| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|---|-----------------------------------------------------------------------------------------|

| o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|---|------------------------------------------------------------------------------------------|

| Delaware(State or other jurisdiction ofincorporation or organization) |   | 32-0064979(I.R.S. Employer Identification No.) |
|-----------------------------------------------------------------------|--------|------------------------------------------------|
|                                                                  |   |                                           |
| 2207 BridgePointe Parkway, Suite 250San Mateo, CA.                    |   | 94404                                          |
| (Address of principal executive offices)                              |   | (Zip Code)                                     |

| Large accelerated filer   o             | Accelerated filer   o         |
|---------------------------------------------------|-----------------------------------------|
| Non-accelerated filer   o               | Smaller reporting company   x |
| (Do not check if smaller reporting company)  |                                    |

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|     |                                                                                                         | Page      |
|----------|--------------------------------------------------------------------------------------------------------------|-----------|
| PART I   | FINANCIAL INFORMATION                                                                                        | 5         |
|     |                                                                                                         |      |
| Item 1.  | Unaudited Condensed Financial Statements                                                                     | 5         |
|     |                                                                                                         |      |
|     | Unaudited Condensed Balance Sheets                                                                           | 5         |
|     |                                                                                                         |      |
|     | Unaudited Condensed Statements of Operations and Other Comprehensive Loss                                    | 6         |
|     |                                                                                                         |      |
|     | Unaudited Condensed Statement of Changes in Redeemable Convertible Preferred Stock and Stockholders' Deficit | 7         |
|     |                                                                                                         |      |
|     | Unaudited Condensed Statements of Cash Flows                                                                 | 8         |
|     |                                                                                                         |      |
|     | Notes to Unaudited Condensed Financial Statements                                                            | 9         |
|     |                                                                                                         |      |
| Item 2.  | Management's Discussion and Analysis of Financial Condition and Results of Operations                        |   20 |
|     |                                                                                                         |      |
| Item 3.  | Quantitative and Qualitative Disclosures About Market Risk                                                   |   25 |
|     |                                                                                                         |      |
| Item 4.  | Controls and Procedures                                                                                      |   25 |
|     |                                                                                                         |      |
| PART II  | OTHER INFORMATION                                                                                            |   26 |
|     |                                                                                                         |      |
| Item 1.  | Legal Proceedings                                                                                            |   26 |
|     |                                                                                                         |      |
| Item 1A. | Risk Factors                                                                                                 |   26 |
|     |                                                                                                         |      |
| Item 2.  | Unregistered Sales of Equity Securities and Use of Proceeds                                                  |   26 |
|     |                                                                                                         |      |
| Item 3.  | Defaults Upon Senior Securities                                                                              |   26 |
|     |                                                                                                         |      |
| Item 4.  | [Removed and Reserved]                                                                                       |   26 |
|     |                                                                                                         |      |
| Item 5.  | Other Information                                                                                            |   26 |
|     |                                                                                                         |      |
| Item 6.  | Exhibits                                                                                                     |   27 |
|     |                                                                                                         |      |
|     | Signatures                                                                                                   |   28 |
|     |                                                                                                         |      |
|     | Index of Exhibits Filed with this Report                                                                     |   29 |

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| ● | our ability to obtain adequate financing; |
|---------|-------------------------------------------|

| ● | the development of our drug candidates, including when we expect to undertake, initiate and complete clinical trials of our product candidates; |
|---------|-------------------------------------------------------------------------------------------------------------------------------------------------|

| ● | the regulatory approval of our drug candidates, including the timing of our submission of applications for marketing approval and other items with the FDA; |
|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ● | our use of clinical research centers and other contractors; |
|---------|-------------------------------------------------------------|

| ● | our ability to find collaborative partners for research, development and commercialization of potential products; |
|---------|-------------------------------------------------------------------------------------------------------------------|

| ● | acceptance of our products by doctors, patients or payors and the availability of reimbursement for our product candidates; |
|---------|-----------------------------------------------------------------------------------------------------------------------------|

| ● | our ability to market any of our products; |
|---------|--------------------------------------------|

| ● | our history of operating losses; |
|---------|----------------------------------|

| ● | our ability to secure adequate protection for our intellectual property; |
|---------|--------------------------------------------------------------------------|

| ● | our ability to compete against other companies and research institutions; |
|---------|---------------------------------------------------------------------------|

| ● | the effect of potential strategic transactions on our business; |
|---------|-----------------------------------------------------------------|

| ● | our ability to attract and retain key personnel; and |
|---------|------------------------------------------------------|

| ● | the volatility of our stock price. |
|---------|------------------------------------|

