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UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
 Form 10-K
  (Mark one)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31, 2008oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission file number
    000-26534
 VION PHARMACEUTICALS,
    INC.
 (Exact name of registrant as
    specified in its charter)
  Delaware


13-3671221(State or other jurisdiction
    of
    incorporation or organization)


(I.R.S. Employer
    Identification No.)4 Science Park
    New Haven, Connecticut(Address of principal
    executive offices)


06511(Zip Code)   Registrants telephone number, including area code:
 (203) 498-4210
  Securities registered pursuant to Section 12(b) of the
    Act:
 None
  Securities registered pursuant to Section 12(g) of the
    Act:
 Common Stock, $0.01 par value
 (Title of Class)
  o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. þ
  Rule 12b-2
 Large accelerated
    filer o

Accelerated
    filer o

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

Smaller reporting
    company o   Rule 12b-2 o þ
  ®
    DOCUMENTS
    INCORPORATED BY REFERENCE




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##### 





VION
    PHARMACEUTICALS, INC.
  2008
    FORM 10-K
    ANNUAL REPORT
  TABLE OF
    CONTENTS
   
 PagePART IItem 1


Business


2Item 1A


Risk Factors


18Item 1B


Unresolved Staff Comments


30Item 2


Properties


31Item 3


Legal Proceedings


31Item 4


Submission of Matters to a Vote of Security
    Holders


31PART IIItem 5


Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


32Item 6


Selected Financial Data


34Item 7


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


34Item 7A


Quantitative and Qualitative Disclosures About
    Market Risk


44Item 8


Financial Statements and Supplementary Data


45Item 9


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


68Item 9A(T)


Controls and Procedures


68Item 9B


Other Information


68PART IIIItem 10


Directors, Executive Officers and Corporate
    Governance


68Item 11


Executive Compensation


69Item 12


Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


80Item 13


Certain Relationships and Related Transactions,
    and Director Independence


82Item 14


Principal Accountant Fees and Services


82PART IVItem 15


Exhibits, Financial Statement Schedules


83SIGNATURESEX-10.44: AMENDMENT 1 TO CLINICAL TRIALS AGREEMENTEX-10.45: AMENDMENT 2 TO CLINICAL TRIALS AGREEMENTEX-21.1: SUBSIDIARIESEX-23.1: CONSENT OF ERNST & YOUNG LLPEX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32.1: CERTIFICATIONEX-32.2: CERTIFICATION




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Form 10-K,
  tm ® ® ® ®
  Form 10-K, Form 10-K, Form 10-K. Form 10-K Form 10-K
 1




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PART I  ITEM 1.
    Business  tm
    tm tm de novo tm tm and/or
  tm
  tm tm tm
  ® ® ®
 2




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##### Table of Contents



® in vitro in
    vivo
  and/or
  scale-up
    Status of
    Common Stock
  Form 10-K
  ® ®
  Overview
    of Cancer and Treatment Methods
       3




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Products
    for the Treatment of Cancer in Clinical Development
    Onrigintm
  tm
  tm in vivo tm tm tm
 4




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##### Table of Contents



tm
  CommencementTrial

Indication

Sponsor

Date

StatusPhase III trial in combination with remission-induction
    therapy

AML and MDS

Investigator

December 2008

OngoingPhase III trial in combination with Ara-C

AML, relapsed

Vion

March 2005

ClosedPhase II single agent trial

AML, elderly de novo poor-risk

Vion

May 2006

NDA submitted
    February 2009;
    OngoingPhase II single agent trial

Small cell lung cancer

Vion

September 2005

ClosedPhase II single agent trial

Brain tumors, adult

Investigator

June 2004

CompletedPhase II single agent trial

AML and high-risk myelodysplastic syndromes, elderly; AML,
    relapsed

Vion

March 2004

CompletedPhase I/II trial in combination with cytarabine

AML, elderly

Investigator

May 2008

OngoingPhase I/II trial in combination with temozolomide

Brain tumors, adult

Investigator

September 2007

OngoingPhase I/II single agent trial

Chronic lymphocytic leukemia

Vion

July 2005

ClosedPhase I trial in combination with stem cell transplantation

Hematologic Malignancies

Investigator

December 2007

ClosedPhase I trial

Brain tumors, pediatric

Investigator

April 2005

CompletedPhase I trial in combination with temozolomide

Hematologic malignancies

Vion

October 2004

CompletedPhase I single agent trial in combination with Ara-C

Hematologic malignancies

Vion

July 2003

CompletedPhase I single agent trial

Solid tumors

Vion

February 2003

CompletedPhase I single agent trial

Hematologic malignancies

Vion

August 2002

CompletedPhase I single agent trial

Solid tumors

Vion

June 2001

Completed   tm
  tm tm
  tm
 5




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tm tm
  Onrigintmin Hematologic Malignancies
  tm
    tm de novo de novo tm tm and/or
  tm
 6




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tm
  tm
  tm tm 18-60
  Onrigintmin Solid Tumors
  tm tm
  tm
  tm tm
  Triapine®
  ® in vitro in
    vivo ®
  ® ®
  ® ® ® ® ® ®
  ® ®
  ® ®
 7




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Other
    Products and Product Candidates for Conditions Other than
    Cancer
  MELASYN®
  ® ® ®
  Novel
    Nucleoside Analogs
    License
    and Research Agreements
  Agreements
    with Yale University
  tm ®
    License
    Agreement with Yale  September 1990
  ®
  ®
 8




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##### Table of Contents



License
    Agreement with Yale  August 1994
  tm ® and/or
    ® ® ® ®
  License
    Agreements with Yale  December 1995
  ®
  Competition
  tm ®
 9




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##### Table of Contents



Patents,
    Licenses and Trade Secrets
      
    Onrigintm,

    and other compounds in the sulfonylhydrazine class;
    Triapine®

    and other ribonucleotide reductase inhibitors; and
    Elvucitabine (ß-L-Fd4C), its composition and its use for
    the treatment of HIV and hepatitis B (HBV) infections, and its
    use in combination with other anti-viral drugs.  ®
  ® and/or and/or ®
    and/or and/or
    Government
    Regulation
   10




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in vitro in vivo
    
    provide enough data for statistical proof of safety and efficacy;
    compare the experimental therapy to existing therapies;
    uncover unexpected safety problems, such as previously
    unobserved side-effects; and
    generate product labeling.    tm tm
   11




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tm de novo tm tm and/or
    tm
         12




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tm
  tm tm
     13




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Manufacturing,
    Distribution and Marketing
    tm tm tm tm
  on-site tm tm tm
  tm
  Pharmaceutical
    Pricing and Reimbursement
  tm
 14




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tm tm
  tm
  Employees
    Executive
    Officers of the Registrant
    Name

Age

PositionAlan Kessman


62


Chief Executive Officer and DirectorHoward B. Johnson


49


President and Chief Financial OfficerAnn Lee Cahill


48


Vice President, Clinical DevelopmentWilliam F. Hahne, M.D.


55


Vice President, MedicalIvan King, Ph.D.


53


Vice President, Research and DevelopmentTanya Lewis


38


Vice President, Regulatory Affairs and Quality AssuranceKaren Schmedlin


46


Vice President, Finance, Chief Accounting Officer and SecretaryJames Tanguay, Ph.D.


47


Vice President, Chemistry, Manufacturing and Controls   Business
    Experience
  Alan Kessman
  Howard B. Johnson
  Ann Lee Cahill
  William F. Hahne, M.D.
 15




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##### Table of Contents



Ivan King, Ph.D.
  Tanya Lewis
  Karen Schmedlin
  James Tanguay, Ph.D.
  Directors
    Name

Age

PositionWilliam R. Miller(1)


80


DirectorGeorge Bickerstaff


53


DirectorAlan Kessman


62


Chief Executive Officer and DirectorKevin Rakin(1,3)


48


DirectorAlan C. Sartorelli, Ph.D.(2)


77


DirectorIan Williams, D. Phil.(2,3)


55


DirectorGary K. Willis(1,3)


63


Director     (1)
    
    Member of the Audit Committee of the Board of Directors.(2)
    
    Member of the Nominating and Governance Committee of the Board
    of Directors.(3)
    
    Member of the Compensation Committee of the Board of Directors.   16




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Business
    Experience
  William R. Miller
  George Bickerstaff
  Kevin Rakin executive-in-residence
  Alan C. Sartorelli, Ph.D.
  Ian Williams, D. Phil.
  Gary K. Willis
  Available
    Information
  http://www.vionpharm.com (203) 498-4210
  
    our annual report on
    Form 10-K,
    quarterly reports on
    Form 10-Q,
    current reports on
    Form 8-K
    and any amendments to those reports, as soon as reasonably
    practicable after such material is electronically filed with the
    SEC;
    our policies related to corporate governance, including the
    charter for the Nominating and Governance Committee of our Board
    of Directors, our code of ethics and business conduct applying
    to our directors, 17




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officers and employees, and our code of ethics applying to our
    chief executive officer, chief financial officer and senior
    financial officials; and  
    the charters of the Audit Committee and the Compensation
    Committee of our Board of Directors.  1-800-SEC-0330. http://www.sec.gov.
  ITEM 1A.
    Risk
    Factors    We
    have incurred substantial losses since our inception, expect to
    continue to incur operating losses, may never be profitable, and
    we may be unable to continue our operations.
  tm
  We do
    not have any products approved for sale. If the FDA does not
    accept our NDA for
    Onrigintm or if the FDA delays approval or does not approve the NDA
    for
    Onrigintm ,

    at all, we will not be able to sell
    Onrigintm and the value of our company and our financial results
    will be materially adversely affected.
      tm de novo tm and/or
 18




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tm tm tm
  We are
    heavily dependent on the success of our lead product candidate
    Onrigintm which is still under development. If
    Onrigintm is not successful in clinical trials or we do not obtain FDA
    approval of
    Onrigin tm ,

    or if FDA delays approval or narrows the indications for which
    we may market
    Onrigin tm ,

    our business will be materially adversely
    affected.
  tm de novo tm tm tm de novo tm tm tm
  tm and/or tm
  tm
 19




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tm tm tm
  Even
    though we have filed an NDA,
    Onrigintmcontinues to be evaluated in clinical trials. If these trials
    are delayed or achieve unfavorable results, we might not be able
    to obtain regulatory approval for
    Onrigintmor our efforts to expand the product label for
    Onrigintmcould be delayed.
      
    slow patient enrollment;
    long treatment time required to demonstrate safety and
    effectiveness;
    lack of sufficient supplies of the product candidate;
    adverse medical events or side effects in treated patients;
    lack of effectiveness of the product candidate being tested;
    negative or equivocal findings of the DSMB for a trial; and
    lack of sufficient funds.  If we
    fail to obtain the capital necessary to fund our operations, we
    will be unable to continue or complete our product development,
    regulatory approval or commercialization efforts.
  tm
  ®
 20




