8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K

CURRENT REPORT

Current Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):     June 17, 2004

GUILFORD PHARMACEUTICALS INC.

(Exact name of registrant as specified in its charter)

Delaware	0-23736	52-1841960
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S. Employer Identification Number)
6611 Tributary Street
Baltimore, Maryland		21224
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code:     (410) 631-6300

(Former name or former address, if changed since last report)

INFORMATION TO BE INCLUDED IN THE REPORT

Item 5. Other Events

     The following includes information that is contained in a prospectus supplement filed today by Guilford Pharmaceuticals Inc. in connection with a proposed public offering of its common stock and is being filed for the purpose of updating, supplementing and, where appropriate, superseding prior disclosures filed by Guilford under the Securities Exchange Act of 1934. See Exhibit 99.1.

BUSINESS OVERVIEW

We are a pharmaceutical company engaged in the research, development and commercialization of proprietary pharmaceutical products that target the hospital and neurology markets. We market and sell proprietary pharmaceutical products within our targeted markets, conduct clinical research to expand the labeled indications for our marketed products, and develop new product candidates. We also collaborate with other pharmaceutical companies to support the sales and marketing of our products and the clinical development of our products and product candidates. We currently have two marketed products: GLIADEL® Wafer, a targeted chemotherapeutic agent for the treatment of malignant glioma at the time of initial surgery and for recurrent glioblastoma multiforme; and AGGRASTAT® Injection, an inhibitor of platelet aggregation approved for the treatment of acute coronary syndrome.

Our product pipeline consists of product candidates in various stages of clinical and pre-clinical development. AQUAVAN® Injection, a prodrug of propofol, is entering Phase III clinical trials for procedural sedation during brief diagnostic or therapeutic procedures such as colonoscopy and minor surgical and therapeutic procedures. Our pre-clinical research programs include the development of NAALADase inhibitor compounds for neuropathic pain and for prostate cancer, drug addiction and traumatic brain and spinal cord injury and the development of PARP inhibitor compounds for cancer chemosensitization and radiosensitization.

Our Product Portfolio

Our product portfolio includes two marketed products and compounds at various stages of development with significant therapeutic targets and novel mechanisms of action. Our principal focus is the hospital and neurology markets. The following table summarizes our marketed products and research and development programs for our key product candidates:

Product		Indication	Status
	GLIADEL® Wafer	Malignant glioma at the time of initial surgery Recurrent glioblastoma multiforme	Marketed(1) Marketed(1)
	AGGRASTAT® Injection	Acute coronary syndrome Percutaneous coronary intervention	Marketed(1)(2) Planning Phase III
	AQUAVAN® Injection	Procedural sedation	Entering Phase III
	GPI 1485(3)	Parkinson’s disease Post-prostatectomy erectile dysfunction HIV-peripheral neuropathy HIV-dementia	Phase II-ongoing Phase II-ongoing Pre-clinical Pre-clinical
	NAALADase inhibitors	Neuropathic pain Prostate cancer	Pre-clinical Pre-clinical
	PARP inhibitors	Cancer chemosensitization Cancer radiosensitization	Pre-clinical Pre-clinical

(1)	“Marketed” means that a product is being sold and marketed under applicable regulatory approval.
(2)	Marketed by us in the United States and by Merck & Co., Inc. in the rest of the world.
(3)	In June 2004, we licensed the U.S. rights to this product for these indications to Symphony Neuro Development Company. See “Recent Developments.”

GLIADEL® Wafer

GLIADEL® Wafer is a proprietary cancer chemotherapy product approved for the treatment of malignant glioma (brain cancer) at the time of initial surgery, as an adjunct to surgery and radiation, and for the treatment of recurrent glioblastoma multiforme, a rapidly fatal form of malignant brain cancer. It is a biodegradable polymer containing BCNU (carmustine), a cancer chemotherapeutic drug, and is designed to provide targeted, site specific chemotherapy. We estimate that there are 11,000 cases of malignant glioma in the United States each year. After a surgeon resects a brain tumor, up to eight wafers are implanted in the cavity that remains. Once implanted, the wafers gradually dissolve, delivering high concentrations of BCNU directly to the tumor site for an extended period of time. By inserting the wafer directly at the site of the tumor, the physician can minimize exposure to BCNU throughout the body and reduce or alleviate many of the side effects associated with intravenous chemotherapy.

AGGRASTAT® Injection

AGGRASTAT® Injection is a glycoprotein GP IIb/ IIIa receptor antagonist, indicated for the treatment of acute coronary syndrome (ACS) including patients who are to be medically managed and those undergoing percutaneous transluminal coronary angioplasty (PTCA) or atherectomy. ACS includes unstable angina, which is characterized by chest pain when one is at rest, and non-ST elevation myocardial infarction (NSTEMI). GP IIb/IIIa receptor antagonists, including AGGRASTAT® Injection, block the ability of platelets to aggregate, thereby inhibiting the formation of blood clots and reducing the potential for cardiac ischemia.

AGGRASTAT® Injection was developed by Merck & Co., Inc. (Merck) and was approved by the FDA in May 1998. We acquired the rights to AGGRASTAT® Injection in the United States and its territories from Merck in October 2003, for $84 million plus certain royalty payments to Merck based on our net sales of the product. We financed $42 million of the purchase price through a revenue interest agreement with Paul Royalty Fund, L.P. and Paul Royalty Fund, II, L.P. (collectively, PRF). Under this agreement, PRF provided us with $42 million and we will provide PRF with a percentage of our revenues of GLIADEL® Wafer, AGGRASTAT® Injection, and in certain circumstances, other products, until 2012. We plan to design and conduct one or more clinical studies with AGGRASTAT® Injection for the purpose of expanding its label to include use for immediate percutaneous coronary intervention in the cardiac catheterization laboratory, or PCI. Between 1999 and 2001 Merck conducted a Phase III clinical trial in order to obtain a PCI label. In that trial, called TARGET, Merck attempted to show that AGGRASTAT® Injection was not inferior to ReoPro® (abciximab), the drug believed to be the most effective in the PCI setting, but failed to do so. Based on several other trials that have been conducted since TARGET, we now believe that the dose of AGGRASTAT® Injection used in TARGET was not sufficient. We plan to design our PCI clinical trials taking this information into account.

AQUAVAN® Injection

AQUAVAN® Injection is a novel sedative/hypnotic. We licensed the rights to AQUAVAN® Injection from ProQuest Pharmaceuticals Inc. (ProQuest) during the first quarter of 2000. AQUAVAN® Injection is a prodrug of a widely-used anesthetic, propofol. A prodrug is a compound that is converted in the body into an active drug. AQUAVAN® Injection is water-soluble and converts to propofol in the body upon intravenous administration. As a result of the body’s conversion of AQUAVAN® Injection into propofol, low, therapeutically effective levels of propofol are released while avoiding the high levels of propofol seen after injection with the FDA approved propofol lipid emulsion. In addition, the administration of propofol lipid emulsion can cause other complications. We are currently studying AQUAVAN® Injection for procedural sedation during brief diagnostic and therapeutic medical procedures. Procedural sedation is “mild to moderate” sedation in which patients are lethargic, but responsive to stimulation and are able to maintain their own airways. Procedural sedation is generally used in non-invasive procedures, lasting under two hours, such as various endoscopy procedures, cardiac procedures, biopsies, insertions or removals of lines, tubes or catheters and other minor surgical procedures.

Our clinical trials with AQUAVAN® Injection have studied its use in connection with elective colonoscopy. In November 2003, we announced that we had completed a preliminary analysis from a Phase II, open label, multi-center adaptive dose ranging study of AQUAVAN® Injection, used in combination with fentanyl citrate, to provide mild sedation in healthy patients aged 18 to 60 undergoing elective colonoscopy. The analysis we submitted to the FDA suggests that AQUAVAN® Injection provides rapid onset of and rapid recovery from sedation/anesthesia in a convenient dosing regimen and without serious adverse effects. In the second part of this Phase II trial we conducted a confirmatory study of AQUAVAN® Injection to evaluate the fixed dose identified in our dose ranging study. This study enrolled a total of 64 patients who received AQUAVAN® Injection for sedation during colonoscopy. In this study, AQUAVAN® Injection provided rapid onset and rapid recovery from sedation without serious adverse effects. During our end-of-Phase II meeting with the FDA, we discussed our proposed indication, clinical trial plan, and other requirements for a potential future New Drug Application (NDA) for AQUAVAN® Injection. We intend to seek approval for AQUAVAN® Injection for mild to moderate sedation for brief diagnostic and therapeutic procedures such as colonoscopy, bronchoscopy, interventional cardiology and minor surgical and therapeutic procedures.

We are initiating a Phase III program which consists of four Phase III trials and a series of smaller studies in special patient populations. The four Phase III trials will be conducted in patients undergoing (i) colonoscopy, (ii) bronchoscopy, (iii) cardiac procedures, and (iv) minor surgical procedures. The first two trials will be randomized comparisons with midazolam. All patients will receive fentanyl citrate for analgesia. The primary endpoint will be success of sedation as determined by a score of less than four using the Modified Observer’s Assessment of Alertness/ Sedation (OAA/ S) scale. Secondary endpoints will include time to full alertness and time to full recovery and duration of sedation. It is anticipated that the investigator’s medical staff, rather than an anesthesiologist, will administer AQUAVAN® Injection in the Phase III program. The FDA also recommended that we conduct a series of smaller studies in special patient populations such as burn patients, patients undergoing upper endoscopy prior to liver transplant and patients having an arterovenous shunt placed for renal dialysis. We anticipate approximately 900 patients will be enrolled in upcoming studies and data from approximately 1,200 patients will be included in the NDA submission for AQUAVAN® Injection.

GPI 1485 / Neuroimmunophilin Ligand Program

GPI 1485 is an investigational new drug that belongs to a class of small molecule compounds called neuroimmunophilin ligands. It is orally administered and, in pre-clinical experiments, has been shown to repair and regenerate damaged nerves without affecting normal healthy nerves. GPI 1485 and other neuroimmunophilin ligands may have application in the treatment of a broad range of diseases and conditions, including Parkinson’s disease, spinal cord injury, brain trauma, and peripheral nerve injuries. We recently announced that we have licensed our United States rights to GPI 1485 to Symphony Neuro Development Company, or SNDC, for the following four disease states: Parkinson’s disease; post-prostatectomy erectile dysfunction, a condition caused by peripheral nerve injury at the time of surgery; HIV related peripheral neuropathy; and HIV related dementia. Our agreement with SNDC is more fully discussed below in the Recent Developments section of this prospectus supplement summary.

Parkinson’s disease is a chronic, progressive degenerative disorder that affects over one million people in the United States. While the exact cause of the disease is not known, physicians have observed that patients with the disease experience a progressive deterioration of dopamine nerve cells located in a specific region of the brain. The loss of these nerve cells is believed to contribute to the symptoms of Parkinson’s disease, which include the loss of muscle tone and coordination, tremors, and non-motor symptoms, such as changes in appetite, cognition, sleep and mood. In October 2003, we announced that we completed enrollment in a Phase II clinical trial studying GPI 1485, compared to placebo, in slowing the rate of decline of dopamine transporters. This trial is a multi-center, randomized, double-blind, placebo-controlled evaluation of the safety, pharmacokinetics and efficacy of GPI 1485 in 212 patients with mild to moderate Parkinson’s disease, and will be continued by SNDC. Clinical endpoints in the trial include changes in the daily amount of anti-Parkinsonian medication administered, clinical symptoms (using the Unified Parkinson’s disease Rating Scale), cognitive function, sleep, mood and quality of life. This trial was designed to follow-up on the findings from a previous Phase II study of GPI 1485 completed in 2001 and is expected to be completed in 2005.

In November 2003, we announced that we had initiated a Phase II clinical trial with GPI 1485 for the treatment of post-prostatectomy erectile dysfunction (PPED). In PPED, sexual dysfunction occurs as a result of compression or stretch injury to nerve fibers that surround the prostate and which are responsible for trapping blood flow to sustain a penile erection. Unfortunately, a high proportion of men undergoing radical prostate surgery may experience side effects from their surgery including urinary incontinence and sexual dysfunction, which is frequently unresponsive to currently available drug therapies, including VIAGRA®. GPI 1485 represents a novel approach to the treatment of PPED by potentially promoting the protection and regeneration of peripheral nerves that may sustain injury during radical prostate surgery. SNDC will also be continuing this trial.

Pre-Clinical and Research Programs

NAALADase Inhibitor Compounds

NAALADase, or N-Acetylated-Alpha-Linked-Acid-Dipeptidase, is a membrane-bound enzyme found in the central and peripheral nervous system. NAALADase is believed to play a role in modulating the release of glutamate in the nervous system. Glutamate is one of the brain’s most common chemical messengers. Under normal conditions, glutamate is released into a microscopic space, called the synapse, that exists between neurons in the brain. There, it stimulates post-synaptic glutamate receptors, an action that is critical to such functions as learning, memory and motor control. However, during conditions of acute injury or chronic disease, there may be a large increase in glutamate release that incites a cascade of biochemical events, ultimately leading to cell injury or death. Our NAALADase inhibitor program is aimed at developing a commercial drug to block excessive glutamate release.

In several animal models of diabetic neuropathy and neuropathic pain, our NAALADase inhibitors appear to normalize pain sensitivity, increase nerve conduction velocity and prevent nerve degeneration. Initially, we selected GPI 5693 as a lead NAALADase inhibitor compound and commenced Phase I clinical studies with this compound in early 2001 for the treatment of neuropathic pain and the underlying disease process associated with diabetic peripheral neuropathy. This Phase I Study, conducted in Europe, evaluated the safety, tolerability and pharmacokinetics of the compound in healthy subjects and suggested that it may be well tolerated at dose levels up to 750mg per day. We are currently pursuing the development of GPI 5693 for prostate cancer and drug addiction. During 2001 and 2002, our scientists identified second-generation NAALADase inhibitor compounds, which appear to be up to 100 times more potent in attenuating neuropathic pain than GPI 5693 in pre-clinical studies. The increased potency of these second-generation compounds may permit a lower dose of these compounds to provide the same or greater therapeutic effect than higher dosages of less potent compounds, thereby reducing the potential for side effects.

PARP Inhibitor Compounds

Poly(ADP-ribose) polymerase, or PARP, is an abundant nuclear enzyme found in most eukaryotic tissues. Upon activation by DNA damage, PARP synthesizes poly(ADP-ribose) from nicotinamide adenine dinucleotide (NAD). As a component of the DNA base excision repair system, PARP plays a major role in facilitating DNA repair and maintaining genomic integrity. In cancer treatment, high PARP activity is believed to enable tumor cells to counteract the chemotherapy and radiation therapy by repairing DNA damage. In animal testing, PARP inhibition enhances the activity of radiotherapy, as well as a wide spectrum of chemotherapeutic agents. In ischemia, over-activation of PARP mediates necrosis by depleting NAD and adenosine triphosphate (ATP). In animal testing, PARP inhibition provides neuroprotection in stroke and myocardial ischemia models.

Our scientists have synthesized several families of potent orally bioavailable small molecule PARP inhibitors that are efficacious in rodent models of cancer and ischemia. Our lead compound, GPI 15427, is highly brain penetrable and has shown robust chemo- and radio-sensitization in several brain cancer and ischemia models. We are currently conducting pre-clinical toxicology and pharmacokinetic characterization of GPI 15427 for clinical development.

