provided
above to or upon the written order of the person or persons exercising this
option. In the event this option shall be exercised, pursuant to the terms
hereof, by any person or persons other than the Optionee, such notice shall be
accompanied by appropriate proof of the right of such person or persons to
exercise this option. All shares that shall be purchased upon the exercise of
this option as provided herein shall be fully paid and non-assessable.

         7. No Obligation to Exercise Option. The grant and acceptance of this
option imposes no obligation on the Optionee to exercise it.

                                       3
<PAGE>

         8. No Obligation to Continue Business Relationship. The Company is not
by the Plan or this option obligated to continue to maintain a Business
Relationship with the Optionee, nor is the Optionee required to maintain a
Business Relationship with the Company.

         9. No Rights as Stockholder until Exercise. The Optionee shall have no
rights as a stockholder with respect to shares subject to this Agreement until a
stock certificate therefor has been issued to the Optionee and is fully paid
for. Except as is expressly provided in the Plan with respect to certain changes
in the capitalization of the Company, no adjustment shall be made for dividends
or similar rights for which the record date is prior to the date such stock
certificate is issued.

         10. Capital Changes and Business Successions. The Plan contains
provisions covering the treatment of options in a number of contingencies such
as stock splits and mergers. Provisions in the Plan for adjustment with respect
to stock subject to options and the related provisions with respect to
successors to the business of the Company are hereby made applicable hereunder
and are incorporated herein by reference.

         11. Governing Law. This Agreement shall be governed by and interpreted
in accordance with the internal laws of the State of Delaware without giving
effect to its conflicts of laws principles.

                                       4
<PAGE>

         IN WITNESS WHEREOF the Company and the Optionee have caused this
instrument to be executed, and the Optionee whose signature appears below
acknowledges receipt of a copy of the Plan and acceptance of an original copy of
this Agreement.

                           VION PHARMACEUTICALS, INC.



                                      By:/s/ Alan Kessman
                                         ---------------------------
                                      Name: Alan Kessman
                                    ` Title: Chief Executive Officer


                                      OPTIONEE:



                                      /s/ Alan Kessman for CBK Associates, LLC
                                      --------------------------
                                      Name: Alan Kessman for CBK Associates, LLC


                                       5

                                                                    EXHIBIT 10.4



                           VION PHARMACEUTICALS, INC.

                      NON-QUALIFIED STOCK OPTION AGREEMENT
                      ------------------------------------
                  UNDER THE SENIOR EXECUTIVE STOCK OPTION PLAN
                  --------------------------------------------


         Vion Pharmaceuticals, Inc., a Delaware corporation (the "Company"),
hereby grants as of the 11th day of January 1999, to CBK Associates, LLC (the
"Optionee"), a non-qualified stock option to purchase 60,000 shares (the "Option
Shares") of its Common Stock, $0.01 par value (the "Common Stock"), at the price
of $5.25 per share, on the following terms and conditions:

         1. Grant Under Senior Executive Stock Option Plan. This option is
granted pursuant to and is governed by the Company's Senior Executive Stock
Option Plan (the "Plan"), which is attached hereto as Exhibit A and incorporated
herein by reference. Unless the context otherwise requires, terms used herein
shall have the same meaning as in the Plan. Determinations made in connection
with this option pursuant to the Plan shall be governed by the Plan as it exists
on this date.

         2. Grant as Non-Qualified Stock Option; Other Options. This option
shall be treated for Federal income tax purposes as a non-qualified stock
option, and the Board of Directors will take appropriate action, if necessary,
to achieve this result. This option is in addition to any other options
hereafter granted to the Optionee by the Company, but a duplicate original of
this instrument shall not affect the grant of another option.

         3. Vesting. The Optionee may exercise this option for the percentage of
Option Shares set opposite the applicable date on or after such date:

                              July 11, 1999 - 100%.

         Notwithstanding the terms of Article 10 of the Plan, this option may be
exercised up to and including the date which is ten (10) years from the date
this option is granted, regardless of whether or not the Optionee has continued
to serve the Company in the capacity of an employee, officer, director,
consultant or otherwise prior to the expiration of this option.

         4. Partial Exercise. Exercise of this option up to the extent vested as
stated above may be made in part at any time and from time to time within the
above limits, except that this option may not be exercised for a fraction of a
share unless such exercise is with respect to the final installment of stock
subject to this option and a fractional share (or cash in lieu thereof) must be
issued to permit the Optionee to exercise completely such final installment. Any
fractional share with respect to which an installment of this option cannot be
exercised because of the


<PAGE>

limitation contained in the proceeding sentence shall remain subject to this
option and shall be available for later purchase by the Optionee in accordance
with the terms hereof.