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
    the progress, timing and scope of our product development
    programs;
    the progress, timing and scope of our clinical trials;
    the time and cost necessary to obtain regulatory approvals;
    the time and cost necessary to further develop manufacturing
    processes, arrange for contract manufacturing facilities and
    obtain the necessary regulatory approvals for those facilities;
    the time and cost necessary to develop sales, marketing and
    distribution capabilities;
    our ability to enter into and maintain collaborative, licensing
    and other commercial relationships; and
    our partners commitment of time and resource to the
    development of our products.  We are
    significantly leveraged.
    
    make it difficult for us to make payments on our notes;
    make it difficult for us to obtain financing for working
    capital, acquisitions or other purposes on favorable terms, if
    at all;
    make us more vulnerable to industry downturns and competitive
    pressures;
    limit our flexibility in planning for, or reacting to changes
    in, our business; and
    limit our ability to merge with or acquire other companies.    If the
    testing or use of our product candidates harms people, we could
    be subject to costly and damaging product liability
    claims.
    The
    commercial success of
    Onrigintmwill depend upon the degree of market acceptance by physicians,
    patients, third party payors and others in the medical
    community.
  tm tm
 21




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tm
  
    the prevalence and severity of any side effects or toxicity;
    any limitations or warnings in the products approved
    labeling;
    the efficacy and potential advantages over alternative
    treatments;
    pricing;
    relative convenience and ease of administration;
    the willingness of the target population to try new therapies;
    the willingness of physicians to try new therapies.
    the strength of marketing and distribution support and timing of
    market introduction; and
    sufficient third party insurance coverage or reimbursement;  tm tm
  If we
    are unable to obtain adequate reimbursement from governments or
    third party payors for
    Onrigintmor if we are unable to obtain an acceptable price for
    Onrigintm,

    our prospects for generating revenue and achieving profitability
    will suffer.
  tm tm
  tm tm tm
  tm tm
 22




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If we
    are found to be infringing on patents or trade secrets owned by
    others, we may be forced to cease or alter our drug development
    efforts, obtain a license to continue the development or sale of
    our products, and/or pay damages.
    We
    rely on confidentiality agreements to protect our trade secrets.
    If these agreements are breached by our employees or other
    parties, our trade secrets may become known to our
    competitors.
    A
    substantial portion of our technology is subject to limited
    retained rights of our licensors, and we may not be able to
    prevent the grant of similar rights to third
    parties.
        Our
    proprietary rights may not adequately protect our
    technologies.
   23




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
    we or our licensors might not have been the first to make the
    inventions covered by each of our pending patent applications
    and issued patents;
    we or our licensors might not have been the first to file patent
    applications for these inventions;
    others may independently develop similar or alternative
    technologies or duplicate any of our technologies;
    it is possible that none of our pending patent applications or
    the pending patent applications of our licensors will result in
    issued patents;
    our issued patents and issued patents of our licensors may not
    provide a basis for commercially viable technologies, or may not
    provide us with any competitive advantages, or may be challenged
    and invalidated by third parties; and
    we may not develop additional proprietary technologies that are
    patentable.           24




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If we
    fail to recruit and retain key personnel, our research and
    development programs may be delayed.
  tm
  We
    face intense competition in the market for anticancer products,
    and if we are unable to compete successfully, our business will
    suffer.
  and/or tm ®
  If our
    corporate partners, licensors, licensees, collaborators at
    research institutions and others do not conduct activities in
    accordance with our arrangements, our research and development
    efforts may be delayed.
    
    Healthcare facilities in the United States and other countries
    to perform human clinical trials of our products;
    Clinical research organizations in the United States and other
    countries to monitor and collect data related to human clinical
    trials; 25




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
    The NCI to perform human clinical trials of
    Triapine®;
    Contract manufacturers to produce our products for use in
    clinical and potential commercial activities;
    Consultants to assist with the preparation of our NDA and our
    commercialization efforts; and
    Yale for technologies that are licensed by them to us.    If
    Yale does not conduct research relating to products we would
    like to pursue, we may never realize any benefits from our
    funding provided to Yale.
    If we
    are unable to establish sales, marketing and distribution
    capabilities, or to enter into agreements with third parties to
    do so, we will be unable to successfully market and sell future
    drug products.
    We
    rely on third-party manufacturers to manufacture our product
    candidates. If these third-party manufacturers fail to
    manufacture product candidates of satisfactory quality, in a
    timely manner, in sufficient quantities or at acceptable costs,
    development and commercialization of our products could be
    delayed.
       26




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tm on-site tm tm tm
  tm
  The
    conduct of our operations may subject us to liabilities under
    environmental laws, and we may face large capital expenditures
    in order to comply with such laws.
   27




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We may
    expand our business through new acquisitions that could disrupt
    our business, harm our financial condition and may also dilute
    current stockholders ownership interests in our
    company.
    
    substantial cash expenditures;
    potentially dilutive issuance of equity securities;
    incurrence of debt and contingent liabilities, some of which may
    be difficult or impossible to identify at the time of
    acquisition;
    difficulties in assimilating the operations of the acquired
    companies;
    diverting our managements attention away from other
    business concerns;
    risks of entering markets in which we have limited or no direct
    experience; and
    the potential loss of our key employees or key employees of the
    acquired companies.    The
    terms of our outstanding notes and warrants, as well as any
    additional funding we raise in the future could cause extreme
    dilution to our stockholders. Further, the large number of our
    shares that may be held in the market may depress the market
    price of our stock.
   28




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Our
    common stock has been delisted from the Nasdaq Capital
    Market®.

    Among other things, delisting from the Nasdaq Capital
    Market®

    may make it more difficult for investors to trade in our
    securities and may make it more difficult for us to raise
    additional capital.
  ® ® ® ®
  ® Form S-3
 29




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Our
    common stock price has been highly volatile, and an investment
    in our common stock could suffer a decline in
    value.
    
    positive or adverse developments with respect to obtaining
    regulatory approval of our proposed products;
    positive or adverse developments with respect to our drug trials;
    actual or anticipated period-to-period fluctuations in financial
    results;
    litigation or threat of litigation;
    failure to achieve, or changes in, financial estimates by
    securities analysts;
    announcements of new products or services or technological
    innovations by us or our competitors;
    comments or opinions by securities analysts or major
    stockholders;
    conditions or trends in the pharmaceutical, biotechnology and
    life science industries;
    announcements by us of significant acquisitions, strategic
    partnerships, joint ventures or capital commitments;
    additions or departures of key personnel;
    sales of our common stock and issuances of common stock to pay
    interest on our outstanding convertible senior notes;
    economic and other external factors or disasters or crises;
    limited daily trading volume; and
    developments regarding our patents or other intellectual
    property or that of our competitors.  ®
  We do
    not currently pay dividends on our common stock and we do not
    intend to do so in the future.
    Provisions
    of our outstanding convertible senior notes could discourage an
    acquisition of us by a third party.
    ITEM 1B.
    Unresolved
    Staff Comments   30




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ITEM 2.Properties   ITEM 3.Legal
    Proceedings   ITEM 4.Submission
    of Matters to a Vote of Security Holders      AuthorityWithheldFromFor Nominee


NomineeWilliam R. Miller


4,779,438



1,550,507George Bickerstaff


4,795,738



1,534,207Alan Kessman


4,753,026



1,576,919Kevin Rakin


4,784,284



1,545,661Alan C. Sartorelli, Ph.D.


4,775,179



1,554,766Ian Williams, D. Phil.


4,785,304



1,544,641Gary K. Willis


4,783,838



1,546,107     Abstentions andFor

Against


Broker Non-Vote4,067,235


2,203,310



59,400     Abstentions andFor

Against


Broker Non-Vote5,479,472


586,344



264,129  31




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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 for Common Stock
  ® ® ® ® ® mark-up,
  2008


2007High


Low


High


LowFirst Quarter

$
8.27


$
1.22


$
19.90


$
13.00Second Quarter


1.85



1.02



23.00



8.60Third Quarter


1.18



0.32



12.10



6.80Fourth Quarter


0.65



0.25



11.00



5.40   Common
    Stockholders
    Dividends
    Securities
    Authorized for Issuance under Equity Compensation
    Plans
  Form 10-K.
 32




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Performance
    Graph
    
 33




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ITEM 6.
    Selected
    Financial Data  Form 10-K. one-for-ten
  For the periodfrom May 1,1994(Inception)throughDecember 31,2008


2007


2006


2005


2004


2008(In thousands, except per share data)Consolidated Statement of Operations Data:Total revenues

$
43


$
66


$
22


$
23


$
275


$
13,073Loss from operations(1)


(25,093
)


(32,561
)


(27,249
)


(19,821
)


(16,501
)


(223,032
)Net loss(1,2)


(29,848
)


(33,993
)


(25,347
)


(18,041
)


(16,055
)


(220,250
)Preferred stock dividends and accretion






















(18,489
)Loss applicable to common shareholders(1,2)


(29,848
)


(33,993
)


(25,347
)


(18,041
)


(16,055
)


(238,739
)Basic and diluted loss applicable to common shareholders per
    share(1,2)


(4.04
)


(5.05
)


(3.83
)


(2.77
)


(3.00
)Consolidated Balance Sheet Data:Cash, cash equivalents and short-term investments

$
37,994


$
61,098


$
31,014


$
52,762


$
41,729Total assets


39,474


$
63,195



31,856



53,719



42,644Long-term obligations(2)


55,443


$
54,275











Cash dividends declared per common share


















     (1)
    
    Since January 1, 2006, we have recorded stock-based
    compensation expense in our consolidated financial statements in
    accordance with Statement of Financial Accounting Standards
    No. 123 (revised 2004), Share-Based
    Payment, (SFAS 123R), which had the following
    impact on operating results in 2008, 2007 and 2006: net loss and
    loss applicable to common shareholders were increased by
    $3.0 million, $4.5 million and $1.9 million,
    respectively, and basic and diluted loss per share was increased
    by $0.40, $0.67 and $0.29, respectively. No employee stock-based
    compensation expense was recognized in reported amounts prior to
    January 1, 2006.(2)
    
    We issued convertible senior notes, a long-term obligation, in
    February 2007. We recorded interest expense related to the notes
    which had the following impact on operating results in 2008 and
    2007: net loss and loss applicable to common shareholders were
    increased by $6.1 million and $5.1 million,
    respectively, and basic and diluted loss per share were
    increased by $0.82 and $0.76, respectively.  ITEM 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operation   34




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Form 10-K.
  Overview
  tm
  tm tm de novo tm and/or
  tm
  tm tm tm
  ® ® ®
  ®
    
    Pursue regulatory approval for
    Onrigintm

    in the U.S.; 35




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
    Conduct pre-launch commercialization activities for
    Onrigintm;
    Conduct Vion-sponsored and support investigator-sponsored
    clinical studies of
    Onrigintm

    as a single agent or in combination with chemotherapy or other
    anti-cancer treatments;
    Support clinical studies sponsored by the NCI of
    Triapine®; and
    Continue to seek development partners, collaborative
    partnerships, joint ventures, co-promotional agreements or other
    arrangements with third parties for all of our product
    development programs.  tm tm tm tm
    
    slow patient enrollment;
    long period of time required to track safety and effectiveness;
    lack of sufficient supplies of the product candidate;
    adverse medical events or side effects in treated patients;
    lack of effectiveness of the product candidate being tested;
    negative or equivocal findings of the data safety monitoring
    board, or DSMB, for a trial; and
    lack of sufficient funds.         36




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Status of
    Common Stock
  one-for-ten Form 10-K
  ® ®
  Critical
    Accounting Policies and Estimates
      Revenue
    Recognition
  Technology License Fees.
  
