##### Table of Contents









UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


WASHINGTON, DC 20549





Form 10-K


FOR ANNUAL AND TRANSITION REPORTS


PURSUANT TO SECTIONS 13 OR 15(d)


OF THE SECURITIES EXCHANGE ACT OF 1934


|           |  |                                                                                             
|---------- |  | --------------------------------------------------------------------------------------------
|(Mark One) |  |                                                                                             
|þ          |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934    
|          
|           |  | For the year ended December 31, 2004                                                        
|          
|or        
|          
|o          |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934
|          
|           |  | For the transition period
    from           to                                             

Commission file number: 0-50440


CancerVax Corporation


(Exact name of registrant as specified in its charter)


|                                                                           |  |                                         
|-------------------------------------------------------------------------- |  | ----------------------------------------
|Delaware                                                                   |  | 52-2243564                              
|(State or other jurisdiction of
    incorporation or organization)         |  | (I.R.S. Employer
    Identification No.)
|                                                                          
|2110 Rutherford Road, Carlsbad, CA(Address of principal executive offices) |  | 92008(Zip Code)                         

(760) 494-4200


(Registrants telephone number, including area code)


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


|                    |  |                                          
|------------------- |  | -----------------------------------------
|Title of Each Class |  | Name of Each Exchange on Which Registered
|                    |  |                                          
|None                |  | None                                     



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


Common Stock, par value $0.00004 per share


þ o


þ


þ o






DOCUMENTS INCORPORATED BY REFERENCE












---










CANCERVAX CORPORATION


FORM 10-K  ANNUAL REPORT


For the Year Ended December 31, 2004


Table of Contents


|              |  |                                                                                                    |    |      |    | 
|------------- |  | -------------------------------------------------------------------------------------------------- | -- | ---- | -- | 
|              |  |                                                                                                    |    | Page |   
|              |  |                                                                                                    |    |      |   
|PART I       
|Item 1        |  | Business                                                                                           |    |      | 2  | 
|Item 2        |  | Properties                                                                                         |    |      | 56 | 
|Item 3        |  | Legal Proceedings                                                                                  |    |      | 57 | 
|Item 4        |  | Submission of Matters to a Vote of Security
    Holders                                            |    |      | 57 | 
|PART II      
|Item 5        |  | Market for Registrants Common Equity
    and Related Stockholder Matters                          |    |      | 58 | 
|Item 6        |  | Selected Consolidated Financial Data                                                               |    |      | 60 | 
|Item 7        |  | Managements Discussion and Analysis
    of Financial Condition and Results of Operations          |    |      | 62 | 
|Item 7A       |  | Quantitative and Qualitative Disclosures
    About Market Risk                                     |    |      | 73 | 
|Item 8        |  | Financial Statements and Supplementary
    Data                                                    |    |      | 73 | 
|Item 9        |  | Changes in and Disagreements With
    Accountants on Accounting and Financial Disclosure           |    |      | 73 | 
|Item 9A       |  | Controls and Procedures                                                                            |    |      | 73 | 
|Item 9B       |  | Other Information                                                                                  |    |      | 76 | 
|PART III     
|Item 10       |  | Directors and Executive Officers of the
    Registrant                                             |    |      | 77 | 
|Item 11       |  | Executive Compensation                                                                             |    |      | 77 | 
|Item 12       |  | Security Ownership of Certain Beneficial
    Owners and Management and Related Stockholder Matters |    |      | 77 | 
|Item 13       |  | Certain Relationships and Related
    Transactions                                                 |    |      | 77 | 
|Item 14       |  | Principal Accounting Fees and Services                                                             |    |      | 77 | 
|PART IV      
|Item 15       |  | Exhibits and Financial Statement
    Schedules                                                     |    |      | 78 | 
|Signatures    |  |                                                                                                    | 82 |     
|EXHIBIT 23.01
|EXHIBIT 31.1 
|EXHIBIT 31.2 
|EXHIBIT 32   



1



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PART I


Forward-Looking Statements






Corporate Information




tm







|        |         
|------- | --------
|Item 1. | Business

Overview






2



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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                 
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | a statistically significant improvement in survival in a matched
    pair analysis of 739 patients who received Canvaxin at JWCI
    or UCLA for Stage III melanoma versus 739 historical
    control patients with Stage III melanoma who were treated
    at JWCI or UCLA but did not receive Canvaxin. These results were
    published in the October 2002 issue of the Annals of
    Surgery;              
|
| |  | a statistically significant improvement in survival in a matched
    pair analysis of 107 patients who received Canvaxin at JWCI
    or UCLA for Stage IV melanoma versus 107 historical control
    patients with Stage IV melanoma who were treated at JWCI or
    UCLA but did not receive Canvaxin. These results were published
    in the December 2002 issue of the Journal of Clinical
    Oncology; and
|
| |  | a favorable safety and side effect profile relative to existing
    therapies for the treatment of patients with advanced-stage
    melanoma.                                                                                                                                                                                                                                                                   





Industry Background


Cancer




3



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| |         
| | --------
| | Melanoma

Journal of Clinical Oncology Journal of American College of
Surgeons






Non-small-cell Lung Cancer




4



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##### Table of Contents



Immunotherapy for the Treatment of Cancer








Journal of Clinical Oncology








| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Passive immunotherapygenerally relies on the direct
    administration of monoclonal antibodies designed to target a
    specific receptor on the surface of a cell or a secreted
    protein. Administering the antibodies to patients interferes
    with the functioning of cancer cells or binds to cancer cells
    and activates various cytotoxic mechanisms that may help destroy
    the cancer.                                                                                                                                            
|
| |  | Non-specific active immunotherapyelicits a general
    immune system response to cancer and includes the use of
    stimulatory proteins, known as cytokines, such as interferons
    and interleukins. Cytokines that have been approved for treating
    cancer in humans to date have been associated with significant
    side effects. Non-specific active immunotherapy also includes
    immune stimulatory agents such as bacillus Calmette-Guérin,
    known as BCG.                                                                        
|
| |  | Specific active immunotherapy, such as Canvaxin,
    generates targeted, cell-mediated and antibody-mediated immune
    responses focused on specific antigens expressed by cancer
    cells, on specific proteins that may activate tumor-promoting
    signaling pathways, or on specific receptors found on cancer or
    normal cells. Specific active immunotherapy is an emerging
    immunotherapeutic approach to the treatment of cancer that
    includes the use of whole cells, peptides, antigens, cell
    fragments and viral vectors.

5



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Anti-Angiogenesis for the Treatment of Cancer






Telomere Signaling Disruption in the Treatment of
Cancer




Our Pipeline




|                                |  |                                   |  |             |  |                         
|------------------------------- |  | --------------------------------- |  | ----------- |  | ------------------------
|Product Candidates              |  | Targeted Disease                  |  | Status      |  | Commercialization Rights
|                               
|Specific Active Immunotherapy   |  |                                   |  |             |  |                         
|Canvaxin                        |  | Stage III melanoma                |  | Phase 3     |  | CancerVax/Serono(a)     
|Canvaxin                        |  | Stage IV melanoma                 |  | Phase 3     |  | CancerVax/Serono(a)     
|SAI-EGF                         |  | Non-small-cell lung cancer        |  | Phase 1/2   |  | CancerVax(b)            
|SAI-TGF-a                       |  | Solid tumors                      |  | Preclinical |  | CancerVax(b)            
|SAI-EGFR-ECD                    |  | Solid tumors                      |  | Preclinical |  | CancerVax(b)            
|Anti-Angiogenesis               |  |                                   |  |             |  |                         
|Humanized monoclonal antibodies |  | Solid tumors, ophthalmic diseases |  | Preclinical |  | CancerVax               
|Various peptides                |  | Solid tumors, ophthalmic diseases |  | Research    |  | CancerVax               
|T-oligonucleotides              |  | Cancer                            |  | Research    |  | CancerVax               






|    |                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Serono has the right to co-promote Canvaxin with
    CancerVax in the United States, and to exclusively commercialize
    Canvaxin outside the United States.                                                                                                                                                                                                                                                   
|   
|(b) | CancerVax has the right to commercialize SAI-EGF, SAI-TGF-a
    and SAI-EGFR-ECD in the United States, Canada, Japan, Australia,
    New Zealand, Mexico and specified countries in Europe, including
    Austria, Belgium, Czech Republic, Denmark, Finland, France,
    Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands,
    Norway, Poland, Portugal, Spain, Sweden, and the United
    Kingdom.

6



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Specific Active Immunotherapy Programs




| |                                                          
| | ---------------------------------------------------------
| | Canvaxin Specific Active Immunotherapy Product Candidates









Advantages of Our
Specific Active Immunotherapy Platform






| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Use of Whole Cells. This technology uses whole cells that
    are irradiated during the manufacturing process to prevent
    replication when administered to patients, but that continue to
    produce antigens and stimulate the immune system for a period of
    days to weeks after they have been injected into a patient as
    they undergo apoptosis, or cell death. We believe that whole
    cell approaches such as that taken with Canvaxin, may stimulate
    a more enduring response than cell fragments, peptides and
    antigens. The use of whole cells may enhance Canvaxins
    ability to stimulate a cross reactive immune response against
    the patients own tumor cells.                                                                                                                                                                                                                                                                                                                     
|
| |  | Polyvalence. Administering a polyvalent technology
    exposes the patients immune system to multiple antigens
    that are associated with a wide range of solid tumors. These
    antigens appear in unpredictable patterns and concentrations
    among different people and within an individual as their cancer
    evolves over time. We believe the presentation of numerous
    antigens, termed polyvalence, is an important element in
    eliciting a therapeutic immune response in most patients and
    reducing a tumor cells ability to escape the immune
    response. Canvaxin contains at least 38 antigens that may be
    associated with tumors and may induce an immune response. Other
    approaches based upon a single tumor-associated antigen or a few
    tumor-associated antigens may not demonstrate therapeutic value
    if they do not stimulate a sufficiently broad immune response to
    cross react with the patients own tumor, particularly as
    the tumor changes over time.
|
| |  | Allogeneity. This technology employs
    non-patient-specific, or allogeneic, tumor cell lines selected
    for their ability to elicit an immune response and their
    expression of a large number of tumor-                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

7



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| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | associated antigens. This is distinct from the autologous, or
    patient-specific, approach in which a specific active
    immunotherapy product is created from cells extracted from a
    patients own tumor. Because it relies on cells harvested
    from the patient, the autologous approach may result in the
    availability of only a limited number of doses for
    administration to the patient. We believe there are numerous
    other potential advantages to our allogeneic approach, including
    a standardized manufacturing procedure, reduced costs,
    simplified distribution and improved quality control.
    Additionally, since allogeneic specific active
    immunotherapeutics contain a different profile of antigens than
    the profile to which a recipient has previously been exposed, we
    believe that these allogeneic immunotherapeutics may induce a
    stronger anti-tumor immune response than autologous
    immunotherapeutics.

Canvaxin for the
Treatment of Patients with Melanoma




| |                                                                 
| | ----------------------------------------------------------------
| | On-Going Phase 3 Clinical Trials for Advanced-Stage
    Melanoma







8



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| |                         
| | ------------------------
| | Analysis of Phase 2 Data

Annals of Surgery Journal of Clinical Oncology


9



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Patients Treated with Canvaxin vs. Patients Not Treated with
Canvaxin


|                     |  |                    |  |                    |  |        |                       |              |          |                    |  |                
|-------------------- |  | ------------------ |  | ------------------ |  | ------ | --------------------- | ------------ | -------- | ------------------ |  | ---------------
|                     |  |                    |  |                   
|                     |  |                    |  |                    |  | Median |                       | Five-Year   
|                     |  | Number of Patients |  | Patient Population |  |        | Overall Survival      |              | Survival
|Disease Stage        |  |                    |  |                    |  |        |                       | (p-vales)(1) |          |                   
|                    
|Melanoma  Stage III |  | Canvaxin           |  | 935                |  |        | All patients(2)       |              |          | 56.4 vs. 31.9 mos. |  | 49% vs. 37%    
|                     |  | Non-Canvaxin       |  | 1,667              |  |        |                       |              |          | (p-value = 0.0001) |  |                
|                     |  |                    |  |                    |  |        |                       |              |          |                    | 
|                     |  | Total              |  | 2,602              |  |        |                       |              |          |                    |  |                
|                    
|Melanoma  Stage III |  | Canvaxin           |  | 739                |  |        | All patients matched  |              |          | 55.3 vs. 31.6 mos. |  | 48.8% vs. 36.8%
|                     |  | Non-Canvaxin       |  | 739                |  |        | according to key      |              |          | (p-value = 0.0001) |  |                
|                     |  |                    |  |                    |  |        |                       |              |          |                    | 
|                     |  | Total              |  | 1,478              |  |        | prognostic factors(2) |              |          |                    |  |                
|                    
|Melanoma  Stage IV  |  | Canvaxin           |  | 150                |  |        | All patients(3)       |              |          | 36 vs. 18 mos.     |  | 39% vs. 19%    
|                     |  | Non-Canvaxin       |  | 113                |  |        |                       |              |          | (p-value = 0.0001) |  |                
|                     |  |                    |  |                    |  |        |                       |              |          |                    | 
|                     |  | Total              |  | 263                |  |        |                       |              |          |                    |  |                
|                    
|Melanoma  Stage IV  |  | Canvaxin           |  | 107                |  |        | All patients matched  |              |          | 38 vs. 19 mos.     |  | 39% vs. 20%    
|                     |  | Non-Canvaxin       |  | 107                |  |        | according to key      |              |          | (p-value = 0.0009) |  |                
|                     |  |                    |  |                    |  |        |                       |              |          |                    | 
|                     |  | Total              |  | 214                |  |        | prognostic factors(3) |              |          |                    |  |                
|                     |  |                    |  |                    |  |        |                       |              |          |                    | 






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | P-values indicate the likelihood that the results were due to
    random statistical fluctuations rather than a true cause and
    effect relationship. The lower the p-value, the more likely
    there is a true cause and effect relationship. Therefore,
    p-values provide a sense of the reliability of the results of
    the study in question, however, the significance of p-values is
    dependent on the underlying study. When the underlying study is
    a retrospective analysis of pooled data, the p-value is of more
    limited significance than for a prospective, controlled study.
    Typically, the FDA requires a p-value of less than 0.05 to
    establish the statistical significance of a clinical trial.
|   
|(2) | All patients with Stage III melanoma who were included
    in the JWCI database and had their primary tumor and regional
    lymph nodes resected, or removed, between 1971 and 1998 were
    included in the analysis. Historical control patients in the
    Canvaxin-treated group received the product candidate between
    1984 and 1998. The 1,478 patients that were matched
    according to key prognostic factors are a subset of the 2,602
    total patient population with Stage III melanoma.                                                                                                                                                                                                                                
|   
|(3) | All patients with Stage IV melanoma who were included in
    the JWCI database and had their primary tumor and all known
    metastases resected between 1971 and 1997 are included in the
    analysis. Patients in the Canvaxin-treated group received the
    product candidate between 1984 and 1997. The 214 patients
    that were matched according to key prognostic factors are a
    subset of the 263 total patient population with surgically
    resected Stage IV melanoma.                                                                                                                                                                                                                                                   





Stage III Melanoma. Annals of Surgery




10



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##### Table of Contents



Journal of
Clinical Oncology


Stage III Melanoma Matched Pair Survival Analysis







Stage IV Melanoma. Journal
of Clinical Oncology


11



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##### Table of Contents





Stage IV Melanoma Matched Pair Survival Analysis





Tumor Response Data. in-transit In-transit


Cancer in-transit


Immune Response Data. Journal of
Clinical Oncology


High-Dose Interferon Data.


12



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Canvaxin with GM-CSF.




Non-Resectable Stage IV Melanoma.