Commercial Operations

Our commercial operations are comprised of 72 full time sales and marketing specialists, encompassing medical affairs, sales operations, sales training and marketing personnel. This function includes a 50 member United States field sales force, 3 marketing specialists, 7 medical affairs specialists, and 12 people dedicated to additional sales and marketing related functions. They are responsible for the direct sale and marketing of GLIADEL® Wafer and AGGRASTAT® Injection throughout the United States and the sale and marketing of GLIADEL® Wafer outside the United States, through a network of specialty pharmaceutical distributors. We expect our experience in commercial operations to benefit us should product candidates in our pipeline, such as AQUAVAN® Injection, obtain FDA approval.

OUR STRATEGY

Our strategy is to achieve sustainable profitability and growth by discovering, developing, marketing and selling proprietary pharmaceutical products for the hospital and neurology markets. Our focus in the hospital market is to target the hospital-based interventionalist who performs diagnostic and therapeutic procedures. To reach these goals we are focusing on the following objectives:

— Use an active and focused marketing effort to increase sales and build market share for AGGRASTAT® Injection for the treatment of ACS. Expand the market for AGGRASTAT® Injection by designing an additional clinical trial or trials, in order to permit us to apply for expansion of AGGRASTAT® Injection’s label to include use in PCI;

— Expand sales for GLIADEL® Wafer by capitalizing on our new sales and marketing effort for GLIADEL® Wafer for patients undergoing initial surgery for malignant glioma and increase international sales by expanding the product’s labeled uses in Europe to include use at the time of initial surgery;

— Continue our drug research and development efforts, including our Phase III AQUAVAN® Injection program; and

— Pursue corporate partnerships to reduce our development costs, generate additional revenues through licensing and benefit from a potential partner’s resources and expertise.

GPI 1485 Licensing Transaction

     On June 17, 2004, Guilford Pharmaceuticals Inc. (“Guilford”) licensed to Symphony Neuro Development Company (“SNDC”), a newly formed Delaware corporation, its rights to GPI 1485, a novel compound based on Guilford’s neuroimmunophilin ligand technology, for certain indications in the United States. SNDC will invest up to $40 million to advance GPI 1485 through clinical development in four indications: Parkinson’s disease, post-prostatectomy erectile dysfunction, HIV-related peripheral neuropathy and HIV-related dementia. In June 2004, outside investors contributed $43 million in capital to SNDC to fund SNDC’s $40 million clinical development budget. Transaction expenses are estimated to be approximately $3 million. It is expected that the $40 million clinical development budget will be fully expended in approximately two years.

     In exchange for the license rights and for five-year warrants to purchase 1.5 million shares of Guilford’s common stock at $7.48 per share issued to outside investors in SNDC, Guilford received a purchase option from SNDC’s sole shareholder, SNDC Holdings LLC, that allows Guilford, in its discretion, to acquire all of the equity of SNDC. The purchase option is exercisable by Guilford at any time beginning on April 1, 2005 and ending on the earlier of (i) March 31, 2007 or (ii) 90th day after the date that SNDC provides Guilford with financial statements showing cash and cash equivalents of less than $2 million. The purchase option exercise price is as follows:

	Purchase Price
Purchase Option Closing Date	($ in millions)
For the period commencing on April 1, 2005 and ending before July 1, 2005	$	75.08
For the period commencing on July 1, 2005 and ending before October 1, 2005	$	80.91
For the period commencing on October 1, 2005 and ending before January 1, 2006	$	85.56
For the period commencing on January 1, 2006 and ending before April 1, 2006	$	85.56
For the period commencing on April 1, 2006 and ending before July 1, 2006	$	93.07
For the period commencing on July 1, 2006 and ending before October 1, 2006	$	101.24
For the period commencing on October 1, 2006 and ending before January 1, 2007	$	110.12
For the period commencing on January 1, 2007 and ending March 31, 2007	$	119.79

     The purchase option may be paid in cash, or in a combination of cash and Guilford’s common stock, at Guilford’s sole discretion, provided that common stock may not constitute more than 50% of the consideration paid for the purchase option exercise price.

     In connection with the advancement of the programs through the clinical development process, Guilford will perform certain clinical trial services for SNDC. These services are based upon a full time equivalent per diem charge in line with industry standards. Guilford expects to receive approximately $9.8 million through the provision of these services and reimbursement for clinical trial supplies over the term of the arrangement.

     In accordance with FASB Interpretation No. 46R (“FIN 46R”), Consolidation of Variable Interest Entities, SNDC Holdings LLC, the parent of SNDC, is considered a variable interest entity . Based on the guidance in FIN 46R, Guilford has been deemed the primary beneficiary of the variable interest entity because it is most closely associated with SNDC Holdings LLC. Accordingly, Guilford will consolidate the financial activity of SNDC Holdings LLC within its financial statements.

     Had the transaction with SNDC occurred on March 31, 2004, the pro forma impact on certain categories of Guilford’s consolidated balance sheet data as of March 31, 2004 would have been as follows:

	March 31, 2004
Balance sheet data	Actual		Pro Forma(1)
	(unaudited)
	(in thousands)
Investments held by SNDC	$	—	$	40,000
Other assets		6,364		9,364
Total assets		199,503		242,503
Minority interest		—		43,000
Total liabilities		150,494		150,494
Total stockholders’ equity	$	49,009	$	49,009

(1)	Our pro forma balance sheet amounts reflect the consolidation of SNDC’s cash and investments of $40 million, which are disclosed as investments held by SNDC and $3 million in deferred transaction costs which are included in other assets.
(2)	We recorded a $5.3 million charge to acquired in-process research and development expense relating to the issuance of 1.5 million warrants.
(3)	All costs associated with the development of the licensed intellectual property prior to our agreement with SNDC are included in our income statement; accordingly a pro forma income statement is not presented.

     A copy of Guilford’s press release announcing the transaction was filed June 17, 2004. The Purchase Option Agreement and a Novated and Restated Technology License Agreement relating to this transaction are attached hereto as Exhibit 99.2 and Exhibit 99.3, respectively, and are incorporated herein by reference.

Risk Factors

     An investment in our common stock involves a high degree of risk. You should consider carefully the following risk factors that supplement the risk factors described in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2004 as well as other information contained in our other filings with the Securities and Exchange Commission. If any of the following risks actually occurs, our business, financial condition, operating results or cash flow could be harmed. As a result, the trading price of our common stock could decline, and you could lose all or part of your investment.

We cannot be certain that we will be able to maintain or increase sales of AGGRASTAT® Injection, nor can we be certain that we will be able to expand the labeled indications for AGGRASTAT® Injection.

When we purchased AGGRASTAT® Injection from Merck and Co., Inc., Merck had not been actively promoting the product in the United States and product sales were in decline. Our strategy for reintroducing AGGRASTAT® Injection into the United States marketplace involves actively promoting the product and conducting an additional clinical trial for AGGRASTAT® Injection, in order to seek from the FDA expanded labeling for use in percutaneous coronary intervention, or PCI. Until we receive approval for use in PCI, we are not promoting the use of the product in catheterization laboratories. We cannot be certain that our promotion of the product will let us maintain or lead to increased sales based on the product’s current indication. For example, although we have begun our active promotion efforts, sales for AGGRASTAT® Injection through our first fiscal quarter, and our expected sales in our second fiscal quarter, have not met our original expectations and are lower than the sales level achieved by Merck without active promotion. Additionally, we may not be able to reach an understanding with the FDA if we submit a protocol under the special protocol assessment procedure as to an appropriate clinical trial design in order to expand the indications for AGGRASTAT® Injection, the clinical trial may be cost prohibitive to conduct, we may not be able to fully enroll the clinical trial or assure you that if conducted the clinical trial will be successful. Even if we are able to reach an understanding with the FDA and even if the trial is successful, we cannot be certain that the expanded indication will lead to increased sales or market share. At this time we are not able to predict when, if ever, a trial to support an expanded indication can commence. Currently, we expect revenues from AGGRASTAT® Injection for fiscal year 2004 to be in the range of $16 to $20 million compared with our expectations of $20 to $30 million at the beginning of the year. This projection is a forward-looking statement within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and must be viewed in light of the discussion under the caption “Forward-looking statements” in our other filing with Securities and Exchange Commission. Investors are cautioned not to place undue reliance on this projection, which is speculative in nature. Our actual results may differ materially due to various risks, including, without limitation, that competitors may respond vigorously, and physicians may not respond favorably, to our product promotion activities, as well as in these risk factors and those identified under “Forward-looking statements” and “Risk factors” in our other filings with the Securities and Exchange Commission.

We have licensed some of our GPI 1485 development and commercialization rights to Symphony Neuro Development Company (“SNDC”) and will not receive any future royalties or revenues with respect to this intellectual property unless we exercise an option to acquire SNDC in the future. We may not have the financial resources to exercise this option.

We have licensed to SNDC our rights to GPI 1485 for some indications in the United States. SNDC will invest up to $40 million to advance GPI 1485 through clinical development in four indications: Parkinson’s disease, post-prostatectomy erectile dysfunction (PPED), HIV-peripheral and HIV-dementia. It is expected that the $40 million clinical development budget will be fully expended in approximately two years. In exchange for the license rights and for five-year warrants to purchase 1.5 million shares of our common stock at $7.48 per share, we received a purchase option allowing us, in our discretion, to acquire all of the equity of SNDC. The purchase option is exercisable by us at any time beginning on April 1, 2005 and ending on the earlier of (i) March 31, 2007, or (ii) the 90th day after the date that SNDC provides us with financial statements showing cash and cash equivalents of less than $2 million. We are also required to pay an additional 20% premium if the purchase option is exercised between March 31, 2005 and March 31, 2006. The purchase option may be paid in cash, or in our common stock, at our sole discretion, provided that our common stock may not constitute more than 50% of the consideration tendered for payment of the purchase option exercise price.

If we elect to exercise the purchase option, we will be required to make a substantial cash payment or to issue a substantial number of shares of our common stock, or enter into a financing arrangement or license arrangement with one or more third parties, or some combination of these. A payment in cash would reduce our capital resources. A payment in shares of our common stock could result in dilution to our stockholders at that time. Other financing or licensing alternatives may be expensive or impossible to obtain. The exercise of the purchase option will likely require us to record a significant charge to earnings and may adversely impact future operating results. If we do not exercise the purchase option prior to its expiration, our rights in and to SNDC with respect to the programs will terminate. We may not have the financial resources to exercise the purchase option, which may result in our loss of valuable rights.

Item 7. Financial Statements, Pro Forma Financial Information and Exhibits

(c) Exhibits

2

99.1	Press Release of Guilford Pharmaceuticals Inc. issued June 21, 2004.
99.2	Purchase Option Agreement, dated June 17, 2004, by and among Guilford Pharmaceuticals Inc., SNDC Holdings LLC and Symphony Neuro Development Company.
99.3	Novated and Restated Technology License Agreement, dated June 17, 2004, between GPI NIL Holdings, Inc., Guilford Pharmaceuticals Inc., Symphony Neuro Development Company and SNDC Holdings LLC.*
*	Confidential treatment has been requested for a portion of this exhibit.

3

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Guilford Pharmaceuticals Inc.
Date: June 21, 2004	By:	/s/ Asher M. Rubin
		Asher M. Rubin Vice President, General Counsel and Secretary

4

INDEX TO EXHIBITS

Exhibit
Number	Exhibit Description
99.1	Press Release of Guilford Pharmaceuticals Inc. issued June 21, 2004.
99.2	Purchase Option Agreement, dated June 17, 2004, by and among Guilford Pharmaceuticals Inc., SNDC Holdings LLC and Symphony Neuro Development Company.
99.3	Novated and Restated Technology License Agreement, dated June 17, 2004, between GPI NIL Holdings, Inc., Guilford Pharmaceuticals Inc., Symphony Neuro Development Company and SNDC Holdings LLC.*

* Confidential treatment has been requested for a portion of this exhibit.

5

EX-99.1

EXHIBIT 99.1

Guilford Pharmaceuticals Inc. Announces Proposed Offering of Common Stock

June 21, 2004 Baltimore—Guilford Pharmaceuticals Inc. (Guilford) (NASDAQ: GLFD) today announced that it plans to file a prospectus supplement with the Securities Exchange Commission related to an underwritten offering of 10,000,000 shares of its common stock under an existing shelf registration statement. In connection with the offering, Guilford expects to grant the underwriters an option to purchase up to 1,500,000 additional shares to cover over-allotments.

UBS Investment Bank is acting as sole book-running manager in this offering. CIBC World Markets Corp. and Citigroup Global Market Inc. are acting as co-managers.

Guilford Pharmaceuticals Inc.

Guilford Pharmaceuticals Inc. is a pharmaceutical company engaged in the research, development and commercialization of products that target the hospital market. Presently, Guilford markets two commercial products, GLIADEL® Wafer (polifeprosan 20 with carmustine implant), for the treatment of brain cancer, and AGGRASTAT® Injection (tirofiban hydrochloride), a glycoprotein GP IIb/IIIa receptor antagonist used for the treatment of acute coronary syndrome (ACS). Guilford’s product pipeline includes a novel anesthetic, AQUAVAN® Injection. For additional information about GLIADEL® Wafer, please visit http://www.guilfordpharm.com under Products / Marketed Products/ GLIADEL; and for AGGRASTAT®, please see http://www.AGGRASTAT.com.

Contact: Stacey Jurchison, Director, Corporate Communications
410-631-5022 http://www.guilfordpharm.com

This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state. A prospectus supplement relating to these securities will be filed with the Securities and Exchange Commission. This offering of the shares of common stock may be made only by means of the prospectus supplement and related prospectus, a copy of which will be available from UBS Investment Bank, ECMG Syndicate, 299 Park Avenue, New York, NY 10171.

EX-99.2

EXHIBIT 99.2

PURCHASE OPTION AGREEMENT

by and among

GUILFORD PHARMACEUTICALS INC.,

SNDC HOLDINGS LLC

and

SYMPHONY NEURO DEVELOPMENT COMPANY

Dated as of June 17, 2004

PURCHASE OPTION AGREEMENT

     This PURCHASE OPTION AGREEMENT (this “Agreement”) is entered into as of June 17, 2004 by and among Guilford Pharmaceuticals Inc., a Delaware corporation (“Guilford”), SNDC Holdings LLC, a Delaware limited liability company (“Holdings”), and Symphony Neuro Development Company, a Delaware corporation (“SNDC”). Capitalized terms used herein and not defined herein shall have the meanings assigned to such terms in Annex A attached hereto.

PRELIMINARY STATEMENT

     WHEREAS, Guilford and Holdings have entered into a Technology License Agreement pursuant to which Guilford has granted Holdings an exclusive license (the “License”) to the use of certain Programs owned or controlled by Guilford;

     WHEREAS, contemporaneously with the execution of this Agreement, Guilford, Holdings and SNDC are entering into a Novated and Restated Technology License Agreement pursuant to which, among other things, Holdings will assign by way of novation the License to SNDC;

     WHEREAS, Guilford and Holdings have entered into a Research and Development Agreement pursuant to which Guilford has agreed to perform, on behalf of Holdings, research and development of the Programs in order to develop GPI 1485 for use in the Field (the “Product”);

     WHEREAS, contemporaneously with the execution of this Agreement, Guilford, Holdings and SNDC are entering into an Amended and Restated Research and Development Agreement pursuant to which, among other things, Holdings will assign by way of novation its rights and obligations under the Research and Development Agreement to SNDC;

     WHEREAS, contemporaneously with the execution of this Agreement, in order to fund such research and development, institutional investors are investing approximately $43,000,000 in Holdings (the “Financing”) in exchange for membership interests in Holdings and for warrants (the “Warrants”), to purchase a total of 1,500,000 shares of Guilford Common Stock to be initially issued to Holdings and subsequently distributed to such institutional investors, and Holdings is contributing the net proceeds of the Financing to SNDC;

     WHEREAS, Holdings desires, in consideration for the Warrants, to grant Guilford an option to purchase all of the Equity Securities of SNDC (“SNDC Equity Securities”) owned, or hereinafter acquired, by Holdings on the terms described in this Agreement; and

     WHEREAS, SNDC and Holdings have determined that it is in each of its best interest to perform and comply with certain agreements and covenants relating to each of its on-going operations contained in this Agreement.

     NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto (the “Parties”) agree as follows:

     Section 1. Grant of Purchase Option.

     (a) Holdings hereby grants to Guilford an exclusive option (the “Purchase Option”) to purchase all, but not less than all, of the SNDC Equity Securities owned, or hereinafter acquired, by Holdings in accordance with the terms of this Agreement.

     (b) SNDC hereby covenants and agrees that all SNDC Equity Securities issued by SNDC at any time prior to the expiration of the Purchase Option Period (including to Holdings on, prior to, or after the date hereof or to any other Person at any time whatsoever, in all cases prior to the expiration of the Purchase Option Period) shall be subject to the Purchase Option and all of the other terms and conditions of this Agreement without any additional action on the part of Guilford or Holdings. Further, to the extent SNDC shall issue any SNDC Equity Securities (including any issuance in respect of a transfer of SNDC Equity Securities by any holder thereof, including Holdings) after the date hereof to any Person (including Holdings) (any issuance of such SNDC Equity Securities being subject to the prior written consent of Guilford as set forth in Sections 6(c) and 8(b) hereof, as applicable), SNDC hereby covenants and agrees that it shall cause such SNDC Equity Securities to be subject to the Purchase Option without the payment of, or any obligation to pay, any additional consideration in respect of such SNDC Equity Securities by Guilford, SNDC or any SNDC Subsidiary to the Person(s) acquiring such subsequently issued SNDC Equity Securities, the Parties acknowledging and agreeing that the sole consideration payable by Guilford for all of the outstanding SNDC Equity Securities now or hereinafter owned by any Person shall be the Purchase Price.

     (c) Guilford’s right to exercise the Purchase Option granted hereby is subject to the following conditions:

     (i) The Purchase Option may only be exercised for the purchase of all, and not less than all, of Holdings’ SNDC Equity Securities;

     (ii) The Purchase Option may only be exercised a single time; and

     (iii) The Purchase Option may be exercised only during the period (the “Purchase Option Period”) commencing on and including April 1, 2005 and ending on and including the earlier of (i) March 31, 2007 and (ii) the 90th calendar day immediately following the first date on which a balance sheet of SNDC (prepared in accordance with GAAP) is delivered to Guilford stating that the amount of cash and cash equivalents held by SNDC is less than $2,000,000.

     Section 2. Exercise of Purchase Option.

     (a) Exercise Notice . Guilford may exercise the Purchase Option only by delivery of a notice in the form attached hereto as Annex B (the “Purchase Option Exercise Notice”) during the Purchase Option Period. The Purchase Option Exercise Notice shall be delivered on a Business Day to Holdings and SNDC and shall be irrevocable once delivered. The date on

2

which the Purchase Option Exercise Notice is first delivered to Holdings and SNDC is referred to as the “Purchase Option Exercise Date.” The Purchase Option Exercise Notice shall specify a closing date for the settlement of the Purchase Option (the “Purchase Option Closing Date”), which Purchase Option Closing Date shall not be less than three (3) and not be more than thirty (30) Business Days after the Purchase Option Exercise Date; provided that, in the event that Guilford shall elect to pay a portion of the Purchase Price in Guilford Common Stock, the Purchase Option Closing Date shall be extended for such longer period as may be necessary for the resale registration statement contemplated by Section 4(b)(i) to have been declared effective by the Securities and Exchange Commission (the Purchase Option Closing Date in such circumstance not to exceed 120 days after the Purchase Option Exercise Date and, in any event, the Purchase Option Closing Date shall not occur later than March 31, 2007). In the event that such resale registration statement is not declared effective within 120 days of the Purchase Option Exercise Date, Guilford shall have the option of paying the full Purchase Price in cash within two (2) Business Days thereafter (in which event the Purchase Option Closing Date shall be the date upon which such cash payment is made by Guilford), and if Guilford shall fail to make such cash payment within such two (2) Business Day period, this Agreement shall terminate and Guilford shall relinquish all rights hereunder to purchase the SNDC Equity Securities.

     (b)  Option Exercise Price . Upon exercise of the Purchase Option and as complete and full consideration for the sale to Guilford by Holdings of its SNDC Equity Securities (and for the SNDC Equity Securities of any other Person), Guilford shall pay to Holdings the amount set forth on Schedule I (the “Purchase Price”) applicable for the date on which the Purchase Option Closing Date occurs (including, for the avoidance of doubt, the Purchase Option Closing Date as it may be extended pursuant to Section 2(a) above).

     (c)  Form of Payment . Subject to Section 2(e) , the Purchase Price may be paid in cash, in Guilford Common Stock, or in any combination thereof, at the sole discretion of Guilford; provided that in no event may the value of Guilford Common Stock (determined in accordance with Section 2(e) hereof) delivered in connection with exercising the Purchase Option exceed 50% of the Purchase Price.

     (d)  Surrender of SNDC Equity Securities . Subject to the terms and conditions of this Agreement, on or prior to the Purchase Option Closing Date, Holdings shall surrender to Guilford its certificates representing its SNDC Equity Securities, free and clear of any and all Encumbrances.

     (e) Valuation of Guilford Stock . In the event that Guilford elects to pay a part of the Purchase Price through the delivery of Guilford Common Stock, the value per share thereof (the “Common Stock Valuation”) shall equal: (a) if Guilford Common Stock is then traded on a national securities exchange, the average closing price of Guilford Common Stock, as such price appears on the Bloomberg Screen, on the principal national securities exchange on which Guilford Common Stock is then listed for the 30 trading days immediately preceding the second trading day prior to the Purchase Option Exercise Date or (b) if not listed on a national securities exchange, the average of the median of the closing bid and ask prices of Guilford Common Stock, as such prices appear on the Bloomberg Screen, on the NASDAQ National Market or SmallCap Market, as applicable, for the 30 trading days immediately preceding the second

3

trading day prior to the Purchase Option Exercise Date. If Guilford Common Stock is neither traded on a national securities exchange nor the NASDAQ National Market or SmallCap Market, then Guilford shall be obligated to pay the Purchase Price solely in cash on the Purchase Option Closing Date. Guilford shall calculate the Common Stock Valuation in accordance with this Section 2(e) , subject to review and concurrence by Symphony. If Guilford and Symphony disagree with respect to the calculation of the Common Stock Valuation, Guilford and Symphony shall each appoint a nationally recognized commercial or investment bank (“Bank”) (that, in each case, has had no prior dealings with Guilford and Symphony, respectively, in the preceding twelve months), and such two Banks shall appoint a third Bank. In accordance with this Section 2(e) , such three Banks shall jointly calculate the Common Stock Valuation, which shall be binding and conclusive absent manifest error.

     (f)  Share Certificates . Any stock certificate(s) issued by Guilford for Guilford Common Stock pursuant to Section 2(c) hereof may contain a legend substantially as follows:

     “THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF ANY STATE, AND THE SAME HAVE BEEN ISSUED IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SAID ACT AND SUCH LAWS. SUCH SHARES MAY NOT BE SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT AS PERMITTED UNDER SUCH SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.”

     (g)  Reporting Requirement . In the event that Guilford elects to pay any portion of the Purchase Price in Guilford Common Stock, on the Purchase Option Closing Date Guilford shall be a reporting company under the Securities Exchange Act of 1934 (the “Exchange Act”); shall have been subject to the requirements of Sections 12 or 15(d) of the Exchange Act and shall have filed all materials required to be filed pursuant to Sections 13, 14 or 15(d) for a period of at least twelve calendar months immediately preceding the Purchase Option Closing Date.

     (h)  Government Approvals . On or prior to the Purchase Option Closing Date, Guilford shall have taken all action to cause all authorizations, consents, orders, declarations or approvals of, or filings with, or terminations or expirations of waiting periods imposed by any Governmental Authority, including, without limitation, the premerger notification and report forms required under the Hart Scott Rodino Antitrust Improvements Act of 1976, as amended (collectively, “Governmental Approvals”) required to be in effect in connection with the transactions contemplated by this Agreement to be in effect, except with respect to which the failure to be in effect would not reasonably be expected to have a Material Adverse Effect on Guilford. SNDC and Holdings shall use reasonable efforts to cooperate with Guilford, to the extent necessary, in the preparation and filing of any such Governmental Approvals.

     (i) Transfer of Title . Transfer of title to Guilford of all of the SNDC Equity Securities shall be deemed to occur automatically on the Purchase Option Closing Date, subject to the payment by Guilford on such date of the Purchase Price and its performance of its other obligations herein required to be performed under Sections 2(e) , (g) and (h) , as applicable, on or

4

prior to the Purchase Option Closing Date to the satisfaction of Holdings, and thereafter SNDC shall be entitled to treat Guilford as the sole holder of all SNDC Equity Securities, notwithstanding the failure of Holdings to tender certificates representing such shares to Guilford in accordance with Section 2(d) hereof. After the Purchase Option Closing Date Holdings shall have no rights in connection with such SNDC Equity Securities other than the right to receive the Purchase Price; provided, however, that nothing in this Section 2(i) shall affect the survivability of any indemnification provision in this Agreement upon termination of this Agreement.

     Section 3. Adjustment of Purchase Price for Redemptions of SNDC Equity Securities. In the event SNDC redeems or repurchases any SNDC Equity Securities from Holdings or any other Person (other than Guilford), the Purchase Price shall be reduced dollar-for-dollar by the amount of any cash or non-cash consideration paid by SNDC (or any SNDC Subsidiary) to Holdings or such other Person, with any such non-cash consideration being valued based on its fair market value as determined in good faith by the SNDC Board.

     Section 4. Guilford Representations, Warranties and Covenants.

     (a) As of the date hereof, Guilford hereby makes, and on the Purchase Option Closing Date shall be deemed to have made, the following representations and warranties:

     (i) Organization . Guilford is duly organized, validly existing and in good standing under the laws of the State of Delaware.

     (ii) Authority and Validity . Other than in respect of the exercise of the Purchase Option pursuant to Section 2(a) (which is subject to future approval by Guilford’s board of directors), Guilford has all requisite corporate power and authority to execute, deliver and perform its obligations under this Agreement and to consummate the transactions contemplated hereby. The execution, delivery and performance by Guilford of its obligations under this Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorized by all necessary action required on the part of Guilford (other than in respect of the exercise of the Purchase Option pursuant to Section 2(a) which is subject to future approval by Guilford’s board of directors), and no other proceedings on the part of Guilford are necessary to authorize this Agreement or for Guilford to perform its obligations under this Agreement. This Agreement constitutes the lawful, valid and legally binding obligation of Guilford, enforceable in accordance with its terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and general equitable principles regardless of whether such enforceability is considered in a proceeding at law or in equity.

     (iii) No Violation or Conflict . The execution, delivery and performance of this Agreement and the transactions contemplated hereby do not (x) violate, conflict with or result in the breach of any provision of the Organizational Documents of Guilford, (y) conflict with or violate any law or Governmental Order applicable to Guilford or any of its assets, properties or businesses, or (z) conflict with, result in any breach of, constitute a default (or event that with the giving of notice or lapse of time, or both, would become a default) under, require any consent under, or give to others any rights of termination,

5

amendment, acceleration, suspension, revocation or cancellation of, or result in the creation of any Encumbrance on any of the assets or properties of Guilford, pursuant to, any note, bond, mortgage or indenture, contract, agreement, lease, sublease, license, permit, franchise or other instrument or arrangement to which Guilford is a party except, in the case of clause (z), to the extent that such conflicts, breaches, defaults or other matters would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Guilford.

     (iv) Governmental Consents and Approvals . Other than any HSR Act Filings and Additional Regulatory Filings which, if the Purchase Option is exercised by Guilford, will be obtained on or prior to the Purchase Option Closing Date and any Governmental Approvals relating to Federal securities or state “blue sky” laws, the execution, delivery and performance of this Agreement by Guilford do not require any Governmental Approval which has not already been obtained, effected or provided, except with respect to which the failure to so obtain, effect or provide would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Guilford.

     (v) Litigation . There are no actions by or against Guilford pending before any Governmental Authority or, to the knowledge of Guilford, threatened to be brought by or before any Governmental Authority, that would reasonably be expected to have a Material Adverse Effect on Guilford. There are no pending or, to the knowledge of Guilford, threatened actions, to which Guilford is a party (or threatened to be named as a party) to set aside, restrain, enjoin or prevent the execution, delivery or performance of this Agreement or the Operative Documents or the consummation of the transactions contemplated hereby or thereby by any party hereto or thereto. Guilford is not subject to any Governmental Order (nor, to the knowledge of Guilford, is there any such Governmental Order threatened to be imposed by any Governmental Authority) that would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Guilford.

     (b) Guilford hereby covenants and agrees with Holdings as follows:

     (i) Immediately prior to the Purchase Option Closing Date, Guilford shall have sufficient amounts of cash and, if applicable, authorized but unissued, freely transferable and nonassessable Guilford Common Stock available to satisfy the portion of the Purchase Price to be paid in cash or Guilford Common Stock pursuant to Section 2(b) and the reimbursement of any costs and expenses pursuant to Section 9(a) . In the event that Guilford elects to satisfy any portion of the Purchase Price in Guilford Common Stock, Guilford shall have available on the Purchase Option Closing Date a resale registration statement declared effective by the Securities and Exchange Commission for the resale of any such shares of Guilford Common Stock to be delivered in partial satisfaction of the Purchase Price.

     (ii) If Guilford elects to satisfy any portion of the Purchase Price in Guilford Common Stock, Guilford shall convey good title to such Guilford Common Stock, free from any Encumbrances and, except as otherwise contemplated in this Agreement, from

6

any and all restrictions that any sale, assignment or other transfer of such Guilford Common Stock be consented to or approved by any Person.

     Section 5. Holdings Representations, Warranties and Covenants.

     (a) As of the date hereof, Holdings hereby makes, and on the Purchase Option Closing Date shall be deemed to have made, the following representations and warranties:

     (i) Organization . Holdings is duly formed, validly existing and in good standing under the laws of the State of Delaware.

     (ii) Authority and Validity . Holdings has all requisite power and authority to execute, deliver and perform its obligations under this Agreement and to consummate the transactions contemplated hereby. The execution, delivery and performance by Holdings of its obligations under this Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorized by all necessary action required on the part of Holdings, and no other proceedings on the part of Holdings are necessary to authorize this Agreement or for Holdings to perform its obligations under this Agreement. This Agreement constitutes the lawful, valid and legally binding obligation of Holdings, enforceable in accordance with its terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and general equitable principles regardless of whether such enforceability is considered in a proceeding at law or in equity.

     (iii) No Violation or Conflict . The execution, delivery and performance of this Agreement and the transactions contemplated hereby do not (x) violate, conflict with or result in the breach of any provision of the Organizational Documents of Holdings, (y) conflict with or violate any law or Governmental Order applicable to Holdings or any of its assets, properties or businesses, or (z) conflict with, result in any breach of, constitute a default (or event that with the giving of notice or lapse of time, or both, would become a default) under, require any consent under, or give to others any rights of termination, amendment, acceleration, suspension, revocation or cancellation of, or result in the creation of any Encumbrance on any of the assets or properties of Holdings, pursuant to, any note, bond, mortgage or indenture, contract, agreement, lease, sublease, license, permit, franchise or other instrument or arrangement to which Holdings is a party except, in the case of clause (z), to the extent that such conflicts, breaches, defaults or other matters would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Holdings.

