PART I

Forward-Looking Statements

     This annual report on Form 10-K, including the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contains “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are subject to the “safe harbor” created by those sections. These forward-looking statements include, but are not limited to, statements about:

	•		strategic alternatives with respect to our MyVax program or other aspects of our business, including our monoclonal antibody program, and the timing, likelihood and outcome thereof;
	•		the progress of our research, development and clinical programs;
	•		potential settlement with our landlord relating to obligations under our lease agreements for our facilities in Fremont, California and the timing, likelihood and outcome thereof;
	•		the ability to develop, market, commercialize and achieve market acceptance for our monoclonal antibody panel, or any other immunotherapies we may develop;
	•		our ability to preserve or realize any value from our MyVax program;
	•		our ability to continue operations and our estimates for future performance and financial position of the company;
	•		the breadth of potential applications for MyVax, potential benefits of our monoclonal antibody panel and the timing of filing of a related investigational new drug application, or IND; and
	•		our estimates regarding sufficiency of our capital resources, our ability to operate as a going concern, our ability to raise necessary additional financing to continue our operations and financial statements for future periods.

     These forward-looking statements are based on our current expectations, assumptions, estimates and projections about our business and industry and involve known and unknown risks, uncertainties and other factors that could cause our or our industry’s actual results to differ materially from any results, levels of activity, performance or achievements expressed in or contemplated or implied by the forward-looking statements. Forward-looking statements are generally identified by words such as “believe,” “should,” “could,” “estimate,” “schedule,” “may,” “potential,” “future,” “predict,” “continue,” “might,” “anticipates,” “plans,” “expects,” “will,” “intends” and other similar words and expressions. The risks discussed in “Risk Factors,” under Part I, Item 1A below, and elsewhere in this Annual Report on Form 10-K, should be considered in evaluating our prospects and future financial performance. We undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this report.

ITEM 1. BUSINESS.

BUSINESS

Overview

     We are a biotechnology company focused on the research and development of novel immunotherapies for the treatment of cancer. Until we recently suspended its development, our lead product candidate was MyVax personalized immunotherapy, or MyVax.

In December 2007, we obtained data indicating that our pivotal Phase 3 clinical trial of MyVax for the treatment of follicular B-cell NHL did not meet its primary clinical endpoint. Although the December 2007 analysis of the primary endpoint indicated that there was no statistically significant difference in progression-free survival of patients receiving MyVax compared to patients receiving the control substance, an analysis of a pre-specified endpoint in the group of patients receiving MyVax showed a highly statistically significant difference in the progression-free survival between patients who mounted a positive immune response to the tumor-specific target and those who did not. As a result, we met with the U.S. Food and Drug Administration, or FDA, in March 2008 to determine the potential for the filing of a Biologics License Application, or BLA, on the basis of the analysis of this pre-specified endpoint, other analyses of the Phase 3 clinical trial and other information, notwithstanding the trial’s failure to meet its primary clinical endpoint. On March 6, 2008, after a review of the data and other information that we had provided, the FDA communicated to us that, in light of the Phase 3 clinical trial’s failure to meet its primary endpoint, one or more additional Phase 3 clinical trials for MyVax would be required before the FDA would accept a BLA for FDA review. We have also been developing a panel of monoclonal antibodies that we believe potentially represents an additional novel, personalized approach for treating NHL. The monoclonal antibodies might reduce or eliminate the need for chemotherapy in the early treatment of NHL.

      We currently have capital resources that we believe to be sufficient to support our operations through approximately May 2008. We are unlikely to be able to raise sufficient funds to continue our existing operations beyond that time, particularly in light of our obligations under the lease agreements described below. Accordingly, we do not expect to resume the conduct of our current operations other than as a substantially restructured entity, whether as a result of bankruptcy proceedings or otherwise. At the present time, our strategy for the benefit of our creditors and stockholders is to take steps to preserve and support the future value, if any, of MyVax, to seek funding for our monoclonal antibody program, to conserve our current cash to the extent reasonably practicable and to generate cash, including potentially through the sale of assets. To conserve cash, as discussed below, we have implemented a plan for a substantial reduction of our workforce. We are also evaluating our alternatives with respect to the sale of equipment and other non-critical assets. In addition, we are pursuing strategic alternatives for our monoclonal antibody and MyVax programs, including potentially through a spin-off or sale to a separately funded entity or entities. Stockholders should recognize that, to satisfy our liabilities, including in particular those under our lease agreements, fund the development of our monoclonal antibody program and preserve the value of our MyVax program, we may pursue strategic alternatives that result in the stockholders of Genitope having little or no continuing interest in the monoclonal antibody or MyVax programs or other assets of the Genitope as stockholders or otherwise.

     On March 14, 2008, we provided a notice to 165 employees under the WARN Act that we plan to conduct a “mass layoff” at our facility in Fremont and that their employment is expected to end on May 13, 2008. We have also provided WARN notices to six of our nine executive officers, not including Dan W. Denney, Jr., our Chief Executive Officer, John Vuko, our Chief Financial Officer, and Laura Woodhead, our Vice President, Legal Affairs, that their employment is expected to end on May 26, 2008. We intend to also provide WARN notices on approximately March 31, 2008 to Mr. Vuko and Ms. Woodhead that their employment is expected to end 60 days following the date that notice is provided. As a result of our reductions in force, we expect that approximately 20 employees will remain as employees of Genitope as of the end of May 2008, and that these employees will primarily be those involved in the development of our monoclonal antibody panel. In March 2008, we retained Development Specialists, Inc., a provider of management and consulting services, as a consultant to, among other potential services, assist in and oversee the wind down of our business in such a fashion as to preserve a potential restart to operations, to provide the services of one of its employees to serve as one of our officers, as necessary, and to assist in our negotiations with creditors, including our landlord, and other stakeholders.

     In May 2005, we entered into lease agreements to lease an aggregate of approximately 220,000 square feet of space located in two buildings in Fremont, California for our manufacturing facility and corporate headquarters. There are currently 12.7 years remaining on the lease, with a total rental obligation of $101.0 million as of February 29, 2008. We are in the process of determining whether or when to vacate the buildings. However, even if we vacate both buildings, we will have continuing obligations under the lease agreements that we may be unable to satisfy. We have commenced initial settlement discussions with our landlord to reach a settlement in connection with our remaining obligations under the lease agreements outside the protection of federal bankruptcy laws. Depending upon the outcome of our discussions with the landlord and our ability to raise the necessary financing to allow the development of the monoclonal antibody panel to continue and to preserve the value of MyVax, we intend to look for alternative space to lease on a short-term basis. If our discussions regarding settlement are ultimately unsuccessful or if we are unable to obtain financing to support continued satisfaction of our lease obligations, we would likely be in default under the lease agreements and would likely be forced to seek protection under the federal bankruptcy laws. In that event, we may seek to reorganize our business, or we or a trustee appointed by the court may be required to liquidate our assets. In either of these events, whether the stockholders receive any value for their shares is highly uncertain. If we need to liquidate our assets, we might realize significantly less from them than the values at which they are carried on our financial statements. The funds resulting from the liquidation of our assets would be used first to pay off the debt owed to secured and unsecured creditors, including our landlord, before any funds would be available to stockholders, and any shortfall in the proceeds would directly reduce the amounts available for distribution, if any, to our creditors and to our stockholders. In the event we are required to liquidate under the federal bankruptcy laws, it is highly unlikely that stockholders would receive any value for their shares.

