##### Table of Contents



---

---

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549




---

Form 10-Q

|           |  |                                                                                                                                                   | 
|---------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------- | 
|(Mark One) |  |                                                                                                                                                  
|X          |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934                                                          
|           |  | For the quarterly period ended March 31, 2003                                                                                                    
|           |  | OR                                                                                                                                               
|           |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934For 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
incorporation or organization) |  | (I.R.S. Employer
Identification No.)
|                                                               |  |                                     
|4545 Horizon Hill Blvd.
San Antonio, Texas                     |  | 78229                               
|(Address of principal executive offices)                       |  | (Zip Code)                          

Registrants telephone number, including area code: (210) 949-8200



---

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. YesX No.

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act) YesX No.

The number of shares outstanding of the Registrants common stock as of
April 28, 2003 is 32,708,485.





---

TABLE OF CONTENTS



|                                                   |                                                                                               |                                            |  |  |  |  |  | 
|-------------------------------------------------- | --------------------------------------------------------------------------------------------- | ------------------------------------------ |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION                     
|                                                   | Item 1. Financial Statements                                                                 
|                                                   |                                                                                               | CONSOLIDATED BALANCE SHEETS               
|                                                   |                                                                                               | CONSOLIDATED STATEMENTS OF OPERATIONS     
|                                                   |                                                                                               | CONSOLIDATED STATEMENTS OF CASH FLOWS     
|                                                   |                                                                                               | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|                                                   | ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                                                   | ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                           
|                                                   | Item 4. CONTROLS AND PROCEDURES                                                              
|PART II. OTHER INFORMATION                        
|                                                   | Item 6. Exhibits and Reports on Form 8-K                                                     
|Signatures                                        
|CERTIFICATIONS                                    
|INDEX TO EXHIBITS                                 
|EX-11.1 Computation of Net Loss Per Share         
|EX-99.1 Certification Pursuant to 18 USC Sec. 1350
|EX-99.2 Certification Pursuant to 18 USC Sec. 1350



---



##### Table of Contents



ILEX ONCOLOGY, INC.
MARCH 31, 2003  QUARTERLY REPORT ON FORM 10-Q

---

INDEX

|                              |                                                                                               |                                                                                           |    |    |   | 
|----------------------------- | --------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------- | -- | -- | - | 
|PART I. FINANCIAL INFORMATION |                                                                                               |                                                                                           |    |   
|                              | Item 1. Financial Statements                                                                  |                                                                                           |    |    |  
|                              |                                                                                               | Consolidated Balance Sheets  March 31, 2003 and December 31, 2002                        |    |    | 3 | 
|                              |                                                                                               | Consolidated Statements of Operations  Three Month Periods Ended March
31, 2003 and 2002 |    |    | 5 | 
|                              |                                                                                               | Consolidated Statements of Cash Flows  Three Month Periods Ended March
31, 2003 and 2002 |    |    | 6 | 
|                              |                                                                                               | Notes to Consolidated Financial Statements                                                |    |    | 7 | 
|                              | Item 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations |                                                                                           |    | 9  |  
|                              | Item 3. Quantitative and Qualitative Disclosures about Market Risk                            |                                                                                           |    | 13 |  
|                              | Item 4. Controls and Procedures                                                               |                                                                                           |    | 13 |  
|PART II. OTHER INFORMATION    |                                                                                               |                                                                                           |    |   
|                              | Item 6. Exhibits and Reports on Form 8-K                                                      |                                                                                           |    | 14 |  
|SIGNATURES                    |                                                                                               |                                                                                           | 15 |   
|CERTIFICATIONS                |                                                                                               |                                                                                           | 16 |   

2



---



##### Table of Contents



ILEX ONCOLOGY, INC.
MARCH 31, 2003  QUARTERLY REPORT ON FORM 10-Q

---




PART I. FINANCIAL INFORMATION




Item 1. Financial Statements




CONSOLIDATED BALANCE SHEETS
(in thousands, except shares and per share amounts)

ASSETS

|                                                                                                                     |                                                                                                                 |                          |       |             |         |              |       |         |         | 
|-------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------- | ------------------------ | ----- | ----------- | ------- | ------------ | ----- | ------- | ------- | 
|                                                                                                                     |                                                                                                                 |                          |       | March 31,   |         | December 31,
|                                                                                                                     |                                                                                                                 |                          |       | 2003        |         | 2002        
|                                                                                                                     |                                                                                                                 |                          |       |             |         |             
|                                                                                                                     |                                                                                                                 |                          |       | (Unaudited) |         |              |       |        
|CURRENT ASSETS:                                                                                                      |                                                                                                                 |                          |       |             |         |              |       |        
|                                                                                                                     | Cash and cash equivalents                                                                                       |                          | $     | 44,511      |         |              | $     | 29,679  |        
|                                                                                                                     | Investments in marketable securities                                                                            |                          |       | 115,886     |         |              |       | 123,591 |        
|                                                                                                                     | Restricted investments                                                                                          |                          |       | 976         |         |              |       | 976     |        
|                                                                                                                     | Accounts receivable, net of allowance for doubtful
accounts of $30                                              |                          |       | 897         |         |              |       | 1,025   |        
|                                                                                                                     | Accounts receivable  Schering AG                                                                               |                          |       | 8,308       |         |              |       | 4,701   |        
|                                                                                                                     | Other receivables                                                                                               |                          |       | 5,890       |         |              |       | 3,500   |        
|                                                                                                                     | Prepaid expenses and other                                                                                      |                          |       | 2,395       |         |              |       | 2,273   |        
|                                                                                                                     |                                                                                                                 |                          |       |             |         |              |       |        
|                                                                                                                     |                                                                                                                 | Total current assets     |       |             | 178,863 |              |       |         | 165,745 | 
|                                                                                                                     |                                                                                                                 |                          |       |             |         |              |       |        
|NON-CURRENT ASSETS:                                                                                                  |                                                                                                                 |                          |       |             |         |              |       |        
|                                                                                                                     | Investments in marketable securities                                                                            |                          |       | 13,836      |         |              |       | 34,737  |        
|                                                                                                                     | Restricted investments                                                                                          |                          |       | 2,017       |         |              |       | 2,017   |        
|                                                                                                                     | Completed technology asset, net of accumulated amortization
of $5,786 and $4,629 in 2003 and 2002, respectively |                          |       | 59,014      |         |              |       | 60,171  |        
|                                                                                                                     | Other intangible assets, net of accumulated amortization of $250 and $200 in 2003 and 2002, respectively        |                          |       | 4,550       |         |              |       | 2,600   |        
|                                                                                                                     | Goodwill                                                                                                        |                          |       | 213         |         |              |       | 213     |        
|                                                                                                                     | Other assets                                                                                                    |                          |       | 887         |         |              |       | 283     |        
|                                                                                                                     |                                                                                                                 |                          |       |             |         |              |       |        
|                                                                                                                     |                                                                                                                 | Total non-current assets |       |             | 80,517  |              |       |         | 100,021 | 
|                                                                                                                     |                                                                                                                 |                          |       |             |         |              |       |        
|PROPERTY AND EQUIPMENT, at cost, net of accumulated
depreciation of $8,517 and $7,950 in 2003 and 2002, respectively |                                                                                                                 |                          | 4,786 |             |         |              | 5,140 |        
|                                                                                                                     |                                                                                                                 |                          |       |             |         |              |       |        
|                                                                                                                     |                                                                                                                 | Total assets             |       | $           | 264,166 |              |       | $       | 270,906 | 
|                                                                                                                     |                                                                                                                 |                          |       |             |         |              |       |        

