Use these links to rapidly review the documentTABLE OF CONTENTS Allos Therapeutics, Inc. Index to Financial Statements



UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-K

|ý                                                                                                      | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.    
|------------------------------------------------------------------------------------------------------ | -----------------------------------------------------------------------------------------
|For the fiscal year ended December 31, 2007.                                                          
|o                                                                                                      | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
|For the transition period
from                                  to      
                            .

Commission File Number 00029815

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Allos Therapeutics, Inc.(Exact name of Registrant as specified in its charter)

|Delaware(State or other jurisdiction of
incorporation or organization) |  | 54-1655029(I.R.S. Employer
Identification No.)
|---------------------------------------------------------------------- |  | ----------------------------------------------

11080 CirclePoint Road, Suite 200
Westminster, Colorado 80020
(303) 426-6262(Address, including zip code, and telephone number, including area code, of principal executive offices)

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

|Common Stock $.001 Par Value(Title of class) |  | NASDAQ Stock Market LLC
(NASDAQ Global Market)(Name of each exchange on which registered)
|-------------------------------------------- |  | -----------------------------------------------------------------------------------------

Securities
registered pursuant to Section 12(g) of the Act:None

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

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

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

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o

Accelerated filer ý

Non-accelerated filer o (Do not check if a smaller
reporting company)

Smaller reporting company o


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

The aggregate market value of common stock held by nonaffiliates of the registrant (based upon the closing sale price of such shares on the NASDAQ Global Market on
June 29, 2007) was $149,964,368. Shares of the registrant's common stock held by each current executive officer and director and by each stockholder who is known by the registrant to own 10% or
more of the outstanding common stock have been excluded from this computation in that such persons may be deemed to be affiliates of the registrant. Share ownership information of certain persons
known by the registrant to own greater than 10% of the outstanding common stock for purposes of the preceding calculation is based solely on information on Schedules 13D and 13G, if any, filed
with the Commission. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

As
of February 20, 2008, there were 67,837,907 shares of the registrant's common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant's definitive Proxy Statement for the 2008 Annual Meeting of Stockholders to be filed within 120 days after the end of the
Registrant's fiscal year ended December 31, 2007 are incorporated by reference into Part III of this Annual Report on Form 10-K to the extent stated therein.



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TABLE OF CONTENTS



|         |  |                                                                                                              |  | Page
|-------- |  | ------------------------------------------------------------------------------------------------------------ |  | ----
|PART I   |  |                                                                                                             
|ITEM 1.  |  | BUSINESS                                                                                                     |  | 3   
|ITEM 1A. |  | RISK FACTORS                                                                                                 |  | 17  
|ITEM 1B. |  | UNRESOLVED STAFF COMMENTS                                                                                    |  | 34  
|ITEM 2.  |  | PROPERTIES                                                                                                   |  | 34  
|ITEM 3.  |  | LEGAL PROCEEDINGS                                                                                            |  | 35  
|ITEM 4.  |  | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                                          |  | 35  
|PART II  |  |                                                                                                             
|ITEM 5.  |  | MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |  | 36  
|ITEM 6.  |  | SELECTED FINANCIAL DATA                                                                                      |  | 38  
|ITEM 7.  |  | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS                        |  | 39  
|ITEM 7A. |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                                   |  | 52  
|ITEM 8.  |  | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                                                  |  | 52  
|ITEM 9.  |  | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE                         |  | 52  
|ITEM 9A. |  | CONTROLS AND PROCEDURES                                                                                      |  | 53  
|ITEM 9B. |  | OTHER INFORMATION                                                                                            |  | 54  
|PART III |  |                                                                                                             
|ITEM 10. |  | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE                                                       |  | 55  
|ITEM 11. |  | EXECUTIVE COMPENSATION                                                                                       |  | 55  
|ITEM 12. |  | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS               |  | 55  
|ITEM 13. |  | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE                                    |  | 56  
|ITEM 14. |  | PRINCIPAL ACCOUNTING FEES AND SERVICES                                                                       |  | 56  
|PART IV  |  |                                                                                                             
|ITEM 15. |  | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES                                                                   |  | 57  
|         |  | SIGNATURES                                                                                                   |  | 61  

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PART I

Allos Therapeutics, Inc., the Allos Therapeutics, Inc. logo and all other Allos names are trademarks of Allos
Therapeutics, Inc. in the United States and in other selected countries. All other brand names or trademarks appearing in this report are the property of their respective holders. Unless the
context requires otherwise, references in this report to "Allos," the "Company," "we," "us," and "our" refer to Allos Therapeutics, Inc.

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. These forward-looking statements include, but are not limited to, statements concerning our projected timelines for the completion of enrollment and
announcement of results from our ongoing clinical trials, including our Phase 2 PROPEL trial; the potential for the results of our Phase 2 PROPEL trial to support marketing approval of
PDX; other statements regarding our future product development and regulatory strategies, including our intent to develop or seek regulatory approval for our product candidates in specific
indications; the ability of our third-party manufacturing parties to support our requirements for drug supply; any statements regarding our future financial performance, results of operations or
sufficiency of capital resources to fund our operating requirements; and any other statements which are other than statements of historical fact. In some cases, these statements may be identified by
terminology such as "may," "will," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential" or "continue," or the negative of such terms and other comparable
terminology. Although we believe that the expectations reflected in the forward-looking statements contained herein are reasonable, we cannot guarantee future results, levels of activity, performance
or achievements. These statements involve known and unknown risks and uncertainties that may cause our, or our industry's results, levels of activity, performance or achievements to be materially
different from those expressed or implied by the forward-looking statements. Factors that may cause or contribute to such differences include, among other things, those discussed under the captions
"Business," "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations." All forward-looking statements included in this report are based on information
available to us as of the date hereof and we undertake no obligation to revise any forward-looking statements in order to reflect any subsequent events or circumstances. Forward-looking statements not
specifically described above also may be found in these and other sections of this report.

ITEM 1.    BUSINESS

Overview

We are a biopharmaceutical company focused on developing and commercializing innovative small molecule drugs for the treatment of cancer. We strive to develop
proprietary products that have the potential to improve the standard of care in cancer therapy. Our focus is on product opportunities for oncology that leverage our internal clinical development and
regulatory expertise and address important markets with unmet medical need. We may also seek to grow our existing portfolio of product candidates through product acquisition and
in-licensing efforts.

Our
lead product candidate, PDX (pralatrexate), is a novel antifolate currently under evaluation in a pivotal Phase 2 trial in patients with relapsed or refractory peripheral
T-cell lymphoma. This trial, which is called PROPEL, is being conducted under an agreement reached with the U.S. Food and Drug Administration, or FDA, under its special protocol assessment
process, or SPA process, which provides an agreement that the study design, including trial size, clinical endpoints and/or data analyses are acceptable to the FDA. We are also investigating PDX in
patients with non-small cell lung cancer and a range of lymphoma sub-types. Our other product candidate is RH1, a targeted chemotherapeutic agent currently under evaluation in
a Phase 1 trial in patients with advanced solid tumors or non-Hodgkin's Lymphoma.

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Our Strategy

Our goal is to build a profitable company by generating income from products we develop and commercialize, either alone or with one or more potential strategic
partners. The key elements of our strategy are to:



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Our Product Candidates

The following table summarizes the target indications and clinical development status of our product candidates:

GRAPHIC

PDX (pralatrexate)

PDX is a novel, small molecule chemotherapeutic agent that inhibits dihydrofolate reductase, or DHFR, a folic acid (folate)-dependent enzyme involved in the
building of nucleic acid, or DNA, and other processes. PDX was rationally designed for efficient transport into tumor cells via the reduced folate carrier, or RFC-1, and effective
intracellular drug retention. We believe these biochemical features, together with preclinical and clinical data in a variety of tumors, suggest that PDX may have a favorable safety and efficacy
profile relative to methotrexate and other related DHFR inhibitors. We believe PDX has the potential to be delivered as a single agent or in combination therapy regimens.

Scientific Rationale

The antimetabolites are a group of low-molecular weight compounds that exert their effect by virtue of their structural or functional similarity to
naturally occurring molecules involved in DNA synthesis. Because the cell mistakes them for a normal metabolite, they either inhibit critical enzymes involved in DNA synthesis or become incorporated
into the nucleic acid, producing incorrect codes. Both mechanisms result in inhibition of DNA synthesis and ultimately, cell death. Because of their primary effect on DNA synthesis, the
antimetabolites are most effective against actively dividing cells and are largely cell-cycle phase specific. There are three classes of antimetabolites; purine analogs, pyrimidine analogs
and folic acid analogs, also termed antifolates. PDX is a folic acid analog.

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The
selectivity of antifolates for tumor cells involves their conversion to a polyglutamated form by the enzyme folypolyglutamyl synthetase, or FPGS. Polyglutamation is a
time- and concentration-dependent process that occurs in tumor cells, and to a lesser extent, normal tissue. The selective activity of the folic acid analogs in malignant cells versus
normal cells likely is due to the relative difference in polyglutamate formation. Polyglutamated metabolites have prolonged intracellular half-life, increased duration of drug action and
are potent inhibitors of several folate-dependent enzymes, including DHFR.

It
is thought that the resistance of malignant cells to the effects of the folic acid analogs may, in part, be due to impaired polyglutamation. The improved antitumor effects of PDX in
comparison to methotrexate, as observed in preclinical studies, is likely due to the more effective uptake and transport of PDX into the cell followed by the greater accumulation of PDX and its
metabolites within the tumor cell through the formation of the polyglutamated derivatives.

PDX in the treatment of peripheral T-cell lymphoma

Peripheral T-cell lymphomas, or PTCLs, are a biologically diverse and uncommon group of blood cancers that account for approximately 10% to 15% of all
cases of non-Hodgkin's lymphoma in the United States. PTCL patients are often treated with multi-agent chemotherapy regimens, for which response rates range from 50% to 70%. However, a
significant number of these patients relapse or become refractory after treatment with first-line therapy. A study that included patients with aggressive PTCL found that the average
five-year survival rate for those patients was approximately 25%. There are currently no pharmaceutical agents approved for use in the treatment of either first-line or
relapsed or refractory PTCL.

In
August 2006, we initiated PROPEL, an international, multi-center, open-label, single-arm Phase 2 clinical trial of PDX in patients with relapsed or
refractory PTCL, that we believe, if positive, will be sufficient to support the filing of a new drug application, or NDA, to seek marketing approval for PDX in this indication. In July 2006, we
reached agreement with the FDA under its special protocol assessment, or SPA, process on the design of this Phase 2 trial. The SPA process allows for FDA evaluation of a clinical trial protocol
intended to form the primary basis of an efficacy claim in support of an NDA, and provides an agreement that the study design, including trial size, clinical endpoints and/or data analyses are
acceptable to the FDA. However, the PROPEL trial protocol does not specify the response rate required to support FDA approval and the response rate will need to be adequate to support approval. The
PROPEL trial will seek to enroll a minimum of 100 evaluable patients at up to 35 centers across the United States, Canada and Europe. The primary endpoint of the study is objective response rate
(complete and partial response). Secondary endpoints
include duration of response, progression-free survival and overall survival. Patients receive 30 mg/m2 of PDX once every week for six weeks followed by one week of rest per
cycle of treatment. The treatment regimen also includes vitamin B12 and folic acid supplementation.

In
accordance with the PROPEL trial protocol, we conducted three pre-planned interim analyses of safety data and one pre-planned interim analysis of response
data. In January, September and December 2007, we announced that an independent data monitoring committee, or DMC, completed interim analyses of safety data from the first 10, 35 and 65 evaluable
patients who completed at least one cycle of treatment with PDX, respectively, and recommended that the trial continue per the protocol at each analysis. No major safety concerns were identified by
the DMC. In September 2007, we announced that the results of the interim analysis of patient response data exceeded the pre-specified threshold for continuation of the trial, which
required a minimum of four responses (complete or partial) out of the first 35 evaluable patients, as determined by independent oncology review. We currently expect to complete patient enrollment in
the PROPEL study in the second quarter of 2008 and report top line results of the trial by year end, although the actual timing may vary based on a number of factors, including patient enrollment
rates.

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Our
decision to begin PROPEL was based upon interim data from an ongoing Phase 1/2 single-center, open-label, single-center study of PDX in patients with relapsed or
refractory non-Hodgkin's lymphoma, or NHL, and Hodgkin's disease. Interim data from this trial, which was most recently presented at the AACR-NCI-EORTC conference
in October 2007, demonstrated a high overall response rate in patients with various subtypes of T-cell lymphoma. Notably, responses were observed in 14 of 26 (54%) evaluable patients with
T-cell lymphoma, including nine complete responses and five partial responses. The addition of vitamins to the treatment regimen appeared to mitigate the occurrence of advanced grade
stomatitis, or mouth ulcers, a toxicity commonly associated with PDX.

In
July 2006, the FDA awarded orphan drug status to PDX for the treatment of patients with T-cell lymphoma. Under the Orphan Drug Act, if we are the first company to receive
FDA approval for PDX for this orphan drug indication, we will obtain seven years of marketing exclusivity during which the FDA may not approve another company's application for the same drug for the
same orphan indication. In October 2006, the FDA granted fast track designation to PDX for the treatment of patients with T-cell lymphoma. The fast track program is designed to facilitate
the development and expedite the review of new drugs that are intended to treat serious or life-threatening conditions and that demonstrate the potential to address unmet medical needs. In
April 2007, the Commission of the European Communities, with a favorable opinion of the Committee for Orphan Medicinal Products of the European Medicines Agency, or EMEA, granted orphan medicinal
product designation to PDX for the treatment of patients with PTCL. The EMEA orphan medicinal product designation, or OMPD, is intended to promote the development of drugs that may provide significant
benefit to patients suffering from rare diseases identified as life-threatening or very serious. Under EMEA guidelines, OMPD provides ten years of
potential market exclusivity once the product candidate is approved for marketing for the designated indication in the European Union.

PDX in the treatment of non-Hodgkin's Lymphoma and Hodgkin's disease

Approximately 63,000 patients were expected to be diagnosed with NHL in the United States in 2007 and approximately 85% of NHL patients represent patients with
B-cell lymphoma. The incidence of NHL has increased significantly since the 1970's and is currently growing at approximately 1% to 2% per year. Patients with indolent or
low-grade NHL may have survival rates as long as 10 years, yet the disease is frequently incurable. Aggressive lymphomas generally result in shorter median survival times although
patients with these malignancies can be cured in 30% to 60% of cases. Standard chemotherapy for NHL involves an initial combination of cyclophosphamide, doxorubicin, vincristine and prednisone, also
known as CHOP. The addition of rituximab in one study increased response rates to nearly 100%. However, a significant number of patients treated with CHOP or rituximab eventually relapse and may be
candidates for salvage chemotherapy, or chemotherapy given after recurrence of a tumor.

As
mentioned above, we are currently evaluating PDX in an ongoing Phase 1/2, open-label, single-center study in patients with relapsed or refractory NHL and Hodgkin's
disease. Interim data from this trial, which was most recently presented at the AACR-NCI-EORTC conference in October 2007, showed that responses were observed in 2 of 20 (10%)
evaluable patients with B-cell lymphoma. Going forward, we plan to use this study to explore alternate dosing and administration schedules in patients with B-cell lymphoma to
further evaluate PDX's potential clinical utility in this setting.

In
May 2007, we initiated patient enrollment in a Phase 1/2a, open-label, multi-center study of PDX and gemcitabine with vitamin B12 and folic acid
supplementation in patients with relapsed or refractory NHL or Hodgkin's disease. In the Phase 1 portion of this study, patients with either relapsed or refractory NHL (diffuse large
B- or T-cell lymphoma, mantle cell lymphoma, transformed large cell lymphomas) or Hodgkin's disease will receive PDX followed the next day by gemcitabine as part of a weekly
schedule for three or four weeks with concurrent vitamin B12 and folic acid supplementation. We plan to enroll up to 54 evaluable patients in the Phase 1 portion of the study with
the objective of

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determining
the maximum tolerated dose, or MTD, safety, tolerability, and pharmacokinetic profile of escalating doses of sequential PDX and gemcitabine. If the Phase I portion of the study is
successful, we plan to enroll up to 30 additional patients with relapsed or refractory PTCL in the Phase 2a portion of the trial at the established MTD to assess preliminary efficacy of PDX and
gemcitabine.

PDX in the treatment of cutaneous T-cell lymphoma

Cutaneous T-cell lymphomas, or CTCL, are comprised of a number of non-Hodgkin's T-cell lymphomas, including mycosis fungoides
and Sezary syndrome, which have their primary manifestations in the skin. According to the Lymphoma Research Foundation, CTCL accounts for approximately 2% to 3% of the estimated 63,000 new cases of
NHL diagnosed each year in the United States.

In
August 2007, we initiated patient enrollment in a Phase 1, open-label, multi-center study of PDX with vitamin B12 and folic acid supplementation in
patients with relapsed or refractory CTCL. In this study, patients with either relapsed or refractory CTCL will receive PDX as part of a weekly schedule for two or three weeks followed by one week of
rest. Patients will receive starting doses of PDX at 30 mg/m2, with dose reduction in subsequent cohorts based on toxicity. We plan to enroll up to 56 evaluable patients in the study
with the objective of determining the optimal dose and safety profile of PDX in this population. We plan to enroll at least 20 of these patients at what we believe to be the optimal dose and schedule.

PDX in the treatment of non-small cell lung cancer

Lung cancer is the most common cause of cancer death in the United States. According to the American Cancer Society, an estimated 213,380 new cases of lung cancer
were expected to be diagnosed in 2007. Non-small cell lung cancer, or NSCLC, is the most common type of lung cancer, accounting for almost 80% of lung cancer cases. More people die of lung
cancer than of breast, prostate and colorectal cancers combined.

Over
the last decade, oncologists have begun treating advanced NSCLC patients more aggressively, typically administering a potent combination of paclitaxel and carboplatin. Other drugs
used in this setting include gemcitabine, vinorelbine, docetaxel and cisplatin. Despite aggressive therapy using gemcitabine and vinorelbine, one study found that the one-year survival
rate for patients with Stage IIIB or IV NSCLC was approximately 40%.

In
January 2008, we initiated patient enrollment in a Phase 2b, randomized, multi-center study comparing PDX and Tarceva® (erlotinib), both with vitamin
B12 and folic acid supplementation, in patients with Stage IIIB/IV NSCLC who are, or have been, cigarette smokers who have failed treatment with at least one prior platinum-based
chemotherapy regimen. The objective of this study is to compare the efficacy of PDX to that of Tarceva in patients with Stage IIIB/IV NSCLC. The primary endpoint of the study is overall
survival. Secondary endpoints include response rate and progression-free survival, both compared to Tarceva, and the safety and tolerability of PDX. The study will seek to enroll
approximately 160 patients in up to 50 investigative sites worldwide. Patients will be randomized 1:1 to either the PDX arm or the Tarceva arm. Patients randomized to the
PDX arm will receive PDX as an intravenous, or IV, push administered on days 1 and 15 of a 4-week/28 day cycle. The initial dose of PDX will be 230 mg/m2, which, based
on defined criteria, may be increased to 270 mg/m2 or reduced in 40 mg/m2 decrements. Patients randomized to the Tarceva arm will receive Tarceva 150 mg/day orally daily
for the 4-week/28 day cycle. Patients in both arms will receive concurrent vitamin therapy of B12 and folic acid.

Our
decision to begin this study was based, in part, upon data from a Phase 2 open-label, single-agent study of PDX in patients with relapsed or refractory
Stage IIIB or IV NSCLC completed in 2001 by Memorial Sloan-Kettering Cancer Center, or MSKCC, one of the institutions from which we licensed PDX. This study demonstrated a response rate of 10%,
a median time to progression of three

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months
and a median survival time of 13.5 months. However, 21% of the patients suffered grade 3 or 4 stomatitis, or mouth ulcers. As a result of subsequent research that suggested
supplementation of PDX with folic acid and vitamin B12 may reduce the incidence of clinically significant stomatitis, in January 2005 we initiated a Phase 1 dose escalation study of
PDX with vitamin B12 and folic acid supplementation in patients with previously treated (Stage IIIB/IV) advanced NSCLC.

In
October 2007, data from this ongoing Phase 1 study were presented at the AACR-NCI-EORTC conference. In the study, a total of 22 patients with relapsed
or refractory NSCLC were treated at doses of 150 to 325 mg/m2 of PDX. The MTD was determined to be 270 mg/m2, which is nearly twice the dose used in the previous
Phase 2 study discussed above in which PDX was administered without vitamin supplementation, and what we believe to be clinically significant radiologic responses were observed. Greater than
50% of patients (13/22) received two or more prior treatment regimens. The MTD determined in this study was used to establish the dosing regimen for our current Phase 2b study in
patients with Stage IIIB/IV NSCLC.

PDX in the treatment of other solid tumor indications

In addition to our ongoing NSCLC studies, we intend to initiate a Phase 2, single-agent study of PDX in another solid tumor indication in the first half of
2008 and additional Phase 1 combination studies with PDX in solid tumor indications by year end.

RH1

RH1 is a small molecule chemotherapeutic agent that we believe is bioactivated by the enzyme DT-diaphorase, or DTD, also known as NAD(P)H quinone
oxidoreductase, or NQ01.
We believe DTD is over-expressed in many tumors, relative to normal tissue, including lung, colon, breast and liver tumors. We believe that because RH1 is bioactivated in the presence of
DTD, it has the potential to provide targeted drug delivery to these tumor types while limiting the amount of toxicity to normal tissue.

In
November 2007, we initiated patient enrollment in a Phase 1, open-label, multi-center dose escalation study of RH1 in patients with advanced solid tumors or NHL. In
this study, patients with either advanced solid tumors or NHL will receive a 3-hour IV infusion of RH1 administered once every 21 days. Patients will receive starting doses of RH1
at 1.5 mg/m2, with dose escalation in subsequent cohorts based on toxicity. We plan to enroll up to 60 evaluable patients in the study with the objective of determining the MTD,
recommended Phase 2 dose and safety profile of RH1 in this population. We plan to enroll three to six patients per cohort. Once we determine what we believe to be the optimal dose and schedule,
we plan to recruit an expanded cohort of up to 24 evaluable patients who have tumor types with a high likelihood of DTD over-expression to explore possible markers of anticancer activity.

EFAPROXYN (efaproxiral) Development Discontinued

In mid-2007, we discontinued the development of EFAPROXYN, our former lead product candidate, after announcing top-line results from
ENRICH, a Phase 3 clinical trial of EFAPROXYN plus whole brain radiation therapy, or WBRT, in women with brain metastases originating from breast cancer. The study failed to achieve its primary
endpoint of demonstrating a statistically significant improvement in overall survival in patients receiving EFAPROXYN plus WBRT, compared to patients receiving WBRT alone. We are currently pursuing
the sale of our rights to EFAPROXYN although we may not receive any material consideration for any sale.

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Manufacturing

The production of PDX and RH1 employ small molecule organic chemistry procedures standard for the pharmaceutical industry. We plan to continue to outsource
manufacturing responsibilities for these and any additional future products, and we intend to select and rely, at least initially, on single source suppliers to manufacture each of our product
candidates. We believe this manufacturing strategy allows us to direct our financial and managerial resources to the development and commercialization of products rather than to the establishment of a
manufacturing infrastructure. We believe it also enables us to minimize fixed costs and capital expenditures, while gaining access to advanced manufacturing process capabilities and expertise.
However, if our third party suppliers become unable or unwilling to
provide sufficient future drug supply or meet regulatory requirements relating to the manufacture of pharmaceutical agents, we would be forced to incur additional expenses to secure alternative third
party manufacturing arrangements and may suffer delays in our ability to conduct clinical trials or commercialize these products.

PDX

We have entered into arrangements with one third party manufacturer to produce PDX bulk drug substance and another third party manufacturer to produce formulated
drug product for use in our clinical development programs. We believe these third party manufacturers have the capability to meet our requirements for all future clinical trial requirements. As we
continue to advance our PDX development program, we will seek to establish appropriate commercial supply arrangements for the production of PDX bulk drug substance and formulated drug product.

RH1

We have entered into arrangements with one third party manufacturer to produce RH1 bulk drug substance and another third party manufacturer to produce formulated
drug product for use in our clinical development programs. We believe these third party manufacturers have the capability to meet our requirements for all planned future clinical trial requirements.

Sales and Marketing

We currently retain exclusive worldwide commercial rights to all of our product candidates for all target indications. If and when we obtain FDA approval, we
intend to commercialize our product candidates in the United States by building a focused sales and marketing organization which may be complemented by co-promotion arrangements with
pharmaceutical or biotechnology partners, where appropriate. Our sales and marketing strategy is to:



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Intellectual Property

We believe that patent protection and trade secret protection are important to our business and that our future success will depend, in part, on our ability to
maintain our technology licenses, maintain trade secret protection, obtain and maintain patents and operate without infringing the proprietary rights of others both in the United States and abroad. We
believe that obtaining identical patents and protection periods for a given technology throughout all markets of the world will be difficult because of differences in patent laws. In addition, the
protection provided by non-United States patents, if any, may be weaker than that provided by United States patents.

In
order to protect the confidentiality of our technology, including trade secrets and know-how and other proprietary technical and business information, we require all of
our employees, consultants, advisors and collaborators to enter into confidentiality agreements that prohibit the use or disclosure of confidential information. The agreements also oblige our
employees, consultants, advisors and collaborators to assign to us ideas, developments, discoveries and inventions made by such persons in connection with their work with us. We cannot be sure that
these agreements will maintain confidentiality, will prevent disclosure, or will protect our proprietary information or intellectual property, or that others will not independently develop
substantially equivalent proprietary information or intellectual property.

The
pharmaceutical industry is highly competitive and patents have been applied for by, and issued to, other parties relating to products or new technologies that may be competitive with
those being developed by us. Therefore, our product candidates may give rise to claims that they infringe the patents or proprietary rights of other parties now or in the future. Furthermore, to the
extent that we, our consultants, or manufacturing and research collaborators, use intellectual property owned by others in work performed for us, disputes may also arise as to the rights to such
intellectual property or in
related or resulting know-how and inventions. An adverse claim could subject us to significant liabilities to such other parties and/or require disputed rights to be licensed from such
other parties. A license required under any such patents or proprietary rights may not be available to us, or may not be available on acceptable terms. If we do not obtain such licenses, we may
encounter delays in product market introductions, or may find that we are prevented from the development, manufacture or sale of products requiring such licenses. In addition, we could incur
substantial costs in defending ourselves in legal proceedings instituted before patent and trademark offices in the United States, the European Union, or other ex-United States
territories, or in a suit brought against us by a private party based on such patents or proprietary rights, or in a suit by us asserting our patent or proprietary rights against another party, even
if the outcome is not adverse to us.

PDX

In December 2002, we entered into a license agreement with Memorial Sloan-Kettering Cancer Center, SRI International and Southern Research Institute, as amended,
under which we obtained exclusive worldwide rights to a portfolio of patents and patent applications related to PDX (pralatrexate) and its uses. The portfolio currently consists of two issued patents
in the U.S., one granted patent application in Europe, and pending patent applications in the U.S., Canada, Europe, Australia, Japan, China, Brazil, Indonesia, India, South Korea, Mexico, Norway, New
Zealand, the Philippines, Singapore, and South Africa. The licensed patents and applications, which expire at various times between July 2017 and May 2025, contain claims covering pralatrexate
substantially free of 10-deazaaminopterin, methods to treat tumors with pralatrexate substantially free of 10-deazaaminopterin, treatment of breast, lung, and prostate cancer
and leukemia with a combination of pralatrexate and a taxane, treatment of T-cell lymphoma with pralatrexate, treatment of lymphoma with a combination of pralatrexate and gemcitabine,
methods of assessing sensitivity of a tumor to pralatrexate, and other methods and compositions.

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Under the terms of the agreement, we paid an up-front license fee of $2.0 million upon execution of the agreement and are also required to make certain additional cash
payments based upon the achievement of certain clinical development or regulatory milestones or the passage of certain time periods. To date, we have made aggregate milestone payments of
$2.0 million based on the passage of time. In the future, we will make aggregate milestone payments of $1.0 million upon the earlier of achievement of a clinical development milestone or
the passage of certain time periods (the "Clinical Milestone"), and up to $10.3 million upon achievement of certain regulatory milestones, including regulatory approval to market PDX in the
United States or Europe. The next scheduled payments toward the Clinical Milestone of $500,000 each are currently due on December 23, 2008 and 2009. The up-front license fee and all
milestone payments under the agreement have been or will be recorded to research and development expense when incurred. Under the terms of the agreement, we are required to fund all development
programs and will have sole responsibility for all commercialization activities. In addition, we will pay the licensors a royalty based on a percentage of net revenues arising from sales of the
product or sublicense revenues arising from sublicensing the product, if and when such sales or sublicenses occur.

RH1

In December 2004, we entered into an agreement with the University of Colorado Health Sciences Center, the University of Salford and Cancer Research Technology
("CRT"), under which we obtained exclusive worldwide rights to certain intellectual property surrounding a proprietary molecule known as RH1. Under the terms of the agreement, we paid an
up-front license fee of $190,500 upon execution of the agreement and are also required to make certain additional cash payments based upon the achievement of certain clinical development,
regulatory and commercialization milestones. We could make aggregate milestone payments of up to $9.2 million upon the achievement of the clinical development, regulatory and commercialization
milestones set forth in the agreement. The up-front license fee and all milestone payments under the agreement, as well as the one-time data option fee discussed below, have
been or will be recorded to research and development expense when incurred. Under the terms of the agreement and related data option agreement, we paid the licensors a one-time data option
fee of $360,000 in 2007, for an exclusive license to the results of a Phase 1 study sponsored by Cancer Research UK, CRT's parent institution. This Phase 1 study was completed in 2007
and, under the terms of the agreement, we have since assumed responsibility for all future development costs and activities and have sole responsibility for all commercialization activities. In
addition, we will pay the licensors a royalty based on a percentage of net revenues arising from sales of the product or sublicense revenues arising from sublicensing the product, if and when such
sales or sublicenses occur.

Competition

The pharmaceutical industry is characterized by rapidly evolving technology and intense competition. Many companies of all sizes, including a number of large
pharmaceutical companies and several biotechnology companies, are developing cancer therapies similar to ours. There are products and technologies currently on the market that will compete directly
with the products that we are developing. In addition, colleges, universities, governmental agencies and other public and private research institutions will continue to conduct research and are
becoming more active in seeking patent protection and licensing arrangements to collect license fees, milestone payments and royalties in exchange for license rights to technologies that they have
developed, some of which may directly compete with our technologies. These companies and institutions also compete with us in recruiting qualified scientific personnel. Many of our competitors have
substantially greater financial, research and development, human and other resources than do we. Furthermore, large pharmaceutical companies

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may
have significantly more experience than we do in preclinical testing, human clinical trials, manufacturing, regulatory approval and commercialization procedures. Our competitors may:



We
expect technology developments in our industry to continue to occur at a rapid pace. Commercial developments by our competitors may render some or all of our potential products
obsolete or non-competitive, which would have a material adverse effect on our business and financial condition.

While
there are currently no FDA-approved agents in the United States indicated for the treatment of PTCL, we are aware of multiple investigational agents that are currently
being studied in clinical trials. There are also several agents and regimens, such as CHOP, that are currently used by physicians without an FDA label in PTCL that could potentially represent
competition for PDX.

Government Regulation

FDA Regulation and Product Approval

The FDA and comparable regulatory agencies in state and local jurisdictions and in foreign countries impose substantial requirements upon the clinical
development, manufacture and marketing of pharmaceutical products. These agencies and other federal, state and local entities regulate research and development activities and the testing, manufacture,
quality control, safety, effectiveness, labeling, storage, record keeping, approval, advertising and promotion of our product candidates.

The
process required by the FDA before our product candidates may be marketed in the United States generally involves the following:



The
testing and approval process requires substantial time, effort and financial resources, and we cannot be certain that any approvals for our product candidates will be granted on a
timely basis, if at all.

Preclinical
tests include laboratory evaluation of the product candidate, its chemistry, formulation and stability, as well as animal studies to assess its potential safety and efficacy.
We then submit the results of the preclinical tests, together with manufacturing information and analytical data, to the FDA as part of an IND application, which must become effective before we may
begin human clinical trials. The IND automatically becomes effective 30 days after the FDA acknowledges that the filing is complete, unless the FDA, within the 30-day time period,
raises concerns or questions about the conduct of the trials as outlined in the IND. In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before clinical trials can begin.
Further, an independent Institutional

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Review
Board at each medical center proposing to conduct the clinical trials must review and approve any clinical study.

Human
clinical trials are typically conducted in three sequential phases, which may overlap:



In
the case of product candidates for severe or life-threatening diseases such as cancer, the initial human testing is often conducted in patients rather than in healthy
volunteers. Since these patients already have the target disease, these studies may provide initial evidence of efficacy
traditionally obtained in Phase 2 trials and thus these trials are frequently referred to as Phase 1b trials. Additionally, when product candidates can do damage to normal cells, it is
not ethical to administer such drugs to healthy patients in a Phase 1 trial.