    Nonrefundable upfront license fees for which no further
    performance obligations exist are recognized as revenue on the
    earlier of when payments are received or collection is assured;
    Nonrefundable upfront license fees including guaranteed,
    time-based payments that require continuing involvement in the
    form of development or other efforts by us are recognized as
    revenue ratably over the performance period;
    Milestone payments are recognized as revenue when milestones, as
    defined in the applicable agreement, are achieved; and
    Royalty revenues based on licensees sales of our products
    or technologies are recognized as earned in accordance with the
    contract terms when royalties from licensees can be reliably
    measured and collectibility is reasonably assured. Royalty
    estimates are made in advance of amounts collected based on
    historical and forecasted trends.    Research and Laboratory Support Fees.
 37




---



##### Table of Contents



Contract Research Grants.
  Research
    and Development Expenses
    Stock-Based
    Compensation
  Share-Based
    Payment Accounting for Stock Issued to Employees
  Accounting for
    Stock-Based Compensation Accounting for Stock-Based Compensation 
    Transition and Disclosure
      Income
    Taxes
    Recently
    Issued Accounting Standards
  14-1, Accounting for Convertible Debt Instruments That May be
    Settled in Cash Upon Conversion (Including Partial Cash
    Settlement) (FSP 14-1) FSP 14-1
 38




---



##### Table of Contents



FSP 14-1
  No. 07-5, Determining Whether an Instrument (or Embedded Feature) Is
    Indexed to an Entitys Own Stock (EITF 07-5) No. 01-6, The Meaning of Indexed to a Companys Own
    Stock (EITF 01-6). Scope Exceptions:
    Whether Options (Including Embedded Conversion Options)
    Are Indexed to both an Entitys Own Stock and Currency
    Exchange Rates EITF 01-6
  EITF 07-5 EITF 07-5
    Results
    of Operations
  Year
    Ended December 31, 2008 Compared to the Year Ended
    December 31, 2007
    Research and Development Expenses. tm tm tm
  Marketing, General and Administrative
    Expenses.
  Interest Income.
  Interest Expense.
  Other Expense.
 39




---



##### Table of Contents



Income Taxes.
  Net Loss.
  Year
    Ended December 31, 2007 Compared to the Year Ended
    December 31, 2006
  Revenues.
  Research and Development Expenses. tm tm ®
  Marketing, General and Administrative
    Expenses. tm
  Interest Income.
  Interest Expense.
  Other Expense.
  Income Taxes.
  Net Loss.
  Liquidity
    and Capital Resources
     40




---



##### Table of Contents



Cash
    Used in Operating Activities
        Cash
    Used in Investing Activities
    Cash
    Provided by Financing Activities
         41




---



##### Table of Contents



42




---



##### Table of Contents



Future
    Cash Requirements
  tm de
    novo
    tm
  Off-Balance
    Sheet Arrangements
    Contractual
    Obligations
    Payments Due by PeriodLess than








More thanContractual Obligations

Total


1 year


1-3 years


3-5 years


5 years(In thousands)7.75% convertible notes due February 2012(1)

$
60,000


$



$



$
60,000


$
Interest expense on convertible notes(1)


14,531



4,650



9,300



581



Operating leases(2)


546



296



250







Employment agreement(2)


412



412











Purchase obligations(3)


1,035



1,035











Total

$
76,524


$
6,393


$
9,550


$
60,581


$
     (1)
    
    See Note 6 to Item 8 of this Annual Report on
    Form 10-K.(2)
    
    See Note 11 to Item 8 of this Annual Report on
    Form 10-K.(3)
    
    Purchase obligations include commitments related to contract
    drug manufacturing.  Form 10-K,
   43




---



##### Table of Contents



ITEM 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk         44




---



##### Table of Contents



ITEM 8.
    Financial
    Statements and Supplementary Data Report of
    Independent Registered Public Accounting Firm  The Board of Directors and Shareholders of Vion
    Pharmaceuticals, Inc.
          Ernst &
    Young LLP
    45




---



##### Table of Contents



Vion
    Pharmaceuticals, Inc.
    (A Development Stage Company)
  Consolidated Balance Sheets
  December 31,2008


2007(In thousands, exceptshare and per share data)ASSETSCurrent assets:Cash and cash equivalents

$
37,990


$
61,067Available-for-sale
    securities


4



31Accounts receivable


12



75Prepaid expenses


242



263Deferred issuance costs


250



250Total current assets


38,498



61,686Deferred issuance costs, net of current portion


531



780Property and equipment, net


420



704Security deposits


25



25Total assets

$
39,474


$
63,195LIABILITIES AND SHAREHOLDERS (DEFICIT) EQUITYCurrent liabilities:Accrued expenses

$
3,306


$
3,716Accounts payable


945



1,116Accrued payroll and payroll-related expenses


1,114



814Interest payable


1,744



1,744Deferred revenue


18



18Total current liabilities


7,127



7,408Deferred revenue, net of current portion


288



305Convertible senior notes


55,443



54,275Total liabilities


62,858



61,988Shareholders (deficit) equity:Preferred stock, $0.01 par value, authorized:
    5,000,000 shares; issued and outstanding: none






Common stock, $0.01 par value, authorized:
    60,000,000 shares; issued and outstanding: 8,036,227 and
    7,551,602 shares at December 31, 2008 and 2007,
    respectively


80



76Additional paid-in capital


215,526



210,246Accumulated other comprehensive income


4



31Deficit accumulated during the development stage


(238,994
)


(209,146
)Total shareholders (deficit) equity


(23,384
)


1,207Total liabilities and shareholders (deficit) equity

$
39,474


$
63,195    46




---



##### Table of Contents



Vion
    Pharmaceuticals, Inc.
    (A Development Stage Company)Consolidated Statements of Operations
  For thePeriodfrom May 1,1994(Inception)For the Year Ended


throughDecember 31,


December 31,2008


2007


2006


2008(In thousands, except share and per share data)Revenues:Technology license fees

$
43


$
66


$
22


$
4,640Research and laboratory support fees














5,932Contract research grants














2,501Total revenues


43



66



22


$
13,073Operating expenses:Clinical trials


9,552



13,627



13,070



82,757Other research and development


7,995



10,571



8,414



100,595Total research and development


17,547



24,198



21,484



183,352Marketing, general and administrative


7,589



8,429



5,787



52,753Total operating expenses


25,136



32,627



27,271



236,105Loss from operations


(25,093
)


(32,561
)


(27,249
)


(223,032
)Interest income


1,062



3,390



1,994



13,694Interest expense


(6,067
)


(5,135
)






(11,416
)Other expense, net


(8
)


(30
)


(50
)


(210
)Loss before income taxes


(30,106
)


(34,336
)


(25,305
)


(220,964
)Income tax (benefit) provision


(258
)


(343
)


42



(714
)Net loss


(29,848
)


(33,993
)


(25,347
)


(220,250
)Preferred stock dividends and accretion














(18,489
)Loss applicable to common shareholders

$
(29,848
)

$
(33,993
)

$
(25,347
)

$
(238,739
)Basic and diluted loss applicable to common shareholders per
    share

$
(4.04
)

$
(5.05
)

$
(3.83
)Weighted-average number of shares of common stock outstanding


7,379,707



6,737,166



6,619,619    47




---



##### Table of Contents



Vion
    Pharmaceuticals, Inc.
    (A Development Stage Company)Consolidated Statements of Cash Flows
  For thePeriodfrom May 1,1994(Inception)throughFor the Year Ended December 31,


December 31,2008


2007


2006


2008(In thousands)Cash flows from operating activities:Net loss

$
(29,848
)

$
(33,993
)

$
(25,347
)

$
(220,250
)Adjustments to reconcile net loss to net cash used in operating
    activities Stock-based compensation


2,957



4,496



1,947



10,494Stock issued in payment of interest


2,325



2,260







4,585Amortization of convertible senior notes issuance costs,
    original issue discount and assigned warrant value


1,417



1,130







2,547Depreciation and amortization


334



297



212



3,897Loss on equipment disposals


6











18Purchased research and development














4,481Stock issued for services














600Amortization of financing costs














346Extension/reissuance of placement agent warrants














168Changes in operating assets and liabilities Receivables and prepaid expenses


84



(126
)


14



(253
)Other assets














(22
)Current liabilities


(281
)


1,330



1,340



7,074Deferred revenue


(17
)


(19
)


(18
)


306Net cash used in operating activities


(23,023
)


(24,625
)


(21,852
)


(186,009
)Cash flows from investing activities:Acquisition of equipment


(56
)


(396
)


(111
)


(3,391
)Purchases of marketable securities














(321,052
)Maturities of marketable securities














321,052Net cash used in investing activities


(56
)


(396
)


(111
)


(3,391
)Cash flows from financing activities:Net proceeds from placement of notes and warrants






55,151







55,151Net proceeds from issuance of common stock


2



23



115



112,371Net proceeds from initial public offering














9,696Net proceeds from issuance of preferred stock














20,716Net proceeds from exercise of warrants














30,669Repayment of equipment capital leases














(927
)Other financing activities, net














(286
)Net cash provided by financing activities


2



55,174



115



227,390Change in cash and cash equivalents


(23,077
)


30,153



(21,848
)


37,990Cash and cash equivalents, beginning of period


61,067



30,914



52,762



Cash and cash equivalents, end of period

$
37,990


$
61,067


$
30,914


$
37,990Supplemental disclosure of cash flow information:Cash paid for interest

$
2,325


$
2


$



$
2,541Cash paid for taxes

$



$
13


$
69


$
149    48




---



##### Table of Contents



Vion
    Pharmaceuticals, Inc.
    (A Development Stage Company)Consolidated Statement of Changes in
    Shareholders (Deficit) Equity
  Accumulated





TotalAdditional





Other





ShareholdersCommon Stock


Paid-in


Deferred


Comprehensive


Accumulated


(Deficit)Shares


Amount


Capital


Compensation


Income (Loss)


Deficit


Equity(In thousands, except share data)BALANCE AT DECEMBER 31, 2005


6,617,789


$
66


$
198,512


$
(133
)

$



$
(149,806
)

$
48,639Stock-based compensation expense










1,947















1,947Restricted stock awards, net


502,454



5



(5
)