----

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|                                                                                                                                                                                                                           |   | March 31,2011 |      |   | December 31,2010 |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------|-----------|--------|------------------|--------|
| ASSETS                                                                                                                                                                                                                         |   |          |      |   |             |   |
| Current assets:                                                                                                                                                                                                                |   |          |      |   |             |   |
| Cash and cash equivalents                                                                                                                                                                                                      |   | $             | 9,170     |   |             | $      | 4,573 |   |
| Available-for-sale securities, equity securities                                                                                                                                                                               |   |          | 7,015     |   |             |   | 18,068 |   |
| Prepaid expenses and other current assets                                                                                                                                                                                      |   |          | 177       |   |             |   | 254 |   |
| Total current assets                                                                                                                                                                                                           |   |          | 16,362    |   |             |   | 22,895 |   |
|                                                                                                                                                                                                                           |   |          |      |   |             |   |   |   |
| Property and equipment, net                                                                                                                                                                                                    |   |          | 125       |   |             |   | 97 |   |
| Restricted cash                                                                                                                                                                                                                |   |          | 125       |   |             |   | 125 |   |
| Other long-term assets                                                                                                                                                                                                         |   |          | 32        |   |             |   | - |   |
| Debt issuance costs                                                                                                                                                                                                            |   |          | 866       |   |             |   | 905 |   |
| Total assets                                                                                                                                                                                                                   |   | $             | 17,510    |   |             | $      | 24,022 |   |
|                                                                                                                                                                                                                           |   |          |      |   |             |   |   |   |
| LIABILITIES AND STOCKHOLDERS' DEFICIT                                                                                                                                                                                          |   |          |      |   |             |   |   |   |
| Current liabilities:                                                                                                                                                                                                           |   |          |      |   |             |   |   |   |
| Accounts payable and accrued liabilities                                                                                                                                                                                       |   | $             | 6,663     |   |             | $      | 6,052 |   |
| Other short-term liabilities                                                                                                                                                                                                   |   |          | 2         |   |             |   | 2 |   |
| Total current liabilities                                                                                                                                                                                                      |   |          | 6,665     |   |             |   | 6,054 |   |
|                                                                                                                                                                                                                           |   |          |      |   |             |   |   |   |
| Notes payable, net of discount                                                                                                                                                                                                 |   |          | 23,513    |   |             |   | 23,340 |   |
| Other long-term liabilities                                                                                                                                                                                                    |   |          | 4         |   |             |   | 5 |   |
| Investors’ right to purchase future shares of Series A-1 and A-2 preferred stock (Note 5)                                                                                                                                |   |          | 7,513     |   |             |   | 5,131 |   |
| Warrant liabilities                                                                                                                                                                                                            |   |          | 1,171     |   |             |   | 713 |   |
|                                                                                                                                                                                                                           |   |          |      |   |             |   |   |   |
| Commitments and contingencies (Notes 5, 7, 9 and 11):                                                                                                                                                                          |   |          |      |   |             |   |   |   |
| Redeemable convertible preferred stock; $100 par value:                                                                                                                                                                        |   |          |      |   |             |   |   |   |
| 10 million shares authorized, 0.4 million issued and outstanding at March 31, 2011 and December 31, 2010; aggregate liquidation value of $43.4 million and $42.4 million at March 31, 2011 and December 31, 2010, respectively |   |          | 30,643    |   |             |   | 30,643 |   |
|                                                                                                                                                                                                                           |   |          |      |   |             |   |   |   |
| Stockholders' deficit:                                                                                                                                                                                                         |   |          |      |   |             |   |   |   |
| Common stock; $0.001 par value:                                                                                                                                                                                                |   |          |      |   |             |   |   |   |
| 350 million shares authorized, 21.2 million shares issued and outstanding at March 31, 2011 and December 31, 2010                                                                                                              |   |          | 21        |   |             |   | 21 |   |
| Additional paid-in capital                                                                                                                                                                                                     |   |          | 119,505   |   |             |   | 119,242 |   |
| Accumulated other comprehensive income                                                                                                                                                                                         |   |          | 1         |   |             |   | (16) |   |
| Accumulated deficit                                                                                                                                                                                                            |   |          | (171,526) |   |             |   | (161,111) |   |
| Total stockholders' deficit                                                                                                                                                                                                    |   |          | (51,999)  |   |             |   | (41,864) |   |
| Total liabilities, redeemable convertible preferred stock and stockholders' deficit                                                                                                                                            |   | $             | 17,510    |   |             | $      | 24,022 |   |

----

|                                                                                                           |   | Three Months Ended |     |
|----------------------------------------------------------------------------------------------------------------|--------|------------------------------|----------|
|                                                                                                           |   | March 31,               |     |
|                                                                                                           |   | 2011                         |     |   | 2010 |   |
| Operating expenses:                                                                                            |   |                         |     |   |   |   |
| General and administrative                                                                                     |   | $                            | 1,480    |   |   | $ | 1,171 |   |
| Research and development                                                                                       |   |                         | 5,144    |   |   |   | 3,258 |   |
| Total operating expenses                                                                                       |   |                         | 6,624    |   |   |   | 4,429 |   |
|                                                                                                           |   |                         |     |   |   |   |   |   |
| Loss from operations                                                                                           |   |                         | (6,624)  |   |   |   | (4,429) |   |
|                                                                                                           |   |                         |     |   |   |   |   |   |
| Other expense:                                                                                                 |   |                         |     |   |   |   |   |   |
| Interest expense                                                                                               |   |                         | (881)    |   |   |   | (1,084) |   |
| Other expense, net                                                                                             |   |                         | (70)     |   |   |   | — |   |
| Change in fair value of warrant liabilities                                                                    |   |                         | (458)    |   |   |   | 41 |   |
| Change in fair value of investors’ right to purchase future shares of Series A-1 and A-2 preferred stock |   |                         | (2,382)  |   |   |   | — |   |
| Total other expense                                                                                            |   |                         | (3,791)  |   |   |   | (1,043) |   |
|                                                                                                           |   |                         |     |   |   |   |   |   |
| Net loss                                                                                                       |   | $                            | (10,415) |   |   | $ | (5,472) |   |
|                                                                                                           |   |                         |     |   |   |   |   |   |
| Deemed dividends attributable to preferred stock                                                               |   |                         | (941)    |   |   |   | — |   |
|                                                                                                           |   |                         |     |   |   |   |   |   |
| Net loss applicable to common stock                                                                            |   |                         | (11,356) |   |   |   | (5,472) |   |
|                                                                                                           |   |                         |     |   |   |   |   |   |
| Net loss per share applicable to common stock, basic and diluted                                               |   | $                            | (0.53)   |   |   | $ | (0.27) |   |
|                                                                                                           |   |                         |     |   |   |   |   |   |
| Weighted average shares used in computing net loss per share, basic and diluted                                |   |                         | 21,243   |   |   |   | 19,946 |   |
| Comprehensive loss:                                                                                            |   |                         |     |   |   |   |   |   |
| Net loss                                                                                                       |   | $                            | (10,415) |   |   | $ | (5,472) |   |
| Unrealized holdings gains (losses) arising during the period                                                   |   |                         | (59)     |   |   |   | 8 |   |
| Less: reclassification adjustment for other-than-temporary impairment included in net loss                     |   |                         | 76       |   |   |   | — |   |
|                                                                                                           |   |                         |     |   |   |   |   |   |
| Comprehensive loss                                                                                             |   | $                            | (10,398) |   |   | $ | (5,464) |   |

