<PAGE>   1
================================================================================

                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                ----------------

                                   FORM 10-K/A
      (MARK ONE)
          X        ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                   For the fiscal year ended December 31, 1999
                                       OR
                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 0-22147

                               ILEX ONCOLOGY, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

           DELAWARE                                   74-2699185
(STATE OR OTHER JURISDICTION OF                    (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION)                    IDENTIFICATION NO.)

     11550 I.H. 10 WEST, SUITE 100
           SAN ANTONIO, TEXAS                            78230
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)              (ZIP CODE)

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (210) 949-8200

                                ----------------

           SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

TITLE OF EACH CLASS:                     NAME OF EXCHANGE ON WHICH REGISTERED:
--------------------                     -------------------------------------
    COMMON STOCK,                        NATIONAL ASSOCIATION OF SECURITIES
   $.01 PAR VALUE                        DEALERS AUTOMATED QUOTATION SYSTEM

        SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None
                                                                    ----

     INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS.  YES  X  NO    .
                                               ---    ---

     INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM
405 OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE
BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION STATEMENTS
INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY AMENDMENT TO THIS
FORM 10-K.  X  .
           ---
     THE NUMBER OF SHARES OUTSTANDING OF THE REGISTRANT'S COMMON STOCK AS OF
MARCH 6, 2000 IS 21,793,682.

     THE AGGREGATE MARKET VALUE OF THE STOCK HELD BY NON-AFFILIATES OF THE
REGISTRANT AS OF MARCH 6, 2000 WAS APPROXIMATELY $832 MILLION.

                       DOCUMENTS INCORPORATED BY REFERENCE

        PORTIONS OF THE REGISTRANT'S DEFINITIVE PROXY STATEMENT FOR THE
         REGISTRANT'S 2000 ANNUAL MEETING OF STOCKHOLDERS, TO BE FILED
   WITH THE SECURITIES AND EXCHANGE COMMISSION NOT LATER THAN APRIL 30, 2000
         ARE INCORPORATED BY REFERENCE INTO PART III OF THIS FORM 10-K.
<PAGE>   2

1999 ANNUAL REPORT ON FORM 10-K
--------------------------------------------------------------------------------

                                    PART II.
                                    --------

ITEM 8. FINANCIAL STATEMENTS AND SCHEDULES

     The reports of the Company's Independent Public Accountants, Financial
Statements and Notes to Financial Statements appear herein commencing on page
F-1.

                                    PART IV.
                                    --------

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)  1.   Financial Statements Index to Financial Statements appears on Page
          F-1.

     2.   Financial Statement Schedules The Financial Statement Schedules of
          fifty percent or less owned persons required to be filed by Regulation
          S-X are attached hereto as Exhibit 99.1.

(b)       Reports on Form 8-K None

(c)       Exhibits

<TABLE>
<CAPTION>
EXHIBIT
NUMBER    IDENTIFICATION OF EXHIBIT
-------   -------------------------
<S>       <C>
2.1       Plan of Merger and Acquisition Agreement dated July 16, 1999, by and
          among ILEX Oncology, Inc., Convergence Pharmaceuticals, Inc., Vikas
          Sukhatme, Raghurom Kalluri, Ralph Weichselbaum, Donald Kufe, Glenn C.
          Rice, and Tsuyneya Ohno (incorporated herein by reference to Exhibit
          2.1 to the Company's Current Report on Form 8-K filed July 30, 1999)

3.1       Amended and Restated Certificate of Incorporation of the Company
          (Incorporated herein by reference to Exhibit 3.1 of the Company's
          Registration Statement No. 333-17769 on Form S-1 filed December
          12, 1996, as amended)

3.2       Bylaws of the Company, as amended (Incorporated herein by
          reference to Exhibit 3.2 of the Company's Registration Statement No.
          333-17769 on Form S-1 filed December 12, 1996, as amended)

4.1       Specimen of certificate representing Common Stock, $.01 par value,
          of the Company (Incorporated herein by reference to Exhibit 4.1 of the
          Company's Registration Statement No. 333-17769 on Form S-1 filed
          December 12, 1996, as amended)

10.1      Services Agreement dated November 18, 1994 between CTRC Research
          Foundation and the Company (Incorporated herein by reference to
          Exhibit 10.6 of the Company's Registration Statement No. 333-17769 on
          Form S-1 filed December 12, 1996, as amended)

10.2      Covenant Not To Sue dated September 1995 between CTRC Research
          Foundation and the Company (Incorporated herein by reference to
          Exhibit 10.7 of the Company's Registration Statement No. 333-17769 on
          Form S-1 filed December 12, 1996, as amended)

10.3      Lease Agreement dated September 1, 1995 between CTRC Research
          Foundation and the Company (Incorporated herein by reference to
          Exhibit 10.10 of the Company's Registration Statement No. 333-17769 on
          Form S-1 filed December 12, 1996, as amended)
</TABLE>

<PAGE>   3

1999 ANNUAL REPORT ON FORM 10-K
--------------------------------------------------------------------------------

<TABLE>

<S>       <C>
10.4      Commercial Industrial Sublease Agreement between TRTF/CTRCRF
          Building Corporation and the Company (Incorporated herein by reference
          to Exhibit 10.11 of the Company's Registration Statement No. 333-17769
          on Form S-1 filed December 12, 1996, as amended)

10.5+     License Agreement [Oxypurinol] dated March 31, 1995 by and among
          BW Wellcome Co., The Welcome Foundation Limited and the Company
          (Incorporated herein by reference to Exhibit 10.14 of the Company's
          Registration Statement No. 333-17769 on Form S-1 filed December 12,
          1996, as amended)

10.6+     License Agreement [Eflornithine] between ILEX Oncology, Inc. and
          Marion Merrell Dow Inc. and its subsidiaries Merrell Dow
          Pharmaceuticals Inc. and Marion Merrell Dow France Et Cie
          (Incorporated herein by reference to Exhibit 10.17 of the Company's
          Registration Statement No. 333-17769 on Form S-1 filed December 12,
          1996, as amended)

10.7+     License Agreement [RP 60475] dated November 18, 1994 between
          Rhone-Poulenc Rorer S.A. and the Company (Incorporated herein by
          reference to Exhibit 10.20 of the Company's Registration Statement No.
          333-17769 on Form S-1 filed December 12, 1996, as amended)

10.8+     Agreement dated November 25, 1996 between Hoffmann-La Roche,
          Inc. and the Company [RO23-7553] (Incorporated herein by reference to
          Exhibit 10.21 of the Company's Registration Statement No. 333-17769 on
          Form S-1 filed December 12, 1996, as amended)

10.9      Subordinated Option Agreement dated March 27, 1995 between CTRC
          Research Foundation and the Company (Incorporated herein by reference
          to Exhibit 10.35 of the Company's Registration Statement No. 333-17769
          on Form S-1 filed December 12, 1996, as amended)

10.10     Employment Agreement dated November 2, 1994 between Richard L.
          Love and the Company (Incorporated herein by reference to Exhibit
          10.36 of the Company's Registration Statement No. 333-17769 on Form
          S-1 filed December 12, 1996, as amended)

10.11     Amendment to Employment Agreement dated April 4, 1995 between
          Richard L. Love and the Company (Incorporated herein by reference to
          Exhibit 10.37 of the Company's Registration Statement No. 333-17769 on
          Form S-1 filed December 12, 1996, as amended)

10.12     Amendment to Employment Agreement dated September 27, 1995
          between Richard L. Love and the Company (Incorporated herein by
          reference to Exhibit 10.38 of the Company's Registration Statement No.
          333-17769 on Form S-1 filed December 12, 1996, as amended)

10.13     Employment Agreement dated August 27, 1996 between Pedro
          Santabarbara, M.D., Ph.D. and the Company (Incorporated herein by
          reference to Exhibit 10.43 of the Company's Registration Statement No.
          333-17769 on Form S-1 filed December 12, 1996, as amended)

10.14     Consulting Services Agreement dated March 16, 1995 between the
          Company and Charles A. Coltman, Jr., M.D. (Incorporated herein by
          reference to Exhibit 10.45 of the Company's Registration Statement No.
          333-17769 on Form S-1 filed December 12, 1996, as amended)

10.15     1995 Stock Option Plan for the Company (Incorporated herein by
          reference to Exhibit 10.47 of the Company's Registration Statement No.
          333-17769 on Form S-1 filed December 12, 1996, as amended)
</TABLE>

<PAGE>   4

1999 ANNUAL REPORT ON FORM 10-K
--------------------------------------------------------------------------------

<TABLE>

<S>       <C>
10.16     1996 Non-Employee Director Stock Option Plan for the Company
          (Incorporated herein by reference to Exhibit 10.48 of the Company's
          Registration Statement No. 333-17769 on Form S-1 filed December 12,
          1996, as amended)

10.17     Form of Non-Employee Director Stock Option Agreement
          (Incorporated herein by reference to Exhibit 10.49 of the Company's
          Registration Statement No. 333-17769 on Form S-1 filed December 12,
          1996, as amended)

10.18     Fourth Amended and Restated Registration Rights Agreement
          between the Company, CTRC and the holders of the Series B, C, D and E
          Preferred Stock (Incorporated herein by reference to Exhibit 10.50 of
          the Company's Registration Statement No. 333-17769 on Form S-1 filed
          December 12, 1996, as amended)

10.19     Form of Pledge Agreement between Cancer Therapy and Research
          Center Endowment and each of Gary V. Woods, and Ruskin C. Norman, M.D.
          (Incorporated herein by reference to Exhibit 10.55 of the Company's
          Registration Statement No. 333-17769 on Form S-1 filed December 12,
          1996, as amended)

10.20+    Exclusive License Agreement [Oxypurinol] dated November 27,
          1996 between MGI Pharma, Inc. and the Company (Incorporated herein by
          reference to Exhibit 10.56 of the Company's Registration Statement No.
          333-17769 on Form S-1 filed December 12, 1996, as amended)

10.21     Stock Purchase Agreement dated April 11, 1995 between Daniel Von
          Hoff and the Company (Incorporated herein by reference to Exhibit
          10.58 of the Company's Registration Statement No. 333-17769 on Form
          S-1 filed December 12, 1996, as amended)

10.22     Stock Purchase Agreement dated April 11, 1995 between Richard L.
          Love and the Company (Incorporated herein by reference to Exhibit
          10.60 of the Company's Registration Statement No. 333-17769 on Form
          S-1 filed December 12, 1996, as amended)

10.23     Promissory Note dated April 12, 1995 between Daniel Von Hoff and
          the Company (Incorporated herein by reference to Exhibit 10.62 of the
          Company's Registration Statement No. 333-17769 on Form S-1 filed
          December 12, 1996, as amended)

10.24     Promissory Note dated April 12, 1995 between Richard L. Love and
          the Company (Incorporated herein by reference to Exhibit 10.63 of the
          Company's Registration Statement No. 333-17769 on Form S-1 filed
          December 12, 1996, as amended)

10.25     Ownership Restriction Agreement dated December 11, 1996 between
          MPILEX Management, L.L.C., MPILEX Partners, L.P. and holders of units
          thereof (Incorporated herein by reference to Exhibit 10.66 of the
          Company's Registration Statement No. 333-17769 on Form S-1 filed
          December 12, 1996, as amended)

10.26     Agreement of Limited Partnership of MPILEX Partners, L.P.
          (Incorporated herein by reference to Exhibit 10.67 of the Company's
          Registration Statement No. 333-17769 on Form S-1 filed December 12,
          1996, as amended)

10.27     Regulations of MPILEX Management, L.L.C. dated December 1996
          (Incorporated herein by reference to Exhibit 10.68 of the Company's
          Registration Statement No. 333-17769 on Form S-1 filed December 12,
          1996, as amended)
</TABLE>

<PAGE>   5

1999 ANNUAL REPORT ON FORM 10-K
--------------------------------------------------------------------------------

<TABLE>

<S>       <C>
10.28     License Agreement dated December 11, 1996 between MPILEX
          Partners, L.P. and the Company (Incorporated herein by reference to
          Exhibit 10.69 of the Company's Registration Statement No. 333-17769 on
          Form S-1 filed December 12, 1996, as amended)

10.29     Registration Rights Agreement dated July 9, 1997, between the
          Company and PRN Research, Inc. (Incorporated herein by reference to
          Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q filed
          August 14, 1997)

10.30     Service Agreement dated June 30, 1997, between the Company and
          PRN Research, Inc. (Incorporated herein by reference to Exhibit 10.4
          to the Company's Quarterly Report on Form 10-Q filed August 14, 1997)

10.31     Drug Development and Commercialization Agreement dated March 27,
          1998, between the Company and The Burnham Institute, Inc.
          (Incorporated herein by reference to Exhibit 10.1 to the Company's
          Quarterly Report on Form 10-Q filed May 15, 1998)

10.32     Office Building Lease Agreement dated April 8, 1998, between the
          Company and N.W.A. Limited Partnership (Incorporated herein by
          reference to Exhibit 10.1 to the Company's Quarterly Report on Form
          10-Q filed August 14, 1998)

10.33     Consulting Services Agreement dated July 1, 1997, between the
          Company and Dr. Daniel D. Von Hoff, M.D.