We
cannot be certain that we will successfully complete Phase 1, Phase 2 or Phase 3 testing of our product candidates within any specific time period, if at all.
Furthermore, the FDA, the Institutional Review Boards or the sponsor may suspend clinical trials at any time on various grounds, including a finding that the subjects or patients are being exposed to
an unacceptable health risk.

The
results of product development, preclinical studies and clinical studies are submitted to the FDA as part of an NDA for approval of the marketing and commercial shipment of the
product candidate. The FDA may deny an NDA if the applicable regulatory criteria are not satisfied or may require additional clinical data. Even if such data is submitted, the FDA may ultimately
decide that the NDA does not satisfy the criteria for approval. Once issued, the FDA may withdraw product approval if compliance with regulatory standards is not maintained or if problems occur after
the product reaches the market. In addition, the FDA may require testing and surveillance programs to monitor the effect of approved products which have been commercialized, and the agency has the
power to prevent or limit further marketing of a product based on the results of these post-marketing programs.

Satisfaction
of the above FDA requirements or similar requirements of state, local and foreign regulatory agencies typically takes several years and the actual time required may vary
substantially, based upon the type, complexity and novelty of the pharmaceutical product candidate. Government regulation may delay or prevent marketing of potential products for a considerable period
of time and impose costly procedures upon our activities.

We
cannot be certain that the FDA or any other regulatory agency will grant approval for any of our product candidates on a timely basis, if at all. Success in preclinical or early stage
clinical trials does not assure success in later stage clinical trials. Data obtained from preclinical and clinical activities is not always conclusive and may be susceptible to varying
interpretations, which could delay, limit or prevent regulatory approval. Even if a product candidate receives regulatory approval, the approval may be significantly limited to specific indications.
Further, even after regulatory approval is obtained, later discovery of previously unknown problems with a product may result in restrictions on the product or even complete withdrawal of the product
from the market. Delays in obtaining, or failures to obtain regulatory approvals for any of our product candidates, including PDX, would have a material adverse effect on our business. Marketing our
product candidates abroad will require similar regulatory

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approvals
and is subject to similar risks. In addition, we cannot predict what adverse governmental regulations may arise from future United States or foreign governmental action.

Any
products manufactured or distributed by us pursuant to FDA clearances or approvals are subject to pervasive and continuing regulation by the FDA, including record-keeping
requirements and
reporting of adverse experiences with the drug. Our third-party drug manufacturers and their subcontractors are required to register their establishments with the FDA and certain state agencies, and
are subject to periodic unannounced inspections by the FDA and certain state agencies for compliance with current Good Manufacturing Practices, which impose certain procedural and documentation
requirements upon us and our third-party manufacturers. We cannot be certain that we or our present or future suppliers will be able to comply with the current Good Manufacturing Practices and other
FDA regulatory requirements.

The
FDA regulates drug labeling and promotion activities. The FDA has actively enforced regulations prohibiting the marketing of products for unapproved uses. Under the Modernization Act
of 1997, the FDA will permit the promotion of a drug for an unapproved use in certain circumstances, but subject to very stringent requirements.

Our
product candidates are also subject to a variety of state laws and regulations in those states or localities where such product candidates may be marketed. Any applicable state or
local regulations may hinder our ability to market our product candidates in those states or localities.

The
FDA's policies may change and additional government regulations may be enacted in the future which could prevent or delay regulatory approval of our potential products. Moreover,
increased attention to the containment of health care costs in the United States and in foreign markets could result in new government regulations, which could have a material adverse effect on our
business. We cannot predict the likelihood, nature or extent of adverse governmental regulation, which might arise from future legislative or administrative action, either in the United States or
abroad.

Foreign Regulation and Product Approval

Outside the United States, our ability to market a product candidate is contingent upon receiving marketing authorization from the appropriate regulatory
authorities. The requirements governing the conduct of clinical trials, marketing authorization, pricing and reimbursement vary widely from country to country. At present, foreign marketing
authorizations are applied for at a national level, although within the European Union, or EU, centralized registration procedures are available to companies wishing to market a product in more than
one EU member state. If the regulatory authority is satisfied that adequate evidence of safety, quality and efficacy has been presented, a marketing authorization will be granted. In some countries in
the EU, pricing of prescription drugs is subject to government control and agreements must be reached on a national level before marketing may begin in that territory. If we are unable to reach
agreement on an acceptable price for our products, we may choose not to pursue marketing of our drugs in that territory. The foreign regulatory approval process involves all of the risks associated
with FDA approval discussed above.

Other Regulations

We are also subject to numerous federal, state and local laws relating to such matters as safe working conditions, manufacturing practices, environmental
protection, fire hazard control, and disposal of hazardous or potentially hazardous substances. We may incur significant costs to comply with such laws and regulations now or in the future.

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Results of Operations

We are a development stage company. Since our inception in 1992, we have not generated any revenue from product sales and have experienced significant net losses
and negative cash flows from operations. We have incurred these losses principally from costs incurred in our research and development programs, our clinical manufacturing, and from our marketing,
general and administrative expenses. Our primary business activities have been focused on the development of EFAPROXYN (a program which we discontinued in mid-2007), PDX and RH1. For the
years ended December 31, 2007, 2006 and 2005, we had net losses attributable to common stockholders of $39.4 million, $30.2 million, and $20.8 million, respectively.
Research and development expenses for the years ended December 31, 2007, 2006 and 2005 were $17.4 million, $14.3 million and $11.2 million, respectively. As of
December 31, 2007, we had accumulated a deficit during our development stage of $247.9 million.

Our
ability to generate revenue and achieve profitability is dependent on our ability, alone or with partners, to successfully complete the development of our product candidates, conduct
clinical trials, obtain the necessary regulatory approvals, and manufacture and market our product candidates. The timing and costs to complete the successful development of any of our product
candidates are highly uncertain, and therefore difficult to estimate. The lengthy process of seeking regulatory approvals for our product candidates, and the subsequent compliance with applicable
regulations, require the expenditure of substantial resources. For a more complete discussion of the regulatory approval process, please refer to the "Government Regulation" section above. Clinical
development timelines, likelihood of success and total costs vary widely and are impacted by a variety of risks and uncertainties discussed in the "Risk Factors" section of Item 1A below.
Because of these risks and uncertainties, we cannot predict when or whether we will successfully complete the development of any of our product candidates or the ultimate costs of such efforts. Due to
these same factors, we cannot be certain when, or if, we will generate any revenue or net cash inflow from any of our current product candidates.

Even
if our clinical trials demonstrate the safety and effectiveness of our product candidates in their target indications, we do not expect to be able to record commercial sales of any
of our product
candidates until 2009 at the earliest. We expect to incur significant and growing net losses for the foreseeable future as a result of our research and development programs and the costs of preparing
for the potential commercial launch of PDX. Although the size and timing of our future net losses are subject to significant uncertainty, we expect them to increase over the next several years as we
continue to fund our development programs and prepare for the potential commercial launch of PDX.

We
will be required to raise additional capital to support our future operations, including the potential commercialization of PDX in the event the PROPEL trial is positive and we obtain
regulatory approval to market PDX. We may seek to obtain this additional capital through arrangements with corporate partners, equity or debt financings, or from other sources. Such arrangements, if
successfully consummated, may be dilutive to our existing stockholders. However, there is no assurance that we will be successful in consummating any such arrangements. In addition, in the event that
additional funds are obtained through arrangements with collaborative partners or other sources, such arrangements may require us to relinquish rights to some of our technologies, product candidates
or products under development that we would otherwise seek to develop or commercialize ourselves. If we are unable to generate meaningful amounts of revenue from future product sales, if any, or
cannot otherwise raise sufficient additional funds to support our operations, we may be required to delay, reduce the scope of or eliminate one or more of our development programs and our business and
future prospects for revenue and profitability may be harmed.

We
incorporated in the Commonwealth of Virginia on September 1, 1992 as HemoTech Sciences, Inc. and filed amended Articles of Incorporation to change our name to Allos
Therapeutics, Inc. on October 19, 1994. We reincorporated in Delaware on October 28, 1996. We operate as a single business segment.

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Employees

As of February 20, 2008, we had a total of 66 full-time employees. Of those, 40 are engaged in clinical development, regulatory affairs,
biostatistics, manufacturing and preclinical development. The remaining 26 are involved in marketing, corporate development, finance, administration and operations.

Available Information

We are located in Westminster, Colorado, a suburb of Denver. Our mailing address is 11080 CirclePoint Road, Suite 200, Westminster, Colorado 80020. Our
website address iswww.allos.com; however, information found on our website is not incorporated by reference into this report. Our web site address is
included in this report as an inactive textual reference only. Our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on
Form 8-K, as well as any amendments to those reports, are available free of charge through our website as soon as reasonably practicable after we file them with, or furnish them to,
the SEC. Once atwww.allos.com, go to Investors/Media and then to SEC Filings. You may also read and copy materials that we file with SEC at the SEC's
Public Reference Room at 100 F Street, NE, Washington, DC 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330. The SEC also maintains a website atwww.sec.govthat contains reports, proxy and information
statements and other information regarding us and other issuers that file electronically with the SEC.

ITEM 1A.    RISK FACTORS

Our business faces significant risks. These risks include those described below and may include additional risks of which we are not
currently aware or which we currently do not believe are material. If any of the events or circumstances described in the following risk factors actually occurs, they may materially harm our business,
financial condition, operating results and cash flow. As a result, the market price of our common stock could decline. Additional risks and uncertainties that are not yet identified or that we think
are immaterial may also materially harm our business, operating results and financial condition. The following risks should be read in conjunction with the other information set forth in this
report.

We have a history of net losses and an accumulated deficit, and we may never generate revenue or achieve or maintain profitability in the future.

Since our inception in 1992, we have not generated any revenue from product sales and have experienced significant net losses and negative cash flows from
operations. To date, we have financed our operations primarily through the private and public sale of securities. For the years ended December 31, 2007, 2006 and 2005, we had net losses
attributable to common stockholders of $39.4 million, $30.2 million, and $20.8 million, respectively. As of December 31, 2007, we had accumulated a deficit during our
development stage of $247.9 million. We have incurred these losses principally from costs incurred in our research and development programs, clinical manufacturing and from our marketing,
general and administrative expenses. We expect to continue incurring net losses for the foreseeable future. Our ability to generate revenue and achieve profitability is dependent on our ability, alone
or with partners, to successfully complete the development of our product candidates, conduct
clinical trials, obtain the necessary regulatory approvals, and manufacture and market our product candidates. We may never generate revenue from product sales or become profitable. We expect to
continue to spend substantial amounts on research and development, including amounts spent on conducting clinical trials for our product candidates, and in preparing for the potential commercial
launch of our product candidates. We may not be able to continue as a going concern if we are unable to generate meaningful amounts of revenue to support our operations or cannot otherwise raise the
necessary funds to support our operations.

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Our near-term prospects are substantially dependent on PDX, our lead product candidate. If we are unable to successfully develop and obtain regulatory approval for
PDX for the treatment of patients with relapsed or refractory PTCL, our ability to generate revenue will be significantly delayed.

We currently have no products that are approved for commercial sale. Our product candidates are in various stages of development, and significant research and
development, financial resources and personnel will be required to develop commercially viable products and obtain regulatory approvals for them. Most of our efforts and expenditures over the next few
years will be devoted to PDX. Accordingly, our future prospects are substantially dependent on the successful development, regulatory approval and commercialization of PDX for the treatment of
patients with relapsed or refractory PTCL. PDX is not expected to be commercially available for this or any other indication until at least 2009. RH1 is in an earlier stage of development relative to
PDX, and if both PDX and RH1 are approved for marketing, we expect that RH1 would not be commercially available until after PDX is commercially available. Further, certain of the indications that we
are pursuing have relatively low incidence rates, which may make it difficult for us to enroll a sufficient number of patients in our clinical trials on a timely basis, or at all, and may limit the
revenue potential of our product candidates. If we are unable to successfully develop, obtain regulatory approval for and commercialize PDX for the treatment of relapsed or refractory PTCL, our
ability to generate revenue from product sales will be significantly delayed and our stock price would likely decline.

We cannot predict when or if we will obtain regulatory approval to commercialize our product candidates.

A pharmaceutical product cannot be marketed in the United States or most other countries until it has completed a rigorous and extensive regulatory approval
process. If we fail to obtain regulatory approval to market our product candidates, we will be unable to sell our products and generate revenue, which would jeopardize our ability to continue
operating our business. Satisfaction of regulatory requirements typically takes many years, is dependent upon the type, complexity and novelty of the product and requires the expenditure of
substantial resources. Of particular significance are the requirements
covering research and development, testing, manufacturing, quality control, labeling and promotion of drugs for human use. We may not obtain regulatory approval for any product candidates we develop,
including PDX, even though PROPEL may be positive and we have a SPA agreement, or we may not obtain regulatory review of such product candidates in a timely manner.

If our product candidates, including PDX, fail to meet safety and efficacy endpoints in clinical trials, they will not receive regulatory approval, and we will be unable to
market them.

Our product candidates may not prove to be safe and efficacious in clinical trials and may not meet all of the applicable regulatory requirements needed to
receive regulatory approval. The clinical development and regulatory approval process is extremely expensive and takes many years. Failure can occur at any stage of development, and the timing of any
regulatory approval cannot be accurately predicted.

We
currently expect to complete patient enrollment in our pivotal Phase 2 PROPEL trial in the second quarter of 2008, although the actual timing of completion of enrollment may
vary based on a number of factors, including site initiation and patient enrollment rates. We cannot assure you that the design of, or data collected from, the PROPEL trial will be adequate to
demonstrate the safety and efficacy of PDX for the treatment of patients with relapsed or refractory PTCL, or otherwise be sufficient to support FDA or any foreign regulatory approval, even though
PROPEL may be positive and we have a SPA agreement. If the PROPEL trial fails to achieve its safety and efficacy endpoints, we may be unable to obtain regulatory approval to commercialize PDX, and our
business and stock price would be harmed. If we fail to obtain regulatory approval for PDX or any of our other current or

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future
product candidates, we will be unable to market and sell them and therefore may never generate meaningful amounts of revenue or become profitable.

As
part of the regulatory process, we must conduct clinical trials for each product candidate to demonstrate safety and efficacy to the satisfaction of the FDA and other regulatory
authorities abroad. The number and design of clinical trials that will be required varies depending on the product candidate, the condition being evaluated, the trial results and regulations
applicable to any particular product candidate. The design of our clinical trials is based on many assumptions about the expected effect of our product candidates, and if those assumptions prove
incorrect, the clinical trials may not demonstrate the safety or efficacy of our product candidates. Preliminary results may not be confirmed upon full analysis of the detailed results of a trial, and
prior clinical trial program designs and results may not be predictive of future clinical trial designs or results. Product candidates in later stage clinical trials may fail to show the desired
safety and efficacy despite having progressed through initial clinical trials with acceptable endpoints. For example, we terminated the development of EFAPROXYN when it failed to demonstrate
statistically significant improvement in overall survival in the targeted patients in a Phase 3 clinical trial. If our product candidates fail to show clinically significant benefits, they will
not be approved for marketing.

We may experience delays in our clinical trials that could adversely affect our financial position and our commercial prospects.

We do not know when our current clinical trials, including our PROPEL trial, will be completed, if at all. We also cannot accurately predict when other planned
clinical trials will begin or be completed. Many factors affect patient enrollment, including the size of the patient population, the proximity of patients to clinical sites, the eligibility criteria
for the trial, competing clinical trials and new drugs approved for the conditions we are investigating. Other companies are conducting clinical trials and have announced plans for future trials that
are seeking or likely to seek patients with the same diseases as those we are studying. Competition for patients in some cancer trials is particularly intense because of the limited number of leading
specialist physicians and the geographic concentration of major clinical centers.

As
a result of the numerous factors which can affect the pace of progress of clinical trials, our trials may take longer to enroll patients than we anticipate, if they can be completed
at all. Delays in patient enrollment in the trials may increase our costs and slow our product development and approval process. Our product development costs will also increase if we need to perform
more or larger clinical trials than planned. If other companies' product candidates show favorable results, we may be required to conduct additional clinical trials to address changes in treatment
regimens or for our products to be commercially competitive. Any delays in completing our clinical trials will delay our ability to generate revenue from product sales, and we may have insufficient
capital resources to support our operations. Even if we do have sufficient capital resources, our ability to become profitable will be delayed.

While we have negotiated a special protocol assessment with the FDA relating to our PROPEL trial, this agreement does not guarantee any particular outcome from regulatory
review of the trial or the product, including any regulatory approval.

The protocol for the PROPEL trial was reviewed by the FDA under the special protocol assessment, or SPA, process, which allows for FDA evaluation of a clinical
trial protocol intended to form the primary basis of an efficacy claim in support of a new drug application, and provides an agreement that the study design, including trial size, clinical endpoints
and/or data analyses are acceptable to the FDA. However, even if we believe PROPEL is positive, a SPA agreement is not a guarantee of approval, and we cannot be certain that the design of, or data
collected from, the PROPEL trial will be adequate to demonstrate the safety and efficacy of PDX for the treatment of patients with relapsed or refractory PTCL, or otherwise be sufficient to support
FDA or any foreign

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regulatory
approval. Further, the SPA agreement is not binding on the FDA if public health concerns unrecognized at the time the SPA agreement is entered into become evident, other new scientific
concerns regarding product safety or efficacy arise, or if we fail to comply with the agreed upon trial protocols. In addition, the SPA agreement may be changed by us or the FDA on written agreement
of both parties, and the FDA retains significant latitude and discretion in interpreting the terms of the SPA agreement and the data and results from the PROPEL trial. As a result, we do not know how
the FDA will interpret the parties' respective commitments under the SPA agreement, how it will interpret the data and results from the PROPEL trial, or whether PDX will receive any regulatory
approvals as a result of the SPA agreement or the clinical trial. Therefore, despite the potential benefits of the SPA agreement, significant uncertainty remains regarding the clinical development and
regulatory approval process for PDX for the treatment of PTCL.

We may be required to suspend, repeat or terminate our clinical trials if they are not conducted in accordance with regulatory requirements, the results are negative or
inconclusive or the trials are not well designed.

Clinical trials must be conducted in accordance with the FDA's Good Clinical Practices and are subject to oversight by the FDA and Institutional Review Boards at
the medical institutions where the clinical trials are conducted. In addition, clinical trials must be conducted with product candidates produced under the FDA's Good Manufacturing Practices, and may
require large numbers of test subjects. Clinical trials may be suspended by the FDA or us at any time if it is believed that the subjects participating in these trials are being exposed to
unacceptable health risks or if the FDA finds deficiencies in the conduct of these trials.

Even
if we achieve positive interim results in clinical trials, these results do not necessarily predict final results, and acceptable results in early trials may not be repeated in
later trials. Data obtained from preclinical and clinical activities are susceptible to varying interpretations that could delay, limit or prevent regulatory clearances, and the FDA can request that
we conduct additional clinical trials. A
number of companies in the pharmaceutical industry have suffered significant setbacks in advanced clinical trials, even after promising results in earlier trials. As a result, there can be no
assurance that our PROPEL trial will achieve its primary or secondary endpoints. In addition, negative or inconclusive results or adverse medical events during a clinical trial could cause a clinical
trial to be repeated or terminated. Also, failure to construct clinical trial protocols to screen patients for risk profile factors relevant to the trial for purposes of segregating patients into the
patient populations treated with the drug being tested and the control group could result in either group experiencing a disproportionate number of adverse events and could cause a clinical trial to
be repeated or terminated. If we have to conduct additional clinical trials, whether for PDX or any other product candidate, it would significantly increase our expenses and delay potential marketing
of our product candidates.

Reports of adverse events or safety concerns involving our product candidates or in related technology fields or other companies' clinical trials could delay or prevent us from
obtaining regulatory approval or negatively impact public perception of our product candidates.

Our product candidates may produce serious adverse events. These adverse events could interrupt, delay or halt clinical trials of our product candidates and could
result in the FDA or other regulatory authorities denying approval of our product candidates for any or all targeted indications. An independent data safety monitoring board, the FDA, other regulatory
authorities or the Company may suspend or terminate clinical trials at any time. We cannot assure you that any of our product candidates will be safe for human use.

At
present, there are a number of clinical trials being conducted by other pharmaceutical companies involving small molecule chemotherapeutic agents. If other pharmaceutical companies
announce that they observed frequent adverse events or unknown safety issues in their trials involving

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compounds
similar to, or competitive with, our product candidates, we could encounter delays in the timing of our clinical trials or difficulties in obtaining the approval of our product candidates.
In addition, the public perception of our product candidates might be adversely affected, which could harm our business and results of operations and cause the market price of our common stock to
decline, even if the concern relates to another company's product or product candidate.

Due to our reliance on contract research organizations and other third parties to conduct our clinical trials, we are unable to directly control the timing, conduct and expense
of our clinical trials.

We rely primarily on third parties to conduct our clinical trials, including the PROPEL trial. As a result, we have had and will continue to have less control
over the conduct of our clinical trials, the timing and completion of the trials, the required reporting of adverse events and the management of data developed through the trial than would be the case
if we were relying entirely upon our own staff.
Communicating with outside parties can also be challenging, potentially leading to mistakes as well as difficulties in coordinating activities. Outside parties may have staffing difficulties, may
undergo changes in priorities or may become financially distressed, adversely affecting their willingness or ability to conduct our trials. We may experience unexpected cost increases that are beyond
our control. Problems with the timeliness or quality of the work of a contract research organization may lead us to seek to terminate the relationship and use an alternative service provider. However,
making this change may be costly and may delay our trials, and contractual restrictions may make such a change difficult or impossible. Additionally, it may be impossible to find a replacement
organization that can conduct our trials in an acceptable manner and at an acceptable cost.

Even if our product candidates meet safety and efficacy endpoints in clinical trials, regulatory authorities may not approve them, or we may face post-approval
problems that require withdrawal of our products from the market.

We will not be able to commercialize any of our product candidates until we have obtained regulatory approval. We have limited experience in filing and pursuing
applications necessary to gain regulatory approvals, which may place us at risk of delays, overspending and human resources inefficiencies.

Our
product candidates may not be approved even if they achieve their endpoints in clinical trials. Regulatory agencies, including the FDA or their advisors, may disagree with our
interpretations of data from preclinical studies and clinical trials. Regulatory agencies also may approve a product candidate for fewer conditions than requested or may grant approval subject to the
performance of post-marketing studies for a product candidate. In addition, regulatory agencies may not approve the labeling claims that are necessary or desirable for the successful
commercialization of our product candidates.

Even
if we receive regulatory approvals, our product candidates may later produce adverse events that limit or prevent their widespread use or that force us to withdraw those product
candidates from the market. In addition, a marketed product continues to be subject to strict regulation after approval and may be required to undergo post-approval studies. Any unforeseen
problems with an approved product or any violation of regulations could result in restrictions on the product, including its withdrawal from the market. Any delay in or failure to receive or maintain
regulatory approval for any of our products could harm our business and prevent us from ever generating meaningful revenues or achieving profitability.

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Even if we receive regulatory approval for our product candidates, we will be subject to ongoing regulatory obligations and review.

Following any regulatory approval of our product candidates, we will be subject to continuing regulatory obligations such as safety reporting requirements and
additional post-marketing obligations, including regulatory oversight of the promotion and marketing of our products. In addition, we or our third-party manufacturers will be required to
adhere to regulations setting forth current Good Manufacturing Practices. These regulations cover all aspects of the manufacturing, storage, testing, quality control and record keeping relating to our
product candidates. Furthermore, we or our third-party manufacturers must pass a pre-approval inspection of manufacturing facilities by the FDA and foreign authorities before obtaining
marketing approval and will be subject to periodic inspection by these regulatory authorities. Such inspections may result in compliance issues that could prevent or delay marketing approval, or
require the expenditure of financial or other resources to address. If we or our third-party manufacturers fail to comply with applicable regulatory requirements, we may be subject to fines,
suspension or withdrawal of regulatory approvals, product recalls, seizure of products, operating restrictions and criminal prosecution.

Budget constraints may force us to delay our efforts to develop certain product candidates in favor of developing others, which may prevent us from commercializing all product
candidates as quickly as possible.

Because we have limited resources, and because research and development is an expensive process, we must regularly assess the most efficient allocation of our
research and development budget. As a result, we may have to prioritize development candidates and may not be able to fully realize the value of some of our product candidates in a timely manner, if
at all.

If we fail to obtain the capital necessary to fund our operations, we will be unable to successfully develop or commercialize our product candidates.

We expect that significant additional capital will be required in the future to continue our research and development efforts and to commercialize our product
candidates, if approved for marketing. Our actual capital requirements will depend on many factors, including:



We
will be required to raise additional capital to support our future operations, including the potential commercialization of PDX in the event the PROPEL trial is positive and we obtain
regulatory approval to market PDX. We may seek to obtain this additional capital through arrangements with corporate partners, equity or debt financings, or from other sources. Such arrangements may
be dilutive to our existing stockholders. However, there is no assurance that we will be successful in consummating any such arrangements. In addition, in the event that additional funds are obtained
through arrangements with collaborative partners or other sources, such arrangements may require us to relinquish rights to some of our technologies, product candidates or products under development
that

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we
would otherwise seek to develop or commercialize ourselves. If we are unable to generate meaningful amounts of revenue from future product sales, if any, or cannot otherwise raise sufficient
additional funds to support our operations, we may be required to delay, reduce the scope of or eliminate one or more of our development programs and our business and future prospects for revenue and
profitability may be harmed.

If we are unable to effectively protect our intellectual property, we will be unable to prevent third parties from using our technology, which would impair our competitiveness
and ability to commercialize our product candidates. In addition, enforcing our proprietary rights may be expensive and result in increased losses.

Our success will depend in part on our ability to obtain and maintain meaningful patent protection for our products, both in the United States and in other
countries. We rely on patents to protect a large part of our intellectual property and our competitive position. Any patents issued to or licensed by us could be challenged, invalidated, infringed,
circumvented or held unenforceable. In addition, it is possible that no patents will issue on any of our licensed patent applications. It is possible that the claims in patents that have been issued
or licensed to us or that may be issued or licensed to us in the future will not be sufficiently broad to protect our intellectual property or that the patents will not provide protection against
competitive products or otherwise be commercially valuable. Failure to obtain and maintain adequate patent protection for our intellectual property would impair our ability to be commercially
competitive.

Our
commercial success will also depend in part on our ability to commercialize our product candidates without infringing patents or other proprietary rights of others or breaching the
licenses granted to us. We may not be able to obtain a license to third-party technology that we may require to conduct our business or, if obtainable, we may not be able to license such technology at
a reasonable cost. If we fail to obtain a license to any technology that we may require to commercialize our technologies or product candidates, or fail to obtain a license at a reasonable cost, we
will be unable to commercialize the affected product or to commercialize it at a price that will allow us to become profitable.

In
addition to patent protection, we also rely upon trade secrets, proprietary know-how and technological advances which we seek to protect through confidentiality agreements
with our
collaborators, employees and consultants. Our employees and consultants are required to enter into confidentiality agreements with us. We also enter into non-disclosure agreements with our
collaborators and vendors, which are intended to protect our confidential information delivered to third parties for research and other purposes. However, these agreements could be breached and we may
not have adequate remedies for any breach, or our trade secrets and proprietary know-how could otherwise become known or be independently discovered by others.

Furthermore,
as with any pharmaceutical company, our patent and other proprietary rights are subject to uncertainty. Our patent rights related to our product candidates might conflict
with current or future patents and other proprietary rights of others. For the same reasons, the products of others could infringe our patents or other proprietary rights. Litigation or patent
interference proceedings, either of which could result in substantial costs to us, may be necessary to enforce any of our patents or other proprietary rights, or to determine the scope and validity or
enforceability of other parties' proprietary rights. The defense and prosecution of patent and intellectual property infringement claims are both costly and time consuming, even if the outcome is
favorable to us. Any adverse outcome could subject us to significant liabilities to third parties, require disputed rights to be licensed from third parties, or require us to cease selling our future
products. We are not currently a party to any patent or other intellectual property infringement claims.

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We do not have manufacturing facilities or capabilities and are dependent on third parties to fulfill our manufacturing needs, which could result in the delay of clinical
trials, regulatory approvals, product introductions and commercial sales.

We are dependent on third parties for the manufacture and storage of our product candidates for clinical trials and, if approved, for commercial sale. If we are
unable to contract for a sufficient supply of our product candidates on acceptable terms, or if we encounter delays or difficulties in the manufacturing process or our relationships with our
manufacturers, we may not have sufficient product to conduct or complete our clinical trials or support commercial requirements for our product candidates, if approved for marketing.

Both
PDX and RH1 are cytotoxic which requires manufacturers of these substances to have specialized equipment and safety systems to handle such substances. In addition, the starting
materials for PDX require custom preparations, which will require us to manage an additional set of suppliers to obtain the needed supplies of PDX.

Given
our lack of formal supply agreements and the fact that in many cases our components are supplied by a single source, our third party suppliers may not be able to fulfill our
potential commercial
needs or meet our deadlines, or the components they supply to us may not meet our specifications and quality policies and procedures. If we need to find an alternative supplier of PDX or other
components, we may not be able to contract for those components on acceptable terms, if at all. Any such failure to supply or delay caused by such suppliers would have an adverse affect on our ability
to continue clinical development of our product candidates or commercialize any future products.

Even
if we obtain approval to market our product candidates in one or more indications, our current or future manufacturers may be unable to accurately and reliably manufacture
commercial quantities of our product candidates at reasonable costs, on a timely basis and in compliance with the FDA's current Good Manufacturing Practices. If our current or future contract
manufacturers fail in any of these respects, our ability to timely complete our clinical trials, obtain required regulatory approvals and successfully commercialize our product candidates will be
materially and adversely affected. This risk may be heightened with respect to PDX and RH1 as there are a limited number of fill/finish manufacturers with the ability to handle cytotoxic products such
as PDX and RH1. Our reliance on contract manufacturers exposes us to additional risks, including:



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Any
of these factors could result in the delay of clinical trials, regulatory submissions, required approvals or commercialization of our product candidates. They could also entail
higher costs and result in our being unable to effectively commercialize our product candidates.

We may explore strategic partnerships that may never materialize or may fail.

We may, in the future, periodically explore a variety of possible strategic partnerships in an effort to gain access to additional complimentary resources. At the
current time, we cannot predict what form such a strategic partnership might take. We are likely to face significant competition in seeking appropriate strategic partners, and these strategic
partnerships can be complicated and time consuming to negotiate and document. We may not be able to negotiate strategic partnerships on acceptable terms, or at all. We are unable to predict when, if
ever, we will enter into any additional strategic partnerships because of the numerous risks and uncertainties associated with establishing strategic partnerships.

If we enter into one or more strategic partnerships, we may be required to relinquish important rights to and control over the development of our product candidates or
otherwise be subject to unfavorable terms.

Any future strategic partnerships we enter into could subject us to a number of risks, including:



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Acceptance of our products in the marketplace is uncertain, and failure to achieve market acceptance will limit our ability to generate revenue and become profitable.

Even if approved for marketing, our products may not achieve market acceptance. The degree of market acceptance will depend upon a number of factors, including:



Physicians,
patients, payors or the medical community in general may be unwilling to accept, utilize or recommend the use of any of our products.

The status of reimbursement from third-party payors for newly approved health care drugs is uncertain and failure to obtain adequate coverage and reimbursement could limit our
ability to generate revenue.

Our ability to successfully commercialize our products will depend, in part, on the extent to which coverage and reimbursement for the products will be available
from government and health administration authorities, private health insurers, managed care programs, and other third-party payors.

Significant
uncertainty exists as to the reimbursement status of newly approved health care products. Third-party payors, including Medicare, are challenging the prices charged for
medical products and services. Government and other third-party payors increasingly are attempting to contain health care costs by limiting both coverage and the level of reimbursement for new drugs
and by refusing, in some cases, to provide coverage for uses of approved products for disease conditions for which the FDA has not granted labeling approval. Third-party insurance coverage may not be
available to patients for our products. If government and other third-party payors do not provide adequate coverage and reimbursement levels for our product candidates, their market acceptance may be
reduced.

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Health care reform measures could adversely affect our business.

The business and financial condition of pharmaceutical and biotechnology companies are affected by the efforts of governmental and third-party payors to contain
or reduce the costs of health care. In the United States and in foreign jurisdictions there have been, and we expect that there will continue to be, a number of legislative and regulatory proposals
aimed at changing the health care system. For example, in some countries other than the United States, pricing of prescription drugs is subject to government control, and we expect proposals to
implement similar controls in the United States to continue. We are unable to predict what additional legislation or regulation, if any, relating to the health care industry or third-party coverage
and reimbursement may be enacted in the future or what effect such legislation or regulation would have on our business. The pendency or approval of such proposals or reforms could result in a
decrease in our stock price or limit our ability to raise capital or to obtain strategic partnerships or licenses.