     On February 7, 2008 and March 6, 2008, we received staff deficiency letters from the Nasdaq Stock Market indicating that we failed to satisfy the minimum bid price and Audit Committee composition requirements for continued maintenance of our listing on the Nasdaq Global Market. In accordance with Nasdaq requirements, we have 180 calendar days, or until August 5, 2008, to regain compliance with the bid price requirement. To reestablish compliance, our minimum closing bid price must be more than $1.00 per share for at least 10 consecutive business days. The cure period with regard to the audit committee deficiency will continue (1) until the earlier of our next annual stockholders’ meeting or February 26, 2009, or (2) if the next annual stockholders’ meeting is held before

August 25, 2008, until August 25, 2008. If we do not regain compliance within these specified cure periods, Nasdaq will commence delisting proceedings. We may not be able to satisfy Nasdaq’s conditions for continued listing. If our common stock is delisted, it would seriously impair stockholders’ ability to trade their shares, limit the liquidity of our common stock and impair our ability to raise capital through the sale of our common stock, which could seriously harm our business, especially at a time when we may need to raise substantial additional capital to fund the development of our monoclonal antibody panel and preserve the value of our MyVax program. See “Risk Factors— If we are unable to maintain our Nasdaq Global Market listing, the liquidity of our common stock would be seriously limited.”

     The failure of our Phase 3 clinical trial to meet its primary clinical endpoint and our recent decision to suspend the development of MyVax have significantly depressed our stock price and impaired our ability to raise additional funds. We are evaluating our strategic alternatives with respect to all aspects of our business. We cannot assure you that any actions that we take would raise or generate sufficient capital to fully address the uncertainties of our financial position. Moreover, we may not successfully identify or implement any of these alternatives, and, even if we determine to pursue one or more of these alternatives, we may be unable to do so on acceptable financial terms. As a result, we may be unable to realize value from our assets and discharge our liabilities in the normal course of business. All of the factors discussed above raise substantial doubt about our ability to continue as a going concern. If we become unable to continue as a going concern, we may need to liquidate our assets, and we might realize significantly less than the values at which they are carried on our financial statements. However, the accompanying financial statements do not include any adjustments or charges that might be necessary should we be unable to continue as a going concern, such as charges related to impairment of our assets, the recoverability and classification of assets or the amounts and classification of liabilities or other similar adjustments. In addition, the report of our independent registered public accounting firm on the accompanying financial statements included in this Annual Report on Form 10-K contains an explanatory paragraph regarding going concern uncertainty.

     Management has considered whether, under Statements of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (“FAS 144”), any events or circumstances had occurred prior to December 31, 2007 that would indicate an impairment of our long-lived assets, particularly in light of our announcement in December 2007 of the results of our Phase 3 clinical trial of MyVax. Management considered, among other information, the fact that the FDA agreed to hold a meeting with us in early 2008 and that between December 2007 and March 2008, we engaged in active discussions of our clinical data with, and provided additional information to, the FDA with a view toward the potential filing of a BLA. Taking into account our view of the positive implications of the data from the Phase 3 clinical trial and the perspective of an FDA consultant engaged by us, our management and board of directors viewed the FDA’s review of data from a number of perspectives and active engagement with us to be encouraging, leading management and the Board to believe that there was a significant possibility of a favorable outcome from our March 2008 meeting with the FDA. Accordingly, during this time, our board of directors and management continued to focus on the potential path to filing of a BLA and possible eventual commercialization of MyVax as early as 2009, and there were no reductions in the level of business activities with respect to MyVax prior to our early March 2008 meeting with the FDA. Following our March 6, 2008 meeting with the FDA in which the FDA communicated to us that one or more additional Phase 3 clinical trials for MyVax would be required before the FDA would accept a BLA for FDA review, we concluded that, because it was not financially feasible for us to conduct additional Phase 3 clinical trials, we would need to suspend the development of MyVax. We are currently evaluating our strategic alternatives with respect to all aspects of our business, including with respect to MyVax. However, we have not committed to take or made any decisions with respect to any permanent discontinuation of any program or disposal of any significant assets. After completing its evaluation and considering all external and internal information available as of the impairment analysis, management concluded that, as of December 31, 2007, the carrying amount of the long-lived assets were recoverable and therefore no impairment existed. However, we will continue to evaluate the possible impairment of assets as required under FAS 144 as it relates to our financial statements for the quarter ending March 31, 2008 and succeeding quarters. In light of the FDA’s March 2008 communication to us, we anticipate that our financial statements may reflect a charge for an impairment of assets at the end of the quarter ending March 31, 2008.

Corporate Information

     We were incorporated in the State of Delaware on August 15, 1996. Our principal executive offices are located at 6900 Dumbarton Circle, Fremont, California and our telephone number is (510) 284-3000.

The Immune System and Cancer

     The immune system is the body’s natural defense mechanism to prevent and combat disease. The primary disease fighting functions of the immune system are carried out by white blood cells. In response to the presence of disease, white blood cells can mediate two types of immune responses, referred to as innate immunity and adaptive immunity. Together the innate and adaptive arms of the immune system generally provide an effective defense against a broad spectrum of diseases.

     Innate immunity is mediated by the white blood cells that engulf and digest infecting microorganisms known as pathogens. These white blood cells are the first line of defense against many common infections because they do not require that the body be previously exposed to the pathogens. The role of the innate immune system is to control infections while adaptive immunity is being established for that pathogen.

     Adaptive immunity is generated by the immune system throughout a person’s lifetime as he or she is exposed to particular pathogens. As a person is exposed to a pathogen, the adaptive immune response will, in many cases, confer life-long protection from re-infection by the same pathogen. This adaptive immune response is the basis for preventative vaccines that protect against viral and bacterial infections such as measles, polio, diphtheria and tetanus.