Reversal of deferred compensation










(133
)


133











Exercise of stock options


12,527







69















69Issuances under employee benefit plan


3,880







46















46Change in net unrealized gains and losses


















100







100Net loss






















(25,347
)


(25,347
)Comprehensive loss


























(25,247
)BALANCE AT DECEMBER 31, 2006


7,136,650


$
71


$
200,436


$



$
100


$
(175,153
)

$
25,454Stock-based compensation expense










4,496















4,496Restricted stock awards


157,713



2



(2
)














Issuances under employee benefit plan


3,393







23















23Issuance of warrants  February 2007










3,036















3,036Issuance for interest payment


253,920



3



2,257















2,260Reverse stock split adjustment


(74
)






















Change in net unrealized gains and losses


















(69
)






(69
)Net loss






















(33,993
)


(33,993
)Comprehensive loss


























(34,062
)BALANCE AT DECEMBER 31, 2007


7,551,602


$
76


$
210,246


$



$
31


$
(209,146
)

$
1,207Stock-based compensation expense










2,957















2,957Restricted stock awards, net


(56,016
)


(1
)


1















Exercise of stock options


200























Issuances under employee benefit plan


2,319







2















2Issuance for interest payment


538,122



5



2,320















2,325Change in net unrealized gains and losses


















(27
)






(27
)Net loss






















(29,848
)


(29,848
)Comprehensive loss


























(29,875
)BALANCE AT DECEMBER 31, 2008


8,036,227


$
80


$
215,526


$



$
4


$
(238,994
)

$
(23,384
)    49




---



##### Table of Contents



Vion
    Pharmaceuticals, Inc.
    (A Development Stage Company)
    Consolidated Statement of Changes in Shareholders
    (Deficit) Equity
    From the Period from May 1, 1994 (Inception) through
    December 31, 2005
  Class A


Class B




















TotalConvertible


Convertible











Additional








ShareholdersPreferred Stock


Preferred Stock


Common Stock


Treasury


Paid-in


Deferred


Accumulated


(Deficit)Shares


Amount


Shares


Amount


Shares


Amount


Stock


Capital


Compensation


Deficit


Equity(In thousands, except share data)Issuance of common stock  July and August 1994


















285,255


$
3






$
26






$
(21
)

$
8Reverse acquisition of MelaRx Pharmaceuticals, Inc. 
    April 1995


















200,000



2







4,318











4,320Shares repurchased pursuant to employment
    agreements 1995


















(27,486
)










(3
)






2



(1
)Private placement of common stock  April 1995


















7,635











205











205Warrants issued with bridge notes  April 1995






























200











200Initial public offering of Unit Purchase Options 
    August and September 1995


















287,500



3







9,693











9,696Public offering of common stock  August 2001


















250,000



3







11,408











11,411Private placement  June 2003


















384,615



4







4,470











4,474Private placement  September 2003


















647,500



6







10,399











10,405Private placement  February 2004


















1,355,385



14







32,913











32,927Private placement  January 2005


















1,000,000



10







30,184











30,194Class A convertible preferred stock Issuance  1996


1,250,000



13























22,890







(11,371
)


11,532Dividend  1996


21,998



























256







(256
)


Dividend  1997


47,592



























623







(623
)


Dividend  1998


34,005



























329







(329
)


Dividend  1999


26,150



























385







(385
)


Dividend  2000


5,279



























248







(248
)


Conversion  1996


(164,970
)


(1
)










45,825











1











Conversion  1997


(396,988
)


(4
)










110,275



1







3











Conversion  1998


(174,981
)


(2
)










48,606











2











Conversion  1999


(144,612
)


(1
)










40,171











1











Conversion  2000


(502,928
)


(5
)










139,704



1







4











Redemption  2000


(545
)


























(5
)










(5
)Issuances of common stock 1995


















125











1











11996


















2,942











104











1041997


















59,834



1







3,469











3,4701999


















342,574



3







14,986











14,989Issuances under employee benefit plan 2001


















1,019











62











622002


















2,510











38











382003


















4,118











14











142004


















669











9











92005


















2,217











41











41    50




---



##### Table of Contents



Vion
    Pharmaceuticals, Inc.
    (A Development Stage Company)
    Consolidated Statement of Changes in Shareholders
    (Deficit) Equity
    From the Period from May 1, 1994 (Inception) through
    December 31, 2005 (continued)
  Class A


Class B




















TotalConvertible


Convertible











Additional








ShareholdersPreferred Stock


Preferred Stock


Common Stock


Treasury


Paid-in


Deferred


Accumulated


(Deficit)Shares


Amount


Shares


Amount


Shares


Amount


Stock


Capital


Compensation


Deficit


Equity(In thousands, except share data)Class B convertible preferred stock Issuance  1997










4,850


$















$
4,852






$
(370
)

$
4,482Conversion  1997










(258
)






6,464


$




















Conversion  1998










(4,592
)






120,518



1







(1
)










Accretion of dividends payable  1997 and 1998






























425







(425
)


Premium on conversion dividend  1998


















58,590



1







2,049







(2,049
)


1Series 1998 convertible preferred stock Discount  1998






























1,597







(1,597
)


Accretion  1998






































(151
)


(151
)Accretion  1999






































(325
)


(325
)Accretion  2000






































(358
)


(358
)Conversion  2000


















150,702



2







5,536











5,538Extension/reissuance of underwriter warrants  1997






























168











168Exercise of warrants 1997


















24























1998


















1,627











11











111999


















2,630























2000


















437,106



4







23,310











23,3142001


















401











14











142004


















298,757



3







7,338











7,341Issuance in exchange for cancellation of warrants 1998


















179,295



2







(45
)










(43
)1999


















10























Exercise of stock options 1997


















5,000











20











201998


















3,275











120











1201999


















47,089



1



(196
)


654







(40
)


4192000


















65,041



1







2,874











2,8752001


















19,153











779











7792002


















1,039











32











322003


















555











3











32004


















3,545











71











712005


















21,780











204











204Retirement of treasury stock


















(3,566
)






196











(196
)


Stock-based compensation expense






























1,068


$
(190
)






878Restricted stock awards  2005


















7,761











159



(159
)






Amortization of deferred compensation


































216







216Net loss and comprehensive loss






































(131,064
)


(131,064
)BALANCE AT DECEMBER 31, 2005





$







$




6,617,789


$
66


$



$
198,512


$
(133
)

$
(149,806
)

$
48,639    51




---



##### Table of Contents



Vion
    Pharmaceuticals, Inc.
    (A Development Stage Company)Notes to Consolidated Financial
    Statements
  1.
    The
    Company        2.
    Liquidity  tm de
    novo
  tm tm tm
  ® ® ® Form S-3
 52




---



##### Table of Contents



Vion
    Pharmaceuticals, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  3.
    Summary
    of Significant Accounting Policies  Principals
    of Consolidation
    Use of
    Estimates
    Cash
    Equivalents
    Available-for-Sale
    Securities
    Fair
    Value of Financial Instruments
    Fair
    Value Measurement
  Fair Value
    Measurements,
    The
    Fair Value Option for Financial Assets and Financial
    Liabilities  Including an amendment of FASB Statement
    No. 115
 53




---



##### Table of Contents



Vion
    Pharmaceuticals, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Property
    and Equipment
      2008


2007Office and computer equipment

$
915


$
936Furniture and fixtures


190



286Laboratory equipment


1,638



2,201Leasehold improvements


330



4643,073



3,887Accumulated depreciation and amortization


(2,653
)


(3,183
)Property and equipment, net

$
420


$
704     Income
    Taxes
    Revenue
    Recognition
  Technology License Fees.
  Research and Laboratory Support Fees.
  Contract Research Grants.
 54




---



##### Table of Contents



Vion
    Pharmaceuticals, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Research
    and Development Expenses
    Stock-Based
    Compensation
  Share-Based Payment Accounting for Stock Issued to Employees Accounting for
    Stock-Based Compensation Accounting for Stock-Based Compensation 
    Transition and Disclosure
      Other
    Expense
    Per
    Share Data
    2008


2007


2006Net loss

$
(29,848
)

$
(33,993
)

$
(25,347
)Weighted-average number of shares of common stock outstanding


7,380



6,737



6,620Basic and diluted loss per share

$
(4.04
)

$
(5.05
)

$
(3.83
)    55




---



##### Table of Contents



Vion
    Pharmaceuticals, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Comprehensive
    Loss
    Recently
    Issued Accounting Standards
  14-1, Accounting for Convertible Debt Instruments That May be
    Settled in Cash Upon Conversion (Including Partial Cash
    Settlement) (FSP 14-1) FSP 14-1 FSP 14-1
  No. 07-5, Determining Whether an Instrument (or Embedded Feature) Is
    Indexed to an Entitys Own Stock (EITF 07-5) No. 01-6, The Meaning of Indexed to a Companys Own
    Stock (EITF 01-6). Scope Exceptions:
    Whether Options (Including Embedded Conversion Options)
    Are Indexed to both an Entitys Own Stock and Currency
    Exchange Rates EITF 01-6
  EITF 07-5 EITF 07-5
    4.
    License
    Agreements  License
    Agreements with Yale University
  tm ®
 56




---



##### Table of Contents



Vion
    Pharmaceuticals, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    tm
  License Agreement with Yale  September
    1990. ®
  ®
  License Agreement with Yale  August
    1994. tm ®
  and/or
  ® ® Revenue Recognition
  License Agreements with Yale  December
    1995.
 57




---



##### Table of Contents



Vion
    Pharmaceuticals, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  ®
  5.
    Accrued
    Expenses    2008


2007Clinical trials

$
2,418


$
2,827Professional fees


307



221Gift to Yale






50Other


581



618Total Accrued Expenses

$
3,306


$
3,716   6.
    Convertible
    Senior Notes and Warrants       58




---



##### Table of Contents



Vion
    Pharmaceuticals, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
        7.
    Shareholders
    (Deficit) Equity  Preferred
    and Common Stock
      
    an aggregate of 1,136,730.9 shares of common stock for
    issuance upon the exercise of outstanding warrants (see below);
    an aggregate of 3,124,998 shares of common stock for
    issuance upon the conversion of its outstanding convertible
    notes (see Note 6); 59




---



##### Table of Contents



Vion
    Pharmaceuticals, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
   
    an aggregate of 388,443 shares of common stock for issuance
    upon the exercise of options outstanding under its stock option
    plans (see Note 8);
    an aggregate of 451,793 shares of common stock for issuance
    under its 2005 Stock Incentive Plan (see Note 8); and
    an aggregate of 28,106 shares of common stock for issuance
    under its Employee Stock Purchase Plan (see Note 8).  Warrants
    Number ofSharesof CommonStock