----

|                                                                       |   | Redeemable ConvertiblePreferred Stock |    |   | Common stock |   |    | Additionalpaid-in |   |   | AccumulatedOtherComprehensive |   |   | Accumulated |    |   | Totalstockholders' |   |
|--------------------------------------------------------------------------------------|--------|-------------------------------------------------|---------|--------|-------------------|--------|---------|-------------------|--------|--------|-------------------------------|--------|--------|-------------|---------|--------|--------------------|--------|
|                                                                                 |   | Shares                                          |    |   | Amount            |   |    | Shares            |   |   | Amount                        |   |   | Capital     |    |   | income             |   |   | deficit |   |   | deficit |   |
| Balance at January 1, 2011                                                           |   |                                            | 413     |   |              | $      | 30,643  |              |   |   | 21,234                        |   |   | $           | 21      |   |               | $      | 119,242 |   |   | $ | (16) |   |   | $ | (161,111) |   |   | $ | (41,864) |   |
| Share-based compensation of employees amortized over vesting period of stock options |   |                                            | — |   |              |   | — |              |   |   | —                       |   |   |        | — |   |               |   | 260 |   |   |   | — |   |   |   | — |   |   |   | 260 |   |
| Issuance of shares under employee stock purchase plan                                |   |                                            | — |   |              |   | — |              |   |   | 8                             |   |   |        | — |   |               |   | 3 |   |   |   | — |   |   |   | — |   |   |   | 3 |   |
| Unrealized loss on available-for-sale securities                                     |   |                                            | — |   |              |   | — |              |   |   | —                       |   |   |        | — |   |               |   | — |   |   |   | 17 |   |   |   | — |   |   |   | 17 |   |
| Net loss                                                                             |   |                                            | — |   |              |   | — |              |   |   | —                       |   |   |        | — |   |               |   | — |   |   |   |   |   |   |   | (10,415) |   |   |   | (10,415) |   |
|                                                                                 |   |                                            |    |   |              |   |    |              |   |   |                          |   |   |        |    |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at March 31, 2011                                                            |   |                                            | 413     |   |              | $      | 30,643  |              |   |   | 21,242                        |   |   | $           | 21      |   |               | $      | 119,505 |   |   | $ | 1 |   |   | $ | (171,526) |   |   | $ | (51,999) |   |

----

|                                                                                                           |   | Three Months Ended March 31, |    |
|----------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------|---------|
|                                                                                                           |   | 2011                                        |    |   | 2010 |   |
| Cash flows from operating activities:                                                                          |   |                                        |    |   |   |   |
| Net loss                                                                                                       |   | $                                           | (10,415 | ) |   | $ | (5,472 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities:                                    |   |                                        |    |   |   |   |   |   |
| Depreciation and amortization                                                                                  |   |                                        | 38      |   |   |   | 41 |   |
| Share-based compensation to employees for services                                                             |   |                                        | 260     |   |   |   | 185 |   |
| Amortization of discount and debt issuance costs                                                               |   |                                        | 212     |   |   |   | 414 |   |
| Change in fair value of warrant liability                                                                      |   |                                        | 458     |   |   |   | (41 | ) |
| Change in fair value of investors’ right to purchase future shares of Series A-1 and A-2 preferred stock |   |                                        | 2,382   |   |   |   |   |   |
| Other-than-temporary loss on marketable securities                                                             |   |                                        | 76      |   |   |   | — |   |
|    Changes in operating assets and liabilities:                                                 |   |                                        |    |   |   |   |   |   |
| Decrease in prepaid expenses and other assets                                                                  |   |                                        | 38      |   |   |   | 9 |   |
| Increase/(decrease) in accounts payable and accrued liabilities                                                |   |                                        | 611     |   |   |   | (610 | ) |
| Net cash used in operating activities                                                                          |   |                                        | (6,340  | ) |   |   | (5,473 | ) |
|                                                                                                      |   |                                        |    |   |   |   |   |   |
| Cash flows from investing activities:                                                                          |   |                                        |    |   |   |   |   |   |
| Purchase of property and equipment                                                                             |   |                                        | (66     | ) |   |   | (6 | ) |
| Sale and maturities of marketable securities                                                                   |   |                                        | 11,000  |   |   |   | — |   |
| Net cash provided by (used in) investing activities                                                            |   |                                        | 10,934  |   |   |   | (6 | ) |
|                                                                                                           |   |                                        |    |   |   |   |   |   |
| Cash flows from financing activities:                                                                          |   |                                        |    |   |   |   |   |   |
| Proceeds from exercise of warrants and options and issuance of shares under employee stock purchase plan       |   |                                        | 3       |   |   |   | 22 |   |
| Payments on capital leases                                                                                     |   |                                        | — |   |   |   | (17 | ) |
| Net cash provided by financing activities                                                                      |   |                                        | 3       |   |   |   | 5 |   |
|                                                                                                      |   |                                        |    |   |   |   |   |   |
| Net increase (decrease) in cash and cash equivalents                                                           |   |                                        | 4,597   |   |   |   | (5,474 | ) |
| Cash and cash equivalents, beginning of period                                                                 |   |                                        | 4,573   |   |   |   | 9,570 |   |
| Cash and cash equivalents, end of period                                                                       |   | $                                           | 9,170   |   |   | $ | 4,096 |   |
| Supplemental disclosures of cash flow data:                                                                    |   |                                        |    |   |   |   |   |   |
| Cash paid for interest                                                                                         |   | $                                           | 684     |   |   | $ | 685 |   |
| Supplemental disclosures of noncash financing activities:                                                      |   |                                        |    |   |   |   |   |   |
| Unrealized loss on available-for-sale securities                                                               |   | $                                           | 1       |   |   | $ | 8 |   |