     Adaptive immunity is mediated by a subset of white blood cells called lymphocytes, which are divided into two types, B-cells and T-cells. B-cells and T-cells recognize molecules, usually proteins, known as antigens. An antigen is a molecule or substance that reacts with an antibody or a receptor on a T-cell. When a B-cell recognizes a specific antigen, it secretes proteins, known as antibodies, which in turn bind to a target containing that antigen and tag it for destruction by other white blood cells. When a T-cell recognizes an antigen, it either promotes the activation of other white blood cells or initiates destruction of the target cells directly. The collective group of B-cells and T-cells can recognize a wide array of antigens, but each individual B-cell or T-cell will recognize only one specific antigen. Because of this specificity, few lymphocytes will recognize the same antigen.

     Despite the effectiveness of the immune system in defending the body against infectious disease, it is generally ineffective in defending the body against a cancer once it has appeared. The immune system has developed numerous immune suppression mechanisms to prevent it from destroying a person’s normal tissue, and these same mechanisms are believed to prevent an immune response from being mounted against cancer cells. In addition, the cancer cells themselves can make changes that reduce the ability of the immune system to attack the tumor.

Immunotherapy and Cancer

     Immunotherapies utilize a person’s immune system in an attempt to combat diseases, including cancer. There are two forms of immunotherapy used to treat various diseases: passive and active. Both types of immunotherapy have been used with success to treat a number of different diseases. For example, active immunotherapies in the form of preventative vaccines have enabled the complete or virtual elimination of viral diseases such as smallpox and polio.

     Passive immunotherapy is characterized by the introduction into a patient of antibodies specific to a particular antigen. When antibodies are infused into a cancer patient, they attach to any cell that displays the antigen. The patient’s immune system then responds to eliminate those specific cells tagged by the antibody. Alternatively, radioactive molecules or toxins can be attached to an antibody before it is infused into the patient to kill the tagged cells directly. Although the protection that is provided by a passive immunotherapy is immediate, it is invariably temporary. Consequently, while passive immunotherapies have shown clinical benefits in some cancers, and some have improved safety profiles compared to existing therapies, they require repeated infusions and can cause the destruction of normal cells as well as cancer cells.

     An active immunotherapy generates an adaptive immune response by introducing an antigen into a patient, often in combination with other components that can enhance an immune response to the antigen. The specific adaptive immunity generated can include both the production of antigen-specific antibodies made by B-cells, known as humoral immunity, and the production of antigen-specific T-cells, known as cellular immunity.

     Active immunotherapies have been successful in preventing many infectious diseases, such as measles, mumps or diphtheria, but the approach has been less successful in treating cancer. Historically, the reasons that effective active immunotherapies for cancer have been difficult to develop included the:

	•		inability of tumor antigens to elicit an effective immune response;
	•		difficulty in identifying suitable target tumor antigens;
	•		inability to manufacture tumor antigens in sufficiently pure form;
	•		inability to manufacture sufficient quantities of tumor antigens;
	•		failure to identify effective components to combine with tumor antigens to enhance an immune response; and
	•		failure to employ immunization methods that elicit an effective immune response.

     We believe that an effective active immunotherapeutic approach for cancer would result from immunizing patients with sufficient quantities of purified, tumor-specific antigens administered with additional components to increase the immunogenicity of these antigens. Immunogenicity is the ability of an antigen to evoke an immune response within an organism. Utilizing this type of immunotherapy should allow a patient’s own immune system to produce both B-cells and T-cells which recognize numerous portions of the tumor antigen and generate clinically significant immune responses. During the late 1980s, physicians at Stanford began development of an active immunotherapy with these characteristics for the treatment of follicular B-cell NHL.

Non-Hodgkin’s Lymphoma

     Background. NHL is a cancer of B-cell and T-cell lymphocytes. Currently, in the United States there are over 350,000 patients diagnosed with NHL, with approximately 63,000 newly diagnosed cases annually. Approximately 85% to 90% of patients diagnosed with NHL in the United States have B-cell NHL. The international market for NHL is estimated to be at least equal in size to the United States market. NHL is the sixth most common cancer and the sixth leading cause of death among cancers in the United States.

     NHL is clinically classified by its microscopic pathology at diagnosis. We were initially developing MyVax for the treatment of follicular B-cell NHL and had conducted clinical trials in diffuse large B-cell and mantle cell NHL. Follicular B-cell NHL constitutes approximately 32% of all NHL in the United States. Diffuse large B-cell NHL constitutes approximately 28% of all NHL. Mantle cell NHL constitutes approximately 7% of all NHL. Although follicular B-cell NHL progresses at a slow rate, it is viewed as an incurable cancer with the currently available therapies. According to the American Cancer Society, the median survival time from diagnosis for patients with stage III/IV follicular B-cell NHL is between seven and ten years. Unlike follicular B-cell NHL, approximately 40% of

diffuse large B-cell NHL cases are cured by standard chemotherapy. The remaining patients with diffuse large B-cell lymphoma typically require more extensive treatment regimens, and some ultimately undergo bone marrow transplants which may or may not be effective in any individual case. Similar to follicular B-cell NHL, mantle cell NHL is viewed as incurable.

     Current Treatments. Chemotherapy alone was previously used as first-line therapy for NHL and has been effective in managing some forms of these cancers. Although chemotherapy can substantially reduce the tumor mass and in most cases achieve a clinical remission, the remissions have not been durable. Follicular B-cell NHL patients invariably relapse within a few months or years of initial treatment, and the cancer becomes increasingly resistant to further chemotherapy treatments. Eventually, patients may become refractory to chemotherapy, meaning their response to therapy is so brief that further chemotherapy regimens would offer no significant benefit.

     Passive immunotherapies, such as Rituxan, have also demonstrated the ability to induce remission in patients with follicular B-cell NHL. But single agent passive immunotherapy has also failed to provide long-term remissions for most patients. In the last few years, Rituxan has been combined with standard chemotherapy regimens for NHL, improving remission rates as compared to chemotherapy alone. This combination has become the most common therapy for follicular B-cell NHL. Although passive immunotherapies such as Rituxan are better tolerated than standard chemotherapy, severe and/or life-threatening reactions, such as cytopenias and infusion reactions, can occur during administration and require careful patient monitoring. In addition, non-neutropenic infections have been reported especially with chemotherapy plus Rituxan combinations. More recently, “Black Box” warnings have been added to the Rituxan package insert detailing the incidents of fatal reactions, tumor lysis syndrome and severe mucocutaneous reactions.

     Even with the advent of combination therapies involving passive immunotherapies, most patients eventually relapse and/or become resistant. Salvage therapy encompasses various approaches, including high-dose chemotherapy, which may be performed to treat refractory follicular B-cell NHL patients or those at high risk for relapse from primary therapy. This approach results in the destruction of essential levels of red and white blood cells and requires stem cell transplants to be performed to restore a patient’s blood count. Stem cell transplants continue to be expensive and are associated with high morbidity and significant mortality. Ultimately, even these very aggressive treatment regimens may not provide long-term remission for most patients.