Exerciseto be Issued


Priceupon Exercise of


Per Share ofOutstanding


Outstanding


ExpirationWarrants issued in connection with a

Warrants


Warrants


DatePrivate equity placement  February 2004


356,730.9


$
32.50



2/11/2009Private debt placement  February 2007


780,000.0


$
20.00



2/15/2010Total


1,136,730.9   8.
    Stock-Based
    Compensation    2005 Stock Incentive Plan.
  Employee Stock Purchase Plan.
  Stock Option Plans.
 60




---



##### Table of Contents



Vion
    Pharmaceuticals, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Stock-Based
    Compensation Expense
        FromInception(May 1,1994) toDecember 31,2005Reported net loss

$
(131,062
)Add: Stock-based compensation expense included in reported net
    loss


795Deduct: Stock-based compensation expense determined under the
    fair value based method for all awards


(22,707
)Pro forma net loss


(152,974
)Pro forma preferred stock dividend and accretion


(18,489
)Pro forma loss applicable to common shareholders

$
(171,463
)   Restricted
    Stock
   61




---



##### Table of Contents



Vion
    Pharmaceuticals, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    2008


2007


2006Weighted-Number of


Average


Number of


Number ofShares


Grant Date


Shares


Shares(in 000s)


Fair Value


(in 000s)


(in 000s)Non-vested restricted stock at beginning of year


651


$
14.98



500



7Shares granted


55



1.02



158



511Shares vested


(474
)


14.70



(7
)


(10
)Shares forfeited


(111
)


15.07







(8
)Non-vested restricted stock at end of year


121


$
9.69



651



500Weighted-average fair value of shares granted





$
1.02


$
15.16


$
14.90       Employee
    Stock Purchase Plan
    Stock
    Options
   62




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##### Table of Contents



Vion
    Pharmaceuticals, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Stock
    Option Activity
    2008


2007


2006Weighted-


Weighted-


Aggregate





Weighted-Average


Average


Intrinsic





AverageOptions


Exercise


Remaining


Value


Options


Exercise


Options


Options(in 000s)


Price


Life (Years


(in 000s)


(in 000s)


Price


(in 000s)


(in 000s)Outstanding at beginning of year


419


$
47.39











423


$
47.34



493


$
48.09Granted






























Exercised


























(13
)


5.50Forfeited


(1
)


34.64











(2
)

$
42.16



(2
)


33.43Expired


(30
)


45.13











(2
)

$
42.17



(55
)


63.98Outstanding at end of year


388


$
47.62



2.69


$




419


$
47.39



423


$
47.34Exercisable at end of year


388


$
47.62



2.69


$
       Options Outstanding and ExercisableWeighted-


Weighted-Number


Average


Averageof Shares


Remaining


ExerciseRange of Exercise Prices

(in 000s)


Life (Years)


Price$3.60  $17.87


89



3.93


$
9.60$17.88  $35.74


6



6.42


$
21.33$35.75  $53.62


168



3.42


$
45.82$53.63  $71.50


79



0.09


$
58.09$71.51  $89.37


21



2.02


$
74.03$89.38  $107.25


1



1.37


$
98.75$107.26  $142.99


3



1.82


$
122.50$143.00  $160.87


20



1.15


$
148.75$160.88  $178.75


1



1.76


$
178.75Total


388



2.69


$
47.62    63




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##### Table of Contents



Vion
    Pharmaceuticals, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  9.
    401(k)
    Savings Plan    10.
    Income
    Taxes        December 31,2008


2007Operating loss carryforwards

$
66,273


$
63,535General business tax credit carryforwards


19,153



15,963AMT tax credit carryforwards


10



10Contributions


258



414Compensation related


900



2,352Other


354



320Deferred income tax assets


86,948



82,594Deferred income tax liabilities






86,948



82,594Valuation allowance


(86,948
)


(82,594
)Deferred income tax assets, net

$



$
      64




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##### Table of Contents



Vion
    Pharmaceuticals, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
     11.
    Commitments
    and Contingencies  Leases
    Agreements
        ®
   65




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##### Table of Contents



Vion
    Pharmaceuticals, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    12.
    Related
    Party Transactions  tm ® Accounting
    for Contributions Received and Contributions Made,
    13.
    Selected
    Quarterly Financial Data (Unaudited)    Quarter2008

First


Second


Third


Fourth


YearRevenues

$
14


$
13


$
8


$
8


$
43Net loss


(8,195
)


(7,903
)


(6,844
)


(6,906
)

$
(29,848
)Basic and diluted loss per share


(1.14
)


(1.06
)


(0.92
)


(0.93
)


(4.04
)   Quarter2007

First


Second


Third


Fourth


YearRevenues

$
5


$
5


$
6


$
50


$
66Net loss


(7,955
)


(8,842
)


(9,037
)


(8,159
)


(33,993
)Basic and diluted loss per share


(1.20
)


(1.33
)


(1.33
)


(1.18
)


(5.05
)   14.
    Regulatory
    Matters  tm on-site
 66




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##### Table of Contents



Vion
    Pharmaceuticals, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  tm tm tm
 67




---



##### Table of Contents



Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure    Item 9A(T).
    Controls
    and Procedures  Evaluation
    of Disclosure Controls and Procedures
  Rules 13a-15(e) 15d-15(e)
  Managements
    Annual Report on Internal Control over Financial
    Reporting
  Rule 13a-15(f) Internal Control-Integrated
    Framework
      Item 9B.
    Other
    Information   PART III  ITEM 10.
    Directors,
    Executive Officers and Corporate Governance  Executive
    Officers and Directors
  Form 10-K.
  Section 16(a)
    Beneficial Ownership Reporting Compliance
   68




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##### Table of Contents



Code of
    Ethics
  www.vionpharm.com. Regulation S-K,
  Audit
    Committee of the Board of Directors
  ®
  ITEM 11.
    Executive
    Compensation  Compensation
    Discussion and Analysis
  Overview
    tm
   69




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##### Table of Contents



Compensation
    Objectives
    
    Adequately and fairly compensate executive officers in relation
    to their responsibilities, capabilities and contributions to the
    Company and in a manner that is commensurate with compensation
    paid by companies of comparable size and at a comparable stage
    of development within our industry;
    Align the interests of the executive officers with those of the
    stockholders with respect to short-term operating goals and
    long-term increases in the value of our common stock;
    Reward executive officers for the achievement of short-term
    goals and for the enhancement of the long-term value of the
    Company;
    Provide a strong emphasis on equity-based compensation and
    equity ownership, creating a direct link between shareholder and
    management interests; and
    Incentivize executive officers to remain in the employ of the
    Company as we proceed with filing the NDA and seeking regulatory
    approval for
    Onrigintm.    Components
    of Compensation
  Elements of Executive Compensation. i.e
  Base Salary.
 70




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##### Table of Contents



Incentive Compensation.
  tm tm de novo tm
  tm
    Non-EquityIncentiveCompensationName

PaidAlan Kessman

$
229,494Howard B. Johnson

$
108,000Ann Lee Cahill

$
100,000William Hahne, M.D.

$
100,000Ivan King, Ph.D.

$
75,000   Restricted Stock.
 71




---



##### Table of Contents



and/or and/or
    tm
  Accounting
    and Tax Treatment
    Perquisites;
    Other Compensation
   72




---



##### Table of Contents




    Cafeteria plan  health and dental insurance, life
    insurance, disability insurance and long term care coverage
    (portion of costs), flexible spending pre-tax reimbursement
    plans for health and dependent care;
    Participation in 401k plan, including matching contribution, and
    employee stock purchase plan which allows purchase of our stock
    at a 15% discount; and
    Tuition reimbursement.    Stock
    Ownership Guidelines
      Summary
    Compensation Table
    Non-EquityStock


Option


Incentive Plan


All Other


TotalName and




Salary(3)


Bonus(4)


Awards(5)


Awards(6)


Compensation(7)


Compensation


CompensationPrincipal Position

Year


($)


($)


($)


($)


($)


($)


($)Alan Kessman


2008


$
458,988


$
61,666


$
1,150,371






$
114,747


$
64,745
(8)

$
1,850,517 Chief Executive Officer(1)


2007


$
458,988






$
1,131,830










$
24,020


$
1,614,8382006


$
445,619






$
310,462






$
95,000


$
30,167
(9)

$
881,248Howard B. Johnson


2008


$
297,440


$
29,291


$
539,934


$
69,163


$
54,000


$
19,518


$
1,009,346 President and Chief


2007


$
297,440






$
532,210


$
75,458


$
38,325


$
219


$
943,652Financial Officer


2006


$
286,000






$
147,470


$
175,798


$
61,150


$
11,433
(10)

$
681,851Ann Lee Cahill


2008


$
262,080


$
24,666


$
462,001



63,122


$
50,000


$
16,375


$
878,244 Vice President, Clinical


2007


$
252,000






$
454,277


$
75,787


$
27,059


$
1,129


$
810,252Development


2006


$
240,000






$
124,185


$
81,008


$
52,000


$
1,486


$
498,679William Hahne, M.D.


2008


$
260,000


$
20,000


$
8,727






$
50,000


$
10,449
(11)

$
349,176 Vice President, Medical(2)Ivan King, Ph.D.


2008


$
257,088


$
15,416


$
289,130


$
34,578


$
37,500


$
11,387
(12)

$
645,099 Vice President, Research


2007


$
247,200






$
283,731


$
37,729


$
26,543


$
1,204


$
596,407and Development


2006


$
240,000






$
88,019


$
57,268


$
42,762


$
1,886


$
429,935     (1)
    
    We are a party to an employment agreement with Mr. Kessman,
    described below.(2)
    
    Dr. Hahne has been our Vice President, Medical since
    February 1, 2008. 73




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##### Table of Contents



(3)
    
    Includes amounts earned but deferred at the election of the
    named executive officer under the Companys qualified
    401(k) Plan.(4)
    
    Cash bonuses to named executive officers paid under an incentive
    plan are reported in the column Non-Equity Incentive Plan
    Compensation.(5)
    
    Reflects compensation expense for all restricted common stock
    awards recognized for financial reporting purposes under
    SFAS 123(R) for fiscal year 2008. The compensation expense
    recognized was based on a grant date fair value of $1.60 (for
    Dr. Hahne) and grant date fair values ranging from $13.80
    to $17.00 for all other named executive officers, which are
    significantly higher than the vesting date fair values of $0.37
    on December 31, 2008 and January 1, 2009 for the named
    executive officers (except for Dr. Hahne). As such, the
    actual compensation reported to the Internal Revenue Service for
    the value upon vesting of the restricted stock awards for years
    2006 through 2008 reported in this column was $66,106 in the
    case of Mr. Kessman, $31,141 in the case of
    Mr. Johnson, $26, 516 in the of Ms. Cahill and $16,711
    in the case of Dr. King. Dr. Hahnes shares have
    not yet vested.See the Outstanding Equity Awards at Fiscal Year-End
    table for a description of restricted stock awards. For
    information regarding our valuation of stock-based compensation,
    see Critical Accounting Policies and Estimates 
    Stock-Based Compensation Expense contained in Item 7
    as well as Notes 3 and 8 to our Consolidated Financial
    Statements contained in Item 8 of this Annual Report on
    Form 10-K.(6)
    