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

3



---



##### Table of Contents



ILEX ONCOLOGY, INC.
MARCH 31, 2003  QUARTERLY REPORT ON FORM 10-Q

---

CONSOLIDATED BALANCE SHEETS
(in thousands, except shares and per share amounts)

LIABILITIES AND STOCKHOLDERS EQUITY

|                                           |                                                                                                                                                       |                 |                                            |          |             |         |              |          |       |         | 
|------------------------------------------ | ----------------------------------------------------------------------------------------------------------------------------------------------------- | --------------- | ------------------------------------------ | -------- | ----------- | ------- | ------------ | -------- | ----- | ------- | 
|                                           |                                                                                                                                                       |                 |                                            |          | March 31,   |         | December 31,
|                                           |                                                                                                                                                       |                 |                                            |          | 2003        |         | 2002        
|                                           |                                                                                                                                                       |                 |                                            |          |             |         |             
|                                           |                                                                                                                                                       |                 |                                            |          | (Unaudited) |         |              |          |      
|CURRENT LIABILITIES:                       |                                                                                                                                                       |                 |                                            |          |             |         |              |         
|                                           | Accounts payable-                                                                                                                                     |                 |                                            |          |             |         |              |          |      
|                                           |                                                                                                                                                       | Related parties |                                            | $        | 515         |         |              | $        | 136   |        
|                                           |                                                                                                                                                       | Other           |                                            |          | 7,493       |         |              |          | 8,214 |        
|                                           | Accrued liabilities-                                                                                                                                  |                 |                                            |          |             |         |              |          |      
|                                           |                                                                                                                                                       | Related parties |                                            |          | 864         |         |              |          | 455   |        
|                                           |                                                                                                                                                       | Other           |                                            |          | 4,270       |         |              |          | 6,378 |        
|                                           | Deferred revenue                                                                                                                                      |                 |                                            | 877      |             |         |              | 879      |      
|                                           | Advances from Schering AG                                                                                                                             |                 |                                            |         |             |         |              | 2,577    |      
|                                           | Settlement-related liability                                                                                                                          |                 |                                            | 20,000   |             |         |              |         |      
|                                           | Note payable                                                                                                                                          |                 |                                            | 38,685   |             |         |              | 38,099   |      
|                                           |                                                                                                                                                       |                 |                                            |          |             |         |              |         
|                                           |                                                                                                                                                       |                 | Total current liabilities                  |          |             | 72,704  |              |          |       | 56,738  | 
|                                           |                                                                                                                                                       |                 |                                            |          |             |         |              |         
|NON-CURRENT LIABILITIES:                   |                                                                                                                                                       |                 |                                            |          |             |         |              |         
|                                           | Deferred revenue                                                                                                                                      |                 |                                            | 1,208    |             |         |              |         |      
|                                           | Note payable                                                                                                                                          |                 |                                            | 36,714   |             |         |              | 36,155   |      
|                                           | Other non-current liabilities                                                                                                                         |                 |                                            | 759      |             |         |              | 771      |      
|                                           |                                                                                                                                                       |                 |                                            |          |             |         |              |         
|                                           |                                                                                                                                                       |                 | Total non-current liabilities              |          |             | 38,681  |              |          |       | 36,926  | 
|                                           |                                                                                                                                                       |                 |                                            |          |             |         |              |         
|                                           |                                                                                                                                                       |                 | Total liabilities                          |          |             | 111,385 |              |          |       | 93,664  | 
|                                           |                                                                                                                                                       |                 |                                            |          |             |         |              |         
|COMMITMENTS AND CONTINGENCIES (see Note 7) |                                                                                                                                                       |                 |                                            |          |             |         |              |         
|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; 100,000,000 shares
authorized; 32,704,390 and 32,546,890 shares issued and
outstanding; in 2003 and 2002, respectively |                 |                                            | 327      |             |         |              | 326      |      
|                                           | Additional paid-in capital                                                                                                                            |                 |                                            | 461,094  |             |         |              | 460,014  |      
|                                           | Deferred compensation                                                                                                                                 |                 |                                            | (683     | )           |         |              |         |      
|                                           | Accumulated deficit                                                                                                                                   |                 |                                            | (308,351 | )           |         |              | (283,430 | )    
|                                           | Accumulated other comprehensive income                                                                                                                |                 |                                            | 394      |             |         |              | 332      |      
|                                           |                                                                                                                                                       |                 |                                            |          |             |         |              |         
|                                           |                                                                                                                                                       |                 | Total stockholders equity                 |          |             | 152,781 |              |          |       | 177,242 | 
|                                           |                                                                                                                                                       |                 |                                            |          |             |         |              |         
|                                           |                                                                                                                                                       |                 | Total liabilities and stockholders equity |          | $           | 264,166 |              |          | $     | 270,906 | 
|                                           |                                                                                                                                                       |                 |                                            |          |             |         |              |         