Canvaxin for the
Treatment of Patients with Other Indications




| |                                                                   
| | ------------------------------------------------------------------
| | Phase 1/2 Results for Patients with Stage IV
    Colorectal Cancer



13



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Annals of Surgical Oncology.




| |                  
| | -----------------
| | Other Indications





| |                                                                                       
| | --------------------------------------------------------------------------------------
| | Additional Proprietary Tumor Cell Targeting Specific Active
    Immunotherapy Programs





| |                                                                                                  
| | -------------------------------------------------------------------------------------------------
| | Specific Active Immunotherapy Product Candidates Targeting
    the EGF Receptor Signaling Pathway





| |                                                           
| | ----------------------------------------------------------
| | EGF Receptor Pathway  Role in Regulating Tumor
    Growth



14



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|                               |  |           
|------------------------------ |  | ----------
|                              
|                               |  | % EGFR    
|Tumors                         |  | Expression
|                              
|Breast                         |  | 14-91     
|                              
|Colorectal                     |  | 25-77     
|                              
|Brain                          |  | 40-60     
|                              
|Head & neck                    |  | 95        
|                              
|Non-small-cell
    lung cancer |  | 40-80     
|                              
|Ovarian                        |  | 35-70     
|                              
|Pancreatic                     |  | 30-50     
|                              
|Prostate                       |  | 62-71     
|                              

Salomon et al. Crit Rev Oncol Hematol. 1995;19:183;
Moscatello et al. Cancer Res. 1995;55:5536; Garcia de
Palazzo et al. Cancer Res. 1993;53:3217; Kumar et al.
Cancer Lett. 1998;134:177; Nagane et al. Cancer Lett.
2001;162:S17.




| |                                                                                   
| | ----------------------------------------------------------------------------------
| | Advantages of Specific Active Immunotherapy Targeting the EGF
    Receptor Pathway





| |                               
| | ------------------------------
| | Phase 1/2 Results with SAI-EGF



Annals of Oncology


15



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##### Table of Contents







| |                                                                      
| | ---------------------------------------------------------------------
| | Proposed Phase 2 Clinical Trial of SAI-EGF in Patients
    with NSCLC





| |                        
| | -----------------------
| | SAI-TGF-α (preclinical)





| |                           
| | --------------------------
| | SAI-EGFR-ECD (preclinical)



Anti-Angiogenesis Programs


tm




| |                                             
| | --------------------------------------------
| | Advantages of Our Anti-Angiogenesis Platform





16



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| |                                     
| | ------------------------------------
| | Anti-Angiogenesis Product Candidates



in vivo


in vitro in
vivo






Telomere Signaling T-Oligonucleotide Technology






| |                                                        
| | -------------------------------------------------------
| | T-oligonucleotide Approaches to the Treatment of Cancer



17



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in vitro Proceedings of the National Academy of Sciences Federation of American Societies for
Experimental Biology in vitro


Our Strategy






| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Obtain Regulatory Approval of Canvaxin for the Treatment of
    Patients with Advanced-Stage Melanoma. We are working with
    Serono to complete our Phase 3 clinical trials for the
    treatment of patients with advanced-stage melanoma and launch
    Canvaxin as promptly as practicable. If the data from the
    Phase 3 trial in Stage III melanoma are positive, we
    anticipate submitting a request for marketing approval in the
    United States and Europe in early 2007. If the FDA and European
    regulatory authorities accept a positive result in a single
    Phase 3 clinical trial as sufficient for marketing
    approval, and if our manufacturing processes and facility are
    approved by the FDA and European regulatory authorities in
    connection with our marketing applications, we expect the launch
    of Canvaxin in the United States and in Europe to occur in 2007.
|
| |  | Co-Promote Canvaxin with Serono in the United States and
    Support Serono in its Efforts to Commercialize Canvaxin
    Abroad. We plan to build a specialty sales force to
    co-promote Canvaxin with Serono to medical and surgical
    oncologists and dermatologists in the United States and, through
    our development efforts, to support Seronos efforts to
    commercialize Canvaxin in Europe, Australia and elsewhere.                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| |  | Leverage Our In-House Manufacturing Capabilities to Support
    the Commercialization of Canvaxin and Our Other Product
    Candidates. We have built our own biologics manufacturing
    facility and are developing a standardized manufacturing process
    for Canvaxin to further our ability to commercialize Canvaxin,
    and are expanding that facility to meet the anticipated demand
    for Canvaxin during the initial years following its launch. We
    intend to outsource the manufacture of our other product
    candidates during the early stages of development, and to
    leverage the experience that we have gained from developing the
    manufacturing process for Canvaxin to these product candidates.                                                                                                                                                                                
|
| |  | Advance the Development of Our Clinical Stage Product
    Candidate Targeting the EGF Receptor Signaling Pathway. We
    plan to initiate a Phase 1/2 clinical trial with SAI-EGF,
    our specific active immunotherapy that targets EGF, in the
    treatment of patients with advanced non-small-cell lung cancer
    in late 2005 or early 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

18



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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Advance the Development of Our Preclinical Product
    Candidates. We plan to initiate a clinical trial with one of
    our anti-angiogenic, humanized monoclonal antibodies in early
    2006, and to continue the development of our other preclinical
    anti-angiogenesis antibodies and peptides, telomere-signaling
    T-oligonucleotide technology, and our preclinical specific
    active immunotherapy candidates targeting TGF-α and the
    extracellular domain of the EGF receptor signaling pathway.                  
|
| |  | Identify Additional Product Candidates Based on Our
    Anti-Angiogenesis Technology Platform. We plan to leverage
    our research and preclinical experience in anti-angiogenesis to
    identify additional product candidates that will interact with
    sites exposed during the denaturation and remodeling of the
    extracellular matrix. In addition, we intend to explore using
    our anti-angiogenesis product candidates in combination with
    other therapies such as immunotherapy, chemotherapy and
    radiation.
|
| |  | Expand Our Product Pipeline and Technologies Through
    Acquisitions and Licensing. In addition to our internal
    development efforts, we plan to selectively license and acquire
    product opportunities, technologies and businesses that
    complement our target markets.                                                                                                                                                                                                                                                    
|
| |  | Create Additional Product Candidates Using Our Proprietary
    Specific Active Immunotherapy Platform. We plan to evaluate
    the applicability of our proprietary specific active
    immunotherapy technology platform to a number of other solid
    tumors, such as renal, prostate, breast, pancreatic and brain
    cancers.                                                                                                                                                                                                    

Marketing






Manufacturing and Supply








19



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Collaborations






| |       
| | ------
| | Serono











20



---



##### Table of Contents









| |                         
| | ------------------------
| | CIMAB and YM BioSciences





21



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##### Table of Contents





| |                            
| | ---------------------------
| | John Wayne Cancer Institute









| |                            
| | ---------------------------
| | Applied Molecular Evolution



22



---



##### Table of Contents









| |                                  
| | ---------------------------------
| | University of Southern California





| |       
| | ------
| | SemaCo



23



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| |                           
| | --------------------------
| | Scripps Research Institute





| |                        
| | -----------------------
| | Eyetech Pharmaceuticals





| |                    
| | -------------------
| | New York University



24



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Patents and Proprietary Technology






| |   |                                                                                                                           
| | - | --------------------------------------------------------------------------------------------------------------------------
| |  | maintain and obtain patent and other proprietary protection for
    cell lines, antigens, antibodies and delivery systems;
|
| |  | defend patents;                                                                                                           
|
| |  | preserve trade secrets; and                                                                                               
|
| |  | operate without infringing the patents and proprietary rights of
    third parties.                                       













25



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Competition








26



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tm tm


tm tm tm tm tm






27



---



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Government Regulation and Product Approval




| |        
| | -------
| | General







| |                     
| | --------------------
| | FDA Approval Process





28



---



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| |                       
| | ----------------------
| | Fast Track Designation



29



---



##### Table of Contents











| |                        
| | -----------------------
| | Orphan Drug Designation





| |                                
| | -------------------------------
| | Ongoing Regulatory Requirements







30



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Employees




Available Information


www.cancervax.com


Risk Factors


The following information sets forth factors that could cause
our actual results to differ materially from those contained in
forward-looking statements we have made in this report, the
information incorporated herein by reference and those we may
make from time to time.




| |                                           
| | ------------------------------------------
| | Risks Related to Our Business and Industry

We are dependent on the success of our lead product
candidate, Canvaxin, and we cannot be certain that it will be
approved by regulatory authorities or that it will be
commercialized.






We are subject to extensive government regulation that
increases the cost and uncertainty associated with gaining
regulatory approval of Canvaxin and our other product
candidates.




31



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If clinical trials of Canvaxin do not produce successful
results, we will be unable to commercialize this product
candidate.






32



---



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We have encountered regulatory delays in our clinical trials
in the past and we may encounter significant delays or
discontinue our clinical trials in the future.






33



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##### Table of Contents





Our clinical trial operations are subject to inspection by
the FDA and other regulatory authorities at any time, and the
FDA has previously noted deficiencies in our clinical trials at
these inspections. Any temporary or permanent hold imposed on
our clinical trial operations as a result of these inspections
or for any other reason would harm the testing and development
of Canvaxin and our other product candidates.






34



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We have undertaken two Phase 3 clinical trials for the
treatment of patients with advanced-stage melanoma based on the
positive results of the Phase 1 and Phase 2 clinical
trials conducted by our founder, Dr. Morton, who has a
substantial ownership interest in our common stock and other
economic incentives. If the results of these Phase 1 and
Phase 2 clinical trials are affected by a bias or conflict
of interest and we fail to obtain satisfactory Phase 3
clinical trial results, our development of Canvaxin would be
significantly delayed or may be terminated.






The analyses of data collected during Phase 1 and
Phase 2 clinical trials may not be predictive of the future
results of our ongoing Phase 3 clinical trials of Canvaxin.
Data from these Phase 1 and Phase 2 clinical trials
were evaluated using retrospective survival analyses that may be
subject to potential selection biases.








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| |   |                                                                                                                                               
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------
| |  | time from which survival of patients is initially calculated,
    such as the time of diagnosis, the time of surgery or time of
    treatment;
|
| |  | definitions of mortality, such as all causes
    mortality or disease-specific mortality;                                                   
|
| |  | diagnosis status of patients, such as initial diagnosis or
    recurrent disease; and                                                         
|
| |  | severity of disease, such as size of tumors and number of
    metastases.                                                                     



We are dependent on our collaboration with Serono to
commercialize Canvaxin, our lead product candidate. Events or
circumstances may occur that delay or prevent the
commercialization of Canvaxin or cause Serono to terminate our
collaboration agreement.










| |   |                                                                                                                                                                                                                                                                                                                                                                
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | we and Serono could disagree as to development plans, including
    the number and timing of clinical trials;                                                                                                                                                                                                                                                  
|
| |  | Serono could independently develop, develop with third parties
    or acquire products that could compete with Canvaxin, including
    drugs approved for other indications that are used by physicians
    off-label for the treatment of melanoma; and                                                                                                       
|
| |  | disputes regarding the collaboration agreement that delay or
    terminate the development, receipt of regulatory approvals, or
    commercialization of Canvaxin, delay or prevent the achievement
    of clinical or regulatory objectives that would result in the
    payment of milestone payments or result in significant
    litigation or arbitration.



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We depend on clinical investigators and medical institutions
to enroll patients in our clinical trials and other third
parties to perform related data collection and analysis, and, as
a result, we may face costs and delays outside of our
control.








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We have limited experience in manufacturing and testing
biological products and may encounter problems or delays that
could result in delayed development or commercialization of
Canvaxin and our other product candidates as well as lost
revenue.










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Changes in the laws or regulations of the United States or
Cuba related to the conduct of our business with CIMAB may
adversely affect our ability to develop and commercialize the
specific active immunotherapeutic product candidates that we
have licensed from that company.








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If we are unable to renew our lease for our sole
manufacturing facility in the Los Angeles, California area, or
if our manufacturing or warehouse facilities are damaged or
destroyed, our ability to manufacture Canvaxin will be
significantly affected, and we will be delayed or prevented from
completing our clinical trials and commercializing Canvaxin.




If we or others identify unexpected, serious or a
significantly higher level of side effects after our products
are on the market, we may be required to perform lengthy
additional clinical trials, withdraw our products from the
market or change the labeling of our products, any of which
would hinder or preclude our ability to generate revenues.






| |   |                                                                                                                                                                                                                                                   
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | regulatory authorities may withdraw their approvals;                                                                                                                                                                                              
|
| |  | we may be required to reformulate our products, conduct
    additional clinical trials, make changes in the labeling of our
    products, implement changes to or obtain re-approvals of our
    manufacturing facilities, or recall our products;
|
| |  | we may experience a significant drop in the sales of the
    affected products;                                                                                                                                                                   
|
| |  | our reputation in the marketplace may suffer; and                                                                                                                                                                                                 
|
| |  | we may become the target of lawsuits, including class action
    suits.                                                                                                                                                                           



Our efforts to discover, develop and commercialize new
product candidates beyond Canvaxin, including the specific
active immunotherapeutic product candidates that we have
licensed from CIMAB, are in a very early stage and, therefore,
these efforts are subject to a high risk of failure.




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If we are unable to establish or manage strategic
collaborations in the future, our revenue and product
development may be limited.








| |   |                                                                                                                                     
| | - | ------------------------------------------------------------------------------------------------------------------------------------
| |  | significant time and effort from our management team;                                                                               
|
| |  | coordination of our research and development programs with the
    research and development priorities of our
    collaborators; and
|
| |  | effective allocation of our resources to multiple projects.                                                                         



If our competitors develop and market products that are more
effective than our existing product candidates or any products
that we may develop, or obtain marketing approval before we do,
our commercial opportunity will be reduced or eliminated.




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tm tm


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tm tm tm tm tm






We are subject to uncertainty relating to health care reform
measures and reimbursement policies which, if not favorable to
our product candidates, could hinder or prevent our product
candidates commercial success.






| |   |                                                                                                       
| | - | ------------------------------------------------------------------------------------------------------
| |  | our ability to generate revenues and achieve profitability;                                           
|
| |  | the future revenues and profitability of our potential
    customers, suppliers and collaborators; and
|
| |  | the availability of capital.                                                                          





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If physicians and patients do not accept the products that we
may develop, our ability to generate product revenue in the
future will be adversely affected.






| |   |                                                                                                
| | - | -----------------------------------------------------------------------------------------------
| |  | our ability to provide acceptable evidence of safety and
    efficacy;                         
|
| |  | convenience and ease of administration;                                                        
|
| |  | prevalence and severity of adverse side effects;                                               
|
| |  | availability of alternative treatments;                                                        
|
| |  | cost effectiveness;                                                                            
|
| |  | effectiveness of our marketing strategy and the pricing of any
    product that we may develop;
|
| |  | publicity concerning our products or competitive
    products; and                             
|
| |  | our ability to obtain third-party coverage or reimbursement.                                   





If we are unable to establish our sales, marketing and
distribution capabilities, we will be unable to successfully
commercialize our product candidates.




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If we are required to seek alternative sources for bacillus
Calmette-Guérin, our clinical trials and/or marketing of
Canvaxin could be disrupted.






We may encounter difficulties managing our growth, which
could adversely affect our results of operations.




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If we do not successfully integrate the operations of any
future acquisitions, we may incur unexpected costs and
disruptions to our business.






| |   |                                                                                                                                   
| | - | ----------------------------------------------------------------------------------------------------------------------------------
| |  | exposure to unknown liabilities;                                                                                                  
|
| |  | disruption of our business and diversion of our
    managements time and attention to developing acquired
    technologies;      
|
| |  | increased amortization expenses;                                                                                                  
|
| |  | higher than expected acquisition and integration costs;                                                                           
|
| |  | difficulty and cost in combining the operations and personnel of
    acquired businesses with our operations and personnel;       
|
| |  | impairment of relationships with key suppliers or customers of
    acquired businesses due to changes in management and ownership;
|
| |  | inability to retain key employees of acquired
    businesses; and                                                                 
|
| |  | incurrence of substantial debt or dilutive issuances of
    securities to pay for acquisitions.                                   



If we are unable to retain our management, scientific staff
and scientific advisors or to attract additional qualified
personnel, our product development efforts will be seriously
jeopardized.










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Any claims relating to our improper handling, storage or
disposal of biological, hazardous and radioactive materials
could be time-consuming and costly.




Product liability claims may damage our reputation and, if
insurance proves inadequate, the product liability claims may
harm our business.










| |                                                                  
| | -----------------------------------------------------------------
| | Risks Related to Our Financial Results and Need for
    Financing

We have a history of net losses, which we expect to continue
for at least several years and, as a result, we are unable to
predict the extent of any future losses or when we will become
profitable.




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Our operating and financial flexibility, including our
ability to borrow money, is limited by certain debt
arrangements.








| |   |                                                                                                                                
| | - | -------------------------------------------------------------------------------------------------------------------------------
| |  | financial reporting;                                                                                                           
|
| |  | limitation on liens;                                                                                                           
|
| |  | limitations on the occurrence of future indebtedness;                                                                          
|
| |  | maintenance of a minimum amount of cash in deposit accounts of
    our lenders or in the accounts of affiliates of our lenders;
|
| |  | limitations on mergers and other consolidations;                                                                               
|
| |  | limitations on dividends;                                                                                                      
|
| |  | limitations on investments; and                                                                                                
|
| |  | limitations on transactions with affiliates.                                                                                   









| |   |                                                                                                                                                                                                                           
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | our ability to obtain additional financing, if necessary, for
    working capital, capital expenditures, acquisitions or other
    purposes may be impaired or such financing may not be available
    on favorable terms;
|
| |  | payments on our indebtedness will reduce the funds that would
    otherwise be available for our operations and future business
    opportunities;                                                                        
|
| |  | we may be more highly leveraged than our competitors, which may
    place us at a competitive disadvantage;                                                                                                               

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| |   |                                                                                                                                                                         
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | our debt level reduces our flexibility in responding to changing
    business and economic conditions; and                                                              
|
| |  | there would be an adverse effect on our business and financial
    condition if we are unable to service our indebtedness or obtain
    additional financing, as needed.

If we fail to obtain the capital necessary to fund our
operations, we will be unable to develop or commercialize
Canvaxin or other product candidates and our ability to operate
as a going concern may be adversely affected.






| |   |                                                                                                                                                                                                                                                                                                            
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the completion of clinical testing for Canvaxin in
    advanced-stage melanoma, potential clinical testing of Canvaxin
    in other indications, and the initiation of clinical trials for
    our specific active immunotherapeutic product candidates that
    target the EGF receptor signaling pathway;
|
| |  | progress in preclinical development and clinical trials for our
    other product candidates;                                                                                                                                                                                                              
|
| |  | the time and costs involved in obtaining and maintaining
    regulatory approvals for Canvaxin and our other product
    candidates;                                                                                                                                                                       
|
| |  | progress in, and the costs of, our research and development
    programs;                                                                                                                                                                                                                                  
|
| |  | the scope, prioritization and number of programs we pursue;                                                                                                                                                                                                                                                
|
| |  | the costs involved in preparing, filing, prosecuting,
    maintaining, enforcing and defending patent and other
    intellectual property claims;                                                                                                                                                          
|
| |  | the costs of expanding our manufacturing capabilities;                                                                                                                                                                                                                                                     
|
| |  | our ability to enter into corporate collaborations and the terms
    and success of these collaborations;                                                                                                                                                                                                  
|
| |  | our acquisition and development of technologies and product
    candidates; and                                                                                                                                                                                                                            
|
| |  | competing technological and market developments.                                                                                                                                                                                                                                                           



We have a history of losses and expect to incur substantial
losses and negative operating cash flows for the foreseeable
future, and we may never achieve sustained profitability.