     (iv) Governmental Consents and Approvals . The execution, delivery and performance of this Agreement by Holdings do not require any Governmental Approval which has not already been obtained, effected or provided, except with respect to which the failure to so obtain, effect or provide would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Holdings.

7

     (v) Litigation . There are no actions by or against Holdings pending before any Governmental Authority or, to the knowledge of Holdings, threatened to be brought by or before any Governmental Authority, that would reasonably be expected to have a Material Adverse Effect on Holdings. There are no pending or, to the knowledge of Holdings, threatened actions to which Holdings is a party (or threatened to be named as a party) to set aside, restrain, enjoin or prevent the execution, delivery or performance of this Agreement or the Operative Documents or the consummation of the transactions contemplated hereby or thereby by any party hereto or thereto. Holdings is not subject to any Governmental Order (nor, to the knowledge of Holdings, is there any such Governmental Order threatened to be imposed by any Governmental Authority) that would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Holdings.

     (vi) Stock Ownership . All of SNDC’s issued and outstanding SNDC Equity Securities are owned beneficially and of record by Holdings, free and clear of any and all Encumbrances.

     (b) Holdings hereby covenants and agrees with Guilford as follows:

     (i) Contribution to SNDC . Concurrently with the execution of this Agreement, Holdings shall contribute proceeds from the Financing of approximately $40,000,000 to SNDC.

     (ii) Encumbrance . Holdings will not, and will not permit any of its Subsidiaries to, create, assume or suffer to exist any Encumbrance on any of its SNDC Equity Securities except with the prior written consent of Guilford.

     (iii) Transfer and Amendment . Commencing upon the date hereof and ending upon the earlier to occur of (y) the Purchase Option Closing Date and (z) the expiration of the Purchase Option Period (such period, the “Term”), the manager of Holdings shall not (A) transfer, or permit the transfer of, any Membership Interest without the prior written consent of Guilford or (B) amend, or permit the amendment of, any provisions relating to the transfer of Membership Interests, as set forth in Section 7.02 of the Holdings LLC Agreement, to the extent such amendment would adversely affect Guilford’s right of consent set forth in Sections 7.02(b)(i) and 7.02(c) of the Holdings LLC Agreement.

     (iv) Guilford Director . During the Term, Holdings agrees to vote all of its SNDC Equity Securities (or to exercise its right with respect to such SNDC Equity Securities to consent to action in writing without a meeting) in favor of, as applicable, the election, removal and replacement of one director of the SNDC Board, and any successor thereto, designated by Guilford (the “Guilford Director”) as directed by Guilford. In furtherance and not in limitation of the foregoing, Holdings hereby grants to Guilford an irrevocable proxy, with respect to all SNDC Equity Securities now owned or hereafter acquired by Holdings, to vote such SNDC Equity Securities or to exercise the right to consent to action in writing without a meeting with respect to such SNDC Equity Securities, such irrevocable proxy to be exercised solely for the limited purpose of

8

electing, removing and replacing the Guilford Director in the event of the failure or refusal of Holdings to elect, remove or replace such Guilford Director as directed by Guilford.

     (v) SNDC Board . During the Term, Holdings shall not vote any of its SNDC Equity Securities (or exercise its rights with respect to such SNDC Equity Securities by written consent without a meeting) to increase the size of the SNDC Board to more than five (5) members without the consent of Guilford.

     (vi) SNDC Certificate of Incorporation . During the Term, Holdings shall not approve or permit any amendment to Article IV, Paragraph (1); Article VI; Article VII; Article X or Article XI of the Amended and Restated Certificate of Incorporation of SNDC without the prior written consent of Guilford.

     Section 6. SNDC Representations, Warranties and Covenants.

     (a) As of the date hereof, SNDC hereby makes, and on the Purchase Option Closing Date shall be deemed to have made, the following representations and warranties:

     (i) Organization . SNDC is duly organized, validly existing and in good standing under the laws of the State of Delaware.

     (ii) Authority and Validity . SNDC has all requisite power and authority to execute, deliver and perform its obligations under this Agreement and to consummate the transactions contemplated hereby. The execution, delivery and performance by SNDC of its obligations under this Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorized by all necessary action required on the part of SNDC, and no other proceedings on the part of SNDC are necessary to authorize this Agreement or for SNDC to perform its obligations under this Agreement. This Agreement constitutes the lawful, valid and legally binding obligation of SNDC, enforceable in accordance with its terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and general equitable principles regardless of whether such enforceability is considered in a proceeding at law or in equity.

     (iii) No Violation or Conflict . The execution, delivery and performance of this Agreement and the transactions contemplated hereby do not (x) violate, conflict with or result in the breach of any provision of the Organizational Documents of SNDC, (y) conflict with or violate any law or Governmental Order applicable to SNDC or any of its assets, properties or businesses, or (z) conflict with, result in any breach of, constitute a default (or event that with the giving of notice or lapse of time, or both, would become a default) under, require any consent under, or give to others any rights of termination, amendment, acceleration, suspension, revocation or cancellation of, or result in the creation of any Encumbrance on any of the assets or properties of SNDC, pursuant to, any note, bond, mortgage or indenture, contract, agreement, lease, sublease, license, permit, franchise or other instrument or arrangement to which SNDC is a party except, in the case of clause (z), to the extent that such conflicts, breaches, defaults or other matters

9

would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on SNDC.

     (iv) Governmental Consents and Approvals . The execution, delivery and performance of this Agreement by SNDC do not require any Governmental Approval which has not already been obtained, effected or provided, except with respect to which the failure to so obtain, effect or provide would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on SNDC.

     (v) Litigation . There are no actions by or against SNDC pending before any Governmental Authority or, to the knowledge of SNDC, threatened to be brought by or before any Governmental Authority that would reasonably be expected to have a Material Adverse Effect on SNDC. There are no pending or, to the knowledge of SNDC, threatened actions to which SNDC is a party (or threatened to be named as a party) to set aside, restrain, enjoin or prevent the execution, delivery or performance of this Agreement. SNDC is not subject to any Governmental Order (nor, to the knowledge of SNDC, is there any such Governmental Order threatened to be imposed by any Governmental Authority) that would reasonably be expected to have a Material Adverse Effect on SNDC.

     (vi) Capitalization . Holdings is the beneficial and record owner of all issued and outstanding SNDC Equity Securities. No shares of SNDC capital stock are held in treasury by SNDC or any SNDC Subsidiary. All of the issued and outstanding SNDC Equity Securities (x) have been duly authorized and validly issued and are fully paid and nonassessable, (y) were issued in compliance with all applicable state and Federal securities laws, and (z) were not issued in violation of any preemptive rights or rights of first refusal. No preemptive rights or rights of first refusal exist with respect to any SNDC Equity Securities and no such rights will arise by virtue of or in connection with the transactions contemplated hereby (other than for the Purchase Option). There are no outstanding stock appreciation, phantom stock, profit participation or other similar rights with respect to SNDC. SNDC is not obligated to redeem or otherwise acquire any of its outstanding SNDC Equity Securities.

     (b) SNDC covenants and agrees that:

     (i) SNDC will comply with all laws, ordinances or governmental rules or regulations to which it is subject and will obtain and maintain in effect all licenses, certificates, permits, franchises and other Governmental Approvals necessary to the ownership of its properties or to the conduct of its business, in each case to the extent necessary to ensure that non-compliance with such laws, ordinances or governmental rules or regulations or failures to obtain or maintain in effect such licenses, certificates, permits, franchises and other Governmental Approvals would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on SNDC;

     (ii) SNDC will file (or cause to be filed) all material tax returns required to be filed by it and pay all taxes shown to be due and payable on such returns and all other taxes imposed on it or its assets to the extent such taxes have become due and payable

10

and before they have become delinquent and shall pay all claims for which sums have become due and payable that have or might become attached to the assets of SNDC; provided that SNDC need not file any such tax returns or pay any such tax or claims if (A) the amount, applicability or validity thereof is contested by SNDC on a timely basis in good faith and in appropriate proceedings, and SNDC has established adequate reserves therefor in accordance with GAAP on the books of SNDC or (B) the failure to file such tax returns or the nonpayment of such taxes and assessments, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect on SNDC;

     (iii) SNDC will at all times preserve and keep in full force and effect its corporate existence;

     (iv) SNDC will keep complete, proper and separate books of record and account, including a record of all costs and expenses incurred, all charges made, all credits made and received, and all income derived in connection with the operation of the business of SNDC, all in accordance with GAAP, in each case to the extent necessary to enable SNDC to comply with the periodic reporting requirements of this Agreement;

     (v) SNDC will perform and observe in all material respects all of the terms and provisions of each Operative Document to be performed or observed by it, maintain each such Operative Document to which it is a party, promptly enforce in all material respects each such Operative Document in accordance with its terms, take all such action to such end as may be from time to time reasonably requested by Holdings or Guilford and make to each other party to each such Operative Document such demands and requests for information and reports or for action as SNDC is entitled to make under such Operative Document;

     (vi) SNDC shall permit the representatives of Holdings (including Holdings’ members and their respective representatives), Symphony Capital Partners, L.P. (“Symphony Fund”) and Guilford, at each of their own expense and upon reasonable prior notice to SNDC, to visit the principal executive office of SNDC, to discuss the affairs, finances and accounts of SNDC with SNDC’s officers and (with the consent of SNDC, which consent will not be unreasonably withheld) its Auditors, all at such reasonable times and as often as may be reasonably requested in writing;

     (vii) SNDC shall permit Symphony Fund (or, at the option of Symphony Fund, Symphony Capital), at its own expense and upon reasonable prior notice to SNDC, to inspect and copy SNDC’s books and records and inspect SNDC’s properties at reasonable times;

     (viii) SNDC shall permit Symphony Fund (or, at the option of Symphony Fund, Symphony Capital) to consult with and advise the management of SNDC on matters relating to the research and development of the Programs in order to develop the Product;

11

     (ix) During the Term, pursuant to Section 5(b)(iv) hereof, Guilford shall have the right to designate, remove and replace one member to the SNDC Board, and any successor thereto in accordance with the terms of Section 5(b)(iv) ; and

     (x) During the Term, Guilford will have the right to consent to any increase in the size of the SNDC Board to more than five (5) directors.

     (c) SNDC covenants and agrees that, until the expiration of the Term, it shall not, and shall cause its Subsidiaries (if any) not to, without Guilford’s prior written consent (such consent, in the case of clause (x) below, not to be unreasonably withheld):

     (i) issue any Equity Securities of SNDC or any Subsidiary thereof (other than any issuances of Equity Securities by SNDC to Holdings so long as SNDC is a wholly owned subsidiary of Holdings or by a Subsidiary of SNDC to SNDC or to another wholly owned Subsidiary of SNDC);

     (ii) redeem, repurchase or otherwise acquire, directly or indirectly, any SNDC Equity Securities or the Equity Securities of any Subsidiary;

     (iii) create, incur, assume or permit to exist any Debt other than any Debt incurred pursuant to the Operative Documents and the Development Budget;

     (iv) declare or pay dividends or other distributions on any Equity Securities;

     (v) enter into any transaction of merger or consolidation, or liquidate, wind up or dissolve itself, or convey, transfer, license, lease or otherwise dispose of all, or a material portion of, its properties, assets or business;

     (vi) other than in respect of the Programs, engage or participate in the development of pharmaceutical products or engage in any other material line of business;

     (vii) other than entering into, and performing its obligations under, the Operative Documents and participating in the Programs, engage in any action that negates or is inconsistent with any rights of Guilford set forth herein;

     (viii) other than as contemplated by the Management Services Agreement, the General Service Agreement and the Guilford Sub-Servicing Agreement, hire, retain or contract for the services of, any employees;

     (ix) other than any transaction contemplated by the Operative Documents, enter into or engage in any Conflict Transactions without the prior approval of a majority of the disinterested members of the SNDC Board; or

     (x) waive, alter, modify, amend or supplement in any manner whatsoever any material terms and conditions of the Management Services Agreement or the General Services Agreement.

12

     (d) SNDC covenants and agrees to deliver, or cause to be delivered, to each other Party and Symphony Fund:

     (i) copies of the then current Development Plan, or a summary thereof in reasonable detail, on or before March 31, June 30, September 30, and December 31 of each year;

     (ii) copies of the then current Development Budget, or a summary thereof in reasonable detail, including a report setting forth in reasonable detail the projected expenditures by SNDC pursuant to the Development Budget, on or before March 31, June 30, September 30, and December 31 of each year;

     (iii) within twenty-five (25) days after the close of each fiscal year, the following financial statements, audited and certified to by the Auditors: (A) a balance sheet of SNDC as of the close of such fiscal year; (B) a statement of net income for such fiscal year, and (C) a statement of cash flows for such fiscal year. Such audited annual financial statements shall set forth in comparative form the figures for the previous fiscal year, all in reasonable detail, prepared in accordance with GAAP, and accompanied by an opinion thereon of the Auditors, which opinion shall state that such financial statements present fairly, in all material respects, the financial position of SNDC and its results of operations and cash flows and have been prepared in conformity with GAAP, and that the examination of such accountants in connection with such financial statements has been made in accordance with generally accepted auditing standards, and that such audit provides a reasonable basis for such opinion in the circumstances;

     (iv) within five (5) days following each fiscal quarter ending March 31, June 30, September 30 and December 31 of each year: (A) the unaudited balance sheet of SNDC for the previous fiscal quarter; (B) the unaudited statement of net income for such previous fiscal quarter; and (C) the unaudited statement of cash flows for such previous fiscal quarter;

     (v) copies of any materials sent to the SNDC Board;

     (vi) promptly on or prior to the due date for filing thereof, a copy of each material income tax return filed by SNDC with any foreign, federal, state or local taxing authority;

     (vii) promptly, and in any event within 10 days of receipt thereof, copies of any notice to SNDC from any federal or state Governmental Authority relating to any order, ruling, statute or other law or regulation that would reasonably be expected to have a Material Adverse Effect on SNDC;

     (viii) promptly upon receipt thereof, notice of all actions, suits, investigations, litigation and proceedings before any court or governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, affecting SNDC;

13

     (ix) promptly upon receipt thereof, copies of any other notices, requests, reports, financial statements and other information and documents received by SNDC under or pursuant to any other Operative Document; and

     (x) with reasonable promptness, such other data and information relating to the business, operations, affairs, financial condition, assets or properties of SNDC or relating to the ability of SNDC to perform its obligations hereunder and under the Operative Documents as from time to time may be reasonably requested by Guilford and/or Holdings.

     (e) SNDC further covenants, until the expiration of the Term, that (w) the principal executive officer and the principal financial officer of SNDC, or persons performing similar functions, shall provide certifications to Guilford substantially similar to those required with respect to public companies for which a class of securities is registered under the Exchange Act (“Public Companies”) under Section 302 of the Sarbanes-Oxley Act of 2002; (x) SNDC shall maintain a system of disclosure controls and internal controls (as defined under the Exchange Act) and conduct quarterly and annual evaluations of the effectiveness of such controls as required under the Exchange Act for Public Companies; (y) SNDC shall provide to Guilford an attestation report of its Auditors with respect to SNDC management’s assessment of SNDC’s internal controls as required under the Exchange Act for Public Companies; and (z) SNDC will maintain, or cause to have maintained, such sufficient evidentiary support for management’s assessment of the effectiveness of SNDC’s internal controls as required under the Exchange Act for Public Companies.

