Exhibit 10.38

| | May 30, 2003
| | ------------

Daniel
R. Hudspeth
1695 Eldorado Circle
Superior, CO 80027

Dear
Dan:

This
letter sets forth the substance of the separation agreement (the "Agreement") which Allos Therapeutics, Inc. (the "Company") is offering to you to aid in your employment
transition.

1.SEPARATION.Your last day of work and employment with the
Company shall be May 30, 2003 (the "Separation Date").

2.ACCRUED SALARY AND PAID TIME OFF.On the Separation Date, the
Company will pay you all accrued salary, and all accrued and unused vacation earned through the Separation Date, subject to standard payroll deductions and withholdings. You are entitled to these
payments regardless of whether or not you sign this Agreement.

3.SEVERANCE PAYMENTS.Pursuant to Paragraph 10(d) of
that certain Employment Agreement dated April 23, 2002 between you and the Company, should you sign and not revoke this Agreement, the Company will pay you, as severance, the equivalent of six
(6) months of your current Base Salary in effect as of the Separation Date, subject to standard payroll deductions and withholdings ("Severance Payments"). The Severance Payments will be made
on the Company's regularly scheduled payroll dates.

4.INSURANCE CONTINUATION BENEFIT.Pursuant to your Employment
Agreement, the Company will pay premiums under the Consolidated Omnibus Budget Reconciliation Act ("COBRA") to continue your current enrollment in medical, dental and vision insurance for six
(6) months following your Separation Date,provided, however,that (a) the Company shall pay premiums for your eligible dependents only
for coverage for which those eligible dependents were enrolled immediately prior to the Separation Date; and (b) the Company's obligation to pay such premiums shall cease immediately upon your
eligibility for comparable group health insurance provided by a new employer.

5.OUTPLACEMENT ASSISTANCE.The Company will pay the fee
associated with your participation in an outplacement assistance program as determined by the Company under your Employment Agreement.

6.STOCK OPTIONS.Pursuant to your stock option grant(s) and the
plan(s) governing those grant(s) (the "Plan"), vesting of your stock options will cease on your Separation Date. Any right to exercise any vested shares or of the Company to repurchase any previously
exercised, but unvested shares, if any, will be as set forth in your stock option grant notice, the stock option agreement, and the Plan.

7.OTHER COMPENSATION OR BENEFITS.You acknowledge that, except
as expressly provided in this Agreement, you will not receive nor are you entitled to any additional compensation, severance or benefits (other than benefit amounts due or vested or reimbursable under
the Company's benefits plans) after the Separation Date.

8.EXPENSE REIMBURSEMENTS.You agree that, within five
(5) business days of the Separation Date, you will submit your final documented expense reimbursement statement reflecting all business expenses you incurred through the Separation Date, if
any, for which you seek reimbursement. The Company will reimburse you for these expenses pursuant to its regular business practice.

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9.RETURN OF COMPANY PROPERTY.Within five (5) business
days of the Separation Date, you agree to return to the Company all Company documents (and all copies thereof) and other Company property which you have had in your possession at any time, including,
but not limited to, Company
files, notes, drawings, records, business plans and forecasts, financial information, specifications, computer-recorded information, tangible property (including, but not limited to, computers),
credit cards, entry cards, identification badges and keys; and, any materials of any kind which contain or embody any proprietary or confidential information of the Company (and all reproductions
thereof).

10.PROPRIETARY INFORMATION OBLIGATIONS.You acknowledge your
continuing obligations under your Allos Confidentiality/Non-Solicitation/Non-Compete Agreement not to use or disclose any confidential or proprietary information of the Company
without prior written authorization from a duly authorized representative of the Company. A copy of your Allos Proprietary Information, Inventions, Non-Competition and
Non-Solicitation Agreement is attached hereto asExhibit A.

11.CONFIDENTIALITY.The provisions of this Agreement shall be
held in strictest confidence by you and the Company and shall not be publicized or disclosed in any manner whatsoever; provided, however, that: (a) you may disclose this Agreement to your
immediate family; (b) the parties may disclose this Agreement in confidence to their respective attorneys, accountants, auditors, tax preparers, and financial advisors; (c) the Company
may disclose this Agreement as necessary to fulfill standard or legally required corporate reporting or disclosure requirements; and (d) the parties may disclose this Agreement insofar as such
disclosure may be necessary to enforce its terms or as otherwise required by law.

12.NON-DISPARAGEMENT.Both you and the Company
agree not to disparage the other party, and the other party's officers, directors, employees, shareholders and agents, in any manner likely to be harmful to them or their business, business reputation
or personal reputation; provided that both you and the Company shall respond accurately and fully to any question, inquiry or request for information when required by legal process.