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Our quarterly operating results and stock price may fluctuate
significantly.






| |   |                                                                                                                                                                                                                                     
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the status of development of Canvaxin and our other product
    candidates;                                                                                                                                                         
|
| |  | the time at which we enter into research and license agreements
    with strategic collaborators that provide for payments to us,
    and the timing and accounting treatment of payments to us, if
    any, under those agreements;
|
| |  | whether or not we achieve specified research or
    commercialization milestones under any agreement that we enter
    into with collaborators and the timely payment by commercial
    collaborators of any amounts payable to us; 
|
| |  | the addition or termination of research programs or funding
    support;                                                                                                                                                            
|
| |  | the timing of milestone and other payments that we may be
    required to make to others; and                                                                                                                                       
|
| |  | variations in the level of expenses related to our product
    candidates or potential product candidates during any given
    period.                                                                                              



Future changes in financial accounting standards or practices
or existing taxation rules or practices may cause adverse
unexpected financial reporting fluctuations and affect our
reported results of operations.


Share-Based Payment




| |                                                          
| | ---------------------------------------------------------
| | Risks Related to Our Intellectual Property and Litigation

Our success depends upon our ability to protect our
intellectual property and our proprietary technology.




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| |   |                                                                                                                                                          
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | obtain and maintain patents to protect our product candidates
    and the related underlying technology;                                                 
|
| |  | obtain and maintain licenses to use certain technologies of
    third parties, which may be protected by patents or subject to
    U.S. regulation;      
|
| |  | maintain our patents, and, along with our collaborators and
    licensors, those of our collaborators and our licensors, that we
    use in our business;
|
| |  | protect our trade secrets and know-how; and                                                                                                              
|
| |  | operate without infringing the intellectual property and
    proprietary rights of others.                                                               

Our success depends on whether we are able to maintain and
enforce our licensing arrangements with various third party
licensors.






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If we were to materially breach any of our license or
collaboration agreements, we could lose our ability to
commercialize the related technologies, and our business could
be materially and adversely affected. We cannot be certain we
will be able to obtain additional patent protection to protect
our product candidates and technology.




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| |   |                                                                                                                                                                                                                                                                                                   
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | we might not have been the first to make the inventions covered
    by each of our patents and our pending patent applications;                                                                                                                                                                   
|
| |  | we might not have been the first to file patent applications for
    these inventions;                                                                                                                                                                                                            
|
| |  | others may independently develop similar or alternative
    technologies or duplicate any of our technologies;                                                                                                                                                                                    
|
| |  | it is possible that none of our pending patent applications will
    result in issued patents;                                                                                                                                                                                                    
|
| |  | any patents under which we hold rights may not provide us with a
    basis for commercially-viable products, may not provide us with
    any competitive advantages or may be challenged by third parties
    as not infringed, invalid, or unenforceable under United States
    or foreign laws;
|
| |  | any of the issued patents under which we hold rights may not be
    valid or enforceable; or                                                                                                                                                                                                      
|
| |  | we may develop additional proprietary technologies that are not
    patentable and which may not be adequately protected through
    trade secrets, for example if a competitor independently
    develops duplicative, similar, or alternative technologies.                                     



If we are not able to protect and control our unpatented
trade secrets, know-how and other technological innovation, we
may suffer competitive harm.






If our products violate third party patents or were derived
from a patients cell lines without the patients
consent, we could be forced to pay royalties or cease selling
our products.






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We may be involved in lawsuits or proceedings to protect or
enforce our patent rights, trade secrets or know-how, which
could be expensive and time consuming.








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| |                                                                              
| | -----------------------------------------------------------------------------
| | Risks Related to the Securities Markets and Ownership of Our
    Common Stock

Future sales of our common stock may cause our stock price to
decline.




Our stock price may be volatile, and you may lose all or a
substantial part of your investment.






| |   |                                                                                                                                                                                                                                                                                                                                                                         
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | changes in the regulatory status of our product candidates,
    including results of our clinical trials for Canvaxin and our
    specific active immunotherapeutic product candidates targeting
    the EGF receptor signaling pathway, significant contracts, new
    technologies, acquisitions, commercial relationships, joint
    ventures or capital commitments;
|
| |  | announcements of the results of clinical trials by companies
    with product candidates in the same therapeutic category as our
    product candidates;                                                                                                                                                                                                                
|
| |  | events affecting Serono or our collaboration agreement with
    Serono;                                                                                                                                                                                                                                                                                                 
|
| |  | fluctuations in stock market prices and trading volumes of
    similar companies;                                                                                                                                                                                                                                                                                       
|
| |  | announcements of new products or technologies, commercial
    relationships or other events by us or our competitors;                                                                                                                                                                                                                                                   
|
| |  | variations in our quarterly operating results;                                                                                                                                                                                                                                                                                                                          
|
| |  | changes in securities analysts estimates of our financial
    performance;                                                                                                                                                                                                                                                                                             
|
| |  | changes in accounting principles;                                                                                                                                                                                                                                                                                                                                       
|
| |  | sales of large blocks of our common stock, including sales by
    our executive officers, directors and significant stockholders;                                                                                                                                                                                                                                       
|
| |  | additions or departures of key personnel; and                                                                                                                                                                                                                                                                                                                           
|
| |  | discussion of CancerVax or our stock price by the financial and
    scientific press and online investor communities such as chat
    rooms.                                                                                                                                                                                                                            

If our officers and directors choose to act together, they
can significantly influence our management and operations in a
manner that may be in their best interests and not in the best
interests of other stockholders.




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Our stockholder rights plan, anti-takeover provisions in our
organizational documents and Delaware law may discourage or
prevent a change in control, even if an acquisition would be
beneficial to our stockholders, which could affect our stock
price adversely and prevent attempts by our stockholders to
replace or remove our current management.






| |   |                                                                                                                                                                
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | dividing our board of directors into three classes serving
    staggered three-year terms;                                                                     
|
| |  | prohibiting our stockholders from calling a special meeting of
    stockholders;                                                                               
|
| |  | permitting the issuance of additional shares of our common stock
    or preferred stock without stockholder approval;                                          
|
| |  | prohibiting our stockholders from making certain changes to our
    certificate of incorporation or bylaws except with
    662/3%
    stockholder approval; and
|
| |  | requiring advance notice for raising matters of business or
    making nominations at stockholders meetings.                                                  








|        |           
|------- | ----------
|Item 2. | Properties









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|        |                  
|------- | -----------------
|Item 3. | Legal Proceedings








|        |                                                    
|------- | ---------------------------------------------------
|Item 4. | Submission of Matters to a Vote of Security Holders



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PART II







|        |                                                                          
|------- | -------------------------------------------------------------------------
|Item 5. | Market for Registrants Common Equity and Related
    Stockholder Matters

Market Information




|                                            |  |      |       |  |     |   |      | 
|------------------------------------------- |  | ---- | ----- |  | --- | - | ---- | 
|                                            |  | High |       |  | Low |  
|                                            |  |      |       |  |     |  
|Year Ended December 31, 2003                |  |      |       |  |     |   |      | 
|Fourth Quarter (beginning October 30, 2003) |  | $    | 13.24 |  |     | $ | 8.82 | 
|Year Ended December 31, 2004                |  |      |       |  |     |   |      | 
|First Quarter                               |  | $    | 13.35 |  |     | $ | 9.25 | 
|Second Quarter                              |  | $    | 12.27 |  |     | $ | 6.99 | 
|Third Quarter                               |  | $    | 8.93  |  |     | $ | 5.55 | 
|Fourth Quarter                              |  | $    | 11.45 |  |     | $ | 7.38 | 



Dividend Policy




Recent Sales of Unregistered Securities




Use of Proceeds






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| |   |                                                                                                                                     
| | - | ------------------------------------------------------------------------------------------------------------------------------------
| |  | advance the development of our specific active immunotherapeutic
    product candidates that target the EGFR signaling pathway;     
|
| |  | advance our preclinical anti-angiogenesis and telomere signaling
    t-oligonucleotide product candidates into clinical development;
|
| |  | expand our research and development programs;                                                                                       
|
| |  | in-license technology and acquire or invest in businesses,
    products or technologies that are complementary to our
    own; and  
|
| |  | fund other working capital and general corporate purposes.                                                                          





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|        |                                      
|------- | -------------------------------------
|Item 6. | Selected Consolidated Financial Data.



|                                                                                             |                                                      |                                          |         |        |      |   |         |        |   |   |         |        |   |      |         |        |   |   |        |       | 
|-------------------------------------------------------------------------------------------- | ---------------------------------------------------- | ---------------------------------------- | ------- | ------ | ---- | - | ------- | ------ | - | - | ------- | ------ | - | ---- | ------- | ------ | - | - | ------ | ----- | 
|                                                                                             |                                                      | Years Ended December 31,                 |        
|                                                                                             |                                                      |                                          |        
|                                                                                             |                                                      | 2004                                     |         |        | 2003 |   |         | 2002   |   |   | 2001    |        |   | 2000 |        
|                                                                                             |                                                      |                                          |         |        |      |   |         |        |   |   |         |        |   |      |        
|                                                                                             |                                                      | (In thousands, except per share amounts) |        
|Consolidated Statement of Operations Data:                                                   |                                                      |                                          |         |        |      |   |         |        |   |   |         |        |   |      |         |        |   |   |        |      
|Revenues:                                                                                    |                                                      |                                          |         |        |      |   |         |        |   |   |         |        |   |      |         |        |   |   |        |      
|                                                                                             | License fee                                          |                                          | $       | 316    |      |   | $       |       |   |   | $       |       |   |      | $       |       |   |   | $      |      | 
|                                                                                             | Collaborative agreement                              |                                          |         | 1,210  |      |   |         |       |   |   |         |       |   |      |         |       |   |   |        |      | 
|                                                                                             |                                                      |                                          |         |        |      |   |         |        |   |   |         |        |   |      |        
|Total revenues                                                                               |                                                      |                                          | 1,526   |        |      |   |        |        |   |   |        |        |   |      |        |        |   |   |       |      
|                                                                                             |                                                      |                                          |         |        |      |   |         |        |   |   |         |        |   |      |        
|Operating expenses:                                                                          |                                                      |                                          |         |        |      |   |         |        |   |   |         |        |   |      |         |        |   |   |        |      
|                                                                                             | Research and development                             |                                          | $       | 43,102 |      |   | $       | 27,725 |   |   | $       | 24,517 |   |      | $       | 13,910 |   |   | $      | 3,495 | 
|                                                                                             | General and administrative                           |                                          |         | 12,310 |      |   |         | 6,826  |   |   |         | 6,514  |   |      |         | 5,441  |   |   |        | 765   | 
|                                                                                             | Amortization of employee stock-based compensation(1) |                                          |         | 1,864  |      |   |         | 2,643  |   |   |         | 1,412  |   |      |         |       |   |   |        |      | 
|                                                                                             | Purchased in-process research and development        |                                          |         |       |      |   |         |       |   |   |         | 2,840  |   |      |         |       |   |   |        |      | 
|                                                                                             |                                                      |                                          |         |        |      |   |         |        |   |   |         |        |   |      |        
|Total operating expenses                                                                     |                                                      |                                          | 57,276  |        |      |   | 37,194  |        |   |   | 35,283  |        |   |      | 19,351  |        |   |   | 4,260  |      
|                                                                                             |                                                      |                                          |         |        |      |   |         |        |   |   |         |        |   |      |        
|Other income (expense):                                                                      |                                                      |                                          |         |        |      |   |         |        |   |   |         |        |   |      |         |        |   |   |        |      
|                                                                                             | Option fee income                                    |                                          |         |       |      |   |         |       |   |   |         |       |   |      |         |       |   |   |        | 1,000 | 
|                                                                                             | Interest income                                      |                                          |         | 920    |      |   |         | 553    |   |   |         | 691    |   |      |         | 909    |   |   |        | 147   | 
|                                                                                             | Interest expense                                     |                                          |         | (756   | )    |   |         | (932   | ) |   |         | (621   | ) |      |         | (140   | ) |   |        |      | 
|                                                                                             |                                                      |                                          |         |        |      |   |         |        |   |   |         |        |   |      |        
|Total other income (expense)                                                                 |                                                      |                                          | 164     |        |      |   | (379    | )      |   |   | 70      |        |   |      | 769     |        |   |   | 1,147  |      
|                                                                                             |                                                      |                                          |         |        |      |   |         |        |   |   |         |        |   |      |        
|Net loss                                                                                     |                                                      |                                          | (55,586 | )      |      |   | (37,573 | )      |   |   | (35,213 | )      |   |      | (18,582 | )      |   |   | (3,113 | )    
|Accretion to redemption value of redeemable convertible
    preferred stock                  |                                                      |                                          |        |        |      |   | (7,867  | )      |   |   | (7,635  | )      |   |      | (4,105  | )      |   |   |       |      
|Deemed dividend resulting from beneficial conversion feature on
    Series C preferred stock |                                                      |                                          |        |        |      |   | (14,775 | )      |   |   |        |        |   |      |        |        |   |   |       |      
|                                                                                             |                                                      |                                          |         |        |      |   |         |        |   |   |         |        |   |      |        
|Net loss applicable to common stockholders                                                   |                                                      | $                                        | (55,586 | )      |      | $ | (60,215 | )      |   | $ | (42,848 | )      |   | $    | (22,687 | )      |   | $ | (3,113 | )    
|                                                                                             |                                                      |                                          |         |        |      |   |         |        |   |   |         |        |   |      |        
|Basic and diluted net loss per share(2)(3)                                                   |                                                      | $                                        | (2.08   | )      |      | $ | (13.30  | )      |   | $ | (153.85 | )      |   | $    | (266.02 | )      |   | $ | (0.58  | )    
|                                                                                             |                                                      |                                          |         |        |      |   |         |        |   |   |         |        |   |      |        
|Weighted average shares used to compute basic and diluted net
    loss per share(2)(3)       |                                                      |                                          | 26,733  |        |      |   | 4,527   |        |   |   | 279     |        |   |      | 85      |        |   |   | 5,361  |      
|                                                                                             |                                                      |                                          |         |        |      |   |         |        |   |   |         |        |   |      |        

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|    |                                                                                                                                                             
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Amortization of employee stock-based compensation is allocated
    among operating expense categories as follows for 2004, 2003 and
    2002 (in thousands):

|                           |  |      |       |  |      |   |       |      |  |   |       | 
|-------------------------- |  | ---- | ----- |  | ---- | - | ----- | ---- |  | - | ----- | 
|                           |  | 2004 |       |  | 2003 |   |       | 2002 | 
|                           |  |      |       |  |      |   |       |      | 
|Research and development   |  | $    | 531   |  |      | $ | 838   |      |  | $ | 379   | 
|General and administrative |  |      | 1,333 |  |      |   | 1,805 |      |  |   | 1,033 | 
|                           |  |      |       |  |      |   |       |      | 
|                           |  |      | 1,864 |  |      |   | 2,643 |      |  |   | 1,412 | 
|                           |  |      |       |  |      |   |       |      | 



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | As a result of the conversion of our preferred stock into
    20.1 million shares of our common stock upon completion of
    our initial public offering on November 4, 2003, there is a
    lack of comparability in the basic and diluted net loss per
    share amounts for the periods presented. Please reference
    Note 1 to our consolidated financial statements included
    elsewhere in this Form 10-K for an unaudited pro forma
    basic and diluted net loss per share calculation for these
    periods.
|   
|(3) | In December 2000, we exchanged 6.0 million shares of our
    common stock for shares of Junior preferred stock on a 1-for-4.4
    basis.                                                                                                                                                                                                                                                                                                                                                                                  

|                                                         |  |                    |          |   |      |   |          |      |  |   |         |   |  |      |         |   |  |   |        |  
|-------------------------------------------------------- |  | ------------------ | -------- | - | ---- | - | -------- | ---- |  | - | ------- | - |  | ---- | ------- | - |  | - | ------ | -
|                                                         |  | As of December 31, |         
|                                                         |  |                    |         
|                                                         |  | 2004               |          |   | 2003 |   |          | 2002 |  |   | 2001    |   |  | 2000 |        
|                                                         |  |                    |          |   |      |   |          |      |  |   |         |   |  |      |        
|                                                         |  | (In thousands)     |         
|Consolidated Balance Sheet Data:                         |  |                    |          |   |      |   |          |      |  |   |         |   |  |      |         |   |  |   |        |  
|Cash, cash equivalents and securities available-for-sale |  | $                  | 65,073   |   |      | $ | 107,092  |      |  | $ | 36,201  |   |  | $    | 10,103  |   |  | $ | 29,194 |  
|Total assets                                             |  |                    | 116,160  |   |      |   | 127,007  |      |  |   | 55,187  |   |  |      | 20,795  |   |  |   | 32,854 |  
|Long-term debt, net of current portion                   |  |                    | 6,355    |   |      |   | 1,811    |      |  |   | 7,379   |   |  |      | 3,353   |   |  |   | 625    |  
|Redeemable convertible preferred stock                   |  |                    |         |   |      |   |         |      |  |   | 96,582  |   |  |      | 32,455  |   |  |   |       |  
|Accumulated deficit                                      |  |                    | (184,778 | ) |      |   | (129,192 | )    |  |   | (68,977 | ) |  |      | (26,129 | ) |  |   | (3,442 | )
|Total stockholders equity (deficit)                     |  |                    | 71,458   |   |      |   | 112,773  |      |  |   | (55,878 | ) |  |      | (20,663 | ) |  |   | 1,568  |  

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|        |                                                                                           
|------- | ------------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis of Financial
    Condition and Results of Operations.