     Section 7. Notification upon Breach. Each Party covenants and agrees that, upon the breach by it of any representation, warranty, covenant or any other term or condition of this agreement, such Party shall promptly notify the other Parties in writing within three (3) Business Days of such breach; provided that the failure to provide such notice shall not impair or otherwise be deemed a waiver of any rights any Party may have arising from such breach.

     Section 8. Assignment, Transfers and Legend.

     (a)  Assignment by Guilford and SNDC . Neither Guilford nor SNDC may assign, delegate, transfer, sell or otherwise dispose of (collectively, "Transfer”), in whole or in part, any or all of their rights or obligations hereunder to any Person (“Transferee”) without the prior written approval of each of the other Parties hereto; provided , however that Guilford may, subject to Holdings’ rights set forth in Section 10(b)(i) , make such Transfer to any Person which acquires all or substantially all of Guilford’s assets or business (or assets or business related to the Programs) or which is the surviving or resulting Person in a merger or consolidation with Guilford; provided further , that in the event of any Transfer, Guilford or SNDC, as applicable, shall provide written notice to the other Parties of any such Transfer not later than thirty (30) days after such Transfer setting forth the identity and address of the Transferee and summarizing the terms of the Transfer. In no event shall such assignment alter the definition of “Guilford Common Stock” except as a result of the surviving or resulting entity in a merger being other than Guilford, in which case any reference to Guilford Common Stock shall be deemed to instead reference the common stock, if any, of the surviving or resulting entity.

14

     (b)  Assignment and Transfers by Holdings . Holdings may not Transfer, in whole or in part, any or all of its SNDC Equity Securities or any or all of its rights or obligations hereunder to any Person without the prior written consent of Guilford. In addition, any Transfer of SNDC Equity Securities by Holdings or any other Person shall be conditioned upon, and no effect shall be given to any such Transfer unless such transferee shall agree in writing in form and substance satisfactory to Guilford to be bound by all of the terms and conditions hereunder, including the Purchase Option, as if such transferee were originally designated as “Holdings” hereunder.

     (c)  Legend . Any certificates evidencing SNDC Equity Securities shall bear a legend in substantially the following form:

     “THE SECURITIES OF SNDC EVIDENCED HEREBY ARE SUBJECT TO AN OPTION, HELD BY GUILFORD PHARMACEUTICALS INC., AS DESCRIBED IN A PURCHASE OPTION AGREEMENT (THE “OPTION AGREEMENT”) DATED AS OF JUNE 17, 2004 BY AND AMONG GUILFORD PHARMACEUTICALS INC. AND THE OTHER PARTIES THERETO, TO PURCHASE SUCH SECURITIES AT A PURCHASE PRICE DETERMINED PURSUANT TO SECTION 2 OF THE OPTION AGREEMENT, EXERCISABLE BY WRITTEN NOTICE AT ANY TIME DURING THE PERIOD SET FORTH THEREIN. COPIES OF THE OPTION AGREEMENT ARE AVAILABLE AT THE PRINCIPAL PLACE OF BUSINESS OF SNDC AT 7361 CALHOUN PLACE, SUITE 325, ROCKVILLE, MARYLAND 20855, AND WILL BE FURNISHED TO THE HOLDER HEREOF UPON WRITTEN REQUEST WITHOUT COST.”

     Section 9. Costs and Expenses; Payments.

     (a)  Costs and Expenses . Guilford agrees to reimburse Holdings for any reasonable and documented costs and expenses (including reasonable fees and expenses of counsel) incurred in connection with the exercise of the Purchase Option.

     (b)  Payments . Payment of the Purchase Price, plus all costs and expenses pursuant to clause (a) above, shall be made to the account of Holdings no later than 5:00 p.m. (New York time) on the Purchase Option Closing Date.

     Section 10. Termination of Agreement; Expiration of Certain Covenants.

     (a) This Agreement shall terminate upon the mutual written consent of each of the Parties.

     (b) Holdings, and SNDC, may terminate this Agreement in the event that:

     (i) Following a Change of Control of Guilford, within 60 days after receipt of a written request from the SNDC Board, Guilford (or its successor) fails to discuss in

15

good faith and reasonable detail with the SNDC Board Guilford’s (or its successor entity’s) ongoing operations, including, but not limited to, Guilford’s or the successor entity’s commitment to Guilford’s obligations under the Operative Documents to which it is a party, as well as the strategic importance of the Programs to Guilford or such successor entity;

     (ii) Guilford shall generally not pay its debts as such debts become due, or shall admit in writing its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors; or any proceeding shall be instituted by or against Guilford or any Material Subsidiary seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee or other similar official for it or for any substantial part of its property and, in the case of any such proceeding instituted against it (but not instituted by it) that is being diligently contested by it in good faith, either such proceeding shall remain undismissed or unstayed for a period of thirty (30) days or any of the actions sought in such proceeding (including, without limitation, the entry of an order for relief against, or the appointment of a receiver, trustee, custodian or other similar official for, it or any substantial part of its property) shall occur; or Guilford or any Material Subsidiary shall take any corporate action to authorize any of the actions set forth above in this subsection (b); or

     (iii) SNDC terminates the Amended and Restated Research and Development Agreement or SNDC or RRD terminates the Guilford Sub-Servicing Agreement, in each case as a result of a material breach thereof by Guilford.

     (c) Upon the expiration of the Term, the covenants and agreements of SNDC and Holdings set forth in Sections 5(b) , 6(b) , 6(c ), 6(d) and 6(e) shall expire and end without any further obligation by SNDC or Holdings thereunder.

     Section 11. Survival; Indemnification.

     (a)  Survival of Representations and Warranties . The representations and warranties of the Parties contained in this Agreement shall survive the exercise of the Purchase Option and/or the termination of this Agreement. The liability of the Parties related to their respective representations and warranties shall not be reduced by any investigation made at any time by or on behalf of Holdings, SNDC or Guilford, as applicable.

     (b)  Indemnification . To the greatest extent permitted by applicable law, Guilford shall defend, protect, indemnify and hold harmless Holdings and SNDC and Holdings shall defend, protect and indemnify and hold harmless Guilford, and any respective affiliates, officers, directors, employees, agents, partners, members, successors, assigns, representatives of, and each Person, if any (including any officers, directors, employees, agents, partners, members of such Person) who controls, Holdings, SNDC and Guilford, as applicable, within the meaning of the Securities Act of 1933 (the “Securities Act”) or the Exchange Act, (each an "Indemnified Party") from and against any and all actions, causes of action, suits, claims, losses, diminution in value, costs, interest, penalties, fees, liabilities and damages, and expenses in connection therewith (irrespective of whether any such Indemnified Party is a party to the action for which indemnification hereunder is sought), and including reasonable attorneys’ fees and

16

disbursements (hereinafter a "Loss”), incurred by any Indemnified Party as a result of, or arising out of, or relating to: (I) in the case of Guilford being the Indemnifying Party, (a) any breach of any representation or warranty made by Guilford herein or in any certificate, instrument or document delivered hereunder, or (b) any breach of any covenant, agreement or obligation of Guilford contained herein or in any certificate, instrument or document delivered hereunder and (II) in the case of Holdings being the Indemnifying Party, (a) any breach of any representation or warranty made by Holdings or SNDC herein or in any certificate, instrument or document delivered hereunder, or (b) any breach of any covenant, agreement or obligation of Holdings or SNDC contained herein or in any certificate, instrument or document delivered hereunder. To the extent that the foregoing undertaking by Guilford or Holdings may be unenforceable for any reason, such Party shall make the maximum contribution to the payment and satisfaction of any Loss that is permissible under applicable law.

     (c)  Notice of Claims . Any Indemnified Party that proposes to assert a right to be indemnified under this Section 11 shall notify Guilford or Holdings, as applicable (the “Indemnifying Party”), promptly after receipt of notice of commencement of any action, suit or proceeding against such Indemnified Party (an “Indemnified Proceeding”) in respect of which a claim is to be made under this Section 11 , or the incurrence or realization of any Loss in respect of which a claim is to be made under this Section 11 , of the commencement of such Indemnified Proceeding or of such incurrence or realization, enclosing a copy of all relevant documents, including all papers served and claims made, but the omission so to notify the applicable Indemnifying Party promptly of any such Indemnified Proceeding or incurrence or realization shall not relieve (x) such Indemnifying Party from any liability that it may have to such Indemnified Party under this Section 11 or otherwise except, as to such Indemnifying Party’s liability under this Section 11 , to the extent, but only to the extent, that such Indemnifying Party shall have been prejudiced by such omission, or (y) any other indemnitor from liability that it may have to any Indemnified Party under the Operative Documents.

     (d)  Defense of Proceedings . In case any Indemnified Proceeding shall be brought against any Indemnified Party and it shall notify the applicable Indemnifying Party of the commencement thereof, such Indemnifying Party shall be entitled to participate in, and to assume the defense of, such Indemnified Proceeding with counsel reasonably satisfactory to such Indemnified Party, and after notice from such Indemnifying Party to such Indemnified Party of such Indemnifying Party’s election so to assume the defense thereof and the failure by such Indemnified Party to object to such counsel within ten (10) Business Days following its receipt of such notice, such Indemnifying Party shall not be liable to such Indemnified Party for legal or other expenses incurred after such notice of election to assume such defense except as provided below and except for the reasonable costs of investigating, monitoring or cooperating in such defense subsequently incurred by such Indemnified Party reasonably necessary in connection with the defense thereof. Such Indemnified Party shall have the right to employ its counsel in any such Indemnified Proceeding, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party unless:

     (1) the employment of counsel by such Indemnified Party at the expense of the applicable Indemnifying Party has been authorized in writing by such Indemnifying Party;

17

     (2) such Indemnified Party shall have reasonably concluded in its good faith (which conclusion shall be determinative unless a court determines that such conclusion was not reached reasonably and in good faith) that there is or may be a conflict of interest between the applicable Indemnifying Party and such Indemnified Party in the conduct of the defense of such Indemnified Proceeding or that there are or may be one or more different or additional defenses, claims, counterclaims, or causes of action available to such Indemnified Party (it being agreed that in any case referred to in this clause (2) such Indemnifying Party shall not have the right to direct the defense of such Indemnified Proceeding on behalf of the Indemnified Party);

     (3) the applicable Indemnifying Party shall not have employed counsel reasonably acceptable to the Indemnified Party, to assume the defense of such Indemnified Proceeding within a reasonable time after notice of the commencement thereof ( provided , however , that this clause shall not be deemed to constitute a waiver of any conflict of interest that may arise with respect to any such counsel); or

     (4) any counsel employed by the applicable Indemnifying Party shall fail to timely commence or maintain the defense of such Indemnified Proceeding;

in each of which cases the fees and expenses of counsel for such Indemnified Party shall be at the expense of such Indemnifying Party. Only one counsel shall be retained by all Indemnified Parties with respect to any Indemnified Proceeding, unless counsel for any Indemnified Party reasonably concludes in good faith (which conclusion shall be determinative unless a court determines that such conclusion was not reached reasonably and in good faith) that there is or may be a conflict of interest between such Indemnified Party and one or more other Indemnified Parties in the conduct of the defense of such Indemnified Proceeding or that there are or may be one or more different or additional defenses, claims, counterclaims, or causes or action available to such Indemnified Party.

     (e)  Settlement . Without the prior written consent of such Indemnified Party, such Indemnifying Party shall not settle or compromise, or consent to the entry of any judgment in, any pending or threatened Indemnified Proceeding, unless such settlement, compromise, consent or related judgment includes an unconditional release of such Indemnified Party from all liability for Losses arising out of such claim, action, investigation, suit or other legal proceeding. No Indemnified Party shall settle or compromise, or consent to the entry of any judgment in, any pending or threatened Indemnified Proceeding in respect of which any payment would result hereunder or under the Operative Documents without the prior written consent of the Indemnifying Party, such consent not to be unreasonably conditioned, withheld or delayed.

     Section 12. Confidentiality. The Parties hereto covenant and agree that, prior to the delivery of the Purchase Option Exercise Notice, no Party shall disclose any information related to this Agreement (“Confidential Information”) in any manner whatsoever, in whole or in part, provided that nothing herein shall prevent a Party from disclosing (a “Disclosing Party”) any such Confidential Information (A) pursuant to any Governmental Order or in any pending or legal or administrative proceeding relating to the Programs, (B) upon the request or demand of

18

any Governmental Authority having jurisdiction over such Party or any of its Affiliates, (C) as required by law, or the rules and regulations of any Governmental Authority (including, in the case of Guilford, the rules and regulations of any national securities exchange or the Nasdaq, to the extent any of Guilford’s securities are listed or quoted for sale thereon), (D) to the extent such Confidential Information was or becomes publicly available other than by reason of disclosure by such Party in violation of this Agreement or was or becomes available to such Party or its Affiliates from a source which is not known by such Party or its Affiliates to be subject to a confidentiality obligation to such other Party or (E) to each Party’s Affiliates and respective employees, legal counsel, independent auditors and other experts or agents, who agree to be bound by the confidentiality terms of this Section 12 and who have a need to know such Confidential Information in connection with the Programs. The Disclosing Party accepts responsibility for compliance by the persons referred to in clause (E) above with the provisions of this Section 12 .

     Section 13. No Petition. Each of Guilford and Holdings covenants and agrees that, prior to the date which is one year and one day after the expiration of the Purchase Option Period, it will not institute or join in the institution of any bankruptcy, insolvency, reorganization or similar proceeding against SNDC. The provisions of this Section 13 shall survive the termination of this Agreement.

     Section 14. Third-Party Beneficiary. Each of the Parties hereto agrees that each of Symphony Capital and Symphony Fund shall be a third-party beneficiary of this Agreement.

     Section 15. Notices. Any notice, request, demand, waiver, consent, approval or other communication which is required or permitted to be given to any Party shall be in writing and shall be deemed given only if delivered to the Party personally or sent to the Party by facsimile transmission (promptly followed by a hard-copy delivered in accordance with this Section 15), by next Business Day delivery by a nationally recognized courier service, or by registered or certified mail (return receipt requested), with postage and registration or certification fees thereon prepaid, addressed to the Party at its address set forth below:

     Guilford:

Guilford Pharmaceuticals Inc.
6611 Tributary Street
Baltimore, Maryland 21224
Attention: Corporate Secretary
Facsimile: (410) 631-6899

     SNDC:

Symphony Neuro Development Company
7361 Calhoun Place, Suite 325
Rockville, MD 20850
Attn: Charles Finn
Facsimile: (301) 762-6154

19

     Holdings:

SNDC Holdings LLC
7361 Calhoun Place, Suite 325
Rockville, MD 20850
Attn: Charles Finn
Facsimile: (301) 762-6154

     with a copy to:

Symphony Capital LLC
875 Third Avenue
18th Floor
New York, NY 10022
Attn: Mark Kessel
Facsimile: (212) 632-5401

or to such other address as such Person may from time to time specify by notice given in the manner provided herein to each other Person entitled to receive notice hereunder.

     Section 16. Governing Law; Consent to Jurisdiction and Service of Process.

     (a) This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York; except to the extent that this Agreement pertains to the internal governance of SNDC or Holdings, and to such extent this Agreement shall be governed and construed in accordance with the laws of the State of Delaware.

     (b) Each of the Parties hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any New York State court or Federal court of the United States of America sitting in The City of New York, Borough of Manhattan, and any appellate court from any jurisdiction thereof, in any action or proceeding arising out of or relating to this Agreement, or for recognition or enforcement of any judgment, and each of the Parties hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in any such New York State court or, to the fullest extent permitted by law, in such Federal court. Each of the Parties agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that any Party may otherwise have to bring any action or proceeding relating to this Agreement.