13.RELEASE OF CLAIMS.In consideration for the severance
benefits you are receiving under the Agreement, you hereby release the Company and its officers, directors, agents, attorneys, employees, shareholders, parents, subsidiaries, and affiliates from any
and all claims, liabilities, demands, causes of action, attorneys' fees, damages, or obligations of every kind and nature, whether they are now known or unknown, arising at any time prior to the date
you sign this Release. This general release includes, but is not limited to: all federal and state statutory and common law claims, claims related to your employment or the termination of your
employment or related to breach of contract, tort, wrongful termination, discrimination, wages or benefits, or claims for any form of equity or compensation. Notwithstanding the release in the
preceding sentence, you are not releasing any right of indemnification you may have for any liabilities arising from your actions within the course and scope of your employment with the Company.

14.ADEA WAIVER AND RELEASE.You acknowledge that you are
knowingly and voluntarily waiving and releasing any rights you may have under the ADEA. You also acknowledge that the consideration given for the waiver and release in the preceding paragraph hereof
is in addition to anything of value to which you were already entitled. You further acknowledge that you have been advised by this writing, as required by the ADEA, that: (a) your waiver and
release do not apply to any rights or claims that may arise after the execution date of this Agreement; (b) you have been advised hereby that you have the right to consult with an attorney
prior to executing this Agreement; (c) you have twenty-one (21) days to consider this Agreement (although you may choose to voluntarily execute this Agreement earlier);
(d) you have seven (7) days following the execution of this Agreement by the parties to revoke the Agreement; and (e) this Agreement will not be effective until the date upon

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which
the revocation period has expired, which will be the eighth day after this Agreement is executed by you, provided that the Company has also executed this Agreement by that date ("Effective
Date").

15.MISCELLANEOUS.This Agreement, including Exhibit A,
constitutes the complete, final and exclusive embodiment of the entire agreement between you and the Company with regard to this
subject matter. It is entered into without reliance on any promise or representation, written or oral, other than those expressly contained herein, and it supersedes any other such promises,
warranties or representations. This Agreement may not be modified or amended except in a writing signed by both you and a duly authorized officer of the Company. This Agreement shall bind the heirs,
personal representatives, successors and assigns of both you and the Company, and inure to the benefit of both you and the Company, their heirs, successors and assigns. If any provision of this
Agreement is determined to be invalid or unenforceable, in whole or in part, this determination will not affect any other provision of this Agreement and the provision in question shall be modified by
the court so as to be rendered enforceable. This Agreement shall be deemed to have been entered into and shall be construed and enforced in accordance with the laws of the State of Colorado as applied
to contracts made and to be performed entirely within Colorado.

16.EFFECTIVE DATE.The "Effective Date" of this Agreement shall
be the eighth day after you sign this Agreement, provided the Company also signs this Agreement.

17.EXPIRATION.If you wish to accept the offer set forth in
this Agreement you must sign and return this Agreement to the Company on or before the 22nd day after the Separation Date.

If
this Agreement is acceptable to you, please sign below and return the original to me. I wish you every success in your future endeavors.

| | Sincerely, ALLOS THERAPEUTICS, INC.
| | -----------------------------------
| | /s/BARBARA E. BARING               

Exhibit APROPRIETARY INFORMATION, INVENTIONS, NON-COMPETITION, AND NON-SOLICITATION AGREEMENT

| | AGREED:                                
| | ---------------------------------------
| | /s/DANIEL R. HUDSPETHDaniel R. Hudspeth

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EXHIBIT A

PROPRIETARY INFORMATION, INVENTIONS,
NON-COMPETITION, AND NON-SOLICITATION AGREEMENT

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EXHIBIT A TO EMPLOYMENT AGREEMENT

MANAGER, EXECUTIVE PERSONNEL OR ASSISTANTS'
PROPRIETARY INFORMATION, INVENTIONS,
NON-COMPETITION, AND NON-SOLICITATION AGREEMENTCOLORADO

This
Manager, Executive Personnel or Assistants' Proprietary Information, Inventions, Non-competition, and Non-solicitation Agreement ("Agreement") is made in
consideration for my employment or continued employment byAllos Therapeutics, Inc.or its subsidiaries or affiliates (the "Company"), and the
compensation now and hereafter paid to me. I hereby agree as follows:

1.     NONDISCLOSURE.



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2.     ASSIGNMENT OF INVENTIONS.