10.34     Stock Purchase Agreement dated January 22, 1999 between the
          Company and Eli Lilly and Company (incorporated herein by reference to
          Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q filed May
          17, 1999)

10.35     Registration Rights Agreement dated January 22, 1999 between the
          Company and Eli Lilly and Company (incorporated herein by reference to
          Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q filed May
          17, 1999)

10.36     Letter of Credit Agreement dated April 5, 1999 between the
          Company and PFK (incorporated herein by reference to Exhibit 10.3 to
          the Company's Quarterly Report on Form 10-Q filed May 17, 1999)

10.37     Employment Agreement dated July 16, 1999 by and between ILEX
          Oncology, Inc. and Glenn C. Rice (incorporated herein by reference to
          Exhibit 10.1 to the Company's Current Report on Form 8-K dated July
          16, 1999 and filed July 30, 1999)

10.38     Registration Rights Agreement dated July 16, 1999 among ILEX
          Oncology, Inc., Vikas Sukhatme, Raghuram Kalluri, Ralph Weichselbaum,
          Donald Kufe, Glenn C. Rice, Tsuneya Ohno, Stephen Dolezalek, Beth
          Israel Deaconess Medical Center and Arch Development Corporation
          (incorporated herein by reference to Exhibit 10.2 to the Company's
          Current Report on Form 8-K dated July 16, 1999 and filed July 30,
          1999)

10.39     Stock Purchase Agreement dated July 16, 1999 by and between ILEX
          Oncology, Inc. and each of the Investors (as defined therein)
          (incorporated herein by reference to Exhibit 10.3 to the Company's
          Quarterly Report on Form 10-Q filed August 16, 1999)

10.40+    Distribution and Development Agreement between L&I Partners, L.P. and
          Schering AG dated August 24, 1999 (incorporated herein by reference to
          Exhibit 99.1 to the Company's Current Report on Form 8-K/A filed
          September 21, 1999)

10.41**   Letter agreement dated September 9, 1999, between the Company
          and Al J. Jecminek.

11.1**    Computation of Earnings Per Share
</TABLE>

<PAGE>   6

1999 ANNUAL REPORT ON FORM 10-K
--------------------------------------------------------------------------------

<TABLE>

<S>       <C>
21.1      Subsidiaries of the Company State of Names Under Name
          Incorporation Which Doing Business
</TABLE>

<TABLE>
<CAPTION>
                                                       State of                 Names Under
          Name                                         Incorporation            Which Doing Business
          ----                                         -------------            --------------------
<S>                                                    <C>                      <C>
          ILEX Oncology Services, Inc.                 Delaware                 ILEX Services, Inc.
          ILEX Products, Inc.                          Delaware                 ILEX Products, Inc.
          Convergence Pharmaceuticals, Inc.            Delaware                 ILEX Products Research Division
          ILEX Services Limited                        United Kingdom           ILEX Services Limited
</TABLE>

<TABLE>

<S>       <C>
23*       Consent of Arthur Andersen LLP

24.1*     Power of Attorney (included on signature page)

27**      Financial Data Schedule

99.1**    Financial Statements of L&I Partners, L.P.
</TABLE>


* Filed herewith.

** Previously filed.

+  Confidential treatment has been requested with respect to certain portions
   of this exhibit. Omitted portions have been filed separately with the
   Securities and Exchange Commission.

<PAGE>   7

1999 ANNUAL REPORT ON FORM 10-K
--------------------------------------------------------------------------------

                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized, in the city of San Antonio, Texas,
on April 6, 2000.

<TABLE>

<S>                                      <C>
                                         ILEX ONCOLOGY, INC.

                                  By:    /s/ RICHARD L. LOVE
                                         -----------------------
                                         Richard L. Love
                                         President and Chief Executive Officer
                                         (Principal Executive Officer)

                                  By:    /s/ GREGORY L. WEAVER
                                         -------------------------
                                         Gregory L. Weaver
                                         Vice President and Chief Financial Officer
                                         (Chief Financial and Accounting Officer)
</TABLE>

Pursuant to the requirements of Section 13 of 15(d) of the Securities Act of
1934, this report has been signed below by the following persons in the
capacities and on the dates indicated on April 6, 2000.

<TABLE>
<CAPTION>
                 SIGNATURE                         TITLE
                 ---------                         -----
<S>              <C>                         <C>
             /s/ GARY V. WOODS
             ----------------------------
                 Gary V. Woods               Director, Chairman of the Board


             /s/ RICHARD L. LOVE
             ----------------------------
                 Richard L. Love             President, Chief Executive Officer
                                             Director

             /s/ DANIEL D. VON HOFF, M.D.
             ----------------------------
                 Daniel D. Von Hoff, M.D     Director


             /s/ JOHN L. CASSIS
             ----------------------------
                 John L. Cassis              Director


             /s/ A. DANA CALLOW, JR.
             ----------------------------
                 A. Dana Callow, Jr.         Director


             /s/ RUSKIN C. NORMAN, M.D.
             ----------------------------
                 Ruskin C. Norman, M.D       Director


             /s/ JASON S. FISHERMAN, M.D.
             ----------------------------
                 Jason S. Fisherman, M.D.    Director


             /s/ JOSEPH S. BAILES, M.D.
             --------------------------
                 Joseph S. Bailes, M.D.      Director


            /s/ GLENN C. RICE, PH.D.
            ------------------------
                Glenn C. Rice, Ph.D          Director
</TABLE>
<PAGE>   8



ILEX ONCOLOGY, INC.
1999 ANNUAL REPORT ON FORM 10-K
--------------------------------------------------------------------------------




                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



<TABLE>
<CAPTION>
                                                                                                      Page

<S>                                                                                                    <C>
Report of Independent Public Accountants                                                                F-2

Consolidated Balance Sheets as of December 31, 1999 and 1998                                            F-3

Consolidated Statements of Operations - For the Years Ended December 31, 1999, 1998 and
  1997
                                                                                                        F-5
Consolidated Statements of Stockholders' Equity - For the Years Ended December 31, 1999, 1998 and
  1997
                                                                                                        F-6
Consolidated Statements of Cash Flows - For the Years Ended December 31, 1999, 1998 and
  1997
                                                                                                        F-7
Notes to Consolidated Financial Statements                                                              F-8
</TABLE>





                                      F-1
<PAGE>   9


ILEX ONCOLOGY, INC.
1999 ANNUAL REPORT ON FORM 10-K
--------------------------------------------------------------------------------


                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS




To ILEX Oncology, Inc.:

We have audited the accompanying consolidated balance sheets of ILEX Oncology,
Inc. (a Delaware corporation), and subsidiaries as of December 31, 1999 and
1998, and the related consolidated statements of operations, stockholders'
equity, and cash flows for the years ended December 31, 1999, 1998 and 1997.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of ILEX Oncology, Inc., and
subsidiaries as of December 31, 1999 and 1998, and the results of its operations
and its cash flows for the years ended December 31, 1999, 1998 and 1997, in
conformity with accounting principles generally accepted in the United States.



                                                         /s/ ARTHUR ANDERSEN LLP


San Antonio, Texas
February 19, 2000



                                      F-2
<PAGE>   10

ILEX ONCOLOGY, INC.
1999 ANNUAL REPORT ON FORM 10-K
--------------------------------------------------------------------------------



                           CONSOLIDATED BALANCE SHEETS
               (In Thousands, Except Shares and Per Share Amounts)

<TABLE>
<CAPTION>
                                                                            December 31
                                                                      ----------------------
                                   ASSETS                               1999         1998
                                                                      ---------    ---------

<S>                                                                   <C>          <C>
CURRENT ASSETS:
   Cash and cash equivalents                                          $  43,477    $   5,331
   Investments in marketable securities                                  33,758       18,849
   Restricted investments                                                 1,400        1,400
   Accounts receivable, net of allowance for doubtful accounts of
     $164 and $150 in 1999 and 1998, respectively
       Billed                                                             4,414        2,477
       Unbilled                                                           2,484          863
       Employee                                                             245           --
       Related party                                                         --          208
   Prepaid expenses and other                                             1,914        1,194
                                                                      ---------    ---------

                           Total current assets                          87,692       30,322
                                                                      ---------    ---------



NONCURRENT ASSETS:
   Investments in marketable securities                                  10,216           --
   Restricted investments                                                   275          445
   Investments in and advances to-
     Research and development partnerships                               (2,534)         228
     Contract research affiliate                                             --          473
   Intangible asset, net                                                     --        6,704
   Other                                                                     --           75
                                                                      ---------    ---------

                                                                          7,957        7,925
                                                                      ---------    ---------


PROPERTY AND EQUIPMENT, at cost, net of accumulated
   depreciation of $3,242 and $1,374 in 1999 and 1998, respectively       4,705        4,441
                                                                      ---------    ---------

                           Total assets                               $ 100,354    $  42,688
                                                                      =========    =========
</TABLE>


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




                                      F-3
<PAGE>   11

ILEX ONCOLOGY, INC.
1999 ANNUAL REPORT ON FORM 10-K
--------------------------------------------------------------------------------



                          CONSOLIDATED BALANCE SHEETS
              (In Thousands, Except Shares and Per Share Amounts)

<TABLE>
<CAPTION>
                                                                           December 31
                                                                     ----------------------
                   LIABILITIES AND STOCKHOLDERS' EQUITY                1999         1998
                                                                     ----------   ---------
<S>                                                                  <C>          <C>
CURRENT LIABILITIES:
   Accounts payable-
     Related parties                                                 $     165    $     306
     Other                                                               2,462        2,000
   Accrued subcontractor costs-
     Related parties                                                       739           95
     Other                                                               1,913        1,038
   Accrued liabilities                                                   2,488          908
   Deferred revenue                                                      2,557        2,033
                                                                     ---------    ---------

               Total current liabilities                                10,324        6,380
                                                                     ---------    ---------

LONG-TERM LIABILITIES                                                      369          404
                                                                     ---------    ---------

                                                                        10,693        6,784
                                                                     ---------    ---------

COMMITMENTS AND CONTINGENCIES (see Note 16)

MINORITY INTEREST                                                        5,082           --

STOCKHOLDERS' EQUITY:
   Convertible preferred stock, $0.01 par value; 20,000,000 shares
     authorized; no shares issued or outstanding                            --           --
   Common stock, $0.01 par value; 40,000,000 shares authorized;
     21,590,425 and 12,652,593 shares issued; 21,551,425 and
     12,613,593 shares outstanding in 1999 and 1998, respectively          216          127
   Additional paid-in capital                                          163,821       67,623
   Receivables on sale of common stock                                      --          (46)
   Accumulated deficit                                                 (77,338)     (31,283)
   Deferred compensation                                                (1,603)          --
   Less - Treasury stock at cost; 39,000 shares in 1999 and 1998          (517)        (517)
                                                                     ---------    ---------

               Total stockholders' equity                               84,579       35,904
                                                                     ---------    ---------

               Total liabilities and stockholders' equity            $ 100,354    $  42,688
                                                                     =========    =========
</TABLE>


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


                                      F-4
<PAGE>   12
ILEX ONCOLOGY, INC.
1999 ANNUAL REPORT ON FORM 10-K
--------------------------------------------------------------------------------


                      CONSOLIDATED STATEMENTS OF OPERATIONS
                    (In Thousands, Except Per Share Amounts)

<TABLE>
<CAPTION>
                                                       Years Ended December 31
                                                  --------------------------------
                                                     1999       1998        1997
                                                  ---------   --------    --------

REVENUE:
<S>                                               <C>         <C>         <C>
   Product development                            $  4,407    $  4,622    $  5,027
   Contract research services                       13,457       9,650       5,903
   Licensing fees                                       --          --         300
                                                  --------    --------    --------

                      Total revenue                 17,864      14,272      11,230
                                                  --------    --------    --------

OPERATING EXPENSES:
   Research and development costs                   15,990      16,127       6,740
   Direct cost of research services                 13,227      10,875       4,587
   General and administrative                        4,063       4,354       6,691
   In-process research and development              11,124          --          --
   Special charges                                  13,882          --          --
                                                  --------    --------    --------

                      Total operating expenses      58,286      31,356      18,018
                                                  --------    --------    --------

OPERATING LOSS                                     (40,422)    (17,084)     (6,788)

OTHER INCOME (EXPENSE):
   Equity in losses of-
     Research and development partnerships          (3,824)     (4,453)     (4,295)
     Contract research affiliate                    (3,310)     (1,541)       (182)
   Interest income, net                              1,700       1,850       2,583
   Minority interest in consolidated subsidiary        (82)         --          --
                                                  --------    --------    --------