----

| ● | Marqibo® (vincristine sulfate liposomes injection), the Company’s lead product candidate, is a novel, targeted OptisomeTM encapsulated formulation product candidate of the FDA-approved anticancer drug vincristine. The Company is currently developing Marqibo primarily for the treatment of adult acute lymphoblastic leukemia, or ALL. The Company plans to submit a new drug application to the Food and Drug Administration, or FDA, in 2011 seeking accelerated approval of Marqibo for the treatment of adult ALL in second relapse or that has progressed following two or more prior lines of anti-leukemia therapy.  Additionally, Marqibo will be studied in a Phase 3 trial in elderly patients with newly diagnosed aggressive Non-Hodgkin’s Lymphoma, or NHL, with enrollment expected to begin before the end of 2011. |
|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ● | Menadione Topical Lotion, a novel supportive care product candidate being developed for the prevention and/or treatment of the skin toxicities associated with the use of epidermal growth factor receptor inhibitors, or EGFRIs, a type of anti-cancer agent used in the treatment of lung, colon, head and neck, pancreatic and breast cancer. |
|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ● | BrakivaTM (topotecan liposome injection), a novel targeted OptisomeTM encapsulated formulation product candidate of the FDA-approved anticancer drug topotecan. |
|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ● | AlocrestTM (vinorelbine liposome injection), a novel, targeted OptisomeTM encapsulated formulation product candidate of the FDA-approved anticancer drug vinorelbine. |
|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| (In thousands)   |   | CarryingValue atJanuary 1, |    |   | AmortizedDiscount |   |    | CarryingValue atMarch 31, |   |
|------------------|--------|--------------------------------------|---------|--------|-------------------|--------|---------|-------------------------------------|--------|
| 2011             |   |                                 |    |   |              |   |    |                                |   |
| Notes payable    |   | $                                    | 27,500  |   |              | $      | — |                                |   | $ | 27,500 |   |
| Discount on debt |   |                                 | (4,160) |   |              |   | (173)   |                                |   |   | (3,987) |   |
| Carrying value   |   | $                                    | 23,340  |   |              |   |    |                                |   |  $ | 23,513 |   |
|             |   |                                 |    |   |              |   |    |                                |   |   |   |   |
| 2010             |   |                                 |    |   |              |   |    |                                |   |   |   |   |
| Notes payable    |   | $                                    | 27,500  |   |              | $      | — |                                |   | $ | 27,500 |   |
| Discount on debt |   |                                 | (4,903) |   |              |   | (239)   |                                |   |   | (4,664) |   |
| Carrying value   |   | $                                    | 22,597  |   |              |   |    |                                |   | $ | 22,836 |   |

----

|                      |   | CarryingValue atJanuary 1, |   |   | AmortizedDeferredTransactionCosts |   |   | CarryingValue atMarch 31, |   |
|--------------------------------|--------|--------------------------------------|--------|--------|-----------------------------------|--------|--------|-------------------------------------|--------|
|  (In thousands)           |   |                                 |   |   |                              |   |   |                                |   |
| 2011Deferred transaction costs |   | $                                    | 905    |   |                              | $      | (39)   |                                |   | $ | 866 |   |
|                           |   |                                 |   |   |                              |   |   |                                |   |   |   |   |
| 2010Deferred transaction costs |   | $                                    | 1,194  |   |                              | $      | (175)  |                                |   | $ | 1,019 |   |

| March 31, 2011 (In thousands)        |   | Input Level |   | Amortized or Historical Cost      |   |   | GrossRealizedGains/(Losses) |   |    | GrossUnrealizedGains/(Losses) |   |   | Estimated FairValue |   |
|-----------------------------------------------------|--------|------------------|--------|-----------------------------------|--------|--------|-----------------------------|--------|---------|-------------------------------|--------|--------|--------------------------|--------|
| Money market funds                                  |   | Level 2     |   | $                                 | 3,261  |   |                        | $      | — |                          |   | $      | —                  |   |   | $ | 3,261 |   |
| U.S. treasury obligations                           |   | Level 2          |   |                              | 6,991  |   |                        |   | — |                          |   |   | 8                        |   |   |   | 6,999 |   |
| Equity securities                                   |   | Level 1          |   |                              | 92     |   |                        |   | (76     | )                             |   |   | —                  |   |   |   | 16 |   |
|                                                |   |             |   |                              |   |   |                        |   |    |                          |   |   |                     |   |   |   |   |   |
| Total available-for-sale securities                 |   |             |   |                              | 10,344 |   |                        |   | (76     | )                             |   |   | 8                        |   |   |   | 10,276 |   |
| Less: amounts classified as cash equivalents        |   |             |   |                              | (3,261 | )      |                        |   | — |                          |   |   | —                  |   |   |   | (3,261 | ) |
|                                                |   |             |   |                              |   |   |                        |   |    |                          |   |   |                     |   |   |   |   |   |
| Amounts classified as available-for-sale securities |   |             |   | $                                 | 7,083  |   |                        | $      | (76     | )                             |   | $      | 8                        |   |   | $ | 7,015 |   |
|                                                |   |             |   |                              |   |   |                        |   |    |                          |   |   |                     |   |   |   |   |   |
| March 31, 2010 (In thousands)        |   | Input Level |   | Amortized or Historical Cost |   |   | GrossRealizedGains/(Losses) |   |    | GrossUnrealizedGains/(Losses) |   |   | Estimated FairValue |   |
| Equity securities                                   |   | Level 1          |   | $                                 | 92     |   |                        | $      | — |                          |   | $      | (16                      | )      |   | $ | 76 |   |
|                                                |   |             |   |                              |   |   |                        |   |    |                          |   |   |                     |   |   |   |   |   |

|   | ● | at any time prior to the date the Company receives marketing approval from the U.S. Food and Drug Administration for the first of its product candidates (“Marketing Approval Date”), the Purchasers may purchase up to an additional 200,000 shares of Series A-1 Preferred Stock at a purchase price of $100 per share for an aggregate purchase price of $20 million (“Additional Investment”); and  |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | ● | at any time beginning 15 days and within 120 days following the Marketing Approval Date, the Purchasers may purchase up to an aggregate of 400,000 shares of Series A-2 Convertible Preferred Stock at the stated value of $100 per share for an aggregate purchase price of $40 million (“Subsequent Investment”).                                                                                                           |