         5. Payment of Price. The option price is payable in United States
dollars and may be paid in cash or by check, or any combination of the
foregoing, equal in amount to the option price. The Board of Directors, in its
sole discretion, may permit the option price to be paid by delivery of shares of
the Company's Common Stock having an aggregate fair market value (as determined
in accordance with the Plan) equal as of the date of exercise to the option
price. The Board of Directors, in its sole discretion, may permit the option
price to be paid by delivery of the Optionee's personal recourse note bearing
interest payable not less than annually at no less than 100% of the lowest
Applicable Federal Rate, as defined in Section 1274(d) of the Code, or by any
combination of the foregoing equal in amount to the option price.

         6. Method of Exercising Option. Subject to the terms and conditions of
this Agreement, this option may be exercised by written notice to the Company,
at the principal executive office of the Company, or to such transfer agent as
the Company shall designate. Such notice shall state the election to exercise
this option and the number of shares in respect of which it is being exercised
and shall be signed by the person or persons so exercising this option. Such
notice shall be accompanied by payment of the full purchase price of such
shares, or such other documents as is necessary to effect payment of the
exercise price as set forth herein and the Company shall deliver a certificate
or certificates representing such shares as soon as practicable after the notice
shall be received. The certificate or certificates for the shares as to which
this option shall have been so exercised shall be registered in the name of the
person or persons so exercising this option and shall be delivered as provided
above to or upon the written order of the person or persons exercising this
option. In the event this option shall be exercised, pursuant to the terms
hereof, by any person or persons other than the Optionee, such notice shall be
accompanied by appropriate proof of the right of such person or persons to
exercise this option. All shares that shall be purchased upon the exercise of
this option as provided herein shall be fully paid and non-assessable.

         7. No Obligation to Exercise Option. The grant and acceptance of this
option imposes no obligation on the Optionee to exercise it.

                                       2
<PAGE>

         8. No Obligation to Continue Business Relationship. The Company is not
by the Plan or this option obligated to continue to maintain a Business
Relationship with the Optionee, nor is the Optionee required to maintain a
Business Relationship with the Company.

         9. No Rights as Stockholder until Exercise. The Optionee shall have no
rights as a stockholder with respect to shares subject to this Agreement until a
stock certificate therefor has been issued to the Optionee and is fully paid
for. Except as is expressly provided in the Plan with respect to certain changes
in the capitalization of the Company, no adjustment shall be made for dividends
or similar rights for which the record date is prior to the date such stock
certificate is issued.

         10. Capital Changes and Business Successions. The Plan contains
provisions covering the treatment of options in a number of contingencies such
as stock splits and mergers. Provisions in the Plan for adjustment with respect
to stock subject to options and the related provisions with respect to
successors to the business of the Company are hereby made applicable hereunder
and are incorporated herein by reference.

         11. Governing Law. This Agreement shall be governed by and interpreted
in accordance with the internal laws of the State of Delaware without giving
effect to its conflicts of laws principles.


         IN WITNESS WHEREOF the Company and the Optionee have caused this
instrument to be executed, and the Optionee whose signature appears below
acknowledges receipt of a copy of the Plan and acceptance of an original copy of
this Agreement.

                           VION PHARMACEUTICALS, INC.


                                      By:/s/ Alan Kessman
                                         ---------------------------
                                      Name: Alan Kessman
                                    ` Title: Chief Executive Officer


                                      OPTIONEE:


                                      /s/ Alan Kessman for CBK Associates, LLC
                                      ----------------------------------------
                                      Name: Alan Kessman for CBK Associates, LLC


                                       3

                                                                    EXHIBIT 10.5



                           VION PHARMACEUTICALS, INC.

                      NON-QUALIFIED STOCK OPTION AGREEMENT
                      ------------------------------------
                  UNDER THE SENIOR EXECUTIVE STOCK OPTION PLAN
                  --------------------------------------------


         Vion Pharmaceuticals, Inc., a Delaware corporation (the "Company"),
hereby grants as of the 11th day of January 1999, to Alan Kessman (the
"Optionee"), a non-qualified stock option to purchase 40,000 shares (the "Option
Shares") of its Common Stock, $0.01 par value (the "Common Stock"), at the price
of $5.25 per share, on the following terms and conditions:

         1. Grant Under Senior Executive Stock Option Plan. This option is
granted pursuant to and is governed by the Company's Senior Executive Stock
Option Plan (the "Plan"), which is attached hereto as Exhibit A and incorporated
herein by reference. Unless the context otherwise requires, terms used herein
shall have the same meaning as in the Plan. Determinations made in connection
with this option pursuant to the Plan shall be governed by the Plan as it exists
on this date.

         2. Grant as Non-Qualified Stock Option; Other Options. This option
shall be treated for Federal income tax purposes as a non-qualified stock
option, and the Board of Directors will take appropriate action, if necessary,
to achieve this result. This option is in addition to any other options
hereafter granted to the Optionee by the Company, but a duplicate original of
this instrument shall not affect the grant of another option.

         3. Vesting. The Optionee may exercise this option for the percentage of
Option Shares set opposite the applicable date on or after such date:

                              July 11, 1999 - 100%.