    Reflects compensation expense for all stock option awards
    recognized for financial reporting purposes (exclusive of any
    assumptions for forfeitures) under SFAS 123(R) for fiscal
    year 2008. The compensation expense was based on grant date fair
    values ranging from $27.67 to $30.18, which are significantly
    higher than the fair value of our common stock of $0.37 at
    December 31, 2008. The fair values of the stock options
    awards were calculated using a Black-Scholes option valuation
    model with the assumptions listed below.  Risk-Free


Expected


Expected


Dividend


ExerciseGrant Date

Interest Rate


Life


Volatility


Yield


Price10/15/2004


3.67
%


5.96 years



69
%


0
%

$
43.1012/8/2004


3.67
%


5.96 years



69
%


0
%

$
47.00
   For information regarding our methodologies used to determine
    these assumptions, see Note 8 to our Consolidated Financial
    Statements contained in Item 8 of this Annual Report on
    Form 10-K.(7)
    
    The amounts shown in the column were earned in the fiscal year
    shown pursuant to non-equity incentive plan compensation
    arrangements with our named executive officers and, in the case
    of our Chief Executive Officer, set forth in an employment
    agreement. Such amounts earned in 2008 were paid 50% in fiscal
    2008 and 50% in fiscal 2009 and such amounts earned in fiscal
    years 2007 and 2006 were paid in the following fiscal year.
    Though the Compensation Committee awarded Mr. Kessman a
    non-equity bonus of $98,568 for 2007 (reflecting the level of
    attainment of target criteria and his 50% bonus target), at
    Mr. Kessmans instigation the payment of his bonus has
    been deferred, and as such is not reflected in this column for
    fiscal 2007, in order to preserve cash which he and the
    Compensation Committee believed to be in the best interests of
    the Company and its stockholders.(8)
    
    Includes company-paid income and employment taxes on restricted
    stock awards of $40,600 and premiums on life and disability
    insurance of $23,145.(9)
    
    Includes company-paid income and employment taxes on restricted
    stock awards of $19,285.(10)
    
    Includes company-paid income and employment taxes on restricted
    stock awards of $16,240.(11)
    
    Includes income of $8,813 paid in fiscal 2008 to Dr. Hahne
    in his capacity as a consultant prior to his hire date.(12)
    
    Includes company-paid income and employment taxes on restricted
    stock awards of $10,150.   74




---



##### Table of Contents



Grants
    of Plan-Based Awards
    GrantEstimated Future Payouts


Estimated Future Payouts


Dateunder Non-Equity Incentive Plan Awards


under Equity Incentive Plan Awards


Fair ValueThreshold


Target


Maximum


Threshold


Target


Maximum


of StockName

Grant Date


($


($)


($)


(#)


(#)


(#)


AwardAlan Kessman


7/17/2008






$
114,747



















Howard B. Johnson


7/17/2008






$
54,000



















Anne Lee Cahill


7/17/2008






$
50,000



















William Hahne, M.D.


4/1/2008
    7/17/2008






$
50,000











20,000






$
32,000Ivan King, Ph.D.


7/17/2008






$
37,500



















     tm
   75




---



##### Table of Contents



Outstanding
    Equity Awards at Fiscal Year-End
    Option Awards


Stock AwardsEquityIncentivePlan Awards:Equity Incentive


Market orPlan Awards:


PayoutNumber of


Value ofNumber of


Number of








Unearned


UnearnedSecurities


Securities








Shares,


Shares,Underlying


Underlying








Units or


Units orUnexercised


Unexercised


Option





Other Rights


Other RightsOptions


Options


Exercise


Option


That Have


That Have(#)


(#)


Price


Expiration


Not Vested


Not VestedName

Exercisable


Unexercisable


($)


Date


(#)


($)Alan Kessman


20,090






$
52.50



1/11/2009



12,000
(1,5)

$
4,44074,725






$
57.75



1/11/20094,999






$
148.75



2/24/20103,000






$
73.75



12/5/201011,478






$
47.50



12/6/201115,000






$
5.50



7/30/20128,000






$
15.70



12/10/201314,999






$
47.00



12/8/2014Howard B. Johnson


34,999






$
38.79



3/18/2012



5,000
(2,5)

$
1,8507,250






$
5.50



7/30/20126,000






$
15.70



12/10/20139,999






$
47.00



12/8/2014Ann Lee Cahill


1,500






$
47.09



1/7/2012



5,000
(2,5)

$
1,8502,000






$
5.50



7/30/20121,000






$
15.70



12/10/20135,500






$
43.09



10/15/20145,000






$
47.00



12/8/2014William Hahne, M.D.


















20,000
(3)

$
7,400Ivan King, Ph.D.


1,400






$
46.87



3/4/2009



3,500
(4,5)

$
1,2951,730






$
60.63



5/20/20095,999






$
148.75



2/24/20104,500






$
73.75



12/5/20105,357






$
47.50



12/6/20116,500






$
5.50



7/30/20123,999






$
15.70



12/10/20134,999






$
47.00



12/8/2014     (1)
    
    Reflects 12,000 restricted shares of common stock awarded on
    March 12, 2007 at a grant date fair value of $17.00 per
    share.(2)
    
    Reflects 5,000 restricted shares of common stock awarded on
    March 12, 2007 at a grant date fair value of $17.00 per
    share.(3)
    
    Reflects 20,000 restricted shares of common stock awarded on
    April 1, 2008 at a grant date fair value of $1.60 per
    share. The restricted common stock award vests upon the earliest
    of (i) in 11 equal monthly installments on the first of the
    month beginning February 1, 2010 and ending
    December 1, 2010, (ii) a Change in Control, as 76




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##### Table of Contents



defined in the Companys 2005 Stock Incentive Plan, or
    (iii) the Company receiving approval of an NDA to market
    Onrigintm.(4)
    
    Reflects 3,500 shares awarded on March 12, 2007 at a
    grant date fair value of $17.00 per share.(5)
    
    Restricted common stock awards vested on January 1, 2009.  Option
    Exercises and Stock Vested
    Stock AwardsNumber of Shares


Value RealizedAcquired on Vesting


on VestingName

(#)


($)Alan Kessman


166,666


$
61,666Howard B. Johnson


79,166


$
29,291Ann Lee Cahill


66,666


$
24,666William Hahne, M.D.





$
Ivan King, Ph.D.


41,665


$
15,416   Pension
    Benefits
    Nonqualified
    Deferred Compensation
    Potential
    Payments upon Termination or Change in Control
       77




---



##### Table of Contents



IntrinsicValue of


Value ofHealth and


Accelerated


AcceleratedWelfare


Unvested


UnvestedBenefits


Restricted


StockName

Severance


Continuation


Stock(1)


Options(2)


TotalAlan Kessman Change of control

$
1,395,907


$
94,212


$
4,440






$
1,494,559Termination

$
1,395,907


$
94,212










$
1,490,119Howard B. Johnson Change of control

$
324,440


$
28,412


$
1,850






$
354,702Termination

$
297,440














$
297,440Ann Lee Cahill Change of control

$
287,080


$
27,766


$
1,850






$
316,696Termination

$
262,080














$
262,080William Hahne, M.D.  Change of control

$
285,000


$
29,670


$
7,400






$
322,070Termination

$
260,000














$
260,000Ivan King, Ph.D.  Change of control

$
275,838


$
27,977


$
1,295






$
305,110Termination

$
257,088














$
257,088     (1)
    
    Value of unvested restricted stock was calculated using the
    closing price of our common stock on December 31, 2008
    ($0.37).(2)
    
    As the exercise prices of the non-vested stock options exceeded
    the closing price of our common stock on December 31, 2008
    ($0.37), there was no intrinsic value of accelerated unvested
    stock options at December 31, 2008.  Director
    Compensation
   78




---



##### Table of Contents



Fees Earned Or


StockPaid In Cash


Awards(2)


TotalName

($)


($)


($)George Bickerstaff

$
19,500


$
5,275


$
24,775Stephen K. Carter, M.D.(1)

$
7,500


$
5,231


$
12,731William R. Miller

$
46,500


$
5,275


$
51,775Kevin Rakin

$
36,000


$
21,468


$
57,468Alan C. Sartorelli, Ph.D.

$
23,000


$
5,275


$
28,275Ian Williams, D. Phil.

$
30,000


$
20,890


$
50,890Gary K. Willis

$
29,000


$
5,275


$
34,275     (1)
    
    Dr. Carter is no longer a member of our Board of Directors
    effective as of our 2008 annual meeting held on
    December 10, 2008.(2)
    
    Represents the dollar amount recognized for financial reporting
    purposes for fiscal year 2008 in accordance with
    SFAS 123(R) for the fair value of restricted common stock
    awards. The awards for fiscal year 2008 include: (i) 1,130
    restricted shares of common stock with a December 11, 2008
    grant date fair value of $531 that will vest on
    December 11, 2009 awarded to each of Mr. Bickerstaff,
    Mr. Miller, Mr. Rakin, Dr. Sartorelli,
    Dr. Williams and Mr. Willis. At December 31,
    2008, the aggregate number of restricted common stock awards
    that have not vested was: (i) 1,130 shares for each of
    Mr. Bickerstaff, Mr. Miller, Dr. Sartorelli and
    Mr. Willis; (ii) 3,444 shares for Mr. Rakin;
    and (iii) 2,287 shares for Dr. Williams. Unvested
    restricted stock immediately vests in the event of a change of
    control, as defined in the equity plan agreement. At
    December 31, 2008, the aggregate number of shares of common
    stock underlying unexercised options (all of which are
    exercisable) was: 2,000 for Mr. Bickerstaff; 8,202 for
    Dr. Carter; 7,971 for Mr. Miller; 10,648 for
    Dr. Sartorelli; and 2,000 for Mr. Willis. For
    information regarding our valuation of stock-based compensation,
    see Critical Accounting Policies and Estimates 
    Stock-Based Compensation Expense contained in Item 7
    as well as Notes 3 and 8 to our Consolidated Financial
    Statements contained in Item 8 of this Annual Report on
    Form 10-K.  Compensation
    Committee Interlocks and Insider Participation
   79




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##### Table of Contents



Compensation
    Committee Report
  Form 10-K Form 10-K.
        ITEM 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters  c/o Vion
    Number of


Percent ofShares


OutstandingBeneficially


Shares ofDirectors and Officers

Owned


Common StockGeorge Bickerstaff


11,683
(1)


*William R. Miller


41,942
(2)


*Kevin Rakin


7,229
(3)


*Alan C. Sartorelli, Ph.D.


55,350
(4)


*Ian Williams. D. Phil.


6,229
(3)


*Gary K. Willis


11,683
(1)


*Ann Lee Cahill


87,072
(5)


1.1
%William Hahne, M.D.