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

4



---



##### Table of Contents



ILEX ONCOLOGY, INC.
MARCH 31, 2003  QUARTERLY REPORT ON FORM 10-Q

---




CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)

|                                                              |                                     |                          |         |                    |        |      |        |        |        | 
|------------------------------------------------------------- | ----------------------------------- | ------------------------ | ------- | ------------------ | ------ | ---- | ------ | ------ | ------ | 
|                                                              |                                     |                          |         | Three Months Ended
|                                                              |                                     |                          |         | March 31,         
|                                                              |                                     |                          |         |                   
|                                                              |                                     |                          |         | 2003               |        | 2002
|                                                              |                                     |                          |         |                    |        |     
|REVENUE:                                                      |                                     |                          |         |                    |        |      |        |       
|                                                              | Product profit and royalty          |                          | $       | 4,499              |        |      | $      | 3,017  |       
|                                                              | Product development                 |                          |         | 3,352              |        |      |        | 1,723  |       
|                                                              | Contract research services          |                          |         | 630                |        |      |        | 3,376  |       
|                                                              | Other                               |                          |         | 203                |        |      |        | 155    |       
|                                                              |                                     |                          |         |                    |        |      |        |       
|                                                              |                                     | Total revenue            |         |                    | 8,684  |      |        |        | 8,271  | 
|                                                              |                                     |                          |         |                    |        |      |        |       
|OPERATING EXPENSES:                                           |                                     |                          |         |                    |        |      |        |       
|                                                              | Research and development costs      |                          |         | 10,611             |        |      |        | 10,933 |       
|                                                              | Selling, general and administrative |                          |         | 3,720              |        |      |        | 2,888  |       
|                                                              | Depreciation and amortization       |                          |         | 1,817              |        |      |        | 1,862  |       
|                                                              | Licensing costs                     |                          |         | 558                |        |      |        | 459    |       
|                                                              | Direct cost of research services    |                          |         | 440                |        |      |        | 1,989  |       
|                                                              | Settlement charge                   |                          |         | 16,500             |        |      |        |       |       
|                                                              |                                     |                          |         |                    |        |      |        |       
|                                                              |                                     | Total operating expenses |         |                    | 33,646 |      |        |        | 18,131 | 
|                                                              |                                     |                          |         |                    |        |      |        |       
|OPERATING LOSS                                                |                                     |                          | (24,962 | )                  |        |      | (9,860 | )     
|OTHER INCOME (EXPENSE):                                       |                                     |                          |         |                    |        |      |        |       
|                                                              | Interest income and other, net      |                          |         | 1,186              |        |      |        | 2,509  |       
|                                                              | Interest expense                    |                          |         | (1,145             | )      |      |        | (1,771 | )     
|                                                              |                                     |                          |         |                    |        |      |        |       
|NET LOSS                                                      |                                     | $                        | (24,921 | )                  |        | $    | (9,122 | )     
|                                                              |                                     |                          |         |                    |        |      |        |        |       
|BASIC AND DILUTED NET LOSS PER SHARE                          |                                     | $                        | (.76    | )                  |        | $    | (.28   | )     
|                                                              |                                     |                          |         |                    |        |      |        |        |       
|WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK
OUTSTANDING |                                     |                          | 32,580  |                    |        |      | 32,370 |       
|                                                              |                                     |                          |         |                    |        |      |        |       

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

5



---



##### Table of Contents



ILEX ONCOLOGY, INC.
MARCH 31, 2003  QUARTERLY REPORT ON FORM 10-Q

---




CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

|                                                             |                                                                             |                                              |                                                      |                                                     |       |                    |         |        |       |        |         |  
|------------------------------------------------------------ | --------------------------------------------------------------------------- | -------------------------------------------- | ---------------------------------------------------- | --------------------------------------------------- | ----- | ------------------ | ------- | ------ | ----- | ------ | ------- | -
|                                                             |                                                                             |                                              |                                                      |                                                     |       | Three Months Ended
|                                                             |                                                                             |                                              |                                                      |                                                     |       | March 31,         
|                                                             |                                                                             |                                              |                                                      |                                                     |       |                   
|                                                             |                                                                             |                                              |                                                      |                                                     |       | 2003               |         | 2002  
|                                                             |                                                                             |                                              |                                                      |                                                     |       |                    |         |       
|CASH FLOWS FROM OPERATING ACTIVITIES:                        |                                                                             |                                              |                                                      |                                                     |       |                    |         |       
|                                                             | Net loss                                                                    |                                              | $                                                    | (24,921                                             | )     |                    | $       | (9,122 | )    
|                                                             | Adjustments to reconcile net loss to net cash used in operating
activities: |                                              |                                                      |                                                     |       |                    |         |        |      
|                                                             |                                                                             | Depreciation and amortization                |                                                      |                                                     | 1,817 |                    |         |        | 1,862 |       
|                                                             |                                                                             | Non-cash compensation expense                |                                                      |                                                     | 372   |                    |         |        |      |       
|                                                             |                                                                             | Gain on investment in marketable securities  |                                                      |                                                     |      |                    |         |        | (435  | )     
|                                                             |                                                                             | Loss on disposal of equipment                |                                                      |                                                     | 15    |                    |         |        | 1     |       
|                                                             |                                                                             | Changes in operating assets and liabilities: |                                                      |                                                     |       |                    |         |        |       |       
|                                                             |                                                                             |                                              | Increase in receivables, net                         |                                                     |       | (5,869             | )       |        |       | (16    | )      
|                                                             |                                                                             |                                              | Increase in prepaid expenses and other               |                                                     |       | (122               | )       |        |       | (156   | )      
|                                                             |                                                                             |                                              | (Increase) decrease in other non-current assets      |                                                     |       | (604               | )       |        |       | 67     |        
|                                                             |                                                                             |                                              | Decrease in accounts payable and accrued liabilities |                                                     |       | (6,603             | )       |        |       | (8,181 | )      
|                                                             |                                                                             |                                              | Increase in settlement-related liability             |                                                     |       | 20,000             |         |        |       |       |        
|                                                             |                                                                             |                                              | Increase (decrease) in deferred revenue              |                                                     |       | 1,206              |         |        |       | (597   | )      
|                                                             |                                                                             |                                              | Increase in interest on note payable                 |                                                     |       | 1,145              |         |        |       | 1,771  |        
|                                                             |                                                                             |                                              | Decrease in other non-current liabilities            |                                                     |       | (12                | )       |        |       | (3,031 | )      
|                                                             |                                                                             |                                              |                                                      |                                                     |       |                    |         |       
|                                                             |                                                                             |                                              |                                                      | Net cash used in operating activities               |       |                    | (13,576 | )      |       |        | (17,837 | )
|                                                             |                                                                             |                                              |                                                      |                                                     |       |                    |         |       
|CASH FLOWS FROM INVESTING ACTIVITIES:                        |                                                                             |                                              |                                                      |                                                     |       |                    |         |       
|                                                             | Net activity of marketable securities transactions                         |                                              |                                                      | 28,606                                              |       |                    |         | (1,936 | )    
|                                                             | Purchase of property and equipment                                          |                                              |                                                      | (265                                                | )     |                    |         | (192   | )    
|                                                             |                                                                             |                                              |                                                      |                                                     |       |                    |         |       
|                                                             |                                                                             |                                              |                                                      | Net cash provided by (used in) investing activities |       |                    | 28,341  |        |       |        | (2,128  | )
|                                                             |                                                                             |                                              |                                                      |                                                     |       |                    |         |       
|CASH FLOWS FROM FINANCING ACTIVITIES:                        |                                                                             |                                              |                                                      |                                                     |       |                    |         |       
|                                                             | Exercise of stock options and warrants                                      |                                              |                                                      | 26                                                  |       |                    |         | 883    |      
|                                                             | Principal payments for capital lease obligations                            |                                              |                                                      | (15                                                 | )     |                    |         | (19    | )    
|                                                             |                                                                             |                                              |                                                      |                                                     |       |                    |         |       
|                                                             |                                                                             |                                              |                                                      | Net cash provided by financing activities           |       |                    | 11      |        |       |        | 864     |  
|                                                             |                                                                             |                                              |                                                      |                                                     |       |                    |         |       
|Effect of Exchange Rate Changes on Cash and Cash Equivalents |                                                                             |                                              | 56                                                   |                                                     |       |                    | 76      |       
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS         |                                                                             |                                              | 14,832                                               |                                                     |       |                    | (19,025 | )     
|CASH AND CASH EQUIVALENTS, beginning of period               |                                                                             |                                              | 29,679                                               |                                                     |       |                    | 84,518  |       
|                                                             |                                                                             |                                              |                                                      |                                                     |       |                    |         |       
|CASH AND CASH EQUIVALENTS, end of period                     |                                                                             | $                                            | 44,511                                               |                                                     |       | $                  | 65,493  |       
|                                                             |                                                                             |                                              |                                                      |                                                     |       |                    |         |        |      