LOSS BEFORE INCOME TAXES                           (45,938)    (21,228)     (8,682)

   Provision for foreign income taxes                  117          --          --
                                                  --------    --------    --------

NET LOSS                                          $(46,055)   $(21,228)   $ (8,682)
                                                  ========    ========    ========

BASIC AND DILUTED NET LOSS PER SHARE              $  (3.04)   $  (1.71)   $   (.72)
                                                  ========    ========    ========

WEIGHTED AVERAGE NUMBER OF SHARES OF
COMMON STOCK OUTSTANDING                            15,144      12,450      12,118
                                                  ========    ========    ========
</TABLE>


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




                                      F-5
<PAGE>   13

ILEX ONCOLOGY, INC.
1999 ANNUAL REPORT ON FORM 10-K
--------------------------------------------------------------------------------




<TABLE>
<CAPTION>
                                                                     CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                                                                   (In Thousands, except Shares Issued and Outstanding

                                                       Series A Convertible         Series B Convertible     Series C Convertible
                                                         Preferred Stock              Preferred Stock          Preferred Stock
                                                       --------------------         --------------------     --------------------
                                                         Shares      $0.01            Shares     $0.01          Shares    $0.01
                                                       Issued and     Par           Issued and     Par       Issued and     Par
                                                       Outstanding   Value          Outstanding   Value      Outstanding   Value
                                                       -----------  -------         -----------  -------     -----------  -------
<S>                                                    <C>          <C>             <C>         <C>          <C>         <C>
BALANCES, December 31, 1996                            2,991,477    $  30           3,101,448   $  31        1,309,424   $  13
    Issuance of common shares in public offering,
      net of issuance costs                                   --       --                  --      --               --      --
    Conversion of Series A, B, C, D and E preferred
      stock to common shares                          (2,991,477)     (30)         (3,101,448)    (31)      (1,309,424)    (13)
    Exercise of stock options and warrants                    --       --                  --      --               --      --
    Issuance of common shares for collaborative
      agreement                                               --       --                  --      --               --      --
    Issuance of common shares for investment in
      European affiliate                                      --       --                  --      --               --      --
    Payments received on receivables on sale of
      common stock                                            --       --                  --      --               --      --
    Net loss                                                  --       --                  --      --               --      --
                                                     -----------    -----          ----------   -----       ----------   -----
BALANCES, December 31, 1997                                   --       --                  --      --               --      --
    Issuance of common shares for collaborative
      agreement                                               --       --                  --      --               --      --
    Stock received as a reduction in advances
      to partners                                             --       --                  --      --               --      --
    Exercise of stock options and warrants                    --       --                  --      --               --      --
    Warrants issued in payment of licensing fee               --       --                  --      --               --      --
    Collections on receivables on sale of
      common stock                                            --       --                  --      --               --      --
    Net loss                                                  --       --                  --      --               --      --
                                                     -----------    -----          ----------   -----       ----------   -----
BALANCES, December 31, 1998                                   --       --                  --      --               --      --
    Issuance of common shares in connection
      with termination of a collaborative agreement           --       --                  --      --               --      --
    Issuance of common shares for acquisition
      of company                                              --       --                  --      --               --      --
    Issuance of common shares sold in
      connection with a collaborative agreement
      for drug compound                                       --       --                  --      --               --      --
    Exercise of stock options and warrants                    --       --                  --      --               --      --
    Options issued for consulting agreements                  --       --                  --      --               --      --
    Issuance of common shares in private
      placement, net of issuance costs                        --       --                  --      --               --      --
    Issuance of common shares in secondary
      offering, net of issuance costs                         --       --                  --      --               --      --
    Payments received on receivables on sale of
      common stock                                            --       --                  --      --               --      --
    Net loss                                                  --       --                  --      --               --      --
                                                     -----------    -----          ----------   -----       ----------   -----
BALANCES, December 31, 1999                                   --    $  --                  --   $  --               --   $  --
                                                     ===========    =====          ==========   =====       ==========   =====
<CAPTION>
                                                                     CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                                                                   (In Thousands, except Shares Issued and Outstanding

                                                       Series D Convertible         Series E Convertible
                                                         Preferred Stock              Preferred Stock            Common Stock
                                                       --------------------         --------------------     --------------------
                                                         Shares      $0.01            Shares     $0.01          Shares    $0.01
                                                       Issued and     Par           Issued and     Par       Issued and     Par
                                                       Outstanding   Value          Outstanding   Value      Outstanding   Value
                                                       -----------  -------         -----------  -------    ------------  -------
<S>                                                    <C>          <C>             <C>         <C>          <C>         <C>
BALANCES, December 31, 1996                              113,953      $   1             475,753   $    5       1,187,539   $  12
    Issuance of common shares in public offering,
      net of issuance costs                                   --         --                  --       --       2,700,000      27
    Conversion of Series A, B, C, D and E preferred
      stock to common shares                            (113,953)        (1)           (475,753)      (5)      7,992,055      80
    Exercise of stock options and warrants                    --         --                  --       --          70,387       1
    Issuance of common shares for collaborative
      agreement                                               --         --                  --       --         312,188       3
    Issuance of common shares for investment in
      European affiliate                                      --         --                  --       --          17,361      --
    Payments received on receivables on sale of
      common stock                                            --         --                  --       --              --      --
    Net loss                                                  --         --                  --       --              --      --
                                                        --------      -----         -----------   ------    ------------   -----

BALANCES, December 31, 1997                                   --         --                  --       --      12,279,530     123
    Issuance of common shares for collaborative
      agreement                                               --         --                  --       --         314,600       3
    Stock received as a reduction in advances
      to partners                                             --         --                  --       --         (39,000)     --
    Exercise of stock options and warrants                    --         --                  --       --          58,463       1
    Warrants issued in payment of licensing fee               --         --                  --       --              --      --
    Collections on receivables on sale of
      common stock                                            --         --                  --       --              --      --
    Net loss                                                  --         --                  --       --              --      --
                                                        --------      -----         -----------   ------    ------------   -----

BALANCES, December 31, 1998                                   --         --                  --       --      12,613,593     127
    Issuance of common shares in connection
      with termination of a collaborative agreement           --         --                  --       --         629,200       6
    Issuance of common shares for acquisition
      of company                                              --         --                  --       --       1,000,000      10
    Issuance of common shares sold in
      connection with a collaborative agreement
      for drug compound                                       --         --                  --       --         218,858       2
    Exercise of stock options and warrants                    --         --                  --       --         500,574       5
    Options issued for consulting agreements                  --         --                  --       --              --      --
    Issuance of common shares in private
      placement, net of issuance costs                        --         --                  --       --       2,389,200      24
    Issuance of common shares in secondary
      offering, net of issuance costs                         --         --                  --       --       4,200,000      42
    Payments received on receivables on sale of
      common stock                                            --         --                  --       --              --      --
    Net loss                                                  --         --                  --       --              --      --
                                                        --------      -----         -----------   ------    ------------   -----
BALANCES, December 31, 1999                                   --      $  --                  --   $   --      21,551,425   $ 216
                                                        ========      =====         ===========   ======    ============   =====



<CAPTION>

                                                                     Receivables
                                                          Additional  on Sale
                                                           Paid-In   of Common   Accumulated      Deferred       Treasury
                                                           Capital     Stock      Deficit       Compensation       Stock     Total
                                                          ---------- ----------- ------------   ------------     --------- --------
<S>                                                       <C>        <C>         <C>            <C>             <C>        <C>
BALANCES, December 31, 1996                                $ 26,218   $ (111)    $ (1,373)        $    --         $  --    $ 24,826
    Issuance of common shares in public offering,
      net of issuance costs                                  29,135       --           --              --            --      29,162
    Conversion of Series A, B, C, D and E preferred
      stock to common shares                                     --       --           --              --            --          --
    Exercise of stock options and warrants                      163       --           --              --            --         164
    Issuance of common shares for collaborative
      agreement                                               5,296       --           --              --            --       5,299
    Issuance of common shares for investment in
      European affiliate                                        278       --           --              --            --         278
    Payments received on receivables on sale of
      common stock                                               --       29           --              --                        29
    Net loss                                                     --       --       (8,682)             --            --      (8,682)
                                                           --------   ------     --------        --------         -----    --------

BALANCES, December 31, 1997                                  61,090      (82)     (10,055)             --            --      51,076
    Issuance of common shares for collaborative
      agreement                                               3,104       --           --              --            --       3,107
    Stock received as a reduction in advances
      to partners                                                --       --           --              --          (517)       (517)
    Exercise of stock options and warrants                      286       --           --              --            --         287
    Warrants issued in payment of licensing fee               3,143       --           --              --            --       3,143
    Collections on receivables on sale of
      common stock                                               --       36           --              --            --          36
    Net loss                                                     --       --      (21,228)             --            --     (21,228)
                                                           --------   ------     --------        --------         -----    --------


BALANCES, December 31, 1998                                  67,623      (46)     (31,283)             --          (517)     35,904
    Issuance of common shares in connection
      with termination of a collaborative agreement           6,286       --           --              --            --       6,292
    Issuance of common shares for acquisition
      of company                                              9,928       --           --              --            --       9,938
    Issuance of common shares sold in
      connection with a collaborative agreement
      for drug compound                                       2,498       --           --              --            --       2,500
    Exercise of stock options and warrants                      874       --           --              --            --         879
    Options issued for consulting agreements                  2,167       --           --          (1,603)           --         564
    Issuance of common shares in private
      placement, net of issuance costs                       19,976       --           --              --            --      20,000
    Issuance of common shares in secondary
      offering, net of issuance costs                        54,469       --           --              --            --      54,511
    Payments received on receivables on sale of
      common stock                                               --       46           --              --            --          46
    Net loss                                                     --       --      (46,055)             --            --     (46,055)
                                                           --------   ------     --------        --------         -----    --------

BALANCES, December 31, 1999                                $163,821   $   --     $(77,338)       $ (1,603)        $(517)   $ 84,579
                                                           ========   ======     ========        ========         =====    ========
</TABLE>

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

                                      F-6
<PAGE>   14

ILEX ONCOLOGY, INC.
1999 ANNUAL REPORT ON FORM 10-K
--------------------------------------------------------------------------------


                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In Thousands)

<TABLE>
<CAPTION>
                                                                                   Years Ended December 31
                                                                             --------------------------------
                                                                               1999         1998         1997
                                                                             ---------    ---------    ------

<S>                                                                          <C>         <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net loss                                                                 $(46,055)   $(21,228)   $ (8,682)
    Adjustments to reconcile net loss to net cash used in operating
      activities:
       Depreciation and amortization                                            2,226       2,076         967
       Special charges                                                         13,882          --          --
       In-process research and development                                     11,124          --          --
       Net activity of research and development partnerships and
         contract research affiliate                                            4,426         435       4,477
       Minority interest                                                           82          --          --
       Deferred compensation expense for consultants options                      564          --          --
       Valuation of warrant issued in payment of licensing fees                    --       3,143          --
       Changes in operating assets and liabilities:
           (Increase) decrease in accounts receivable, net                     (3,622)       (143)     (3,589)
           (Increase) decrease in prepaid expenses and other                     (443)       (474)        327
           Increase in other noncurrent assets                                     75         (75)         --
           Increase in accounts payable and accrued liabilities                 1,468       1,473       1,071
           Increase in deferred revenue                                           524       1,105         398
           Increase (decrease) in other long-term liabilities                     (35)        (29)        207
                                                                             --------    --------    --------

                   Net cash used in operating activities                      (15,784)    (13,717)     (4,824)
                                                                             --------    --------    --------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Net activity of marketable securities' transactions                        (25,125)        417      (2,144)
   Net activity in restricted investments                                         170      (1,120)        100
   Purchase of property and equipment                                          (1,723)     (2,708)     (2,047)
   Advances to research and development partnerships and contract research
     affiliate                                                                 (1,000)       (519)     (2,736)
   Acquisitions, net of cash acquired                                            (328)         --          --
                                                                             --------    --------    --------

                   Net cash used in investing activities                      (28,006)     (3,930)     (6,827)
                                                                             --------    --------    --------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Issuance of common stock for cash, net of issuance costs                    77,011          --      29,076
   Proceeds from sale of subsidiary's preferred stock                           5,000          --          --
   Exercise of options and warrants                                               879         287         164
   Collections of receivables on sale of common stock                              46          36          29
   Payment of note payable assumed in acquisition                              (1,000)         --          --
                                                                             --------    --------    --------

                   Net cash provided by financing activities                   81,936         323      29,269
                                                                             --------    --------    --------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                         $ 38,146    $(17,324)   $ 17,618

CASH AND CASH EQUIVALENTS, beginning of year                                    5,331      22,655       5,037
                                                                             --------    --------    --------

CASH AND CASH EQUIVALENTS, end of year                                       $ 43,477    $  5,331    $ 22,655
                                                                             ========    ========    ========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
   Cash paid during the year for -
     Interest                                                                $     --    $     --    $     --
     Income taxes                                                                  --          --          --
</TABLE>



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





                                      F-7
<PAGE>   15

ILEX ONCOLOGY, INC.
1999 ANNUAL REPORT ON FORM 10-K
--------------------------------------------------------------------------------



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in Thousands, Except Share Information, Per Share Information or As
Otherwise Indicated)

1.  ORGANIZATION AND OPERATIONS

ILEX Oncology, Inc. (the Company), was incorporated in December 1993 under the
laws of the State of Delaware. The Company is a drug development company that is
focused on oncology through its subsidiaries: ILEX Products, Inc. (ILEX
Products) and ILEX Oncology Services, Inc. (ILEX Services). ILEX Products is
focused in the areas of identification, development, manufacturing and
regulatory approval of oncology compounds to develop cancer therapeutics and
build a chemoprevention product platform. ILEX Services manages the preclinical
research and clinical trials for our own product candidates, as well as oncology
products being developed by other companies.