     (c) Each of the Parties irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in any New York State or Federal court. Each of the Parties hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

20

     Section 17. Waiver of Jury Trial. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT.

     Section 18. Entire Agreement. This Agreement constitutes the entire agreement between the Parties with respect to the matters covered hereby and supersedes all prior agreements and understanding with respect to such matters between the Parties.

     Section 19. Amendment; Successors; Counterparts.

     (a) The terms of this Agreement shall not be altered, modified, amended, waived or supplemented in any manner whatsoever except by a written instrument signed by each of the Parties.

     (b) Except as set forth in Section 14 , nothing expressed or implied herein is intended or shall be construed to confer upon or to give to any Person, other than the Parties, any right, remedy or claim under or by reason of this Agreement or of any term, covenant or condition hereof, and all the terms, covenants, conditions, promises and agreements contained herein shall be for the sole and exclusive benefit of the Parties and their successors and permitted assigns.

     (c) This Agreement may be executed in several counterparts, each of which shall be deemed an original hereof.

     Section 20. Specific Performance. The Parties acknowledge that irreparable damage would result if this Agreement were not specifically enforced, and they therefore agree that the rights and obligations of the Parties under this Agreement may be enforced by a decree of specific performance issued by a court of competent jurisdiction. Such a remedy shall, however, not be exclusive, and shall be in addition to any other remedies which any Party may have under this Agreement or otherwise. The Parties further acknowledge and agree that a decree of specific performance may not be an available remedy in all circumstances.

21

     IN WITNESS WHEREOF, the Parties hereto have signed this Agreement as of the day and year first above written.

GUILFORD PHARMACEUTICALS INC.
By:
	Name:
	Title:
SNDC HOLDINGS LLC
By:	Symphony Capital LLC, its Manager
By:
	Name:
	Title:
SYMPHONY NEURO DEVELOPMENT COMPANY
By:
	Name:
	Title:

SCHEDULE I

PURCHASE PRICE TABLE

Purchase Option	Purchase Price
Closing Date	($ millions)
For the period commencing on April 1, 2005 and ending before July 1, 2005	$	75.08
For the period commencing on July 1, 2005 and ending before October 1, 2005	$	80.91
For the period commencing on October 1, 2005 and ending before January 1, 2006	$	85.56
For the period commencing on January 1, 2006 and ending before April 1, 2006	$	85.56
For the period commencing on April 1, 2006 and ending before July 1, 2006	$	93.07
For the period commencing on July 1, 2006 and ending before October 1, 2006	$	101.24
For the period commencing on October 1, 2006 and ending before January 1, 2007	$	110.12
For the period commencing on January 1, 2007 and ending before April 1, 2007	$	119.79

ANNEX A

CERTAIN DEFINITIONS

     "Additional Regulatory Filings” means such Governmental Approvals as required to be made under any law applicable to the purchase of the SNDC Equity Securities under the Agreement.

     "Affiliate” means, with respect to any Person (i) any Person directly or indirectly controlling, controlled by or under common control with such Person, (ii) any officer, director, general partner, member or trustee of such Person or (iii) any Person who is an officer, director, general partner, member or trustee of any Person described in clauses (i) or (ii) of this sentence. For purposes of this definition, the terms “controlling,” “controlled by” or “under common control with” shall mean the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person or entity, whether through the ownership of voting securities, by contract or otherwise, or the power to elect at least 50% of the directors, managers, general partners, or persons exercising similar authority with respect to such Person or entities.

     "Amended and Restated Research and Development Agreement” means the Amended and Restated Research and Development Agreement dated as of June 17, 2004, among Guilford, Holdings and SNDC.

     "Auditors” means an independent certified public accounting firm of recognized national standing.

     "Bloomberg” means Bloomberg L.P., a multi-media based distributor of information services, including data and analysis for financial markets and businesses.

     "Bloomberg Screen” means the display page designated on the Bloomberg service (or such other page as may replace that page on that service) for the purpose of displaying prices or bids of Guilford Common Stock.

     "Business Day” means any day other than Saturday, Sunday or any other day on which commercial banks in The City of New York are authorized or required by law to remain closed.

     "Capitalized Leases” means all leases that have been or should be, in accordance with GAAP, recorded as capitalized leases.

     "Change of Control” means and includes the occurrence of any of the following events, but specifically excludes (i) acquisitions of capital stock directly from Guilford for cash, whether in a public or private offering, (ii) sales of capital stock by stockholders of Guilford, and (iii) acquisitions of capital stock by or from any employee benefit plan or related trust:

     (a) the merger, reorganization or consolidation of Guilford into or with another corporation or legal entity in which Guilford’s stockholders holding the right to vote with respect to matters generally immediately preceding such merger, reorganization or consolidation, own less than fifty percent (50%) of the voting securities of the surviving entity; or

     (b) the sale of all or substantially all of Guilford’s assets or business.

     "Conflict Transaction” means (i) any acquisition or disposition transaction involving as purchaser or seller any of the RRD, Symphony Capital, Symphony Fund or their respective Affiliates; (ii) any joint venture or co-investment transaction involving as venturer or co-investor any of RRD, Symphony Capital, Symphony Fund or their respective Affiliates; (iii) any lending or financing transaction involving as lender or borrower any of RRD, Symphony Capital, Symphony Fund or their respective Affiliates; or (iv) any other service arrangements or agreements with RRD, Symphony Capital, Symphony Fund or their respective Affiliates solely to the extent that the fees to be paid for such services are in excess of then-current market rates as reasonably determined by the SNDC Board in consultation with the Development Committee and not otherwise addressed in this Agreement.

     "Debt” of any Person means, without duplication:

     (a) all indebtedness of such Person for borrowed money,

     (b) all obligations of such Person for the deferred purchase price of property or services (other than any portion of any trade payable obligation that shall not have remained unpaid for 91 days or more from the later of (A) the original due date of such portion and (B) the customary payment date in the industry and relevant market for such portion),

     (c) all obligations of such Person evidenced by bonds, notes, debentures or other similar instruments,

     (d) all obligations of such Person created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (whether or not the rights and remedies of the seller or lender under such agreement in an event of default are limited to repossession or sale of such property),

     (e) all Capitalized Leases to which such Person is a party,

     (f) all obligations, contingent or otherwise, of such Person under acceptance, letter of credit or similar facilities,

     (g) all obligations of such Person to purchase, redeem, retire, defease or otherwise acquire for value any Equity Securities of such Person,

     (h) the net amount of all financial obligations of such Person in respect of Hedge Agreements,

     (i) the net amount of all other financial obligations of such Person under any contract or other agreement to which such Person is a party,

     (j) all Debt of other Persons of the type described in clauses (a) through (i) above guaranteed, directly or indirectly, in any manner by such Person, or in effect guaranteed, directly or indirectly, by such Person through an agreement (A) to pay or purchase such Debt or to advance or supply funds for the payment or purchase of such Debt, (B) to purchase, sell or lease (as lessee or lessor) property, or to purchase or sell services, primarily for the purpose of enabling the debtor to make payment of such Debt or to assure the holder of such Debt against loss, (C) to supply funds to or in any other manner invest in the debtor (including any agreement to pay for property or services irrespective of whether such property is received or such services are rendered) or (D) otherwise to assure a creditor against loss, and

     (k) all Debt of the type described in clauses (a) through (i) above secured by (or for which the holder of such Debt has an existing right, contingent or otherwise, to be secured by) any Encumbrance on property (including accounts and contract rights) owned or held or used under lease or license by such Person, even though such Person has not assumed or become liable for payment of such Debt.

     "Development Budget” means the budget approved by the SNDC Board for the implementation of the Development Plan.

     "Development Committee” has the meaning set forth in Section 2 of the Amended and Restated Research and Development Agreement.

     "Development Plan” means the development plan presented by the Development Committee and agreed to by the SNDC Board.

     "Encumbrance” means (i) any security interest, pledge, mortgage, lien (statutory or other), charge or option to purchase, lease or otherwise acquire any interest, (ii) any adverse claim, restriction, covenant, title defect, hypothecation, assignment, deposit arrangement or other encumbrance of any kind, preference or priority, or (iii) any other security agreement or preferential arrangement of any kind or nature whatsoever (including, without limitation, any conditional sale or other title retention agreement).

     "Equity Securities” means, with respect to any Person, shares of capital stock of (or other ownership or profit interests in) such Person, warrants, options or other rights for the purchase or other acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such Person, securities convertible into or exchangeable for shares of capital stock of (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or other acquisition from such Person of such shares (or such other interests), and other ownership or profit interests in such Person (including, without limitation, partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are authorized or otherwise existing on any date of determination.

     "Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

     "Field” has the meaning ascribed to it in the Novated and Restated Technology License Agreement.

     "GAAP” means generally accepted accounting principles in effect in the United States of America from time to time.

     "General Services Agreement” means the General Services Agreement between RRD and SNDC, dated as of June 17, 2004.

     "Governmental Authority” means any United States or non-United States federal, national, supranational, state, provincial, local, or similar government, governmental, regulatory or administrative authority, agency or commission or any court, tribunal, or judicial or arbitral body.

     "Governmental Order” means any order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Authority.

     "GPI 1485” has the meaning ascribed to it in the Novated and Restated Technology License Agreement.

     "Guilford Common Stock” means the common stock, par value $0.01 per share, of Guilford.

     "Guilford Sub-Servicing Agreement” means the Guilford Sub-Servicing Agreement dated as of June 17, 2004 among RRD, SNDC and Guilford.

     "Hedge Agreement” means any interest rate swap, cap or collar agreement, interest rate future or option contract, currency swap agreement, currency future or option contract or other similar hedging agreement.

     "Holdings LLC Agreement” means the Amended and Restated Limited Liability Company Agreement of SNDC Holdings LLC dated June 17, 2004.

     "HSR Act Filings” means the premerger notification and report forms required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

     "Indemnification Agreement” means the Indemnification Agreement among SNDC and the Directors named therein, dated June 17, 2004.

     "Investors” means SNDC Investors LLC, a Delaware limited liability company.

     "Management Services Agreement” means the Management Services Agreement between SNDC and RRD, dated as of June 17, 2004.

     "Material Adverse Effect” means, with respect to any Person, a material adverse effect on (i) the business, assets, property, condition (financial or otherwise) or prospects of such Person or, to such Person’s knowledge, any other Transaction Party, (ii) its ability, or to such Person’s knowledge, any Transaction Party’s ability, to comply with and satisfy its respective agreements and obligations under the Operative Documents or (iii) to such Person’s knowledge, the enforceability of any of the Operative Documents.

     “Material Subsidiary” means, at any time, a Subsidiary of Guilford having assets in an amount equal to at least 5% of the amount of total consolidated assets of Guilford and its Subsidiaries (determined as of the last day of the most recent fiscal quarter of Guilford) or revenues or net income in an amount equal to at least 5% of the amount of total consolidated revenues or net income of Guilford and its Subsidiaries for the 12-month period ending on the last day of the most recent fiscal quarter of Guilford.

     "Membership Interest” has the meaning stated in Section 6.02 of the Holdings LLC Agreement.

     "Novated and Restated Technology License Agreement” means the Novated and Restated Technology License Agreement, dated as of June 17, 2004, among Guilford, GPI NIL Holdings, Inc. and Holdings.

     "Operative Documents” means, collectively, the Indemnification Agreement, the Holdings LLC Agreement, the Purchase Option Agreement, the Warrant Purchase Agreement, the Subscription Agreement, the Technology License Agreement, the Novated and Restated Technology License Agreement, the General Services Agreement, the Guilford Sub-Servicing Agreement, the Management Services Agreement, the Research and Development Agreement, the Amended and Restated Research and Development Agreement, the Registration Rights Agreement, the Purchase Agreement, the Voting Agreement and each other certificate and agreement executed in connection with any of the foregoing documents.

     "Organizational Documents” means any certificates or articles of incorporation or formation, partnership agreements, trust instruments, bylaws or other governing documents.

     "Person” means any individual, partnership (whether general or limited), limited liability company, corporation, trust, estate, association, nominee or other entity.

     "Programs” has the meaning set forth in the Novated and Restated Technology License Agreement.

     "Purchase Option Agreement” means this Purchase Option Agreement dated as of June 17, 2004, among Guilford, Holdings and SNDC.

     "Registration Rights Agreement” means the Registration Rights Agreement dated as of June 17, 2004, between Guilford and Holdings.

     "Research and Development Agreement” means the Research and Development Agreement dated as of June 17, 2004, between Guilford and Holdings.

     "RRD” means RRD International, LLC, a Delaware limited liability company.

     "SNDC Board” means the SNDC board of directors.

     "Subscription Agreement” means the Subscription Agreement between SNDC and Holdings, dated as of June 17, 2004.

     "Subsidiary” of any Person means any corporation, partnership, joint venture, limited liability company, trust or estate of which (or in which) more than 50% of (a) the issued and outstanding capital stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether at the time capital stock of any other class or classes of such corporation shall or might have voting power upon the occurrence of any contingency), (b) the interest in the capital or profits of such partnership, joint venture or limited liability company or (c) the beneficial interest in such trust or estate is at the time directly or indirectly owned or controlled by such Person, by such Person and one or more of its other Subsidiaries or by one or more of such Person’s other Subsidiaries.

     "Symphony Capital” means Symphony Capital LLC, a Delaware limited liability company.

     "Technology License Agreement” means the Technology License Agreement, dated as of June 17, 2004, between Guilford and Holdings.

     "Transaction Party” means any party to any of the Operative Documents.

     "Voting Agreement” means the Voting and Management Rights Agreement, dated as of June 17, 2004 among Investors, Ritchie Long/Short Trading Ltd., Symphony Strategic Partners, LLC, O’Connor PIPES Corporate Strategies Master Ltd., Global Convertible Arbitrage Master Limited, SNDC, Symphony Fund, Holdings and Guilford.

     "Warrant Purchase Agreement” means the Warrant Purchase Agreement dated as of June 17, 2004, between Guilford and Holdings.

ANNEX B

PURCHASE EXERCISE NOTICE

                   , 20     

Attention:                    

Ladies and Gentlemen:

     Reference is hereby made to that certain Purchase Option Agreement dated as of June 17, 2004 (the “Purchase Option Agreement") by and among Guilford Pharmaceuticals Inc., a Delaware corporation (“Guilford”), SNDC Holdings LLC, a Delaware limited liability company, and Symphony Neuro Development Company, a Delaware corporation. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned thereto in the Purchase Option Agreement.

     Pursuant to Section 2(a) of the Purchase Option Agreement, Guilford hereby irrevocably notifies you that it hereby exercises the Purchase Option.

     Guilford hereby affirms the representations and warranties set forth in Section 4 of the Purchase Option Agreement have been satisfied as of the date hereof.

     The Purchase Option Closing Date shall be                    .

Very truly yours,
GUILFORD PHARMACEUTICALS INC.
By:
	Name:
	Title:

EX-99.3

Execution Copy

NOVATED AND RESTATED
TECHNOLOGY LICENSE AGREEMENT

dated as of June 17, 2004

between

GPI NIL HOLDINGS, INC.,

GUILFORD PHARMACEUTICALS INC.,

SYMPHONY NEURO DEVELOPMENT COMPANY

and

SNDC HOLDINGS LLC

NOVATED AND RESTATED
TECHNOLOGY LICENSE AGREEMENT

     This NOVATED AND RESTATED TECHNOLOGY LICENSE AGREEMENT (this “Agreement”) is made and effective as of June 17, 2004 (the “Effective Date”) by and between GPI NIL Holdings, Inc., a Delaware corporation (“GPI”), Guilford Pharmaceuticals Inc., a Delaware corporation (“Guilford,” and together with GPI, “Licensor”), Symphony Neuro Development Company, a Delaware corporation (“SNDC”) (each of Licensor and SNDC being a “Party,” and collectively, the "Parties”), and SNDC Holdings LLC, a Delaware limited liability company (“Holdings”).