The following discussion contains forward-looking statements,
which involve risks and uncertainties. Our actual results could
differ materially from those anticipated in these
forward-looking statements as a result of various factors,
including those set forth under the caption
Business  Risk Factors. This
Managements Discussion and Analysis of Financial Condition
and Results of Operations should be read in conjunction with our
consolidated financial statements and related notes included
elsewhere in this Form 10-K.


Overview










| |   |                                                                                                                                                                                                                                                               
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | continue the development and prepare for the commercialization
    of our lead specific active immunotherapy product candidate,
    Canvaxin, in advanced-stage melanoma, and explore the potential
    for clinical testing of Canvaxin in other indications;
|
| |  | scale-up and validate our manufacturing operations and improve
    our quality systems;                                                                                                                                                                       
|
| |  | advance the development of our specific active immunotherapeutic
    product candidates that target the EGFR signaling pathway;                                                                                                                               
|
| |  | advance our preclinical anti-angiogenesis and telomere signaling
    t-oligonucleotide product candidates into clinical development;                                                                                                                          
|
| |  | expand our research and development programs; and                                                                                                                                                                                                             

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| |   |                                                                                                                           
| | - | --------------------------------------------------------------------------------------------------------------------------
| |  | in-license technology and acquire or invest in businesses,
    products or technologies that are complementary to our own.









Research and Development






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Critical Accounting Policies and Estimates






| |                    
| | -------------------
| | Revenue Recognition

Revenue Recognition in Financial
Statements Revenue Recognition,
corrected copy Accounting for Revenue Arrangements
with Multiple Deliverables






65



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| |                                
| | -------------------------------
| | Impairment of Long-Lived Assets

Accounting for the Impairment or
Disposal of Long-Lived Assets




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| |         
| | --------
| | Goodwill

Goodwill and Other
Intangible Assets




Results of Operations






| |                                                             
| | ------------------------------------------------------------
| | Comparison of the Years Ended December 31, 2004 and
    2003

Revenues.


Research and Development Expenses.


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General and Administrative Expenses.




Amortization of Employee Stock-based Compensation.


Interest Income.


Interest Expense.




| |                                                             
| | ------------------------------------------------------------
| | Comparison of the Years Ended December 31, 2003 and
    2002

Research and Development Expenses.


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General and Administrative Expenses.




Amortization of Employee Stock-based Compensation.


Purchased In-Process Research and Development.


Interest Income.


Interest Expense.


Liquidity and Capital Resources






69



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| |   |                                                                                                                                                                      
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the progress of our clinical trials;                                                                                                                                 
|
| |  | the progress of our research and preclinical activities;                                                                                                             
|
| |  | the number and scope of our research programs;                                                                                                                       
|
| |  | our ability to establish and maintain strategic collaborations;                                                                                                      
|
| |  | the costs involved in enforcing or defending patent claims and
    other intellectual property rights;                                                               
|
| |  | the costs and timing of regulatory approvals;                                                                                                                        
|
| |  | the costs of establishing or expanding manufacturing, sales and
    distribution capabilities;                                                                       
|
| |  | the success of the commercialization of Canvaxin;                                                                                                                    
|
| |  | the risk of product liability claims inherent in the
    manufacturing, testing and marketing of therapies for treating
    people with cancer or other diseases; and
|
| |  | the extent to which we acquire or invest in other products,
    technologies and businesses.                                                                         



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Contractual Obligations




|                                                                                 |  |       |        |                        |        |   |        |       |  |        |       |  |         |       |       |  |  |   |       | 
|-------------------------------------------------------------------------------- |  | ----- | ------ | ---------------------- | ------ | - | ------ | ----- |  | ------ | ----- |  | ------- | ----- | ----- |  |  | - | ----- | 
|                                                                                 |  |       |        | Payments Due by Period |       
|                                                                                 |  |       |        |                        |       
|                                                                                 |  |       |        | Less than              |        |   | 1 to 3 |       |  | 4 to 5 |       |  | After 5 |      
|Contractual Obligations                                                          |  | Total |        |                        | 1 Year |   |        | Years |  |        | Years |  |         | Years |      
|                                                                                 |  |       |        |                        |        |   |        |       |  |        |       |  |         |       |      
|Operating leases                                                                 |  | $     | 21,140 |                        |        | $ | 2,697  |       |  | $      | 5,601 |  |         | $     | 5,989 |  |  | $ | 6,853 | 
|Contractual payments under licensing and research and
    development agreements |  |       | 4,600  |                        |        |   | 2,980  |       |  |        | 1,110 |  |         |       | 110   |  |  |   | 400   | 
|Equipment and tenant improvement loans                                           |  |       | 6,630  |                        |        |   | 400    |       |  |        | 2,952 |  |         |       | 3,278 |  |  |   |      | 
|Installment obligation due to JWCI                                               |  |       | 250    |                        |        |   | 125    |       |  |        | 125   |  |         |       |      |  |  |   |      | 
|                                                                                 |  |       |        |                        |        |   |        |       |  |        |       |  |         |       |      
|                                                                                 |  | $     | 32,620 |                        |        | $ | 6,202  |       |  | $      | 9,788 |  |         | $     | 9,377 |  |  | $ | 7,253 | 
|                                                                                 |  |       |        |                        |        |   |        |       |  |        |       |  |         |       |      





Related Party Transactions




Off-Balance Sheet Arrangements




Recent Accounting Pronouncements


Share-Based
Payment


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The
Meaning of Other-Than-Temporary Impairment and Its Application
to Certain Investments







|         |                                                           
|-------- | ----------------------------------------------------------
|Item 7A. | Quantitative and Qualitative Disclosures About Market Risk










|        |                                            
|------- | -------------------------------------------
|Item 8. | Financial Statements and Supplementary Data








|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 9. | Changes in and Disagreements With Accountants on Accounting
    and Financial Disclosures








|         |                        
|-------- | -----------------------
|Item 9A. | Controls and Procedures

Conclusion Regarding the Effectiveness of Disclosure Controls
and Procedures




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Changes in Internal Control Over Financial Reporting




Managements Report on Internal Control Over Financial
Reporting






| |                                                                                                                                                                                                                                                                                                                                              
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) Pertain to the maintenance of records that in
    reasonable detail accurately and fairly reflect the transactions
    and dispositions of our assets;                                                                                                                                                                                   
|
| | (2) Provide reasonable assurance that transactions are
    recorded as necessary to permit preparation of financial
    statements in accordance with generally accepted accounting
    principles, and that our receipts and expenditures are being
    made only in accordance with authorizations of our management
    and directors; and
|
| | (3) Provide reasonable assurance regarding prevention or
    timely detection of unauthorized acquisition, use or disposition
    of our assets that could have a material effect on the financial
    statements.                                                                                                                           



Internal Control 
Integrated Framework Internal
Control  Integrated Framework


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Report of Independent Registered Public Accounting Firm on
Internal Control Over Financial Reporting






Internal Control  Integrated Framework












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| |                          
| | -------------------------
| | /s/ Ernst & Young
    LLP










|         |                  
|-------- | -----------------
|Item 9B. | Other Information



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PART III







|         |                                                   
|-------- | --------------------------------------------------
|Item 10. | Directors and Executive Officers of the Registrant








|         |                       
|-------- | ----------------------
|Item 11. | Executive Compensation








|         |                                                                   
|-------- | ------------------------------------------------------------------
|Item 12. | Security Ownership of Certain Beneficial Owners and
    Management








|         |                                               
|-------- | ----------------------------------------------
|Item 13. | Certain Relationships and Related Transactions








|         |                                       
|-------- | --------------------------------------
|Item 14. | Principal Accounting Fees and Services



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PART IV







|         |                                                                    
|-------- | -------------------------------------------------------------------
|Item 15. | Exhibits, Financial Statement Schedules and Reports on
    Form 8-K

Documents filed as part of this report.








Exhibits.


|        |          |  |             |                                                                                                                                                                                                                                                                                                                                                                                                          
|------- | -------- |  | ----------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |          |  |            
|Number  |          |  | Description
|        |          |  |            
|        | 2.01(1)  |  |             | Agreement and Plan of Merger, dated January 8, 2002, by and
    among CancerVax Corporation, CMI Acquisition Corp. and
    Cell-Matrix, Inc.                                                                                                                                                                                                                                                             
|        | 3.01(2)  |  |             | Amended and Restated Certificate of Incorporation                                                                                                                                                                                                                                                                                                                                                        
|        | 3.02(2)  |  |             | Amended and Restated Bylaws                                                                                                                                                                                                                                                                                                                                                                              
|        | 3.03(3)  |  |             | Certificate of Designations for Series A Junior
    Participating Preferred Stock of CancerVax Corporation                                                                                                                                                                                                                                                                                               
|        | 4.01(4)  |  |             | Form of Specimen Common Stock Certificate                                                                                                                                                                                                                                                                                                                                                                
|        | 4.02(5)  |  |             | Third Amended and Restated Investors Rights Agreement,
    dated as of December 15, 2004, by and between CancerVax
    Corporation, Serono B.V. and the investors listed on
    Schedule A thereto                                                                                                                                                                                                      
|        | 4.03(1)  |  |             | Form of Warrant to Purchase Vendor Preferred Stock, Series 1                                                                                                                                                                                                                                                                                                                                             
|        | 4.04(1)  |  |             | Warrant to Purchase Vendor Preferred Stock, Series 2, dated
    September 6, 2002, issued to Venture Lending &
    Leasing III, LLC                                                                                                                                                                                                                                                                      
|        | 4.05(1)  |  |             | Form of Incidental Registration Rights Agreement                                                                                                                                                                                                                                                                                                                                                         
|        | 4.06(3)  |  |             | Rights Agreement, dated as of November 3, 2004, between
    CancerVax Corporation and Mellon Investor Services LLC, which
    includes the form of Certificate of Designations of the
    Series A Junior Participating Preferred Stock of CancerVax
    Corporation as Exhibit A, the form of Right Certificate as
    Exhibit B and the Summary of Rights to Purchase Preferred
    Shares as Exhibit C
|        | 10.01(1) |  |             | Standard Industrial/Commercial Single-Tenant Lease-Net, dated
    August 31, 2001, between Blackmore Airport Centre and
    CancerVax Corporation                                                                                                                                                                                                                                                        
|        | 10.02(1) |  |             | Lease, made as of July 22, 1999, between Spieker
    Properties, L.P. and John Wayne Cancer Institute                                                                                                                                                                                                                                                                                                    
|        | 10.03(1) |  |             | Agreement of Lease Assignment, dated as of August 4, 2000,
    between John Wayne Cancer Institute and CancerVax Corporation                                                                                                                                                                                                                                                                             
|        | 10.04(1) |  |             | First Amendment to Lease, entered into as of October 1,
    2001, between EOP  Marina Business Center, L.L.C. (as
    successor in interest to Spieker Properties, L.P.) and CancerVax
    Corporation (as successor in interest to John Wayne Cancer
    Institute)                                                                                                                                    
|        | 10.05(1) |  |             | Second Amendment to Lease, entered into as of September 4,
    2002, between EOP  Marina Business Center, L.L.C. (as
    successor in interest to Spieker Properties, L.P.) and CancerVax
    Corporation (as successor in interest to John Wayne Cancer
    Institute)                                                                                                                                 
|        | 10.06(6) |  |             | Third Amendment to Lease, entered into as of November 14,
    2003, between CA-Marina Business Center Limited Partnership and
    CancerVax Corporation                                                                                                                                                                                                                                                  
|        | 10.07(7) |  |             | Fourth Amendment to Lease entered into as of January 18,
    2005, between Marina Business Center, LLC and CancerVax
    Corporation                                                                                                                                                                                                                                                                     
|        | 10.08(8) |  |             | Standard Industrial/ Commercial Multi-Tenant Lease 
    Net for 18120 Central Avenue, Los Angeles, California, executed
    as of August 18, 2004                                                                                                                                                                                                                                                       

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|        |           |   |             |                                                                                                                                                                                                              
|------- | --------- | - | ----------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |           |   |            
|Number  |           |   | Description
|        |           |   |            
|        | 10.09(1)# |   |             | Third Amended and Restated 2000 Stock Incentive Plan                                                                                                                                                         
|        | 10.10(1)# |   |             | 2003 Employee Stock Purchase Plan                                                                                                                                                                            
|        | 10.11(9)# |   |             | CancerVax 2004 Management Incentive Compensation Plan                                                                                                                                                        
|        | 10.12(9)# |   |             | CancerVax 2005 Management Incentive Compensation Plan                                                                                                                                                        
|        | 10.13(1)# |   |             | Form of Indemnification Agreement entered into by CancerVax
    Corporation with its directors and executive officers                                                                                        
|        | 10.14(8)# |   |             | Form of Amended and Restated Employment Agreement, dated as of
    November 15, 2004, between CancerVax Corporation and its
    executive officers                                                           
|        | 10.15(8)# |   |             | Amended and Restated Employment Agreement, dated as of
    November 15, 2004, between CancerVax Corporation and
    David F. Hale                                                                            
|        | 10.16(1)  |   |             | Assignment of Cross-License Agreement, dated as of July 31,
    2000, by and among 3DLM, Inc., the John Wayne Cancer Institute
    and CancerVax Corporation                                                 
|        | 10.17(1) |   |             | Cross-License Agreement, dated as of July 24, 1998, by and
    between CancerVax, Inc. and the John Wayne Cancer Institute                                                                                   
|        | 10.18(1) |   |             | Agreement, dated as July 31, 2000, by and between Cancer
    Diagnostic Laboratories, Inc. and CancerVax Corporation                                                                                         
|        | 10.19(1)  |   |             | Amendment No. 1 to CDL Agreement, dated as of
    December 15, 2000, by and between Cancer Diagnostic
    Laboratories, Inc. and CancerVax Corporation                                                       
|        | 10.20(1)  |   |             | Second Amendment to CDL Agreement, dated as of May 1, 2002,
    between Cancer Diagnostic Laboratories, Inc. and CancerVax
    Corporation                                                                   
|        | 10.21(1)  |   |             | Contribution of Technology and Exchange Agreement, dated as of
    December 15, 2000, by and between Donald L.
    Morton, M.D. and CancerVax Corporation                                                    
|        | 10.22(1)  |   |             | First Amendment to Contribution of Technology and Exchange
    Agreement, entered into as of May 1, 2002, between Donald
    L. Morton, M.D. and CancerVax Corporation                                       
|        | 10.23(1)  |   |             | Fetal Antigen License Agreement, dated as of December 15,
    2000, by and between Donald L. Morton, M.D. and CancerVax
    Corporation                                                                      
|        | 10.24(1) |   |             | License Agreement, dated May 23, 2000, by and between the
    University of Southern California and Bio-Management, Inc.                                                                                     
|        | 10.25(1) |   |             | License Agreement, dated September 19, 1999, by and between
    the University of Southern California and Bio-Management, Inc.                                                                               
|        | 10.26(1) |   |             | Development and Sublicensing Agreement, effective as of
    March 5, 2001, by and among EyeTech Pharmaceuticals, Inc.
    and Cell-Matrix, Inc.                                                              
|        | 10.27(1) |   |             | License Agreement, dated October 26, 2001, by and between
    The Scripps Research Institute and Cell-Matrix, Inc.                                                                                           
|        | 10.28(1) |   |             | License Agreement, effective as of June 2, 2003, between
    New York University and Cell-Matrix, Inc.                                                                                                       
|        | 10.29(1)  |   |             | Assignment of Supply Agreement, entered into as of July 31,
    2000, between 3DLM, Inc., f/k/a CancerVax, Inc., and CancerVax
    Corporation                                                               
|        | 10.30(1) |   |             | Supply Agreement, entered into as of April 15, 1998,
    between CancerVax, Inc. and Organon Teknika Corporation                                                                                             
|        | 10.31(1)  |   |             | Letter Agreement, entered into as of January 22, 2002,
    between the John Wayne Cancer Institute and CancerVax Corporation                                                                                 
|        | 10.32(10) |  |             | Sublicense Agreement, dated as of March 10, 2004, by and
    among SemaCo, Inc., Barbara Gilchrest, M.D. and CancerVax
    Corporation                                                                       
|        | 10.33(11) |  |             | TGF-α HER-1 Vaccine License, Development, Manufacturing and
    Supply Agreement, dated July 13, 2004, by and among
    Tarcanta, Inc., Tarcanta, Ltd., CIMAB, S.A., YM BioSciences,
    Inc. and CIMYM, Inc.
|        | 10.34(11) |  |             | EGF Vaccine License, Development, Manufacturing and Supply
    Agreement, dated July 13, 2004, by and among Tarcanta,
    Inc., Tarcanta, Ltd. and CIMAB, S.A.                                               