If we fail to comply with healthcare fraud and abuse laws, we could face substantial penalties and our business, operations and financial condition could be adversely
affected.

As a biopharmaceutical company, even though we do not and will not control referrals of health care services or bill directly to Medicare, Medicaid or other
third-party payors, certain federal and state healthcare laws and regulations pertaining to fraud and abuse will be applicable to our business. These laws and regulations, include, among others:



Although
there are a number of statutory exemptions and regulatory safe harbors protecting certain common activities from prosecution under the federal Anti-Kickback statute,
the exemptions and safe harbors are drawn narrowly, and practices that involve remuneration intended to induce prescribing, purchases or recommendations may be subject to scrutiny if they do not
qualify for an exemption or safe harbor. Our practices may not in all cases meet all of the criteria for safe harbor protection from anti-kickback liability.

If
our operations are found to be in violation of any of the laws described above or any other governmental regulations that apply to us, we may be subject to penalties, including civil
and criminal penalties, damages, fines and the curtailment or restructuring of our operations. Any penalties, damages, fines, curtailment or restructuring of our operations could adversely affect our
ability to operate our business and our financial results. Although compliance programs can mitigate the risk of investigation and prosecution for violations of these laws, the risks cannot be
entirely eliminated. Any action against us for violation of these laws, even if we successfully defend against it, could cause us to incur significant legal expenses and divert our management's
attention from the operation of our

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business.
Moreover, achieving and sustaining compliance with all applicable federal and state fraud and abuse laws may prove costly.

If we are unable to develop adequate sales, marketing or distribution capabilities or enter into agreements with third parties to perform some of these functions, we will not
be able to commercialize our products effectively.

We have limited experience in sales, marketing and distribution. To directly market and distribute any products, we must build a sales and marketing organization
with appropriate technical expertise and distribution capabilities. We may attempt to build such a sales and marketing organization on our own or with the assistance of a contract sales organization.
For some market opportunities, we may need to enter into co-promotion or other licensing arrangements with larger pharmaceutical or biotechnology firms in order to increase the likelihood
of commercial success for our products. We may
not be able to establish sales, marketing and distribution capabilities of our own or enter into such arrangements with third parties in a timely manner or on acceptable terms. To the extent that we
enter into co-promotion or other licensing arrangements, our product revenues are likely to be lower than if we directly marketed and sold our products, and some or all of the revenues we
receive will depend upon the efforts of third parties, and these efforts may not be successful. Additionally, building marketing and distribution capabilities may be more expensive than we anticipate,
requiring us to divert capital from other intended purposes or preventing us from building our marketing and distribution capabilities to the desired levels.

If our competitors develop and market products that are more effective than ours, our commercial opportunity will be reduced or eliminated.

Even if we obtain the necessary regulatory approvals to market PDX or any other product candidate, our commercial opportunity will be reduced or eliminated if our
competitors develop and market products that are more effective, have fewer side effects or are less expensive than our product candidates. Our potential competitors include large fully integrated
pharmaceutical companies and more established biotechnology companies, both of which have significant resources and expertise in research and development, manufacturing, testing, obtaining regulatory
approvals and marketing. Academic institutions, government agencies, and other public and private research organizations conduct research, seek patent protection and establish collaborative
arrangements for research, development, manufacturing and marketing. It is possible that competitors will succeed in developing technologies that are more effective than those being developed by us or
that would render our technology obsolete or noncompetitive.

If product liability lawsuits are brought against us, we may incur substantial liabilities and may be required to limit commercialization of our product candidates.

The testing and marketing of pharmaceutical products entail an inherent risk of product liability. Product liability claims might be brought against us by
consumers, health care providers or by pharmaceutical companies or others selling our future products. If we cannot successfully defend ourselves against such claims, we may incur substantial
liabilities or be required to limit the commercialization of our product candidates. We have obtained limited product liability insurance coverage for our human clinical trials. However, product
liability insurance coverage is becoming increasingly expensive, and we may be unable to maintain product liability insurance coverage at a reasonable cost or in sufficient amounts to protect us
against losses due to product liability. A successful product liability claim in excess of our insurance coverage could have a material adverse effect on our business, financial condition and results
of operations. We may not be able to obtain commercially reasonable product liability insurance for any products approved for marketing.

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We are currently involved in a securities class action litigation, which could harm our business if management attention is diverted or the claims are decided against us.

We have been named as a defendant in a purported securities class action lawsuit seeking unspecified damages relating to the issuance of allegedly false and
misleading statements regarding EFAPROXYN during the period from May 29, 2003 to April 29, 2004 and subsequent declines in our stock price. In an opinion dated October 20, 2005,
the District Court concluded that the plaintiff's complaint failed to meet the legal requirements applicable to its alleged claims and dismissed the lawsuit. On November 20, 2005, the plaintiff
appealed the District Court's decision to the U.S. Court of Appeals for the Tenth Circuit (the "Court of Appeals"). On February 6, 2008, the parties signed a stipulation of settlement, settling
the case for $2,000,000. The defendants do not admit any liability in connection with the settlement. The Court of Appeals has remanded the case to the District Court for consideration of the
settlement. The settlement is subject to various conditions, including without limitation approval of the District Court. We expect that the amount of the settlement in excess of our deductible will
be covered by our insurance carrier. In the event the settlement does not become final, we intend to vigorously defend against the plaintiff's appeal. If the Court of Appeals then were to reverse the
District Court's decision and we were not successful in our defense of such claims, we could be forced to make significant payments to the plaintiffs, and such payments could have a material adverse
effect on our business, financial condition, results of operations and cash flows to the extent such payments are not covered by our insurance carriers. Even if our defense against such claims were
successful, the litigation could result in substantial costs and divert management's attention and resources, which could adversely affect our business. As of December 31, 2007, we have
recorded $2,000,000 in accrued litigation settlement costs, which represents our best estimate of the potential gross amount of the settlement costs to be paid to the plaintiffs, and $1,759,000 in
prepaid expenses and other assets, which represents the amount we expect to be reimbursed from our insurance carrier. The net difference of $241,000 between these amounts represents the remaining
unpaid deductible under our insurance policy, and this amount was recorded to marketing, general and administrative expenses during the year ended December 31, 2006.

Our success depends on retention of our President and Chief Executive Officer, Chief Medical Officer and other key personnel.

We are highly dependent on our President and Chief Executive Officer, Paul L. Berns, our Chief Medical Officer, Pablo J. Cagnoni, M.D. and other members of our
management team. We are named as the beneficiary on a term life insurance policy covering Mr. Berns in the amount of $10.0 million. We also depend on academic collaborators for each of
our research and development programs. The loss of any of our key employees or academic collaborators could delay our discovery research program and the development and commercialization of our
product candidates or result in termination of them in their entirety. Mr. Berns and Dr. Cagnoni, as well as others on our executive management team, have severance agreements with us,
but the agreements provides for "at-will" employment with no specified term. Our future success also will depend in large part on our continued ability to attract and retain other highly
qualified scientific, technical and management personnel, as well as personnel with expertise in clinical testing, governmental regulation and commercialization. We face competition for personnel from
other companies, universities, public and private research institutions,
government entities and other organizations. If we are unsuccessful in our recruitment and retention efforts, our business will be harmed.

We
also rely on consultants, collaborators and advisors to assist us in formulating and conducting our research. All of our consultants, collaborators and advisors are employed by other
employers or are self-employed and may have commitments to or consulting contracts with other entities that may limit their ability to contribute to our company.

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We cannot guarantee that we will be in compliance with all potentially applicable regulations.

The development, manufacturing, and, if approved, pricing, marketing, sale and reimbursement of our products, together with our general obligations, are subject
to extensive regulation by federal, state and other authorities within the United States and numerous entities outside of the United States. We also have significantly fewer employees than many other
companies that have the same or fewer product candidates in late stage clinical development and we rely heavily on third parties to conduct many important functions.

As
a publicly-traded company, we are subject to significant regulations, some of which have either only recently been adopted, including the Sarbanes Oxley Act of 2002, or are currently
proposals subject to change. We cannot assure that we are or will be in compliance with all potentially applicable regulations. If we fail to comply with the Sarbanes Oxley Act of 2002 or any other
regulations we could be subject to a range of consequences, including restrictions on our ability to sell equity or otherwise raise capital funds, the de-listing of our common stock from
the Nasdaq Global Market, suspension or termination of our clinical trials, failure to obtain approval to market our product candidates, restrictions on future products or our manufacturing processes,
significant fines, or other sanctions or litigation.

If our internal controls over financial reporting are not considered effective, our business and stock price could be adversely affected.

Section 404 of the Sarbanes-Oxley Act of 2002 requires us to evaluate the effectiveness of our internal controls over financial reporting as of the end of
each fiscal year, and to include a management report assessing the effectiveness of our internal controls over financial reporting in this annual report on Form 10-K for that fiscal
year. Section 404 also requires our independent registered public accounting firm to attest to, and report on, management's assessment of our internal controls over financial reporting.

Our
management, including our chief executive officer and principal financial officer, does not expect that our internal controls over financial reporting will prevent all error and all
fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that
the control system's objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative
to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud involving a company
have been, or will be, detected. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and we cannot assure you that any design will
succeed in achieving its stated goals under all potential future conditions. Over time, controls may become ineffective because of changes in conditions or deterioration in the degree of compliance
with policies or procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. We cannot assure you
that we or our independent registered public accounting firm will not identify a material weakness in our internal controls in the future. A material weakness in our internal controls over financial
reporting would require management and our independent registered public accounting firm to consider our internal controls as ineffective. If our internal controls over financial reporting are not
considered effective, we may experience a loss of public confidence, which could have an adverse effect on our business and on the market price of our common stock.

If we do not progress in our programs as anticipated, our stock price could decrease.

For planning purposes, we estimate the timing of a variety of clinical, regulatory and other milestones, such as when a certain product candidate will enter
clinical development, when a clinical

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trial
will be initiated or completed, or when an application for regulatory approval will be filed. Some of our estimates are included in this report. Our estimates are based on information available
to us as of the date of this report and a variety of assumptions. Many of the underlying assumptions are outside of our control. If milestones are not achieved when we estimated that they would be,
investors could be disappointed, and our stock price may decrease.

Warburg Pincus Private Equity VIII, L.P. ("Warburg") and Baker Brothers Life Sciences, L.P. ("Baker") each control a substantial percentage of the voting power of
our outstanding common stock.

On March 2, 2005, we entered into a Securities Purchase Agreement with Warburg Pincus Private Equity VIII, L.P. ("Warburg") and certain other
investors pursuant to which we issued and sold an aggregate of 2,352,443 shares of our Series A Exchangeable Preferred Stock (the "Exchangeable Preferred") at a price per share of $22.10, for
aggregate gross proceeds of approximately $52.0 million. On May 18, 2005, at our Annual Meeting of Stockholders, our stockholders voted to approve the issuance of shares of our common
stock upon exchange of shares of the Exchangeable Preferred. As a result of such approval, we issued a total of 23,524,430 shares of common stock upon exchange of 2,352,443 shares of Exchangeable
Preferred. In connection with its purchase of the Exchangeable Preferred, Warburg entered into a standstill agreement agreeing not to pursue certain activities the purpose or effect of which may be to
change or influence the control of the Company.

On
February 2, 2007, we closed an underwritten offering of 9,000,000 shares of common stock, of which Baker Brothers Life Sciences, L.P. and certain other affiliated funds
(collectively "Baker") purchased 3,300,000 shares, at a price per share of $6.00, for aggregate gross proceeds of approximately $54.0 million (the "February 2007 Financing"). In connection with
its purchase of shares in the February 2007 Financing, Baker entered into a standstill agreement agreeing not to pursue certain activities the purpose or effect of which might be to change or
influence the control of the Company.

As
of December 31, 2007, we had approximately 67.6 million shares of common stock outstanding, of which Warburg owned 22,624,430 shares, or approximately 33% of the voting
power of our outstanding common stock, and Baker owned 8,741,480 shares, or approximately 13% of the voting power of our outstanding common stock. Although each of Warburg and Baker have entered into
a standstill agreement with us, they are, and will continue to be, able to exercise substantial influence over any actions requiring stockholder approval.

Anti-takeover provisions in our charter documents and under Delaware law could discourage, delay or prevent an acquisition of us, even if an acquisition would be
beneficial to our stockholders, and may prevent attempts by our stockholders to replace or remove our current management.

Provisions of our amended and restated certificate of incorporation and bylaws, as well as provisions of Delaware law, could make it more difficult for a third
party to acquire us, even if doing so would benefit our stockholders. In addition, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current
management by making it more difficult for stockholders to replace members of our board of directors. Because our board of directors is responsible for appointing the members of our management team,
these provisions could in turn affect any attempt by our stockholders to replace current members of our management team. These provisions include:



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In
addition, 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 an interested stockholder for a period of three years following the date on which the stockholder became an interested stockholder. This provision could have the effect of
delaying or preventing a change of control, whether or not it is desired by or beneficial to our stockholders. Notwithstanding the foregoing, the three year moratorium imposed on business combinations
by Section 203 will not apply to either Warburg or Baker because, prior to the dates on which they became interested stockholders, our board of directors approved the transactions which
resulted in Warburg and Baker becoming interested stockholders. However, in connection with its purchase of Exchangeable Preferred in March 2005, Warburg entered into a standstill agreement agreeing
not to pursue certain activities the purpose or effect of which may be to change or influence the control of the Company. Similarly, in connection with the February 2007 Financing, Baker entered into
a standstill agreement agreeing not to pursue certain activities the purpose or effect of which may be to change or influence the control of the Company.

We have adopted a stockholder rights plan that may discourage, delay or prevent a merger or acquisition that is beneficial to our stockholders.

In May 2003, our board of directors adopted a stockholder rights plan that may have the effect of discouraging, delaying or preventing a merger or acquisition of
us that is beneficial to our stockholders by diluting the ability of a potential acquirer to acquire us. Pursuant to the terms of our plan, when a person or group, except under certain circumstances,
acquires 15% or more of our outstanding common stock or 10 business days after announcement of a tender or exchange offer for 15% or more of our outstanding common stock, the rights (except those
rights held by the person or group who has acquired or announced an offer to acquire 15% or more of our outstanding common stock) would generally become exercisable for shares of our common stock at a
discount. Because the potential acquirer's rights would not become exercisable for our shares of common stock at a discount, the potential acquirer would suffer substantial dilution and may lose its
ability to acquire us. In addition, the existence of the plan itself may deter a potential acquirer from acquiring or making an offer to
acquire the Company. As a result, either by operation of the plan or by its potential deterrent effect, mergers and acquisitions of the Company that our stockholders may consider in their best
interests may not occur.

Because
Warburg owns a substantial percentage of our outstanding common stock, we amended the stockholder rights plan in connection with Warburg's purchase of Exchangeable Preferred in
March 2005 to provide that Warburg and its affiliates will be exempt from the stockholder rights plan, unless Warburg and its affiliates become, without the prior consent of our board of directors,
the beneficial owner of more than 44% of our common stock. Likewise, since Baker owns a substantial percentage of our outstanding common stock, we amended the stockholder rights plan in connection
with the February 2007 Financing to provide that Baker and its affiliates will be exempt from the stockholder rights plan, unless Baker becomes, without the prior consent of our board of directors,
the beneficial owner of more than 20% of our common stock. Under the stockholder rights plan, our board of directors has express authority to amend the rights plan without stockholder approval.

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The market price for our common stock has been and may continue to be highly volatile, and an active trading market for our common stock may never exist.

We cannot assure you that an active trading market for our common stock will exist at any time. Holders of our common stock may not be able to sell shares quickly
or at the market price if trading in our common stock is not active. The trading price of our common stock has been and is likely to continue to be highly volatile and could be subject to wide
fluctuations in price in response to various factors, many of which are beyond our control, including:



Public
companies in general and companies included on the Nasdaq Global Market in particular have experienced extreme price and volume fluctuations that have often been unrelated or
disproportionate to the operating performance of those companies. There has been particular volatility in the market prices of securities of biotechnology and other life sciences companies, and the
market prices of these companies have often fluctuated because of problems or successes in a given market segment or because investor interest has shifted to other segments. These broad market and
industry factors may cause the market price of our common stock to decline, regardless of our operating performance. We have no control over this volatility and can only focus our efforts on our own
operations, and even these may be affected due to the state of the capital markets. In the past, following large price declines in the public market price of a company's securities, securities class
action litigation has often been initiated against that company, including in 2004 against us. Litigation of this type could result in substantial costs and diversion of management's attention and
resources, which would hurt our business. Any adverse determination in litigation could also subject us to significant liabilities.

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We are required to recognize stock-based compensation expense relating to employee stock options, restricted stock, and stock purchases under our Employee Stock Purchase Plan,
and the amount of expense we recognize may not accurately reflect the value of our share-based payment awards. Further, the recognition of stock-based compensation expense will cause our net losses to
increase and may cause the trading price of our common stock to fluctuate.

On January 1, 2006, we adopted SFAS No. 123 (Revised 2004),Share-Based Payment("SFAS 123R"), which requires the measurement and recognition of compensation expense for all stock-based compensation based on estimated fair values. As a result, our operating results for the
years ended December 31, 2007 and 2006 include, and future periods will include, a charge for stock-based compensation related to employee stock options, restricted stock and discounted
employee stock purchases. The application of SFAS 123R requires the use of an option-pricing model to determine the fair value of share-based payment awards. This determination of fair value is
affected by our stock
price as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, our expected stock price volatility over the term of the
awards, and actual and projected employee stock option exercise behaviors. Option-pricing models were developed for use in estimating the value of traded options that have no vesting or hedging
restrictions and are fully transferable. Because our employee stock options have certain characteristics that are significantly different from traded options, and because changes in the subjective
assumptions can materially affect the estimated value, in management's opinion the existing valuation models may not provide an accurate measure of the fair value of our employee stock options.

Our
adoption of SFAS 123R had a material impact on our financial statements and results of operations. We also expect that SFAS 123R will have a material impact on our
future financial statements and results of operations. We cannot predict the effect that our stock-based compensation expense will have on the trading price of our common stock.

Substantial sales of shares may impact the market price of our common stock.

If our stockholders sell substantial amounts of our common stock, the market price of our common stock may decline. These sales also might make it more difficult
for us to sell equity or equity-related securities in the future at a time and price that we consider appropriate. We are unable to predict the effect that sales may have on the then prevailing market
price of our common stock. We have entered into a Registration Rights Agreement with Warburg and the other purchasers of our Exchangeable Preferred pursuant to which such investors are entitled to
certain registration rights with respect to the shares of common stock that we issued upon exchange of the Exchangeable Preferred.

In
addition, we will need to raise substantial additional capital in the future to fund our operations. If we raise additional funds by issuing equity securities, the market price of our
common stock may decline and our existing stockholders may experience significant dilution.

ITEM 1B.    UNRESOLVED STAFF COMMENTS

Not Applicable.

ITEM 2.    PROPERTIES

Our corporate headquarters facility consists of approximately 43,956 square feet in Westminster, Colorado. We lease our corporate headquarters facility pursuant
to a lease agreement that expires on October 31, 2008. In January 2005, we entered into agreements to sublease 9,420 square feet of this space to two other entities. We believe that our leased
facilities are adequate to meet our needs until such time, if any, as we receive regulatory approval to market one or more of our product candidates.

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ITEM 3.    LEGAL PROCEEDINGS

The Company and one of its former officers were named as defendants in a purported securities class action lawsuit filed in May 2004 in the United States District
Court for the District of Colorado (the "District Court"). An amended complaint was filed in August 2004. The lawsuit was brought on behalf of a purported class of purchasers of our securities during
the period from May 29, 2003 to April 29, 2004, and sought unspecified damages relating to the issuance of allegedly false and misleading statements regarding EFAPROXYN during this
period and subsequent declines in our stock price. On October 20, 2005, the District Court granted the defendants' motion to dismiss the lawsuit with prejudice. In an opinion dated
October 20, 2005, the District Court concluded that the plaintiff's complaint failed to meet the legal requirements applicable to its alleged claims.

On
November 20, 2005, the plaintiff appealed the District Court's decision to the U.S. Court of Appeals for the Tenth Circuit (the "Court of Appeals"). On February 6, 2008,
the parties signed a stipulation of settlement, settling the case for $2,000,000. Neither we nor our former officer admits any liability in connection with the settlement. The Court of Appeals
accordingly has remanded the case to the District Court for consideration of the settlement. The settlement is subject to various conditions, including without limitation approval of the District
Court. We expect that the amount of the settlement in excess of our deductible will be covered by our insurance carrier. In the event the settlement does not become final, we intend to vigorously
defend against the plaintiff's appeal. If the Court of Appeals then were to reverse the District Court's decision and we were not successful in our defense of such claims, we could be forced to make
significant payments to the plaintiffs, and such payments could have a material adverse effect on our business, financial condition, results of operations and cash flows to the extent such payments
are not covered by our insurance carriers. Even if our defense against such claims were successful, the litigation could result in substantial costs and divert management's attention and resources,
which could adversely affect our business. As of December 31, 2007, we have recorded $2,000,000 in accrued litigation settlement costs, which represents our best estimate of the potential gross
amount of the settlement costs to be paid to the plaintiffs, and
$1,759,000 in prepaid expenses and other assets, which represents the amount we expect to be reimbursed from our insurance carrier. The net difference of $241,000 between these amounts represents the
remaining unpaid deductible under our insurance policy, and this amount was recorded to marketing, general and administrative expenses during the year ended December 31, 2006.

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

35

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PART II

ITEM 5.    MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information and Holders

Our common stock is traded on the Nasdaq Global Market® under the symbol "ALTH." The following table sets forth, for the periods indicated, the high
and low sales prices for our common stock as reported on the Nasdaq Global Market:

Year Ended December 31, 2007

HIGH

LOWFirst Quarter

$
8.54

$
5.75Second Quarter

$
7.08

$
3.91Third Quarter

$
5.90

$
3.92Fourth Quarter

$
7.52

$
4.70


|
|

Year Ended December 31, 2006

HIGH

LOWFirst Quarter

$
3.60

$
2.08Second Quarter

$
3.55

$
2.84Third Quarter

$
4.25

$
3.43Fourth Quarter

$
7.58

$
3.65


On
February 20, 2008, we had approximately 72 holders of record of our common stock.

36

---



Stock Performance Measurement Comparison(1)

The following graph shows the total stockholder return of an investment of $100 in cash on December 31, 2002 for (i) the Company's common stock,
(ii) the Nasdaq Composite Index and (iii) the Nasdaq Biotechnology Index. All values assume reinvestment of the full amount of all dividends and are calculated as of December 31
of each year:

Comparison of 5 year Cumulative Total Return on Investment

Line Graph

|Total Return Analysis    |  | 12/31/2002 |        | 12/31/2003 |   | 12/31/2004 |  | 12/31/2005 |        | 12/31/2006 |   | 12/31/2007
|------------------------ |  | ---------- | ------ | ---------- | - | ---------- |  | ---------- | ------ | ---------- | - | ----------
|Allos Therapeutics, Inc. |  | $          | 100.00 |            | $ | 47.74      |  | $          | 31.91  |            | $ | 28.59     
|NASDAQ Composite         |  | $          | 100.00 |            | $ | 150.01     |  | $          | 162.89 |            | $ | 165.13    
|NASDAQ Biotechnology     |  | $          | 100.00 |            | $ | 145.75     |  | $          | 154.68 |            | $ | 159.06    

---

Dividends

We have never paid dividends to holders of our common stock, and we do not anticipate paying any cash dividends in the foreseeable future as we intend to retain
any earnings for use in our business. Any future determination to pay dividends will be at the discretion of our board of directors and will depend upon the results of operations, financial condition,
contractual restrictions, restrictions imposed by applicable law and other factors our board of directors deems relevant.

37

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ITEM 6.    SELECTED FINANCIAL DATA

The selected financial data set forth below should be read in conjunction with our financial statements and the related notes and "Management's Discussion and
Analysis of Financial Condition and Results of Operations," included in this report. The statement of operations data for the years ended December 31, 2007, 2006, 2005, and cumulative period
from September 1, 1992 through December 31, 2007, and the balance sheet data as of December 31, 2007 and 2006, are derived from, and qualified by reference to, our audited
financial statements included elsewhere in this report. The statement of operations data for the years ended December 31, 2004 and 2003, and the balance sheet data as of December 31,
2005, 2004 and 2003, are derived from our audited financial statements that do not appear in this report. The historical results are not necessarily indicative of the operating results to be expected
in the future.

|                                                                     |                                       |                          |            |         |        |            |         |        |            |         |        | Cumulative period from September 1, 1992 (date of inception) through December 31, 2007 |        
|-------------------------------------------------------------------- | ------------------------------------- | ------------------------ | ---------- | ------- | ------ | ---------- | ------- | ------ | ---------- | ------- | ------ | -------------------------------------------------------------------------------------- | -------
|
|
|
|Statement of Operations Data:                                        |                                       |                          |            |         |        |            |         |        |            |         |        |                                                                                        |        
|Operating expenses:                                                  |                                       |                          |            |         |        |            |         |        |            |         |        |                                                                                        |        
|                                                                     | Research and development              |                          | $          | 17,444  |        | $          | 14,322  |        | $          | 11,215  |        | $                                                                                      | 10,158 
|                                                                     | Clinical manufacturing                |                          |            | 5,548   |        |            | 2,284   |        |            | 1,266   |        |                                                                                        | 2,979  
|                                                                     | Marketing, general and administrative |                          |            | 19,672  |        |            | 14,876  |        |            | 9,044   |        |                                                                                        | 9,194  
|                                                                     | Restructuring and separation costs    |                          |            |        |        |            | 646     |        |            | 380     |        |                                                                                        |       
|                                                                     |                                       |                          |            |         |        |            |         |        |            |         |        |                                                                                        |        
|                                                                     |                                       | Total operating expenses |            |         | 42,664 |            |         | 32,128 |            |         | 21,905 |                                                                                        |        
|Loss from operations                                                 |                                       |                          | (42,664    | )       |        | (32,128    | )       |        | (21,905    | )       |        | (22,331                                                                                | )      
|Gain on settlement claims                                            |                                       |                          |           |         |        |           |         |        |           |         |        |                                                                                       |        
|Interest and other income, net                                       |                                       |                          | 3,294      |         |        | 1,916      |         |        | 1,768      |         |        | 494                                                                                    |        
|                                                                     |                                       |                          |            |         |        |            |         |        |            |         |        |                                                                                        |        
|                                                                     | Net loss                              |                          |            | (39,370 | )      |            | (30,212 | )      |            | (20,137 | )      |                                                                                        | (21,837
|Dividend related to beneficial conversion feature of preferred stock |                                       |                          |           |         |        |           |         |        | (623       | )       |        |                                                                                       |        
|                                                                     |                                       |                          |            |         |        |            |         |        |            |         |        |                                                                                        |        
|Net loss attributable to common stockholders                         |                                       | $                        | (39,370    | )       | $      | (30,212    | )       | $      | (20,760    | )       | $      | (21,837                                                                                | )      
|                                                                     |                                       |                          |            |         |        |            |         |        |            |         |        |                                                                                        |        
|Net loss per share: basic and diluted                                |                                       | $                        | (0.60      | )       | $      | (0.55      | )       | $      | (0.45      | )       | $      | (0.70                                                                                  | )      
|                                                                     |                                       |                          |            |         |        |            |         |        |            |         |        |                                                                                        |        
|Weighted-average shares: basic and diluted                           |                                       |                          | 65,188,913 |         |        | 55,299,614 |         |        | 46,070,686 |         |        | 31,139,192                                                                             |        
|                                                                     |                                       |                          |            |         |        |            |         |        |            |         |        |                                                                                        |        

|
|

|                                                                |  | As of December 31, |         
|--------------------------------------------------------------- |  | ------------------ | --------
|
|
|Balance Sheet Data:                                             |  |                    |         
|Cash, cash equivalents and investments in marketable securities |  | $                  | 57,756  
|Long-term investments in marketable securities                  |  |                    |        
|Working capital                                                 |  |                    | 51,958  
|Total assets                                                    |  |                    | 61,460  
|Long-term obligations, less current portion                     |  |                    |        
|Common stock                                                    |  |                    | 300,508 
|Deficit accumulated during the development stage                |  |                    | (247,929
|Total stockholders' equity                                      |  |                    | 52,579  

38

---



ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

We are a biopharmaceutical company focused on developing and commercializing innovative small molecule drugs for the treatment of cancer. Our goal is to build a
profitable company by generating income from products we develop and commercialize, either alone or with one or more potential strategic partners. We strive to develop proprietary products that have
the potential to improve the standard of care in cancer therapy. Our focus is on product opportunities for oncology that leverage our internal clinical development and regulatory expertise and address
important markets with unmet medical need. We may also seek to grow our existing portfolio of product candidates through product acquisition and in-licensing efforts.

We
currently have two small molecule chemotherapeutic product candidates in clinical development, PDX (pralatrexate) and RH1.

PDX

PDX is a novel, small molecule chemotherapeutic agent that inhibits dihydrofolate reductase, or DHFR, a folic acid (folate)-dependent enzyme involved in the
building of nucleic acid, or DNA, and other processes. PDX was rationally designed for efficient transport into tumor cells via the reduced folate carrier, or RFC-1, and effective
intracellular drug retention. We believe these biochemical features, together with preclinical and clinical data in a variety of tumors, suggest that PDX may have a favorable safety and efficacy
profile relative to methotrexate and other related DHFR inhibitors. We believe PDX has the potential to be delivered as a single agent or in combination therapy regimens.

The
following clinical trials involving PDX are currently open for enrollment:



39

---





In
addition to our ongoing NSCLC studies, we intend to initiate a Phase 2, single-agent study of PDX in another solid tumor indication in the first half of 2008 and additional
Phase 1 combination studies with PDX in solid tumor indications by year end.

RH1

RH1 is a small molecule chemotherapeutic agent that we believe is bioactivated by the enzyme DT-diaphorase, or DTD, also known as NAD(P)H quinone
oxidoreductase, or NQ01. We believe DTD is over-expressed in many tumors, relative to normal tissue, including lung, colon, breast and liver tumors. We believe that because RH1 is
bioactivated in the presence of DTD, it has the potential to provide targeted drug delivery to these tumor types while limiting the amount of toxicity to normal tissue.

In
November 2007, we initiated patient enrollment in a Phase 1 study of RH1 in patients with advanced solid tumors or NHL. We plan to enroll up to 60 evaluable patients in the
study with the objective of determining the MTD, recommended Phase 2 dose and safety profile of RH1 in this population. We plan to enroll three to six patients per cohort. Once we determine
what we believe to be the optimal dose and schedule, we plan to recruit an expanded cohort of up to 24 evaluable patients who have tumor types with a high likelihood of DTD over-expression
to explore possible markers of anticancer activity.

EFAPROXYN (efaproxiral) Development Discontinued

In mid-2007, we discontinued the development of EFAPROXYN, our former lead product candidate, after announcing top-line results from
ENRICH, a Phase 3 clinical trial of EFAPROXYN plus whole brain radiation therapy, or WBRT, in women with brain metastases originating from breast cancer. The study failed to achieve its primary
endpoint of demonstrating a statistically significant improvement in overall survival in patients receiving EFAPROXYN plus WBRT, compared to patients receiving WBRT alone. We are currently pursuing
the sale of our rights to EFAPROXYN although we may not receive any material consideration for any sale.

Results of Operations

We are a development stage company. Since our inception in 1992, we have not generated any revenue from product sales and have experienced significant net losses
and negative cash flows from operations. We have incurred these losses principally from costs incurred in our research and development programs, our clinical manufacturing, and from our marketing,
general and administrative expenses. Our primary business activities have been focused on the development of EFAPROXYN (a program which we discontinued in mid-2007), PDX and RH1. For the
years ended December 31, 2007, 2006 and 2005, we had net losses attributable to common stockholders of $39.4 million, $30.2 million, and $20.8 million, respectively.
Research and development expenses for the years ended December 31, 2007, 2006 and 2005 were $17.4 million, $14.3 million and $11.2 million, respectively. As of
December 31, 2007, we had accumulated a deficit during our development stage of $247.9 million.

40

---



Our
ability to generate revenue and achieve profitability is dependent on our ability, alone or with partners, to successfully complete the development of our product candidates, conduct
clinical trials, obtain the necessary regulatory approvals, and manufacture and market our product candidates. The timing and costs to complete the successful development of any of our product
candidates are highly uncertain, and therefore difficult to estimate. The lengthy process of seeking regulatory approvals for our product candidates, and the subsequent compliance with applicable
regulations, require the expenditure of substantial resources. For a more complete description of the regulatory approval process, please refer to the "Government Regulation" section of Part I,
Item 1 above. Clinical development timelines, likelihood of success and total costs vary widely and are impacted by a variety of risks and uncertainties discussed in the "Risk Factors" section
of Part I, Item 1A above. Because of these risks and uncertainties, we cannot predict when or whether we will successfully complete the development of any of our product candidates or
the ultimate costs of such efforts. Due to these same factors, we cannot be certain when, or if, we will generate any revenue or net cash inflow from any of our current product candidates.