In December 1996, the Company entered into an agreement with MPI Enterprises,
L.L.C. (MPI) in order to form a drug development joint venture, which has been
fully consolidated (see Note 4). In June 1999, ILEX Services acquired certain
assets and liabilities of Pharma Forschung Kaufbeuren GmbH (PFK), a European
contract research affiliate, through its new wholly owned subsidiary ILEX
Services Limited (Services Ltd.), which now provides the Company with two
locations from which European clinical trials will be managed and supported:
Edinburgh, Scotland and Guildford, England (see Note 4). In July 1999, the
Company acquired Convergence Pharmaceutical, Inc. (Convergence), a Boston,
Massachusetts company, and its portfolio of angiogenesis inhibitors (see Note
6).

The accompanying consolidated financial statements include the accounts of ILEX
Oncology, Inc., and its subsidiaries. All significant intercompany transactions
and accounts have been eliminated in consolidation. Certain prior period amounts
have been reclassified to conform to the 1999 presentation.

Currently, the Company has no products available for sale. The Company does have
seven drugs in clinical development and several product candidates in late
preclinical research. All of the product rights are either acquired or
in-licensed. The Company has not generated any revenues from product sales to
date, and there can be no assurance that revenues from product sales will be
achieved. Accordingly, the Company has incurred net losses to date.

The Company's ability to achieve a profitable level of operations in the future
will depend in large part on the ability to complete development of its
compounds, obtaining regulatory approvals for such compounds, commercializing
these potential products through marketing agreements with other companies or,
if the Company chooses, marketing such compounds independently, successfully
manufacturing such compounds, achieving market acceptance of such compounds and
expanding its contract research services business. There can be no assurance
that the Company will be successful in developing such compounds, obtaining such
approvals, bringing such compounds to market, developing sales, marketing or
distribution capabilities, manufacturing such products, generating market
acceptance or expanding its contract research services business.

During 1999, the Company received $77,011 in net proceeds from common stock
offerings including common stock sold in connection with a collaborative
agreement for a drug compound. Additionally, the Company received $5,000 from
the sale of preferred stock of a subsidiary. These transactions provide
additional funding to expand preclinical research and clinical trials, potential
acquisitions of complementary technologies, products or companies, and for
general corporate purposes (see Note 8). However, the Company may require
substantial additional funds to conduct research and development, to further
develop its potential pharmaceutical products, to manufacture and market any
pharmaceutical products that may be developed and to expand its contract
research service business (see Note 18). The Company expects its capital and
operating expenditures to increase substantially over the next several years.
The Company's current sources of funding are derived from its collaborative
agreements with its strategic partners, its contract research services, existing
cash and cash equivalents and investments in marketable securities. The Company
believes that its collaborative agreements with strategic partners, its contract
research services, existing cash and cash equivalents and investments in
marketable securities will satisfy its cash requirements for the foreseeable
future. There can be no assurance, however, that additional funds will be
available on acceptable terms, if at all.


                                      F-8
<PAGE>   16

ILEX ONCOLOGY, INC.
1999 ANNUAL REPORT ON FORM 10-K
--------------------------------------------------------------------------------




2.       SIGNIFICANT ACCOUNTING POLICIES

Revenue Recognition.

   Product Development - Revenues from drug development studies are based on the
   time incurred on such studies. The Company is reimbursed for investigator
   costs based on actual costs incurred or predetermined rates together with
   out-of-pocket costs incurred during the performance of the study. Revenues
   related to milestone payments of the drug development studies are recognized
   based on the completion of the milestone measurement.

   Contract Research Services - Revenues from contract research services are
   related to both fixed price and hourly based customer contracts and are
   recognized on a percentage-of-completion basis or as such services are
   performed.

   Licensing Fees - Revenues from the signing of licensing agreements are
   recognized upon the execution of the agreements as the Company has no future
   obligations related to the signing of the license agreement and such fees are
   nonrefundable.

Current Assets and Current Liabilities. The carrying value of current assets and
current liabilities, excluding investments in marketable securities,
approximates fair value due to the short maturity of these items.

Property and Equipment. Property and equipment are reported at cost and
depreciated over the estimated useful lives of the individual assets using the
straight-line method (see Note 5). Leasehold improvements represent capitalized
employee salaries related to construction and other miscellaneous costs incurred
to bring the leased current Good Manufacturing Practices (cGMP) facility (see
Note 14) into use, as well as improvements made to leased facilities. Leasehold
improvements are amortized over the lesser of the life of the lease or the
useful life of the related property. Expenditures for maintenance and repairs
are charged to expense as incurred. The estimated lives used in computing
depreciation and amortization are as follows:

            Office equipment                     3 - 10 years
            Lab equipment                        5 - 10 years
            Leasehold improvements               2 - 15 years

Deferred Revenue. Deferred revenue represents advances for services not yet
rendered under fixed fee contract services and billings in excess of revenue
recognized, and should be realized within six months to one year.

Investments in Marketable Securities. At December 31, 1999 and 1998, marketable
debt securities have been categorized as held to maturity and are stated at
amortized cost, as these securities have staggered maturity dates, and
management of the Company does not intend to liquidate these securities before
maturity. Marketable debt securities with an original maturity of less than one
year are classified in the balance sheet as current assets, while securities
with a maturity of greater than one year are classified as noncurrent assets.
The fair value of marketable securities is based on currently published market
quotations (see Note 3).

Credit Risk and Major Customer. The Company places its excess temporary cash and
cash equivalents in a money market account with a high quality financial
institution. At times, such amounts may be in excess of the FDIC insurance
limit. The Company's accounts receivable are primarily from pharmaceutical and
biotechnology companies. Based on the Company's evaluation of the collectibility
of these accounts receivable, an allowance for doubtful accounts of $164 and
$150 was necessary at December 31, 1999 and 1998, respectively. The Company
believes the exposure to credit risk related to the remaining accounts
receivable is minimal.

For the years ended December 31, 1999, 1998 and 1997, the Company's top five
customers accounted for 65 percent, 78 percent and 51 percent of total revenue,
respectively. The following table represents total revenue in excess of ten
percent from significant customers:

<TABLE>
<CAPTION>
  December 31, 1999      December 31, 1998     December 31, 1997
  -----------------      -----------------     -----------------
<S>             <C>        <C>        <C>      <C>          <C>
   $4,330       24%        $3,615     25%      $  2,143     19%
    3,006       17%         2,714     19%         1,700     15%
    1,868       10%         2,149     15%
                            1,901     13%
</TABLE>



                                      F-9
<PAGE>   17

ILEX ONCOLOGY, INC.
1999 ANNUAL REPORT ON FORM 10-K
--------------------------------------------------------------------------------



Use of Estimates. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results may differ from those estimates.

Income Taxes. The Company has incurred losses since inception for both book and
tax purposes. The tax provision recorded in 1999 relates to amounts accrued for
the Company's wholly owned subsidiary acquired during 1999 which operates in the
United Kingdom.

Statements of Cash Flows. The Company considers all highly liquid investments
with maturities of three months or less at the date of purchase to be cash
equivalents.

Noncash financing and investing activities for the years ended December 31,
1999, 1998 and 1997, include the following:

<TABLE>
<CAPTION>
                                                                      1999     1998     1997
                                                                     ------   ------   ------

<S>                                                                  <C>      <C>      <C>
Conversion of preferred stock into common stock                      $   --   $   --   $   80

Contribution payable to MPILEX Partners, L.P. (MPILEX)                   --       --       11

Contribution made to MPILEX as a reduction in accounts receivable        --       --    1,089

Issuance of common stock for investment in PFK GmbH (PFK)                --       --      278

Issuance of common stock to Physician Reliance Network, Inc. (PRN)    6,292    3,107    5,299

Treasury shares received from MPILEX as a reduction in advances
   to research and development partnerships                              --      517       --

Issuance of common stock for acquisition                              9,938       --       --

Assets acquired in acquisition                                          774       --       --

Liabilities assumed in acquisition                                    2,199       --       --

Settlement of accounts payable through acquisition                      566       --       --
</TABLE>


Foreign Currency Translation. Services Ltd. is a wholly owned subsidiary of ILEX
Services based in the United Kingdom. The financial statements of Services Ltd.
were prepared in British pounds and translated to United States (U.S.) dollars
based on the current exchange rate at the end of the period for the balance
sheet and a weighted-average rate for the period on the statement of operations.
Translation adjustments were insignificant for the year ended December 31, 1999.

Net Loss Per Share. Basic net loss per share was computed by dividing net loss
by the weighted average number of shares of common stock outstanding during the
year. Diluted net loss per share is equal to basic net loss per share, as the
effect of all common stock equivalents is antidilutive.


3.   INVESTMENTS IN MARKETABLE SECURITIES

At December 31, 1999 and 1998, the following marketable securities due within
one year were classified as current assets:

<TABLE>
<CAPTION>
                                                                1999                       1998
                                                       -----------------------    -----------------------
                                                         Cost       Fair Value      Cost       Fair Value
                                                       --------     ----------    ---------    ----------
<S>                                                    <C>            <C>         <C>            <C>
Government agency securities                           $     --       $     --    $   2,885      $  2,885
                                                       ========       ========    =========      ========

Corporate securities                                   $  33,050      $ 32,991    $  15,964      $ 15,955
                                                       =========      ========    =========      ========

U.S. Treasury securities                               $     150      $    150    $     150      $    150
                                                       =========      ========    =========      ========

Foreign government securities                          $     708      $    706    $     --       $     --
                                                       =========      ========    ========       ========
</TABLE>



                                      F-10
<PAGE>   18

ILEX ONCOLOGY, INC.
1999 ANNUAL REPORT ON FORM 10-K
--------------------------------------------------------------------------------



At December 31, 1999 and 1998, the following marketable securities with a
maturity greater than one year were classified as noncurrent assets:

<TABLE>
<CAPTION>
                                                  1999                         1998
                                      ---------------------------   ---------------------------
                                           Cost       Fair Value       Cost         Fair Value
                                      ------------   ------------   ------------   ------------
<S>                                   <C>            <C>            <C>            <C>
U.S. Treasury securities              $        275   $        279   $        445   $        446
                                      ============   ============   ============   ============

Corporate securities                  $     10,216   $     10,164   $          -   $          -
                                      ============   ============   ============   ============
</TABLE>

Gross unrealized holding gains and losses at December 31, 1999, were
approximately $18 and $127, respectively. Gross unrealized holding gains and
losses at December 31, 1998, were approximately $7 and $15, respectively.
Amounts related to U.S. Treasury securities which are classified as restricted
investments and are attributable to collateral for a lease commitment, are
included in their respective investment categories (see Note 10 and 14).

4.  INVESTMENTS IN AND ADVANCES TO RESEARCH AND DEVELOPMENT PARTNERSHIPS AND
    CONTRACT RESEARCH AFFILIATE

In December 1996, the Company entered into an agreement with MPI, for an equally
owned joint venture, MPILEX, for research collaboration endeavors. At December
31, 1998, as a result of making contributions to MPILEX in excess of MPI's
contributions, the Company had a majority ownership interest in and controlling
interest of MPILEX. The activity for the venture has been fully consolidated in
the Company's 1999 and 1998 operating results with all significant intercompany
transactions and accounts being eliminated.