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|        |           |   |             |                                                                                                                                                                                       
|------- | --------- | - | ----------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |           |   |            
|Number  |           |   | Description
|        |           |   |            
|        | 10.35(12) |  |             | Amended and Restated Collaboration Agreement, dated as of
    October 15, 2004, by and between Cell-Matrix, Inc., and
    Applied Molecular Evolution                                 
|        | 10.36(5)+ |   |             | Collaboration and License Agreement, dated as of
    December 15, 2004, by and between CancerVax Corporation and
    Serono Technologies S.A.                                         
|        | 10.37(5)  |   |             | Stock Purchase Agreement, dated as of December 15, 2004, by
    and between CancerVax Corporation and Serono B.V.                                                                     
|        | 10.38(6)  |   |             | Loan and Security Agreement, dated December 23, 2004,
    entered into between CancerVax Corporation and Silicon Valley
    Bank                                                      
|        | 10.39(13) | # |             | CancerVax Corporation Amended and Restated 2003 Equity Incentive
    Award Plan                                                                                                       
|        | 10.40(13) | # |             | Form of Time Based Vesting Option Agreement under the CancerVax
    Corporation Amended and Restated 2003 Equity Incentive Award Plan                                                 
|        | 21.01(14) |   |             | List of Subsidiaries                                                                                                                                                                  
|        | 23.01     |   |             | Consent of Ernst & Young LLP, Independent Registered
    Public Accounting Firm                                                                                                       
|        | 31.1      |   |             | Certification of Chief Executive Officer pursuant to
    Rules 13a-14 and 15d-14 promulgated under the Securities
    Exchange Act of 1934                                            
|        | 31.2      |   |             | Certification of Chief Financial Officer pursuant to
    Rules 13a-14 and 15d-14 promulgated under the Securities
    Exchange Act of 1934                                            
|        | 32*       |   |             | Certifications of Chief Executive Officer and Chief Financial
    Officer pursuant to 18 U.S.C. Section 1350, as adopted
    pursuant to Section 906 of the Sarbanes-Oxley Act of 2002






| |     |                                                                                                                                                                       
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | Incorporated by reference to CancerVax Corporations
    Registration Statement on Form S-1 filed with the
    Securities and Exchange Commission on October 24, 2003.
|
| | (2) | Incorporated by reference to CancerVax Corporations
    Quarterly Report on Form 10-Q filed with the Securities and
    Exchange Commission on December 11, 2003.    
|
| | (3) | Incorporated by reference to CancerVax Corporations
    Current Report on Form 8-K filed with the Securities and
    Exchange Commission on November 8, 2004.        
|
| | (4) | Incorporated by reference to CancerVax Corporations
    Registration Statement on Form S-3 filed with the
    Securities and Exchange Commission on December 9, 2004.
|
| | (5) | Incorporated by reference to CancerVax Corporations
    Current Report on Form 8-K filed with the Securities and
    Exchange Commission on December 21, 2004.       
|
| | (6) | Incorporated by reference to CancerVax Corporations
    Current Report on Form 8-K filed with the Securities and
    Exchange Commission on December 29, 2004.       
|
| | (7) | Incorporated by reference to CancerVax Corporations
    Current Report on Form 8-K filed with the Securities and
    Exchange Commission on January 20, 2005.        
|
| | (8) | Incorporated by reference to CancerVax Corporations
    Quarterly Report on Form 10-Q filed with the Securities and
    Exchange Commission on November 15, 2004.    
|
| | (9) | Incorporated by reference to CancerVax Corporations
    Current Report on Form 8-K filed with the Securities and
    Exchange Commission on February 14, 2005.       



|     |                                                                                                                                                                        
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(10) | Incorporated by reference to CancerVax Corporations
    Current Report on Form 8-K filed with the Securities and
    Exchange Commission on March 15, 2004.           
|    
|(11) | Incorporated by reference to CancerVax Corporations
    Quarterly Report on Form 10-Q filed with the Securities and
    Exchange Commission on August 13, 2004.       
|    
|(12) | Incorporated by reference to CancerVax Corporations
    Current Report on Form 8-K filed with the Securities and
    Exchange Commission on October 21, 2004.         
|    
|(13) | Incorporated by reference to CancerVax Corporations
    Registration Statement on Form S-8 filed with the
    Securities and Exchange Commission on November 17, 2004.

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|     |                                                                                                                                                             
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------
|(14) | Incorporated by reference to CancerVax Corporations Annual
    Report on Form 10-K filed with the Securities and Exchange
    Commission on March 29, 2004.



| |   |                                                    
| | - | ---------------------------------------------------
| | # | Indicates management contract or compensatory plan.



| |   |                                                                                                                                                                                                                                   
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | CancerVax Corporation has been granted confidential treatment
    with respect to certain portions of this exhibit (indicated
    by asterisks), which have been filed separately with the
    Securities and Exchange Commission.



| |   |                                                                                                                                                                                                             
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | + | Portions of this exhibit (indicated by asterisks) have been
    omitted pursuant to a request for confidential treatment and
    have been separately filed with the Securities and Exchange
    Commission.



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | * | These certifications are being furnished solely to accompany
    this annual report pursuant to 18 U.S.C. Section 1350,
    and are not being filed for purposes of Section 18 of the
    Securities Exchange Act of 1934 and are not to be incorporated
    by reference into any filing of CancerVax Corporation, whether
    made before or after the date hereof, regardless of any general
    incorporation language in such filing.

81



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SIGNATURES






| |                      
| | ---------------------
| | CancerVax Corporation



| |     |                  
| | --- | -----------------
| | By: | /s/ David F. Hale

| |  | 
| |  | 
| |  | 

| |                                      
| | -------------------------------------
| | David F. Hale                        
| | President and Chief Executive Officer



|                                                         |  |                                                                                                       |  |                |  | 
|-------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------- |  | -------------- |  | 
|Name                                                     |  | Title                                                                                                 |  | Date          
|                                                         |  |                                                                                                       |  |               
|                                                        
|/s/ David F. HaleDavid
    F. Hale                       |  | President, Chief Executive
    Officer and Director(Principal Executive Officer)                      |  | March 15, 2005
|                                                        
|/s/ William R. LaRueWilliam
    R. LaRue                 |  | Senior Vice President and
    Chief Financial Officer(Principal Financial and
    Accounting Officer) |  | March 15, 2005
|                                                        
|/s/ Ivor RoystonIvor
    Royston                         |  | Director(Chairman of the Board of Directors)                                                          |  | March 15, 2005
|                                                        
|/s/ Michael G. CarterMichael
    G. Carter               |  | Director                                                                                              |  | March 15, 2005
|                                                        
|/s/ Cam L. GarnerCam
    L. Garner                       |  | Director                                                                                              |  | March 15, 2005
|                                                        
|/s/ Clayburn La Force,
    Jr.Clayburn
    La Force, Jr. |  | Director                                                                                              |  | March 15, 2005
|                                                        
|/s/ Donald L. MortonDonald
    L. Morton                 |  | Director                                                                                              |  | March 15, 2005
|                                                        
|/s/ Barclay A. PhillipsBarclay
    A. Phillips           |  | Director                                                                                              |  | March 15, 2005
|                                                        
|/s/ Phillip M.
    SchneiderPhillip
    M. Schneider     |  | Director                                                                                              |  | March 15, 2005
|                                                        
|Gail
    S. Schoettler                                   |  | Director                                                                                              |  | March 15, 2005

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CANCERVAX CORPORATION


INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


|                                                                                                                       |  |      |     | 
|---------------------------------------------------------------------------------------------------------------------- |  | ---- | --- | 
|                                                                                                                       |  | Page |    
|                                                                                                                       |  |      |    
|Report of Independent Registered Public
    Accounting Firm                                                            |  |      | F-2 | 
|Consolidated Balance Sheets as of
    December 31, 2004 and 2003                                                       |  |      | F-3 | 
|Consolidated Statements of Operations for
    the years ended December 31, 2004, 2003 and 2002                         |  |      | F-4 | 
|Consolidated Statements of
    Stockholders Equity (Deficit) for the years ended
    December 31, 2004, 2003 and 2002 |  |      | F-5 | 
|Consolidated Statements of Cash Flows for
    the years ended December 31, 2004, 2003 and 2002                         |  |      | F-7 | 
|Notes to Consolidated Financial
    Statements                                                                         |  |      | F-8 | 

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM












Internal Control 
Integrated Framework




| |                          
| | -------------------------
| | /s/ Ernst & Young
    LLP





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CANCERVAX CORPORATION





CONSOLIDATED BALANCE SHEETS


(In thousands, except par value amounts)


|                                           |                                                                                                                                                                |              |         |          |      |   |         |          |  
|------------------------------------------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------ | ------- | -------- | ---- | - | ------- | -------- | -
|                                           |                                                                                                                                                                | December 31, |        
|                                           |                                                                                                                                                                |              |        
|                                           |                                                                                                                                                                | 2004         |         |          | 2003 |  
|                                           |                                                                                                                                                                |              |         |          |      |  
|Assets                                    
|Current assets:                            |                                                                                                                                                                |              |         |          |      |   |         |         
|                                           | Cash and cash equivalents                                                                                                                                      |              | $       | 40,588   |      |   | $       | 101,681  |  
|                                           | Securities available-for-sale                                                                                                                                  |              |         | 24,485   |      |   |         | 5,411    |  
|                                           | Restricted cash                                                                                                                                                |              |         |         |      |   |         | 1,000    |  
|                                           | Receivables under collaborative agreement                                                                                                                      |              |         | 26,210   |      |   |         |         |  
|                                           | Other current assets                                                                                                                                           |              |         | 1,573    |      |   |         | 917      |  
|                                           |                                                                                                                                                                |              |         |          |      |  
|Total current assets                       |                                                                                                                                                                |              | 92,856  |          |      |   | 109,009 |         
|Property and equipment, net                |                                                                                                                                                                |              | 15,650  |          |      |   | 10,529  |         
|Goodwill                                   |                                                                                                                                                                |              | 5,381   |          |      |   | 5,381   |         
|Intangibles, net                           |                                                                                                                                                                |              | 625     |          |      |   | 519     |         
|Restricted cash                            |                                                                                                                                                                |              | 1,280   |          |      |   | 1,000   |         
|Other assets                               |                                                                                                                                                                |              | 368     |          |      |   | 569     |         
|                                           |                                                                                                                                                                |              |         |          |      |  
|Total assets                               |                                                                                                                                                                | $            | 116,160 |          |      | $ | 127,007 |         
|                                           |                                                                                                                                                                |              |         |          |      |  
|                                          
|Liabilities and stockholders equity      
|Current liabilities:                       |                                                                                                                                                                |              |         |          |      |   |         |         
|                                           | Accounts payable and accrued liabilities                                                                                                                       |              | $       | 11,354   |      |   | $       | 5,650    |  
|                                           | Current portion of deferred revenue                                                                                                                            |              |         | 7,595    |      |   |         |         |  
|                                           | Current portion of long-term debt                                                                                                                              |              |         | 525      |      |   |         | 6,091    |  
|                                           |                                                                                                                                                                |              |         |          |      |  
|Total current liabilities                  |                                                                                                                                                                |              | 19,474  |          |      |   | 11,741  |         
|Deferred revenue, net of current portion   |                                                                                                                                                                |              | 17,139  |          |      |   |        |         
|Long-term debt, net of current portion     |                                                                                                                                                                |              | 6,355   |          |      |   | 1,811   |         
|Other liabilities                          |                                                                                                                                                                |              | 1,734   |          |      |   | 682     |         
|Commitments                                |                                                                                                                                                                |              |         |          |      |   |         |         
|Stockholders equity:                      |                                                                                                                                                                |              |         |          |      |   |         |         
|                                           | Preferred stock, $.00004 par value; 10,000 shares
    authorized; no shares issued and outstanding                                                             |              |         |         |      |   |         |         |  
|                                           | Common stock, $.00004 par value; 75,000 shares
    authorized; 27,808 and 26,736 shares issued and outstanding
    at December 31, 2004 and 2003, respectively |              |         | 1        |      |   |         | 1        |  
|                                           | Additional paid-in capital                                                                                                                                     |              |         | 257,582  |      |   |         | 245,314  |  
|                                           | Accumulated other comprehensive income (loss)                                                                                                                  |              |         | (71      | )    |   |         | 3        |  
|                                           | Deferred compensation                                                                                                                                          |              |         | (1,276   | )    |   |         | (3,353   | )
|                                           | Accumulated deficit                                                                                                                                            |              |         | (184,778 | )    |   |         | (129,192 | )
|                                           |                                                                                                                                                                |              |         |          |      |  
|Total stockholders equity                 |                                                                                                                                                                |              | 71,458  |          |      |   | 112,773 |         
|                                           |                                                                                                                                                                |              |         |          |      |  
|Total liabilities and stockholders equity |                                                                                                                                                                | $            | 116,160 |          |      | $ | 127,007 |         
|                                           |                                                                                                                                                                |              |         |          |      |  



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CANCERVAX CORPORATION





CONSOLIDATED STATEMENTS OF OPERATIONS


(In thousands, except per share amounts)


|                                                                                             |                                                   |                          |         |        |      |   |         |        |   |   |         |        |  
|-------------------------------------------------------------------------------------------- | ------------------------------------------------- | ------------------------ | ------- | ------ | ---- | - | ------- | ------ | - | - | ------- | ------ | -
|                                                                                             |                                                   | Years Ended December 31, |        
|                                                                                             |                                                   |                          |        
|                                                                                             |                                                   | 2004                     |         |        | 2003 |   |         | 2002   |  
|                                                                                             |                                                   |                          |         |        |      |   |         |        |  
|Revenues:                                                                                    |                                                   |                          |         |        |      |   |         |        |   |   |         |       
|                                                                                             | License fee                                       |                          | $       | 316    |      |   | $       |       |   |   | $       |       |  
|                                                                                             | Collaborative agreement                           |                          |         | 1,210  |      |   |         |       |   |   |         |       |  
|                                                                                             |                                                   |                          |         |        |      |   |         |        |  
|Total revenues                                                                               |                                                   |                          | 1,526   |        |      |   |        |        |   |   |        |       
|Operating expenses:                                                                          |                                                   |                          |         |        |      |   |         |        |   |   |         |       
|                                                                                             | Research and development                          |                          |         | 43,102 |      |   |         | 27,725 |   |   |         | 24,517 |  
|                                                                                             | General and administrative                        |                          |         | 12,310 |      |   |         | 6,826  |   |   |         | 6,514  |  
|                                                                                             | Amortization of employee stock-based compensation |                          |         | 1,864  |      |   |         | 2,643  |   |   |         | 1,412  |  
|                                                                                             | Purchased in-process research and development     |                          |         |       |      |   |         |       |   |   |         | 2,840  |  
|                                                                                             |                                                   |                          |         |        |      |   |         |        |  
|Total operating expenses                                                                     |                                                   |                          | 57,276  |        |      |   | 37,194  |        |   |   | 35,283  |       
|                                                                                             |                                                   |                          |         |        |      |   |         |        |  
|Other income (expense):                                                                      |                                                   |                          |         |        |      |   |         |        |   |   |         |       
|                                                                                             | Interest income                                   |                          |         | 920    |      |   |         | 553    |   |   |         | 691    |  
|                                                                                             | Interest expense                                  |                          |         | (756   | )    |   |         | (932   | ) |   |         | (621   | )
|                                                                                             |                                                   |                          |         |        |      |   |         |        |  
|Total other income (expense)                                                                 |                                                   |                          | 164     |        |      |   | (379    | )      |   |   | 70      |       
|                                                                                             |                                                   |                          |         |        |      |   |         |        |  
|Net loss                                                                                     |                                                   |                          | (55,586 | )      |      |   | (37,573 | )      |   |   | (35,213 | )     
|Accretion to redemption value of redeemable convertible
    preferred stock                  |                                                   |                          |        |        |      |   | (7,867  | )      |   |   | (7,635  | )     
|Deemed dividend resulting from beneficial conversion feature on
    Series C preferred stock |                                                   |                          |        |        |      |   | (14,775 | )      |   |   |        |       
|                                                                                             |                                                   |                          |         |        |      |   |         |        |  
|Net loss applicable to common stockholders                                                   |                                                   | $                        | (55,586 | )      |      | $ | (60,215 | )      |   | $ | (42,848 | )     
|                                                                                             |                                                   |                          |         |        |      |   |         |        |  
|Basic and diluted net loss per share(1)                                                      |                                                   | $                        | (2.08   | )      |      | $ | (13.30  | )      |   | $ | (153.85 | )     
|                                                                                             |                                                   |                          |         |        |      |   |         |        |  
|Weighted averaged shares used to compute basic and diluted net
    loss per share(1)         |                                                   |                          | 26,733  |        |      |   | 4,527   |        |   |   | 279     |       
|                                                                                             |                                                   |                          |         |        |      |   |         |        |  
|The allocation of employee stock-based compensation is as
    follows:                       |                                                   |                          |         |        |      |   |         |        |   |   |         |       
|                                                                                             | Research and development                          |                          | $       | 531    |      |   | $       | 838    |   |   | $       | 379    |  
|                                                                                             | General and administrative                        |                          |         | 1,333  |      |   |         | 1,805  |   |   |         | 1,033  |  
|                                                                                             |                                                   |                          |         |        |      |   |         |        |  
|                                                                                             |                                                   | $                        | 1,864   |        |      | $ | 2,643   |        |   | $ | 1,412   |       
|                                                                                             |                                                   |                          |         |        |      |   |         |        |  






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | As a result of the conversion of our preferred stock into
    20.1 million shares of our common stock upon completion of
    our initial public offering on November 4, 2003, there is a
    lack of comparability in the basic and diluted net loss per
    share amounts for the periods presented above. Please reference
    Note 1 for an unaudited pro forma basic and diluted net
    loss per share calculation for the periods presented.