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

6



---



##### Table of Contents



ILEX ONCOLOGY, INC.
MARCH 31, 2003  QUARTERLY REPORT ON FORM 10-Q

---




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(amounts in thousands, except share information, per share information or as
otherwise indicated) (unaudited)

1.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of consolidation and basis of presentation

The accompanying interim Consolidated Financial Statements presented herein
include the accounts of ILEX Oncology, Inc. and its subsidiaries (the Company
or ILEX). All significant intercompany transactions and accounts have been
eliminated in consolidation. These interim consolidated financial statements
have been prepared by the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations. In managements opinion, all
adjustments that are necessary for a fair presentation of financial position
and results of operations have been made. Certain prior year amounts have
been reclassified to conform to the 2003 presentation.

It is recommended that these interim consolidated financial statements be read
in conjunction with the financial statements and notes thereto included in the
Companys Annual Report on Form 10-K for the year ended December 31, 2002. The
results of operations for any interim period are not necessarily indicative of
the results of operations for the entire year.

Stock-based compensation

The Company uses the intrinsic value method in accounting for its stock
compensation plans. Had compensation cost for the Companys stock compensation
plans been determined based upon a fair value method consistent with Statement
of Financial Accounting Standard (SFAS) No. 123 the Companys net loss and loss
per share would have been increased to the pro forma amounts indicated below:

|                                 |  |             |  |                                                         |         |                              |         |      |        |   |         |  
|-------------------------------- |  | ----------- |  | ------------------------------------------------------- | ------- | ---------------------------- | ------- | ---- | ------ | - | ------- | -
|                                 |  |             |  |                                                         |         | Three Months Ended March 31,
|                                 |  |             |  |                                                         |         |                             
|                                 |  |             |  |                                                         |         | 2003                         |         | 2002
|                                 |  |             |  |                                                         |         |                              |         |     
|Net loss                         |  | As reported |  | $                                                       | (24,921 | )                            |         | $    | (9,122 | )
|                                 |  |             |  | Stock grant compensation cost
included in reported loss |         |                              | 372     |      |        |   |        |  
|                                 |  |             |  | Fair value compensation cost                            |         |                              | (2,922  | )    |        |   | (2,736  | )
|                                 |  |             |  |                                                         |         |                              |         |      |        |   |         |  
|                                 |  |             |  | Pro forma                                               |         | $                            | (27,471 | )    |        | $ | (11,858 | )
|Loss per share
basic and diluted |  | As reported |  | $                                                       | (0.76   | )                            |         | $    | (0.28  | )
|                                 |  |             |  | Stock grant compensation cost
included in reported loss |         |                              | 0.01    |      |        |   |        |  
|                                 |  |             |  | Fair value compensation cost                            |         |                              | (0.09   | )    |        |   | (0.09   | )
|                                 |  |             |  |                                                         |         |                              |         |      |        |   |         |  
|                                 |  |             |  | Pro forma                                               |         | $                            | (0.84   | )    |        | $ | (0.37   | )

Intangible assets and goodwill

In December 2001, Genentech announced that it was granted a patent relating to
fundamental methods and compositions for the production of monoclonal
antibodies using anti-recombinant DNA technology. This proceeding entitled
Genentech to priority over the patent held by the Celltech Group PLC, who had
first received the patent in 1989. In March 2003, the Company finalized a
license from Genentech covering the production of its CAMPATH 1-H monoclonal
antibody against the CD52 target. Accordingly, as of March 31, 2003, the
Company has recorded an intangible asset of $2.0 million associated with the
license grant fee paid to Genentech in April 2003, which will be amortized over
the remaining patent life of 13 years. The Company will also pay milestones
and royalties based upon net U.S. sales levels.