     WHEREAS, Licensor and Holdings have entered into that certain Technology License Agreement, dated June 17, 2004 (the “Original Agreement ”);

     WHEREAS, Holdings desires to assign its right, title and interest in, and delegate and novate its obligations under the Original Agreement to SNDC, and Licensor and SNDC desire to novate and restate the terms and conditions of the Original Agreement in favor of SNDC;

     WHEREAS, Licensor owns or has rights in certain technology, know-how, patents and other intellectual property rights related to the design, development and manufacture of GPI 1485 and/or the Programs (each as defined below); and

     WHEREAS, Licensor desires to grant, and SNDC desires to acquire, the exclusive right to use such technology, know-how, patents and other intellectual property rights on the terms and conditions of this Agreement.

     NOW THEREFORE, in consideration of the mutual promises and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

ARTICLE 1
DEFINITIONS

Capitalized terms used herein and not defined shall have the meanings assigned to such terms in Annex A attached hereto.

     1.1. “Confidential Information” means any and all confidential or proprietary information and materials of or concerning a Party, including, but not limited to, commercial, financial, and technical information, substances, formulations, techniques, methodologies, customer or client lists, programs, procedures, data, documents, know-how, protocols, results of experimentation and testing, specifications, databases, business plans, trade secrets, budget forecasts, business arrangements, information regarding specific transactions, financial information and estimates, long-term plans and goals, and the terms of this Agreement. During the Development Period, Tangible Materials and Licensed Intellectual Property shall be treated as Confidential Information of both parties to the extent related to the Field. Upon expiration of the Development Period, Tangible Materials and Licensed Intellectual Property shall be deemed solely Confidential Information of SNDC to the extent related to the Field. Tangible Materials

Certain portions of this exhibit have been omitted and will be filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment. The symbol “[***]” has been inserted in place of the portions so omitted.

2

and Licensed Intellectual Property shall be deemed solely Confidential Information of Licensor to the extent not related to the Field.

     1.2. “Development Period” means the period starting on the Effective Date and ending upon the termination or expiration of the Purchase Option Period.

     1.3. “Field”[***]

     1.4. “GPI 1485” means the compound described as GPI 1485 in Annex B, or the prodrug thereof described in Annex B as [***]; and any other compound which, [***]

     1.5. "HIV-D” means HIV related dementia.

     1.6. “HIV-PN” means HIV-related peripheral neuropathy.

     1.7. “IND” means an Investigational New Drug Application, as defined in the regulations promulgated by the United States Food and Drug Administration, or any foreign equivalent thereof.

     1.8. “JHU Agreement” means that certain Amended and Restated License Agreement dated November 25, 1998, among The Johns Hopkins University, GPI and Guilford.

     1.9. “Licensed Intellectual Property” means the Licensed Patent Rights, Sublicensed Patent Rights, Licensor Enhancements and the Licensed Know-How.

     1.10. “Licensed Know-How” means any and all proprietary technology owned by, or licensed to (solely to the extent that Licensor has the right to grant sublicenses thereto), Licensor (i) as of April 1, 2004 that is within the Field or related to the Regulatory Files to the extent within the Field, and (ii) during the Development Period that is related to Licensor Enhancements or the Regulatory Files to the extent within the Field, in each case, including without limitation, manufacturing processes or protocols, know-how, writings, documentation, data, technical information, results of experimentation and testing, specifications, databases, any and all laboratory, research, pre-clinical and clinical data, and other information and materials, whether or not patentable, and all data and other work product available to Licensor under the NINDS Agreement.

     1.11. “Licensed Patent Rights” means (i) the rights in the patents, patent applications and invention disclosures owned by Licensor that are listed on Annex C hereto as “Patents Covering Licensed Patent Rights” to the extent the claims in such patents are related to the Field, and (ii) the rights in patents, patent applications and invention disclosures owned by Licensor during the Development Period that cover Licensor Enhancements, to the extent the

Certain portions of this exhibit have been omitted and will be filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment. The symbol “[***]” has been inserted in place of the portions so omitted.

3

claims in such patents are related to the Field, in each case, including any reissues, continuations, divisionals, continuations-in-part, reexaminations or renewals thereof in the Territory.

     1.12. “Licensed Products and Services” means any material, composition, drug, product or service, which incorporates or uses GPI 1485 in the Field and would constitute, or the manufacture, use, sale or importation of which would constitute, but for the licenses granted herein, an infringement of a valid, issued claim of the Licensed Patent Rights.

     1.13. “Licensor Enhancements” means findings, improvements, discoveries, inventions, additions, modifications, enhancements, derivative works, or changes to the Licensed Intellectual Property and Regulatory Files, to the extent in the Field, in each case, developed by Licensor during the Development Period to the extent such items do not otherwise qualify as SNDC Enhancements hereunder.

     1.14. “MLA” means that certain Management and Licensing Agreement dated October 28, 2003 between Artery, LLC and Guilford.

     1.15. “NDA” means a New Drug Application, as defined in the regulations promulgated by the United States Food and Drug Administration, or any foreign equivalent thereof.

     1.16. “NINDS Agreement” means that certain Clinical Trial Agreement between The National Institute of Neurological Disorders and Stroke and Guilford Pharmaceuticals Inc., dated September 12, 2003.

     1.17. “PD” means Parkinson’s disease.

     1.18. “Personnel” of a Party means such Party, its employees, subcontractors, consultants, representatives and agents.

     1.19. “PPED” means traumatic nerve injury, including but not limited to post-prostatectomy erectile dysfunction. For the avoidance of doubt, PPED shall not include [***].

     1.20. “Programs” means those certain clinical neurology programs pursuing indications for GPI 1485 in the following four disease states in accordance with the Development Plan: PD, PPED, HIV-PN, or HIV-D.

     1.21. “Regulatory Files” means any IND, NDA or any other regulatory filings filed with the United States Food and Drug Administration thereof relating to GPI 1485 and the Programs, in each case, solely for an indication in the Field.

     1.22. “RIAA” means that certain Revenue Interest Assignment Agreement dated October 28, 2003 among, Artery, LLC, Licensor, Paul Royalty Fund, L.P., and Paul Royalty Fund Holdings II.

     1.23. “SNDC Enhancements” means findings, improvements, discoveries, inventions, additions, modifications, enhancements, derivative works, or changes to the Licensed

Certain portions of this exhibit have been omitted and will be filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment. The symbol “[***]” has been inserted in place of the portions so omitted.

4

Intellectual Property and Regulatory Files, made by or on behalf of SNDC. [***]

     1.24. “Sublicensed Patent Rights” means (i) the rights in the patents, patent applications and invention disclosures licensed to Licensor pursuant to the JHU Agreement that are listed on Annex C hereto as “Patents Covering Sublicensed Patent Rights” to the extent the claims in such patents are related to the Field, and (ii) any reissues, continuations, divisionals, continuations-in-part, reexaminations, renewals, thereof in the Territory which are directed to the subject matter specifically described in the patent applications listed on Annex C as “Patents Covering Sublicensed Patent Rights” to the extent the claims in such patents are related to the Field, in each case, solely to the extent Licensor has the right to grant sublicenses thereto.

     1.25. “Tangible Materials” means any tangible materials, in any format, whether written or electronic, existing as of April 1, 2004 or during the Development Period, that are in Licensor’s possession, embodying or related to the Licensed Intellectual Property, Regulatory Files, GPI 1485 or the Programs, including, but not limited to, documentation, patent applications and invention disclosures, in each case solely to the extent such materials are related to the Field.

     1.26. “Term” has the meaning set forth in Section 8.1.

     1.27. “Territory” means the United States, including all fifty states and territories.

ARTICLE 2
GRANT OF RIGHTS

     2.1. Assignment . Holdings hereby assigns to SNDC all of its right, title and interest in and to the Original Agreement. The Parties agree that from and after the date hereof, all of the right, title, interest and obligations of Holdings under the Original Agreement will be assigned, novated and transferred to, and assumed by, SNDC, as amended and restated by this Agreement.

     2.2. License Grant . Licensor hereby grants to SNDC, subject to the terms and conditions of this Agreement, a fully paid up, exclusive license, in and limited to the Territory, under the Licensed Intellectual Property, to develop, make, have made, use, offer for sale, sell, and import, GPI 1485, Licensor Enhancements, and other Licensed Products and Services, in and limited to the Field.

     2.3. Right to Sublicense . The license granted hereunder includes the right of SNDC to grant sublicenses under the Licensed Intellectual Property, provided , that ,

(a) during the Development Period, SNDC shall not sublicense any of the rights granted hereunder nor any SNDC Enhancements to any third party (including without limitation any Affiliates) other than third parties required for the development of the Programs in accordance with the

Certain portions of this exhibit have been omitted and will be filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment. The symbol “[***]” has been inserted in place of the portions so omitted.

5

	Development Plan and the Amended and Restated Research and Development Agreement;
(b)	any sublicense granted is (i) pursuant to a written contract, (ii) consistent with the terms of this Agreement, (iii) with respect to Sublicensed Patent Rights, is consistent with the JHU Agreement or other applicable third-party agreement, (iv) does not grant any rights beyond the scope of the license rights granted herein, and (v) is as protective of Licensor’s rights as this Agreement;
(c)	SNDC obtains Licensor’s prior written consent for any sublicense granted during the Development Period, which consent shall not be unreasonably withheld or delayed; and
(d)	SNDC provides to Licensor a copy of each such sublicense agreement promptly after it is executed, provided that SNDC may redact any financial information contained therein.

     2.4. Restrictions . SNDC acknowledges and agrees, that, notwithstanding anything to the contrary herein,

(a)	the licenses, rights, representations, warranties or covenants herein with respect to the Sublicensed Patent Rights are subject to and limited by the terms and conditions of the JHU Agreement, and in the event of any inconsistency regarding the Sublicensed Patent Rights between this Agreement and the JHU Agreement, the restrictions, obligations, and limitations set forth in the JHU Agreement shall prevail;
(b)	certain of the Licensed Patent Rights, as noted in Annex C , are jointly owned by Licensor and a third party; and
(c)	the licenses granted herein are expressly conditioned on SNDC’s performance of its obligations hereunder, including without limitation, the obligations set forth in Articles 3, 4, and 5 of this Agreement.

     2.5. Reservation of Rights . Licensor reserves all rights in and to the Licensed Intellectual Property not expressly granted herein. SNDC covenants and agrees not to use or exploit such Licensed Intellectual Property outside of the scope of the licenses granted herein. Notwithstanding anything to the contrary herein, Licensor shall have the continuing right to exploit the Licensed Intellectual Property for (i) any use outside of the Field, and (ii) any use outside of the Territory.

     2.6. Regulatory Files . Effective upon expiration or termination of the Purchase Option, Licensor hereby assigns to SNDC all right, title, and interest in and to the Regulatory Files filed in the Territory to the extent related to the Field. Licensor shall, at the reasonable request of SNDC and at SNDC’s expense, perform any acts that SNDC may reasonably deem necessary or desirable to evidence or confirm SNDC’s ownership interest in such Regulatory Files, including, but not limited to, making further written assignments in a form determined by

6

SNDC. Without limiting the license rights granted under this Article 2, the parties understand and agree that the assignment of such Regulatory Files (i) is subject to Licensor’s reservation of rights in the Licensed Intellectual Property and the terms and conditions of the JHU Agreement, (ii) does not include an assignment of any Licensed Intellectual Property, and (iii) and does not include the assignment of any portion of the Regulatory Files outside of the Field or outside of the Territory.

     2.7. Restrictions Regarding Competing Programs . During the Development Period and subject to SNDC’s compliance with the terms and conditions of this Agreement, Licensor shall not file an IND with the FDA or conduct clinical research in the Territory for indications for the treatment of the following four disease states: PD, PPED, HIV-PN, or HIV-D. The foregoing limitation will in no event limit Licensor’s ability to (i) perform or engage in any of the foregoing activity outside the Territory or in filing any INDs or conducting any clinical research for indications other than PD, PPED, HIV-PN, or HIV-D, or (ii) license any of its other intellectual property to a third party for any purpose, provided that the purpose is not expressly for the conduct of clinical research in the Territory for indications for the treatment of the following four disease states: PD, PPED, HIV-PN, or HIV-D. The parties further acknowledge that (x) in the event of a Change of Control, this Section 2.7 shall only apply with respect to the on-going business of Licensor as it exists immediately prior to the Change of Control, and shall not apply to any existing research, development or commercialization activities of the acquiror of Licensor, and (y) the existence of and Licensor’s performance of its obligations under the NINDS Agreement shall not be deemed a breach of this Section 2.7 .

     2.8. Delivery of Materials . With respect to Tangible Materials existing as of the Effective Date, Licensor shall, upon the reasonable request of SNDC at SNDC’s expense, deliver all such Tangible Materials to a location designated by SNDC within thirty (30) days of such request. During the Development Period, Licensor shall provide SNDC with a report every calendar quarter identifying any new Licensor Enhancements and delivering all newly acquired or newly created Tangible Materials to SNDC.

     2.9. License Back for SNDC Enhancements . Guilford shall have the option to obtain from SNDC a non-exclusive, perpetual license, with the right to sublicense, develop, make, have made, use, offer for sale, sell, and import SNDC Enhancements or any product or service covered by, using or incorporating SNDC Enhancements developed during the Development Period for use (i) outside of the Territory or (ii) inside the Territory but outside of the Field; provided that, the foregoing license will be subject to a commercially reasonable royalty rate to be mutually and promptly agreed upon by the parties in the event Guilford exercises the option.

     2.10. License Opportunities . [***]

Certain portions of this exhibit have been omitted and will be filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment. The symbol “[***]” has been inserted in place of the portions so omitted.

7

[***]

     2.11. Discontinuation of a Program . During Development Period, in the event that SNDC discontinues or abandons any of the Programs or commercialization of the Licensed Intellectual Property in any of the disease states in the Field, (i) SNDC shall so notify Licensor promptly in writing, (ii) Licensor shall have the right and option, exercisable for ninety (90) days after receipt of written notice of abandonment from SNDC, to buy back the license rights granted (and any SNDC Enhancements thereto) with respect to such abandoned Program or disease state for [***]

     2.12. NINDS Agreement . Licensor shall, from time to time, or otherwise on the reasonable request of SNDC, request from NINDS all data, work product, and other information available from NINDS or the Coordinating Center (as defined in the NINDS Agreement) under the NINDS Agreement.

ARTICLE 3
SNDC COVENANTS

     3.1. JHU Agreement . SNDC acknowledges and agrees that it is a “Sublicensee” under the JHU Agreement with respect to the Sublicensed Patent Rights, and therefore, without limiting the generality of Section 2.4 above, SNDC covenants and agrees to:

(a)	Pay to Licensor or Licensor’s designee, in U.S. dollars, all amounts due under Article 4 of the JHU Agreement with respect to SNDC’s exploitation of the Sublicensed Patent Rights and other Licensed Intellectual Property hereunder within forty-five (45) days after the end of each calendar quarter;
(b)	Provide to Licensor or Licensor’s designee the reports due under Paragraph 4.3 of the JHU Agreement with respect to SNDC’s exploitation of the Sublicensed Patent Rights and other Licensed Intellectual Property hereunder within forty-five (45) days after the end of each calendar quarter;
(c)	Retain the records, files, and books of account with respect to SNDC’s exploitation of the Sublicensed Patent Rights and other Licensed Intellectual Property in accordance with Licensor’s obligations set forth in Paragraph 4.4 of the JHU Agreement, and permit Licensor, The Johns

Certain portions of this exhibit have been omitted and will be filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment. The symbol “[***]” has been inserted in place of the portions so omitted.