20,000
(6)


*Howard B. Johnson


144,094
(7)


1.8
%Alan Kessman


243,728
(8)


3.0
%Ivan King, Ph.D.


80,757
(9)


1.0
%All directors and executive officers as a group (14 persons)


782,305
(10)


9.5
%Other Beneficial
    OwnersBruce & Co., Inc. 20 N. Wacker Drive
    Suite 2414 Chicago, Il 60606


781,017
(11)


8.9
%     *
    
    Less than one percent(1)
    
    Includes 2,000 shares issuable upon exercise of options.(2)
    
    Includes 7,971 shares issuable upon exercise of options.(3)
    
    Includes restricted shares of our common stock not vested as of
    March 1, 2009 as follows: 80




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##### Table of Contents




    On June 28, 2006, Dr. Williams received an initial
    grant following his election to our Board of Directors of
    3,470 shares of restricted stock;
    On January 15, 2007, Mr. Rakin received an initial
    grant following his appointment to our Board of Directors of
    3,470 shares of restricted stock; and
    On December 11, 2008, Mr. Bickerstaff,
    Mr. Miller, Mr. Rakin, Dr. Sartorelli,
    Dr. Williams and Mr. Willis each received an annual
    grant of 1,130 shares of restricted stock.    (4)
    
    Includes 19,087 shares beneficially owned by
    Dr. Sartorellis wife, as to which Dr. Sartorelli
    disclaims beneficial ownership. Also includes 10,648 shares
    issuable upon exercise of options.(5)
    
    Includes 15,000 shares issuable upon exercise of options.(6)
    
    Includes 20,000 shares of restricted stock granted to
    Dr. Hahne on April 1, 2008 and not vested as of
    March 1, 2009. Shares will vest upon the earliest of
    (i) 11 equal monthly increments on the first of each month
    beginning February 1, 2010 and ending December 1,
    2010; (ii) the approval of an NDA to market
    Onrigintm;

    or (iii) the occurrence of a Change of Control, as defined
    in our 2005 Stock Incentive Plan.(7)
    
    Includes 58,248 shares issuable upon exercise of options.(8)
    
    Includes 1,275 shares held by a family trust of which
    Mr. Kessman is a controlling member. Also includes
    57,476 shares issuable upon exercise of options.(9)
    
    Includes 34,484 shares issuable upon exercise of options.(10)
    
    Includes 195,970 shares issuable upon exercise of options.(11)
    
    Based on data set forth in Schedule 13G filed with the SEC
    on March 13, 2009, 781,017 shares of common stock
    reported in such Schedule 13G are held by Bruce &
    Co., Inc., consisting of 132,580 shares of common stock and
    648,437 shares of common stock underlying convertible
    senior notes. Bruce & Co., Inc. has sole dispositive
    and voting power over the shares in its capacity as the
    investment manager for Bruce Ford, Inc., a Maryland registered
    investment company, and other clients.  Equity
    Compensation Plan Information
    Number ofSecurities to


Weighted-


Number ofbe Issued


Average


SecuritiesUpon


Exercise


AvailableExercise of


Price of


for FutureOutstanding


Outstanding


IssuanceOptions,


Options,


Under EquityWarrants


Warrants


CompensationPlan Category

and Rights


and Rights($)


PlansPlans approved by security holders Vion 2005 Stock Incentive Plan










451,793Vion 2003 Stock Option Plan


102,777


$
34.15



Vion 1993 Stock Option Plan


190,851


$
50.39



Vion 2000 Employee Stock Purchase Plan



(1)






28,106293,628


$
44.71



479,899Plan not approved by security holders Vion 1999 Senior Executive Option Plan


94,815
(2)

$
56.64



Total


388,443







479,899  81




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##### Table of Contents



(1)
    
    Under our 2000 Employee Stock Purchase Plan, participants are
    permitted to purchase our common stock during the stock offering
    period. Accordingly, the number of shares of common stock to be
    issued under our 2000 Employee Stock Purchase Plan is not
    determinable and is not included.(2)
    
    Reflects outstanding options to purchase 94,815 shares of
    our common stock granted under our Senior Executive Stock Option
    Plan (the Senior Plan) to Mr. Kessman in
    January 1999 at exercise prices ranging from $52.50 to $57.75 in
    connection with his employment agreement. The shares of common
    stock issuable upon exercise of the options granted to
    Mr. Kessman under the Senior Plan have not been registered.
    The following summarizes the principal terms of the Senior Plan,
    which was adopted by our Board of Directors on January 11,
    1999 and terminated on January 11, 2009. Options were
    granted under the Senior Plan to our Chief Executive Officer.
    The Board appointed its Compensation Committee to administer the
    plan, including determination of pricing and terms of awards
    under the plan. The maximum number of shares of common stock
    authorized for issuance under the Senior Plan was 98,000,
    subject to customary antidilution and other adjustments provided
    for in the Senior Plan. All options outstanding as of
    December 31, 2008 expired upon the plans termination
    on January 11, 2009.  ITEM 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence  tm ®
    ®
  ITEM 14.
    Principal
    Accountant Fees and Services    Years Ended December 31,2008


2007% Approved





% Approvedby the Audit





by the AuditFees


Committee


Fees


CommitteeAudit fees(1)

$
198,415



100
%

$
206,294



100
%Audit related fees(2)






100
%


63,547



100
%Tax fees(3)


33,470



100
%


49,547



100
%All other fees(4)


1,515



100
%


1,515



100
%Total

$
233,400






$
320,903     (1)
    
    Represents fees for the audit of our annual consolidated
    financial statements, review of the consolidated financial
    statements included in our
    Forms 10-Q
    and other audit services including the issuance of consents and
    the review of documents filed with the SEC. The fees for 2008
    include $77,185 of accrued audit fees for the 2008 year-end
    audit that were not billed until 2009. The fees for 2007 include
    $61,087 of accrued audit fees for the 2007 year-end audit
    that were not billed until 2008. 82




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##### 



(2)
    
    Represents fees billed for accounting consultations and
    transaction reviews.(3)
    
    Represents fees billed for tax compliance services and
    transaction reviews.(4)
    
    Represents a subscription fee for an online accounting research
    database.  Audit
    Committee Pre-approval Policies and Procedures
    case-by-case
   PART IV  ITEM 15.
    Exhibits,
    Financial Statement Schedules  (a) 1.  Financial
    Statements
     
 PageReport of Independent Registered Public
    Accounting Firm


45Consolidated Balance Sheets as of
    December 31, 2008 and 2007


46Consolidated Statements of Operations for the
    Years Ended December 31, 2008, 2007 and 2006 and for the
    Period from May 1, 1994 (Inception) through
    December 31, 2008


47Consolidated Statements of Cash Flows for the
    Years Ended December 31, 2008, 2007 and 2006 and for the
    Period from May 1, 1994 (Inception) through
    December 31, 2008


48Consolidated Statement of Changes in
    Shareholders Equity for the Period from May 1, 1994
    (Inception) Through December 31, 2008


49Notes to Consolidated Financial Statements


52    2.  Financial
    Statement Schedules
   83




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##### Table of Contents



3.  Exhibits
    ExhibitNo.

Description3
.1

Restated Certificate of Incorporation, as Amended, of Vion
    Pharmaceuticals, Inc. dated August 8, 2007(1)3
.2

Certificate of Amendment to the Restated Certificate of
    Incorporation of Vion Pharmaceuticals, Inc. dated as of
    February 20, 2008(2)3
.3

Certificate of Amendment to the Restated Certificate of
    Incorporation of Vion Pharmaceuticals, Inc. dated as of
    December 10, 2008(3)3
.4

By-laws, as amended(4)10
.1

Indenture between Vion Pharmaceuticals, Inc. and U.S. Bank
    National Association, as Trustee (including Form of Note
    attached thereto) dated February 20, 2007(5)10
.2

Registration Rights Agreement between Vion Pharmaceuticals, Inc.
    and CRT Capital Group LLC, as Initial Purchaser dated
    February 20, 2007(5)10
.3

Placement Agency Agreement by and among Vion Pharmaceuticals,
    Inc., CIBC World Markets Corp. and Leerink Swann &
    Company, dated January 25, 2005(6)10
.4

Securities Purchase Agreement dated February 9, 2004(7)10
.5

Registration Rights Agreement dated February 9, 2004(7)10
.6

Form of Warrant(7)10
.7

Form of Warrant(5)10
.8

Senior Executive Stock Option Plan(8)10
.9

Vion Pharmaceuticals, Inc. Amended and Restated 1993 Stock
    Option Plan, as Amended(9)10
.10

Vion Pharmaceuticals, Inc. 2003 Stock Option Plan, as
    Amended(10)10
.11

Vion Pharmaceuticals, Inc. 2003 Stock Option Plan, Form of Stock
    Option Agreement for Executive Officers(10)10
.12

Vion Pharmaceuticals, Inc. 2005 Stock Incentive Plan, as Amended
    and Restated(1)10
.13

Vion Pharmaceuticals, Inc. 2005 Stock Incentive Plan, Form of
    Restricted Stock Agreement for Non-Employee Directors (11)10
.14

Vion Pharmaceuticals, Inc. 2005 Stock Incentive Plan, Form of
    Restricted Stock Agreement under 2005 Stock Incentive Plan for
    Executive Officers (12)10
.15

Employment Agreement between Vion Pharmaceuticals, Inc. and Alan
    Kessman dated November 3, 2003(13)10
.16

Amendment No. 1, dated September 13, 2005, to the
    Employment Agreement with Alan Kessman dated November 3,
    2003 (14)10
.17

Amendment No. 2, dated January 3, 2006, to the
    Employment Agreement with Alan Kessman dated November 3,
    2003 (12)10
.18

Amendment No. 3, dated February 13, 2008, to the
    Employment Agreement with Alan Kessman dated November 3,
    2003 (15)10
.19

Amendment No. 4 to Employment Agreement of Alan Kessman,
    dated June 23, 2008(16)10
.20

Employment Offer Letter to James Tanguay dated March 9,
    2007(17)10
.21

Employment Offer Letter to William F. Hahne dated
    December 23, 2007(18)10
.22

Employment Offer Letter to Tanya Lewis dated November 21,
    2008(3)10
.23

Form of Severance Agreement between the Company and Ann Lee
    Cahill, William F. Hahne, Howard B. Johnson, Ivan King, Tanya
    Lewis, Karen Schmedlin and James Tanguay(8)10
.24

Form of Retention Plan Agreement between the Company and Ann Lee
    Cahill, William F. Hahne, Howard B. Johnson, Alan Kessman, Ivan
    King, Karen Schmedlin and James Tanguay (19)10
.25

Lease between Science Park Development Corporation and Vion
    Pharmaceuticals, Inc. dated November 1, 2001(9) 84




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##### Table of Contents



ExhibitNo.