         Notwithstanding the terms of Article 10 of the Plan, this option may be
exercised up to and including the date which is ten (10) years from the date
this option is granted, regardless of whether or not the Optionee has continued
to serve the Company in the capacity of an employee, officer, director,
consultant or otherwise prior to the expiration of this option.

         4. Partial Exercise. Exercise of this option up to the extent vested as
stated above may be made in part at any time and from time to time within the
above limits, except that this option may not be exercised for a fraction of a
share unless such exercise is with respect to the final installment of stock
subject to this option and a fractional share (or cash in lieu thereof) must be
issued to permit the Optionee to exercise completely such final installment. Any
fractional share with respect to which an installment of this option cannot be
exercised because of the

<PAGE>

limitation contained in the proceeding sentence shall remain subject to this
option and shall be available for later purchase by the Optionee in accordance
with the terms hereof.

         5. Payment of Price. The option price is payable in United States
dollars and may be paid in cash or by check, or any combination of the
foregoing, equal in amount to the option price. The Board of Directors, in its
sole discretion, may permit the option price to be paid by delivery of shares of
the Company's Common Stock having an aggregate fair market value (as determined
in accordance with the Plan) equal as of the date of exercise to the option
price. The Board of Directors, in its sole discretion, may permit the option
price to be paid by delivery of the Optionee's personal recourse note bearing
interest payable not less than annually at no less than 100% of the lowest
Applicable Federal Rate, as defined in Section 1274(d) of the Code, or by any
combination of the foregoing equal in amount to the option price.

         6. Method of Exercising Option. Subject to the terms and conditions of
this Agreement, this option may be exercised by written notice to the Company,
at the principal executive office of the Company, or to such transfer agent as
the Company shall designate. Such notice shall state the election to exercise
this option and the number of shares in respect of which it is being exercised
and shall be signed by the person or persons so exercising this option. Such
notice shall be accompanied by payment of the full purchase price of such
shares, or such other documents as is necessary to effect payment of the
exercise price as set forth herein and the Company shall deliver a certificate
or certificates representing such shares as soon as practicable after the notice
shall be received. The certificate or certificates for the shares as to which
this option shall have been so exercised shall be registered in the name of the
person or persons so exercising this option and shall be delivered as provided
above to or upon the written order of the person or persons exercising this
option. In the event this option shall be exercised, pursuant to the terms
hereof, by any person or persons other than the Optionee, such notice shall be
accompanied by appropriate proof of the right of such person or persons to
exercise this option. All shares that shall be purchased upon the exercise of
this option as provided herein shall be fully paid and non-assessable.

         7. No Obligation to Exercise Option. The grant and acceptance of this
option imposes no obligation on the Optionee to exercise it.

                                        2
<PAGE>

         8. No Obligation to Continue Business Relationship. The Company is not
by the Plan or this option obligated to continue to maintain a Business
Relationship with the Optionee, nor is the Optionee required to maintain a
Business Relationship with the Company.

         9. No Rights as Stockholder until Exercise. The Optionee shall have no
rights as a stockholder with respect to shares subject to this Agreement until a
stock certificate therefor has been issued to the Optionee and is fully paid
for. Except as is expressly provided in the Plan with respect to certain changes
in the capitalization of the Company, no adjustment shall be made for dividends
or similar rights for which the record date is prior to the date such stock
certificate is issued.

         10. Capital Changes and Business Successions. The Plan contains
provisions covering the treatment of options in a number of contingencies such
as stock splits and mergers. Provisions in the Plan for adjustment with respect
to stock subject to options and the related provisions with respect to
successors to the business of the Company are hereby made applicable hereunder
and are incorporated herein by reference.

         11. Governing Law. This Agreement shall be governed by and interpreted
in accordance with the internal laws of the State of Delaware without giving
effect to its conflicts of laws principles.


         IN WITNESS WHEREOF the Company and the Optionee have caused this
instrument to be executed, and the Optionee whose signature appears below
acknowledges receipt of a copy of the Plan and acceptance of an original copy of
this Agreement.

                           VION PHARMACEUTICALS, INC.


                                            By: /s/ Alan Kessman
                                                --------------------------
                                            Name: Alan Kessman
                                    `       Title: Chief Executive Officer


                                            OPTIONEE:


                                            /s/ Alan Kessman
                                            ---------------------------
                                            Name: Alan Kessman

                                       3


                                                                   Exhibit 23.1


                         Consent of Independent Auditors

         We consent to the reference to our firm under the caption "Experts" in
Amendment No. 1 to the Registration Statement (Form S-3 No. 333-79939) and
related Prospectus of Vion Pharmaceuticals, Inc. for the registration of
1,873,915 shares of its common stock and to the incorporation by reference
therein of our report dated February 12, 1999 with respect to the financial
statements of Vion Pharmaceuticals, Inc. included in its Annual Report (Form
10-KSB/A Amendment No. 1) for the year ended December 31, 1998 filed with the
Securities and Exchange Commission.


                                                     /s/  Ernst & Young LLP

Stamford, Connecticut
July 16, 1999






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