----

|   | ● | the stated value of the Series A-1 Preferred Stock, initially $100 per share, accretes at a rate of 9% per annum for a five-year term, compounded quarterly, and following such five-year term, the holders are thereafter entitled to cash dividends at 9% of the accreted stated value per annum, payable quarterly; |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | each share of Series A-1 Preferred Stock is convertible into shares of the Company’s Common Stock at a conversion price of $0.736 per share; |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | upon a liquidation of the Company, as defined, including a change in control of the Company, holders of the Series A-1 Preferred Stock would be entitled to receive a liquidation preference per share equal to the greater of (i) 100% of the then-accreted value of the Series A-1 Preferred Stock and (ii) the amount which the holder would have received if the Series A-1 Preferred Stock had been converted into common stock immediately prior to the liquidation; and |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | the Series A-1 Preferred Stock is not redeemable except as noted in the bullet points above. |
|--------|---------|----------------------------------------------------------------------------------------------|

|   | ● | the stated value of the Series A-1 Preferred Stock, initially $100 per share, accreted at a rate of 12% per annum; |
|--------|---------|--------------------------------------------------------------------------------------------------------------------|

|   | ● | each share of Series A-1 Preferred Stock was convertible into shares of the Company’s Common Stock at a conversion price of $0.5152 per share, subject to the limitation on the number of shares of Common Stock then available for issuance; and |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | the Series A-1 Preferred Stock were redeemable at the holders’ election any time after December 7, 2010, at a redemption price equal to the greater of (i) 250% of the then-accreted value of the Series A-1 Preferred Stock, plus any unpaid dividends accrued thereon and (ii) market value of common stock shares the holder would receive if the Series A-1 Preferred Stock are converted into common stock immediately prior to the redemption. |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | ● | Outstanding Series A-1 Preferred Stock – Due to certain contingent redemption features of this instrument, the Company classified the 400,000 shares of Series A-1 Preferred Stock sold on June 7, 2010 in the mezzanine section (between equity and liabilities) on the accompanying balance sheet.  The Company recorded the residual value of these shares as $29.9 million on June 7, 2010, net of transaction costs of $1.4 million and $8.7 million allocated to the rights to purchase additional Preferred Stock in the future.  When the 400,000 shares of Preferred Stock were issued on June 7, 2010, approximately 121,000 shares were convertible due to the limited remaining authorized shares of common stock available for conversion.  At the Second Closing, the remaining 279,000 shares of Preferred Stock became convertible when the reverse stock split and the additional shares of common stock were authorized. |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | Additional Series A-1 Preferred Stock Issued During Second Closing – At the Second Closing on September 10, 2010, the Company issued an additional 12,562 shares to the Purchasers to capture the accretion to the stated value of the Preferred Stock from June 7, 2010, when the shares were issued through the second closing.  The carrying value of the Preferred Stock was increased by the estimated fair value of these shares on September 10, 2010, which was $0.7 million.  The Company reduced shareholder’s equity by the same amount.  All of these additional shares were convertible upon issuance. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | Rights to Purchase Preferred Stockin the Additional and Subsequent Investments – The Company determined that the Purchasers’ rights to purchase future shares of Preferred Stock in connection with the Additional and Subsequent Investments are freestanding instruments that are required to be classified as liabilities and carried at fair value. The treatment of these instruments as a liability is due to certain redemption features of the underlying Preferred Stock.    |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   | The following table summarizes the fair value of right to purchase future shares of Preferred Stock outstanding as of March 31, 2011 and the changes in the valuation in the three month periods then ended: |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (In thousands)                                                                                                  |   | Fair Value atJanuary 1, 2011 |   |   | Net change in fair value of liabilities |   |   | Fair Value atMarch 31, 2011 |   |
|-----------------------------------------------------------------------------------------------------------------|--------|----------------------------------------|--------|--------|---------------------------------------------------|--------|--------|---------------------------------------|--------|
| Investors’ rights to purchase future shares of series     A-1 and A-2 preferred stock |   | $                                      | 5,131  |   |                                              |   | 2,382  |                                  |   | $ | 7,513 |   |

| Rights to purchase future shares of preferred stock |   | Three Months EndedMarch 31, 2011 |               |
|-----------------------------------------------------|--------|----------------------------------|--------------------|
| Risk-free interest rate                             |   |                             | 0.23 – 0.25  | % |
| Expected life (in years)                            |   |                             | 0.75 – 0.83  |   |
| Volatility                                          |   |                             | 0.98 – 0.985 |   |
| Dividend Yield                                      |   |                             | 8.7                | % |