In connection with the Companys December 31, 2001 acquisition of Millennium
Pharmaceuticals, Inc.s (Millenniums) interest in ILEX Pharmaceuticals, L.P.,
formerly known as Millennium & ILEX, L.P. (the Partnership), the Company has
recorded intangible assets classified as completed technology and a trademark
in the

7



---



##### Table of Contents



ILEX ONCOLOGY, INC.
MARCH 31, 2003  QUARTERLY REPORT ON FORM 10-Q

---

amounts of $64.8 million and $2.8 million, respectively. These intangible
assets are currently being amortized under the straight-line method over 14
years. As of March 31, 2003, the Company has recorded accumulated
amortization of $6.0 million related to these assets.

The Company acquired Symphar S.A. on February 13, 2001. SFAS No. 141 required
that the Company recognize its assembled workforce as goodwill rather than an
intangible asset as it does not meet the specified criteria for recognition
apart from goodwill. The Companys goodwill was reviewed as of December 31,
2002 and will continue to be reviewed at least annually for impairment. The
Company believes that there was no impairment of its goodwill as of December
31, 2002. As of March 31, 2003, no events have occurred that would cause the
Company to change its assessment of the recoverability of its goodwill.

2.     LOSS PER SHARE

Diluted net loss per share is equal to basic net loss per share, as the effect
of all common stock equivalents is antidilutive.

3.     STATEMENTS OF CASH FLOWS

Non-cash investing and financing activities for the three months ended March
31, 2003 and 2002, include the following:

|                                        |  |      |       |      |  |   |   | 
|--------------------------------------- |  | ---- | ----- | ---- |  | - | - | 
|                                        |  | 2003 |       | 2002
|                                        |  |      |       |     
|Other intangible assets  license grant |  | $    | 2,000 |      |  | $ |  | 
|Deferred compensation  stock grant     |  |      | 683   |      |  |   |  | 

Supplemental disclosures of cash flow information for the three months ended
March 31, 2003 and 2002 include the following:

|                       |  |      |   |      |  |   |   | 
|---------------------- |  | ---- | - | ---- |  | - | - | 
|                       |  | 2003 |   | 2002
|                       |  |      |   |     
|Cash paid for interest |  | $    | 1 |      |  | $ | 3 | 

4.     SETTLEMENT CHARGE

In April 2003, the Companys subsidiary, ILEX Oncology Services, Inc, (ILEX
Services) settled a dispute with a former contract research organization (CRO)
customer. As a result of this settlement, ILEX Services will pay the former
CRO customer $20.0 million in the second quarter of 2003. The Company has
recorded a settlement charge in the first quarter of 2003 of $16.5 million,
which is net of insurance reimbursement of $3.5 million, related to the
settlement of this dispute.

5.     COMPREHENSIVE LOSS

Comprehensive loss is defined as the change in equity during a period from
transactions and other events and circumstances from non-owner sources. The
following table presents the components of the Companys comprehensive loss:

|                            |                                          |   |                    |    |      |   |        |    | 
|--------------------------- | ---------------------------------------- | - | ------------------ | -- | ---- | - | ------ | -- | 
|                            |                                          |   | Three Months Ended
|                            |                                          |   | March 31,         
|                            |                                          |   |                   
|                            |                                          |   | 2003               |    | 2002
|                            |                                          |   |                    |    |     
|Net loss                    |                                          | $ | (24,921            | )  |      | $ | (9,122 | ) 
|Other comprehensive income: |                                          |   |                    |    |      |   |        |   
|                            | Foreign currency translation adjustments |   |                    | 62 |      |   |        | 83 | 
|                            |                                          |   |                    |    |      |   |        |   
|Comprehensive loss          |                                          | $ | (24,859            | )  |      | $ | (9,039 | ) 
|                            |                                          |   |                    |    |      |   |        |   

8



---



##### Table of Contents



ILEX ONCOLOGY, INC.
MARCH 31, 2003  QUARTERLY REPORT ON FORM 10-Q

---

6.     DEVELOPMENT AND DISTRIBUTION AGREEMENT

In January 2003, Schering AG obtained exclusive rights to develop, sell and
distribute CAMPATH in Japan and the Asian Pacific Basin. The Company received
an up-front payment and incurred an associated fee of 50% of such payment, both
of which are being recognized over the life of the patent in that region. The
Company will also receive payments upon completion of certain milestones and a
royalty based on net sales of CAMPATH in Japan and the Asian Pacific Basin.

7.     COMMITMENTS AND CONTINGENCIES

The Company and its subsidiaries are subject to various claims and assessments
arising out of the ordinary course of 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 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.

In April 2003, ILEX Services settled a dispute with a former CRO customer. As
a result of this settlement, ILEX Services will pay the former CRO customer
$20.0 million in the second quarter of 2003. At March 31, 2003, this amount
has been included in settlement-related liability in the Companys consolidated
balance sheet (see Note 4).

In March 2003, the Company finalized a license from Genentech covering the
production of its monoclonal antibody against the CD52 target (see Note 1). At
March 31, 2003, the license grant fee has been included in accounts payable 
other in the Companys consolidated balance sheet.

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. 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 has
maintained $651.0 in the form of securities as collateral for the guarantee as
of March 31, 2003. As of March 31, 2003 the Company had yet to fund the
guarantee, however it has been reserved for in prior financial statements.




ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements  Cautionary Statements

This Quarterly Report on Form 10-Q contains certain forward-looking statements
as such term is defined in the Private Securities Litigation Reform Act of 1995
and information relating to the Company and its subsidiaries that are based on
the beliefs of the Companys management as well as assumptions made by and
information currently available to the Companys management. When used in this
report, the words anticipate, believe, estimate, expect and intend and words or
phrases of similar import, as they relate to the Company or its subsidiaries or
Company management, are intended to identify forward-looking statements. Such
statements reflect the current risks, uncertainties and assumptions related to
certain factors including, without limitations, risks associated with
preclinical and clinical developments in the biopharmaceutical industry in
general and in ILEXs compounds under development in particular; the potential
failure of the Companys compounds under development to prove safe and
effective for treatment of disease; uncertainties inherent in the early stage
of the Companys compounds under development; failure to successfully implement
or complete clinical trials; failure to receive market clearance from
regulatory agencies for our compounds under development; managements ability
to implement strategic initiatives; the ability of the Company to predict its
future expenses and capital needs; the development of competing products; the
ability of the Company to combine its disparate research capabilities and
translate them into clinical drug development programs; uncertainties related
to the Companys dependence on and relationships with third parties and
partners; general economic and market conditions; risks inherent in the
biopharmaceutical industry; stock price volatility; variability of license,
royalty and other revenue; risks related to the outcome of litigation and
claims made against us; risks related to the market acceptance of CAMPATH;
uncertainties related to protection of our intellectual property; rapid
technological change could render our technologies obsolete; one-time events
and those risks described herein, in the Companys Report on Form 10-K filed
March 14, 2003, and in other filings made by the Company with the SEC. Based
upon changing conditions, should any one or more of these risks or
uncertainties