Active Idiotype Immunotherapy

     The active immunotherapy developed at Stanford was focused on the treatment of a cancer of B-lymphocytes known as follicular B-cell NHL. This immunotherapy consists of a patient-specific tumor protein and a foreign carrier protein administered with an adjuvant to enhance the immune response. Patient-specific tumor proteins, which include idiotype proteins, are proteins expressed by a tumor cell that are unique to an individual’s tumor cell. A foreign carrier protein is a type of protein, which when coupled to a non-immunogenic or weakly immunogenic antigen, increases the immunogenicity of the antigen. An adjuvant is a substance that is administered with an antigen to enhance or increase the immune response to that antigen.

     The key to the cancer immunotherapy developed at Stanford is the fact that the patient-specific tumor protein is the antibody expressed by the cancerous B-cells. Because the patient’s cancerous B-cells are replicates of a single malignant B-cell, all of the cancerous B-cells express the same antibody. Each antibody has unique portions, collectively known as the idiotype, which can be recognized by the immune system. This type of active immunotherapy is referred to as an active idiotype immunotherapy. It utilizes the patient- and tumor-specific antibody, or idiotype protein, as an antigen to direct the patient’s immune system to mount an immune response against the targeted tumor cells. Because the antigen is specific to the cancerous B-cells and not found on normal B-cells, the immune system should target the cancerous B-cells for destruction while leaving normal B-cells unharmed.

     The Stanford clinical trials began in 1988 for the treatment of follicular B-cell NHL. The first clinical trial involved 41 patients with indolent B-cell NHL who commenced their course of immunizations between November 1988 and December 1995. These patients were immunized while in remission following chemotherapy. The treated patients had either a complete response to chemotherapy, defined as no detectable tumor, or a partial response to chemotherapy, defined as at least a 50% reduction in their tumor volume. Of the 41 patients treated, 32 were in remission following their first course of chemotherapy, while the remaining patients were in remission following two or three courses of chemotherapy.

     Positive immune responses to the patient-specific active idiotype immunotherapy were detected in 20 of the 41 immunized patients, including 14 of the 32 patients in first remission following chemotherapy. The median time-to-disease progression for all 41 patients in the clinical trial was reported to be 4.4 years from the last chemotherapy regimen. Time-to-disease progression measures the interval of time between response to chemotherapy and recurrence of disease. The median time-to-disease progression was further analyzed by dividing patients into two groups based upon the presence or absence of an immune response. The median time-to-disease

progression was calculated to be 7.9 years for the 20 immune response positive patients and 1.3 years for the 21 immune response negative patients. The median time-to-disease progression for the 32 patients in first remission was virtually identical to that for the 41 total patients, which suggests that patient-specific active idiotype immunotherapy may be as effective in the larger population of relapsed patients as in the smaller population of newly diagnosed patients. Median survival time was also measured for patients treated in the clinical trial. At the time of publication, the median survival time of all 41 immunized patients had not been reached, and the investigators reported that the median survival time of all 41 patients was significantly longer than the median survival time seen in patients having the same type of NHL who were treated with chemotherapy alone. NHL patients treated at Stanford with chemotherapy alone had a median survival time of 10.9 years. The fact that the median survival time had not been reached for the 41 immunized patients demonstrates that these patients have a median survival time that is greater than 10.9 years. The median survival time of the 20 immune response positive patients had not been reached versus a median survival time of seven years calculated for the 21 immune response negative patients. The results are statistically significant and suggest that an active idiotype immunotherapy, similar to MyVax, may induce long-term remission and improve survival in follicular NHL patients.

     Long-term results from the first Stanford clinical trial were published in the medical journal, Blood, in May 1997 and are presented in the following table.

Median Time

Median

to Disease

Survival

Patients

Progression

Time

Total

41

4.4 years

Not Reached

Immune Response Positive

20

7.9 years*

Not Reached

Immune Response Negative

21

1.3 years

7.0 years*

     An independent clinical trial of a patient-specific active idiotype immunotherapy similar to the one tested at Stanford was conducted at the NCI to treat patients with follicular B-cell NHL. The NCI clinical trial results were published in Nature Medicine in October 1999. Patients treated in the NCI clinical trial had previously achieved a clinical complete response following an initial course of chemotherapy, that is, no tumor was apparent by physical examination and CT scans. Positive immune responses to the patient-specific active idiotype immunotherapy were reported for 19 of 20 immunized patients. Despite the fact that all 20 patients were in clinical complete remission, 11 of these 20 patients were shown to have lymphoma cells in their peripheral blood following chemotherapy using a very sensitive DNA-based test. After completing the course of immunization with the active idiotype immunotherapy, eight of these 11 patients were shown to have no lymphoma cells in their peripheral blood using the DNA-based test. These results suggest that active idiotype immunotherapy was able to induce a molecular complete response in patients that had minimal residual disease following chemotherapy.

     Despite the results of the Stanford and NCI clinical trials, further development of an active immunotherapeutic approach to the treatment of NHL historically has been limited by significant manufacturing difficulties. The production technology that was used to manufacture these active idiotype immunotherapies at Stanford and NCI is known as rescue fusion. Rescue fusion is a method that generates cell lines, referred to as hybridomas, which are created by combining, or fusing, the patient’s live tumor cells with cells from a cell line that grows indefinitely in culture. The resulting hybridomas are screened to identify those which secrete the idiotype protein present on the patient’s tumor cells. We believe that rescue fusion cannot be used to produce these patient-specific immunotherapies for the number of patients and at a cost that would enable widespread commercial use. The barriers to commercialization using the rescue fusion method include:

	•		the need for a relatively large sample of fresh tumor cells, requiring a surgical biopsy;
	•		the need for rapid processing, as viable tumor cells are required;
	•		a 10% to 20% failure rate;
	•		inconsistent and variable manufacturing timelines which frequently fall outside the desired clinical treatment timeline; and
	•		low productivity on a per technician basis.