|   | ● | Beneficial Conversion Feature – Because the conversion price of the shares of Preferred Stock was less than the fair market price of the Company’s common stock at the date Preferred Stock was sold and issued, the in-the-money conversion feature (Beneficial Conversion Feature, or BCF) requires separate recognition and is measured at the intrinsic value (i.e., the amount of the increase in value that preferred stockholders would realize upon conversion based on the value of the conversion shares on the commitment date).  The BCF is limited to the proceeds allocated to preferred shares and is initially recorded as a discount to preferred shares and included as additional paid-in capital.  Because there is not a stated redemption date of the shares of the convertible Series A-1 Preferred Stock, the BCF is immediately accreted to the Preferred Shares as a deemed preferred stock dividend.   The Company has recognized aggregate BCF of $29.9 million related to the shares of Preferred Share in June 2010. |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | Accretion on Preferred Stock - For the period from June 7, 2010 to September 10, 2010 (the date of the Second Closing), the 400,000 shares of Series A-1 Preferred Stock accreted value to the stated rate of $100 at an annual rate of 12%, compounded quarterly.  Upon the Second Closing, the 412,652 shares of Series A-1 Preferred Stock accreted value to the stated rate of $100 at an annual rate of 9%, compounded quarterly.  The total accretable value from the transaction date to March 31, 2011 was $3.4 million, including $0.9 million for the three months ended March 31, 2011.  The Company will not recognize the value of the accretion to the preferred stock until such time that it becomes probable that the shares of preferred stock will become redeemable.  The accretable value is included, for loss per share purposes only, as a dividend to preferred stockholders and the loss attributable to common shareholders is increased by the value of the accretion for the period. |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                          |   | Number OfShares Subject ToOptions Outstanding(in 000’s) |    |   | Weighted AverageExercise PricePer Share |   |    | Weighted AverageRemainingContractual Term(In Years) |   | AggregateIntrinsic Value($ in 000’s) |   |
|-------------------------------|--------|-----------------------------------------------------------------------------------|---------|--------|--------------------------------------------------------|--------|---------|--------------------------------------------------------------------|--------|-------------------------------------------------|--------|
|                          |   |                                                                              |    |   |                                                   |   |    |                                                               |   |                                            |   |
| Outstanding January 1, 2011   |   |                                                                              | 6,749   |   |                                                   | $      | 1.32    |                                                               |   |                                            |   |   |   |
|                          |   |                                                                              |    |   |                                                   |   |    |                                                               |   |                                            |   |   |   |
| Options granted               |   |                                                                              | — |   |                                                   |   | — |                                                               |   |                                            |   |   |   |
| Options exercised             |   |                                                                              | — |   |                                                   |   | — |                                                               |   |                                            |   |   |   |   |
| Options cancelled             |   |                                                                              | (138)   |   |                                                   |   | 1.14    |                                                               |   |                                            |   |   |   |   |
| Outstanding March 31, 2011    |   |                                                                              | 6,611   |   |                                                   | $      | 1.32    |                                                               |   |                                            | 9.0    |   |   | $ | $1,247 |   |
| Exercisable at March 31, 2011 |   |                                                                              | 1,509   |   |                                                   | $      | 3.92    |                                                               |   |                                            | 7.1    |   |   | $ | 114 |   |

|                     |   | Three Months Ended March 31, |   |
|--------------------------|--------|---------------------------------------------|--------|
|                     |   | 2011                                        |   |   | 2010 |   |
| Stock options            |   |                                        |   |   |   |   |
| Risk-free interest rate  |   |                                        | -      | % |   |   | 3.00 | % |
| Expected life (in years) |   |                                        | -      |   |   |   | 5.5 – 6.0 |   |
| Volatility               |   |                                        | -      |   |   |   | 0.99 |   |
| Dividend Yield           |   |                                        | -      | % |   |   | 0 | % |

----

|                                                |   | Number OfShares SubjectTo WarrantsOutstanding(in 000’s) |    |   | Weighted-AverageExercise Price |   |
|----------------------------------------------------------|--------|------------------------------------------------------------------------------|---------|--------|-------------------------------------|--------|
| Warrants outstanding January 1, 2011 |   |                                                                         | 2,037   |   |                                | $      | 0.84 |   |
| Warrants granted                                         |   |                                                                         | — |   |                                |   | — |   |
| Warrants cancelled                                       |   |                                                                         | — |   |                                |   | — |   |
| Warrants exercised                                       |   |                                                                         | — |   |                                |   |   |   |
| Warrants outstanding March 31, 2011                      |   |                                                                         | 2,037   |   |                                | $      | 0.84 |   |

----

| (In thousands)                     |   | Fair valueValue atJanuary 1, |   |   | Reduction of liability due to redemption or exercise |   |    | Net change in fair value of liabilities |   |    | FairValue atMarch 31, |   |
|------------------------------------|--------|----------------------------------------|--------|--------|-----------------------------------------------------------|--------|---------|---------------------------------------------------|--------|---------|---------------------------------|--------|
| 2011                               |   |                                   |   |   |                                                      |   |    |                                              |   |    |                            |   |
| Warrants classified as liabilities |   | $                                      | 713    |   |                                                      | $      | — |                                              |   | $       | 458                             |   |   | $ | 1,171 |   |
|                               |   |                                   |   |   |                                                      |   |    |                                              |   |    |                            |   |   |   |   |   |
| 2010                               |   |                                   |   |   |                                                      |   |    |                                              |   |    |                            |   |   |   |   |   |
| Warrants classified as liabilities |   | $                                      | 2,146  |   |                                                      |   | — |                                              |   |  $ | (41)                            |   |   | $ | 2,105 |   |

|                     |   | Three Months Ended March 31, |   |
|--------------------------|--------|---------------------------------------------|--------|
| Warrant liabilities      |   | 2011                                        |   |   | 2010 |   |
| Risk-free interest rate  |   |                                        | 2.24   | % |   |   | 3.28 | % |
| Expected life (in years) |   |                                        | 5.50   |   |   |   | 6.5 |   |
| Volatility               |   |                                        | 98     |   |   |   | 99 |   |
| Dividend Yield           |   |                                        | 0      | % |   |   | 0 | % |