Description10
.26

First Amendment to Lease by and between Vion Pharmaceuticals,
    Inc. and Science Park Development Corporation dated
    January 25, 2006(22)10
.27

Second Amendment to Lease by and between the registrant and
    Science Park Development Corporation dated June 27, 2007(23)10
.28

Third Amendment to Lease by and between Vion Pharmaceuticals,
    Inc. and Science Park Development Corporation dated
    October 1, 2008(24)10
.29

License Agreement between Yale University and Vion
    Pharmaceuticals, Inc. (f/k/a OncoRx, Inc.) dated August 31,
    1994(25)10
.30

License Agreement between Yale University and Vion
    Pharmaceuticals, Inc. (f/k/a OncoRx Corporation) dated
    November 15, 1995(26)10
.31

License Agreement between Yale University and Vion
    Pharmaceuticals, Inc. (f/k/a OncoRx, Inc.) dated
    December 15, 1995(26)10
.32

Amendment No. 1 to a License Agreement between Yale
    University and Vion Pharmaceuticals, Inc. (f/k/a OncoRx, Inc.)
    dated June 12, 1997(27)10
.33

Amendment No. 2 to a License Agreement between Yale
    University and Vion Pharmaceuticals, Inc. (f/k/a OncoRx, Inc.)
    dated June 12, 1997(27)10
.34

Amendment No. 3 to a License Agreement between Yale
    University and Vion Pharmaceuticals, Inc. (f/k/a OncoRx, Inc.)
    dated September 25, 1998(28)10
.35

Amendment No. 4 to a License Agreement between Yale
    University and Vion Pharmaceuticals, Inc. (f/k/a OncoRx, Inc.)
    dated January 31, 2000 (29)(*)10
.36

Amendment No. 5 to a License Agreement between Yale
    University and Vion Pharmaceuticals, Inc. (f/k/a OncoRx, Inc.)
    dated March 3, 2003 (30)(*)10
.37

License Agreement between Vion Pharmaceuticals, Inc. and Beijing
    Pason Pharmaceuticals, Inc. dated September 12, 2003 (13)(*)10
.38

Research Collaboration and Option Agreement with a group of
    inventors from the Institute of Pharmacy and the Institute of
    Medical Chemistry and Biochemistry at the University of
    Innsbruck, and Austria Wirtschaftsservice Gesellschaft m.b.H.
    and Vion Pharmaceuticals, Inc. dated November 24, 2003
    (31)(*)10
.39

Amended Exclusive License Agreement, by and among
    Dr. Johnny Easmon, Prof. Dr. Gottfried Heinisch,
    Dr. Gerhard Purstinger, Prof. Dr. Heinz-Herbert
    Fiebig, Prof. Dr. Johann-Hofmann, Austria
    Wirtschaftsservice Gesellschaft m.b.H. and Vion Pharmaceuticals,
    Inc., dated June 30, 2005 (32)(*)10
.40

License Agreement between Johnson & Johnson Consumer
    Companies, Inc. and Vion Pharmaceuticals, Inc. dated
    March 1, 2004 (33)(*)10
.41

First Amendment to a License Agreement between
    Johnson & Johnson Consumer Companies, Inc. and Vion
    Pharmaceuticals, Inc. dated December 31, 2007 (18)(*)10
.42

Consulting and Finders Agreement between MelaRx
    Pharmaceuticals, Inc. and Jacob A. Melnick, dated June 4,
    1992, as Amended by Agreement dated February 17, 1995
    (25)10
.43

Clinical Trials Agreement between Vion Pharmaceuticals, Inc. and
    the Division of Cancer Treatment and Diagnosis, NCI dated
    January 9, 2003(26)10
.44

Amendment 1 to Clinical Trials Agreement between Vion
    Pharmaceuticals, Inc. and the Division of Cancer Treatment and
    Diagnosis, NCI dated March 2, 200610
.45

Amendment 2 to Clinical Trials Agreement between Vion
    Pharmaceuticals, Inc. and the Division of Cancer Treatment and
    Diagnosis, NCI dated January 8, 200810
.46

Manufacturing and Service Contract for Commercial and
    Development Products between Vion Pharmaceuticals, Inc. and
    BenVenue Laboratories, Inc., dated November 28, 2006 (34)(*)10
.47

Master Supply Agreement for Commercial and Developmental
    Products, effective as of September 29, 2003, by and
    between Vion Pharmaceuticals, Inc. and Sigma Aldrich Five
    Chemicals, Inc. (f/k/a Tetrionics Inc.), as amended by that
    certain first amendment dated March 13, 2007 (17)(*)21
.1

Subsidiaries of the registrant23
.1

Consent of Ernst & Young LLP, Independent Registered
    Public Accounting Firm 85




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##### Table of Contents



ExhibitNo.

Description24
.1

Power of Attorney (included on signature page)31
.1

Certification of the Chief Executive Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 200231
.2

Certification of the Chief Financial Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 200232
.1

Certification of the Chief Executive Officer pursuant to
    Section 906 of the Sarbanes-Oxley Act of 200232
.2

Certification of the Chief Financial Officer pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002     (1)
    
    Incorporated by reference to the Companys Quarterly Report
    on
    Form 10-Q
    for the quarter ended June 30, 2007.(2)
    
    Incorporated by reference to the Companys Current Report
    on
    Form 8-K
    filed on February 20, 2008.(3)
    
    Incorporated by reference to the Companys Post-Effective
    Amendment No. 1 to
    Form S-3
    on
    Form S-1
    Registration Statement (File No.
    333-141849),
    filed with the Commission on January 7, 2009.(4)
    
    Incorporated by reference to the Companys Annual Report on
    Form 10-K
    (File
    No. 000-26534)
    for the fiscal year ended December 31, 2000.(5)
    
    Incorporated by reference to the Companys Current Report
    on
    Form 8-K
    filed on February 20, 2007.(6)
    
    Incorporated by reference to the Companys Current Report
    on
    Form 8-K
    filed on January 26, 2005.(7)
    
    Incorporated by reference to the Companys Current Report
    on
    Form 8-K
    filed on February 11, 2004.(8)
    
    Incorporated by reference to the Companys Quarterly Report
    on
    Form 10-QSB
    (File
    No. 000-26534)
    for the quarter ended March 31, 1999.(9)
    
    Incorporated by reference to the Companys Annual Report on
    Form 10-K
    (File
    No. 000-26534)
    for the fiscal year ended December 31, 2001.(10)
    
    Incorporated by reference to the Companys Quarterly Report
    on
    Form 10-Q
    for the quarter ended September 30, 2004.(11)
    
    Incorporated by reference to the Companys Current Report
    on
    Form 8-K
    filed on October 31, 2005.(12)
    
    Incorporated by reference to the Companys Current Report
    on
    Form 8-K
    filed on January 9, 2006.(13)
    
    Incorporated by reference to the Companys Quarterly Report
    on
    Form 10-Q
    (File
    No. 000-26534)
    for the quarter ended September 30, 2003.(14)
    
    Incorporated by reference to the Companys Current Report
    on
    Form 8-K
    filed on September 13, 2005.(15)
    
    Incorporated by reference to the Companys Current Report
    on
    Form 8-K
    filed on February 15, 2008.(16)
    
    Incorporated by reference to the Companys Current Report
    on
    Form 8-K
    filed on June 25, 2008.(17)
    
    Incorporated by reference to the Companys Quarterly Report
    on
    Form 10-Q
    for the quarter ended March 31, 2007.(18)
    
    Incorporated by reference to the Companys Annual Report on
    Form 10-K
    for the fiscal year ended December 31, 2007.(19)
    
    Incorporated by reference to the Companys Quarterly Report
    on
    Form 10-Q
    for the quarter ended September 30, 2008.(20)
    
    Incorporated by reference to the Companys Current Report
    on
    Form 8-K
    filed on January 31, 2006.(21)
    
    Incorporated by reference to the Companys Current Report
    on
    Form 8-K
    filed on June 28, 2007.(22)
    
    Incorporated by reference to the Companys Current Report
    on
    Form 8-K
    filed on October 17, 2008.(23)
    
    Incorporated by reference to the Companys Registration
    Statement on
    Form SB-2
    (File
    No. 33-93468),
    effective August 14, 1995.(24)
    
    Incorporated by reference to the Companys Annual Report on
    Form 10-K
    (File
    No. 000-26534)
    for the fiscal year ended December 31, 2002.(25)
    
    Incorporated by reference to the Companys Quarterly Report
    on
    Form 10-QSB
    (File
    No. 000-26534)
    for the quarter ended September 30, 1997. 86




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##### Table of Contents



(26)
    
    Incorporated by reference to the Companys Annual Report on
    Form 10-KSB
    (File
    No. 000-26534)
    for the fiscal year ended December 31, 1998.(27)
    
    Incorporated by reference to the Companys Quarterly Report
    on
    Form 10-Q
    (File
    No. 000-26534)
    for the quarter ended June 30, 2001.(28)
    
    Incorporated by reference to the Companys Annual Report on
    Form 10-K/A(File
    No. 000-26534)
    for the fiscal year ended December 31, 2002.(29)
    
    Incorporated by reference to the Companys Annual Report on
    Form 10-K/A
    for the fiscal year ended December 31, 2003.(30)
    
    Incorporated by reference to the Companys Current Report
    on
    Form 8-K
    filed on September 28, 2005.(31)
    
    Incorporated by reference to the Companys Current Report
    on
    Form 8-K/A
    filed on March 18, 2004.(32)
    
    Incorporated by reference to the Companys Current Report
    on
    Form 8-K/A
    filed on February 14, 2007.*
    
    Certain portions of this exhibit have been omitted pursuant to
    an order granting confidential treatment by the Securities and
    Exchange Commission.
    
    Management contract or compensatory plan or arrangement. 87




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##### Table of Contents



SIGNATURES        By:
    /s/  Alan
    Kessman   Chief Executive Officer
    POWER OF
    ATTORNEY
      Signature

Title

Date/s/  William
    R. MillerWilliam
    R. Miller

Chairman of the Board

March 23, 2009/s/  Alan
    KessmanAlan
    Kessman

Chief Executive Officer and Director
    (Principal Executive Officer)

March 23, 2009/s/  Howard
    B.
    JohnsonHoward
    B. Johnson

President and Chief Financial Officer
    (Principal Financial Officer)

March 23, 2009/s/  Karen
    SchmedlinKaren
    Schmedlin

VP Finance and Chief Accounting Officer
    (Principal Accounting Officer)

March 23, 2009/s/  George
    BickerstaffGeorge
    Bickerstaff

Director

March 23, 2009/s/  Kevin
    RakinKevin
    Rakin

Director

March 23, 2009 88




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##### Table of Contents



Signature

Title

Date/s/  Alan
    C. Sartorelli, Ph.D.Alan
    C. Sartorelli, Ph.D.

Director

March 23, 2009/s/  Ian
    Williams, D. Phil.Ian
    Williams, D. Phil.

Director

March 23, 2009/s/  Gary
    K. WillisGary
    K. Willis

Director

March 23, 2009  89