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3.NO CONFLICTS OR SOLICITATION.I acknowledge that during my
employment I will have access to and knowledge of Proprietary Information. I also acknowledge that during my employment with the Company, I have held and/or will hold a management or executive
position or am, or will be, an assistant to a manager or executive. To protect the Company's Proprietary Information, I agree that during the period of my employment by the Company I will not, without
the Company's express written consent, engage in any other employment or business activity directly related to the business in which the Company is now involved or becomes involved, nor will I engage
in any other activities which conflict with my obligations to the Company. To protect the Company's

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Proprietary
Information, and because of the position in the Company that I hold, I agree that during my employment with the Company whether full-time or part-time and for a
period of one year after my last day of employment with the Company, I will not (a) directly or indirectly solicit or induce any employee of the Company to terminate or negatively alter his or
her relationship with the Company or (b) directly or indirectly solicit the business of any client or customer of the Company (other than on behalf of the Company) or (c) directly or
indirectly induce any client, customer, supplier, vendor, consultant or independent contractor of the Company to terminate or negatively alter his, her or its relationship with the Company. I agree
that the geographic scope of the non-solicitation should include the "Restricted Territory" (as defined below).

4.If any restriction set forth in this Section is found by any court of competent jurisdiction to be unenforceable because
it extends for too long a period of time or over too great a range of activities or in too broad a geographic area, it shall be interpreted to extend only over the maximum period of time, range of
activities or geographic area as to which it may be enforceable.

5.COVENANT NOT TO COMPETE.I acknowledge that during my
employment I will have access to and knowledge of Proprietary Information. I also acknowledge that during my employment with the Company, I have held and/or will hold a management or executive
position or am, or will be, an assistant to a manager or executive. To protect the Company's Proprietary Information, and because of the position in the Company that I may hold, I agree that during my
employment with the Company whether full-time or part-time and for a period of one year after my last day of employment with the Company, I will not directly or indirectly
engage in (whether as an employee, consultant, proprietor, partner, director or otherwise), or have any ownership interest in, or participate in the financing, operation, management or control of, any
person, firm, corporation or business that engages in a "Restricted Business" in a "Restricted Territory" (as defined below). It is
agreed that ownership of (i) no more than one percent (1%) of the outstanding voting stock of a publicly traded corporation, or (ii) any stock I presently own shall not constitute a
violation of this provision.



6.Records.I agree to keep and maintain adequate and current
records (in the form of notes, sketches, drawings and in any other form that may be required by the Company) of all Proprietary Information developed by me and all Inventions made by me during the
period of my employment at the Company, which records shall be available to and remain the sole property of the Company at all times.

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7.NO CONFLICTING OBLIGATION.I represent that my performance of
all the terms of this Agreement and as an employee of the Company does not and will not breach any agreement to keep in confidence information acquired by me in confidence or in trust prior to my
employment by the Company. I have not entered into, and I agree I will not enter into, any agreement either written or oral in conflict herewith.

8.RETURN OF COMPANY MATERIALS.When I leave the employ of the
Company, I will deliver to the Company any and all drawings, notes, memoranda, specifications, devices, formulas, and documents, together with all copies thereof, and any other material containing or
disclosing any Company Inventions, Third Party Information or Proprietary Information of the Company, unless agreed to by the Company. I further agree that any property situated on the Company's
premises and owned by the Company, including disks and other storage media, filing cabinets or other work areas, is subject to inspection by Company personnel at any time with or without notice.

9.LEGAL AND EQUITABLE REMEDIES.Because my services are
personal and unique and because I may have access to and become acquainted with the Proprietary Information of the Company, the Company shall have the right to enforce this Agreement and any of its
provisions by injunction, specific performance or other equitable relief, without bond and without prejudice to any other rights and remedies that the Company may have for a breach of this Agreement.

10.NOTICES.Any notices required or permitted hereunder shall
be given to the appropriate party at the address specified below or at such other address as the party shall specify in writing. Such notice shall be deemed given upon personal delivery to the
appropriate address or if sent by certified or registered mail, three days after the date of mailing.

11.NOTIFICATION OF NEW EMPLOYER.In the event that I leave the
employ of the Company, I hereby consent to the notification of my new employer of my rights and obligations under this Agreement.

12.GENERAL PROVISIONS.



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I HAVE READ THIS AGREEMENT CAREFULLY AND UNDERSTAND ITS TERMS. I HAVE COMPLETELY FILLED OUT EXHIBIT A TO THIS AGREEMENT.

Dated:
7/25/02

|/s/DANIEL R. HUDSPETHDaniel R. Hudspeth                                 | 
|----------------------------------------------------------------------- | 
|ACCEPTED AND AGREED TO:                                                 | 
|/s/MICHAEL E. HARTMichael E. Hart
President and Chief Executive Officer | 

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