Even
if our clinical trials demonstrate the safety and effectiveness of our product candidates in their target indications, we do not expect to be able to record commercial sales of any
of our product candidates until 2009 at the earliest. We expect to incur significant and growing net losses for the foreseeable future as a result of our research and development programs and the
costs of preparing for the potential commercial launch of PDX. Although the size and timing of our future net losses are subject to significant uncertainty, we expect them to increase over the next
several years as we continue to fund our development programs and prepare for the potential commercial launch of PDX.

We
will be required to raise additional capital to support our future operations, including the potential commercialization of PDX in the event the PROPEL trial is positive and we obtain
regulatory approval to market PDX. We may seek to obtain this additional capital through arrangements with corporate partners, equity or debt financings, or from other sources. Such arrangements, if
successfully consummated, may be dilutive to our existing stockholders. However, there is no assurance that we will be successful in consummating any such arrangements. In addition, in the event that
additional funds are obtained through arrangements with collaborative partners or other sources, such arrangements may require us to relinquish rights to some of our technologies, product candidates
or products under development that we would otherwise seek to develop or commercialize ourselves. If we are unable to generate meaningful amounts of revenue from future product sales, if any, or
cannot otherwise raise sufficient additional funds to support our operations, we may be required to delay, reduce the scope of or eliminate one or more of our development programs and our business and
future prospects for revenue and profitability may be harmed.

Comparison of Years Ended December 31, 2007, 2006 and 2005

Research and Development.Research and development expenses include the costs of certain personnel, basic research,
preclinical studies, clinical trials, regulatory affairs, biostatistical data analysis, patents and licensing fees for our product candidates.

Years Ended
December 31,2007

2006

2005(in millions)Research and development expenses

$
17.4

$
14.3

$
11.2


41

---



The
$3.1 million increase in research and development expenses in 2007 as compared to 2006 was primarily due to the following:



These
increases were partially offset by a $3.2 million decrease in clinical trial costs for EFAPROXYN, primarily resulting from the completion of patient enrollment in our
Phase 3 ENRICH trial in September 2006.

The
$3.1 million increase in research and development expenses in 2006 as compared to 2005 was primarily due to the following:



These
increases were partially offset by a $1.3 million decrease in clinical trial costs for ENRICH as (i) we incurred a one-time milestone payment of $550,000
in 2005 related to third party trial management services, (ii) we changed our estimate relating to certain costs for ENRICH during the quarter ended December 31, 2006 as a result of new
information, which resulted in a reduction of research and development expenses of approximately $400,000, and (iii) patients were enrolled in the ENRICH trial throughout 2005 whereas patient
enrollment was completed in September 2006.

We
expect research and development expenses to increase in 2008 as compared to 2007 due to the following:



We
charge direct internal and external research and development expenses to the respective development programs. Since our inception through December 31, 2007, we have incurred
direct costs of approximately $39.5 million, $15.2 million and $840,000 associated with research and development expenses for EFAPROXYN, PDX and RH1, respectively, and approximately
$5.5 million associated with our other research and development programs, including programs that have been discontinued.

42

---



We
also incur indirect costs that are not allocated to specific programs because such costs benefit multiple development programs. These consist primarily of salaries and benefits, facilities costs
and other internal-shared resources related to the development and maintenance of systems and processes applicable to all of our programs. Unallocated costs since our inception through
December 31, 2007 represent approximately $64.3 million of research and development expenses.

The
following table summarizes our research and development expenses for the years ended December 31, 2007, 2006 and 2005 and for the cumulative period from our inception through
December 31, 2007:

Cumulative
Period from
September 1, 1992
through
December 31, 2007Years Ended December 31,2007

2006

2005(in millions)EFAPROXYN

$
1.0

$
4.3

$
5.3

$
39.5PDX


6.8


3.4


0.5


15.2RH1


0.6








0.8Other programs











5.5Unallocated


9.0


6.6


5.4


64.3Total research and development expenses

$
17.4

$
14.3

$
11.2

$
125.3


The
timing and costs to complete the successful development of any of our product candidates are highly uncertain, and therefore difficult to estimate. The lengthy process of seeking
regulatory approvals for our product candidates, and the subsequent compliance with applicable regulations, require the expenditure of substantial resources. Clinical development timelines, likelihood
of success and total costs vary widely and are impacted by a variety of factors discussed in the "Risk Factors" section of Part I, Item 1A above. Because of these risks and
uncertainties, we cannot predict when or whether we will successfully complete the development of any of our product candidates or the ultimate costs of such efforts. Due to these same factors, we
cannot be certain when, or if, we will generate any revenue or net cash inflow from any of our current product candidates.

Clinical Manufacturing.Clinical manufacturing expenses include the costs of certain personnel, third-party manufacturing
costs for development of drug materials for use in clinical trials and preclinical studies, and costs associated with pre-commercial scale-up of manufacturing to support
anticipated regulatory and potential commercial requirements.

Years Ended
December 31,2007

2006

2005(in millions)Clinical manufacturing expenses

$
5.5

$
2.3

$
1.3


The
$3.3 million increase in clinical manufacturing expenses in 2007 as compared to 2006 was primarily due to the following:



43

---





The
$1.0 million increase in clinical manufacturing expenses in 2006 as compared to 2005 was primarily due to an $856,000 increase in third-party manufacturing costs for PDX and
RH1 bulk drug substance and formulated drug product.

We
expect our clinical manufacturing expenses to increase in 2008 as compared to 2007 due to the following:



Marketing, General and Administrative.Marketing, general and administrative expenses include costs for
pre-marketing activities, corporate development, executive administration, corporate offices and related infrastructure.

Years Ended
December 31,2007

2006

2005(in millions)Marketing, general and administrative expenses

$
19.7

$
14.9

$
9.0


The
$4.8 million increase in marketing, general and administrative expenses in 2007 as compared to 2006 was primarily due to the following:



The
$5.8 million increase in marketing, general and administrative expenses in 2006 as compared to 2005 was primarily due to the following:



44

---





These
increases were partially offset by a $311,000 decrease in insurance costs.

We
expect marketing, general and administrative expenses to increase in 2008 as compared to 2007 due to the following:



Stock-based Compensation Expense.Stock-based compensation expense for the years ended December 31, 2007,
2006 and 2005 has been recognized in our Statements of Operations as follows:

|                                      |                                        | Year ended December 31,
|------------------------------------- | -------------------------------------- | -----------------------
|
|Research and development              |                                        | $                      
|Clinical manufacturing                |                                        |                        
|Marketing, general and administrative |                                        |                        
|                                      |                                        |                        
|                                      | Total stock-based compensation expense |                        
|                                      |                                        |                        

Of
the $6.7 million of stock-based compensation recognized in year ended December 31, 2007, $5.9 million was related to our stock option plans, $690,000 related to
restricted stock and $61,000 related to our employee stock purchase plan. Of the $3.6 million of stock-based compensation recognized in the year ended December 31, 2006,
$3.0 million was related to our stock option plans, $503,000 related to restricted stock and $36,000 related to our employee stock purchase plan. The $3.1 million increase in stock-based
compensation expense in 2007 as compared to 2006 was primarily due to a higher fair-value for options granted in 2007 compared to options granted in 2006 due to our stock price being
higher during the year ended December 31, 2007 as compared to 2006. The stock-based compensation expense recognized in the year ended December 31, 2005 primarily resulted from $462,000
in expense related to an amendment in May 2005 of the terms surrounding the exercise period for certain options that were granted to our Chairman of the Board of Directors in 2000. The
$3.1 million increase in stock-based compensation expense in 2006 as compared to 2005 was due to the implementation of SFAS No. 123 (Revised 2004),Share-Based
Payment("SFAS 123R") on January 1, 2006.

As
of December 31, 2007, the unrecorded stock-based compensation balance related to stock option awards was $5,991,942 and will be recognized over an estimated weighted-average
amortization period of 1.4 years. As of December 31, 2007, the unrecorded stock-based compensation balance related to restricted stock awards was $695,779 and will be recognized over an
estimated weighted-average amortization period of 1.5 years.

Restructuring and Separation Costs.We recorded $0, $646,000 and $380,000 in restructuring and separation costs during the
years ended December 31, 2007, 2006 and 2005, respectively.

In
January 2006, Michael E. Hart notified our Board of Directors of his intent to resign from his positions as President, Chief Executive Officer and Chief Financial Officer of the
Company once a successor Chief Executive Officer was appointed. On March 3, 2006, we entered into a separation agreement with Mr. Hart to provide certain incentives for his continued
employment with the Company while we conducted our search for his successor. On March 9, 2006, we appointed Paul L. Berns as our President, Chief Executive Officer and a member of the Board of
Directors and Mr. Hart resigned from his positions in accordance with the terms of the separation agreement. The separation agreement with Mr. Hart was amended on March 9, 2006,
and on May 10, 2006 (as so amended, the "Separation

45

---



Agreement").
We recorded separation costs of $646,000 during the year ended December 31, 2006 relating to our estimate of our total obligations under the Separation Agreement with
Mr. Hart. During the years ended December 31, 2007 and 2006, respectively, we made payments to Mr. Hart under the Separation Agreement of $321,000 and $325,000. As of
December 31, 2007, there was no remaining liability relating to the Separation Agreement with Mr. Hart.

In
January 2005, we executed agreements to sublease approximately three-quarters of the 12,708 square feet of excess space in our corporate offices located in Westminster, Colorado. The
term of each sublease agreement is through the term of our office lease, or October 31, 2008. The total rental payments to us under the terms of the sublease agreements approximate $230,000. In
the year ended December 31, 2005, we recorded a lease abandonment charge of $380,000 as our obligations under our primary lease were in excess of the sum of the actual and expected sublease
rental payments for this excess space. As of December 31, 2007, the amount remaining in accrued restructuring and separation costs relating to this lease abandonment charge was $39,000.

Interest and Other Income, Net.Interest income, net of interest expense, for 2007, 2006 and 2005 was $3.3 million,
$1.9 million, and $1.8 million, respectively. The $1.4 million increase in 2007 as compared to 2006 primarily resulted from higher average investment balances resulting from our
February 2007 financing and higher yields on United States government securities, high-grade commercial paper and corporate notes, and money market funds. The $148,000 increase in 2006 as
compared to 2005 primarily resulted from higher yields on United States government securities, high-grade commercial paper and corporate notes, and money market funds partially offset by
lower average investment balances.

Income Taxes.As of December 31, 2007, we had available approximately $130.6 million of net operating loss
("NOL") carryforwards, after taking into consideration NOLs expected to expire unused due to limitations under Section 382 of the Internal Revenue Code, and which includes
approximately $3.4 million of deductions related to stock-based compensation that are not realized as deferred tax assets until current taxes payable can be reduced. These NOL carryforwards
will expire beginning in 2009. In addition, we had research and development credit and orphan drug credit carryforwards, after taking into consideration the Section 382 limitation, of
$2.3 million and $4.9 million, respectively, as of December 31, 2007, to offset future regular and alternative tax expense. Since our formation, we have raised capital through the
issuance of capital stock on several occasions which, combined with shareholders' subsequent disposition of those shares, have resulted in four changes of control in 1994, 1998, 2001 and 2005, as
defined by Section 382. In general, an ownership change, as defined by Section 382, results from transactions increasing the ownership of certain shareholders or public groups
in the stock of a corporation by more than 50% within a three-year period. As a result of the most recent ownership change in 2005, utilization of our NOLs generated prior to the latest
change in control are subject to an annual limitation under Section 382 determined by multiplying the value of our stock at the time of the ownership change by the applicable
long-term tax-exempt rate resulting in an annual limitation amount of approximately $2.2 million. Any unused annual limitation may be carried over to later years, and
the amount of the limitation may, under certain circumstances, be subject to adjustment if the fair value of the Company's net assets are determined to be below or in excess of the tax basis of such
assets at the time of the ownership change, and such unrealized loss or gain is recognized during the five-year period after the ownership change. Subsequent ownership changes, as defined
in Section 382, could further limit the amount of our NOLs and research and development credits that can be utilized annually to offset future taxable income.

Liquidity and Capital Resources

As of December 31, 2007, we had $57.8 million in cash, cash equivalents, and investments in marketable securities. Since our inception, we have
financed our operations primarily through public and private sales of our equity securities, which have resulted in net proceeds to us of $257.9 million through December 31, 2007. We
have also generated $21.6 million of net interest income since our inception from investing the net proceeds of these financings.

46

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We have used $195.5 million of cash for operating activities from our inception through December 31, 2007. Net cash used to fund our operating activities for 2007, 2006 and
2005 was $30.8 million, $25.1 million and $17.7 million, respectively.

Net
cash used in investing activities for 2007 and 2005 was $19.3 million and $28.2 million, respectively, and consisted primarily of purchases of investments in marketable
securities, partially offset by the proceeds from maturities of investments in marketable securities. Net cash provided by investing activities for 2006 was $27.9 million and consisted
primarily of proceeds from the maturities of investments in marketable securities, partially offset by the purchase of investments in marketable securities.

Net
cash provided by financing activities during 2007 was $55.9 million and resulted primarily from the sale of 9,000,000 shares of common stock in February 2007 in an
underwritten offering at a price of $6.00 per share (the "February 2007 Financing"), $5.5 million of proceeds associated with the exercise of common stock options, common stock warrants and
sales of stock under our employee stock purchase plan, and the release of $183,000 of restricted cash in connection with a reduction of the letter of credit required pursuant to the lease for our
corporate headquarters facility. We received net proceeds from the February 2007 Financing of approximately $50.3 million, after deducting underwriting commissions of approximately
$3.2 million and other offering expenses of approximately $503,000. The shares of common stock were sold under our shelf Registration Statement on Form S-3 (File
No. 333-134965), declared effective by the Securities and Exchange Commission ("SEC") on July 10, 2006. We retired the unused portion of this shelf registration statement in
June 2007. Net cash provided by financing activities during 2006 was $3.1 million and resulted primarily from proceeds associated with the exercise of common stock options, common stock
warrants and sales of stock under our employee stock purchase plan, and the release of $183,000 of restricted cash in connection with a reduction of the letter of credit required pursuant to the lease
for our corporate headquarters facility. Net cash provided by financing activities during 2005 was $49.1 million and resulted primarily from the sale of 2,352,443 shares of Series A
Exchangeable Preferred Stock in March 2005 (the "Exchangeable Preferred"), at a price per share of $22.10, to Warburg Pincus Private Equity VIII, L.P. ("Warburg") and certain other investors
for aggregate gross proceeds of approximately $52.0 million. We incurred offering expenses of $3.2 million in connection with the sale of Exchangeable Preferred, resulting in net
proceeds to us of $48.8 million. On May 18, 2005, at our Annual Meeting of Stockholders, our stockholders voted to approve the issuance of shares of our common stock upon exchange of
shares of the Exchangeable Preferred. As a result of such approval, we issued a total of 23,524,430 shares of common stock upon exchange of 2,352,443 shares of Exchangeable Preferred.

On
June 5, 2007, a universal shelf Registration Statement on Form S-3 (File No. 333-143198) was declared effective by the SEC. Under the
registration statement, we
are allowed to sell, from time to time, up to $150 million of our common stock, preferred stock, depository shares, debt securities and/or warrants, either individually or in units, in one or
more offerings. We have no specific plans to offer the securities covered by the registration statement and we are not required to offer the securities in the future pursuant to the registration
statement. The terms of any offering under the registration statement will be established at the time of the offering. Proceeds from the sale of any securities will be used for the purposes described
in a prospectus supplement filed at the time of an offering.

Based
upon the current status of our product development plans, we believe that our cash, cash equivalents, and investments in marketable securities as of December 31, 2007 should
be adequate to support our operations through at least the first quarter of 2009, although there can be no assurance that this can, in fact, be accomplished. Our forecast of the period of time through
which our financial resources will be adequate to support our operations is a forward-looking statement that involves risks and uncertainties, and actual results could vary materially.

47

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We
anticipate continuing our current development programs and/or beginning other long-term development projects involving our product candidates. These projects may require
many years and substantial expenditures to complete and may ultimately be unsuccessful. Therefore, we will need to obtain additional funds from outside sources to continue research and development
activities, fund operating expenses, pursue regulatory approvals and build sales and marketing capabilities, as necessary. However, our actual capital requirements will depend on many factors,
including:



We
will be required to raise additional capital to support our future operations, including the potential commercialization of PDX in the event the PROPEL trial is positive and we obtain
regulatory approval to market PDX. We may seek to obtain this additional capital through arrangements with corporate partners, equity or debt financings, or from other sources. Such arrangements, if
successfully consummated, may be dilutive to our existing stockholders. However, there is no assurance that we will be successful in consummating any such arrangements. In addition, in the event that
additional funds are obtained through arrangements with collaborative partners or other sources, such arrangements may require us to relinquish rights to some of our technologies, product candidates
or products under development that we would otherwise seek to develop or commercialize ourselves. If we are unable to generate meaningful amounts of revenue from future product sales, if any, or
cannot otherwise raise sufficient additional funds to support our operations, we may be required to delay, reduce the scope of or eliminate one or more of our development programs and our business and
future prospects for revenue and profitability may be harmed.

Obligations and Commitments

Below is a schedule of the timing of contractual commitments, by fiscal year, related to our leases, service contracts and license agreements. We currently have
no off-balance sheet arrangements.

|                              |  | 2008 |           | 2009 to 2010 |   | 2011 to 2012 |  | After 2012 |   | Total
|----------------------------- |  | ---- | --------- | ------------ | - | ------------ |  | ---------- | - | -----
|Operating lease obligations   |  | $    | 657,000   |              | $ | 73,000       |  | $          |  |      
|License agreement obligations |  |      | 500,000   |              |   | 500,000      |  |            |  |      
|                              |  |      |           |              |   |              |  |            |   |      
|Total obligations             |  | $    | 1,157,000 |              | $ | 573,000      |  | $          |  |      
|                              |  |      |           |              |   |              |  |            |   |      

Operating
lease obligations represent our future minimum rental commitments for non-cancelable operating leases for our facilities and certain office equipment, net of
$61,000 of remaining sublease payments on excess space in our corporate offices. We lease our corporate headquarters facility pursuant to a lease agreement that expires on October 31, 2008. We
are currently in the process of negotiating an extension to the lease for our corporate headquarters facility. However, there is no assurance that we will be successful in negotiating any such
extension. If we are unable to extend the lease, we believe that there is adequate space for lease in our area to support our current and future growth requirements.

License
agreement obligations represent future milestone payments which could be made under our license agreement for PDX, due upon the passage of certain time periods after the
effective date

48

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of
the agreement. These payments could be paid earlier depending on the timing of achieving a certain development milestone.

Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance
with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of
assets, liabilities, and expenses. We base our estimates on historical experience, available information and assumptions that we believe to be reasonable under the circumstances. Actual results may
differ from these estimates under different assumptions or conditions. We believe the following policies to be the most critical to an understanding of our financial condition and results of
operations because they require us to make estimates, assumptions and informed management judgments about matters that are inherently uncertain:



Research and Development.Research and development expenditures are charged to expense as incurred. Research and development
expenses include the costs of certain personnel, basic research, preclinical studies, clinical trials, regulatory affairs, biostatistical data analysis, patents and licensing fees for our product
candidates. Clinical trial costs represent internal costs from personnel, external costs incurred at clinical sites and contracted costs incurred by third party clinical research organizations to
perform certain clinical trials.

We
record upfront fees and milestone payments made under our licensing agreements for our product candidates as research and development expense as the services are performed.

We
accrue research and development expenses for activity as incurred during the fiscal year and prior to receiving invoices from clinical sites and third party clinical and preclinical
research organizations. We accrue external costs for clinical and preclinical studies based on an evaluation of the following: the progress of the studies, including patient enrollment, dosing levels
of patients enrolled, estimated costs to dose patients, invoices received, and contracted costs with clinical sites and third party clinical and preclinical research organizations. Significant
judgments and estimates must be made and used in determining the accrued balance in any accounting period. Actual results could differ from those estimates. During the years ended December 31,
2007, 2006, and 2005, we did not have any changes in estimates that would have resulted in material adjustments to research and development expenses accrued in the prior period. However, during the
quarter ended December 31, 2006, we did change our estimate relating to certain costs for our Phase 3 ENRICH trial for EFAPROXYN as a result of new information, which resulted in a
reduction of research and development expenses of approximately $400,000 and a corresponding decrease in accrued research and development expenses as of December 31, 2006.

In
accordance with certain research and development agreements, we are obligated to make certain upfront payments upon execution of the agreement. We record these upfront payments as
prepaid
research and development expenses. Such payments are recorded to research and development expense as services are performed. We evaluate on a quarterly basis whether events and circumstances have
occurred that may indicate impairment of remaining prepaid research and development expenses.

Clinical Manufacturing.Clinical manufacturing expenses include the costs of certain personnel and third party manufacturing
costs for our product candidates for use in clinical trials and preclinical

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studies,
and certain costs associated with pre-commercial scale-up of manufacturing to support anticipated regulatory and potential commercial requirements. Our finished drug
inventory is expensed to clinical manufacturing since we are still a development stage company and we have not received regulatory approval to market our product candidates. If and when we receive
regulatory approval, we will be required to capitalize any future manufacturing costs for our marketed products at the lower of cost or market and then expense the sold inventory as a component of
cost of goods sold.

Cash Equivalents and Investments in Marketable Securities.All highly liquid investments with original maturities of three
months or less are considered to be cash equivalents. The carrying values of our cash equivalents and investments in marketable securities approximate their market values based on quoted market
prices. We account for investments in marketable securities in accordance with Statement of Financial Accounting Standards ("SFAS") No. 115,Accounting for Certain
Investments in Debt and Equity Securities. Investments in marketable securities are classified as held to maturity and are carried at cost plus accrued interest. Our cash and
cash equivalents are maintained in a financial institution in amounts that, at times, may exceed federally insured limits. We have not experienced any losses in such accounts and believe such accounts
are not exposed to any significant credit risk in this area. We place investments in high-quality securities in accordance with our investment policy. Substantially all of our investments
in marketable securities as of December 31, 2007 are held in corporate notes with remaining maturities ranging from one to five months.

Stock-based Compensation Expense.We adopted SFAS No. 123 (Revised 2004),Share-Based
Payment("SFAS 123R") effective January 1, 2006. Under the provisions of SFAS 123R, stock-based compensation is measured at the grant date based on the
fair value of the award and is recognized as expense over the required service period of the award. Prior to the adoption of SFAS 123R, we accounted for grants of stock-based awards according
to the intrinsic value method as prescribed by Accounting Principles Board Opinion No. 25,Accounting for Stock Issued to Employeesand related
Interpretations.

In
March 2005, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 107 ("SAB 107") relating to SFAS 123R. We applied the provisions of
SAB 107 in connection with our adoption of SFAS 123R. We adopted SFAS 123R using the modified prospective transition method, which requires the application of the accounting
standard as of January 1, 2006, the first day of our fiscal year 2006. Our financial statements as of and for the years ended December 31, 2007 and 2006 reflect the impact of
SFAS 123R. In accordance with the modified prospective transition method, our
financial statements for prior periods have not been restated to reflect, and do not include, the impact of SFAS 123R.

The
adoption of SFAS 123R on January 1, 2006 had a material impact on our net loss and net loss per share for the years ended December 31, 2007 and 2006. We expect
that our adoption of SFAS 123R will have a material impact on our future financial statements and results of operations. During the years ended December 31, 2007 and 2006, we recorded
stock-based compensation expense of approximately $6.7 million and $3.6 million, respectively, related to stock-based awards, including stock options, restricted stock and our employee
stock purchase plan. As of December 31, 2007, the unrecorded deferred stock-based compensation balance related to these stock-based awards was approximately $6.7 million and will be
recognized over the remaining vesting periods of the awards. Judgments and estimates must be made and used in determining the factors used in calculating the fair value of stock-based awards,
including the expected forfeiture rate of our stock-based awards, the expected life of our stock-based awards, and the expected volatility of our stock price. For more information on stock-based
compensation expense during the year ended December 31, 2007, refer to Note 4 "Stock-Based Compensation Plans" of the Notes to our Financial Statements included in Part IV,
Item 15 of this report.

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Recent Accounting Pronouncements

In September 2006, the Financial Accounting Standards Board ("FASB") issued SFAS 157,Fair Value
Measurements,which defines fair value, provides a framework for measuring fair value, and expands the disclosures required for fair value measurements. SFAS 157 applies
to other accounting pronouncements that require fair value measurements; it does not require any new fair value measurements. SFAS 157 is effective for fiscal years beginning after
November 15, 2007 and we are required to adopt it on January 1, 2008. The application of SFAS 157 to certain items has been deferred and will be effective for fiscal years
beginning after November 15, 2008 and interim periods with that year. Although we will continue to evaluate the application of SFAS 157, management does not currently believe adoption of
this pronouncement will have a material impact on our results of operations or financial position.

In
February 2007, the FASB issued SFAS No. 159,The Fair Value Option for Financial Assets and Financial LiabilitiesIncluding an Amendment of
FASB Statement No. 115,which is effective for fiscal years beginning after November 15, 2007 and we are required to adopt it on January 1, 2008. This
statement permits an entity to choose to measure many financial instruments and certain other items at fair value at specified election dates. Subsequent unrealized gains and losses on items for which
the fair value option has been elected will be reported in earnings. We are currently evaluating the potential impact of this statement.

In
June 2007, the Emerging Issues Task Force ("EITF") issued a consensus, EITF 07-3,Advance Payments for Research and Development
Activities, which states that non-refundable advance payments for goods that will be used or services that will be performed in future research and development
activities should be deferred and capitalized until the goods have been delivered or the related services have been rendered. EITF 07-3 is to be applied prospectively for new
contractual arrangements entered into in fiscal years beginning after December 15, 2007. We do not expect that EITF 07-3 will result in a material change to our current
accounting practice.

In
November 2007, the EITF issued a consensus, EITF 07-01,Accounting for Collaboration Arrangements Related to the Development and
Commercialization of Intellectual Property, which is focused on how the parties to a collaborative agreement should account for costs incurred and revenue generated on sales to
third parties, how sharing payments pursuant to a collaboration agreement should be presented in the income statement and certain related disclosure questions. EITF 07-1 is to be
applied retrospectively for collaboration arrangements in fiscal years beginning after December 15, 2008. We currently do not have any such arrangements.

In
December 2007, the FASB issued SFAS 141(R),Business Combinations. This Statement replaces SFAS 141, Business Combinations,and requires an
acquirer to recognize the assets acquired, the liabilities assumed, including those arising from contractual
contingencies, any contingent consideration, and any noncontrolling interest in the acquiree at the acquisition date, measured at their fair values as of that date, with limited exceptions specified
in the statement. SFAS 141(R) also requires the acquirer in a business combination achieved in stages (sometimes referred to as a step acquisition) to recognize the identifiable assets and
liabilities, as well as the noncontrolling interest in the acquiree, at the full amounts of their fair values (or other amounts determined in accordance with SFAS 141(R)). In addition,
SFAS 141(R)'s requirement to measure the noncontrolling interest in the acquiree at fair value will result in recognizing the goodwill attributable to the noncontrolling interest in addition to
that attributable to the acquirer. SFAS 141(R) amends SFAS No. 109,Accounting for Income Taxes, to require the acquirer to recognize
changes in the amount of its deferred tax benefits that are recognizable because of a business combination either in income from continuing operations in the period of the combination or directly in
contributed capital, depending on the circumstances. It also amends SFAS 142,Goodwill and Other Intangible Assets, to, among other things,
provide guidance on the impairment testing of acquired research and development intangible assets and assets that the

51

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acquirer
intends not to use. SFAS 141(R) applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period
beginning on or after December 15, 2008. We are currently evaluating the potential impact of this Statement.

In
December 2007, the FASB issued SFAS 160,Noncontrolling Interests in Consolidated Financial Statements. SFAS 160 amends
Accounting Research Bulletin 51,Consolidated Financial Statements, to establish accounting and reporting standards for the noncontrolling interest in a
subsidiary and for the deconsolidation of a subsidiary. It also clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as
equity in the consolidated financial statements. SFAS 160 also changes the way the consolidated income statement is presented by
requiring consolidated net income to be reported at amounts that include the amounts attributable to both the parent and the noncontrolling interest. It also requires disclosure, on the face of the
consolidated statement of income, of the amounts of consolidated net income attributable to the parent and to the noncontrolling interest. SFAS 160 requires that a parent recognize a gain or
loss in net income when a subsidiary is deconsolidated and requires expanded disclosures in the consolidated financial statements that clearly identify and distinguish between the interests of the
parent owners and the interests of the noncontrolling owners of a subsidiary. SFAS 160 is effective for fiscal periods, and interim periods within those fiscal years, beginning on or after
December 15, 2008. We are currently evaluating the potential impact of this statement.

ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We do not use derivative financial instruments in our investment portfolio and have no foreign exchange contracts. Our financial instruments as of
December 31, 2007 consist of cash, cash equivalents, short-term investments in marketable securities, and accounts payable. All highly liquid investments with original maturities of
three months or less are considered to be cash equivalents.

We
invest in marketable securities in accordance with our investment policy. The primary objectives of our investment policy are to preserve principal, maintain proper liquidity to meet
operating needs and maximize yields. Our investment policy specifies credit quality standards for our investments and limits the amount of credit exposure to any single issue, issuer or type of
investment. The average duration of the issues in our portfolio as of December 31, 2007 is approximately two months. As of December 31, 2007, our investments in marketable securities of
$41.8 million are all classified as held-to-maturity and were held in a variety of interest-bearing instruments, consisting mainly of high-grade corporate
notes.

Investments
in fixed-rate interest-earning instruments carry varying degrees of interest rate risk. The fair market value of our fixed-rate securities may be
adversely impacted due to a rise in interest rates. In general, securities with longer maturities are subject to greater interest-rate risk than those with shorter maturities. Due in part
to this factor, our interest income may fall short of expectations or we may suffer losses in principal if securities are sold that have declined in market value due to changes in interest rates. Due
to the short duration of our investment portfolio, we believe an immediate 10% change in interest rates would not be material to our financial condition or results of operations.

ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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

ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

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ITEM 9A.    CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

As of the end of the period covered by this report, an evaluation was carried out under the supervision and with the participation of our management, including
our principal executive officer and principal financial officer (the "Evaluating Officers"), of the effectiveness of our disclosure controls and procedures, as defined in
Rule 13(a)-15(e) of the Securities Exchange Act of 1934, as amended ("Exchange Act"). Based on that evaluation, our management, including the Evaluating Officers, concluded that our
disclosure controls and procedures were effective as of December 31, 2007 to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to
our management, including the Evaluating Officers, as appropriate, to allow timely decisions regarding required disclosure.

Management's Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining effective internal control over financial reporting. Internal control over financial reporting is
defined in Rule 13a-15(f) or Rule 15d-(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, a company's principal executive officer
and principal financial officer and effected by the company's board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies
and procedures that:



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

Our
management assessed the effectiveness of our internal control over financial reporting as of December 31, 2007. In making its assessment, management used the criteria
established inInternal ControlIntegrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission. Based
on its assessment, management determined that, as of December 31, 2007, we maintained effective internal control over financial reporting based on those criteria.

In
addition, the effectiveness of our internal control over financial reporting as of December 31, 2007 has been audited by PricewaterhouseCoopers LLP, an independent
registered public accounting firm, as stated in their report on page F-2 of this Annual Report on Form 10-K.

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No Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended December 31, 2007 that have materially affected, or are
reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B.    OTHER INFORMATION

None.

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PART III

ITEM 10.    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by this Item concerning our directors is incorporated by reference to the information to be set forth in the sections entitled "Proposal
1Election of Directors" and "Section 16(a) Beneficial Ownership Reporting Compliance" in our definitive Proxy Statement for the 2008 Annual Meeting of Stockholders to be filed with
the Securities and Exchange Commission within 120 days after the end of our fiscal year ended December 31, 2007 (the "Proxy Statement"). The information required by this Item concerning
our executive officers is incorporated by reference to the information to be set forth in the section of the Proxy Statement entitled "Executive Officers."

Our
Board of Directors has adopted a Code of Business Conduct and Ethics for all of our directors, officers and employees. Stockholders may locate a copy of our Code of Business Conduct
and Ethics on our website at http://www.allos.com or request a free copy from:



To
date, there have been no waivers under our Code of Business Conduct and Ethics. We will post any waivers, if and when granted, of our Code of Business Conduct and Ethics on our
website.

ITEM 11.    EXECUTIVE COMPENSATION

The information required by this Item regarding executive compensation is incorporated by reference to the information to be set forth in the sections of the
Proxy Statement entitled "Executive Compensation," "Director Compensation," "Compensation Committee Interlocks and Insider Participation," and "Compensation Committee Report."

ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Securities Authorized for Issuance Under Equity Compensation Plans

The following table provides certain information with respect to our equity compensation plans in effect as of December 31, 2007:

|Plan Category                                              |  | Number of securities to
be issued upon exercise
of outstanding options
and rights
(a) |  | Weighted-average
exercise price
of outstanding
options and rights
(b) |      | Number of securities
remaining available
for issuance under
equity compensation
plans (excluding
securities reflected
in column (a))
(c) |          
|---------------------------------------------------------- |  | ------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------- | ---- | ---------------------------------------------------------------------------------------------------------------------------------------- | ---------
|Equity compensation plans approved by security holders     |  | 5,339,649                                                                             |  | $                                                                     | 4.64 |                                                                                                                                          | 3,666,292
|Equity compensation plans not approved by security holders |  | 1,065,781                                                                             |  | $                                                                     | 4.90 |                                                                                                                                          | 1,108,231
|                                                           |  |                                                                                       |  |                                                                       |      |                                                                                                                                          |          
|Total                                                      |  | 6,405,430                                                                             |  | $                                                                     | 4.68 |                                                                                                                                          | 4,774,523
|                                                           |  |                                                                                       |  |                                                                       |      |                                                                                                                                          |          

---

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Please
see Note 4 to our Financial Statements included in Part IV, Item 15 of this report for a description of the material features of our 2002 Broad Based Equity
Incentive Plan and 2006 Inducement Award Plan, each of which was adopted without the approval of our security holders.

Other Information

Other information required by this Item regarding security ownership of certain beneficial owners and management is incorporated by reference to the information
to be set forth in the section of the Proxy Statement entitled "Security Ownership of Certain Beneficial Owners and Management."

ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by this Item regarding certain relationships and related transactions and director independence is incorporated by reference to the
information to be set forth in the sections of the Proxy Statement entitled "Transactions with Related Persons" and "Proposal 1Election of Directors."

ITEM 14.    PRINCIPAL ACCOUNTING FEES AND SERVICES

The information required by this Item regarding principal accounting fees and services is incorporated by reference to the information to be set forth in the
section of the Proxy Statement entitled "Proposal 2Ratification of Selection of Independent Auditors."

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PART IV

ITEM 15.    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

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





|        |  |                                                                                                        |  | Incorporated by Reference |  |           
|------- |  | ------------------------------------------------------------------------------------------------------ |  | ------------------------- |  | ----------
|
|
|3.01    |  | Amended and Restated Certificate of Incorporation.                                                     |  | 10-Q                      |  | 8/7/2006  
|3.02    |  | Certificate of Designation of Series A Junior Participating Preferred Stock.                           |  | 10-Q                      |  | 8/7/2006  
|3.03    |  | Certificate of Amendment to Restated Certificate of Incorporation.                                     |  | 10-Q                      |  | 8/7/2006  
|3.04    |  | Amended and Restated Bylaws of Allos Therapeutics, Inc.                                                |  | 8-K                       |  | 6/25/2007 
|4.01    |  | Form of Common Stock Certificate.                                                                      |  | S-1/A                     |  | 3/17/2000 
|4.02    |  | Reference is made to Exhibits 3.01, 3.02, 3.03 and 3.04.                                               |  |                           |  |           
|4.03    |  | Rights Agreement dated May 6, 2003 between Allos and Mellon Investor Services LLC.                     |  | 8-K                       |  | 5/9/2003  
|4.04    |  | Form of Rights Certificate.                                                                            |  | 8-K                       |  | 5/9/2003  
|4.05    |  | Amendment to Rights Agreement dated March 4, 2005 between Allos and Mellon Investor Services LLC.      |  | 8-K                       |  | 3/4/2005  
|4.06    |  | Amendment to Rights Agreement dated January 29, 2007 between Allos and Mellon Investor Services LLC.   |  | 8-K                       |  | 1/30/2007 
|10.01  |  | Form of Amended and Restated Indemnity Agreement between Allos and each of its directors and officers. |  | 8-K                       |  | 6/25/2007 
|10.02  |  | 1995 Stock Option Plan, as amended.                                                                    |  | S-1                       |  | 1/26/2000 
|10.3   |  | 2000 Stock Incentive Compensation Plan, as amended.                                                    |  | 8-K                       |  | 12/22/2005
|10.3.1 |  | Form of Incentive Stock Option Letter Agreement under 2000 Stock Incentive Compensation Plan.          |  | 8-K                       |  | 2/11/2005 
|10.3.2 |  | Form of Nonqualified Stock Option Letter Agreement under 2000 Stock Incentive Compensation Plan.       |  | 8-K                       |  | 2/11/2005 

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|10.3.3  |  | Form of Nonqualified Stock Option Letter Agreement for Non-Employee Directors under 2000 Stock Incentive Compensation Plan.              |  | 8-K   |  | 2/24/2006 |  | 10.1    |  | 
|-------- |  | ---------------------------------------------------------------------------------------------------------------------------------------- |  | ----- |  | --------- |  | ------- |  | 
|10.4    |  | 2001 Employee Stock Purchase Plan and form of Offering.                                                                                  |  | 10-K  |  | 3/7/2001  |  | 10.26   |  | 
|10.4.1  |  | 2001 Employee Stock Purchase Plan Offering (Series Beginning July 1, 2007).                                                              |  | 8-K   |  | 6/25/2007 |  | 10.12.1 |  | 
|10.5*    |  | Office Lease dated April 4, 2001 between Allos and Catellus Development Corporation.                                                     |  | 10-Q  |  | 8/14/2001 |  | 10.27   |  | 
|10.5.1*  |  | Amended and Restated Second Amendment to Lease dated December 9, 2002 between Allos and Catellus Development Corporation.                |  | 10-K  |  | 3/28/2003 |  | 10.27.1 |  | 
|10.5.2*  |  | Third Amendment to Lease dated November 28, 2003 between Allos and Catellus Development Corporation.                                     |  | 10-K  |  | 3/5/2004  |  | 10.27.2 |  | 
|10.6    |  | 2002 Broad Based Equity Incentive Plan.                                                                                                  |  | S-8   |  | 1/16/2002 |  | 99.1    |  | 
|10.6.1  |  | Form of Stock Option Grant Notice under 2002 Broad Based Equity Incentive Plan.                                                          |  | 10-K  |  | 3/16/2005 |  | 10.14.1 |  | 
|10.6.2  |  | Form of Stock Option Agreement under 2002 Broad Based Equity Incentive Plan.                                                             |  | 10-K  |  | 3/16/2005 |  | 10.14.2 |  | 
|10.7     |  | Securities Purchase Agreement dated March 2, 2005 between Allos and the Investors listed on the signature pages thereto.                 |  | 8-K/A |  | 3/10/2005 |  | 10.41   |  | 
|10.8     |  | Registration Rights Agreement dated March 4, 2005 between Allos and the Investors listed on Schedule I thereto.                          |  | 8-K/A |  | 3/10/2005 |  | 10.42   |  | 
|10.9     |  | Letter Agreement dated March 4, 2005 among Allos, Warburg Pincus Private Equity VIII, L.P., Warburg Pincus & Co. and Warburg Pincus LLC. |  | 8-K   |  | 3/4/2005  |  | 10.43   |  | 
|10.10   |  | Separation Agreement dated March 1, 2006 between Allos and Michael E. Hart.                                                              |  | 8-K   |  | 3/6/2006  |  | 10.1    |  | 
|10.10.1 |  | First Amendment to Separation Agreement dated March 9, 2006 between Allos and Michael E. Hart.                                           |  | 8-K   |  | 3/14/2006 |  | 10.3    |  | 
|10.10.2 |  | Second Amendment to Separation Agreement dated May 10, 2006 between Allos and Michael E. Hart.                                           |  | 8-K   |  | 5/16/2006 |  | 10.1    |  | 
|10.11   |  | Nonqualified Stock Option Letter Agreement dated March 3, 2006 between Allos and Michael E. Hart.                                        |  | 8-K   |  | 3/6/2006  |  | 10.2    |  | 
|10.12   |  | Summary of Compensation Arrangements for Non-Employee Directors.                                                                         |  | 10-Q  |  | 8/7/2007  |  | 10.32   |  | 
|10.13   |  | Restricted Stock Award Agreement dated March 9, 2006 between Allos and Paul L. Berns.                                                    |  | 8-K   |  | 3/14/2006 |  | 10.2    |  | 

58

---



|10.14   |  | Consultant Agreement effective May 10, 2006 between Allos and Michael E. Hart.                                                                                                                                                      |  | 8-K  |  | 5/16/2006 |  | 10.2  |  |  
|-------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- |  | --------- |  | ----- |  | -
|10.15   |  | Consultant Agreement effective May 10, 2006 between Allos and Marvin E. Jaffe, M.D.                                                                                                                                                 |  | 8-K  |  | 5/16/2006 |  | 10.3  |  |  
|10.16   |  | 2006 Inducement Award Plan, including forms of Stock Option Grant Notice with Stock Option Agreement and Restricted Stock Grant Notice with Restricted Stock Grant Agreement.                                                       |  | 8-K  |  | 6/6/2006  |  | 10.1  |  |  
|10.17    |  | Letter agreement dated January 28, 2007 among Allos, Baker Bros. Investments, L.P., Baker Bros. Investments II, L.P., Baker/Tisch Investments, L.P., Baker Biotech Fund I, L.P., 14159, L.P. and Baker Brothers Life
Sciences, L.P. |  | 8-K  |  | 1/30/2007 |  | 10.1  |  |  
|10.18*   |  | License Agreement for 10-Propargyl-10-Deazaaminopterin "PDX" dated December 23, 2002 and amended May 9, 2006 between Allos and SRI International, Sloan-Kettering Institute for Cancer Research and Southern Research Institute.    |  | 10-Q |  | 8/7/2007  |  | 10.45 |  |  
|10.18.1+ |  | Second Amendment to License Agreement for 10-Propargyl-10-Deazaaminopterin "PDX" dated November 6, 2007 between Allos and SRI International, Sloan-Kettering Institute for Cancer Research and Southern Research Institute.         |  |      |  |           |  |       |  | X
|10.19   |  | Corporate Bonus Plan, as amended and restated effective December 11, 2007.                                                                                                                                                          |  |      |  |           |  |       |  | X
|10.20   |  | Amended and Restated Employment Agreement, effective December 13, 2007, between Allos and Paul L. Berns.                                                                                                                            |  |      |  |           |  |       |  | X
|10.21   |  | Amended and Restated Employment Agreement, effective December 13, 2007, between Allos and Pablo J. Cagnoni, M.D.                                                                                                                    |  |      |  |           |  |       |  | X
|10.22   |  | Amended and Restated Employment Agreement, effective December 13, 2007, between Allos and James V. Caruso.                                                                                                                          |  |      |  |           |  |       |  | X
|10.23   |  | Amended and Restated Employment Agreement, effective December 13, 2007, between Allos and Marc H. Graboyes.                                                                                                                         |  |      |  |           |  |       |  | X
|10.24   |  | Letter agreement, effective January 22, 2008, between Allos and Bruce K. Bennett.                                                                                                                                                   |  |      |  |           |  |       |  | X
|23.01    |  | Consent of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm.                                                                                                                                               |  |      |  |           |  |       |  | X
|24.01    |  | Power of Attorney (included on signature page hereto).                                                                                                                                                                              |  |      |  |           |  |       |  | X

59

---



|31.01  |  | Rule 13a-14(a)/15d-14(a) Certification. |  |  |  |  |  |  |  | X
|------ |  | --------------------------------------- |  |  |  |  |  |  |  | -
|31.02  |  | Rule 13a-14(a)/15d-14(a) Certification. |  |  |  |  |  |  |  | X
|32.01# |  | Section 1350 Certification.             |  |  |  |  |  |  |  | X

---

60

---





SIGNATURES

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

|                        |  | ALLOS THERAPEUTICS, INC.
|----------------------- |  | ------------------------
|Date: February 27, 2008 |  | By:                     

POWER OF ATTORNEY

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

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed by the following persons on behalf of the registrant
on February 27, 2008, and in the capacities indicated:

|Name                                    |  | Title                                                                             
|--------------------------------------- |  | ----------------------------------------------------------------------------------
|                                        |  |                                                                                   
|/s/STEPHEN J. HOFFMANStephen J. Hoffman |  | Chairman of Board of Directors and Director                                       
|/s/PAUL L. BERNSPaul L. Berns           |  | President, Chief Executive Officer and Director
(Principal Executive Officer)     
|/s/DAVID C. CLARKDavid C. Clark         |  | Vice President, Finance and Treasurer
(Principal Financial and Accounting Officer)
|/s/MICHAEL D. CASEYMichael D. Casey     |  | Director                                                                          
|/s/STEWART HENStewart Hen               |  | Director                                                                          
|/s/JEFFREY R. LATTSJeffrey R. Latts     |  | Director                                                                          

61

---



|/s/JONATHAN S. LEFFJonathan S. Leff |  | Director
|----------------------------------- |  | --------
|/s/TIMOTHY P. LYNCHTimothy P. Lynch |  | Director
|/s/WILLIAM R. RINGOWilliam R. Ringo |  | Director

62

---





Allos Therapeutics, Inc.        Index to Financial Statements



|                                                        |  | Page
|------------------------------------------------------- |  | ----
|Report of Independent Registered Public Accounting Firm |  | F-2 
|Balance Sheets                                          |  | F-3 
|Statements of Operations                                |  | F-4 
|Statements of Changes in Stockholders' Equity (Deficit) |  | F-5 
|Statements of Cash Flows                                |  | F-10
|Notes to Financial Statements                           |  | F-11

F-1

---





Report of Independent Registered Public Accounting Firm

To
the Board of Directors and Stockholders of
        Allos Therapeutics, Inc.:

In
our opinion, the accompanying balance sheets and the related statements of operations, changes in stockholders' equity (deficit), and cash flows present fairly, in all material
respects, the financial position of Allos Therapeutics, Inc. (a development stage enterprise) at December 31, 2007 and 2006, and the results of its operations and its cash flows for each
of the three years in the period ended December 31, 2007 and, cumulatively, for the period from September 1, 1992 (date of inception) to December 31, 2007, in conformity with
accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as
of December 31, 2007, based on criteria established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
The Company's management is responsible for these financial statements, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal
control over financial reporting, included in Management's Report on Internal Control Over Financial Reporting, appearing under Item 9A. Our responsibility is to express opinions on these
financial statements and on the Company's internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material
misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial
statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we
considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

As
discussed in Note 4 to the financial statements, the Company changed the manner in which it accounts for stock-based compensation in 2006.

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

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

/s/
PricewaterhouseCoopers LLP
Denver, CO
February 25, 2008

F-2

---





ALLOS THERAPEUTICS, INC.        BALANCE SHEETS

|                                                 |                                                                                                                                                                                 | December 31,                               |             
|------------------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ------------
|
|ASSETS                                           |                                                                                                                                                                                 |                                            |             
|Current assets:                                  |                                                                                                                                                                                 |                                            |             
|                                                 | Cash and cash equivalents                                                                                                                                                       |                                            | $           
|                                                 | Restricted cash                                                                                                                                                                 |                                            |             
|                                                 | Investments in marketable securities                                                                                                                                            |                                            |             
|                                                 | Prepaid research and development expenses                                                                                                                                       |                                            |             
|                                                 | Prepaid expenses and other assets                                                                                                                                               |                                            |             
|                                                 |                                                                                                                                                                                 |                                            |             
|                                                 |                                                                                                                                                                                 | Total current assets                       |             
|                                                 |                                                                                                                                                                                 |                                            |             
|Property and equipment, net                      |                                                                                                                                                                                 |                                            | 621,451     
|Other assets                                     |                                                                                                                                                                                 |                                            |            
|                                                 |                                                                                                                                                                                 |                                            |             
|                                                 |                                                                                                                                                                                 | Total assets                               |             
|                                                 |                                                                                                                                                                                 |                                            |             
|LIABILITIES AND STOCKHOLDERS' EQUITY             |                                                                                                                                                                                 |                                            |             
|Current liabilities:                             |                                                                                                                                                                                 |                                            |             
|                                                 | Accounts payable                                                                                                                                                                |                                            | $           
|                                                 | Accrued liabilities                                                                                                                                                             |                                            |             
|                                                 |                                                                                                                                                                                 |                                            |             
|                                                 |                                                                                                                                                                                 | Total current liabilities                  |             
|Commitments and contingencies (Note 8)           |                                                                                                                                                                                 |                                            |             
|Stockholders' equity:                            |                                                                                                                                                                                 |                                            |             
|                                                 | Preferred stock, $0.001 par value; 10,000,000 shares authorized; no shares issued or outstanding                                                                                |                                            |             
|                                                 | Series A Junior Participating Preferred Stock, $0.001 par value; 1,000,000 shares designated from authorized preferred stock; no shares issued or outstanding                   |                                            |             
|                                                 | Common stock, $0.001 par value; 150,000,000 shares authorized; 67,641,943 and 56,695,633 shares issued and outstanding at December 31, 2007 and December 31, 2006, respectively |                                            |             
|Additional paid-in capital                       |                                                                                                                                                                                 |                                            | 300,440,336 
|Deficit accumulated during the development stage |                                                                                                                                                                                 |                                            | (247,928,975
|                                                 |                                                                                                                                                                                 |                                            |             
|                                                 |                                                                                                                                                                                 | Total stockholders' equity                 |             
|                                                 |                                                                                                                                                                                 |                                            |             
|                                                 |                                                                                                                                                                                 | Total liabilities and stockholders' equity |             
|                                                 |                                                                                                                                                                                 |                                            |             

The
accompanying notes are an integral part of these financial statements.

F-3

---





ALLOS THERAPEUTICS, INC.        STATEMENTS OF OPERATIONS

|                                                                     |                                       |                          |             |            |             |             |            | Cumulative
Period from
September 1, 1992
(date of inception)
through
December 31, 2007 |            
|-------------------------------------------------------------------- | ------------------------------------- | ------------------------ | ----------- | ---------- | ----------- | ----------- | ---------- | -------------------------------------------------------------------------------------- | -----------
|
|
|Operating expenses:                                                  |                                       |                          |             |            |             |             |            |                                                                                        |            
|                                                                     | Research and development              |                          | $           | 17,444,320 |             | $           | 14,322,601 |                                                                                        | $          
|                                                                     | Clinical manufacturing                |                          |             | 5,547,411  |             |             | 2,283,907  |                                                                                        |            
|                                                                     | Marketing, general and administrative |                          |             | 19,672,014 |             |             | 14,876,273 |                                                                                        |            
|                                                                     | Restructuring and separation costs    |                          |             |           |             |             | 645,666    |                                                                                        |            
|                                                                     |                                       |                          |             |            |             |             |            |                                                                                        |            
|                                                                     |                                       | Total operating expenses |             |            | 42,663,745  |             |            | 32,128,447                                                                             |            
|                                                                     |                                       |                          |             |            |             |             |            |                                                                                        |            
|Loss from operations                                                 |                                       |                          | (42,663,745 | )          |             | (32,128,447 | )          |                                                                                        | (21,904,648
|Gain on settlement claims                                            |                                       |                          |            |            |             |            |            |                                                                                        |           
|Interest and other income, net                                       |                                       |                          | 3,294,146   |            |             | 1,915,977   |            |                                                                                        | 1,768,060  
|                                                                     |                                       |                          |             |            |             |             |            |                                                                                        |            
|                                                                     |                                       | Net loss                 |             |            | (39,369,599 | )           |            | (30,212,470                                                                            | )          
|Dividend related to beneficial conversion feature of preferred stock |                                       |                          |            |            |             |            |            |                                                                                        | (623,489   
|                                                                     |                                       |                          |             |            |             |             |            |                                                                                        |            
|Net loss attributable to common stockholders                         |                                       | $                        | (39,369,599 | )          | $           | (30,212,470 | )          | $                                                                                      | (20,760,077
|                                                                     |                                       |                          |             |            |             |             |            |                                                                                        |            
|Net loss per share: basic and diluted                                |                                       | $                        | (0.60       | )          | $           | (0.55       | )          | $                                                                                      | (0.45      
|                                                                     |                                       |                          |             |            |             |             |            |                                                                                        |            
|Weighted average shares: basic and diluted                           |                                       |                          | 65,188,913  |            |             | 55,299,614  |            |                                                                                        | 46,070,686 
|                                                                     |                                       |                          |             |            |             |             |            |                                                                                        |            

The
accompanying notes are an integral part of these financial statements.

F-4

---





ALLOS THERAPEUTICS, INC.

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

|                                                            |                                                                                                                                          |           |         |   |       |     |            |           |   |        |       |   |            |           |   | Deficit
Accumulated
During the
Development
Stage |         |   |  
|----------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------- | --------- | ------- | - | ----- | --- | ---------- | --------- | - | ------ | ----- | - | ---------- | --------- | - | ------------------------------------------------ | ------- | - | -
|
|
|
|Subscription receivable for common stock at $1.61 per share |                                                                                                                                          |          |         | $ | 90    |     |           |           | $ |       |       | $ |           |           | $ |                                                 |         | $ | 
|                                                            |                                                                                                                                          |           |         |   |       |     |            |           |   |        |       |   |            |           |   |                                                  |         |   |  
|Balance at December 31, 1992                                |                                                                                                                                          |          |         |   | 90    |     |           |           |   |       |       |   |           |           |   |                                                 |         |   | 
|                                                            | Subscription receivable for common stock at $1.61 per share                                                                              |           |        |   |       | 10  |            |          |   |        |      |   |            |          |   |                                                  |        |   |  
|                                                            | Issuance of common stock for subscription receivable                                                                                     |           | 992,000 |   |       | 892 |            |          |   |        |      |   |            | (892      | ) |                                                  |        |   |  
|Net loss                                                    |                                                                                                                                          |          |         |   |      |     |           |           |   |       |       |   |           |           |   |                                                 |         |   | 
|                                                            |                                                                                                                                          |           |         |   |       |     |            |           |   |        |       |   |            |           |   |                                                  |         |   |  
|Balance at December 31, 1993                                |                                                                                                                                          | 992,000   |         |   | 992   |     |           |           |   |       |       |   | (892       | )         |   |                                                 |         |   | 
|                                                            | Issuance of $.001 par value common stock in exchange for license agreement                                                               |           | 248,000 |   |       | 248 |            |          |   |        |      |   |            | 39,752    |   |                                                  |        |   |  
|                                                            | Issuance of Series A convertible preferred stock ($.001 par value) together with Series A and Series B stock warrants at $1.00 per share |           |        |   |       |    |            | 700,000   |   |        | 704   |   |            | 529,023   |   |                                                  |        |   |  
|                                                            | Issuance of Series A convertible preferred stock upon exercise of Series A warrants at $1.00 per share                                   |           |        |   |       |    |            | 1,300,000 |   |        | 1,300 |   |            | 1,298,700 |   |                                                  |        |   |  
|                                                            | Accretion to redemption value of preferred stock                                                                                         |           |        |   |       |    |            |          |   |        |      |   |            | 58,839    |   |                                                  |        |   |  
|Net loss                                                    |                                                                                                                                          |          |         |   |      |     |           |           |   |       |       |   |           |           |   |                                                 |         |   | 
|                                                            |                                                                                                                                          |           |         |   |       |     |            |           |   |        |       |   |            |           |   |                                                  |         |   |  
|Balance at December 31, 1994                                |                                                                                                                                          | 1,240,000 |         |   | 1,240 |     | 2,000,000  |           |   | 2,004  |       |   | 1,925,422  |           |   |                                                 |         |   | 
|                                                            | Issuance of Series A convertible preferred stock at $1.00 per share                                                                      |           |        |   |       |    |            | 3,000,000 |   |        | 3,000 |   |            | 2,973,454 |   |                                                  |        |   |  
|                                                            | Accretion to redemption value of preferred stock                                                                                         |           |        |   |       |    |            |          |   |        |      |   |            | 229,837   |   |                                                  |        |   |  
|Net loss                                                    |                                                                                                                                          |          |         |   |      |     |           |           |   |       |       |   |           |           |   |                                                 |         |   | 
|                                                            |                                                                                                                                          |           |         |   |       |     |            |           |   |        |       |   |            |           |   |                                                  |         |   |  
|Balance at December 31, 1995                                |                                                                                                                                          | 1,240,000 |         |   | 1,240 |     | 5,000,000  |           |   | 5,004  |       |   | 5,128,713  |           |   |                                                 |         |   | 
|                                                            | Issuance of Series B convertible preferred stock at $1.60 per share, net of issuance costs                                               |           |        |   |       |    |            | 5,032,500 |   |        | 5,033 |   |            | 7,992,705 |   |                                                  |        |   |  
|                                                            | Cancellation of Series B warrants previously issued with Series A                                                                        |           |        |   |       |    |            |          |   |        | (4    | ) |            | 4         |   |                                                  |        |   |  
|                                                            | Cancellation of Series A redemption rights                                                                                               |           |        |   |       |    |            |          |   |        |      |   |            | (288,676  | ) |                                                  |        |   |  
|                                                            | Issuance of common stock upon exercise of stock options for cash of $4,024 and notes receivable of $90,000 at $0.16 per share            |           | 582,950 |   |       | 583 |            |          |   |        |      |   |            | 93,441    |   |                                                  | (90,000 | ) |  
|Net loss                                                    |                                                                                                                                          |          |         |   |      |     |           |           |   |       |       |   |           |           |   |                                                 |         |   | 
|                                                            |                                                                                                                                          |           |         |   |       |     |            |           |   |        |       |   |            |           |   |                                                  |         |   |  
|Balance at December 31, 1996                                |                                                                                                                                          | 1,822,950 |         |   | 1,823 |     | 10,032,500 |           |   | 10,033 |       |   | 12,926,187 |           |   | (90,000                                          | )       |   | 

F-5

---



ALLOS THERAPEUTICS, INC.

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) (Continued)

|                             |                                                                                                                                      |            |            |        |        |            |             |        |         |             |            |          |         |            |            | Deficit
Accumulated
During the
Development
Stage |            |             |           
|---------------------------- | ------------------------------------------------------------------------------------------------------------------------------------ | ---------- | ---------- | ------ | ------ | ---------- | ----------- | ------ | ------- | ----------- | ---------- | -------- | ------- | ---------- | ---------- | ------------------------------------------------ | ---------- | ----------- | ----------
|
|
|
|Balance at December 31, 1996 |                                                                                                                                      | 1,822,950  |            | 1,823  |        | 10,032,500 |             | 10,033 |         | 12,926,187  |            | (90,000  | )       |           |            | (7,360,916                                       | )          | 5,487,127   |           
|                             | Issuance of common stock upon exercise of stock options for cash of $20,288 and notes receivable of $49,687 at $0.16-$0.40 per share |            | 175,770    |        | 176    |            |            |        |        |             | 69,799     |          | (49,687 | )          |           |                                                  |           |             | 20,288    
|Net loss                     |                                                                                                                                      |           |            |       |        |           |             |       |         |            |            |         |         |           |            | (6,512,591                                       | )          | (6,512,591  | )         
|                             |                                                                                                                                      |            |            |        |        |            |             |        |         |             |            |          |         |            |            |                                                  |            |             |           
|Balance at December 31, 1997 |                                                                                                                                      | 1,998,720  |            | 1,999  |        | 10,032,500 |             | 10,033 |         | 12,995,986  |            | (139,687 | )       |           |            | (13,873,507                                      | )          | (1,005,176  | )         
|                             | Issuance of Series C convertible preferred stock at $1.81 per share, net of issuance costs                                           |            |           |        |       |            | 9,944,750   |        | 9,945   |             | 17,937,102 |          |        |            |           |                                                  |           |             | 17,947,047
|                             | Issuance of common stock upon exercise of stock options for cash of $3,464 at $0.16-$0.40 per share                                  |            | 13,239     |        | 13     |            |            |        |        |             | 3,451      |          |        |            |           |                                                  |           |             | 3,464     
|Net loss                     |                                                                                                                                      |           |            |       |        |           |             |       |         |            |            |         |         |           |            | (8,573,923                                       | )          | (8,573,923  | )         
|                             |                                                                                                                                      |            |            |        |        |            |             |        |         |             |            |          |         |            |            |                                                  |            |             |           
|Balance at December 31, 1998 |                                                                                                                                      | 2,011,959  |            | 2,012  |        | 19,977,250 |             | 19,978 |         | 30,936,539  |            | (139,687 | )       |           |            | (22,447,430                                      | )          | 8,371,412   |           
|                             | Issuance of Series C convertible preferred stock at $1.81 per share, net of issuance costs                                           |            |           |        |       |            | 5,311,036   |        | 5,311   |             | 9,529,532  |          |        |            |           |                                                  |           |             | 9,534,843 
|                             | Issuance of common stock upon exercise of stock options for cash of $3,695 at $0.16-$0.56 per share                                  |            | 10,179     |        | 10     |            |            |        |        |             | 3,685      |          |        |            |           |                                                  |           |             | 3,695     
|                             | Deferred compensation related to options                                                                                             |            |           |        |       |            |            |        |        |             | 6,811,055  |          |        |            | (4,442,294 | )                                                |           |             | 2,368,761 
|                             | Beneficial conversion feature related to issuance of preferred stock                                                                 |            |           |        |       |            |            |        |        |             | 9,612,975  |          |        |            |           |                                                  | (9,612,975 | )           |          
|Net loss                     |                                                                                                                                      |           |            |       |        |           |             |       |         |            |            |         |         |           |            | (11,287,740                                      | )          | (11,287,740 | )         
|                             |                                                                                                                                      |            |            |        |        |            |             |        |         |             |            |          |         |            |            |                                                  |            |             |           
|Balance at December 31, 1999 |                                                                                                                                      | 2,022,138  |            | 2,022  |        | 25,288,286 |             | 25,289 |         | 56,893,786  |            | (139,687 | )       | (4,442,294 | )          | (43,348,145                                      | )          | 8,990,971   |           
|                             | Issuance of 5,000,000 shares of common stock, net of issuance costs                                                                  |            | 5,000,000  |        | 5,000  |            |            |        |        |             | 82,764,396 |          |        |            |           |                                                  |           |             | 82,769,396
|                             | Conversion of preferred stock to common stock upon IPO                                                                               |            | 15,678,737 |        | 15,679 |            | (25,288,286 | )      | (25,289 | )           | 9,610      |          |        |            |           |                                                  |           |             |          
|                             | Extinguishments of notes receivable                                                                                                  |            |           |        |       |            |            |        |        |             |           |          | 139,687 |            |           |                                                  |           |             | 139,687   
|                             | Issuance of common stock upon exercise of stock options for cash of $73,855 at $0.16-$0.56 per share                                 |            | 254,001    |        | 254    |            |            |        |        |             | 73,601     |          |        |            |           |                                                  |           |             | 73,855    
|                             | Deferred compensation related to options                                                                                             |            |           |        |       |            |            |        |        |             | 16,860,998 |          |        |            | (2,062,800 | )                                                |           |             | 14,798,198
|Net loss                     |                                                                                                                                      |           |            |       |        |           |             |       |         |            |            |         |         |           |            | (23,361,475                                      | )          | (23,361,475 | )         
|                             |                                                                                                                                      |            |            |        |        |            |             |        |         |             |            |          |         |            |            |                                                  |            |             |           
|Balance at December 31, 2000 |                                                                                                                                      | 22,954,876 |            | 22,955 |        |           |             |       |         | 156,602,391 |            |         |         | (6,505,094 | )          | (66,709,620                                      | )          | 83,410,632  |           
|                             | Issuance of common stock upon exercise of stock options for cash of $103,831 at $0.40-$2.42 per share                                |            | 175,096    |        | 175    |            |            |        |        |             | 103,656    |          |        |            |           |                                                  |           |             | 103,831   
|                             | Issuance of common stock upon exercise of purchase rights at an exercise price of $3.84 per share                                    |            | 9,225      |        | 9      |            |            |        |        |             | 35,433     |          |        |            |           |                                                  |           |             | 35,442    
|                             | Stock compensation expense                                                                                                           |            |           |        |       |            |            |        |        |             | 283,512    |          |        |            |           |                                                  |           |             | 283,512   
|                             | Deferred compensation related to options                                                                                             |            |           |        |       |            |            |        |        |             | (99,700    | )        |        |            | 3,561,504  |                                                  |           |             | 3,461,804 
|Net loss                     |                                                                                                                                      |           |            |       |        |           |             |       |         |            |            |         |         |           |            | (20,144,325                                      | )          | (20,144,325 | )         
|                             |                                                                                                                                      |            |            |        |        |            |             |        |         |             |            |          |         |            |            |                                                  |            |             |           
|Balance at December 31, 2001 |                                                                                                                                      | 23,139,197 |            | 23,139 |        |           |             |       |         | 156,925,292 |            |         |         | (2,943,590 | )          | (86,853,945                                      | )          | 67,150,896  |           

F-6

---





ALLOS THERAPEUTICS, INC.