9



---



##### Table of Contents



ILEX ONCOLOGY, INC.
MARCH 31, 2003  QUARTERLY REPORT ON FORM 10-Q

---

materialize, or should any underlying assumptions prove incorrect, actual
results may vary materially from those described herein as anticipated,
believed, estimated, expected or intended. The Company does not intend to
update these forward-looking statements.

The following discussion describes the Companys financial position and results
of operations for the three-month period ended March 31, 2003. The consolidated
financial statements and notes thereto contain detailed information that should
be referred to in conjunction with this discussion.

OUR BUSINESS

We are building a product-driven biopharmaceutical company, primarily focused
on oncology, by developing and commercializing a portfolio of novel treatments
for both early and late stage cancers. We are leveraging our core competencies
in clinical drug development to identify, develop and commercialize our
proprietary product candidates. Our lead product, CAMPATH®, has been approved
in the United States and Europe for treating patients with refractory chronic
lymphocytic leukemia (CLL) and is distributed by Schering AG and its United
States (U.S.) subsidiary, Berlex Laboratories, Inc. (Berlex). CAMPATH was
developed in a 50/50 partnership with Millennium Pharmaceuticals, Inc.
(Millennium). In December 2001, we acquired Millenniums equity interest in
ILEX Pharmaceuticals, L.P. (formerly known as Millennium & ILEX Partners, L.P.
(the Partnership)). This transaction has helped streamline the process of
developing CAMPATH in additional indications including nononcology indications.
In addition to CAMPATH, we have multiple targeted product candidates in
clinical trials, as well as several active preclinical programs. To date, we
have built this pipeline primarily through focused development of leads
obtained through the licensing and acquisition of promising drug candidates. In
addition to our clinical development programs, we conduct drug discovery
research, translational research and preclinical studies in the fields of
signal transduction, angiogenesis inhibition, molecular receptor chemistry and
medicinal phosphonate chemistry.

Since inception we have incurred losses and had an accumulated deficit through
March 31, 2003, of $308.4 million. Our losses have resulted primarily from
research and product development activities, including licensing of products
and product and corporate acquisitions for which we incur in-process research
and development fees, and related administrative expenses. We plan to continue
to invest in key research and development activities. We expect to continue to
incur operating losses throughout 2003. Our revenue for the foreseeable future
will be limited to our profit participation and royalty revenue, product
development revenue, interest income and other miscellaneous income.

In February 2001, we announced our intent to focus our in-house drug
development capabilities on our own proprietary products, including those being
jointly developed with partners. At that time, we began a transition out of
the fee-for-service CRO business, which is expected to take at least
one more year. We will continue to recognize revenue from current client projects, but
we do not intend to take on any new fee-for-service contracts.

RECENT DEVELOPMENTS

In April 2003, our subsidiary, ILEX Oncology
Services, Inc. (ILEX Services) settled a dispute with a former
contract research organization (CRO) customer. As
a result of this settlement, ILEX Services will pay the former CRO customer
$20.0 million in the second quarter of 2003. We have recorded a
settlement charge in the first quarter of 2003 of $16.5 million,
which is net of insurance reimbursement of $3.5 million, related
to the settlement of this dispute.

In March 2003, we finalized a license from Genentech covering the
production of its monoclonal antibody against the CD52 target. At March 31,
2003, the license grant fee has been included in accounts payable  other in
our consolidated balance sheet.

CRITICAL ACCOUNTING POLICIES

We believe that our most critical accounting issues include the process we use
to evaluate an impairment on the intangible assets acquired in the purchase of
Millenniums interest in the Partnership and the process of determining the
amount of in-process research and development obtained in an acquisition. The
amounts recorded as completed technology and trademark were determined based on
an independent appraisal of the estimated timing and amount

10



---



##### Table of Contents



ILEX ONCOLOGY, INC.
MARCH 31, 2003  QUARTERLY REPORT ON FORM 10-Q

---

of revenue to be generated from sales of CAMPATH.

Amounts recorded as in-process research and development are based upon
assumptions and estimates regarding the amount and timing of projected revenues
and costs as well as the appropriate discount rates and expected trends in
technology. 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.

RESULTS OF OPERATIONS  THREE MONTHS ENDED MARCH 31, 2003 AND 2002

Operating Revenues

Total revenue increased to $8.7 million in the first quarter of 2003, from
$8.3 million in the first quarter of 2002. The overall increase of $0.4
million, or 5%, was due to several factors. First, product profit and royalty
revenue, which is the Companys share of CAMPATH net profits on U.S. sales and
a royalty on the rest of the world sales, totaled $4.5 million in the first
quarter of 2003 compared to $3.0 million in the first quarter of 2002. Second,
product development revenue increased to $3.4 million in the first quarter of
2003 from $1.7 million in the first quarter of 2002, an increase of $1.7
million or 100%. The increase in product development revenue is due to an
increase in spending for CAMPATH-related development activities as revenue that
is recorded by the Partnership is based upon research and development expenses
incurred. Revenue from the Companys contract research services (CRO)
decreased $2.8 million or 82% to $0.6 million in the first quarter of 2003 from
$3.4 million in the first quarter of 2002. This decrease is the result of the
Companys continued transition out of the fee-for-service CRO business.

Operating Expenses

Research and development costs. Research and development costs decreased
slightly to $10.6 million in the first quarter of 2003, from $10.9 million in
2002. This decrease of $0.3 million, or 3%, was due to a decrease in direct
payroll-related research and development costs partially offset by increased
spending on our product pipeline.

Selling, general and administrative costs. Selling, general and
administrative costs increased to $3.7 million for the first quarter of 2003,
compared to $2.9 million for the same quarter in 2002. This increase of $0.8
million, or 28%, is primarily due to an increase in legal fees resulting from
the settlement, increased medical advisory board expenses and non-cash
compensation charges.