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CANCERVAX CORPORATION





CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
(DEFICIT)


(In thousands)


|                             |                                                                                                                     |                                                  |        |         |              |   |   |            |       |             |               |        |   |          |   |       |             |               |        |              |   |   |         |   |     |           |        |        |   |   |         |         |         |   |         |         |         |  
|---------------------------- | ------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------ | ------ | ------- | ------------ | - | - | ---------- | ----- | ----------- | ------------- | ------ | - | -------- | - | ----- | ----------- | ------------- | ------ | ------------ | - | - | ------- | - | --- | --------- | ------ | ------ | - | - | ------- | ------- | ------- | - | ------- | ------- | ------- | -
|                             |                                                                                                                     |                                                  |        |         |              |   |   |            |       | Accumulated |               |        |   |          |   |       |            
|                             |                                                                                                                     | Convertible                                      |        |         |              |   |   |            | Other |             |               |        |   |          |   | Total |            
|                             |                                                                                                                     | Preferred Stock                                  |        |         | Common Stock |   |   | Additional |       |             | Comprehensive |        |   |          |   |       |             | Stockholders |       
|                             |                                                                                                                     |                                                  |        |         |              |   |   | Paid-in    |       |             | Income        |        |   | Deferred |   |       | Accumulated |               |        | Equity       |  
|                             |                                                                                                                     | Shares                                           |        |         | Amount       |   |   | Shares     |       |             | Amount        |        |   | Capital  |   |       | (Loss)      |               |        | Compensation |   |   | Deficit |   |     | (Deficit) |       
|                             |                                                                                                                     |                                                  |        |         |              |   |   |            |       |             |               |        |   |          |   |       |             |               |        |              |   |   |         |   |     |           |       
|Balance at December 31, 2001 |                                                                                                                     |                                                  | 25,046 |         |              | $ | 1 |            |       |             | 358           |        |   | $        |  |       |             | $             | 5,466  |              |   | $ |        |   |     | $         |       |        |   | $ | (26,129 | )       |         | $ | (20,662 | )      
|                             | Issuance of common stock under equity compensation plans, net                                                       |                                                  |        |        |              |   |   |           |       |             |               | 138    |   |          |   |      |             |               |        | 182          |   |   |         |  |     |           |        |       |   |   |         |        |         |   |         | 182     |        
|                             | Deferred employee stock-based compensation                                                                          |                                                  |        |        |              |   |   |           |       |             |               |       |   |          |   |      |             |               |        | 2,740        |   |   |         |  |     |           |        | (2,740 | ) |   |         |        |         |   |         |        |        
|                             | Amortization of deferred employee stock-based compensation, net                                                     |                                                  |        |        |              |   |   |           |       |             |               |       |   |          |   |      |             |               |        | (60          | ) |   |         |  |     |           |        | 1,472  |   |   |         |        |         |   |         | 1,412   |        
|                             | Issuance of stock options to consultants                                                                            |                                                  |        |        |              |   |   |           |       |             |               |       |   |          |   |      |             |               |        | 41           |   |   |         |  |     |           |        |       |   |   |         |        |         |   |         | 41      |        
|                             | Issuance of warrants in conjunction with debt and facility lease                                                    |                                                  |        |        |              |   |   |           |       |             |               |       |   |          |   |      |             |               |        | 319          |   |   |         |  |     |           |        |       |   |   |         |        |         |   |         | 319     |        
|                             | Issuance of preferred stock in conjunction with Cell-Matrix
    acquisition                                         |                                                  |        | 2,143   |              |   |   |           |       |             |               |       |   |          |   |      |             |               |        | 5,721        |   |   |         |  |     |           |        |       |   |   |         |        |         |   |         | 5,721   |        
|                             | Accretion to redemption value of redeemable convertible
    preferred stock                                         |                                                  |        |        |              |   |   |           |       |             |               |       |   |          |   |      |             |               |        |             |   |   |         |  |     |           |        |       |   |   |         | (7,635  | )       |   |         | (7,635  | )      
|                             | Comprehensive loss:                                                                                                 |                                                  |        |         |              |   |   |            |       |             |               |        |   |          |   |       |             |               |        |              |   |   |         |   |     |           |        |        |   |   |         |         |         |   |         |         |        
|                             |                                                                                                                     | Net loss                                         |        |         |             |   |   |            |      |             |               |        |  |          |   |       |            |               |        |              |  |   |         |   |    |           |        |        |  |   |         |         | (35,213 | ) |         |         | (35,213 | )
|                             |                                                                                                                     | Unrealized loss on securities available-for-sale |        |         |             |   |   |            |      |             |               |        |  |          |   |       |            |               |        |              |  |   |         |   | (43 | )         |        |        |  |   |         |         |        |   |         |         | (43     | )
|                             |                                                                                                                     |                                                  |        |         |              |   |   |            |       |             |               |        |   |          |   |       |             |               |        |              |   |   |         |   |     |           |       
|                             | Total comprehensive loss                                                                                            |                                                  |        |        |              |   |   |           |       |             |               |       |   |          |   |      |             |               |        |             |   |   |         |  |     |           |        |       |   |   |         |        |         |   |         | (35,256 | )      
|                             |                                                                                                                     |                                                  |        |         |              |   |   |            |       |             |               |        |   |          |   |       |             |               |        |              |   |   |         |   |     |           |       
|Balance at December 31, 2002 |                                                                                                                     |                                                  | 27,189 |         |              |   | 1 |            |       |             | 496           |        |   |          |  |       |             |               | 14,409 |              |   |   | (43     | ) |     |           | (1,268 | )      |   |   | (68,977 | )       |         |   | (55,878 | )      
|                             | Issuance of common stock under equity compensation plans and
    upon exercise of warrants                          |                                                  |        |        |              |   |   |           |       |             |               | 133    |   |          |   |      |             |               |        | 263          |   |   |         |  |     |           |        |       |   |   |         |        |         |   |         | 263     |        
|                             | Deferred employee stock-based compensation                                                                          |                                                  |        |        |              |   |   |           |       |             |               |       |   |          |   |      |             |               |        | 4,999        |   |   |         |  |     |           |        | (4,999 | ) |   |         |        |         |   |         |        |        
|                             | Amortization of deferred employee stock-based compensation, net                                                     |                                                  |        |        |              |   |   |           |       |             |               |       |   |          |   |      |             |               |        | (271         | ) |   |         |  |     |           |        | 2,914  |   |   |         |        |         |   |         | 2,643   |        
|                             | Issuance of stock options to consultants                                                                            |                                                  |        |        |              |   |   |           |       |             |               |       |   |          |   |      |             |               |        | 131          |   |   |         |  |     |           |        |       |   |   |         |        |         |   |         | 131     |        
|                             | Issuance of warrants in conjunction with a research consulting
    agreement                                        |                                                  |        |        |              |   |   |           |       |             |               |       |   |          |   |      |             |               |        | 245          |   |   |         |  |     |           |        |       |   |   |         |        |         |   |         | 245     |        
|                             | Issuance of common stock in initial public offering                                                                 |                                                  |        |        |              |   |   |           |       |             |               | 6,000  |   |          |   |      |             |               |        | 65,139       |   |   |         |  |     |           |        |       |   |   |         |        |         |   |         | 65,139  |        
|                             | Conversion of redeemable convertible preferred stock into common
    stock                                          |                                                  |        |        |              |   |   |           |       |             |               | 13,892 |   |          |   | 1     |             |               |        | 145,623      |   |   |         |  |     |           |        |       |   |   |         |        |         |   |         | 145,624 |        
|                             | Conversion of convertible preferred stock into common stock                                                         |                                                  |        | (27,189 | )            |   |   | (1         | )     |             |               | 6,215  |   |          |   |      |             |               |        | 1            |   |   |         |  |     |           |        |       |   |   |         |        |         |   |         |        |        
|                             | Deemed dividend resulting from beneficial conversion feature on
    Series C redeemable convertible preferred stock |                                                  |        |        |              |   |   |           |       |             |               |       |   |          |   |      |             |               |        | 14,775       |   |   |         |  |     |           |        |       |   |   |         | (14,775 | )       |   |         |        |        

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|                             |                                                                             |                                                  |   |              |        |   |            |       |   |               |        |       |          |   |       |             |               |   |              |        |   |         |     |   |           |   |        |       |   |   |          |        |         |   |         |         |         |  
|---------------------------- | --------------------------------------------------------------------------- | ------------------------------------------------ | - | ------------ | ------ | - | ---------- | ----- | - | ------------- | ------ | ----- | -------- | - | ----- | ----------- | ------------- | - | ------------ | ------ | - | ------- | --- | - | --------- | - | ------ | ----- | - | - | -------- | ------ | ------- | - | ------- | ------- | ------- | -
|                             |                                                                             |                                                  |   |              |        |   |            |       |   | Accumulated   |        |       |          |   |       |             |              
|                             |                                                                             | Convertible                                      |   |              |        |   |            | Other |   |               |        |       |          |   | Total |            
|                             |                                                                             | Preferred Stock                                  |   | Common Stock |        |   | Additional |       |   | Comprehensive |        |       |          |   |       |             | Stockholders |  
|                             |                                                                             |                                                  |   |              |        |   | Paid-in    |       |   | Income        |        |       | Deferred |   |       | Accumulated |               |   | Equity       |       
|                             |                                                                             | Shares                                           |   |              | Amount |   | Shares     |       |   | Amount        |        |       | Capital  |   |       | (Loss)      |               |   | Compensation |        |   | Deficit |     |   | (Deficit) |  
|                             |                                                                             |                                                  |   |              |        |   |            |       |   |               |        |       |          |   |       |             |               |   |              |        |   |         |     |   |           |  
|                             | Accretion to redemption value of redeemable convertible
    preferred stock |                                                  |   |             |        |   |            |      |   |               |        |      |          |   |       |            |               |   |              |       |   |         |     |  |           |   |        |      |   |   |          | (7,867 | )       |   |         | (7,867  | )      
|                             | Comprehensive loss:                                                         |                                                  |   |              |        |   |            |       |   |               |        |       |          |   |       |             |               |   |              |        |   |         |     |   |           |   |        |       |   |   |          |        |         |   |         |         |        
|                             |                                                                             | Net loss                                         |   |              |       |   |            |       |  |               |        |       |         |   |       |             |              |   |              |        |  |         |     |   |          |   |        |       |  |   |          |        | (37,573 | ) |         |         | (37,573 | )
|                             |                                                                             | Unrealized gain on securities available-for-sale |   |              |       |   |            |       |  |               |        |       |         |   |       |             |              |   |              |        |  |         |     |   | 46        |   |        |       |  |   |          |        |        |   |         |         | 46      |  
|                             |                                                                             |                                                  |   |              |        |   |            |       |   |               |        |       |          |   |       |             |               |   |              |        |   |         |     |   |           |   |       
|                             | Total comprehensive loss                                                    |                                                  |   |             |        |   |            |      |   |               |        |      |          |   |       |            |               |   |              |       |   |         |     |  |           |   |        |      |   |   |          |       |         |   |         | (37,527 | )      
|                             |                                                                             |                                                  |   |              |        |   |            |       |   |               |        |       |          |   |       |             |               |   |              |        |   |         |     |   |           |   |       
|Balance at December 31, 2003 |                                                                             |                                                  |  |              |        |   |           |       |   |               | 26,736 |       |          |   | 1     |             |               |   | 245,314      |        |   |         | 3   |   |           |   | (3,353 | )     |   |   | (129,192 | )      |         |   | 112,773 |        
|                             | Issuance of common stock under equity compensation plans, net               |                                                  |   |             |        |   |            |      |   |               |        | 72    |          |   |       |            |               |   |              | 376    |   |         |     |  |           |   |        |      |   |   |          |       |         |   |         | 376     |        
|                             | Amortization of deferred employee stock-based compensation, net             |                                                  |   |             |        |   |            |      |   |               |        |      |          |   |       |            |               |   |              | (213   | ) |         |     |  |           |   |        | 2,077 |   |   |          |       |         |   |         | 1,864   |        
|                             | Issuance of stock options to consultants                                    |                                                  |   |             |        |   |            |      |   |               |        |      |          |   |       |            |               |   |              | 105    |   |         |     |  |           |   |        |      |   |   |          |       |         |   |         | 105     |        
|                             | Issuance of common stock in connection with collaboration
    agreement     |                                                  |   |             |        |   |            |      |   |               |        | 1,000 |          |   |       |            |               |   |              | 12,000 |   |         |     |  |           |   |        |      |   |   |          |       |         |   |         | 12,000  |        
|                             | Comprehensive loss:                                                         |                                                  |   |              |        |   |            |       |   |               |        |       |          |   |       |             |               |   |              |        |   |         |     |   |           |   |        |       |   |   |          |        |         |   |         |         |        
|                             |                                                                             | Net loss                                         |   |              |       |   |            |       |  |               |        |       |         |   |       |             |              |   |              |        |  |         |     |   |          |   |        |       |  |   |          |        | (55,586 | ) |         |         | (55,586 | )
|                             |                                                                             | Unrealized loss on securities available-for-sale |   |              |       |   |            |       |  |               |        |       |         |   |       |             |              |   |              |        |  |         |     |   | (74       | ) |        |       |  |   |          |        |        |   |         |         | (74     | )
|                             |                                                                             |                                                  |   |              |        |   |            |       |   |               |        |       |          |   |       |             |               |   |              |        |   |         |     |   |           |   |       
|                             | Total comprehensive loss                                                    |                                                  |   |             |        |   |            |      |   |               |        |      |          |   |       |            |               |   |              |       |   |         |     |  |           |   |        |      |   |   |          |       |         |   |         | (55,660 | )      
|                             |                                                                             |                                                  |   |              |        |   |            |       |   |               |        |       |          |   |       |             |               |   |              |        |   |         |     |   |           |   |       
|Balance at December 31, 2004 |                                                                             |                                                  |  |              |        | $ |           |       |   |               | 27,808 |       |          | $ | 1     |             |               | $ | 257,582      |        |   | $       | (71 | ) |           | $ | (1,276 | )     |   | $ | (184,778 | )      |         | $ | 71,458  |        
|                             |                                                                             |                                                  |   |              |        |   |            |       |   |               |        |       |          |   |       |             |               |   |              |        |   |         |     |   |           |   |       



F-6



---



##### Table of Contents



CANCERVAX CORPORATION





CONSOLIDATED STATEMENTS OF CASH FLOWS


(In thousands)