In May 1997, the Company entered into an agreement with LeukoSite, Inc.
(LeukoSite), now Millennium Pharmaceutical, Inc. (Millennium), for an equally
owned joint venture, L&I Partners, L.P. (L&I), for research collaboration
endeavors. The Company accounts for its investment in L&I using the equity
method of accounting. The following is summarized financial information for L&I
as of and for the period ended December 31, 1999, 1998 and 1997:

<TABLE>
<CAPTION>
                                      Summarized Income Statement Information

                                     1999           1998         1997
                                     ----           ----         ----
                                 (Unaudited)

<S>                              <C>            <C>           <C>
Revenue                          $  3,750       $      -      $      -
Operating expenses                 11,339          7,784         6,722
Operating loss                     (7,589)        (7,784)       (6,722)
Net loss                           (7,686)        (7,716)       (6,716)

                                       Summarized Balance Sheet Information

                                                 1999          1998
                                                 ----          ----
                                             (Unaudited)

Assets                                       $  2,899       $     64
Liabilities                                     9,279            737
                                             --------       --------

Partners' equity                             $ (6,380)      $   (673)
                                             ========       ========
</TABLE>

In August 1999, L&I entered into an agreement which grants Schering AG exclusive
marketing and distribution rights to CAMPATH(R) in the U.S., Europe, and the
rest of the world except Japan and East Asia, where ILEX and Millennium have
retained rights. The agreement provides that Schering will advance to the
partnership up to $30 million to L&I for the rights to CAMPATH(R) and for the
achievement of certain regulatory milestones. Profits from the sale of CAMPATH
in the U.S. will be shared equally between ILEX, Millennium, and Schering's U.S.
affiliate, Berlex Laboratories, Inc. For sales made in the rest of the
territory, Schering AG will make royalty payments equivalent to the rate of
profit sharing expected in the U.S.



                                      F-11
<PAGE>   19

ILEX ONCOLOGY, INC.
1999 ANNUAL REPORT ON FORM 10-K
--------------------------------------------------------------------------------





In September 1997, the Company entered into an agreement with PFK, a German
contract research organization, to purchase a 30 percent equity interest in PFK.
In 1998, the Company purchased an additional 10 percent equity interest in PFK
for a cash payment of $519, bringing the Company's total ownership interest in
PFK to 40 percent. In June 1999, ILEX Services acquired certain assets and
liabilities of the former PFK offices in the United Kingdom through its wholly
owned subsidiary, Services Ltd. The acquisition, for $541, was accounted for as
a purchase and provides ILEX Services with two locations from which European
clinical trials will be managed and supported: Edinburgh, Scotland, and
Guildford, England. Also on June 1, 1999, ILEX Services incurred one-time exit
costs of approximately $2.9 million in letter of credit guarantee funding costs
and a write-off of its remaining investment in PFK. While the Company continues
to hold a 40 percent interest in PFK, management believes the funding provided
to PFK under the letter of credit is uncollectible and, accordingly, has
expensed such amount as additional losses attributable to its contract research
affiliate.

5.   PROPERTY AND EQUIPMENT

Property and equipment are composed of the following:
<TABLE>
<CAPTION>

                                               December 31,
                                            ------------------
                                              1999       1998
                                            -------    -------
<S>                                         <C>        <C>
Office equipment                            $ 5,188    $ 4,208
Lab equipment                                 2,147      1,252
Leasehold improvements                          612        355
                                            -------    -------
                                              7,947      5,815
Accumulated depreciation and amortization    (3,242)    (1,374)
                                            -------    -------
Net property and equipment                  $ 4,705    $ 4,441
                                            =======    =======
</TABLE>

6.   ACQUISITION OF CONVERGENCE

On July 16, 1999, the Company acquired Convergence, of Boston, Massachusetts, a
privately held research-based pharmaceutical company with an emerging portfolio
of angiogenesis and DNA repair inhibitors. The acquisition has been accounted
for using the purchase method of accounting. Under the terms of the agreement,
ILEX acquired Convergence in exchange for 1 million shares of the Company's
common stock, and an additional earn-out of up to 1 million shares to be issued
to Convergence's founders if certain development milestones are met. The Company
also assumed $1.0 million in Convergence debt as part of the purchase.
Accordingly, the Company has included the results of operations for Convergence
from the date of acquisition. Subsequent to the purchase of Convergence by the
Company, the note was called and the Company paid the principal sum of this note
together with the accrued interest.

Concurrent with the acquisition, the Company entered into four consulting
agreements with the founders of Convergence. The agreements specify compensation
levels and grant the four founders of Convergence the option to purchase a total
of 100,000 shares of the Company's common stock at an exercise price of $9.94.
The options vest at the rate of 25 percent per year beginning in July 2000. The
fair value of the options is recorded as deferred compensation as a separate
component of stockholders' equity and adjusted to current market value on a
quarterly basis. Deferred compensation is being amortized to expense over the
vesting period of the options. At December 31, 1999, using an option-pricing
model, the fair value of the options was calculated as approximately $2.2
million, and the Company had recognized approximately $564 in consulting
expense.

In connection with the acquisition of Convergence, the Company acquired certain
intangible assets including intellectual property in the area of angiogenesis
inhibitors. In connection with the purchase price allocation, $11.1 million was
expensed as a charge for the purchase of in-process research and development.

In performing this allocation, the Company considered, among other factors,
Convergence's research and development projects that were in process at the date
of acquisition. With regard to the in-process research and development projects,
the Company considered factors such as the stage of development of the
technology at the time of acquisition, the importance of each project to the
overall development plan, alternative future use of the technology and the
projected incremental cash flows from the projects when completed and any
associated risks. Due to their specialized nature, the in-process research and
development projects had no alternative future use, either for re-deployment
elsewhere in the business or in liquidation, in the event the projects failed.



                                      F-12
<PAGE>   20
ILEX ONCOLOGY, INC.
1999 ANNUAL REPORT ON FORM 10-K
--------------------------------------------------------------------------------


The Income Approach was the primary technique utilized in valuing the purchased
research and development projects. The value assigned to these projects was
limited because technological feasibility had not been established; including
development, testing and regulatory activities associated with the introduction
of projected product launches. The value assigned to purchased in-process
technology was determined by estimating the costs to develop the purchased
in-process technology into commercially viable products, estimating the
resulting net cash flows from the projects and discounting the net cash flows to
their present value. The independent appraisal also considered the fact that the
existing know-how diminishes in value over time as new technologies are
developed and changes in market conditions render current products and
methodologies obsolete. The assumptions underlying the cash flow projections
used were derived primarily from investment banking reports, historical results,
company records and discussions with management.

Revenue estimates for each in-process project were developed by management based
on estimates of relevant market sizes and growth factors, expected trends in
technology and the nature and expected timing of new product introductions by
the Company and its competitors. Due to the technological and economic risks
associated with the developmental projects, a discount rate of 100 percent was
used to discount cash flows from the in-process products. The Company believes
that the foregoing assumptions used in the purchase price allocation were
reasonable at the time of the acquisition. No assurance can be given, however,
that the underlying assumptions used to estimate revenue, development costs or
profitability or the events associated with such projects will transpire as
estimated. For these reasons, actual results may vary from projected results.
The most significant and uncertain assumptions relating to the in-process
projects relate to the projected timing of completion and revenues attributable
to each project.

The following table reflects unaudited pro forma combined results of operations
of ILEX, Convergence and Services Ltd. as if the acquisitions had occurred on
January 1, 1999 and 1998 (see Note 4). Such pro forma information is presented
for informational purposes only and is not necessarily indicative of the
consolidated results that would have been achieved had the acquisition actually
been consummated at January 1, 1999 and 1998.

<TABLE>
<CAPTION>
                                                December 31,
                                          ----------------------
                                             1999         1998
                                          ---------    ---------

<S>                                       <C>          <C>
Total revenue                             $  18,662    $  15,822
Net loss                                  $ (46,686)   $ (21,864)
Basic loss per share                      $   (3.08)   $   (1.76)
</TABLE>

7.   MINORITY INTEREST

On September 23, 1999, ILEX Services issued 290,867 shares of Series A
convertible preferred stock for $5 million to Impath, Inc. The preferred stock
is convertible to the Company's common stock based upon a computation set forth
in the certificate of designation for the preferred stock. The preferred stock
is entitled to liquidation preferences over the ILEX Services' common stock.
The preferred stock is eligible for dividends at an annual rate of $1.031 per
share. Dividends are accrued monthly and will be paid to the stockholders
annually in arrears beginning in September 2000, when and as declared by ILEX
Services' board of directors. A member of the Company's board of directors also
serves as a member of the board of directors of Impath, Inc.

At December 31, 1999, the convertible preferred stock is reflected as minority
interest on the Company's consolidated balance sheet. The corresponding
dividends are reflected as minority interest in consolidated subsidiary on the
Company's consolidated statements of operations.

8.   STOCKHOLDERS' EQUITY

In April 1995, certain consultants and employees of the Company exercised rights
to purchase, in aggregate, 1,187,481 shares of common stock pursuant to their
respective consulting or employment agreements for $208. A portion of this
amount was paid in cash and the Company financed the remaining balance. The
remaining notes receivable were repaid in 1999.

In February 1997, the Company completed the issuance of an additional 2.7
million common shares through a public offering, resulting in net proceeds
(after deducting issuance costs) of $29.2 million. In connection with the public
offering, the board of directors approved an approximate 1.75 for 1 reverse
stock split of the Company's common stock effective upon the effective date of
the public offering. All common stock, convertible preferred stock, options,
warrants



                                      F-13
<PAGE>   21

ILEX ONCOLOGY, INC.
1999 ANNUAL REPORT ON FORM 10-K
--------------------------------------------------------------------------------




and per share information included in the accompanying consolidated financial
statements were adjusted to give retroactive effect to the split. All of the
outstanding Series A, Series B, Series C, Series D and Series E convertible
preferred stock were converted into 7,992,055 shares of common stock at the date
of the public offering. In September 1997, the Company acquired a 30 percent
equity interest in PFK, a German contract research organization, followed by an
additional investment of 10 percent in 1998. This purchase was effected through
the issuance of 17,361 common shares and cash payments of $1.4 million and $519
in 1997 and 1998, respectively.

In December 1998, the Company received 39,000 shares of its own stock from
MPILEX as payment for contract research services rendered by the Company. The
cost of the stock at the date of payment was $517 and was recorded as treasury
stock in the accompanying consolidated financial statements.

In January 1999, the Company entered into a development and licensing agreement
for an oncology compound with a pharmaceutical company. In March 1999, the
pharmaceutical company purchased $2.5 million of common stock of the Company
(see Note 12).

In July 1999, the Company completed a $20 million private placement of 2,389,200
shares of common stock. The shares were sold at a 15 percent discount from the
average 30-day trading price prior to closing.

In November 1999, the Company completed an underwritten public offering of its
common stock pursuant to which 4.2 million shares were sold by the Company. The
number of shares sold by the Company includes the underwriters' exercise of
their overallotment option. Proceeds, net of offering costs, to the Company from
this offering were approximately $54.5 million.

9.   STOCK OPTIONS AND STOCK PURCHASE WARRANTS

Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" (FAS 123) defines a fair value based method of accounting for
employee stock options or similar equity instruments and encourages all entities
to adopt that method of accounting for all of their employee stock compensation
plans. Under the fair value based method, compensation cost is measured at the
grant date based on the value of the award and is recognized over the service
period of the award, which is usually the vesting period. However, FAS 123 also
allows entities to continue to measure compensation costs for employee stock
compensation plans using the intrinsic value method of accounting prescribed by
Accounting Principles Board (APB) Opinion No. 25, "Accounting for Stock Issued
to Employees" (APB 25). The Company has adopted FAS 123 and has elected to
remain with the accounting prescribed by APB 25. The Company has made the
required disclosures prescribed by FAS 123.

During 1995, the Company adopted a stock option plan (the Plan). Under the Plan,
stock options may be granted to key employees and consultants of the Company as
approved by a committee of the Company's board of directors. Originally, the
Company had reserved 570,904 shares of common stock for issuance in accordance
with the Plan. In May 1998, the Company increased the number of authorized
shares of common stock reserved for issuance under the Plan to 1.8 million.
Stock options vest pursuant to the individual stock option agreements, usually
25 percent per year beginning one year from the date of grant, with unexercised
options expiring ten years from the date of grant. As of December 31, 1999,
options covering 311,619 shares have been exercised under this plan and options
covering 301,139 shares have expired.

In October 1996, the Company adopted a nonemployee directors' stock option plan
(the Directors' Plan). Under the Directors' Plan, each nonemployee director is
granted a one-time option equaling 17,128 shares of common stock. In October
1996, December 1996, August 1997, and February 1998 the nonemployee directors
were granted 102,768, 17,128, 17,128, and 30,000 options, respectively,
exercisable at $7.01, $7.01, $16.50, and $8.63 per share, respectively. These
options vest at 1/48 per month, with unexercised options expiring ten years from
the date of grant. During both 1997 and 1998, 17,128 of these options were
forfeited when nonemployee directors resigned their positions with the Company.
As of December 31, 1999, no options covering shares under this plan have been
exercised.