Depreciation and amortization. Depreciation and amortization decreased to
$1.8 million from $1.9 million in 2002, a decrease of approximately $0.1
million or 5%. This decrease is the result of a lower property, plant and
equipment balance throughout the first quarter of 2003 versus the same period
in 2002.

Licensing costs. Licensing costs increased to $0.6 million for the first
quarter of 2003 from $0.5 million in the first quarter of 2002. This increase
of $0.1 million or 20% is primarily related to legal expenses for product
filing fees.

Direct cost of research services. Direct cost of research services
decreased to $0.4 million during the first quarter of 2003, from $2.0 million
in 2002. This decrease of $1.6 million, or 80%, is attributable to the
Companys continued transition out of the fee-for-service business.

Settlement charge. We incurred a settlement charge of $16.5 million in the
first quarter of 2003. This charge is the result of the settlement of a
dispute with a former client of our contract research organization.

Interest Income and Other, Net

Interest and other income decreased to $1.2 million for the quarter ended
March 31, 2003 from $2.5 million for the quarter ended March 31, 2002. This
decrease of $1.3 million, or 52%, is attributable to a decrease in our cash
balances from the same period last year as well as a decrease in the available
interest rates on investment balances compared to interest rates in 2002.

11



---



##### Table of Contents



ILEX ONCOLOGY, INC.
MARCH 31, 2003  QUARTERLY REPORT ON FORM 10-Q

---

Interest Expense

Interest expense decreased to $1.1 million for the quarter ended March 31,
2003 from $1.8 million for the quarter ended March 31, 2002. Interest expense
relates to the imputed interest on the note to Millennium for our purchase of
their interest in the Partnership. The decrease of $0.7 million or 39% is a
result of the decrease in the outstanding balance on which interest expense is
calculated.

Net Loss

Net loss increased $15.8 million in the first quarter of 2003 to $24.9
million, from $9.1 million in 2002. Net loss per share increased $0.48 per
share to $0.76 per share in 2003, from $0.28 per share in 2002. Excluding the
settlement charge of $16.5 million in the first quarter of 2003, non-GAAP net
loss was $8.4 million compared to $9.1 million in the first quarter of 2002.
The Companys non-GAAP net loss per share was $0.26 for the quarter ended March
31, 2003 compared to $0.28 per share for the same period in 2002. Management
of the Company believes that the aforementioned non-GAAP measure of net loss
and net loss per share is useful for investors as it excludes the significant,
unusual settlement charge. Management also believes that excluding the
settlement charge from our GAAP net loss provides users of the Companys
financial statements an important insight into our net results and the related
trends, which are affecting our core business. The following table shows the
reconciliation of our GAAP net loss and net loss per share to our non-GAAP net
loss and net loss per share:

|                                     |  |          |         |                |  |   |       |  
|------------------------------------ |  | -------- | ------- | -------------- |  | - | ----- | -
|                                     |  | Net Loss |         | Loss per share
|                                     |  |          |         |               
|GAAP net loss and loss per share     |  | $        | (24,921 | )              |  | $ | (0.76 | )
|Settlement charge                    |  |          | 16,500  |                |  |   | 0.50  |  
|                                     |  |          |         |                |  |   |       |  
|Non-GAAP net loss and loss per share |  | $        | (8,421  | )              |  | $ | (0.26 | )
|                                     |  |          |         |                |  |   |       |  

LIQUIDITY AND CAPITAL RESOURCES

We have historically financed our operations primarily through the sale of
our capital stock, through development and licensing fee revenues provided by
our collaborative partners under our collaborative agreements and through
fee-for-service or participatory revenues pursuant to contracts with our CRO
clients.

At March 31, 2003, we had cash, cash equivalents, restricted investments
and investments in marketable securities of $177.2 million and working capital
of $106.2 million. Cash, cash equivalents, restricted investments and
investments in marketable securities decreased by $13.8 million in the first
quarter of 2003 as a result of general operating requirements as well as
development spending on our product candidates.

In April 2003, our subsidiary, ILEX Oncology
Services, Inc. (ILEX Services) settled a dispute with a former CRO customer. As
a result of this settlement, ILEX Services will pay the former CRO customer
$20.0 million in the second quarter of 2003. We have recorded a
settlement charge in the first quarter of 2003 of $16.5 million,
which is net of insurance reimbursement of $3.5 million, related
to the settlement of this dispute.

In December 2001, Genentech announced that it was granted a patent
relating to fundamental methods and compositions for the production of
monoclonal antibodies using anti-recombinant DNA technology. This proceeding
entitled Genentech to priority over the patent held by the Celltech Group PLC,
who had first received the patent in 1989. In March 2003, we finalized a
license from Genentech covering the production of our CAMPATH 1-H monoclonal
antibody against the CD52 target. Accordingly, as of March 31, 2003, we have
recorded an intangible asset of $2.0 million associated with the license grant
fee paid to Genentech in April 2003, which will be amortized over the remaining
patent life of 13 years. We will also pay milestones and royalties based upon
net U.S. sales levels.

We expect our current funds will be adequate to cover all of our
obligations for at least the next year. Until our business can generate
sufficient levels of cash from product sales, we expect to continue to finance
our operations through existing cash, revenue from collaborative relationships,
and proceeds from the sale of equity securities.

We plan to continue our policy of investing available funds in government
securities and investment-grade, interest-bearing securities, none of which
matures in more than two years. We do not invest in derivative financial

12



---



##### Table of Contents



ILEX ONCOLOGY, INC.
MARCH 31, 2003  QUARTERLY REPORT ON FORM 10-Q

---

instruments, as defined by Statement of Financial Accounting Standards No. 133
and 138.

Our future expenditures and capital requirements will depend on numerous
factors, including but not limited to: the progress of our research and
development programs; the progress of our non-clinical and clinical testing;
the magnitude and scope of these activities; the time and costs involved in
obtaining regulatory approvals; the cost of filing, prosecuting; defending and
enforcing any patent claims and other intellectual property rights; competing
technological and market developments; changes in or termination of existing
collaborative arrangements; the ability to establish, maintain and avoid
termination of collaborative arrangements and the purchase of capital equipment
and acquisitions of compounds, technologies or businesses. At March 31, 2003,
we did not have any material commitments for capital expenditures.




ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk represents the risk of loss that may impact the financial position,
results of operations or cash flows of the Company due to adverse changes in
financial market prices, including interest rate risk, foreign currency
exchange rate risk, commodity price risk and other relevant market rate or
price risks.

We are exposed to some market risk through interest rates, related to our
investment of cash, cash equivalents, restricted investments and investments in
marketable securities of $177.2 million at March 31, 2003. These funds are
generally invested in interest-bearing securities, primarily with maturities of
one year or less. As such instruments mature and the funds are reinvested, we
are exposed to changes in market interest rates. This risk is not considered
material and we manage such risk by continuing to evaluate the best investment
rates available for short-term high quality investments. If market interest
rates were to increase or decrease immediately and uniformly by 50 basis
points, we would not expect there to be a material effect on our results of
operations or on our balance sheet. We have not used derivative financial
instruments in our investment portfolio.

Our European operations are denominated in local currency. We have unhedged
transaction exposures in these currencies, which are not considered material.
We have not entered into any forward foreign exchange contracts for
speculative, trading or other purposes.




Item 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures.

As of March 31, 2003 an evaluation was performed under the supervision and with
the participation of management, including the Chief Executive Officer and
Chief Financial Officer, of the effectiveness of the design and operation of
our disclosure controls and procedures (as such term is defined in Rules
13a-14(c) and 15d-14(c) under the Securities and Exchange Act of 1934, as
amended). Based on that evaluation, the Chief Executive Officer and Chief
Financial Officer concluded that our disclosure controls and procedures were
effective as of March 31, 2003.

Changes in Internal Controls.

There have been no significant changes in internal controls or in other factors
that could significantly affect internal controls subsequent to March 31, 2003.

13



---



##### Table of Contents



ILEX ONCOLOGY, INC.
MARCH 31, 2003  QUARTERLY REPORT ON FORM 10-Q

---




PART II. OTHER INFORMATION




Item 6. Exhibits and Reports on Form 8-K



| | (a) |  | Exhibits      
| | --- |  | --------------
|
| |     |  | Exhibit
Number



| | 3.1   |  | Amended and Restated Certificate of Incorporation of
the Company filed May 31, 2000 (Incorporated herein by reference
to Exhibit 3.1 of the Companys Quarterly Report on Form 10-Q
filed August 8, 2000)
| | ----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 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)                
|
| | 11.1* |  | Computation of Net Loss per Share                                                                                                                                                                        
|
| | 99.1* |  | Certification Pursuant to 18 U.S.C. Section
1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002                                                                                   
|
| | 99.2* |  | Certification Pursuant to 18 U.S.C. Section
1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002                                                                                   



| | (b) |  | Reports on Form 8-K:

No reports on Form 8-K were filed in the first quarter of 2003.
| | --- |  | -------------------------------------------------------------------------------------



|* |  | Filed herewith.
|- |  | ---------------

14



---



##### Table of Contents



ILEX ONCOLOGY, INC.
MARCH 31, 2003  QUARTERLY REPORT ON FORM 10-Q

---




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 May 13, 2003.

| |  |     |  |                                                                                           
| |  | --- |  | ------------------------------------------------------------------------------------------
| |  |     |  | ILEX ONCOLOGY, INC                                                                        
| |  |     |  |                                                                                           
| |  | By: |  | /s/ JEFFREY H. BUCHALTER                                                                  
| |  |     |  |                                                                                           
| |  |     |  | Jeffrey H. Buchalter                                                                      
| |  |     |  | President and Chief Executive
Officer
(Principal Executive Officer)                       
| |  |     |  |                                                                                           
| |  | By: |  | /s/ MARK P. MELLIN                                                                        
| |  |     |  |                                                                                           
| |  |     |  | Mark P. Mellin                                                                            
| |  |     |  | Senior Vice President and
Chief Financial Officer
(Chief Financial and
Accounting Officer)

15



---



##### Table of Contents



ILEX ONCOLOGY, INC.
MARCH 31, 2003  QUARTERLY REPORT ON FORM 10-Q

---




CERTIFICATIONS

I, Jeffrey H. Buchalter, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of ILEX Oncology, Inc;

2.     Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3.     Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.     The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrants disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the Evaluation Date); and

c) presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5.     The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):

a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrants ability to record, process,
summarize and report financial data and have identified for the registrants
auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal controls;
and

6.     The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: May 13, 2003

| |                                                                                          | 
| | ---------------------------------------------------------------------------------------- | 
| | /s/ JEFFREY H. BUCHALTER                                                                 | 
| |                                                                                          | 
| | Jeffrey H. Buchalter
President and Chief Executive Officer
(Principal Executive Officer) | 

16



---



##### Table of Contents



ILEX ONCOLOGY, INC.
MARCH 31, 2003  QUARTERLY REPORT ON FORM 10-Q

---

CERTIFICATIONS

I, Mark P. Mellin, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of ILEX Oncology, Inc;

2.     Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3.     Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.     The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrants disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the Evaluation Date); and

c) presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5.     The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):

a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrants ability to record, process,
summarize and report financial data and have identified for the registrants
auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal controls;
and

6.     The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: May 13, 2003

| |                                                                                                           | 
| | --------------------------------------------------------------------------------------------------------- | 
| | /s/ MARK P. MELLIN                                                                                        | 
| |                                                                                                           | 
| | Mark P. Mellin
Senior Vice President and Chief Financial Officer
(Chief Financial and Accounting Officer) | 

17



---



##### Table of Contents






INDEX TO EXHIBITS

|        |  |                                                                                                                                                                                                          
|------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|EXHIBIT |  |                                                                                                                                                                                                          
|NUMBER  |  | DESCRIPTION                                                                                                                                                                                              
|        |  |                                                                                                                                                                                                          
|3.1     |  | Amended and Restated Certificate of Incorporation of
the Company filed May 31, 2000 (Incorporated herein by reference
to Exhibit 3.1 of the Companys Quarterly Report on Form 10-Q
filed August 8, 2000)
|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)                
|11.1*   |  | Computation of Net Loss per Share                                                                                                                                                                        
|99.1*   |  | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002                                                                                   
|99.2*   |  | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002                                                                                   



|* |  | Filed herewith.
|- |  | ---------------