MyVax Personalized Immunotherapy

     MyVax is an injectable patient-specific active idiotype immunotherapy that we had been developing initially for the treatment of follicular B-cell NHL. MyVax combines a patient and tumor-specific antibody, or idiotype protein, with a foreign carrier protein and is administered with an adjuvant. We had developed a proprietary manufacturing process for MyVax, which includes our patented Hi-GET gene amplification technology. Our manufacturing process is designed to overcome the barriers to commercialization of active idiotype immunotherapies that are associated with the use of a hybridoma-based process such as rescue fusion. In light of the FDA’s decision following the failure of our Phase 3 clinical trial to meet its primary clinical endpoint, we have suspended the development of MyVax. We are pursuing strategic alternatives with respect to our MyVax program and taking steps to preserve and support the future value, if any, of MyVax. Stockholders should recognize that, to satisfy our liabilities, including in particular those under our lease agreements, preserve the value of our MyVax program and pursue alternatives with respect to other aspects of our business, we may pursue strategic alternatives that result in the stockholders of Genitope having little or no continuing interest in MyVax program or other assets of the Genitope as stockholders or otherwise.

     In comparison to other cancer therapies, MyVax was designed to provide:

     Efficacious and lasting treatment: We believe, based on our analysis of our clinical trials, that (1) MyVax has the potential to provide durable remissions and extend survival in those B-cell NHL patients who are treated with MyVax and mount a positive immune response to their tumor-specific target, and (2) this therapeutic benefit could be greater than the benefit that is provided by currently available therapies, including passive immunotherapies such as Rituxan.

     Safety: MyVax has demonstrated an excellent safety profile to date. MyVax has been well tolerated in clinical trials, with the majority of adverse events being only mild to moderate. In our clinical trials, these adverse events have included injection site and systemic effects. The most commonly reported injection adverse events were bruising, swelling, redness, itching, inflammation, pain and other similar reactions at the injection site. The most commonly reported systemic adverse events were fatigue, influenza-like illness, fever, chills, nausea, pain, back, chest or muscle pain, rash and diarrhea. Furthermore, MyVax is designed to target only the idiotype protein unique to tumor cells and, thus, should not harm normal cells or impair a patient’s immune system. With an intact immune system, patients are less likely to develop significant complications, such as infections that have been reported in patients treated with Rituxan.

     Ease of administration: The administration of MyVax can be accomplished during a 30-minute outpatient visit, which includes the immunizations followed by an observation period, with each injection taking less than a minute. In comparison, currently available passive immunotherapies such as Rituxan must be administered via a series of lengthy, intravenous infusions. Each infusion of a passive immunotherapy takes hours, requires patients to be monitored for infusion reactions on multiple occasions during the infusion and can result in serious complications for patients. The safety and ease of administration of MyVax compared to currently available passive immunotherapies such as Rituxan should reduce the medical intervention required on behalf of patients during and after treatment and subsequently reduce the associated cost of care for patients with B-cell NHL

     Ease of sample collection: The tumor samples used to produce MyVax are collected using standard medical procedures that are commonly used in the diagnosis and staging of cancer patients. Our manufacturing process is designed to require only a small number of tumor cells, which need not be living cells, in order to produce MyVax . The required tumor samples can be acquired by surgical or non-surgical means, can be frozen and are shipped to our central facility, eliminating the need for on-site processing.

     Efficient manufacturing: Our manufacturing process is designed to enable MyVax to be produced within a clinically relevant time-frame for B-cell NHL patient whose tumor expresses an idiotype protein, enabling an oncologist to schedule a patient’s therapy with a high degree of certainty. In addition, our manufacturing process is designed to enable the reliable production of patient-specific active immunotherapies utilizing a less labor-intensive process than is associated with rescue fusion, permitting us to produce MyVax at cost levels that can yield margins that are competitive with current cancer treatments.

Monoclonal Antibody Program

     We have also been developing a monoclonal antibody panel that we believe will potentially represent a novel, personalized approach for treating NHL. We have filed patent applications for the composition and therapeutic use of this panel. The monoclonal antibodies might reduce or eliminate the need for chemotherapy in the early treatment of NHL.

     Our monoclonal antibodies are directed against specific portions of proteins, or epitopes, in the variable regions of the B-cell receptor, or BCR. Our approach is based on the finding that even though each NHL patient’s B-cell tumor expresses a unique idiotypic surface immunoglobulin, those immunoglobulins nevertheless have characteristics that are shared across predictable patient subsets. We have developed a panel of monoclonal antibodies that bind to BCR proteins based on their particular genetic makeup. It is possible to classify NHL patients into subsets based on which variable region is used by their particular tumor. This classification allows for the production of monoclonal antibodies that are off-the-shelf, while still personalizing the treatment for each patient. Our monoclonal antibodies should leave the majority of the B-cell repertoire of a patient’s immune system intact since they target only the subpopulation of a patient’s B-cells that share the same variable region as the lymphoma.

     At the present time, we are seeking funding and pursuing strategic alternatives for our monoclonal antibody program, including potentially through a spin-off or sale to a separately funded entity. Stockholders should recognize that, to satisfy our liabilities, including in particular those under our lease agreements, fund the development of our monoclonal antibody program and pursue alternatives with respect to other aspects of our business, we may pursue strategic alternatives that result in the stockholders of Genitope having little or no continuing interest in the monoclonal antibody or other assets of the Genitope as stockholders or otherwise.

Our Strategy

     We are evaluating our strategic alternatives with respect to all aspects of our business. We currently have capital resources that we believe to be sufficient to support our operations through approximately May 2008. We are unlikely to be able to raise sufficient funds to continue our existing operations beyond that time, particularly in light of our obligations under our lease agreements. Accordingly, we do not expect to resume the conduct of our current operations other than as a substantially restructured entity, whether as a result of bankruptcy proceedings or otherwise. At the present time, our strategy for the benefit of our creditors and stockholders is to take steps to preserve and support the future value, if any, of MyVax, to seek funding for our monoclonal antibody program, to conserve our current cash to the extent reasonably practicable and to generate cash, including potentially through the sale of assets. To conserve cash, we have implemented a plan for a substantial reduction of our workforce. We are also evaluating our alternatives with respect to the sale of equipment and other non-critical assets. In addition, we are pursuing strategic alternatives for our monoclonal antibody and MyVax programs, including potentially through a spin-off or sale to a separately funded entity or entities.

MyVax Clinical Development Program

     The following chart summarizes the results of our clinical trials of MyVax. As a result of our recent decision to suspend the development of MyVax, we are in the process of terminating all of the clinical trials listed in the chart below. We are evaluating whether it is possible to continue long-term follow-up of patients in the Phase 3 or other trials.

Clinical

No. of

Indication

Trial No.

Phase

Patients

Status

Follicular B-cell NHL

•   Patients in first remission following chemotherapy; 7 immunizations over 24 weeks

2000-03

Phase 3

287

Treatment phase completed

•   Patients in first remission following chemotherapy; 5 immunizations over 24 weeks

9901

Phase 2

21

Treatment phase completed

•   Patients in first remission following chemotherapy, administered with

2000-07

Phase 2

11

Treatment phase completed

Clinical

No. of

Indication

Trial No.