                                      F-14
<PAGE>   22

ILEX ONCOLOGY, INC.
1999 ANNUAL REPORT ON FORM 10-K
--------------------------------------------------------------------------------




A summary of the status of the Company's fixed stock option plans for the years
ended December 31, 1999, 1998 and 1997, and changes during these years on those
dates is presented below:

<TABLE>
<CAPTION>
                                                 December 31, 1999         December 31, 1998         December 31, 1997
                                              ---------------------    ----------------------    ---------------------
                                                           Weighted                  Weighted                  Weighted
                                                            Average                   Average                   Average
                                                           Exercise                  Exercise                  Exercise
                                               Shares       Price       Shares        Price       Shares        Price
                                              ----------  ---------    ----------   ---------    ---------    ---------

<S>                                            <C>          <C>           <C>         <C>          <C>          <C>
Outstanding, beginning of year                 1,178,736    $  8.56       972,258     $  7.74      688,680      $  4.21
Granted                                          492,530      11.02       396,514       10.37      380,730        12.96
Exercised                                       (184,181)      4.77       (58,463)       5.12      (68,975)        2.20
Forfeited                                       (175,644)     10.25      (131,573)      10.09      (28,177)        5.79
                                                --------    -------    ----------     -------      -------      -------

Outstanding, end of year                       1,311,441    $  9.71     1,178,736     $  8.56      972,258      $  7.74
                                              ==========    =======    ==========     =======      =======      =======

Options exercisable at end of year               458,050    $  7.67       401,144     $  5.65      232,256      $  3.77
                                              ==========    =======    ===========    =======      =======      =======

Weighted average fair value of options
   granted during the year                                  $  6.31                   $  7.07                   $ 10.39
                                                            =======                   =======                   =======
</TABLE>

The following table summarizes the information about fixed stock options
outstanding at December 31, 1999:

<TABLE>
<CAPTION>
                                         Options Outstanding                         Options Exercisable
                           ---------------------------------------------------   ----------------------------
                                               Weighted                               Number         Weighted
                                                Average            Weighted       Exercisable at      Average
                              Number           Remaining           Average         December 31,      Exercise
    Exercise Prices        Outstanding     Contractual Life     Exercise Price           1999           Price
    ---------------        -----------     ----------------     --------------   -------------     ----------

<S>                       <C>                 <C>                  <C>               <C>             <C>
$0.18 - $3.86                  184,797         1.9 years            $  3.50           168,194         $  3.50
$3.87 - $7.73                  201,875         4.5 years            $  7.06           132,184         $  7.05
$7.74 - $11.60                 556,107         7.7 years            $  9.69            57,261         $  8.90
$11.61 - $15.47                228,791         6.2 years            $ 12.97            47,315         $ 13.01
$15.48 - $19.34                139,871         4.8 years            $ 16.51            53,096         $ 16.34
                          ------------                                           ------------

                             1,311,441         5.8 years            $  9.71           458,050         $  7.67
                          ============                                           ============
</TABLE>

Had compensation cost for the Company's stock-based compensation plans been
determined on the fair value of the grant dates for awards under those plans
consistent with the method of FAS 123, the Company's net loss and loss per share
would have been increased to the pro forma amounts indicated below:

<TABLE>
<CAPTION>
                                                     December 31
                                          -----------------------------------
                                            1999         1998          1997
                                          ---------    ---------     --------

<S>                                        <C>         <C>            <C>
Net loss              As reported          $(46,055)   $(21,228)      $(8,682)

                      Pro forma            $(48,362)   $(22,900)      $(9,468)

Loss per share        As reported          $  (3.04)   $  (1.71)      $ (0.72)

                      Pro forma            $  (3.20)   $  (1.84)      $ (0.78)
</TABLE>

For options granted in 1999, 1998 and 1997, the fair value of each option grant
was estimated on the date of the grant using the Black-Scholes option pricing
model with the following weighted average assumptions: dividend yield of 0
percent for all years; expected volatility of 72.57 percent, 81.89 percent and
62.18 percent in 1999, 1998 and 1997, respectively; risk free interest rate of
5.875 percent, 4.5 percent and 6.3 percent in 1999, 1998 and 1997, respectively.
The expected life of the options granted for 1999 is 3.78 years, and the
expected life of the options granted for 1998 and 1997 was the term to
expiration.



                                      F-15
<PAGE>   23

ILEX ONCOLOGY, INC.
1999 ANNUAL REPORT ON FORM 10-K
--------------------------------------------------------------------------------


In connection with the private placement of Series B convertible preferred
stock, the Company issued a warrant for the purchase of 97,044 shares of common
stock at approximately $3.50 per share. The Company's management determined the
value of the warrant issued was immaterial to the financial position and results
of operations of the Company. The value of the warrants was based on the
exercise price of the warrant and the fair value of the Company's common stock
at the date of issuance as well as the terms of the warrant issued. The warrant
may be exercised in whole at any time or in part from time to time, prior to its
expiration in September 2000. In December 1999, a cashless exercise of these
warrants was executed for shares totaling 80,918. As of December 31, 1999, all
outstanding warrants were exercised.

In connection with the private placement of Series C convertible preferred
stock, the Company issued 355,913 warrants for the purchase of common stock at
approximately $8.76 per share to the Series C convertible preferred
stockholders. The value of the warrants issued were immaterial based on the
exercise price of the warrants and the fair value of the Company's common stock
on the date the warrants were issued. As such, no amount was attributed to the
warrants. The warrants may be exercised in whole at any time or in part from
time to time, prior to their expiration in July 2001. The exercise price of
these warrants is subject to an adjustment if the Company issues common stock
subsequent to the date of the warrants at a price per share less than the
exercise price of the warrants. As a result of the Company's private placement
in July 1999 (see Note 8), the exercise price of the warrants was adjusted to
$8.71. During 1999, two warrant holders completed a cashless exercise of
warrants for shares totaling 6,259. As of December 31, 1999, 344,672 of these
warrants remain unexercised.

In March 1998, the Company entered into an agreement with a drug development
institute to license a compound for development by the Company. The agreement
called for an initial payment of $250 and a warrant to purchase 590,113 shares
of the Company's common stock. Using the Black-Scholes pricing model, the value
of the warrant was determined to be $3,143. In 1999, all outstanding warrants
were exchanged for shares totaling 229,216 via a cashless exercise.

10.  SPECIAL CHARGES

The Company recorded special charges totaling $13.9 million in the second
quarter of 1999. As discussed below, these charges include the recognition of
$12.3 million of costs associated with the termination of the Company's
agreements with PRN and $1.6 million of charges related to other items.

In July 1997, the Company entered into an assignment agreement and a services
agreement with PRN under which the Company and PRN agreed to jointly market
their clinical trial service capabilities. In accordance with these agreements,
the Company issued 312,188 and 314,600 common shares to PRN in July 1997 and
1998, respectively. The value of the shares issued was recorded as an intangible
asset and was being amortized over the term of the agreements. The Company also
agreed to issue up to an additional 629,200 shares to PRN over a two-year period
if PRN remained in compliance with various provisions of the agreements.
Additionally, 1,255,988 common shares could have been issued over a four-year
period if certain milestones were achieved. Effective June 30, 1999, the Company
and PRN terminated the agreements and the Company recorded an approximate $12.3
million special charge associated with the value of the remaining 629,200 shares
issued and the write-off, in accordance with Financial Accounting Standard 121,
of the net intangible asset associated with the PRN agreements. The Company has
no further obligation with respect to the assignment agreement or with respect
to the contingent shares under the services agreement.

The remaining $1.6 million in special charges is comprised of a $750 accrual for
a debt guarantee of an unaffiliated site management organization which
management determined to be uncollectible, a $350 write-down of computer
equipment, and an approximate $500 write-off of an operating lease commitment
for manufacturing equipment which management has determined will not be
utilized.

11.  RELATED-PARTY TRANSACTIONS

CTRC Research Foundation (CTRC Research), a stockholder of the Company, performs
certain administrative and technical support services for the Company. For the
years ended December 31, 1999, 1998 and 1997, the Company paid CTRC Research
approximately $190, $672, and $832, respectively, for these services and
reimbursement of salaries and benefits. As described in Note 14, the Company has
lease agreements with CTRC Research for labs and the cGMP



                                      F-16
<PAGE>   24

ILEX ONCOLOGY, INC.
1999 ANNUAL REPORT ON FORM 10-K
--------------------------------------------------------------------------------


facility. For the years ended December 31, 1999, 1998 and 1997, the Company paid
CTRC Research approximately $439, $280, and $94, respectively, related to these
lease agreements. At December 31, 1999 and 1998, the Company had payables to
CTRC Research amounting to $92, related to the aforementioned services and lease
agreements.

In March 1995, the Company entered into a subordinated option agreement with
CTRC Research. The agreement gives the Company the subordinated option to
acquire licenses or certain marketable rights, as defined in the agreement,
owned by CTRC Research. The subordinated option for any particular marketable
right is exercisable only after a third party, with which CTRC Research has
contracted, elects not to exercise its primary option on the same marketable
right. The subordinated option agreement expires in fiscal year 2000.

During 1999, the Company had outstanding receivables from employees related to
the exercise of stock options, which are repaid prior to the transfer of stock.
Additionally, during the year the Company made an interest free loan to an
officer of the Company, which was repaid prior to year-end.

Subcontractors provide the Company with consulting services and preclinical and
clinical testing related to certain of its contracts. Such costs may be included
in either research and development costs or subcontractor costs in the
accompanying consolidated financial statements. For the years ended December 31,
1999, 1998 and 1997, the Company incurred the following related-party expenses
for subcontracting costs:


<TABLE>
<CAPTION>
                                                              December 31
                                                     ------------------------------
                                                       1999        1998      1997
                                                     --------    --------  --------

<S>                                                  <C>         <C>       <C>
CTRC Research                                        $  1,037    $    699  $    486
Director of the Company                                   312         323       388
Stockholders                                              350          63       305
Company owned by officer/director of the Company            -           -     1,654
PRN                                                       223         649       540
US Oncology                                                28           -         -
MPI                                                         -           -        21
PFK                                                       175       1,084       404
                                                     --------    --------  --------
                                                     $  2,125    $  2,818  $  3,798
                                                     ========    ========  ========
</TABLE>

At December 31, 1999 and 1998, the following subcontractor costs were payable to
related parties:

<TABLE>
<CAPTION>
                                December 31
                             ----------------
                               1999     1998
                             -------   ------

<S>                          <C>       <C>
    CTRC Research            $   428   $    -
    PRN                          225       95
    US Oncology                   86        -
                             -------   ------

                             $   739   $   95
                             =======   ======
</TABLE>

During 1999 and 1998, the Company performed contract research services on behalf
of L&I and MPILEX, the Company's research and development partnerships. For the
years ended December 31, 1999, 1998 and 1997, the Company recorded the following
revenues related to these services:

<TABLE>
<CAPTION>
                                                 December 31
                                      ------------------------------
                                       1999       1998       1997
                                      --------   --------   --------

<S>                                   <C>        <C>        <C>
L&I                                   $  4,330   $  3,615   $    952

MPILEX                                       -        851      1,421
</TABLE>




                                      F-17
<PAGE>   25

ILEX ONCOLOGY, INC.
1999 ANNUAL REPORT ON FORM 10-K
--------------------------------------------------------------------------------



12.  LICENSING AGREEMENTS

In 1994, the Company obtained two licensing agreements for oncology compounds
from CTRC Research. During 1995 and 1996, the Company entered into six
additional licensing agreements. All of the licensing agreements grant the
Company the right to develop and market the oncology compounds covered by such
agreements and to license the rights to such compounds to other third parties.

Under the terms of the agreements, the Company is required to pay upfront fees
and/or annual fees, as defined in the agreements. In addition, the Company must
also pay royalties upon commercialization of the compounds. Under certain
agreements, the Company is required to make milestone payments, as defined in
the agreements. At December 31, 1999, the Company had not attained any of the
events that require a milestone payment.

During 1998, the Company entered into an agreement with a drug development
institute to license a compound for development by the Company. The agreement
called for an initial payment and a warrant to purchase shares of the Company's
common stock. (See Note 9.) The agreement also requires subsequent payments to
the drug development institute at the attainment of various milestones. At
December 31, 1999, the Company had not attained any of the events that require a
milestone payment.

During 1998, the Company entered into an agreement with a customer for the
development of an oncology compound. The agreement requires the Company to
perform clinical research services valued at $3 million in exchange for a 30
percent ownership interest in the compound. The Company also has certain rights
to negotiate for additional ownership interest.

In January 1999, the Company entered into a development and licensing agreement
for an oncology compound with a pharmaceutical company. Under the terms of the
development and licensing agreement, the pharmaceutical company has the option
to further develop and commercialize the compound after completion of specified
clinical trials and, if exercised, the Company is eligible to receive royalties.
Should the pharmaceutical company decide not to exercise its option, the Company
will have to pay the pharmaceutical company milestone payments and royalties on
sales in addition to a license fee to continue development and commercialization
of the compound.