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) (Continued)

|                             |                                                                                                                                                  |            |           |   |        |       |   |   |   |   |   |   |             |            |   | Deficit
Accumulated
During the
Development
Stage |   |   |           
|---------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------ | ---------- | --------- | - | ------ | ----- | - | - | - | - | - | - | ----------- | ---------- | - | ------------------------------------------------ | - | - | ----------
|
|
|
|Balance at December 31, 2001 |                                                                                                                                                  | 23,139,197 |           |   | 23,139 |       |  |   |   |  |   |   | 156,925,292 |            |   |                                                 |   |   | (2,943,590
|                             | Issuance of common stock in private placement for $6.00 per share, net of issuance costs                                                         |            | 2,500,000 |   |        | 2,500 |   |  |   |   |  |   |             | 14,929,273 |   |                                                  |  |   |           
|                             | Issuance of common stock upon exercise of stock options for cash of $290,753 at $0.40-$7.38 per share                                            |            | 187,126   |   |        | 187   |   |  |   |   |  |   |             | 290,566    |   |                                                  |  |   |           
|                             | Issuance of common stock upon exercise of purchase rights at an exercise price of $3.84-$6.39 per share                                          |            | 27,446    |   |        | 27    |   |  |   |   |  |   |             | 120,252    |   |                                                  |  |   |           
|                             | Issuance of common stock upon exercise of warrants for equipment lease line                                                                      |            | 9,685     |   |        | 10    |   |  |   |   |  |   |             | 21,521     |   |                                                  |  |   |           
|                             | Stock compensation expense                                                                                                                       |            |          |   |        |      |   |  |   |   |  |   |             | 190,378    |   |                                                  |  |   |           
|                             | Deferred compensation related to options                                                                                                         |            |          |   |        |      |   |  |   |   |  |   |             | (1,456,577 | ) |                                                  |  |   |           
|Net loss                     |                                                                                                                                                  |           |           |   |       |       |  |   |   |  |   |   |            |            |   |                                                 |   |   |          
|                             |                                                                                                                                                  |            |           |   |        |       |   |   |   |   |   |   |             |            |   |                                                  |   |   |           
|Balance at December 31, 2002 |                                                                                                                                                  | 25,863,454 |           |   | 25,863 |       |  |   |   |  |   |   | 171,020,705 |            |   |                                                 |   |   | (1,101,466
|                             | Issuance of common stock upon exercise of stock options for cash of $75,686 at $.56-$2.42 per share                                              |            | 35,400    |   |        | 35    |   |  |   |   |  |   |             | 75,651     |   |                                                  |  |   |           
|                             | Issuance of common stock upon exercise of purchase rights at an exercise price of $2.48-$2.58 per share                                          |            | 32,189    |   |        | 33    |   |  |   |   |  |   |             | 81,466     |   |                                                  |  |   |           
|                             | Issuance of common stock in private placement for $2.32 per share together with common stock warrants for $3.14 per share, net of issuance costs |            | 5,172,412 |   |        | 5,173 |   |  |   |   |  |   |             | 11,196,549 |   |                                                  |  |   |           
|                             | Stock compensation expense                                                                                                                       |            |          |   |        |      |   |  |   |   |  |   |             | 178,166    |   |                                                  |  |   |           
|                             | Deferred compensation related to options                                                                                                         |            |          |   |        |      |   |  |   |   |  |   |             | (1,137,244 | ) |                                                  |  |   |           
|Net loss                     |                                                                                                                                                  |           |           |   |       |       |  |   |   |  |   |   |            |            |   |                                                 |   |   |          
|                             |                                                                                                                                                  |            |           |   |        |       |   |   |   |   |   |   |             |            |   |                                                  |   |   |           
|Balance at December 31, 2003 |                                                                                                                                                  | 31,103,455 |           |   | 31,104 |       |  |   |   |  |   |   | 181,415,293 |            |   |                                                 |   |   | (285,576  
|                             | Issuance of common stock upon exercise of stock options for cash of $97,794 at $.40-$4.75 per share                                              |            | 35,935    |   |        | 36    |   |  |   |   |  |   |             | 97,758     |   |                                                  |  |   |           
|                             | Issuance of common stock upon exercise of purchase rights at an exercise price of $1.85-$1.91 per share                                          |            | 36,393    |   |        | 36    |   |  |   |   |  |   |             | 68,239     |   |                                                  |  |   |           
|                             | Stock issuance costs                                                                                                                             |            |          |   |        |      |   |  |   |   |  |   |             | (8,279     | ) |                                                  |  |   |           
|                             | Stock compensation recovery                                                                                                                      |            |          |   |        |      |   |  |   |   |  |   |             | (170,118   | ) |                                                  |  |   |           
|                             | Deferred compensation related to options                                                                                                         |            |          |   |        |      |   |  |   |   |  |   |             | 50,583     |   |                                                  |  |   |           
|Net loss                     |                                                                                                                                                  |           |           |   |       |       |  |   |   |  |   |   |            |            |   |                                                 |   |   |          
|                             |                                                                                                                                                  |            |           |   |        |       |   |   |   |   |   |   |             |            |   |                                                  |   |   |           
|Balance at December 31, 2004 |                                                                                                                                                  | 31,175,783 |           | $ | 31,176 |       |  |   | $ |  |   | $ | 181,453,476 |            | $ |                                                 |   | $ | (34,820   

F-7

---



ALLOS THERAPEUTICS, INC.

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) (Continued)

|                             |                                                                                                                    |            |            |   |        |        |   |            |   |   |        |   |             |            |   | Deficit
Accumulated
During the
Development
Stage |   |   |        
|---------------------------- | ------------------------------------------------------------------------------------------------------------------ | ---------- | ---------- | - | ------ | ------ | - | ---------- | - | - | ------ | - | ----------- | ---------- | - | ------------------------------------------------ | - | - | -------
|
|
|
|Balance at December 31, 2004 |                                                                                                                    | 31,175,783 |            | $ | 31,176 |        |  |            | $ |  |        | $ | 181,453,476 |            | $ |                                                 |   | $ | (34,820
|                             | Issuance of common stock upon exercise of stock options for cash of $197,513 at $.16-$1.78 per share               |            | 352,081    |   |        | 352    |   |           |   |   |       |   |             | 197,161    |   |                                                  |  |   |        
|                             | Issuance of common stock upon exercise of purchase rights at an exercise price of $1.82 and $1.85 per share        |            | 26,675     |   |        | 27     |   |           |   |   |       |   |             | 48,804     |   |                                                  |  |   |        
|                             | Issuance of Series A Exchangeable Preferred Stock at $22.10 per share, net of issuance costs                       |            |           |   |        |       |   | 2,352,443  |   |   | 2,352  |   |             | 48,837,479 |   |                                                  |  |   |        
|                             | Beneficial conversion feature related to issuance of preferred stock                                               |            |           |   |        |       |   |           |   |   |       |   |             | 623,489    |   |                                                  |  |   |        
|                             | Conversion of Series A Exchangeable Preferred Stock to common stock                                                |            | 23,524,430 |   |        | 23,524 |   | (2,352,443 | ) |   | (2,352 | ) |             | (21,172    | ) |                                                  |  |   |        
|                             | Stock compensation expense                                                                                         |            |           |   |        |       |   |           |   |   |       |   |             | 443,644    |   |                                                  |  |   |        
|                             | Deferred compensation related to options                                                                           |            |           |   |        |       |   |           |   |   |       |   |             | (604       | ) |                                                  |  |   |        
|Net loss                     |                                                                                                                    |           |            |   |       |        |  |            |   |  |        |   |            |            |   |                                                 |   |   |       
|                             |                                                                                                                    |            |            |   |        |        |   |            |   |   |        |   |             |            |   |                                                  |   |   |        
|Balance at December 31, 2005 |                                                                                                                    | 55,078,969 |            | $ | 55,079 |        |  |            | $ |  |        | $ | 231,582,277 |            | $ |                                                 |   | $ |       
|                             | Issuance of common stock upon exercise of stock options for cash of $561,097 at $.40-$3.20 per share               |            | 413,680    |   |        | 414    |   |           |   |   |       |   |             | 560,683    |   |                                                  |  |   |        
|                             | Issuance of common stock upon exercise of purchase rights at an exercise price of $1.82, $1.96 and $3.05 per share |            | 44,319     |   |        | 44     |   |           |   |   |       |   |             | 90,627     |   |                                                  |  |   |        
|                             | Issuance of common stock upon net exercise of warrants at an exercise price of $3.14 per share                     |            | 37,459     |   |        | 37     |   |           |   |   |       |   |             | (37        | ) |                                                  |  |   |        
|                             | Issuance of common stock upon exercise of warrants for cash of $2,233,187 at an exercise price of $3.14 per share  |            | 711,206    |   |        | 711    |   |           |   |   |       |   |             | 2,232,476  |   |                                                  |  |   |        
|                             | Issuance of restricted stock                                                                                       |            | 410,000    |   |        | 410    |   |           |   |   |       |   |             | (410       | ) |                                                  |  |   |        
|                             | Stock compensation expense                                                                                         |            |           |   |        |       |   |           |   |   |       |   |             | 3,587,001  |   |                                                  |  |   |        
|Net loss                     |                                                                                                                    |           |            |   |       |        |  |            |   |  |        |   |            |            |   |                                                 |   |   |       
|                             |                                                                                                                    |            |            |   |        |        |   |            |   |   |        |   |             |            |   |                                                  |   |   |        
|Balance at December 31, 2006 |                                                                                                                    | 56,695,633 |            | $ | 56,695 |        |  |            | $ |  |        | $ | 238,052,617 |            | $ |                                                 |   | $ |       

F-8

---





ALLOS THERAPEUTICS, INC.

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) (Continued)

|                             |                                                                                                                   |            |           |   |        |       |   |   |   |   |   |   |             |            |   | Deficit
Accumulated
During the
Development
Stage |   |   |  
|---------------------------- | ----------------------------------------------------------------------------------------------------------------- | ---------- | --------- | - | ------ | ----- | - | - | - | - | - | - | ----------- | ---------- | - | ------------------------------------------------ | - | - | -
|
|
|
|Balance at December 31, 2006 |                                                                                                                   | 56,695,633 |           | $ | 56,695 |       |  |   | $ |  |   | $ | 238,052,617 |            | $ |                                                 |   | $ | 
|                             | Issuance of common stock upon exercise of stock options for cash of $3,696,811 at $.40-$6.38 per share            |            | 1,156,471 |   |        | 1,157 |   |  |   |   |  |   |             | 3,695,654  |   |                                                  |  |   |  
|                             | Issuance of common stock upon exercise of purchase rights at an exercise price of $1.82-$3.89 per share           |            | 41,148    |   |        | 41    |   |  |   |   |  |   |             | 124,805    |   |                                                  |  |   |  
|                             | Issuance of common stock upon net exercise of warrants at an exercise price of $3.14 per share                    |            | 112,106   |   |        | 112   |   |  |   |   |  |   |             | (112       | ) |                                                  |  |   |  
|                             | Issuance of common stock upon exercise of warrants for cash of $1,669,177 at an exercise price of $3.14 per share |            | 531,585   |   |        | 532   |   |  |   |   |  |   |             | 1,668,645  |   |                                                  |  |   |  
|                             | Issuance of common stock net of offering costs of $3,742,793, at $6.00 per share                                  |            | 9,000,000 |   |        | 9,000 |   |  |   |   |  |   |             | 50,248,207 |   |                                                  |  |   |  
|                             | Issuance of restricted stock                                                                                      |            | 105,000   |   |        | 105   |   |  |   |   |  |   |             | (105       | ) |                                                  |  |   |  
|                             | Stock compensation expense                                                                                        |            |          |   |        |      |   |  |   |   |  |   |             | 6,650,625  |   |                                                  |  |   |  
|Net loss                     |                                                                                                                   |           |           |   |       |       |  |   |   |  |   |   |            |            |   |                                                 |   |   | 
|                             |                                                                                                                   |            |           |   |        |       |   |   |   |   |   |   |             |            |   |                                                  |   |   |  
|Balance at December 31, 2007 |                                                                                                                   | 67,641,943 |           | $ | 67,642 |       |  |   | $ |  |   | $ | 300,440,336 |            | $ |                                                 |   | $ | 
|                             |                                                                                                                   |            |           |   |        |       |   |   |   |   |   |   |             |            |   |                                                  |   |   |  

The accompanying notes are an integral part of these financial statements.

F-9

---





ALLOS THERAPEUTICS, INC.        STATEMENTS OF CASH FLOWS

|                                                                               |                                                                                                                       |                                              |                                    |                                                     |           |            |             | Cumulative
Period from
September 1, 1992
(date of inception)
through
December 31,
2007 |           
|------------------------------------------------------------------------------ | --------------------------------------------------------------------------------------------------------------------- | -------------------------------------------- | ---------------------------------- | --------------------------------------------------- | --------- | ---------- | ----------- | -------------------------------------------------------------------------------------- | ----------
|
|
|Cash Flows From Operating Activities:                                          |                                                                                                                       |                                              |                                    |                                                     |           |            |             |                                                                                        |           
|                                                                               | Net loss                                                                                                              |                                              | $                                  | (39,369,599                                         | )         | $          | (30,212,470 | )                                                                                      | $         
|                                                                               | Adjustments to reconcile net loss to net cash used in operating activities:                                           |                                              |                                    |                                                     |           |            |             |                                                                                        |           
|                                                                               |                                                                                                                       | Depreciation and amortization                |                                    |                                                     | 361,045   |            |             | 312,251                                                                                |           
|                                                                               |                                                                                                                       | Stock-based compensation expense             |                                    |                                                     | 6,650,625 |            |             | 3,587,001                                                                              |           
|                                                                               |                                                                                                                       | Write-off of long-term investment            |                                    |                                                     |          |            |             |                                                                                       |           
|                                                                               |                                                                                                                       | Other                                        |                                    |                                                     |          |            |             |                                                                                       |           
|                                                                               |                                                                                                                       | Changes in operating assets and liabilities: |                                    |                                                     |           |            |             |                                                                                        |           
|                                                                               |                                                                                                                       |                                              | Prepaid expenses and other assets  |                                                     |           | (283,823   | )           |                                                                                        | (2,054,486
|                                                                               |                                                                                                                       |                                              | Interest receivable on investments |                                                     |           | (231,201   | )           |                                                                                        | 179,326   
|                                                                               |                                                                                                                       |                                              | Accounts payable                   |                                                     |           | 791,716    |             |                                                                                        | 34,921    
|                                                                               |                                                                                                                       |                                              | Accrued liabilities                |                                                     |           | 1,257,817  |             |                                                                                        | 3,006,617 
|                                                                               |                                                                                                                       |                                              |                                    |                                                     |           |            |             |                                                                                        |           
|                                                                               |                                                                                                                       |                                              |                                    | Net cash used in operating activities               |           |            | (30,823,420 | )                                                                                      |           
|                                                                               |                                                                                                                       |                                              |                                    |                                                     |           |            |             |                                                                                        |           
|Cash Flows From Investing Activities:                                          |                                                                                                                       |                                              |                                    |                                                     |           |            |             |                                                                                        |           
|                                                                               | Acquisition of property and equipment                                                                                 |                                              |                                    | (378,976                                            | )         |            | (228,043    | )                                                                                      |           
|                                                                               | Purchases of marketable securities                                                                                    |                                              |                                    | (89,014,032                                         | )         |            | (33,847,513 | )                                                                                      |           
|                                                                               | Proceeds from sales of marketable securities                                                                          |                                              |                                    | 70,134,192                                          |           |            | 62,000,000  |                                                                                        |           
|                                                                               | Purchase of long-term investment                                                                                      |                                              |                                    |                                                    |           |            |            |                                                                                        |           
|                                                                               | Payments received on notes receivable                                                                                 |                                              |                                    |                                                    |           |            |            |                                                                                        |           
|                                                                               |                                                                                                                       |                                              |                                    |                                                     |           |            |             |                                                                                        |           
|                                                                               |                                                                                                                       |                                              |                                    | Net cash (used in) provided by investing activities |           |            | (19,258,816 | )                                                                                      |           
|                                                                               |                                                                                                                       |                                              |                                    |                                                     |           |            |             |                                                                                        |           
|Cash Flows From Financing Activities:                                          |                                                                                                                       |                                              |                                    |                                                     |           |            |             |                                                                                        |           
|                                                                               | Principal payments under capital leases                                                                               |                                              |                                    |                                                    |           |            |            |                                                                                        |           
|                                                                               | Proceeds from sales leaseback                                                                                         |                                              |                                    |                                                    |           |            |            |                                                                                        |           
|                                                                               | Release (pledge) of restricted cash                                                                                   |                                              |                                    | 183,333                                             |           |            | 183,333     |                                                                                        |           
|                                                                               | Proceeds from issuance of convertible preferred stock, net of issuance costs                                          |                                              |                                    |                                                    |           |            |            |                                                                                        |           
|                                                                               | Proceeds from issuance of common stock associated with stock options, stock warrants and employee stock purchase plan |                                              |                                    | 5,490,834                                           |           |            | 2,884,955   |                                                                                        |           
|                                                                               | Proceeds from issuance of common stock, net of issuance costs                                                         |                                              |                                    | 50,257,207                                          |           |            |            |                                                                                        |           
|                                                                               |                                                                                                                       |                                              |                                    |                                                     |           |            |             |                                                                                        |           
|                                                                               |                                                                                                                       |                                              |                                    | Net cash provided by financing activities           |           |            | 55,931,374  |                                                                                        |           
|                                                                               |                                                                                                                       |                                              |                                    |                                                     |           |            |             |                                                                                        |           
|Net increase in cash and cash equivalents                                      |                                                                                                                       |                                              | 5,849,138                          |                                                     |           | 5,845,892  |             |                                                                                        | 3,115,908 
|Cash and cash equivalents, beginning of period                                 |                                                                                                                       |                                              | 10,070,526                         |                                                     |           | 4,224,634  |             |                                                                                        | 1,108,726 
|                                                                               |                                                                                                                       |                                              |                                    |                                                     |           |            |             |                                                                                        |           
|Cash and cash equivalents, end of period                                       |                                                                                                                       | $                                            | 15,919,664                         |                                                     | $         | 10,070,526 |             | $                                                                                      | 4,224,634 
|                                                                               |                                                                                                                       |                                              |                                    |                                                     |           |            |             |                                                                                        |           
|Supplemental Schedule of Cash and Non-cash Operating and Financing Activities: |                                                                                                                       |                                              |                                    |                                                     |           |            |             |                                                                                        |           
|                                                                               | Cash paid for interest                                                                                                |                                              | $                                  |                                                    |           | $          |            |                                                                                        | $         
|                                                                               | Issuance of stock in exchange for license agreement                                                                   |                                              |                                    |                                                    |           |            |            |                                                                                        |           
|                                                                               | Capital lease obligations incurred for acquisition of property and equipment                                          |                                              |                                    |                                                    |           |            |            |                                                                                        |           
|                                                                               | Issuance of stock in exchange for notes receivable                                                                    |                                              |                                    |                                                    |           |            |            |                                                                                        |           
|                                                                               | Conversion of preferred stock to common stock                                                                         |                                              |                                    |                                                    |           |            |            |                                                                                        |           

The accompanying notes are an integral part of these financial statements.

F-10

---



ALLOS THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS

Unless the context otherwise requires, references in this report to "Allos," the "Company," "we," "us" and "our" refer to Allos Therapeutics, Inc.

1. Formation and Business of the Company

We are a biopharmaceutical company focused on developing and commercializing innovative small molecule drugs for the treatment of cancer. We have two product
candidates that are currently under development, PDX (pralatrexate) and RH1.



In
mid-2007, we discontinued the development of EFAPROXYN, our former lead product candidate, after announcing top-line results from ENRICH, a Phase 3
clinical trial of EFAPROXYN plus whole brain radiation therapy, or WBRT, in women with brain metastases originating from breast cancer. The study failed to achieve its primary endpoint of
demonstrating a statistically significant improvement in overall survival in patients receiving EFAPROXYN plus WBRT, compared to patients receiving WBRT alone. We are currently pursuing the sale of
our rights to EFAPROXYN although we may not receive any material consideration for any sale.

We
incorporated in the Commonwealth of Virginia on September 1, 1992 as HemoTech Sciences, Inc. and filed amended Articles of Incorporation to change our name to Allos
Therapeutics, Inc. on October 19, 1994. We reincorporated in Delaware on October 28, 1996. We operate as a single business segment.

Since
our inception in 1992, we have not generated any revenue from product sales and have experienced significant net losses and negative cash flows from operations. We have incurred
these losses principally from costs incurred in our research and development programs, our clinical manufacturing, and from our marketing, general and administrative expenses. Our primary business
activities have been focused on the development of EFAPROXYN (a program which we discontinued in mid-2007), PDX and RH1.

Our
ability to generate revenue and achieve profitability is dependent on our ability, alone or with partners, to successfully complete the development of our product candidates, conduct
clinical trials, obtain the necessary regulatory approvals, and manufacture and market our product candidates. The timing and costs to complete the successful development of any of our product
candidates are highly uncertain, and therefore difficult to estimate. The lengthy process of seeking regulatory approvals for our product candidates, and the subsequent compliance with applicable
regulations, require the

F-11

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ALLOS THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

1. Formation and Business of the Company (Continued)

expenditure
of substantial resources. Clinical development timelines, likelihood of success and total costs vary widely and are impacted by a variety of risks and uncertainties. Because of these risks
and uncertainties, we cannot predict when or whether we will successfully complete the development of any of our product candidates or the ultimate costs of such efforts. Due to these same factors, we
cannot be certain when, or if, we will generate any revenue or net cash inflow from any of our current product candidates.

Even
if our clinical trials demonstrate the safety and effectiveness of our product candidates in their target indications, we do not expect to be able to record commercial sales for any
of our product candidates until 2009 at the earliest. We expect to incur significant and growing net losses for the foreseeable future as a result of our research and development programs and the
costs of preparing for the potential commercial launch of PDX. Although the size and timing of our future net losses are subject to significant uncertainty, we expect them to increase over the next
several years as we continue to fund our development programs and prepare for the potential commercial launch of PDX.

As
of December 31, 2007, we had $57.8 million in cash, cash equivalents, and investments in marketable securities. Based upon the current status of our product development
plans, we believe that our cash, cash equivalents, and investments in marketable securities as of December 31, 2007 should be adequate to support our operations through at least the first
quarter of 2009, although there can be no assurance that this can, in fact, be accomplished. Our forecast of the period of time through which our financial resources will be adequate to support our
operations is a forward-looking statement that involves risks and uncertainties, and actual results could vary materially.

We
anticipate continuing our current development programs and/or beginning other long-term development projects involving our product candidates. These projects may require
many years and substantial expenditures to complete and may ultimately be unsuccessful. Therefore, we will need to obtain additional funds from outside sources to continue research and development
activities, fund operating expenses, pursue regulatory approvals and build sales and marketing capabilities, as necessary. If we are unable to raise sufficient additional funds to support our
operations, we may be required to delay, reduce the scope of or eliminate one or more of our development programs. However, our actual capital requirements will depend on many factors, including:



2. Summary of Significant Accounting Policies

Basis of Presentation

We have not generated any revenue to date and our activities have consisted primarily of developing products, raising capital and recruiting personnel.
Accordingly, we are considered to be in

F-12

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ALLOS THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

2. Summary of Significant Accounting Policies (Continued)

the
development stage at December 31, 2007, as defined in Statement of Financial Accounting Standards ("SFAS") No. 7,Accounting and Reporting by Development
Stage Enterprises.

Use of Estimates

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

Cash, Cash Equivalents and Investments in Marketable Securities

All highly liquid investments with original maturities of three months or less are considered to be cash equivalents. The carrying values of our cash equivalents
and investments in marketable securities approximate their market values based on quoted market prices. We account for investments in marketable securities in accordance with SFAS No. 115, Accounting for Certain
Investments in Debt and Equity Securities. Investments in marketable securities are classified as held to maturity and are
carried at cost plus accrued interest. Our cash and cash equivalents are maintained in a financial institution in amounts that, at times, may exceed federally insured limits. We have not experienced
any losses in such accounts and believe such accounts are not exposed to any significant credit risk in this area. We place investments in high-quality securities in accordance with our
investment policy. Substantially all of our investments in marketable securities as of December 31, 2007 are held in corporate notes with remaining maturities ranging from one to five months.

Restricted Cash

On May 24, 2001, $550,000 of cash was pledged as collateral on a letter of credit related to our building lease and was classified as restricted cash on
the balance sheet. During both 2007 and 2006, in accordance with the terms of the building lease, the amount of the letter of credit was reduced by $183,333. The remaining amount of $183,334 on the
letter of credit is classified as restricted cash on the balance sheet as of December 31, 2007.

Prepaid Research and Development Expenses

Research and development expenditures are charged to expense as incurred. In accordance with certain research and development agreements, we are obligated to make
certain upfront payments upon execution of the agreement. We record these upfront payments as prepaid research and development
expenses. Such payments are recorded to research and development expense as services are performed. We evaluate on a quarterly basis whether events and circumstances have occurred that may indicate
impairment of remaining prepaid research and development expenses.

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ALLOS THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

2. Summary of Significant Accounting Policies (Continued)

Prepaid Expenses and Other Assets

Prepaid expenses and other assets are comprised of the following:

December 31,2007

2006Prepaid expenses and other assets

$
615,471

$
320,840Receivable related to pending litigation settlement (see Note 8)


1,759,000


1,749,000$
2,374,471

$
2,069,840


Property and Equipment

Property and equipment is recorded at cost and is depreciated using the straight-line method over estimated useful lives. Depreciation and
amortization expense was $361,045, $312,251 and $401,106 for the years ended December 31, 2007, 2006 and 2005, respectively, and $3,448,309 for the cumulative period from inception through
December 31, 2007.

The
components of property and equipment are as follows:

December 31,Estimated
Lives2007

2006Computer hardware and software

$
1,520,157

$
1,291,675

3 yearsOffice furniture and equipment


1,344,008


1,244,924

5-7 yearsLeasehold improvements


394,740


394,740

7 yearsLab equipment


76,763


76,763

5 years3,335,668


3,008,102Less accumulated depreciation and amortization


(2,714,217
)

(2,404,582
)Property and equipment, net

$
621,451

$
603,520


Long-lived Assets

Long-lived assets, consisting primarily of property and equipment, are reviewed for impairment when events or changes in circumstances indicate the
carrying value of the assets may not be recoverable. Recoverability is measured by comparison of the assets' book value to future net
undiscounted cash flows the assets are expected to generate. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the book value of the
assets exceed their fair value, which is measured based on the projected discounted future net cash flows arising from the assets.

F-14

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ALLOS THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

2. Summary of Significant Accounting Policies (Continued)

Accounts Payable

Accounts payable are comprised of the following:

December 31,2007

2006Trade accounts payable

$
1,191,849

$
388,133Related parties





12,000$
1,191,849

$
400,133


Accrued liabilities

Accrued liabilities are comprised of the following:

December 31,2007

2006Accrued personnel costs

$
2,122,805

$
1,481,849Accrued litigation settlement costs (see Note 8)


2,000,000


2,000,000Accrued research and development expenses


1,571,975


1,430,417Accrued clinical manufacturing expenses


1,259,799


655,552Accrued expensesother


696,027


436,437Accrued restructuring and separation costs (see Note 5)


38,732


427,266$
7,689,338

$
6,431,521


During
the year ended December 31, 2007, we recorded $307,817 in research and development expenses and $117,280 in clinical manufacturing expenses related to the discontinuation
of the EFAPROXYN development program. These expenses represent estimated costs to be incurred by contract research organizations in connection with closing out our EFAPROXYN clinical trials and
estimated costs for the destruction and storage of EFAPROXYN bulk drug substance and formulated drug product. As of December 31, 2007, $144,501 remains accrued, with approximately $280,596 in
payments made since the program was discontinued.

Fair Value of Financial Instruments

Our financial instruments include cash and cash equivalents, investments in marketable securities, prepaid expenses, accounts payable and accrued liabilities. The
carrying amounts of financial instruments approximate their fair value due to their short maturities.

Stock-Based Compensation

We adopted SFAS No. 123 (Revised 2004),Share-Based Payment("SFAS 123R") effective
January 1, 2006. Under the provisions of SFAS 123R, stock-based compensation is measured at the grant date based on the fair value of the award and is recognized as expense over the
required service period of the award. Prior to the adoption of SFAS 123R, we accounted for grants of stock-based awards according to the intrinsic value method as prescribed by Accounting
Principles Board ("APB") Opinion No. 25,Accounting for Stock Issued to Employees("APB 25") and related Interpretations.

F-15

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ALLOS THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

2. Summary of Significant Accounting Policies (Continued)

In
March 2005, the Securities and Exchange Commission ("SEC") issued Staff Accounting Bulletin No. 107 ("SAB 107") relating to SFAS 123R. We applied the provisions
of SAB 107 in connection with our adoption of SFAS 123R. We adopted SFAS 123R using the modified prospective transition method, which requires the application of the accounting
standard as of January 1, 2006, the first day of our fiscal year 2006. Our financial statements as of and for the years ended December 31, 2007 and 2006 reflect the impact of
SFAS 123R (see Note 4). In accordance with the modified prospective transition method, our financial statements for prior periods have not been restated to reflect, and do not include,
the impact of SFAS 123R.

In
November 2005, the Financial Accounting Standards Board ("FASB") issued Staff Position ("FSP") No. FAS 123(R)-3,Transition Election Related
to Accounting for Tax Effects of Share-Based Payment Awards("FSP 123R-3"). We elected to adopt the alternative transition method provided in FSP 123R-3
for calculating the tax effects of stock-based compensation pursuant to SFAS 123R. The alternative transition method includes simplified methods to establish the beginning balance of the
additional paid-in capital ("APIC") pool related to the tax effects of employee stock-based compensation, and to determine the subsequent impact on the APIC pool and our Statements of Cash
Flows of the tax effects of employee stock-based compensation awards that are outstanding upon adoption of SFAS 123R. This adoption did not have an impact on our financial statements.

See
Note 4"Stock-Based Compensation Plans" for additional details regarding the impact of our stock based compensation plans on our financial statements.

Research and Development

Research and development expenditures are charged to expense as incurred. Research and development expenses include the costs of certain personnel, basic
research, preclinical studies, clinical trials, regulatory affairs, biostatistical data analysis, patents and licensing fees for our product candidates. We record upfront fees and milestone payments
made under our licensing agreements for our product candidates as research and development expense as the services are performed. We accrue research and development expenses for activity as incurred
during the fiscal year and prior to receiving invoices from clinical sites and third party clinical and preclinical research organizations. We accrue external costs for clinical and preclinical
studies based on an evaluation of the following: the progress of the studies, including patient enrollment, dosing levels of patients enrolled, estimated costs to dose patients, invoices received, and
contracted costs with clinical sites and third party clinical and preclinical research organizations. Significant judgments and estimates must be made and used in determining the accrued balance in
any accounting period. Actual results could differ from those estimates. During the years ended December 31, 2007, 2006, and 2005, we did not have any changes in estimates that would have
resulted in material adjustments to research and development expenses accrued in the prior period. However, during the quarter ended December 31, 2006, we did change our estimate relating to
certain costs for our Phase 3 ENRICH trial for EFAPROXYN as a result of new information, which resulted in a reduction of research and development expenses of approximately $400,000 and a
corresponding decrease in accrued research and development expenses as of December 31, 2006.

Clinical Manufacturing

Clinical manufacturing expenses include the costs of certain personnel and third party manufacturing costs for our product candidates for use in clinical trials
and preclinical studies, and

F-16

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ALLOS THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

2. Summary of Significant Accounting Policies (Continued)

certain
costs associated with pre-commercial scale-up of manufacturing to support anticipated regulatory and potential commercial requirements. Our finished drug inventory is
expensed to clinical manufacturing since we are still a development stage company and we have not received regulatory approval to market our product candidates. If and when we receive regulatory
approval, we will be required to capitalize any future manufacturing costs for our marketed products at the lower of cost or market and then expense the sold inventory as a component of cost of goods
sold.

Income Taxes

Income taxes are accounted for under SFAS No. 109,Accounting for Income Taxes("SFAS 109").
Deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and
liabilities at each
year end and their respective tax bases using enacted tax rates in effect for the year in which the differences are expected to affect taxable income. Valuation allowances have been established to
reduce the Company's deferred tax assets to zero, as we believe that it is more likely than not that such assets will not be realized.

Net Loss Per Share

Net loss per share is calculated in accordance with SFAS No. 128,Earnings Per Share("SFAS 128").
Under the provisions of SFAS 128, basic net loss per share is computed by dividing the net loss attributable to common stockholders for the period by the weighted average number of common
shares outstanding during the period. Diluted earnings per share is computed by giving effect to all dilutive potential common stock outstanding during the period, including stock options, restricted
stock, stock warrants and shares to be issued under our employee stock purchase plan.

Diluted
net loss per share is the same as basic net loss per share for all periods presented because any potential dilutive common shares were anti-dilutive due to our net
loss (as including such shares would decrease our basic net loss per share). Potential dilutive common shares that would have been included in the calculation of diluted earnings per share if we had
net income are as follows:

Year ended December 31,2007

2006

2005Common stock options

1,630,431

1,142,205

233,063Restricted stock

438,226

410,000

Common stock warrants

262,132

255,210

2,330,789

1,807,415

233,063


Reclassifications

Certain amounts in Note 6, Income Taxes, were reclassified to conform to the current year presentation.