Phase

Patients

Status

reduced amount of adjuvant; 5 immunizations over 24 weeks

•   Sole initial therapy; 5 immunizations over 24 weeks, with patients demonstrating either a clinical or an immune response receiving 3 additional immunizations over 8 weeks

2000-04

Phase 2

16

Treatment phase completed

•   Patients who relapsed following chemotherapy and were subsequently treated with Rituxan; 8 immunizations over 14 weeks

2002-09

Phase 2

57

Treatment phase completed

•   Re-immunization of patients who participated in 2000-#04; 16 immunizations over 52 weeks

2005-10

Phase 2

Up to 16

Treatment phase was in process

•   Patients who relapsed following chemotherapy and were subsequently treated with Rituxan; 24 immunizations over 92 weeks

2007-12

Phase 2

Up to 100

Treatment phase was in process

Diffuse Large B-cell NHL and Mantle Cell NHL

•   Patients in first remission following chemotherapy

9902

Phase 2

27

•   Schedule A: 5 immunizations over 24 weeks

9902-A

Phase 2

14

Treatment phase completed

•   Schedule B: 8 immunizations over 18 weeks

9902-B

Phase 2

13

Treatment phase completed

Chronic Lymphocytic Leukemia

•   Sole initial therapy; 16 immunizations over 52 weeks

2005-11

Phase 2

76

Treatment phase almost complete

Pivotal Phase 3 Follicular B-cell NHL Clinical Trial — the 2000-03 Trial

     In November 2000, based on positive interim Phase 2 clinical trial results, we initiated a pivotal, randomized, double-blind, placebo-controlled Phase 3 clinical trial, our 2000-03 trial, to assess the safety and efficacy of MyVax in treating patients with previously untreated follicular B-cell NHL, which represents approximately 32% of the cases of NHL in the United States. This Phase 3 clinical trial of MyVax included 287 patients and was conducted at 34 treatment centers in the United States and Canada. In this clinical trial, patients first received chemotherapy to reduce their tumor burden, followed by a rest period. Patients who maintained at least a partial response through the rest period were then randomized to receive either MyVax or a non-specific immunotherapy, which serves as the control for this trial.

     The following chart summarizes the treatment schedule of patients in the clinical trial.

(CHART)

Patients received seven immunizations over a 24-week period, which represented two more immunizations than were administered in our 9901 Phase 2 clinical trial described below. Physical evaluations of the patients were conducted monthly during the immunization period and every three to six months after completion of the course of immunizations. A CT scan occurred prior to the first immunization and every six months following the last immunization for the two years of follow-up to detect disease progression. CT scans were read by an independent, central radiology group, which was designed to ensure a consistent determination of patients’ responses to MyVax. The primary endpoint of the clinical trial was progression-free survival, which was the interval of time measured from enrollment during which a patient was alive with no evidence of disease progression. Enrollment occurred when the patient was assigned to receive either MyVax or the control substance. The clinical trial was designed to evaluate whether a statistically significant increase in progression-free-survival was observed in patients receiving MyVax compared to patients receiving the control substance. We completed the detailed follow-up period of the clinical trial in the fourth quarter of 2007. In December 2007, we obtained data from this Phase 3 clinical trial indicating that the trial did not meet its primary clinical endpoint in that there was no statistically significant difference in progression-free survival of patients receiving MyVax compared to patients receiving the control substance. However, an analysis of a pre-specified endpoint in the group of patients receiving MyVax showed a highly statistically significant difference in the progression-free survival between patients who mounted a positive immune response to the tumor-specific target and those who did not. We met with the FDA in March 2008 to discuss the potential for the filing of a BLA on the basis of the results of the pre-specified endpoint and other analyses of the Phase 3 clinical trial, notwithstanding the trial’s failure to meet its primary clinical endpoint. After a review of the data, the FDA communicated to us that, in light of the Phase 3 clinical trial’s failure to meet its primary endpoint, one or more additional Phase 3 clinical trials for MyVax would be required before the FDA would accept a BLA for FDA review. We have determined that it is not financially feasible at this time to pursue further Phase 3 clinical trials of MyVax prior to receipt of FDA approval. In March 2008, based on our meeting with representatives of the FDA, we suspended the development of MyVax, and currently, all activities related to the development of MyVax have ceased. We are evaluating our strategic alternatives with respect to all aspects of our business, including with respect to the MyVax program, and implementing steps to preserve the future value of MyVax, if any. In the future, if we determine that there is a path forward for MyVax, we will determine what steps to take to resume the development program for MyVax.

Supporting Phase 2 Follicular B-cell NHL Clinical Trial — the 9901 Trial

     In August 2001, we completed the treatment of 21 patients in a Phase 2 clinical trial, our 9901 trial, to evaluate the ability of patients to mount an immune response to MyVax and to examine its safety profile. The clinical trial involved patients with follicular B-cell NHL in first remission following a four-to-seven-month regimen of conventional chemotherapy. The clinical trial was conducted at Stanford and University of Nebraska Medical Center. The primary endpoint of the clinical trial was the generation of anti-idiotype immune response. Positive immune responses were observed. Patients who participated in this clinical trial continue to be monitored for disease progression and survival.

     The clinical protocol for this Phase 2 clinical trial was based on the original treatment protocols used in the Stanford and NCI clinical trials. We used MyVax, which is comprised of the same basic components of active idiotype immunotherapy used in the Stanford and NCI trials. MyVax includes the tumor-specific idiotype protein linked to a foreign carrier protein called keyhole limpet hemocyanin, or KLH, which is derived from a giant sea snail, and was given in the same dose as used in the Stanford and NCI clinical trials. The adjuvant administered with MyVax was Leukine, a recombinant human granulocyte macrophage colony stimulating factor, or GM-CSF, which was also used in the NCI clinical trial. In addition, we produced MyVax using our proprietary manufacturing process instead of rescue fusion. Upon diagnosis, a biopsy was obtained to provide a tumor sample sufficient to produce the patient-specific active idiotype immunotherapy. After obtaining an adequate biopsy, a four-to-seven month regimen of conventional chemotherapy was administered to reduce the tumor mass in the patient. Following an approximately six-month rest period to allow the immune system to recuperate from the chemotherapy, the patient received a series of five immunizations over 24 weeks. Patients were evaluated for an immune response during the course of immunizations and two weeks following the final immunization. The entire treatment protocol from the initiation of chemotherapy through the final immunization lasted about 18 months.