|                                              |                                                                                                    |                                                      |                                           |         |       |        |   |         |       |       |   |         |       |     |  
|--------------------------------------------- | -------------------------------------------------------------------------------------------------- | ---------------------------------------------------- | ----------------------------------------- | ------- | ----- | ------ | - | ------- | ----- | ----- | - | ------- | ----- | --- | -
|                                              |                                                                                                    | Years Ended December 31,                             |                                          
|                                              |                                                                                                    |                                                      |                                          
|                                              |                                                                                                    | 2004                                                 |                                           |         | 2003  |        |   | 2002    |      
|                                              |                                                                                                    |                                                      |                                           |         |       |        |   |         |      
|Cash flows from operating activities:         |                                                                                                    |                                                      |                                           |         |       |        |   |         |       |       |   |        
|                                              | Net loss                                                                                           |                                                      | $                                         | (55,586 | )     |        | $ | (37,573 | )     |       | $ | (35,213 | )    
|                                              | Adjustments to reconcile net loss to net cash used in operating
    activities:                    |                                                      |                                           |         |       |        |   |         |       |       |   |         |      
|                                              |                                                                                                    | Non-cash stock-based compensation                    |                                           |         | 2,113 |        |   |         | 2,913 |       |   |         | 1,499 |    
|                                              |                                                                                                    | Investment income from securities available-for-sale |                                           |         | 413   |        |   |         | 216   |       |   |         | (94   | )  
|                                              |                                                                                                    | Depreciation                                         |                                           |         | 2,071 |        |   |         | 1,891 |       |   |         | 1,443 |    
|                                              |                                                                                                    | Amortization of intangibles                          |                                           |         | 225   |        |   |         | 252   |       |   |         | 209   |    
|                                              |                                                                                                    | Purchased in-process research and development        |                                           |         |      |        |   |         |      |       |   |         | 2,840 |    
|                                              |                                                                                                    | Deferred rent                                        |                                           |         | 324   |        |   |         | 446   |       |   |         | 80    |    
|                                              |                                                                                                    | Changes in operating assets and liabilities:         |                                           |         |       |        |   |         |       |       |   |         |       |    
|                                              |                                                                                                    |                                                      | Receivables under collaborative agreement |         |       | (1,210 | ) |         |       |      |   |         |       |    |  
|                                              |                                                                                                    |                                                      | Other assets                              |         |       | (599   | ) |         |       | (759  | ) |         |       | (51 | )
|                                              |                                                                                                    |                                                      | Accounts payable and accrued liabilities  |         |       | 6,433  |   |         |       | 1,742 |   |         |       | 500 |  
|                                              |                                                                                                    |                                                      | Deferred revenue                          |         |       | (266   | ) |         |       |      |   |         |       |    |  
|                                              |                                                                                                    |                                                      |                                           |         |       |        |   |         |      
|                                              | Net cash used in operating activities                                                              |                                                      |                                           | (46,082 | )     |        |   | (30,872 | )     |       |   | (28,787 | )    
|Cash flows from investing activities:         |                                                                                                    |                                                      |                                           |         |       |        |   |         |       |       |   |        
|                                              | Cash paid in Cell-Matrix acquisition                                                               |                                                      |                                           |        |       |        |   |        |       |       |   | (222    | )    
|                                              | Purchases of property and equipment                                                                |                                                      |                                           | (7,192  | )     |        |   | (1,575  | )     |       |   | (4,421  | )    
|                                              | Purchases of securities available-for-sale                                                         |                                                      |                                           | (56,722 | )     |        |   | (2,942  | )     |       |   | (10,567 | )    
|                                              | Maturities of securities available-for-sale                                                        |                                                      |                                           | 37,161  |       |        |   | 1,998   |       |       |   |        |      
|                                              | Sale of securities available-for-sale                                                              |                                                      |                                           |        |       |        |   | 5,481   |       |       |   | 500     |      
|                                              | Increase in intangibles                                                                            |                                                      |                                           | (331    | )     |        |   | (183    | )     |       |   | (234    | )    
|                                              | (Increase) decrease in restricted cash                                                             |                                                      |                                           | 720     |       |        |   | (450    | )     |       |   | 578     |      
|                                              |                                                                                                    |                                                      |                                           |         |       |        |   |         |      
|                                              | Net cash provided by (used in) investing activities                                                |                                                      |                                           | (26,364 | )     |        |   | 2,329   |       |       |   | (14,366 | )    
|Cash flows from financing activities:         |                                                                                                    |                                                      |                                           |         |       |        |   |         |       |       |   |        
|                                              | Proceeds from long-term debt                                                                       |                                                      |                                           | 6,230   |       |        |   | 462     |       |       |   | 4,901   |      
|                                              | Payments on long-term debt                                                                         |                                                      |                                           | (7,253  | )     |        |   | (2,900  | )     |       |   | (1,541  | )    
|                                              | Proceeds from equity compensation plans, net                                                       |                                                      |                                           | 376     |       |        |   | 263     |       |       |   | 182     |      
|                                              | Proceeds from issuance of common stock, net                                                        |                                                      |                                           | 12,000  |       |        |   | 65,139  |       |       |   |        |      
|                                              | Proceeds from issuance of preferred stock, net                                                     |                                                      |                                           |        |       |        |   | 41,177  |       |       |   | 55,591  |      
|                                              |                                                                                                    |                                                      |                                           |         |       |        |   |         |      
|                                              | Net cash provided by financing activities                                                          |                                                      |                                           | 11,353  |       |        |   | 104,141 |       |       |   | 59,133  |      
|                                              | Increase (decrease) in cash and cash equivalents                                                   |                                                      |                                           | (61,093 | )     |        |   | 75,598  |       |       |   | 15,980  |      
|                                              | Cash and cash equivalents at beginning of year                                                     |                                                      |                                           | 101,681 |       |        |   | 26,083  |       |       |   | 10,103  |      
|                                              |                                                                                                    |                                                      |                                           |         |       |        |   |         |      
|                                              | Cash and cash equivalents at end of year                                                           |                                                      | $                                         | 40,588  |       |        | $ | 101,681 |       |       | $ | 26,083  |      
|                                              |                                                                                                    |                                                      |                                           |         |       |        |   |         |      
|Supplemental cash flow information:           |                                                                                                    |                                                      |                                           |         |       |        |   |         |       |       |   |        
|                                              | Cash paid during the year for interest                                                             |                                                      | $                                         | 751     |       |        | $ | 750     |       |       | $ | 416     |      
|                                              |                                                                                                    |                                                      |                                           |         |       |        |   |         |      
|Supplemental schedule of non-cash activities: |                                                                                                    |                                                      |                                           |         |       |        |   |         |       |       |   |        
|                                              | Unrealized gain (loss) on securities available-for-sale                                            |                                                      | $                                         | (74     | )     |        | $ | 46      |       |       | $ | (43     | )    
|                                              |                                                                                                    |                                                      |                                           |         |       |        |   |         |      
|                                              | Value of stock issued in Cell-Matrix acquisition                                                   |                                                      | $                                         |        |       |        | $ |        |       |       | $ | 5,721   |      
|                                              |                                                                                                    |                                                      |                                           |         |       |        |   |         |      
|                                              | Issuance of warrants in connection with debt, facility lease and
    research consulting agreement |                                                      | $                                         |        |       |        | $ | 245     |       |       | $ | 296     |      
|                                              |                                                                                                    |                                                      |                                           |         |       |        |   |         |      
|                                              | Conversion of preferred stock into common stock                                                    |                                                      | $                                         |        |       |        | $ | 145,624 |       |       | $ |        |      
|                                              |                                                                                                    |                                                      |                                           |         |       |        |   |         |      
|                                              | Deferred up-front license fee receivable under collaborative
    agreement                         |                                                      | $                                         | 24,684  |       |        | $ |        |       |       | $ |        |      
|                                              |                                                                                                    |                                                      |                                           |         |       |        |   |         |      



F-7



---



##### Table of Contents



CANCERVAX CORPORATION





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




|   |                                                                
|-- | ---------------------------------------------------------------
|1. | Organization and Summary of Significant Accounting
    Policies



| |                          
| | -------------------------
| | Organization and Business





| |                            
| | ---------------------------
| | Principles of Consolidation





| |                 
| | ----------------
| | Use of Estimates





| |                          
| | -------------------------
| | Cash and Cash Equivalents





| |                              
| | -----------------------------
| | Securities Available-for-Sale





| |                                    
| | -----------------------------------
| | Fair Value of Financial Instruments





| |                       
| | ----------------------
| | Concentrations of Risk



F-8



---



##### Table of Contents



CANCERVAX CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)












| |                       
| | ----------------------
| | Property and Equipment





| |        
| | -------
| | Patents





| |                                
| | -------------------------------
| | Impairment of Long-Lived Assets

Accounting for the Impairment or
Disposal of Long-Lived Assets




F-9



---



##### Table of Contents



CANCERVAX CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |         
| | --------
| | Goodwill

Goodwill and Other
Intangible Assets




| |                    
| | -------------------
| | Revenue Recognition

Revenue Recognition in Financial
Statements Revenue Recognition,
corrected copy Accounting for Revenue Arrangements
with Multiple Deliverables










F-10



---



##### Table of Contents



CANCERVAX CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                         
| | ------------------------
| | Research and Development





| |                   
| | ------------------
| | Net Loss Per Share

Earnings Per Share




|                                     |                                                                                              |                                 |       |         |      |   |        |         |   |   |         |         |  
|------------------------------------ | -------------------------------------------------------------------------------------------- | ------------------------------- | ----- | ------- | ---- | - | ------ | ------- | - | - | ------- | ------- | -
|                                     |                                                                                              | 2004                            |       |         | 2003 |   |        | 2002    |  
|                                     |                                                                                              |                                 |       |         |      |   |        |         |  
|                                     |                                                                                              | (In thousands, except per share |      
|                                     |                                                                                              | amounts)                        |      
|Actual:                              |                                                                                              |                                 |       |         |      |   |        |         |   |   |         |        
|Numerator:                           |                                                                                              |                                 |       |         |      |   |        |         |   |   |         |        
|                                     | Net loss, as reported                                                                        |                                 | $     | (55,586 | )    |   | $      | (37,573 | ) |   | $       | (35,213 | )
|                                     | Accretion to redemption value of redeemable convertible
    preferred stock                  |                                 |       |        |      |   |        | (7,867  | ) |   |         | (7,635  | )
|                                     | Deemed dividend resulting from beneficial conversion feature on
    Series C preferred stock |                                 |       |        |      |   |        | (14,775 | ) |   |         |        |  
|                                     |                                                                                              |                                 |       |         |      |   |        |         |  
|                                     | Net loss applicable to common stockholders, as reported                                      |                                 | $     | (55,586 | )    |   | $      | (60,215 | ) |   | $       | (42,848 | )
|                                     |                                                                                              |                                 |       |         |      |   |        |         |  
|Denominator:                         |                                                                                              |                                 |       |         |      |   |        |         |   |   |         |        
|                                     | Weighted average common shares outstanding                                                   |                                 |       | 26,784  |      |   |        | 4,643   |   |   |         | 469     |  
|                                     | Weighted average unvested common shares subject to repurchase                                |                                 |       | (51     | )    |   |        | (116    | ) |   |         | (190    | )
|                                     |                                                                                              |                                 |       |         |      |   |        |         |  
|                                     | Weighted average common shares used to calculate basic and
    diluted loss per share        |                                 |       | 26,733  |      |   |        | 4,527   |   |   |         | 279     |  
|                                     |                                                                                              |                                 |       |         |      |   |        |         |  
|Basic and diluted net loss per share |                                                                                              | $                               | (2.08 | )       |      | $ | (13.30 | )       |   | $ | (153.85 | )      
|                                     |                                                                                              |                                 |       |         |      |   |        |         |  

F-11



---



##### Table of Contents



CANCERVAX CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


|                                               |                                                                                                       |                                 |       |         |      |   |       |         |   |   |       |         |  
|---------------------------------------------- | ----------------------------------------------------------------------------------------------------- | ------------------------------- | ----- | ------- | ---- | - | ----- | ------- | - | - | ----- | ------- | -
|                                               |                                                                                                       | 2004                            |       |         | 2003 |   |       | 2002    |  
|                                               |                                                                                                       |                                 |       |         |      |   |       |         |  
|                                               |                                                                                                       | (In thousands, except per share |      
|                                               |                                                                                                       | amounts)                        |      
|Pro forma:                                     |                                                                                                       |                                 |       |         |      |   |       |         |   |   |       |        
|Numerator:                                     |                                                                                                       |                                 |       |         |      |   |       |         |   |   |       |        
|                                               | Net loss, as reported                                                                                 |                                 | $     | (55,586 | )    |   | $     | (37,573 | ) |   | $     | (35,213 | )
|                                               | Deemed dividend resulting from beneficial conversion feature on
    Series C preferred stock          |                                 |       |        |      |   |       | (14,775 | ) |   |       |        |  
|                                               |                                                                                                       |                                 |       |         |      |   |       |         |  
|                                               | Pro forma net loss applicable to common stockholders                                                  |                                 | $     | (55,586 | )    |   | $     | (52,348 | ) |   | $     | (35,213 | )
|                                               |                                                                                                       |                                 |       |         |      |   |       |         |  
|Denominator:                                   |                                                                                                       |                                 |       |         |      |   |       |         |   |   |       |        
|                                               | Weighted average common shares used to calculate basic and
    diluted loss per share                 |                                 |       | 26,733  |      |   |       | 4,527   |   |   |       | 279     |  
|                                               | Pro forma adjustments to reflect weighted average effect of
    assumed conversion of preferred stock |                                 |       |        |      |   |       | 14,098  |   |   |       | 13,132  |  
|                                               |                                                                                                       |                                 |       |         |      |   |       |         |  
|                                               | Weighted average shares used to compute pro forma basic and
    diluted net loss per share            |                                 |       | 26,733  |      |   |       | 18,625  |   |   |       | 13,411  |  
|                                               |                                                                                                       |                                 |       |         |      |   |       |         |  
|Pro forma basic and diluted net loss per share |                                                                                                       | $                               | (2.08 | )       |      | $ | (2.81 | )       |   | $ | (2.63 | )      
|                                               |                                                                                                       |                                 |       |         |      |   |       |         |  



|                                   |  |              |       |  |      |  |       |      |  |  |        | 
|---------------------------------- |  | ------------ | ----- |  | ---- |  | ----- | ---- |  |  | ------ | 
|                                   |  | December 31, |      
|                                   |  |              |      
|                                   |  | 2004         |       |  | 2003 |  |       | 2002 | 
|                                   |  |              |       |  |      |  |       |      | 
|Preferred stock                    |  |              |      |  |      |  |      |      |  |  | 15,431 | 
|Common stock subject to repurchase |  |              | 25    |  |      |  | 91    |      |  |  | 150    | 
|Stock options                      |  |              | 3,182 |  |      |  | 2,032 |      |  |  | 1,058  | 
|Stock warrants                     |  |              | 86    |  |      |  | 86    |      |  |  | 66     | 
|                                   |  |              |       |  |      |  |       |      | 
|                                   |  |              | 3,293 |  |      |  | 2,209 |      |  |  | 16,705 | 
|                                   |  |              |       |  |      |  |       |      | 



| |                         
| | ------------------------
| | Stock-Based Compensation

Accounting for Stock Issued to Employees Accounting for Stock
Appreciation Rights and Other Variable Stock Option or Award
Plans


F-12



---



##### Table of Contents



CANCERVAX CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


Accounting for Stock-based Compensation


|                                                                                                                       |  |                                 |         |   |      |   |         |      |  |   |         |  
|---------------------------------------------------------------------------------------------------------------------- |  | ------------------------------- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                                                                                                       |  | 2004                            |         |   | 2003 |   |         | 2002 | 
|                                                                                                                       |  |                                 |         |   |      |   |         |      | 
|                                                                                                                       |  | (In thousands, except per share |        
|                                                                                                                       |  | amounts)                        |        
|Net loss applicable to common stockholders, as reported                                                                |  | $                               | (55,586 | ) |      | $ | (60,215 | )    |  | $ | (42,848 | )
|Add: Stock-based employee compensation expense included in net
    loss applicable to common stockholders, as reported |  |                                 | 1,864   |   |      |   | 2,643   |      |  |   | 1,412   |  
|Deduct: Stock-based employee compensation expense determined
    under the fair value based method for all awards      |  |                                 | (6,256  | ) |      |   | (3,763  | )    |  |   | (1,939  | )
|                                                                                                                       |  |                                 |         |   |      |   |         |      | 
|Pro forma net loss applicable to common stockholders                                                                   |  | $                               | (59,978 | ) |      | $ | (61,335 | )    |  | $ | (43,375 | )
|                                                                                                                       |  |                                 |         |   |      |   |         |      | 
|Loss per share:                                                                                                        |  |                                 |         |   |      |   |         |      |  |   |         |  
|Basic and diluted net loss per share, as reported                                                                      |  | $                               | (2.08   | ) |      | $ | (13.30  | )    |  | $ | (153.85 | )
|                                                                                                                       |  |                                 |         |   |      |   |         |      | 
|Pro forma basic and diluted net loss per share                                                                         |  | $                               | (2.24   | ) |      | $ | (13.55  | )    |  | $ | (155.74 | )
|                                                                                                                       |  |                                 |         |   |      |   |         |      | 



|                                                  |                                                                |      |      |      |      |  |      |      |  |  |      |      | 
|------------------------------------------------- | -------------------------------------------------------------- | ---- | ---- | ---- | ---- |  | ---- | ---- |  |  | ---- | ---- | 
|                                                  |                                                                | 2004 |      |      | 2003 |  |      | 2002 | 
|                                                  |                                                                |      |      |      |      |  |      |      | 
|Dividend yield                                    |                                                                |      | 0    | %    |      |  | 0    | %    |  |  | 0    | %   
|Expected volatility                               |                                                                |      | 70   | %    |      |  | 70   | %    |  |  | 70   | %   
|Risk-free interest rate                           |                                                                |      | 3.25 | %    |      |  | 2.63 | %    |  |  | 3.81 | %   
|Expected life in years                            |                                                                |      | 4.89 |      |      |  | 4.85 |      |  |  | 4.97 |     
|Weighted average per share grant date fair value: |                                                                |      |      |      |      |  |      |      |  |  |      |     
|                                                  | Stock options granted with exercise prices below fair value    |      | $    |     |      |  | $    | 7.14 |  |  | $    | 8.58 | 
|                                                  | Stock options granted with exercise prices equal to fair value |      | $    | 6.47 |      |  | $    | 6.29 |  |  | $    | 1.77 | 





Share-Based
Payment


F-13



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##### Table of Contents



CANCERVAX CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




Accounting for Equity Instruments That are Issued to Other
Than Employees for Acquiring, or in Conjunction with Selling
Goods and Services




| |             
| | ------------
| | Income Taxes





| |                    
| | -------------------
| | Segment Information





| |           
| | ----------
| | Guarantees

Guarantors Accounting and
Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others




F-14



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##### Table of Contents



CANCERVAX CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                                   
| | ----------------------------------
| | Effect of New Accounting Standards

The
Meaning of Other-Than-Temporary Impairment and Its Application
to Certain Investments




|   |                        
|-- | -----------------------
|2. | Cell-Matrix Acquisition



|                                                       |  |   |       | 
|------------------------------------------------------ |  | - | ----- | 
|Value of preferred stock issued in acquisition         |  | $ | 5,721 | 
|Cash paid at acquisition                               |  |   | 118   | 
|Acquisition-related costs                              |  |   | 104   | 
|Assumed contractual obligations due to related parties |  |   | 2,500 | 
|                                                       |  |   |      
|                                                       |  | $ | 8,443 | 
|                                                       |  |   |      





|                                    |  |   |       | 
|----------------------------------- |  | - | ----- | 
|Property and equipment acquired     |  | $ | 222   | 
|In-process research and development |  |   | 2,840 | 
|Goodwill                            |  |   | 5,381 | 
|                                    |  |   |      
|                                    |  | $ | 8,443 | 
|                                    |  |   |      

Applicability of FASB Statement No. 2 to Business
Combinations Accounted for by the Purchase Method