13.  EMPLOYEE BENEFITS:

The Company has an employee benefit plan and trust for certain employees who
meet specified length of service requirements. The plan qualifies under Section
401(k) of the Internal Revenue Code as a salary reduction plan. Employees may
elect to contribute a certain percentage of their salary on a before-tax basis.
Employees are immediately fully vested in their contributions and begin vesting
in employer contributions after one year of service, as defined in the plan
document. The plan is a defined contribution plan with employer contributions
made solely at the discretion of the board of directors. Since adoption of the
plan, the Company has made no employer contributions. For the years ended
December 31, 1999, 1998 and 1997, administrative expenses incurred by the
Company related to this plan were not significant. The Company does not provide
postretirement benefits or postemployment benefits to its employees.

14.  OPERATING LEASES

The Company has several noncancelable operating leases for office space,
equipment and the cGMP facility. Rent expense associated with these leases was
approximately $1,421, $904, and $885 for the years ended December 31, 1999, 1998
and 1997, respectively. As described in Note 11, one of the leases is with CTRC
Research, a related party.

During 1995, the Company entered into a lease agreement with a non-profit
corporation controlled by CTRC Research and the Texas Research Park Foundation
for the use of the cGMP facility. The cGMP facility will be utilized for the
manufacturing of oncology drugs. Under the terms of the lease agreement, which
expires in 2010, the Company is required to make monthly payments, which
commenced in 1998. The payments are based on a fixed monthly rate plus a
percentage of gross sales, as defined in the agreement.

In February 1996, the Company entered into a noncancelable lease agreement for
equipment to be used in the cGMP facility. The lease required the Company to
make monthly payments of approximately $16 and was to expire in 2001. Under the
terms of the agreement, the Company maintained $425 in the form of securities as
collateral for the equipment. During 1999, the Company expensed the remaining
balance of the lease commitment (see Note 10). Additionally, in

                                      F-18
<PAGE>   26

ILEX ONCOLOGY, INC.
1999 ANNUAL REPORT ON FORM 10-K
--------------------------------------------------------------------------------



January 2000, the Company paid the balance of the lease commitment, and the
securities held as collateral were released to the Company.

At December 31, 1999, future minimum lease payments under all operating leases
are as follows:

<TABLE>
<CAPTION>
                                     Related
                                      Party     Other       Total
                                     -------   --------    -------

Year ending December 31-
<S>                                  <C>       <C>         <C>
  2000                               $  159    $ 1,507     $  1,666
  2001                                  159      1,551        1,710
  2002                                  159      1,345        1,504
  2003                                  159      1,372        1,531
  2004                                  159        403          562
  Thereafter                            891      1,169        2,060
</TABLE>

15.  INCOME TAXES

As of December 31, 1999, the Company had net operating loss (NOL) carryforwards
of approximately $60 million for U.S. federal income tax purposes which are
available to reduce future taxable income will expire in 2010 through 2019. The
tax effects of significant temporary differences representing deferred income
tax assets and liabilities are as follows as of December 31, 1999 and 1998:


<TABLE>
<CAPTION>
                                                       December 31
                                                   -------------------
                                                     1999       1998
                                                   --------   --------

<S>                                                <C>        <C>
Net operating loss carryforward                    $ 20,342   $  9,584
Expense provisions                                      341        182
Other tax differences, net                            1,686         (4)
Valuation allowance                                 (22,369)    (9,762)
                                                   --------   --------

        Total deferred income tax assets           $      -   $      -
                                                   ========   ========
</TABLE>

The valuation allowance as of December 31, 1999 and 1998, represents tax
benefits, primarily NOL carryforwards, which were not realizable at that date.

For December 31, 1999, the Company's tax provision of $117 relates solely to
foreign (UK) operations. Otherwise, the Company has not provided any U.S.
deferred income taxes or UK withholding taxes on the undistributed earnings of
its UK subsidiary based on the determination that such earnings will be
indefinitely reinvested. At December 31, 1999, the cumulative undistributed
earnings of this subsidiary were approximately $240. If such earnings were not
considered indefinitely reinvested, deferred U.S. and UK withholding taxes would
have been provided after consideration of foreign tax credits.

The availability of the NOL and credit carryforwards to reduce U.S. federal
taxable income is subject to various limitations under the Internal Revenue Code
of 1986 (the Code), as amended, in the event of a greater than 50 percent
ownership change as defined in Section 382 of the Code during the applicable
three-year period. As of December 31, 1999, the Company had incurred such an
ownership change. However, the Company does not believe that this change in
ownership significantly impacts the Company's ability to utilize its NOL and tax
credit carryforwards as of December 31, 1999, because the amount of the
cumulative limitation (based upon the Company's current market capitalization)
during the carryforward period exceeds the total amount of NOL and tax credit
carryforwards.

16.  COMMITMENTS AND CONTINGENCIES

The Company is involved in various claims, legal actions and regulatory
proceedings arising in the ordinary course business. The Company believes it is
unlikely that the final outcome of any of the claims or proceedings to which the
Company is a party will have a material adverse effect on the Company's
financial position or results of operations. However, due to the inherent
uncertainty of litigation, there can be no assurance that the resolution of any
particular



                                      F-19
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ILEX ONCOLOGY, INC.
1999 ANNUAL REPORT ON FORM 10-K
--------------------------------------------------------------------------------



claim or proceeding would not have a material adverse effect on the Company's
results of operations for the period in which such resolution occurred.

During 1998, the Company guaranteed a $1.0 million line of credit for Clinical
Research Group, Inc. (CRG). The guarantee gave the Company access to a network
of clinical sites managed by CRG. The guarantee is limited for a period of three
years beginning in May 1998 and ending in May 2001. If the guarantee comes to
redemption, the Company will obtain an ownership interest in CRG in accordance
with the guarantee agreement. Under the terms of the agreement, the Company
maintained $1.25 million in the form of securities as collateral for the
guarantee. During 1999, the Company expensed $750 related to this guarantee as
part of a special charge (see Note 10). At December 31, 1999, the Company had
yet to fund the guarantee, however management believes that it will be funded
during 2000 and is considered uncollectible.

17.  SEGMENT REPORTING

The Company has two reportable segments: ILEX Products and ILEX Services. ILEX
Products is involved in the development of proprietary compounds for the
treatment and prevention of cancer. ILEX Services provides contract research
services for the development, manufacturing, and regulatory approval of oncology
compounds. The Company's reportable segments are strategic business units that
are managed separately because each business requires different technology and
marketing strategies.

The Company has reclassified certain prior year income statement amounts between
its two operating segments for purposes of comparability with current year
presentation. The effect of these reclassifications for the year ended December
31, 1998 is to increase research & development costs by $618, increase the cost
of contract research services by $1,562, and to reduce corporate general &
administrative costs by $2,180.

The accounting policies of the segments are the same as those of the Company.
The Company evaluates performance based on the profit or loss from operations
before income taxes.

                          Selected Segment Information

<TABLE>
<CAPTION>
                                       Services    Products      Total
                                       --------    --------    --------

For the Year Ended December 31, 1999

<S>                                    <C>         <C>         <C>
Revenue from external customers        $ 13,457    $  4,407    $ 17,864
Intersegment revenue                     11,322          --      11,322
                                       --------    --------    --------
    Total revenue                        24,779       4,407      29,186

Direct costs                             20,165      20,374      40,539
In-process research and development          --      11,124      11,124
Special charges                          12,847           8      12,855
                                       --------    --------    --------

Segment operating loss                   (8,233)    (27,099)    (35,332)

Equity in losses of partnerships         (3,310)     (3,824)     (7,134)
                                       --------    --------    --------

Segment net loss                       $(11,543)   $(30,923)   $(42,466)
                                       ========    ========    ========

For the Year Ended December 31, 1998

Revenue from external customers        $  9,650    $  4,622    $ 14,272
Intersegment revenue                      7,513          --       7,513
                                       --------    --------    --------
    Total revenue                        17,163       4,622      21,785

Direct costs                             17,015      17,500      34,515
                                       --------    --------    --------
Segment operating income (loss)             148     (12,878)    (12,730)

Equity in losses of partnerships         (1,541)     (4,453)     (5,994)
                                       --------    --------    --------

Segment net income (loss)              $ (1,393)   $(17,331)   $(18,724)
                                       ========    ========    ========
</TABLE>




                                      F-20
<PAGE>   28

ILEX ONCOLOGY, INC.
1999 ANNUAL REPORT ON FORM 10-K
--------------------------------------------------------------------------------




<TABLE>
<CAPTION>
                                           Services    Products     Total
                                           --------    --------    --------

For the Year Ended December 31, 1997

<S>                                        <C>         <C>         <C>
Revenue                                    $  5,903    $  5,327    $ 11,230

Direct costs                                  4,587       6,740      11,327
                                           --------    --------    --------

Segment operating income (loss)               1,316      (1,413)        (97)

Equity in losses of partnerships               (182)     (4,295)     (4,477)
                                           --------    --------    --------

Segment net income (loss)                  $  1,134    $ (5,708)   $ (4,574)
                                           ========    ========    ========
</TABLE>


          Reconciliation of Segment Information to Consolidated Totals

<TABLE>
<CAPTION>
                                                                 For the Years Ended
                                                                     December 31
                                                        ---------------------------------
                                                          1999        1998        1997
                                                        --------    --------    --------

Research and Development Costs:
<S>                                                     <C>         <C>         <C>
    Reportable products segment direct costs            $ 20,374    $ 17,500    $  6,740
    Elimination of intersegment gross profit              (4,384)     (1,373)         --
                                                        --------    --------    --------

      Consolidated research and development costs       $ 15,990    $ 16,127    $  6,740
                                                        ========    ========    ========

CRO Costs:
    Reportable services segment direct costs            $ 20,165    $ 17,015    $  4,587
    Elimination of intersegment expenses                  (6,938)     (6,140)         --
                                                        --------    --------    --------

       Consolidated direct costs of research services   $ 13,227    $ 10,875    $  4,587
                                                        ========    ========    ========

Operating net loss:
   Reportable segment operating loss                    $(35,332)   $(12,730)   $    (97)
   Corporate general and administrative expenses          (4,063)     (4,354)     (6,691)
   Special charges                                        (1,027)         --          --
                                                        --------    --------    --------


Consolidated operating loss                             $(40,422)   $(17,084)   $ (6,788)
                                                        ========    ========    ========

Net income (loss)-
   Reportable segment net loss                          $(42,466)   $(18,724)   $ (4,574)
   Corporate general and administrative expenses          (4,063)     (4,354)     (6,691)
   Special charges                                        (1,027)         --          --

   Interest income, net                                    1,700       1,850       2,583
   Minority interest                                         (82)         --          --

   Foreign income taxes                                     (117)         --          --
                                                        --------    --------    --------


Consolidated net loss                                   $(46,055)   $(21,228)   $ (8,682)
                                                        ========    ========    ========
</TABLE>


18.  SUBSEQUENT EVENT (UNAUDITED)

In March 2000, the Company entered into definitive agreements to sell 3.0
million shares of its common stock at $45 per share to selected institutional
and other accredited investors. Gross proceeds to the Company are expected to be
approximately $135 million. Net proceeds to the Company are expected to be
approximately $127 million. The transaction is expected to close during the
first quarter of 2000. ILEX intends to use its share of the proceeds from the
private placement to accelerate its clinical trials and preclinical research,
with a particular focus on its late-stage clinical product candidates and
preclinical angiogenesis inhibitors, as well as for potential acquisitions of
complementary technologies, products, companies and for general corporate
purposes.