     The long-term follow-up data (median 5.8 years) from patients in our 9901 trial demonstrated a median time-to-disease progression of 37.7 months (measured from the end of chemotherapy). Published studies in similar follicular B-cell NHL patients treated with chemotherapy alone have shown a median time-to-disease progression of 15 months. Nine of the 21 patients in our trial remained progression-free as of their last clinical follow-up at 726 to 100 months post-chemotherapy (reported to us and collected from our database in the fourth quarter of 2007).

Additional Phase 2 Follicular B-cell NHL Clinical Trials — the 2000-07, 2000-04, 2002-09 and 2007-12 Trials

     We have completed the treatment phase of three additional Phase 2 clinical trials to study the use of MyVax in treating follicular B-cell NHL. One Phase 2 clinical trial, our 2000-07 trial, evaluated the use of a reduced amount of the GM-CSF administered with MyVax. Patients in this clinical trial were in first remission following chemotherapy after initial diagnosis. This clinical trial was conducted at the University of Nebraska Medical Center. The 11 patients in this clinical trial received five immunizations over 24 weeks between March 2001 and January 2002. The primary endpoint of the clinical trial was the generation of an anti-idiotype immune response using MyVax. Positive immune responses were observed. A median time-to-disease progression of 23.8 months has been reached in the patients in this clinical trial. Patients who participated in this clinical trial were monitored for disease progression and survival.

     A second Phase 2 clinical trial, our 2000-04 trial, evaluated the use of MyVax as the sole initial therapy for patients with follicular B-cell NHL. This clinical trial is being conducted at Stanford. A significant percentage of patients with follicular B-cell NHL do not clinically require immediate treatment upon diagnosis. As there is no curative treatment, many physicians elect to monitor this population of patients until their clinical symptoms require treatment. Patients in this clinical trial were initially administered five immunizations over 24 weeks. For those demonstrating an immune response or a clinical response, three additional immunizations were administered. The primary endpoint of the clinical trial was the generation of an anti-idiotype immune response using MyVax. Positive immune responses were observed. Patients who participated in this clinical trial were monitored for safety, disease progression and survival. As a result of our recent decision to suspend the development of MyVax, we intend to terminate this Phase 2 clinical trial.

     We initiated a Phase 2 clinical trial in March 2003, our 2002-09 trial, to treat 57 patients with follicular B-cell NHL who have relapsed following chemotherapy. This clinical trial is designed to evaluate the use of MyVax in patients treated with Rituxan after relapsing following chemotherapy. All 57 patients were immunized with MyVax following a course of treatment with Rituxan and are in the follow-up phase of the study. The primary endpoint of the clinical trial is time-to-disease progression. The clinical trial is also designed to evaluate whether an anti-idiotype immune response can be generated. As a result of our recent decision to suspend the development of MyVax, we intend to terminate this Phase 2 clinical trial.

     We initiated a Phase 2 clinical trial in May 2007, our 2007-12 trial, to evaluate the use of MyVax following primary treatment with Rituxan and chemotherapy for follicular B-cell NHL. The trial called for enrollment up to 100 patients in this multi-center, Phase 2, single-arm study at eight cancer centers across the United States. The primary endpoint of the clinical trial is immune response generation. As a result of our recent decision to suspend the development of MyVax, we intend to terminate this Phase 2 clinical trial.

Phase 2 Diffuse Large B-cell and Mantle Cell NHL Clinical Trial — the 9902 Trial

     We also have completed the treatment phase of a Phase 2 clinical trial, our 9902 trial, to treat patients initially diagnosed with diffuse large B-cell NHL or mantle cell NHL. This is the first clinical trial of an active idiotype immunotherapy in newly diagnosed diffuse large B-cell NHL or mantle cell NHL patients. Patients enrolled are in first remission following chemotherapy after initial diagnosis. The clinical trial is being conducted at Stanford, University of Nebraska Medical Center and Weill Medical College of Cornell University. We have enrolled 27 patients in first remission following chemotherapy. The primary endpoint of the clinical trial is the generation of an anti-idiotype immune response using MyVax. The trial was designed to monitor patients for safety, disease progression and survival. As a result of our recent decision to suspend the development of MyVax, we intend to terminate this Phase 2 clinical trial.

     Because patients with diffuse large B-cell NHL or mantle cell NHL tend to relapse much sooner following the completion of chemotherapy than patients with follicular B-cell NHL, the treatment regimen was altered from the one used in follicular B-cell NHL clinical trials. Patients began immunization three months after the end of their chemotherapy, as opposed to after a six-month rest period. Two different administration schedules were examined: 14 patients on Schedule A received five immunizations over a 24-week period and 13 patients on Schedule B received eight immunizations over an 18-week period. Positive immune responses were observed on both Schedule A and Schedule B.

     The patients on Schedule A have a median time-to-disease progression of 11.6 months, which could suggest that giving five immunizations over a 24-week period does not allow for the establishment of a clinically effective response before the fast-growing aggressive B-cell NHL reappears following chemotherapy. In contrast, patients on Schedule B have a median time-to-disease progression of 16.8 months. The results from Schedule B are encouraging as 11 of the 13 patients treated on Schedule B have mantle cell lymphoma, which is a type of B-cell NHL that is viewed as incurable.

Additional Clinical Programs

     We believe active immunotherapy has the potential to be applied successfully to the treatment of other cancers. Like NHL, CLL is primarily a B-cell cancer. We believe CLL can potentially be treated with MyVax, and the same method of manufacturing would be

used to produce active idiotype immunotherapies for CLL as is currently used for our follicular and other B-cell NHL patients. We initiated a Phase 2 clinical trial in February 2006 to evaluate MyVax for the initial treatment of CLL. This clinical trial is being conducted at eight sites across the United States. The protocol provides that patients in this Phase 2 clinical trial be administered 16 immunizations over 52 weeks. The primary endpoint of the Phase 2 clinical trial is whether or not an immune response can be generated. We have completed enrollment of 76 patients in this trial, and the immunization phase is almost complete. As a result of the recent decision to suspend the development of MyVax, we intend to terminate this Phase 2 clinical trial.

Manufacturing Process

     Our manufacturing process is divided into three phases: molecular biology, cell culture and production, as illustrated below.

(PICTURE)

     Each phase of our manufacturing process uses standard procedures that apply to each personalized immunotherapy that we produce. The manufacturing of each patient’s active idiotype immunotherapy begins with the collection of a tumor sample by routine biopsy of the patient. The tumor samples can be acquired by surgical or non-surgical means, can be frozen and are shipped via an overnight courier to our manufacturing facility for processing. After processing, each patient’s active idiotype immunotherapy is shipped to the clinical site or the treating physician for immunization of the patient.