F-15



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##### Table of Contents



CANCERVAX CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








|   |                      
|-- | ---------------------
|3. | Balance Sheet Details



| |                              
| | -----------------------------
| | Securities Available-For-Sale



|                           |  |           |        |  |          |       |     |            |       |   |            |  |  |            |     |   |  |   |        | 
|-------------------------- |  | --------- | ------ |  | -------- | ----- | --- | ---------- | ----- | - | ---------- |  |  | ---------- | --- | - |  | - | ------ | 
|                           |  |           |        |  |          | Gross |     |            | Gross |   |            | 
|                           |  | Amortized |        |  | Accrued  |       |     | Unrealized |       |   | Unrealized |  |  |           
|                           |  | Cost      |        |  | Interest |       |     | Gains      |       |   | Losses     |  |  | Fair Value |    
|                           |  |           |        |  |          |       |     |            |       |   |            |  |  |            |    
|December 31, 2004:         |  |           |        |  |          |       |     |            |       |   |            |  |  |            |     |   |  |   |        | 
|U.S. government securities |  | $         | 9,897  |  |          | $     | 90  |            |       | $ |           |  |  | $          |    |   |  | $ | 9,987  | 
|Corporate debt securities  |  |           | 14,468 |  |          |       | 101 |            |       |   |           |  |  |            | (71 | ) |  |   | 14,498 | 
|                           |  |           |        |  |          |       |     |            |       |   |            |  |  |            |    
|                           |  | $         | 24,365 |  |          | $     | 191 |            |       | $ |           |  |  | $          | (71 | ) |  | $ | 24,485 | 
|                           |  |           |        |  |          |       |     |            |       |   |            |  |  |            |    
|December 31, 2003:         |  |           |        |  |          |       |     |            |       |   |            |  |  |            |     |   |  |   |        | 
|U.S. government securities |  | $         | 5,011  |  |          | $     | 101 |            |       | $ | 2          |  |  | $          |    |   |  | $ | 5,114  | 
|Corporate debt securities  |  |           | 293    |  |          |       | 3   |            |       |   | 1          |  |  |            |    |   |  |   | 297    | 
|                           |  |           |        |  |          |       |     |            |       |   |            |  |  |            |    
|                           |  | $         | 5,304  |  |          | $     | 104 |            |       | $ | 3          |  |  | $          |    |   |  | $ | 5,411  | 
|                           |  |           |        |  |          |       |     |            |       |   |            |  |  |            |    



F-16



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##### Table of Contents



CANCERVAX CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                       
| | ----------------------
| | Property and Equipment



|                                               |  |              |        |   |      |   |        |  
|---------------------------------------------- |  | ------------ | ------ | - | ---- | - | ------ | -
|                                               |  | December 31, |       
|                                               |  |              |       
|                                               |  | 2004         |        |   | 2003 |  
|                                               |  |              |        |   |      |  
|Leasehold improvements                         |  | $            | 10,335 |   |      | $ | 6,450  |  
|Manufacturing and lab equipment                |  |              | 6,364  |   |      |   | 5,265  |  
|Office equipment and furniture                 |  |              | 1,735  |   |      |   | 1,519  |  
|Computer equipment                             |  |              | 1,362  |   |      |   | 1,053  |  
|Construction in progress                       |  |              | 1,908  |   |      |   | 226    |  
|                                               |  |              |        |   |      |  
|                                               |  |              | 21,704 |   |      |   | 14,513 |  
|Less accumulated depreciation and amortization |  |              | (6,054 | ) |      |   | (3,984 | )
|                                               |  |              |        |   |      |  
|                                               |  | $            | 15,650 |   |      | $ | 10,529 |  
|                                               |  |              |        |   |      |  



| |                                         
| | ----------------------------------------
| | Accounts Payable and Accrued Liabilities



|                                        |  |              |        |  |      |   |       | 
|--------------------------------------- |  | ------------ | ------ |  | ---- | - | ----- | 
|                                        |  | December 31, |       
|                                        |  |              |       
|                                        |  | 2004         |        |  | 2003 |  
|                                        |  |              |        |  |      |  
|Accounts payable                        |  | $            | 4,963  |  |      | $ | 2,445 | 
|Accrued employee benefits               |  |              | 2,967  |  |      |   | 2,041 | 
|Accrued clinical trial patient costs    |  |              | 1,047  |  |      |   | 591   | 
|Accrued technology access fees (Note 6) |  |              | 800    |  |      |   |      | 
|Other accrued liabilities and expenses  |  |              | 1,577  |  |      |   | 573   | 
|                                        |  |              |        |  |      |  
|                                        |  | $            | 11,354 |  |      | $ | 5,650 | 
|                                        |  |              |        |  |      |  



|   |                           
|-- | --------------------------
|4. | Related Party Transactions







F-17



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##### Table of Contents



CANCERVAX CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)










|   |                                       
|-- | --------------------------------------
|5. | Debt Obligations and Lease Commitments



| |                 
| | ----------------
| | Debt Obligations



|                                             |  |              |       |   |      |   |        |  
|-------------------------------------------- |  | ------------ | ----- | - | ---- | - | ------ | -
|                                             |  | December 31, |      
|                                             |  |              |      
|                                             |  | 2004         |       |   | 2003 |  
|                                             |  |              |       |   |      |  
|Equipment and tenant improvement loans       |  | $            | 6,630 |   |      | $ | 4,802  |  
|Notes payable to related parties (Note 2)    |  |              |      |   |      |   | 2,725  |  
|Installment obligations due to JWCI (Note 4) |  |              | 250   |   |      |   | 375    |  
|                                             |  |              |       |   |      |  
|                                             |  |              | 6,880 |   |      |   | 7,902  |  
|Current portion of debt                      |  |              | (525  | ) |      |   | (6,091 | )
|                                             |  |              |       |   |      |  
|Long-term debt, less current portion         |  | $            | 6,355 |   |      | $ | 1,811  |  
|                                             |  |              |       |   |      |  



F-18



---



##### Table of Contents



CANCERVAX CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)












| |                  
| | -----------------
| | Lease Commitments







F-19



---



##### Table of Contents



CANCERVAX CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|           |  |                   |       |  |             |   |     |           |  |   |        | 
|---------- |  | ----------------- | ----- |  | ----------- | - | --- | --------- |  | - | ------ | 
|           |  | Equipment         |       |  | Installment |   |     |          
|           |  | and Tenant        |       |  | Obligation  |   |     | Operating | 
|           |  | Improvement Loans |       |  | Due to JWCI |   |     | Leases    | 
|           |  |                   |       |  |             |   |     |           | 
|2005       |  | $                 | 400   |  |             | $ | 125 |           |  | $ | 2,697  | 
|2006       |  |                   | 1,437 |  |             |   | 125 |           |  |   | 2,757  | 
|2007       |  |                   | 1,515 |  |             |   |    |           |  |   | 2,844  | 
|2008       |  |                   | 1,596 |  |             |   |    |           |  |   | 2,942  | 
|2009       |  |                   | 1,682 |  |             |   |    |           |  |   | 3,047  | 
|Thereafter |  |                   |      |  |             |   |    |           |  |   | 6,853  | 
|           |  |                   |       |  |             |   |     |           | 
|           |  | $                 | 6,630 |  |             | $ | 250 |           |  | $ | 21,140 | 
|           |  |                   |       |  |             |   |     |           | 



|   |                                                                    
|-- | -------------------------------------------------------------------
|6. | Collaborative Research and Development and Licensing
    Agreements



| |       
| | ------
| | Serono







F-20



---



##### Table of Contents



CANCERVAX CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |                                     
| | ------------------------------------
| | CIMAB, S.A. and YM BioSciences, Inc.









| |             
| | ------------
| | SemaCo, Inc.



F-21



---



##### Table of Contents



CANCERVAX CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |                                                        
| | -------------------------------------------------------
| | Other Licensing and Research and Development Agreements





|           |  |   |       | 
|---------- |  | - | ----- | 
|2005       |  | $ | 2,980 | 
|2006       |  |   | 855   | 
|2007       |  |   | 255   | 
|2008       |  |   | 55    | 
|2009       |  |   | 55    | 
|Thereafter |  |   | 400   | 
|           |  |   |      
|           |  | $ | 4,600 | 
|           |  |   |      



|   |                     
|-- | --------------------
|7. | Stockholders Equity



| |                
| | ---------------
| | Preferred Stock





F-22



---



##### Table of Contents



CANCERVAX CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




Accounting for Convertible Securities
with Beneficial Conversion Features




| |         
| | --------
| | Warrants







F-23



---



##### Table of Contents



CANCERVAX CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








| |                          
| | -------------------------
| | Equity Compensation Plans





F-24



---



##### Table of Contents



CANCERVAX CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                 |                                   |                                     |       |          |                |   |      |       |       | 
|-------------------------------- | --------------------------------- | ----------------------------------- | ----- | -------- | -------------- | - | ---- | ----- | ----- | 
|                                 |                                   |                                     |       | Weighted |               
|                                 |                                   | Number of                           |       |          | Average        |  
|                                 |                                   | Options                             |       |          | Exercise Price |  
|                                 |                                   |                                     |       |          |                |  
|Outstanding at December 31, 2001 |                                   |                                     | 738   |          |                | $ | 1.25 |      
|                                 | Granted:                          |                                     |       |          |                |   |      |       |      
|                                 |                                   | Exercise prices below fair value    |       |          | 377            |   |      |       | 3.30  | 
|                                 |                                   | Exercise prices equal to fair value |       |          | 118            |   |      |       | 2.95  | 
|                                 | Exercised                         |                                     |       | (146     | )              |   |      | 1.37  |      
|                                 | Cancelled                         |                                     |       | (29      | )              |   |      | 2.50  |      
|                                 |                                   |                                     |       |          |                |  
|Outstanding at December 31, 2002 |                                   |                                     | 1,058 |          |                |   | 2.12 |      
|                                 | Granted:                          |                                     |       |          |                |   |      |       |      
|                                 |                                   | Exercise prices below fair value    |       |          | 895            |   |      |       | 3.45  | 
|                                 |                                   | Exercise prices equal to fair value |       |          | 301            |   |      |       | 10.76 | 
|                                 | Exercised                         |                                     |       | (131     | )              |   |      | 2.00  |      
|                                 | Cancelled                         |                                     |       | (91      | )              |   |      | 2.44  |      
|                                 |                                   |                                     |       |          |                |  
|Outstanding at December 31, 2003 |                                   |                                     | 2,032 |          |                |   | 3.98 |      
|                                 | Granted (all equal to fair value) |                                     |       | 1,371    |                |   |      | 10.96 |      
|                                 | Exercised                         |                                     |       | (42      | )              |   |      | 2.66  |      
|                                 | Cancelled                         |                                     |       | (179     | )              |   |      | 8.39  |      
|                                 |                                   |                                     |       |          |                |  
|Outstanding at December 31, 2004 |                                   |                                     | 3,182 |          |                | $ | 6.76 |      
|                                 |                                   |                                     |       |          |                |  



|                    |  |                  |                     |  |                  |  |      |          |  |          |             |  |  |          |       |  |  |   |       | 
|------------------- |  | ---------------- | ------------------- |  | ---------------- |  | ---- | -------- |  | -------- | ----------- |  |  | -------- | ----- |  |  | - | ----- | 
|Options Outstanding |  |                  | Options Exercisable | 
|                    |  |                  |                     | 
|                    |  | Weighted Average |                     |  | Weighted         |  |      |          |  | Weighted |            
|Range of            |  | Number           |                     |  | Remaining        |  |      | Average  |  |          | Number      |  |  | Average  |      
|Exercise            |  | Outstanding      |                     |  | Contractual Life |  |      | Exercise |  |          | Exercisable |  |  | Exercise |      
|Prices              |  | (thousands)      |                     |  | (years)          |  |      | Price    |  |          | (thousands) |  |  | Price    |      
|                    |  |                  |                     |  |                  |  |      |          |  |          |             |  |  |          |      
|$1.08-2.16          |  |                  | 463                 |  |                  |  | 6.13 |          |  | $        | 1.25        |  |  |          | 458   |  |  | $ | 1.25  | 
|3.30                |  |                  | 1,160               |  |                  |  | 8.04 |          |  |          | 3.30        |  |  |          | 1,088 |  |  |   | 3.30  | 
|6.60-8.62           |  |                  | 179                 |  |                  |  | 9.46 |          |  |          | 7.52        |  |  |          | 31    |  |  |   | 6.75  | 
|8.95-9.75           |  |                  | 204                 |  |                  |  | 9.18 |          |  |          | 9.45        |  |  |          | 108   |  |  |   | 9.45  | 
|10.00-11.55         |  |                  | 465                 |  |                  |  | 9.30 |          |  |          | 10.92       |  |  |          | 3     |  |  |   | 10.45 | 
|11.98-12.87         |  |                  | 711                 |  |                  |  | 9.10 |          |  |          | 12.28       |  |  |          | 112   |  |  |   | 12.18 | 
|                    |  |                  |                     |  |                  |  |      |          |  |          |             |  |  |          |      
|$1.08-12.87         |  |                  | 3,182               |  |                  |  | 8.34 |          |  | $        | 6.76        |  |  |          | 1,800 |  |  | $ | 3.77  | 
|                    |  |                  |                     |  |                  |  |      |          |  |          |             |  |  |          |      





F-25



---



##### Table of Contents



CANCERVAX CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |                        
| | -----------------------
| | Stockholder Rights Plan





| |                                           
| | ------------------------------------------
| | Common Shares Reserved For Future Issuance





|   |             
|-- | ------------
|8. | Income Taxes





|                     |                                                               |              |   |         |      |   |   |         |  
|-------------------- | ------------------------------------------------------------- | ------------ | - | ------- | ---- | - | - | ------- | -
|                     |                                                               | December 31, |  
|                     |                                                               |              |  
|                     |                                                               | 2004         |   |         | 2003 |  
|                     |                                                               |              |   |         |      |  
|Deferred tax assets: |                                                               |              |   |         |      |   |   |        
|                     | Net operating loss carryforwards                              |              | $ | 32,713  |      |   | $ | 27,579  |  
|                     | Orphan drug and research and development credit carryforwards |              |   | 37,791  |      |   |   | 24,822  |  
|                     | Property and equipment and intangibles                        |              |   | 2,787   |      |   |   | 884     |  
|                     | Deferred revenues                                             |              |   | 10,078  |      |   |   |        |  
|                     | Accrued liabilities and deferred rent                         |              |   | 1,485   |      |   |   | 1,057   |  
|                     | Other, net                                                    |              |   | 1,304   |      |   |   | 851     |  
|                     |                                                               |              |   |         |      |  
|                     | Total net deferred tax assets                                 |              |   | 86,158  |      |   |   | 55,193  |  
|                     | Valuation allowance for deferred tax assets                   |              |   | (86,158 | )    |   |   | (55,193 | )
|                     |                                                               |              |   |         |      |  
|Net deferred taxes   |                                                               | $            |  |         |      | $ |  |        
|                     |                                                               |              |   |         |      |  

F-26



---



##### Table of Contents



CANCERVAX CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)












|   |                                     
|-- | ------------------------------------
|9. | Quarterly Financial Data (unaudited)



|                                            |  |                              |         |   |         |   |         |         |  |   |         |   |  |   |         |  
|------------------------------------------- |  | ---------------------------- | ------- | - | ------- | - | ------- | ------- |  | - | ------- | - |  | - | ------- | -
|                                            |  | Year Ended December 31, 2004 |        
|                                            |  |                              |        
|                                            |  | First                        |         |   | Second  |   |         | Third   |  |   | Fourth  |  
|                                            |  | Quarter                      |         |   | Quarter |   |         | Quarter |  |   | Quarter |  
|                                            |  |                              |         |   |         |   |         |         |  |   |         |  
|Total revenues                              |  | $                            |        |   |         | $ |        |         |  | $ |        |   |  | $ | 1,526   |  
|Total operating expenses                    |  |                              | 12,890  |   |         |   | 12,851  |         |  |   | 15,768  |   |  |   | 15,767  |  
|Net loss                                    |  |                              | (12,831 | ) |         |   | (12,754 | )       |  |   | (15,656 | ) |  |   | (14,345 | )
|Net loss applicable to common stockholders  |  |                              | (12,831 | ) |         |   | (12,754 | )       |  |   | (15,656 | ) |  |   | (14,345 | )
|Basic and diluted net loss per common share |  |                              | (0.48   | ) |         |   | (0.48   | )       |  |   | (0.59   | ) |  |   | (0.53   | )

|                                              |  |                              |        |   |         |   |         |         |  |   |         |   |  |   |         |  
|--------------------------------------------- |  | ---------------------------- | ------ | - | ------- | - | ------- | ------- |  | - | ------- | - |  | - | ------- | -
|                                              |  | Year Ended December 31, 2003 |       
|                                              |  |                              |       
|                                              |  | First                        |        |   | Second  |   |         | Third   |  |   | Fourth  |  
|                                              |  | Quarter                      |        |   | Quarter |   |         | Quarter |  |   | Quarter |  
|                                              |  |                              |        |   |         |   |         |         |  |   |         |  
|Total operating expenses                      |  | $                            | 7,698  |   |         | $ | 8,451   |         |  | $ | 9,907   |   |  | $ | 11,138  |  
|Net loss                                      |  |                              | (7,816 | ) |         |   | (8,602  | )       |  |   | (10,013 | ) |  |   | (11,142 | )
|Net loss applicable to common stockholders(1) |  |                              | (9,966 | ) |         |   | (10,752 | )       |  |   | (27,357 | ) |  |   | (12,140 | )
|Basic and diluted net loss per common share   |  |                              | (27.72 | ) |         |   | (24.83  | )       |  |   | (57.14  | ) |  |   | (0.73   | )






|    |                                                                                                                                                                                                                                                                                          
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Included in net loss applicable to common stockholders for the
    third quarter of 2003 is a $14.8 million non-cash, deemed
    dividend resulting from the beneficial conversion feature on our
    Series C redeemable convertible preferred stock issued in
    August 2003 (Note 7).

F-27