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Table of Contents

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Form 10-Q

Commission file number 0-22147

ILEX ONCOLOGY, INC.

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. Yes     X     No           .

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

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

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

INDEX

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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

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

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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

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

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

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

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

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

CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

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

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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:

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

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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:

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

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:

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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

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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

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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.

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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:

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

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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.

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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.

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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.

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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

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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

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INDEX TO EXHIBITS

*

Filed herewith.