Recent Accounting Pronouncements

In September 2006, the FASB issued SFAS 157,Fair Value Measurements,which defines fair value, provides a
framework for measuring fair value, and expands the disclosures required for fair value

F-17

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ALLOS THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

2. Summary of Significant Accounting Policies (Continued)

measurements.
SFAS 157 applies to other accounting pronouncements that require fair value measurements; it does not require any new fair value measurements. SFAS 157 is effective for
fiscal years beginning after November 15, 2007 and we are required to adopt it on January 1, 2008. The application of SFAS 157 to certain items has been deferred and will be
effective for fiscal years beginning after November 15, 2008 and interim periods with that year. Although we will continue to evaluate the application of SFAS 157, management does not
currently believe adoption of this pronouncement will have a material impact on our results of operations or financial position.

In
February 2007, the FASB issued SFAS No. 159,The Fair Value Option for Financial Assets and Financial LiabilitiesIncluding an Amendment of
FASB Statement No. 115,which is effective for fiscal years beginning after November 15, 2007 and we are required to adopt it on January 1, 2008. This
statement permits an entity to choose to measure many financial instruments and certain other items at fair value at specified election dates. Subsequent unrealized gains and losses on items for which
the fair value option has been elected will be reported in earnings. We are currently evaluating the potential impact of this statement.

In
June 2007, the Emerging Issues Task Force ("EITF") issued a consensus, EITF 07-3,Advance Payments for Research and Development
Activities, which states that non-refundable advance payments for goods that will be used or services that will be performed in future research and development
activities should be deferred and capitalized until the goods have been delivered or the related services have been rendered. EITF 07-3 is to be applied prospectively for new
contractual arrangements entered into in fiscal years beginning after December 15, 2007. We do not expect that EITF 07-3 will result in a material change to our current
accounting practice.

In
November 2007, the EITF issued a consensus, EITF 07-01,Accounting for Collaboration Arrangements Related to the Development and
Commercialization of Intellectual Property, which is focused on how the parties to a collaborative agreement should account for costs incurred and revenue generated on sales to
third parties, how sharing payments pursuant to a collaboration agreement should be presented in the income statement and certain related disclosure questions. EITF 07-1 is to be
applied retrospectively for collaboration arrangements in fiscal years beginning after December 15, 2008. We currently do not have any such arrangements.

In
December 2007, the FASB issued SFAS 141(R),Business Combinations. This Statement replaces SFAS 141, Business Combinations,and requires an
acquirer to recognize the assets acquired, the liabilities assumed, including those arising from contractual
contingencies, any contingent consideration, and any noncontrolling interest in the acquiree at the acquisition date, measured at their fair values as of that date, with limited exceptions specified
in the statement. SFAS 141(R) also requires the acquirer in a business combination achieved in stages (sometimes referred to as a step acquisition) to recognize the identifiable assets and
liabilities, as well as the noncontrolling interest in the acquiree, at the full amounts of their fair values (or other amounts determined in accordance with SFAS 141(R)). In addition,
SFAS 141(R)'s requirement to measure the noncontrolling interest in the acquiree at fair value will result in recognizing the goodwill attributable to the noncontrolling interest in addition to
that attributable to the acquirer. SFAS 141(R) amends SFAS No. 109,Accounting for Income Taxes, to require the acquirer to recognize
changes in the amount of its deferred tax benefits that are recognizable because of a business combination either in income from continuing operations in the period of the combination or directly in
contributed capital, depending on the circumstances. It also amends SFAS 142,Goodwill and Other Intangible Assets, to, among other things,
provide guidance on

F-18

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ALLOS THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

2. Summary of Significant Accounting Policies (Continued)

the
impairment testing of acquired research and development intangible assets and assets that the acquirer intends not to use. SFAS 141(R) applies prospectively to business combinations for
which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. We are currently evaluating the potential impact of this
Statement.

In
December 2007, the FASB issued SFAS 160,Noncontrolling Interests in Consolidated Financial Statements. SFAS 160 amends
Accounting Research Bulletin 51,Consolidated Financial Statements, to establish accounting and reporting standards for the noncontrolling interest in a
subsidiary and for the deconsolidation of a subsidiary. It also clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as
equity in the consolidated financial statements. SFAS 160 also changes the way the consolidated income statement is presented by requiring consolidated net income to be reported at amounts that
include the amounts attributable to both the parent and the noncontrolling interest. It also requires disclosure, on the face of the consolidated statement of income, of the amounts of consolidated
net income attributable to the parent and to the noncontrolling interest. SFAS 160 requires that a parent recognize a gain or loss in net income when a subsidiary is deconsolidated and requires
expanded disclosures in the consolidated financial statements that clearly identify and distinguish between the interests of the parent owners and the interests of the noncontrolling owners of a
subsidiary. SFAS 160 is effective for fiscal periods, and interim periods within those fiscal years, beginning on or after December 15, 2008. We are currently evaluating the potential
impact of this statement.

3. Stockholders' Equity

Common Stock

2000 Initial Public Offering

On March 27, 2000, the SEC declared effective our Registration Statement on Form S-1. Pursuant to this Registration Statement, we
completed an Initial Public Offering of 5,000,000 shares of our common stock at a price of $18.00 per share (the "IPO"). Proceeds to us from the IPO, after calculation of the underwriters' discount
and commission, totaled approximately $82.8 million, net of offering costs of approximately $1.0 million (excluding underwriters discounts and commissions). Concurrent with the closing
of the IPO, all outstanding shares of our convertible preferred stock were automatically converted into 15,678,737 shares of common stock.

Concurrent
with the closing of our IPO, our Certificate of Incorporation was amended to authorize 10,000,000 shares of undesignated preferred stock, none of which were issued or
outstanding at December 31, 2007. Our Board of Directors is authorized to fix the designation, powers, preferences, and rights of any such series.

2002 Private Placement

In April 2002, we completed a private placement of 2,500,000 shares of common stock at a purchase price of $6.00 per share to Perseus-Soros BioPharmaceutical
Fund, L.P. for an aggregate purchase price
of $15.0 million, net of $100,000 in issuance costs, which resulted in net cash proceeds to us of approximately $14.9 million.

F-19

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ALLOS THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

3. Stockholders' Equity (Continued)

2003 Private Placement

In November 2003, we completed a private placement of 5,172,412 shares of common stock at a purchase price of $2.32 per share to various purchasers for an
aggregate purchase price of $12.0 million, net of $800,000 in issuance costs, which resulted in net cash proceeds to us of approximately $11.2 million. The purchase price was privately
negotiated with the purchasers to represent an approximately 16% discount to the market value of our common stock on November 14, 2003.

2005 Series A Exchangeable Preferred Stock Financing

In March 2005, we entered into a Securities Purchase Agreement with Warburg Pincus Private Equity VIII, L.P. ("Warburg") and certain other investors
pursuant to which we issued and sold 2,352,443 shares of Series A Exchangeable Preferred Stock (the "Exchangeable Preferred"), at a price per share of $22.10 (the "Preferred Purchase Price"),
for aggregate gross proceeds of approximately $52.0 million (the "Preferred Stock Financing"). We incurred offering expenses of $3.2 million in connection with the sale of Exchangeable
Preferred, resulting in net cash proceeds to the Company of approximately $48.8 million. The shares of Exchangeable Preferred were sold under our shelf Registration Statement on
Form S-3 (File No. 333-113353) declared effective by the Securities and Exchange Commission on April 21, 2004.

On
May 18, 2005, at our 2005 Annual Meeting of Stockholders, our stockholders voted to approve the issuance of shares of our common stock upon exchange of all of the outstanding
shares of Exchangeable Preferred. As a result of such approval, we issued a total of 23,524,430 shares of common stock upon exchange of 2,352,443 shares of Exchangeable Preferred (the "Share
Exchange").

The
Preferred Purchase Price represented a 7.5% discount to the 20-day trailing average closing price of our common stock on the Nasdaq National Market as of March 2,
2005, calculated on an as-exchanged for common stock basis. In connection with the Share Exchange, we recorded a deemed dividend related to the beneficial conversion feature of the
Exchangeable Preferred equal to $623,489, representing the difference between the effective conversion price per share of common stock and the market value per share of common stock as of the closing
date of the Preferred Stock Financing. As reflected on the Statements of Operations, this dividend increases the net loss attributable to common stockholders for the year ended December 31,
2005.

In
connection with the sale of Exchangeable Preferred, we entered into a Registration Rights Agreement between us and the purchasers of Exchangeable Preferred. Pursuant to this
Registration Rights Agreement, beginning on March 4, 2007, the purchasers of Exchangeable Preferred became entitled to certain registration rights with respect to the shares of common stock
that were issued upon exchange of the Exchangeable Preferred.

Pursuant
to the Securities Purchase Agreement, for so long as Warburg owns at least two-thirds of the shares of common stock issued upon exchange of such Exchangeable
Preferred, we will nominate and use our reasonable best efforts to cause to be elected and cause to remain as directors on our Board of Directors two individuals designated by Warburg (each, an
"Investor Designee" and collectively, the "Investor Designees"). If Warburg no longer has the right to designate two members of our Board of Directors, then, for so long as Warburg owns at least 50%
of the shares of common stock issued upon exchange of such Exchangeable Preferred, we will nominate and use our reasonable best

F-20

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ALLOS THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

3. Stockholders' Equity (Continued)

efforts
to cause to be elected and cause to remain as a director on our Board of Directors, one Investor Designee. In addition, subject to applicable law and the rules and regulations of the SEC and
the Nasdaq Stock Market, we will use our reasonable best efforts to cause one of the Investor Designees to be a member of each principal committee of our Board of Directors; however, our Board of
Directors has determined, based on its analysis of Rule 10A-3 under the Securities Exchange Act of 1934, as amended, that the Investor Designees are not eligible to serve as members
of the Audit Committee of the Board of Directors due to the size of Warburg's ownership interest. Effective upon the closing of the sale of Exchangeable Preferred to Warburg on March 4, 2005,
Messrs. Stewart Hen and Jonathan Leff, each of whom is a Managing Director of Warburg, were appointed to our Board of Directors pursuant to Warburg's right to nominate directors.

On
November 7, 2005, we filed a Certificate of Elimination of Series A Exchangeable Preferred Stock (the "Certificate of Elimination") with the Secretary of State of the
State of Delaware. The Certificate of Elimination had the effect of eliminating from our Restated Certificate of Incorporation, as amended, all matters with respect to the Series A Exchangeable
Preferred Stock set forth in the Certificate of Designations, Number, Voting Power, Preferences and Rights of Series A Exchangeable Preferred Stock (the "Certificate of Designations") filed
with the Secretary of State of the State of Delaware on March 3, 2005. As a result of the Certificate of Elimination, all 2,714,932 shares of Series A Exchangeable Preferred Stock
authorized pursuant to the Certificate of Designations have resumed their status as authorized and unissued Preferred Stock as of November 7, 2005.

2007 Common Stock Financing

On February 2, 2007, we sold 9,000,000 shares of our common stock in an underwritten offering at a price of $6.00 per share (the "February 2007
Financing"). We received net proceeds from the offering of approximately $50.3 million, after deducting underwriting commissions of approximately $3.2 million and other offering expenses
of approximately $503,000. The shares of common stock were sold under our shelf Registration Statement on Form S-3 (File No. 333-134965), declared effective by
the SEC on July 10, 2006.

Baker
Brothers Life Sciences, L.P. and certain other affiliated funds (collectively "Baker") purchased 3,300,000 shares of common stock in the February 2007 Financing. As a result
of such purchase, Baker
held in excess of 15% of our outstanding common stock following the closing of the February 2007 Financing. In connection with the February 2007 Financing, Baker entered into a standstill agreement
with the Company, agreeing not to pursue, for four years, certain activities the purpose or effect of which may be to change or influence control of the Company.

F-21

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ALLOS THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

3. Stockholders' Equity (Continued)

Common Stock Reserved for Future Issuance

At December 31, 2007, we have reserved shares of common stock for future issuance as follows:

|                                       |                                  | Outstanding at
December 31,
2007 |           | Available for
grant at
December 31,
2007 |           | Shares of
Common Stock
Reserved at
December 31,
2007
|-------------------------------------- | -------------------------------- | -------------------------------- | --------- | ---------------------------------------- | --------- | ----------------------------------------------------
|1995 Stock Option Plan                 |                                  | 353,528                          |           |                                         |           | 353,528                                             
|2000 Stock Incentive Compensation Plan |                                  | 4,986,121                        |           | 1,383,687                                |           | 6,369,808                                           
|2001 Employee Stock Purchase Plan      |                                  |                                 |           | 2,282,605                                |           | 2,282,605                                           
|2002 Broad Based Equity Incentive Plan |                                  | 415,781                          |           | 443,231                                  |           | 859,012                                             
|2006 Inducement Award Plan             |                                  | 650,000                          |           | 665,000                                  |           | 1,315,000                                           
|                                       |                                  |                                  |           |                                          |           |                                                     
|                                       | Total for Equity Incentive Plans |                                  | 6,405,430 |                                          | 4,774,523 |                                                     
|                                       |                                  |                                  |           |                                          |           |                                                     

Stock Warrants

In November 2003, in conjunction with the private placement of 5,172,412 shares of common stock to various purchasers, we issued warrants to purchase 1,706,893
shares of common stock at an exercise price of $3.14 per share with a life of four years. There were 748,187 and 958,706 of these warrants exercised during 2007 and 2006, respectively. As of
December 31, 2007, none of these warrants remained outstanding.

Stockholder Rights Plan

In May 2003, we designated 1,000,000 shares of our authorized Preferred Stock as Series A Junior Participating Preferred Stock, par value $0.001 per share,
pursuant to a Stockholder Rights Plan approved by our Board of Directors under which all stockholders of record as of May 28, 2003 received a dividend distribution of one preferred share
purchase right (a "Right") for each outstanding share of our common stock. The Rights trade with the common stock and no separate Right certificates will be distributed until such time as the Rights
become exercisable in accordance with the Stockholder Rights Plan. The Stockholder Rights Plan is intended as a means to guard against abusive takeover tactics and to provide for fair and equal
treatment for all stockholders in the event that an unsolicited attempt is made to acquire us.

In
connection with the sale of shares of Exchangeable Preferred to Warburg in March 2005, we amended the Stockholder Rights Plan to provide that Warburg and its affiliates will be exempt
from the Stockholder Rights Plan, unless Warburg and its affiliates become, without the prior consent of our Board of Directors, the beneficial owner of more than 44% of our common stock.

In
connection with the acquisition of shares of our common stock by Baker in the February 2007 Financing, we amended the Stockholder Rights Plan to provide that Baker will be exempt from
the Stockholder Rights Plan, unless Baker becomes, without the Company's prior consent, the beneficial owner of more than 20% of our common stock.

F-22

---



ALLOS THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

3. Stockholders' Equity (Continued)

Until
the Rights become exercisable, the Rights will have no dilutive impact on our earnings per share data. The Rights are protected by customary anti-dilution provisions.
As of December 31, 2007, no shares of Series A Junior Participating Preferred Stock were issued or outstanding.

4. Stock-Based Compensation Plans

Expense Information under SFAS 123R

In accordance with the modified prospective transition method of SFAS No. 123 (Revised 2004),Share-Based
Payment("SFAS 123R"), stock-based compensation expense for the years ended December 31, 2007 and 2006 has been recognized in the accompanying Statements of
Operations as follows:

Year ended December 31,2007

2006Research and development

$
1,870,767

$
660,274Clinical manufacturing


180,592


113,066Marketing, general and administrative


4,599,266


2,813,661Total stock-based compensation expense

$
6,650,625

$
3,587,001


We
did not recognize a related tax benefit during the years ended December 31, 2007 and 2006, as we maintain net operating loss carryforwards and we have established a valuation
allowance against the entire tax benefit as of December 31, 2007. No stock-based compensation expense was capitalized on our Balance Sheets as of December 31, 2007 and 2006.

During
the year ended December 31, 2006, we entered into a Separation Agreement with our former President and Chief Executive Officer, Michael E. Hart, and we entered into a
consulting agreement with a former member of our Board of Directors, Dr. Marvin E. Jaffe (these arrangements are described in more detail in Note 9 below). Pursuant to these
arrangements, the exercise periods of certain stock options held by Mr. Hart and Dr. Jaffe were extended as a result of their consulting relationships and were deemed modified for
accounting purposes. We have accounted for the modifications to these options in accordance with SFAS 123R and FASB Interpretation No. 44,Accounting for Certain
Transactions Involving Stock Compensation, and recorded a one-time stock-based compensation charge of $441,129 during the year ended December 31, 2006.

Stock Options

During 1995, our Board of Directors terminated the 1992 Stock Plan (the "1992 Plan") and adopted the 1995 Stock Option Plan (the "1995 Plan"). The 1995 Plan was
amended and restated in 1997. Termination of the 1992 Plan had no effect on the options outstanding under that plan, as they were assumed under the 1995 Plan. Under the 1995 Plan, we could grant fixed
and performance-based stock options and stock appreciation rights to officers, employees, consultants and directors. The stock options were intended to qualify as "incentive stock options" under
Section 422 of the Internal Revenue Code, unless specifically designated as non-qualifying stock options or unless exceeding the applicable statutory limit.

F-23

---



ALLOS THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

4. Stock-Based Compensation Plans (Continued)

During
2000, concurrent with our IPO, the Board of Directors suspended the 1995 Plan and adopted the Allos Therapeutics, Inc. 2000 Stock Incentive Compensation Plan (the "2000
Plan"). The 2000 Plan provides for the granting of stock options similar to the terms of the 1995 Plan as described above. Any shares remaining for future option grants and any future cancellations of
options from our 1995 Plan will be available for future grant under the 2000 Plan. Suspension of the 1995 Plan had no effect on the options outstanding under the 1995 Plan. Under the 2000 Plan, we are
authorized to increase the number of shares of common stock that shall be available annually on the first day of each fiscal year beginning in 2001 in an amount equal to the lesser of 440,000 shares
or 2% of the adjusted average common shares outstanding used to calculate fully diluted earnings per share as reported in our Annual Report to Stockholders for the preceding year, or alternatively, by
any lesser amount determined by our Board of Directors. On December 21, 2005, our stockholders approved an amendment and restatement of the 2000 Plan to: (i) increase the aggregate
number of shares of common stock authorized for issuance under the 2000 Plan by 3,500,000 shares and (ii) provide that the number of shares of common stock that may be granted under the 2000
Plan to any one employee during any calendar year cannot exceed 2,000,000 shares.

In
January 2002, our Board of Directors approved the Allos Therapeutics, Inc. 2002 Broad Based Equity Incentive Plan (the "2002 Plan"). Under the 2002 Plan, we are authorized to
issue up to 1,000,000 shares of common stock to employees, consultants and members of the Board of Directors. Under the terms of the 2002 Plan, the aggregate number of shares underlying stock awards
to officers and directors once employed by us cannot exceed 49% of the number of shares underlying all stock awards granted, as determined on certain specific dates. The 2002 Plan will terminate on
January 7, 2012.

In
June 2006, our Board of Directors approved the Allos Therapeutics, Inc. 2006 Inducement Award Plan (the "2006 Plan"). Under the 2006 Plan, we are authorized to issue up to
1,500,000 shares of common stock pursuant to equity awards, including nonstatutory stock options, stock grant awards, stock purchase awards, stock unit awards and other forms of equity compensation.
We may grant awards under the 2006 Plan only to persons not previously an employee or director of ours, or following a bona fide period of non-employment, as an inducement material to such
individual's entering into employment with us and to provide incentives for such persons to exert maximum efforts for our success.

The
1995, 2000, 2002 and 2006 Plans (the "Plans") provide for appropriate adjustments in the number of shares reserved and outstanding options in the event of certain changes to our
outstanding common stock by reason of merger, recapitalization, stock split or other similar events. Options granted under the Plans may be exercised for a period of not more than 10 years from
the date of grant or any shorter period as determined by our Board of Directors. Options vest as determined by the Board of Directors, generally over a period of two to four years, subject to
acceleration under certain events. The exercise price of any incentive stock option granted under the Plans must equal or exceed the fair market value of our common stock on the date of grant, or 110%
of the fair market value per share in the case of a 10% or greater stockholder.

F-24

---



ALLOS THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

4. Stock-Based Compensation Plans (Continued)

The
following table summarizes our stock option activity and related information for the 1995, 2000, 2002 and 2006 Plans:

|                                 |           | Options Outstanding |            | Options Exercisable
|-------------------------------- | --------- | ------------------- | ---------- | -------------------
|
|Outstanding at December 31, 2004 |           | 3,873,448           |            | $                  
|                                 |           |                     |            |                    
|                                 | Granted   |                     | 602,764    |                    
|                                 | Exercised |                     | (352,081   | )                  
|                                 | Canceled  |                     | (179,756   | )                  
|                                 |           |                     |            |                    
|Outstanding at December 31, 2005 |           | 3,944,375           |            | $                  
|                                 |           |                     |            |                    
|                                 | Granted   |                     | 2,660,343  |                    
|                                 | Exercised |                     | (413,680   | )                  
|                                 | Canceled  |                     | (412,467   | )                  
|                                 |           |                     |            |                    
|Outstanding at December 31, 2006 |           | 5,778,571           |            | $                  
|                                 |           |                     |            |                    
|                                 | Granted   |                     | 2,731,574  |                    
|                                 | Exercised |                     | (1,156,471 | )                  
|                                 | Canceled  |                     | (948,244   | )                  
|                                 |           |                     |            |                    
|Outstanding at December 31, 2007 |           | 6,405,430           |            | $                  
|                                 |           |                     |            |                    

The
following table summarizes information about options outstanding and exercisable as of December 31, 2007:

|             |  | Options Outstanding |  | Options Exercisable
|------------ |  | ------------------- |  | -------------------
|
|$1.90$2.55  |  | 914,848             |  | 5.1                
|$2.56$2.95  |  | 805,435             |  | 8.2                
|$2.96$3.13  |  | 402,250             |  | 8.1                
|$3.14$3.24  |  | 794,800             |  | 7.9                
|$3.25$5.62  |  | 724,307             |  | 5.6                
|$5.63$5.84  |  | 414,000             |  | 7.2                
|$5.84$6.16  |  | 618,201             |  | 7.8                
|$6.17$7.46  |  | 726,667             |  | 7.3                
|$7.47$8.04  |  | 907,917             |  | 9.1                
|$8.05$13.75 |  | 97,005              |  | 3.9                
|             |  |                     |  |                    
|             |  | 6,405,430           |  | 7.3                
|             |  |                     |  |                    

F-25

---



ALLOS THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

4. Stock-Based Compensation Plans (Continued)

The
following table summarizes information about outstanding stock options that are fully vested and currently exercisable, and outstanding stock options that are expected to vest in the
future:

|                         |                                                                     | Number
Outstanding |           | Weighted Average
Remaining
Contractual Term |     | Weighted
Average
Exercise Price |   | Aggregate
Intrinsic Value
|------------------------ | ------------------------------------------------------------------- | ------------------ | --------- | ------------------------------------------- | --- | ------------------------------- | - | -------------------------
|As of December 31, 2007: |                                                                     |                    |           |                                             |     |                                 |   |                          
|                         | Options fully vested and exercisable                                |                    | 2,754,274 |                                             | 5.1 |                                 | $ | 3.80                     
|                         | Options expected to vest, including effects of expected forfeitures |                    | 3,169,916 |                                             | 8.9 |                                 | $ | 5.33                     
|                         |                                                                     |                    |           |                                             |     |                                 |   |                          
|                         | Options fully vested and expected to vest                           |                    | 5,924,190 |                                             | 7.2 |                                 | $ | 4.62                     
|                         |                                                                     |                    |           |                                             |     |                                 |   |                          

During
the years ended December 31, 2007 and 2006, we granted stock options with a weighted-average grant-date fair value of $4.12 and $1.79 per share. Compensation
expense related to our stock option plans was $5,899,387 and $3,048,523 for the years ended December 31, 2007 and 2006, respectively. As of December 31, 2007, the unrecorded stock-based
compensation balance related to stock option awards was $5,991,942 and will be recognized over an estimated weighted-average amortization period of 1.4 years.

The
aggregate intrinsic value in the tables above represents the total pretax intrinsic value, based on our closing stock price of $6.29 as of December 31, 2007, which would have
been received by the option holders had all option holders with in-the-money options exercised their options as of that date. The total number of
in-the-money options exercisable as of December 31, 2007 was 2,470,602. The total intrinsic value of outstanding stock options as of December 31, 2007 was
$11,784,334.

The
total intrinsic value of options exercised during the years ended December 31, 2007, 2006 and 2005 was $2,634,426, $1,104,117 and $553,447, respectively. The total cash
received from employees as a result of employee stock option exercises during the years ended December 31, 2007, 2006 and 2005 was $3,696,811, $561,097 and $197,513, respectively. We settle
employee stock option exercises with newly issued common shares. No tax benefits were realized by us in connection with these exercises during the year ended December 31, 2007 as we maintain
net operating loss carryforwards and we have established a valuation allowance against the entire tax benefit as of December 31, 2007.

Valuation assumptions for stock options granted during the years ended December 31, 2007 and 2006

For stock options granted during the years ended December 31, 2007 and 2006, the majority vest according to the following schedule: 25% of the shares
subject to the award vest one year after the date of grant, and the remaining 75% of the shares subject to the award vest in equal monthly installments thereafter over the next three years, until all
such shares are vested and exercisable. Stock-based compensation calculated according to SFAS 123R is expensed over the vesting period of the individual options in accordance with FASB
Interpretation No. 28,Accounting for Stock Appreciation Rights and Other Variable Stock Option and Award Plans("FIN 28"). The fair value
of stock options granted to our employees during the years ended December 31, 2007 and 2006 was estimated on the

F-26

---



ALLOS THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

4. Stock-Based Compensation Plans (Continued)

date
of each grant using the Black-Scholes option pricing model using the following weighted-average assumptions:

2007

2006Stock option plans:Expected dividend yield

0
%
0
%Expected stock price volatility

80
%
81
%Risk free interest rate

4.7
%
4.7
%Expected life (years)

4.3

3.9


We
used an expected dividend yield of 0%, as we do not expect to pay dividends during the expected life of these awards. The expected stock price volatility is determined using our
historical stock volatility over the period equal to the expected life of each award. The risk-free interest rate is based on United States Treasury zero-coupon issues with a
remaining term equal to the expected life of each award. During 2006 through the first quarter of 2007, the expected life was determined by factoring the different vesting periods of each award in
combination with our employees' expected exercise behavior. In June 2007, we concluded that our historical share option exercise experience would not provide a reasonable basis upon which to estimate
expected term going forward, given our relative stage of development and changes in our business given the termination of the EFAPROXYN development program. Beginning in the second quarter of 2007,
the expected life of the stock options was estimated using peer data of companies in the life science industry with similar equity plans. As required by SFAS 123R, stock-based compensation
expense is recognized net of estimated pre-vesting forfeitures, which results in recognition of expense on options that are ultimately expected to vest over the expected option term.
Forfeitures were estimated using actual historical forfeiture experience.

Restricted Stock

The following table summarizes activity and related information for our restricted stock awards:

Number of
Shares

Weighted
Average
Grant-Date
Fair ValueNonvested as of December 31, 2006

410,000

$
3.14Granted

105,000


6.08Vested

(102,500
)

3.14Nonvested as of December 31, 2007

412,500

$
3.89


During
the years ended December 31, 2007 and 2006, we granted 105,000 and 410,000 shares of restricted stock, respectively. We did not grant restricted stock during the year ended
December 31, 2005. The shares of restricted stock vest in four equal annual installments from the date of grant. The grant-date fair value of shares granted during the years ended
December 31, 2007 and 2006 was $638,400 and $1,286,300, respectively. The weighted-average grant-date fair value per share for restricted stock awards granted was based on the
closing market price of the Company's common stock on the grant dates of the awards and was $6.08 and $3.14 for the years ended December 31, 2007 and 2006, respectively. The total fair value of
shares vested during the year ended December 31, 2007 was

F-27

---



ALLOS THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

4. Stock-Based Compensation Plans (Continued)

approximately
$643,025. During the years ended December 31, 2007 and 2006, we recorded stock-based compensation related to restricted stock awards of $689,754 and $502,514, respectively. As of
December 31, 2007, the unrecorded stock-based compensation balance related to restricted stock awards was $695,779 and will be recognized over an estimated weighted-average amortization period
of 1.5 years.

Employee Stock Purchase Plan

On February 28, 2001, our Board of Directors approved the Allos Therapeutics, Inc. 2001 Employee Stock Purchase Plan ("Purchase Plan"), which was
also approved by our stockholders on April 17, 2001. Under the Purchase Plan, we are authorized to issue up to 2,500,000 shares of common stock to qualified employees. Qualified employees can
choose to have up to 10% of their annual base earnings withheld to purchase shares of our common stock during each offering period. The purchase price of the common stock is 85% percent of the lower
of the fair market value of a share of common stock on the first day of the offering or the fair market value of a share of common stock on the last day of the purchase period. We sold 41,148, 44,319
and 26,675 shares to employees in 2007, 2006 and 2005, respectively. There were 2,282,605 shares available for sale under the Purchase Plan as of December 31, 2007. The Purchase Plan will
terminate on February 27, 2011. Compensation expense related to our Purchase Plan was $61,484 and $35,964 for the years ended December 31, 2007 and 2006, respectively. As of
December 31, 2007, there was no unrecorded deferred stock-based compensation balance related to the Purchase Plan. The weighted-average estimated grant date fair value of purchase awards under
the Purchase Plan during the years ended December 31, 2007 and 2006 was $1.42 and $0.96 per share.

The
fair value of purchase awards granted to our employees during the years ended December 31, 2007 and 2006 was estimated using the Black-Scholes option pricing model using the
following weighted-average assumptions:

2007

2006Stock purchase plan:Expected dividend yield

0
%
0
%Expected stock price volatility

55
%
46
%Risk free interest rate

4.9
%
4.7
%Expected life (years)

0.9

1.0


Expense Information for 2005

During the year ended December 31, 2005, we recorded stock-based compensation expense of approximately $476,000 and $2,000 in marketing, general and
administrative expenses and research and development expenses, respectively. The $476,000 of stock-based compensation expense recorded in marketing, general and administrative expenses is primarily
due to an amendment in May 2005 of the terms surrounding the exercise period for certain options that were granted to our Chairman of the Board of Directors during 2000 (see Note 9).

F-28

---



ALLOS THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

4. Stock-Based Compensation Plans (Continued)

Pro forma SFAS 123 Information

Prior to the adoption of SFAS 123R, we provided the disclosures required under SFAS No. 123,Accounting for Stock-Based
Compensation("SFAS 123"), as amended by SFAS No. 148,Accounting for Stock-Based CompensationTransition and
Disclosures. The following table illustrates the pro forma effect on net loss attributable to common stockholders and net loss per share if we had applied the fair value
recognition provisions of SFAS 123 to stock-based compensation for the year ended December 31, 2005:

2005Net loss attributable to common stockholdersas reported

$
(20,760,077
)Add: Stock-based employee compensation expense included in reported net loss


477,860Deduct: Stock-based employee compensation expense determined under the fair value based method for all awards


(1,737,894
)Pro forma net loss attributable to common stockholders

$
(22,020,111
)Net loss per share: basic and dilutedas reported

$
(0.45
)Net loss per share: basic and dilutedpro forma

$
(0.48
)


The
weighted average estimated grant date fair value, as defined by SFAS 123, for options granted under our stock option plans during the year ended December 31, 2005 was
$1.42 per share. The weighted average estimated grant date fair value of purchase awards under the Purchase Plan during the year ended December 31, 2005 was $0.84. The estimated grant date fair
values were calculated using the Black-Scholes option-pricing model.

The
following assumptions are included in the estimated grant date fair value calculations for our stock option and employee stock purchase awards for the year ended December 31,
2005:

2005Stock option plans:Expected dividend yield

0%Expected stock price volatility

78%-85%Risk free interest rate

2.3%-4.5%Expected life (years)

4.0-5.0Stock purchase plan:Expected dividend yield

0%Expected stock price volatility

35%-69%Risk free interest rate

1.6%-3.8%Expected life (years)

2.0


F-29

---



ALLOS THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

5. Restructuring and Separation Costs

In January 2005, we executed agreements to sublease approximately three-quarters of the 12,708 square feet of excess space in our corporate offices located in
Westminster, Colorado. The term of each sublease agreement is through the term of our office lease, or October 31, 2008. The total rental payments to us under the terms of the sublease
agreements approximate $230,000. In the year ended December 31, 2005, we recorded a lease abandonment charge of $380,085 as our obligations under our primary lease were in excess of the sum of
the actual and expected sublease rental payments for this excess space. As of December 31, 2007, the amount remaining in accrued restructuring and separation costs relating to this lease
abandonment charge was $38,732.