----

|                                                                            |   | Three Months Ended |     |
|---------------------------------------------------------------------------------|--------|------------------------------|----------|
|                                                                            |   | March 31,               |     |
| (In thousands, except per share amounts)                                        |   | 2011                         |     |   | 2010 |   |
| Net loss                                                                        |   | $                            | (10,415) |   |   | $ | (5,472) |   |
| Deemed dividend to preferred shareholders, additional accretion                 |   |                         | (941)    |   |   |   | — |   |
|                                                                            |   |                         |     |   |   |   |   |   |
| Net loss applicable to Common Stock                                             |   |                         | (11,356) |   |   |   | (5,472) |   |
|                                                                            |   |                         |     |   |   |   |   |   |
| Weighted average shares used in computing net loss per share, basic and diluted |   |                         | 21,243   |   |   |   | 19,946 |   |
|                                                                            |   |                         |     |   |   |   |   |   |
| Net loss per share, basic and diluted                                           |   | $                            | (0.53)   |   |   | $ | (0.27) |   |

| (In thousands)                                  |   | 2011   |   |   | 2010   |   |
|-------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Warrants                                        |   |   | 2,037  |   |   |   | 3,686 |   |
| Stock options and Employee Stock Purchase Plans |   |   | 6,650  |   |   |   | 2,260 |   |
| Convertible redeemable preferred stock          |   |   | 58,902 |   |   |   | — |   |
|                                            |   |   |   |   |   |   |   |   |
| Total                                           |   |   | 67,589 |   |   |   | 5,946 |   |

| ● | Level 1 - Quoted prices in active markets for identical assets or liabilities; |
|---------|--------------------------------------------------------------------------------|

| ● | Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Our Level 2 assets exclusively include U.S. government obligations with quoted prices that are traded less frequently than exchange-traded instruments. All of our Level 2 asset values are determined using a pricing model with inputs that are observable in the market or can be derived principally from or corroborated by observable market data. The pricing model information is provided by third party entities (e.g. banks or brokers). In some instances, these third party entities engage external pricing services to estimate the fair value of these securities; and |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ● | Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. |
|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| As of March 31, 2011                                        |   |         |    |   |         |   |    |          |   |   |    |   |
|-------------------------------------------------------------|--------|--------------|---------|--------|--------------|--------|---------|---------------|--------|--------|---------|--------|
| (In thousands)                                              |   | Level 1 |    |   | Level 2 |   |    | Level 31 |   |   | Total   |   |
| Assets                                                      |   |         |    |   |         |   |    |          |   |   |    |   |   |   |   |   |
| Available-for-sale equity securities                        |   | $            | 16      |   |         | $      | — |          |   | $      | — |   |   | $ | 16 |   |
| Available-for-sale debt securities                          |   |         | — |   |         |   | 10,260  |          |   |   | — |   |   |   | 10,260 |   |
| Total                                                       |   | $            | 16      |   |         | $      | 10,260  |          |   | $      | — |   |   | $ | 10,276 |   |
| Liabilities                                                 |   |         |    |   |         |   |    |          |   |   |    |   |   |   |   |   |
| Warrant liabilities                                         |   |         | — |   |         |   | — |          |   | $      | 1,171   |   |   | $ | 1,171 |   |
| Right to purchase future Series A-1 and A-2 preferred stock |   |         | — |   |         |   | — |          |   |   | 7,513   |   |   |   | 7,513 |   |
| Total                                                       |   | $            | — |   |         | $      | — |          |   | $      | 8,684   |   |   | $ | 8,684 |   |

| As of December 31, 2010                                     |   |         |    |   |         |   |    |         |   |   |    |   |
|-------------------------------------------------------------|--------|--------------|---------|--------|--------------|--------|---------|--------------|--------|--------|---------|--------|
| (In thousands)                                              |   | Level 1 |    |   | Level 2 |   |    | Level 3 |   |   | Total   |   |
| Assets                                                      |   |         |    |   |         |   |    |         |   |   |    |   |
| Available-for-sale equity securities                        |   | $            | 74      |   |         | $      | — |         |   | $      | — |   |   | $ | 74 |   |
| Available-for-sale debt securities                          |   |         | — |   |         |   | 17,994  |         |   |   | — |   |   |   | 17,994 |   |
| Total                                                       |   | $            | 74      |   |         | $      | 17,994  |         |   | $      | — |   |   | $ | 18,068 |   |
| Liabilities                                                 |   |         |    |   |         |   |    |         |   |   |    |   |   |   |   |   |
| Warrant liabilities                                         |   |         | — |   |         |   | — |         |   | $      | 713     |   |   | $ | 713 |   |
| Right to purchase future Series A-1 and A-2 preferred stock |   |         | — |   |         |   | — |         |   |   | 5,131   |   |   |   | 5,131 |   |
| Total                                                       |   | $            | — |   |         | $      | — |         |   | $      | 5,844   |   |   | $ | 5,844 |   |

|  (In thousands)                                  |   | March 31,2011 |   |   | December 31, 2010 |   |
|-------------------------------------------------------|--------|---------------|--------|--------|-------------------|--------|
| Trade accounts payable                                |   | $             | 1,961  |   |              | $      | 1,725 |   |
| Clinical research and other development related costs |   |          | 3,413  |   |              |   | 2,340 |   |
| Accrued personnel related expenses                    |   |          | 333    |   |              |   | 1,202 |   |
| Interest payable                                      |   |          | 668    |   |              |   | 683 |   |
| Accrued other expenses                                |   |          | 288    |   |              |   | 102 |   |
| Total                                                 |   | $             | 6,663  |   |              | $      | 6,052 |   |

|   |   |
|--------|--------|

----

| ● | Marqibo® (vincristine sulfate liposomes injection), our lead product candidate, is a novel, targeted OptisomeTM encapsulated formulation product candidate of the FDA-approved anticancer drug vincristine, being developed primarily for the treatment of ALL. We plan to submit a new drug application to the FDA in 2011 seeking accelerated approval of Marqibo for the treatment of adult ALL in second relapse or that has progressed following two or more prior lines of anti-leukemia therapy.  Additionally, Marqibo will be studied in a Phase 3 trial in elderly patients with newly diagnosed aggressive NHL, with enrollment expected to begin before the end of 2011. |
|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| ● | Menadione Topical Lotion, a novel supportive care product candidate, being developed for the prevention and/or treatment of the skin toxicities associated with the use of epidermal growth factor receptor inhibitors, a type of anti-cancer agent used in the treatment of certain cancers.                                                                                                                                                                                                                                                                                                                                                                                                            |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| ● | BrakivaTM (topotecan liposome injection), a novel targeted OptisomeTM encapsulated formulation product candidate of the FDA-approved anticancer drug topotecan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| ● | AlocrestTM (vinorelbine liposome injection), a novel, targeted OptisomeTM encapsulated formulation product candidate of the FDA-approved anticancer drug vinorelbine, being developed for the treatment of solid tumors such as non-small-cell lung cancer.                                                                                                                                                                                                                                                                                                                                                                                                                                    |