                                      F-21
<PAGE>   29

ILEX ONCOLOGY, INC.
1999 ANNUAL REPORT ON FORM 10-K
--------------------------------------------------------------------------------



                               INDEX TO EXHIBITS


<TABLE>
<CAPTION>

EXHIBIT
NUMBER          DESCRIPTIONS
------          ------------

<S>             <C>
 2.1            Plan of Merger and Acquisition Agreement dated July 16, 1999, by
                and among ILEX Oncology, Inc., Convergence Pharmaceuticals,
                Inc., Vikas Sukhatme, Raghurom Kalluri, Ralph Weichselbaum,
                Donald Kufe, Glenn C. Rice, and Tsuyneya Ohno (incorporated
                herein by reference to Exhibit 2.1 to the Company's Current
                Report on Form 8-K filed July 30, 1999)

 3.1            Amended and Restated Certificate of Incorporation of the Company
                (Incorporated herein by reference to Exhibit 3.1 of the
                Company's Registration Statement No. 333-17769 on Form S-1 filed
                December 12, 1996, as amended)

 3.2            Bylaws of the Company, as amended (Incorporated herein by
                reference to Exhibit 3.2 of the Company's Registration Statement
                No. 333-17769 on Form S-1 filed December 12, 1996, as amended)

 4.1            Specimen of certificate representing Common Stock, $.01 par
                value, of the Company (Incorporated herein by reference to
                Exhibit 4.1 of the Company's Registration Statement No.
                333-17769 on Form S-1 filed December 12, 1996, as amended)

10.1            Services Agreement dated November 18, 1994 between CTRC Research
                Foundation and the Company (Incorporated herein by reference to
                Exhibit 10.6 of the Company's Registration Statement No.
                333-17769 on Form S-1 filed December 12, 1996, as amended)

10.2            Covenant Not To Sue dated September 1995 between CTRC Research
                Foundation and the Company (Incorporated herein by reference to
                Exhibit 10.7 of the Company's Registration Statement No.
                333-17769 on Form S-1 filed December 12, 1996, as amended)

10.3            Lease Agreement dated September 1, 1995 between CTRC Research
                Foundation and the Company (Incorporated herein by reference to
                Exhibit 10.10 of the Company's Registration Statement No.
                333-17769 on Form S-1 filed December 12, 1996, as amended)

10.4            Commercial Industrial Sublease Agreement between TRTF/CTRCRF
                Building Corporation and the Company (Incorporated herein by
                reference to Exhibit 10.11 of the Company's Registration
                Statement No. 333-17769 on Form S-1 filed December 12, 1996, as
                amended)
</TABLE>


<PAGE>   30

ILEX ONCOLOGY, INC.
1999 ANNUAL REPORT ON FORM 10-K
--------------------------------------------------------------------------------


<TABLE>
<S>          <C>
10.5+           License Agreement [Oxypurinol] dated March 31, 1995 by and among
                BW Welcome Co., The Welcome Foundation Limited and the Company
                (Incorporated herein by reference to Exhibit 10.14 of the
                Company's Registration Statement No. 333-17769 on Form S-1 filed
                December 12, 1996, as amended)

10.6+           License Agreement [Eflornithine] between ILEX Oncology, Inc. and
                Marion Merrell Dow Inc. and its subsidiaries Merrell Dow
                Pharmaceuticals Inc. and Marion Merrell Dow France Et Cie
                (Incorporated herein by reference to Exhibit 10.17 of the
                Company's Registration Statement No. 333-17769 on Form S-1 filed
                December 12, 1996, as amended)

10.7+           License Agreement [RP 60475] dated November 18, 1994 between
                Rhone-Poulenc Rorer S.A. and the Company (Incorporated herein by
                reference to Exhibit 10.20 of the Company's Registration
                Statement No. 333-17769 on Form S-1 filed December 12, 1996, as
                amended)

10.8+           Agreement dated November 25, 1996 between Hoffmann-La Roche,
                Inc. and the Company [RO23-7553] (Incorporated herein by
                reference to Exhibit 10.21 of the Company's Registration
                Statement No. 333-17769 on Form S-1 filed December 12, 1996, as
                amended)

10.9            Subordinated Option Agreement dated March 27, 1995 between CTRC
                Research Foundation and the Company (Incorporated herein by
                reference to Exhibit 10.35 of the Company's Registration
                Statement No. 333-17769 on Form S-1 filed December 12, 1996, as
                amended)

10.10           Employment Agreement dated November 2, 1994 between Richard L.
                Love and the Company (Incorporated herein by reference to
                Exhibit 10.36 of the Company's Registration Statement No.
                333-17769 on Form S-1 filed December 12, 1996, as amended)

10.11           Amendment to Employment Agreement dated April 4, 1995 between
                Richard L. Love and the Company (Incorporated herein by
                reference to Exhibit 10.37 of the Company's Registration
                Statement No. 333-17769 on Form S-1 filed December 12, 1996, as
                amended)

10.12           Amendment to Employment Agreement dated September 27, 1995
                between Richard L. Love and the Company (Incorporated herein by
                reference to Exhibit 10.38 of the Company's Registration
                Statement No. 333-17769 on Form S-1 filed December 12, 1996, as
                amended)

10.13           Employment Agreement dated August 27, 1996 between Pedro
                Santabarbara, M.D., Ph.D. and the Company (Incorporated herein
                by reference to Exhibit 10.43 of the Company's Registration
                Statement No. 333-17769 on Form S-1 filed December 12, 1996, as
                amended)

10.14           Consulting Services Agreement dated March 16, 1995 between the
                Company and Charles A. Coltman, Jr., M.D. (Incorporated herein
                by reference to Exhibit 10.45 of the Company's Registration
                Statement No. 333-17769 on Form S-1 filed December 12, 1996, as
                amended)

10.15           1995 Stock Option Plan for the Company (Incorporated herein by
                reference to Exhibit 10.47 of the Company's Registration
                Statement No. 333-17769 on Form S-1 filed December 12, 1996, as
                amended)

10.16           1996 Non-Employee Director Stock Option Plan for the Company
                (Incorporated herein by reference to Exhibit 10.48 of the
                Company's Registration Statement No. 333-17769 on Form S-1 filed
                December 12, 1996, as amended)
</TABLE>


<PAGE>   31

ILEX ONCOLOGY, INC.
1999 ANNUAL REPORT ON FORM 10-K
--------------------------------------------------------------------------------



<TABLE>
<S>          <C>
10.17           Form of Non-Employee Director Stock Option Agreement
                (Incorporated herein by reference to Exhibit 10.49 of the
                Company's Registration Statement No. 333-17769 on Form S-1 filed
                December 12, 1996, as amended)

10.18           Fourth Amended and Restated Registration Rights Agreement
                between the Company, CTRC and the holders of the Series B, C, D
                and E Preferred Stock (Incorporated herein by reference to
                Exhibit 10.50 of the Company's Registration Statement No.
                333-17769 on Form S-1 filed December 12, 1996, as amended)

10.19           Form of Pledge Agreement between Cancer Therapy and Research
                Center Endowment and each of Gary V. Woods, and Ruskin C.
                Norman, M.D. (Incorporated herein by reference to Exhibit 10.55
                of the Company's Registration Statement No. 333-17769 on Form
                S-1 filed December 12, 1996, as amended)

10.20+          Exclusive License Agreement [Oxypurinol] dated November 27, 1996
                between MGI Pharma, Inc. and the Company (Incorporated herein by
                reference to Exhibit 10.56 of the Company's Registration
                Statement No. 333-17769 on Form S-1 filed December 12, 1996, as
                amended)

10.21           Stock Purchase Agreement dated April 11, 1995 between Daniel Von
                Hoff and the Company (Incorporated herein by reference to
                Exhibit 10.58 of the Company's Registration Statement No.
                333-17769 on Form S-1 filed December 12, 1996, as amended)

10.22           Stock Purchase Agreement dated April 11, 1995 between Richard L.
                Love and the Company (Incorporated herein by reference to
                Exhibit 10.60 of the Company's Registration Statement No.
                333-17769 on Form S-1 filed December 12, 1996, as amended)

10.23           Promissory Note dated April 12, 1995 between Daniel Von Hoff and
                the Company (Incorporated herein by reference to Exhibit 10.62
                of the Company's Registration Statement No. 333-17769 on Form
                S-1 filed December 12, 1996, as amended)

10.24           Promissory Note dated April 12, 1995 between Richard L. Love and
                the Company (Incorporated herein by reference to Exhibit 10.63
                of the Company's Registration Statement No. 333-17769 on Form
                S-1 filed December 12, 1996, as amended)

10.25           Ownership Restriction Agreement dated December 11, 1996 between
                MPILEX Management, L.L.C., MPILEX Partners, L.P. and holders of
                units thereof (Incorporated herein by reference to Exhibit 10.66
                of the Company's Registration Statement No. 333-17769 on Form
                S-1 filed December 12, 1996, as amended)

10.26           Agreement of Limited Partnership of MPILEX Partners, L.P. among
                MPILEX Management, L.L.C. (Incorporated herein by reference to
                Exhibit 10.67 of the Company's Registration Statement No.
                333-17769 on Form S-1 filed December 12, 1996, as amended)

10.27           Regulations of MPILEX Management, L.L.C. dated December 1996
                (Incorporated herein by reference to Exhibit 10.68 of the
                Company's Registration Statement No. 333-17769 on Form S-1 filed
                December 12, 1996, as amended)
</TABLE>


<PAGE>   32

ILEX ONCOLOGY, INC.
1999 ANNUAL REPORT ON FORM 10-K
--------------------------------------------------------------------------------



<TABLE>
<CAPTION>
<S>          <C>
10.28           License Agreement dated December 11, 1996 between MPILEX
                Partners, L.P. and the Company (Incorporated herein by reference
                to Exhibit 10.69 of the Company's Registration Statement No.
                333-17769 on Form S-1 filed December 12, 1996, as amended)

10.29           Registration Rights Agreement dated July 9, 1997, between the
                Company and PRN Research, Inc. (Incorporated herein by reference
                to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q
                filed August 14, 1997)

10.30           Service Agreement dated June 30, 1997, between the Company and
                PRN Research, Inc. (Incorporated herein by reference to Exhibit
                10.4 to the Company's Quarterly Report on Form 10-Q filed August
                14, 1997)

10.31           Drug Development and Commercialization Agreement dated March 27,
                1998, between the Company and The Burnham Institute, Inc.
                (Incorporated herein by reference to Exhibit 10.1 to the
                Company's Quarterly Report on Form 10-Q filed May 15, 1998)

10.32           Office Building Lease Agreement dated April 8, 1998, between the
                Company and N.W.A. Limited Partnership (Incorporated herein by
                reference to Exhibit 10.1 to the Company's Quarterly Report on
                Form 10-Q filed August 14, 1998)

10.33           Consulting Services Agreement dated July 1, 1997, between the
                Company and Dr. Daniel D. Von Hoff, M.D. (Incorporated herein by
                reference to Exhibit 10.61 to the Company's Annual Report on
                Form 10-K for the year ended December 31, 1998)

10.34           Stock Purchase Agreement dated January 22, 1999 between the
                Company and Eli Lilly and Company (incorporated herein by
                reference to Exhibit 10.1 to the Company's Quarterly Report on
                Form 10-Q filed May 17, 1999)

10.35           Registration Rights Agreement dated January 22, 1999 between the
                Company and Eli Lilly and Company (incorporated herein by
                reference to Exhibit 10.2 to the Company's Quarterly Report on
                Form 10-Q filed May 17, 1999)

10.36           Letter of Credit Agreement dated April 5, 1999 between the
                Company and PFK (incorporated herein by reference to Exhibit
                10.3 to the Company's Quarterly Report on Form 10-Q filed May
                17, 1999)

10.37           Employment Agreement dated July 16, 1999 by and between ILEX
                Oncology, Inc. and Glenn C. Rice (incorporated herein by
                reference to Exhibit 10.1 to the Company's Current Report on
                Form 8-K dated July 16, 1999 and filed July 30, 1999)

10.38           Registration Rights Agreement dated July 16, 1999 among ILEX
                Oncology, Inc., Vikas Sukhatme, Raghuram Kalluri, Ralph
                Weichselbaum, Donald Kufe, Glenn C. Rice, Tsuneya Ohno, Stephen
                Dolezalek, Beth Israel Deaconess Medical Center and Arch
                Development Corporation (incorporated herein by reference to
                Exhibit 10.2 to the Company's Current Report on Form 8-K dated
                July 16, 1999 and filed July 30, 1999)

10.39           Stock Purchase Agreement dated July 16, 1999 by and between ILEX
                Oncology, Inc. and each of the Investors (as defined therein)
                (incorporated herein by reference to Exhibit 10.3 to the
                Company's Quarterly Report on Form 10-Q filed August 16, 1999)

10.40+          Distribution and Development Agreement between L&I Partners,
                L.P. and Schering AG dated August 24, 1999 (incorporated herein
                by reference to Exhibit 99.1 to the Company's Current Report on
                Form 8-K/A filed September 21, 1999)

10.41**         Letter agreement dated September 9, 1999, between the Company
                and Al J. Jecminek.

11.1**          Computation of Earnings Per Share
</TABLE>


<PAGE>   33

ILEX ONCOLOGY, INC.
1999 ANNUAL REPORT ON FORM 10-K
--------------------------------------------------------------------------------




<TABLE>
<S>             <C>
21.1            Subsidiaries of the Company


                                                     State of                  Names Under
                Name                                 Incorporation             Which Doing Business
                ----                                 -------------             --------------------
                ILEX Oncology Services, Inc.         Delaware                  ILEX Services, Inc.
                ILEX Products, Inc.                  Delaware                  ILEX Products, Inc.
                Convergence Pharmaceuticals, Inc.    Delaware                  ILEX Products Research Division
                ILEX Services Limited                United Kingdom            ILEX Services Limited

23*             Consent of Arthur Andersen LLP

24.1*           Power of Attorney (included on signature page)

27**            Financial Data Schedule

99.1**          Financial Statements of L&I Partners, L.P.


*        Filed herewith.
**       Filed previously
+        Confidential treatment has been requested with respect to certain
         portions of this exhibit. Omitted portions have been filed separately
         with the Securities and Exchange Commission.
</TABLE>