     Molecular Biology

     Upon arrival of the tumor sample at our manufacturing facility, we extract genetic material from the sample and isolate the genes that encode the two unique regions of a patient’s tumor-specific idiotype protein. Our proprietary knowledge allows us to identify the genes encoding the idiotype protein generally within a few weeks. We then generate a pair of expression vectors encoding the idiotype protein. An expression vector is a DNA molecule that contains all of the elements required for the production of the tumor-derived idiotype protein in a host cell.

     Cell Culture

     The expression vectors encoding the idiotype protein are then introduced into mammalian cells. Individual mammalian cell lines producing the idiotype protein are then generated using a series of cycles of growth and selection steps. These cycles of growth and selection, known as gene amplification, are completed using our patented Hi-GET technology that provides for the rapid and efficient isolation of mammalian cell lines expressing increased levels of the idiotype protein. These cell lines are referred to as manufacturing cell lines.

     In comparison to alternative methods of gene amplification, our Hi-GET technology more efficiently and reproducibly generates stable cell lines containing increased copies of the expression vectors that encode the patient’s idiotype protein. Consequently, fewer candidate cell lines must be subjected to selection techniques in order to identify a suitable manufacturing cell line, thus reducing the amount of time a technician must spend to identify a cell line that is expressing sufficient levels of idiotype protein. This allows each of our technicians to work on the development of 10 to 20 different manufacturing cell lines at the same time.

     Production

     Upon isolation of a manufacturing cell line, the size of the culture is expanded to allow for the production of an appropriate amount of the idiotype protein. Following a standard purification process, the idiotype protein is linked to KLH, a foreign carrier protein, resulting in MyVax. After release testing, the frozen MyVax product and GM-CSF adjuvant are shipped to the clinical trial site or the treating physician for immunization of the patient.

Additional Hi-GET Technology Applications

     We believe that our patented Hi-GET technology may have additional potential applications, such as monoclonal antibodies used in passive immunotherapies, and other therapeutic proteins. We believe that our technology could be used to produce monoclonal antibodies for the treatment of NHL and other therapeutic proteins that have greater patient specificity than currently available monoclonal antibodies. Our Hi-GET technology can also be used to produce proteins for research, for example, to support genomic companies’ needs to strengthen their patent positions by enabling them to link protein function with their DNA sequences more quickly. Our Hi-GET technology has also been used to produce both single and multi-chain proteins that are secreted into the culture medium, proteins that are located in the cytoplasm of the cell and proteins that are located in the membrane of the cell. Many proteins

of therapeutic and diagnostic interest must be produced in mammalian cells in order for the proteins to retain their characteristic features and biologic activities. Our Hi-GET technology can be used to efficiently produce a wide variety of proteins in mammalian cell lines.

Competition

     The biotechnology and biopharmaceutical industries are characterized by rapidly advancing technologies, intense competition and a strong emphasis on proprietary products. We face competition from many different sources, including commercial pharmaceutical and biotechnology enterprises, academic institutions, government agencies and private and public research institutions. Due to the high demand for new cancer therapies, research is intense and new treatments are being sought out and developed by our competitors.

     Many of our competitors have significantly greater financial resources and expertise in research and development, manufacturing, preclinical testing, clinical trials, regulatory approvals and marketing approved products than we do. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. These third parties compete with us in recruiting and retaining qualified scientific and management personnel, establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies and technology licenses complementary to our programs or advantageous to our business.

     Several companies, such as GlaxoSmithKline and Biogen Idec Inc., are involved in the development of passive immunotherapies for the treatment of NHL. Various products are currently marketed for treatment of NHL. Rituxan, a monoclonal antibody co-marketed by Genentech, Inc. and Biogen Idec Inc., is approved for the first line treatment of relapsed or refractory, low grade or follicular B-cell NHL, as well as for the first-line treatment of diffuse large B-cell NHL in combination with chemotherapy. There are additional monoclonal antibodies, developed by a number of other companies in various stages of development for NHL, many of which are slated to be used in combination with Rituxan.

     Other treatment approaches include radioimmunotherapy, which essentially combines a passive immunotherapy with a radio-labeled monoclonal antibody to improve tumor cell destruction. This approach is approved for the treatment of relapsed or refractory low grade, follicular, or transformed B-cell NHL and is under clinical investigation for earlier use in low grade NHL. Bortezomib, a proteosome inhibitor manufactured and marketed by Millennium Pharmaceuticals is now approved for mantle cell NHL.

     In addition, there are several companies focusing on the development of active immunotherapies for the treatment of NHL, including Favrille, Inc. and Biovest International, Inc., a majority-owned subsidiary of Accentia, Inc. Favrille has completed enrollment of its Phase 3 clinical trial for patients with follicular NHL and has publicly disclosed that it expects to conduct data analysis in the third quarter of 2008, and Biovest has unblinded its Phase 3 clinical trial for patients with follicular NHL prior to its completion and intends to file for a conditional approval of its product candidate in the U.S. and Europe if the results are positive.

Intellectual Property

     We rely on the proprietary nature of our technology and production processes for the protection of MyVax and any other immunotherapies that we may develop. Our policy is to patent the technology, inventions and improvements that we consider important to the development of our business. We hold two issued U.S. patents (and one allowed) related to our core gene amplification technology, including composition of matter claims directed to cell lines and claims directed to methods of making proteins derived from patients’ tumors. Unless extended, these patents expire in 2016. We also hold one issued U.S. patent relating to treating lymphoma with custom vaccines. Unless extended, this patent expires in 2018. Corresponding patents, although more constrained in scope due to rules not applicable in the United States, have been issued in Australia, Canada and South Africa, all of which expire in 2017. We have also filed additional U.S. and corresponding foreign patent applications relating to our Hi-GET gene amplification technology and expect to continue to file additional patent applications.

     We also rely on trade secrets, technical know-how and continuing innovation to develop and maintain our competitive position. We seek to protect our proprietary information by requiring our employees, consultants, contractors, outside scientific collaborators and other advisors to execute non-disclosure and assignment of invention agreements on commencement of their employment or engagement, through which we seek to protect our intellectual property. Agreements with our employees also prevent them from bringing the proprietary rights of third parties to us. We also require confidentiality or material transfer agreements from third parties that receive our confidential data or materials.

     The biotechnology and biopharmaceutical industries are characterized by the existence of a large number of patents and frequent litigation based on allegations of patent infringement. While our active immunotherapies are in clinical trials and not being commercialized, we believe our current activities fall within the scope of the exemptions provided by 35 U.S.C. Section 271(e) in the

United States and Section 55.2(1) of the Canadian Patent Act, each of which covers activities related to developing information for submission to the FDA and its counterpart agency in Canada. As product candidates progress toward commercialization, the possibility of an infringement claim would increase. While we attempt to ensure that our active immunotherapies and the methods we employ to manufacture them do not in