In
January 2006, Michael E. Hart notified our Board of Directors of his intent to resign from his positions as President, Chief Executive Officer and Chief Financial Officer of the
Company once a successor Chief Executive Officer was appointed. On March 3, 2006, we entered into a separation agreement with Mr. Hart to provide certain incentives for his continued
employment with the Company while we conducted our search for his successor. On March 9, 2006, we appointed Paul L. Berns as our President, Chief Executive Officer and a member of the Board of
Directors and Mr. Hart resigned from his positions in accordance with the terms of the separation agreement. The separation agreement with Mr. Hart was amended on March 9, 2006
and on May 10, 2006 (as so amended, the "Separation Agreement").

We
recorded separation costs of $645,666 during the year ended December 31, 2006 relating to our estimate of our total obligations under the Separation Agreement with
Mr. Hart. During the years ended December 31, 2007 and 2006, we made payments to Mr. Hart under the Separation Agreement of $320,458 and $325,208, respectively. As of
December 31, 2007, there was no remaining liability relating to the Separation Agreement with Mr. Hart.

6. Income Taxes

We adopted the provisions of Financial Accounting Standards Board ("FASB") Interpretation No. 48,Accounting for Uncertainty in
Income Taxes-an interpretation of FASB Statement No. 109("FIN 48"), on January 1, 2007. FIN 48 clarifies the accounting for uncertainty
in income taxes recognized in an enterprise's financial statements in accordance with SFAS No. 109 and prescribes a recognition threshold and measurement process for financial statement
recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting
in interim periods, disclosure and transition. Based on our evaluation, we have concluded that there are no significant uncertain tax positions requiring recognition in our financial statements. Our
evaluation was performed for the periods from December 31, 1993 through December 31, 2007, the tax periods which remain subject to examination by major tax jurisdictions as of
December 31, 2007.

We
may from time to time be assessed interest or penalties by major tax jurisdictions, although there have been no such assessments historically with no material impact to our financial
results. In the event we receive an assessment for interest and/or penalties, it would be classified in the financial statements as income tax expense.

F-30

---



ALLOS THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

6. Income Taxes (Continued)

The
income tax benefit computed using our net loss and the federal statutory income tax rate differs from our actual income tax benefit of $0, primarily due to the following for the
years ended December 31, 2007, 2006 and 2005:

|                                                                                             |                          | 2007 |             | 2006 |   | 2005        |  
|-------------------------------------------------------------------------------------------- | ------------------------ | ---- | ----------- | ---- | - | ----------- | -
|Federal income tax benefit at 35%                                                            |                          | $    | (13,779,360 | )    | $ | (10,574,400 | )
|State income tax, net of federal benefit                                                     |                          |      | 974,838     |      |   | (813,900    | )
|Stock-based compensation                                                                     |                          |      | 1,160,681   |      |   | 275,600     |  
|Research and development and orphan drug credits                                             |                          |      | (3,311,029  | )    |   | (1,355,693  | )
|Research and development and orphan drug credits to expire related to Section 382 limitation |                          |      | 5,880,410   |      |   |            |  
|Net operating losses to expire related to Section 382 limitation                             |                          |      | 23,086,377  |      |   |            |  
|Change in valuation allowance                                                                |                          |      | (14,161,720 | )    |   | 12,496,693  |  
|Other                                                                                        |                          |      | 149,803     |      |   | (28,300     | )
|                                                                                             |                          |      |             |      |   |             |  
|                                                                                             | Benefit for income taxes |      | $           |     |   | $           | 
|                                                                                             |                          |      |             |      |   |             |  

The
components of our deferred tax assets as of December 31, 2007 and 2006 are as follows:

|                     |                                                               | 2007                      |   | 2006        |           
|-------------------- | ------------------------------------------------------------- | ------------------------- | - | ----------- | ----------
|Deferred tax assets: |                                                               |                           |   |             |           
|                     | Net operating loss carryforwards                              |                           | $ | 48,354,464  |           
|                     | Amortization of intangibles                                   |                           |   | 943,154     |           
|                     | Research and development and orphan drug credit carryforwards |                           |   | 7,195,874   |           
|                     | Stock-based compensation                                      |                           |   | 2,989,285   |           
|                     | Other                                                         |                           |   | 320,786     |           
|                     |                                                               |                           |   |             |           
|                     |                                                               | Total deferred tax assets |   |             | 59,803,563
|                     | Valuation allowance                                           |                           |   | (59,803,563 | )         
|                     |                                                               |                           |   |             |           
|                     |                                                               | Net deferred tax assets   |   | $           |          
|                     |                                                               |                           |   |             |           

Our
deferred tax assets represent an unrecognized future tax benefit. A valuation allowance has been established for the entire tax benefit as we believe that it is more likely than not
that such assets will not be realized.

As
of December 31, 2007, we had available approximately $130.6 million of net operating loss ("NOL") carryforwards, after taking into consideration NOLs
expected to expire unused due to the limitations under Section 382 of the Internal Revenue Code, and which includes approximately $3.4 million of deductions related to stock-based
compensation that are not realized as deferred tax assets until current taxes payable can be reduced. These NOL carryforwards will expire beginning in 2009. In addition, we had research and
development credit and orphan drug credit carryforwards, after taking into consideration the Section 382 limitation, of $2.3 million and $4.9 million, respectively, as of
December 31, 2007, to offset future regular and alternative tax expense. Since the Company's formation, it has raised capital through the issuance of capital stock on several occasions which,
combined with shareholders' subsequent disposition of those shares, has resulted in four changes of

F-31

---



ALLOS THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

6. Income Taxes (Continued)

control
in 1994, 1998, 2001 and 2005, as defined by Section 382. In general, an ownership change, as defined by Section 382, results from transactions increasing the ownership of certain
shareholders or public groups in the stock of a corporation by more than 50% within a three-year period. As a result of the most recent ownership change in 2005, utilization of our NOLs
generated prior to the latest change are subject to an annual limitation under Section 382 determined by multiplying the value of our stock at the time of the ownership change in control by the
applicable long-term tax-exempt rate resulting in an annual limitation amount of approximately $2.2 million. Additionally, we have a recognized built-in gain that will
increase the annual limitation by $3.3 million for each of the five years after the 2005 ownership change. Any unused annual limitation may be carried over to later years, and the amount of the
limitation may, under certain circumstances, be subject to adjustment if the fair value of the Company's net assets are determined to be below or in excess of the tax basis of such assets at the time
of the ownership change, and such unrealized loss or gain is recognized during the five-year period after the ownership change.

Subsequent
ownership changes, as defined in Section 382, could further limit the amount of our NOL carryforwards and research and development credits that can be utilized annually
to offset future taxable income.

7. Employee Benefit Plan

We maintain a defined contribution plan covering substantially all employees under Section 401(k) of the Internal Revenue Code. From January 1, 1999
through December 31, 2006, we provided a 50% match of employees' contributions up to $2,000 per employee per year. Effective January 1, 2007, we provided a 50% match of employees'
contributions up to $5,000 per employee per year. We made total contributions of $241,227, $105,675 and $98,276 during the years ended December 31, 2007, 2006 and 2005, respectively. Company
contributions are fully vested after four years of employment.

8. Commitments and Contingencies

Lease Commitments

We lease offices and research and development facilities, as well as certain office and lab equipment under agreements that expire at various dates through 2010.
Total rent expense for the years ended December 31, 2007, 2006 and 2005 and the cumulative period from inception through December 31, 2007 was $686,606, $586,010, $619,581 and
$5,063,783, respectively. See Note 5 for a discussion of our subleases which terminate October 31, 2008. As of December 31, 2007, remaining payments under these subleases
approximate $60,630.

F-32

---



ALLOS THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

8. Commitments and Contingencies (Continued)

The
aggregate future minimum rental commitments as of December 31, 2007, net of sublease payments, for non-cancelable operating leases with initial or remaining terms
in excess of one year are as follows:

Year Ending December 31:2008

$
657,0142009


67,6422010


5,6512011 and thereafter


Total

$
730,307


Royalty and License Fee Commitments

On January 14, 1994, we entered into a license agreement with the Center for Innovative Technology, or CIT, under which we obtained exclusive worldwide
rights to a portfolio of patents related to allosteric hemoglobin modifier compounds, including EFAPROXYN, and their uses. In exchange for the license agreement, we paid CIT $50,000 in cash and issued
248,000 shares of our common stock valued at $0.16 per share. This license agreement was assigned by CIT to the Virginia Commonwealth University Intellectual Property Foundation, or VCUIPF, on
July 28, 1997. Under the terms of the license agreement, we have the right to grant sublicenses, for which we must also pay royalties to VCUIPF for products produced by the sublicensees. Also,
pursuant to the license agreement, we will pay VCUIPF a running royalty of 1% to 1.25% of our worldwide net revenue arising from the sale, lease or other commercialization of the allosteric hemoglobin
modifier compounds. This license agreement terminates on the date the last United States patent licensed to us under the agreement expires, which is currently October 2016, but could be later
depending on possible patent term extensions. Quarterly royalty
payments are due within 60 days from the end of each calendar quarter. As of December 31, 2007, no royalty payments have been incurred.

In
December 2002, we entered into a license agreement with Memorial Sloan-Kettering Cancer Center, SRI International and Southern Research Institute, as amended, under which we obtained
exclusive worldwide rights to a portfolio of patents and patent applications related to PDX (pralatrexate) and its uses. Under the terms of the agreement, we paid an up-front license fee
of $2.0 million upon execution of the agreement and are also required to make certain additional cash payments based upon the achievement of certain clinical development or regulatory
milestones or the passage of certain time periods. To date, we have made aggregate milestone payments of $2.0 million based on the passage of time. In the future, we could make aggregate
milestone payments of $1.0 million upon the earlier of achievement of a clinical development milestone or the passage of certain time periods (the "Clinical Milestone"), and up to
$10.3 million upon achievement of certain regulatory milestones, including regulatory approval to market PDX in the United States or Europe. The next scheduled payments toward the Clinical
Milestone of $500,000 each are currently due on December 23, 2008 and 2009. The up-front license fee and all milestone payments under the agreement have been or will be recorded to
research and development expense when incurred. Under the terms of the agreement, we are required to fund all development programs and will have sole responsibility for all commercialization
activities. In addition, we will pay the licensors a royalty based on a percentage of

F-33

---



ALLOS THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

8. Commitments and Contingencies (Continued)

net
revenues arising from sales of the product or sublicense revenues arising from sublicensing the product, if and when such sales or sublicenses occur.

In
December 2004, we entered into an agreement with the University of Colorado Health Sciences Center, the University of Salford and Cancer Research Technology ("CRT"), under which we
obtained exclusive worldwide rights to certain intellectual property surrounding a proprietary molecule known as RH1. Under the terms of the agreement, we paid an up-front license fee of
$190,500 upon execution of the agreement and are also required to make certain additional cash payments based upon the achievement of certain clinical development, regulatory and commercialization
milestones. We could make aggregate milestone payments of up to $9.2 million upon the achievement of the clinical development, regulatory and commercialization milestones set forth in the
agreement. The up-front license fee and all milestone payments under the agreement, as well as the one-time data option fee discussed below, have been or will be recorded to
research and development expense when incurred. Under the terms of the agreement and related data option agreement, we paid the licensors a one-time data option fee of $360,000 in 2007,
for an exclusive license to the results of a Phase 1 study sponsored by Cancer Research UK, CRT's parent institution. This Phase 1 study was completed in 2007 and, under the terms of the
agreement, we have since assumed responsibility for all future development costs and activities and have sole responsibility for all commercialization activities. In addition, we will pay the
licensors a royalty based on a percentage of net revenues arising from sales of the product or sublicense revenues arising from sublicensing the product, if and when such sales or sublicenses occur.

Contingencies

The Company and one of its former officers were named as defendants in a purported securities class action lawsuit filed in May 2004 in the United States District
Court for the District of Colorado (the "District Court"). An amended complaint was filed in August 2004. The lawsuit was brought on behalf of a purported class of purchasers of our securities during
the period from May 29, 2003 to April 29, 2004, and sought unspecified damages relating to the issuance of allegedly false and misleading statements regarding EFAPROXYN during this
period and subsequent declines in our stock price. On October 20, 2005, the District Court granted the defendants' motion to dismiss the lawsuit with prejudice. In an opinion dated
October 20, 2005, the District Court concluded that the plaintiff's complaint failed to meet the legal requirements applicable to its alleged claims.

On
November 20, 2005, the plaintiff appealed the District Court's decision to the U.S. Court of Appeals for the Tenth Circuit (the "Court of Appeals"). On February 6, 2008,
the parties signed a stipulation of settlement, settling the case for $2,000,000. Neither we nor our former officer admits any liability in connection with the settlement. The Court of Appeals
accordingly has remanded the case to the District Court for consideration of the settlement. The settlement is subject to various conditions, including without limitation approval of the District
Court. We expect that the amount of the settlement in excess of our deductible will be covered by our insurance carrier. In the event the settlement does not become final, we intend to vigorously
defend against the plaintiff's appeal. If the Court of Appeals then were to reverse the District Court's decision and we were not successful in our defense of such claims, we could be forced to make
significant payments to the plaintiffs, and such payments could have a material adverse effect on our business, financial condition, results of operations and cash flows to the extent such payments
are not covered by our insurance carriers. Even if our defense against such claims were successful, the litigation could result in substantial costs and divert management's attention and resources,
which could adversely affect our business. As of December 31,

F-34

---



ALLOS THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

8. Commitments and Contingencies (Continued)

2007,
we have recorded $2,000,000 in accrued litigation settlement costs, which represents our best estimate of the potential gross amount of the settlement costs to be paid to the plaintiffs, and
$1,759,000 in prepaid expenses and other assets, which represents the amount we expect to be reimbursed from our insurance carrier. The net difference of $241,000 between these amounts represents the
remaining unpaid deductible under our insurance policy, and this amount was recorded to marketing, general and administrative expenses during the year ended December 31, 2006.

We
enter into indemnification provisions under our agreements with other companies in our ordinary course of business, typically with business partners, contractors, clinical sites and
suppliers. Under these provisions we generally indemnify and hold harmless the indemnified party for losses suffered or incurred by the indemnified party as a result of our activities or the use of
our product candidates. These indemnification provisions generally survive termination of the underlying agreement. The maximum potential amount of future payments we could be required to make under
these indemnification provisions is unlimited. We have not incurred material costs to defend lawsuits or settle claims related to these indemnification agreements. The estimated fair value of the
indemnification
provisions of these agreements is minimal as of December 31, 2007, and accordingly, we have no corresponding liabilities recorded as of December 31, 2007.

9. Related Party Transactions

Dr. Donald Abraham

In January 2001, we entered into a consulting agreement for scientific advisory services with Dr. Donald Abraham, a director of the Company from 1994
through May 10, 2004. Under the one-year agreement, which was renewable upon mutual consent, we paid Dr. Abraham consulting fees of $2,000 per month. In March 2002, this
contract was terminated. Effective July 1, 2003, we entered into another one-year consulting agreement, under which we paid Dr. Abraham consulting fees of $5,000 per month.
Starting in June 2004, this agreement was renewed each year for successive one-year terms through June 30, 2007. The agreement was not renewed after June 30, 2007. For the
years ended December 31, 2007, 2006, 2005 and the cumulative period from inception through December 31, 2007, we paid Dr. Abraham consulting fees of $30,000, $60,000, $60,000 and
$288,000, respectively.

Dr. Stephen Hoffman

Dr. Stephen J. Hoffman has served as a member of our Board of Directors since 1994 and as our Chairman of the Board since December 2001. He also served as
our President and Chief Executive Officer from July 1994 to December 2001. On January 12, 2000, we granted Dr. Hoffman a stock option to purchase 328,971 shares of common stock at $2.42
per share (the "1995 Plan Option") under the terms of our 1995 Stock Option Plan. Effective February 28, 2003, we entered into a two-year consulting agreement (the "Consulting
Agreement") with Dr. Hoffman and terminated the employment agreement previously entered into with him in January 2001.

Pursuant
to the Consulting Agreement, Dr. Hoffman served us as non-executive Chairman of the Board and was required to provide consulting services as requested by us
from time to time. The Consulting Agreement provided for an annual consulting fee of $150,000, paid monthly, so long as Dr. Hoffman provided consulting services in accordance with the
agreement. For the years ended December 31, 2007, 2006, and 2005, we paid Dr. Hoffman consulting fees of $0, $0 and $20,800, respectively. The Consulting Agreement also provided for a
minimum guaranteed incentive payment of

F-35

---



ALLOS THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

9. Related Party Transactions (Continued)

$45,000
per year payable to Dr. Hoffman for each full year of consulting services provided under the agreement. We paid Dr. Hoffman incentive compensation payments in 2007, 2006 and 2005
of $0, $0 and $45,000, respectively.

According
to the Consulting Agreement, Dr. Hoffman's then-outstanding options continued to vest through the end of the term of the agreement, or February 28,
2005. We have accounted for these stock options using variable accounting as prescribed by FASB Interpretation No. 44,Accounting for Certain Transactions Involving
Stock Compensation, and we recorded a recovery of non-cash stock-based compensation of $2,488 and $170,118 during 2004 and 2005 and stock-based compensation of
$173,963 during 2003, respectively. Stock options granted to Dr. Hoffman in 2007, 2006 and 2005 related to Board of Director services.

The
Consulting Agreement expired in accordance with its terms on February 28, 2005. On May 18, 2005, in recognition of Dr. Hoffman's efforts and services on behalf
of the Company and as an incentive for Dr. Hoffman's continued service as our Chairman of the Board, our Board of Directors approved an amendment to the 1995 Plan Option to extend the exercise
period for such option until the earlier of: (i) January 12, 2010 (the expiration date of such option), or (ii) three months after the date that Dr. Hoffman ceases to serve
as a director of the Company. Prior to such amendment, the 1995 Plan Option would have expired on May 28, 2005, or three months after the expiration of Dr. Hoffman's Consulting Agreement
with the Company. Except as set forth above, the 1995 Plan Option remains in full force and effect in accordance with its original terms. In conjunction with this amendment to the 1995 Plan Option, we
recorded non-cash stock-based compensation expense of $462,000 during the year ended December 31, 2005. This expense is reflected in marketing, general and administrative expenses
in our Statement of Operations for the year ended December 31, 2005.

Dr. Marvin Jaffe, M.D.

Dr. Marvin E. Jaffe served as a member of our Board of Directors from 1994 to May 10, 2006. On March 11, 2006, Dr. Jaffe tendered his
resignation as a director of the Company effective immediately prior to our 2006 annual meeting of stockholders and notified the Board that he did not intend to stand for reelection. As a result of
Dr. Jaffe's resignation as a director, on May 10, 2006, we entered into a consulting agreement with Dr. Jaffe in order to allow us to retain the benefit of Dr. Jaffe's
knowledge and expertise regarding the Company's business and the potential clinical development and commercialization strategies for our products (the "Jaffe Consulting Agreement"). Pursuant to the
Jaffe
Consulting Agreement, Dr. Jaffe has agreed to provide up to 10 hours of consulting service per month as and when requested from time to time by the Company. In connection with the
performance of his consulting services, we granted Dr. Jaffe a nonqualified stock option under the Company's 2000 Stock Incentive Compensation Plan to purchase 20,000 shares of common stock at
an exercise price equal to $2.94 per share, which equals the closing sale price of a share of our common stock on the effective date of the Jaffe Consulting Agreement (as reported by the Nasdaq
National Market). This option is subject to the terms and conditions of the 2000 Stock Incentive Compensation Plan and vests in eighteen equal monthly installments commencing July 1, 2006.
Dr. Jaffe is not entitled to any additional compensation or benefits in connection with the performance of his consulting services. The Jaffe Consulting Agreement terminated on
December 31, 2007.

F-36

---



ALLOS THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS (Continued)

9. Related Party Transactions (Continued)

Michael E. Hart

Pursuant to the Separation Agreement with Mr. Hart (as discussed in Note 5) and as a result of Mr. Hart's resignation as a director, on
May 10, 2006, we entered into a consulting agreement with Mr. Hart in order to allow us to retain the benefit of Mr. Hart's historical knowledge regarding the Company's operations
and corporate development strategies (the "Hart Consulting Agreement"). Pursuant to the Hart Consulting Agreement, Mr. Hart has agreed to provide an average of at least 10 hours of
consulting services per month as and when requested from time to time by the Company. Mr. Hart is not entitled to any compensation or benefits in connection with the performance of his
consulting services, except for those payments and benefits being provided to him under the Separation Agreement. The Hart Consulting Agreement terminated on December 31, 2007.

10. Quarterly Information (Unaudited)

The results of operations on a quarterly basis for the years ended December 31, 2007 and 2006 were as follows:

|                                           |                                       | March 31,
2007           |            | June 30,
2007 |           | Sept. 30,
2007 |           | Dec. 31,
2007 |             | March 31,
2006 |            | June 30,
2006 |           | Sept. 30,
2006 |            | Dec. 31,
2006 |          
|------------------------------------------ | ------------------------------------- | ------------------------ | ---------- | ------------- | --------- | -------------- | --------- | ------------- | ----------- | -------------- | ---------- | ------------- | --------- | -------------- | ---------- | ------------- | ---------
|Operating expenses:                        |                                       |                          |            |               |           |                |           |               |             |                |            |               |           |                |            |               |          
|                                           | Research and development              |                          | $          | 3,289,428     |           | $              | 4,360,787 |               | $           | 4,394,726      |            | $             | 5,399,379 |                | $          | 3,439,830     |          
|                                           | Clinical manufacturing                |                          |            | 1,147,304     |           |                | 1,384,804 |               |             | 1,506,255      |            |               | 1,509,048 |                |            | 561,573       |          
|                                           | Marketing, general and administrative |                          |            | 4,747,596     |           |                | 5,514,923 |               |             | 4,240,704      |            |               | 5,168,791 |                |            | 2,925,798     |          
|                                           | Restructuring and separation costs    |                          |            |              |           |                |          |               |             |               |            |               |          |                |            | 645,666       |          
|                                           |                                       |                          |            |               |           |                |           |               |             |                |            |               |           |                |            |               |          
|                                           |                                       | Total operating expenses |            |               | 9,184,328 |                |           | 11,260,514    |             |                | 10,141,685 |               |           | 12,077,218     |            |               | 7,572,867
|Loss from operations                       |                                       |                          | (9,184,328 | )             |           | (11,260,514    | )         |               | (10,141,685 | )              |            | (12,077,218   | )         |                | (7,572,867 | )             |          
|Interest and other income, net             |                                       |                          | 773,464    |               |           | 909,140        |           |               | 843,542     |                |            | 768,000       |           |                | 503,952    |               |          
|                                           |                                       |                          |            |               |           |                |           |               |             |                |            |               |           |                |            |               |          
|Net loss                                   |                                       | $                        | (8,410,864 | )             | $         | (10,351,374    | )         | $             | (9,298,143  | )              | $          | (11,309,218   | )         | $              | (7,068,915 | )             | $        
|                                           |                                       |                          |            |               |           |                |           |               |             |                |            |               |           |                |            |               |          
|Net loss per share: basic and diluted      |                                       | $                        | (0.14      | )             | $         | (0.16          | )         | $             | (0.14       | )              | $          | (0.17         | )         | $              | (0.13      | )             | $        
|                                           |                                       |                          |            |               |           |                |           |               |             |                |            |               |           |                |            |               |          
|Weighted average shares: basic and diluted |                                       |                          | 62,151,400 |               |           | 65,645,678     |           |               | 66,042,023  |                |            | 66,855,484    |           |                | 55,079,180 |               |          
|                                           |                                       |                          |            |               |           |                |           |               |             |                |            |               |           |                |            |               |          

F-37

---



EXHIBIT INDEX

|        |  |                                                                                                                             |  | Incorporated by Reference |  |           
|------- |  | --------------------------------------------------------------------------------------------------------------------------- |  | ------------------------- |  | ----------
|
|
|3.01    |  | Amended and Restated Certificate of Incorporation.                                                                          |  | 10-Q                      |  | 8/7/2006  
|3.02    |  | Certificate of Designation of Series A Junior Participating Preferred Stock.                                                |  | 10-Q                      |  | 8/7/2006  
|3.03    |  | Certificate of Amendment to Restated Certificate of Incorporation.                                                          |  | 10-Q                      |  | 8/7/2006  
|3.04    |  | Amended and Restated Bylaws of Allos Therapeutics, Inc.                                                                     |  | 8-K                       |  | 6/25/2007 
|4.01    |  | Form of Common Stock Certificate.                                                                                           |  | S-1/A                     |  | 3/17/2000 
|4.02    |  | Reference is made to Exhibits 3.01, 3.02, 3.03 and 3.04.                                                                    |  |                           |  |           
|4.03    |  | Rights Agreement dated May 6, 2003 between Allos and Mellon Investor Services LLC.                                          |  | 8-K                       |  | 5/9/2003  
|4.04    |  | Form of Rights Certificate.                                                                                                 |  | 8-K                       |  | 5/9/2003  
|4.05    |  | Amendment to Rights Agreement dated March 4, 2005 between Allos and Mellon Investor Services LLC.                           |  | 8-K                       |  | 3/4/2005  
|4.06    |  | Amendment to Rights Agreement dated January 29, 2007 between Allos and Mellon Investor Services LLC.                        |  | 8-K                       |  | 1/30/2007 
|10.01  |  | Form of Amended and Restated Indemnity Agreement between Allos and each of its directors and officers.                      |  | 8-K                       |  | 6/25/2007 
|10.02  |  | 1995 Stock Option Plan, as amended.                                                                                         |  | S-1                       |  | 1/26/2000 
|10.3   |  | 2000 Stock Incentive Compensation Plan, as amended.                                                                         |  | 8-K                       |  | 12/22/2005
|10.3.1 |  | Form of Incentive Stock Option Letter Agreement under 2000 Stock Incentive Compensation Plan.                               |  | 8-K                       |  | 2/11/2005 
|10.3.2 |  | Form of Nonqualified Stock Option Letter Agreement under 2000 Stock Incentive Compensation Plan.                            |  | 8-K                       |  | 2/11/2005 
|10.3.3 |  | Form of Nonqualified Stock Option Letter Agreement for Non-Employee Directors under 2000 Stock Incentive Compensation Plan. |  | 8-K                       |  | 2/24/2006 
|10.4   |  | 2001 Employee Stock Purchase Plan and form of Offering.                                                                     |  | 10-K                      |  | 3/7/2001  
|10.4.1 |  | 2001 Employee Stock Purchase Plan Offering (Series Beginning July 1, 2007).                                                 |  | 8-K                       |  | 6/25/2007 
|10.5*   |  | Office Lease dated April 4, 2001 between Allos and Catellus Development Corporation.                                        |  | 10-Q                      |  | 8/14/2001 
|10.5.1* |  | Amended and Restated Second Amendment to Lease dated December 9, 2002 between Allos and Catellus Development Corporation.   |  | 10-K                      |  | 3/28/2003 
|10.5.2* |  | Third Amendment to Lease dated November 28, 2003 between Allos and Catellus Development Corporation.                        |  | 10-K                      |  | 3/5/2004  
|10.6   |  | 2002 Broad Based Equity Incentive Plan.                                                                                     |  | S-8                       |  | 1/16/2002 

---



|10.6.1  |  | Form of Stock Option Grant Notice under 2002 Broad Based Equity Incentive Plan.                                                                                                                                                     |  | 10-K  |  | 3/16/2005 |  | 10.14.1 |  | 
|-------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----- |  | --------- |  | ------- |  | 
|10.6.2  |  | Form of Stock Option Agreement under 2002 Broad Based Equity Incentive Plan.                                                                                                                                                        |  | 10-K  |  | 3/16/2005 |  | 10.14.2 |  | 
|10.7     |  | Securities Purchase Agreement dated March 2, 2005 between Allos and the Investors listed on the signature pages thereto.                                                                                                            |  | 8-K/A |  | 3/10/2005 |  | 10.41   |  | 
|10.8     |  | Registration Rights Agreement dated March 4, 2005 between Allos and the Investors listed on Schedule I thereto.                                                                                                                     |  | 8-K/A |  | 3/10/2005 |  | 10.42   |  | 
|10.9     |  | Letter Agreement dated March 4, 2005 among Allos, Warburg Pincus Private Equity VIII, L.P., Warburg Pincus & Co. and Warburg Pincus LLC.                                                                                            |  | 8-K   |  | 3/4/2005  |  | 10.43   |  | 
|10.10   |  | Separation Agreement dated March 1, 2006 between Allos and Michael E. Hart.                                                                                                                                                         |  | 8-K   |  | 3/6/2006  |  | 10.1    |  | 
|10.10.1 |  | First Amendment to Separation Agreement dated March 9, 2006 between Allos and Michael E. Hart.                                                                                                                                      |  | 8-K   |  | 3/14/2006 |  | 10.3    |  | 
|10.10.2 |  | Second Amendment to Separation Agreement dated May 10, 2006 between Allos and Michael E. Hart.                                                                                                                                      |  | 8-K   |  | 5/16/2006 |  | 10.1    |  | 
|10.11   |  | Nonqualified Stock Option Letter Agreement dated March 3, 2006 between Allos and Michael E. Hart.                                                                                                                                   |  | 8-K   |  | 3/6/2006  |  | 10.2    |  | 
|10.12   |  | Summary of Compensation Arrangements for Non-Employee Directors.                                                                                                                                                                    |  | 10-Q  |  | 8/7/2007  |  | 10.32   |  | 
|10.13   |  | Restricted Stock Award Agreement dated March 9, 2006 between Allos and Paul L. Berns.                                                                                                                                               |  | 8-K   |  | 3/14/2006 |  | 10.2    |  | 
|10.14   |  | Consultant Agreement effective May 10, 2006 between Allos and Michael E. Hart.                                                                                                                                                      |  | 8-K   |  | 5/16/2006 |  | 10.2    |  | 
|10.15   |  | Consultant Agreement effective May 10, 2006 between Allos and Marvin E. Jaffe, M.D.                                                                                                                                                 |  | 8-K   |  | 5/16/2006 |  | 10.3    |  | 
|10.16   |  | 2006 Inducement Award Plan, including forms of Stock Option Grant Notice with Stock Option Agreement and Restricted Stock Grant Notice with Restricted Stock Grant Agreement.                                                       |  | 8-K   |  | 6/6/2006  |  | 10.1    |  | 
|10.17    |  | Letter agreement dated January 28, 2007 among Allos, Baker Bros. Investments, L.P., Baker Bros. Investments II, L.P., Baker/Tisch Investments, L.P., Baker Biotech Fund I, L.P., 14159, L.P. and Baker Brothers Life
Sciences, L.P. |  | 8-K   |  | 1/30/2007 |  | 10.1    |  | 
|10.18*   |  | License Agreement for 10-Propargyl-10-Deazaaminopterin "PDX" dated December 23, 2002 and amended May 9, 2006 between Allos and SRI International, Sloan-Kettering Institute for Cancer Research and Southern Research Institute.    |  | 10-Q  |  | 8/7/2007  |  | 10.45   |  | 

---



|10.18.1+ |  | Second Amendment to License Agreement for 10-Propargyl-10-Deazaaminopterin "PDX" dated November 6, 2007 between Allos and SRI International, Sloan-Kettering Institute for Cancer Research and Southern Research Institute. |  |  |  |  |  |  |  | X
|-------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  |  |  |  |  |  | -
|10.19   |  | Corporate Bonus Plan, as amended and restated effective December 11, 2007.                                                                                                                                                  |  |  |  |  |  |  |  | X
|10.20   |  | Amended and Restated Employment Agreement, effective December 13, 2007, between Allos and Paul L. Berns.                                                                                                                    |  |  |  |  |  |  |  | X
|10.21   |  | Amended and Restated Employment Agreement, effective December 13, 2007, between Allos and Pablo J. Cagnoni, M.D.                                                                                                            |  |  |  |  |  |  |  | X
|10.22   |  | Amended and Restated Employment Agreement, effective December 13, 2007, between Allos and James V. Caruso.                                                                                                                  |  |  |  |  |  |  |  | X
|10.23   |  | Amended and Restated Employment Agreement, effective December 13, 2007, between Allos and Marc H. Graboyes.                                                                                                                 |  |  |  |  |  |  |  | X
|10.24   |  | Letter agreement, effective January 22, 2008, between Allos and Bruce K. Bennett.                                                                                                                                           |  |  |  |  |  |  |  | X
|23.01    |  | Consent of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm.                                                                                                                                       |  |  |  |  |  |  |  | X
|24.01    |  | Power of Attorney (included on signature page hereto).                                                                                                                                                                      |  |  |  |  |  |  |  | X
|31.01    |  | Rule 13a-14(a)/15d-14(a) Certification.                                                                                                                                                                                     |  |  |  |  |  |  |  | X
|31.02    |  | Rule 13a-14(a)/15d-14(a) Certification.                                                                                                                                                                                     |  |  |  |  |  |  |  | X
|32.01#   |  | Section 1350 Certification.                                                                                                                                                                                                 |  |  |  |  |  |  |  | X

---

---