----

----

|   | ● | the number of trials and studies in a clinical program; |
|--------|---------|---------------------------------------------------------|

|   | ● | the number of patients who participate in the trials; |
|--------|---------|-------------------------------------------------------|

|   | ● | the number of sites included in the trials; |
|--------|---------|---------------------------------------------|

|   | ● | the rates of patient recruitment and enrollment; |
|--------|---------|--------------------------------------------------|

|   | ● | the duration of patient treatment and follow-up; |
|--------|---------|--------------------------------------------------|

|   | ● | the costs of manufacturing our drug candidates; and |
|--------|---------|-----------------------------------------------------|

|   | ● | the costs, requirements, timing of, and the ability to secure regulatory approvals. |
|--------|---------|-------------------------------------------------------------------------------------|

----

| Product candidates ($ in thousands) |   | 2011   |   |   | 2010   |   |   | Annual %Change |   |
|---------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|---------------------|--------|
| Marqibo                                                 |   | $      | 3,254  |   |   | $      | 1,600  |                |   |   | 103 | % |
| Other product candidates                                |   |   | 59     |   |   |   | 6      |                |   |   | 883 | % |
| Professional fees and third-party service costs         |   |   | 175    |   |   |   | 80     |                |   |   | 119 | % |
| Allocable costs and overhead                            |   |   | 273    |   |   |   | 288    |                |   |   | -5 | % |
| Personnel related expense                               |   |   | 1,312  |   |   |   | 1,200  |                |   |   | 9 | % |
| Share-based compensation expense                        |   |   | 71     |   |   |   | 84     |                |   |   | -15 | % |
| Total research and development expense                  |   | $      | 5,144  |   |   | $      | 3,258  |                |   |   | 58 | % |

----

| ●   | at any time prior to the date we receive marketing approval from the U.S. Food and Drug Administration for any of our product candidates (“Marketing Approval Date”), the Purchasers may purchase up to an additional 200,000 shares of Series A-1 Preferred Stock at a purchase price of $100 per share for an aggregate purchase price of $20 million (“Additional Investment”); and |
|---------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ●   | at any time beginning 15 days and within 120 days following the Marketing Approval Date, the investors may purchase up to an aggregate of 400,000 shares of Series A-2 Convertible Preferred Stock at the stated value of $100 per share for an aggregate purchase price of $40 million. |
|---------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ● | costs associated with conducting preclinical and clinical testing;                        |
|---------|-------------------------------------------------------------------------------------------|
|    |                                                                                      |
| ● | costs of establishing arrangements for manufacturing our product candidates;              |
|    |                                                                                      |
| ● | payments required under our current and any future license agreements and collaborations; |
|    |                                                                                      |
| ● | costs, timing and outcome of regulatory reviews;                                          |
|    |                                                                                      |
| ● | costs of obtaining, maintaining and defending patents on our product candidates; and      |
|    |                                                                                      |
| ● | costs of increased general and administrative expenses.                                   |

----

----

| Exhibit No. |   | Description                                                                                                                                                                                                                           |
|------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|             |   |                                                                                                                                                                                                                                  |
| 10.1             |   | Letter agreement between Talon Therapeutics, Inc. and Steven R. Deitcher, M.D., dated January 6, 2011 (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on January 12, 2011).                          |
|             |   |                                                                                                                                                                                                                                  |
| 10.2             |   | Agreement and Release dated January 11, 2011 between the Company and Anne E. Hagey (incorporated  by reference to Exhibit 10.31 to the Company's Registration Statement on Form S-1 filed on May 5, 2011 (File No. 333-173957)). |
|             |   |                                                                                                                                                                                                                                  |
| 31.1             |   | Certification of Chief Executive Officer, as required by Rule 13a-14(a) or Rule 15d-14(a).                                                                                                                                            |
|             |   |                                                                                                                                                                                                                                  |
| 31.2             |   | Certification of Chief Financial Officer, as required by Rule 13a-14(a) or Rule 15d-14(a).                                                                                                                                            |
|             |   |                                                                                                                                                                                                                                  |
| 32.1             |   | Certification of Chief Executive Officer and Chief Financial Officer, as required by Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350).                                                          |

----

|                | TALON THERAPEUTICS, INC.                                |
|---------------------|---------------------------------------------------------|
|                |                                                    |   |
| Dated: May 13, 2011 | By:                                           | /s/ Steven R. Deitcher, MD |
|                | Steven R. Deitcher, MD                                  |
|                | President and Chief Executive Officer                   |
|                |                                                    |   |
| Dated: May 13, 2011 | By:                                           | /s/ Craig W. Carlson   |
|                | Craig W. CarlsonVice President, Chief Financial Officer |

----

| Exhibit No. |   | Description                                                                                                                                                                  |
|------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|             |   |                                                                                                                                                                         |
| 31.1             |   | Certification of Chief Executive Officer, as required by Rule 13a-14(a) or Rule 15d-14(a).                                                                                   |
|             |   |                                                                                                                                                                         |
| 31.2             |   | Certification of Chief Financial Officer, as required by Rule 13a-14(a) or Rule 15d-14(a).                                                                                   |
|             |   |                                                                                                                                                                         |
| 32.1             |   | Certification of Chief Executive Officer and Chief Financial Officer, as required by Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350). |