8

	Hopkins University and/or their agents to audit such items in accordance with the audit rights granted under Paragraph 4.4 of the JHU Agreement;
(d)	Comply with the confidentiality obligations set forth in Paragraph 5.3 of the JHU Agreement;
(e)	Spend at least the Minimum Annual Expenditure (as defined in the JHU Agreement) in accordance with Licensor’s obligations in Paragraph 6.2 of the JHU Agreement, provide to Licensor a certificate no later than March 15th of each calendar year signed by an officer of SNDC certifying as to whether SNDC has spent in the preceding calendar year at least the Minimum Annual Expenditure for such year, and if requested by Licensor or The Johns Hopkins University, provide a written accounting of such expenditure;
(f)	Perform the milestones set forth in Paragraph 6.3 of the JHU Agreement;
(g)	After FDA commercial approval has been granted, exercise commercially reasonable efforts to market a Licensed Product covered by the Sublicensed Patent Rights in the Territory; and
(h)	Comply with and/or perform, as applicable, Licensor’s obligations set forth in Paragraphs 7.6, 7.8, and 7.9 of the JHU Agreement.

     3.2. Paul Capital Agreements . SNDC agrees to cooperate with Licensor in order for Licensor to fulfill its obligations under Sections 4.1, 4.2, and 4.3 of the MLA, and Sections 5.11(g), 5.11(h), 5.11(p) and 5.12(d) of the RIAA, including but not limited to complying with the record retention requirements, reporting requirements, and audit obligations set forth in such sections of the MLA and RIAA, to the extent such obligations are applicable to this Agreement and the transactions contemplated by the Operative Documents.

ARTICLE 4
INTELLECTUAL PROPERTY

     4.1. Ownership. The Parties acknowledge and agree that, as between Licensor and SNDC, (i) Licensor or its licensors are the owner of all right, title and interest in and to the Licensed Intellectual Property, and (ii) subject to Licensor’s and its licensor’s rights in the Licensed Intellectual Property and any U.S. government rights in such Licensed Intellectual Property, SNDC is the owner of all right, title and interest in and to all SNDC Enhancements.

     4.2. Marking . SNDC shall mark, and shall cause all of its sublicensees to mark, any Licensed Products or Services, or the packaging thereof or materials related thereto, with the number of the applicable patents licensed hereunder in accordance with applicable U.S. patent law.

     4.3. Prosecution and Maintenance .

9

(a)	Unless otherwise directed by the Development Committee or as otherwise set forth in Section 4.3, Licensor shall (x) prepare, file, prosecute and maintain the patents and patent applications covering the Licensed Patent Rights in the Territory, in the name of Licensor, and (y) prepare, file, prosecute and maintain the patents and patent applications covering the Sublicensed Patent Rights in the Territory, in the name of JHU, in accordance with the terms of the Paragraph 5.1 of the JHU Agreement.
(b)	Licensor will use commercially reasonable efforts to (i) seek the allowance of broad generic claims, consistent with Licensor’s determination of enforceability, business considerations and other factors, (ii) provide to SNDC and its patent counsel copies of patent applications and other substantive patent prosecution documents pertaining to the patents covering Licensed Patent Rights and Sublicensed Patent Rights prior to filing in the United States so as to afford SNDC a reasonable opportunity to review and comment, and (iii) consider SNDC’s input in the formulation and execution of Licensor’s strategy with respect to filing, prosecuting and maintaining patents and patent applications covering the Licensed Patent Rights and Sublicensed Patent Rights.
(c)	The cost of such prosecution and maintenance shall be paid by SNDC provided, however, that except as set forth herein, during the Development Period, SNDC shall not be responsible for such costs in excess of the amount budgeted therefore in the Development Budget. Following the Development Period, prosecution costs of the Licensed Patent Rights and or Sublicensed Patent Rights shall be paid by SNDC only to the extent that the scope of any patent or patent application included in the Licensed Patent Rights or Sublicensed Patent Rights covers uses in the Field. Upon the scope of any Licensed Patent Rights or Sublicensed Patent Rights being amended so that the patent or patent application’s claims are outside of the Field, such prosecution costs shall be paid exclusively by Licensor. Upon the scope of any patent or patent application included in the Licensed Patent Rights or Sublicensed Patent Rights being substantially amended as relates to the Field, the Parties shall use reasonable good faith efforts to determine a reimbursement percentage for such patent or patent application to reflect changes in scope wherein (a) when the scope changes to be more related to the Field, the reimbursement amount will increase accordingly, and (b) when the scope changes to be less related to the Field, the reimbursement amount will decrease accordingly.
(d)	SNDC shall not be responsible for the costs of any interference or reexamination instituted by Licensor with respect to the Licensed Patent Rights or Sublicensed Patent Rights in the Territory (except to the extent allocated in the Development Budget), unless the parties mutually agree in writing that it is reasonably necessary to file and prosecute an interference or re-examination in connection with such Licensed Patent Rights or Sublicensed Patent Rights in the Territory to protect their interests in such

10

	Licensed Patent Rights or Sublicensed Patent Rights, which agreement will not be unreasonably withheld. In the event of such agreement during the Development Period, SNDC shall pay such costs as mutually agreed, even if they are in excess of the amount budgeted therefore in the Development Budget. In the event of such agreement following the Development Period, each Party shall pay such costs as mutually agreed, based on the criteria set forth in clause (c) above.
(e)	[***]
(f)	Each Party shall provide the prosecuting Party with reasonable cooperation under this Section 4.3.

     4.4. Abandonment . Without the prior written consent of SNDC, which consent shall not be unreasonably withheld or delayed, and except with respect to the prosecution or maintenance of any Field Limited Patents for which SNDC is responsible under Section 4.3(e), during the Development Period, Licensor shall not abandon or allow to lapse any patent or patent application covering the Licensed Patent Rights or Sublicensed Patent Rights. In the event Licensor desires to abandon any such patent or patent application (whether during or after the Development Period), Licensor shall provide prompt, timely written notice thereof to SNDC sufficient to permit SNDC to avoid such abandonment or lapse, and shall, upon the request of SNDC, immediately transfer control of such registration or application to SNDC. This section shall apply mutates mutandis with respect to the Field Limited Patents filed in the name of JHU for which SNDC is responsible under Section 4.3(e).

     4.5. Infringement . Each Party agrees to immediately notify the other Party and provide to the other Party upon becoming aware of any infringement, misappropriation, illegal

Certain portions of this exhibit have been omitted and will be filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment. The symbol “[***]” has been inserted in place of the portions so omitted.

11

use or misuse of the Licensed Intellectual Property and provide to the other party all available evidence of such infringement.

     4.6. First Right . Subject to JHU’s rights regarding the Sublicensed Patent Rights as set forth in the JHU Agreement, SNDC has the first right, but not the obligation, to take action against others in the courts, administrative agencies or otherwise, at SNDC’s cost and expense, to prevent or terminate infringement, misappropriation, illegal use or misuse of the Licensed Patent Rights or the Sublicensed Patent Rights. Licensor shall, at SNDC’s expense, cooperate with and reasonably assist SNDC at SNDC’s expense in any such action if so requested, and, upon SNDC’s request, execute, file and deliver all documents and proof necessary for such purpose, including being named as a party to such litigation if requested by SNDC or if required by law. Licensor shall have the right to participate and be represented in any such action, suit or proceeding by its own counsel at its own expense. SNDC shall not enter into any settlement or compromise of such action, suit or proceeding that affects or concerns the validity, enforceability, or ownership of any Licensed Patent Rights or any Sublicensed Patent without the prior written consent of Licensor, which consent shall not be unreasonably withheld.

     4.7. Reversion of Enforcement Rights . SNDC shall promptly notify Licensor in the event it elects not to take action under Section 4.6. If Licensor is so notified, or if SNDC does not commence any such action within ninety (90) days after becoming aware of such potential claim, Licensor shall have the option to commence any such action under its own direction and control, and at its cost and expense. SNDC shall, at Licensor’s expense, cooperate and reasonably assist Licensor in such action if so requested, and upon Licensor’s request, execute, file and deliver all documents and proof necessary for such purpose, including being named as a party to such litigation if requested by SNDC or if required by law. SNDC shall have the right to participate and be represented in any such action, suit or proceeding by its own counsel at its own expense. The rights of Licensor, and the obligations of SNDC under this Section 4.7 shall expire on expiration of the Development Period.

     4.8. Withdrawal of Enforcement . If either Party brings an action under this Article 4 and subsequently ceases to pursue or withdraws from such action, it shall promptly notify the other Party and the other Party may substitute itself for the withdrawing party under the terms of this Article 4.

     4.9. Recoveries . Subject to Section 4.10 below, all damages or other compensation of any kind recovered in such action, suit, or proceeding or from any settlement or compromise brought under this Article 4 shall first be used to reimburse each party for its expenses in connection with such action, suit or proceeding, (in proportion to the expenses of each party if recovery is insufficient to cover all such expenses) and the remainder of such recover shall be allocated 85% to the party hereto taking the lead in representing the interests of the owners of the Licensed Patent Right and/or Sublicensed Patent Rights in the action, suit or proceeding, and 15% to the other party hereto.

     4.10. Sublicensed Patent Rights . To the extent any action contemplated in Sections 4.6, 4.7, 4.8 or 4.9 of this Agreement involves Sublicensed Patent Rights, such action shall be subject to JHU’s rights set forth in Article 3 of the JHU Agreement, and in the event of a conflict between the terms of Article 3 of the JHU Agreement and Sections 4.6, 4.7, 4.8 or 4.9

12

hereof, Article 3 of the JHU Agreement will prevail, including without limitation, the recovery of proceeds to which JHU is entitled under Paragraph 3.4 of the JHU Agreement.

ARTICLE 5
CONFIDENTIALITY

     5.1. Confidentiality . Each Party shall maintain in confidence all Confidential Information of the other Party, and shall not disclose such Confidential Information to any third party except to those of its Personnel as are necessary in connection with such Party’s activities as contemplated by this Agreement. In maintaining the confidentiality of Confidential Information of the other Party, each Party shall exercise the same degree of care that it exercises with its own confidential information, and in no event less than a reasonable degree of care. Each Party shall ensure that each of its Personnel holds in confidence and makes no use of the Confidential Information of the other Party for any purpose other than those permitted under this Agreement or to the extent required in other Operative Documents, or otherwise required by law.

     5.2. Exceptions . The obligation of confidentiality contained in this Agreement shall not apply to the extent that (i) either Party (the "Receiving Party”) is required to disclose information by order or regulation of a governmental agency or a court of competent jurisdiction; provided, however, that the Receiving Party shall not make any such disclosure without first notifying the other Party and allowing the other Party a reasonable opportunity to seek injunctive relief from (or a protective order with respect to) the obligation to make such disclosure or (ii) the Receiving Party can demonstrate that (a) the disclosed information was at the time of such disclosure to the Receiving Party already in (or thereafter entered) the public domain other than as a result of actions of the Receiving Party or its Personnel in violation hereof, (b) the disclosed information was rightfully known to the Receiving Party prior to the date of disclosure to the Receiving Party, (c) the disclosed information was received by the Receiving Party on an unrestricted basis from a source unrelated to any Party to this Agreement and not under a duty of confidentiality to the other Party, or (d) was independently developed by the Receiving Party.

     5.3. Unauthorized Disclosure . Each Party acknowledges and confirms that the Confidential Information of the other Party constitutes proprietary information or trade secrets valuable to the other Party, and that the unauthorized use, loss or outside disclosure of such Confidential Information shall be presumed to cause irreparable injury to the other Party. Each Party shall notify the other Party immediately upon discovery of any unauthorized use or disclosure of Confidential Information, and will cooperate with the other Party in every reasonable way to help regain possession of such Confidential Information and to prevent its further unauthorized use.

     5.4. Injunctive Relief . Each Party acknowledges that monetary damages is not a sufficient remedy for unauthorized disclosure of Confidential Information of the other Party and that the other Party shall be entitled, without waiving other rights or remedies, to such injunctive or equitable relief as may be deemed proper by a court of competent jurisdiction.

     5.5. Public Disclosure . Except as required by law, no Party shall make, or cause to be made, any press release or public announcement in respect of this Agreement or the transactions contemplated hereby or otherwise communicate with any news media without the

13

prior written consent of the other Party, and the Parties shall cooperate as to the timing and contents of any such press release or public announcement.

ARTICLE 6
REPRESENTATIONS AND WARRANTIES

     6.1. Mutual Representations . Each Party hereby represents and warrants to the other Party as follows:

(a)	Organization . Such Party is duly organized, validly existing and in good standing under the laws of the State of Delaware.
(b)	Authority and Validity . Other than as set forth in the Operative Documents, such Party has all requisite corporate power and authority to execute, deliver and perform its obligations under this Agreement and to consummate the transactions contemplated hereby. The execution, delivery and performance by such Party of its obligations under this Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorized by all necessary action required on the part of such Party (other than as set forth in the Operative Documents), and no other proceedings on the part of such Party are necessary to authorize this Agreement or for such Party to perform its obligations under this Agreement. This Agreement constitutes the lawful, valid and legally binding obligation of such Party, enforceable in accordance with its terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and general equitable principles regardless of whether such enforceability is considered in a proceeding at law or in equity.
(c)	No Violation or Conflict . The execution, delivery and performance of this Agreement and the transactions contemplated hereby do not (x) violate, conflict with or result in the breach of any provision of the Organizational Documents of such Party, (y) conflict with or violate any law or Governmental Order applicable to such Party or any of its assets, properties or businesses, or (z) conflict with, result in any breach of, constitute a default (or event that with the giving of notice or lapse of time, or both, would become a default) under, require any consent under, or give to others any rights of termination, amendment, acceleration, suspension, revocation or cancellation of, or result in the creation of any Encumbrance on any of the assets or properties of such Party, pursuant to, any note, bond, mortgage or indenture, contract, agreement, lease, sublease, license, permit, franchise or other instrument or arrangement to which such Party is a party except, in the case of clause (z), to the extent that such conflicts, breaches, defaults or other matters would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on such Party.

14

(d)

Governmental Consents and Approvals . Other than as set forth in the Operative Documents, the execution, delivery and performance of this Agreement by such Party do not require any Governmental Approval which has not already been obtained, effected or provided, except with respect to which the failure to so obtain, effect or provide would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on such Party.

(e)

Litigation . There are no actions by or against such Party pending before any Governmental Authority or, to the knowledge of such Party, threatened to be brought by or before any Governmental Authority, that would reasonably be expected to have a Material Adverse Effect on such Party. There are no pending or, to the knowledge of such Party, threatened actions, to which such Party is a party (or threatened to be named as a party) to set aside, restrain, enjoin or prevent the execution, delivery or performance of this Agreement or the Operative Documents or the consummation of the transactions contemplated hereby or thereby by any party hereto or thereto. Such Party is not subject to any Governmental Order (nor, to the knowledge of such Party, is there any such Governmental Order threatened to be imposed by any Governmental Authority) that would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on such Party.

     6.2. Representations and Warranties of Licensor . Licensor hereby represents and warrants to SNDC, that, as of the Effective Date:

     (a) Licensor is the owner of all right, title, and interest in and to (i) all Licensed Patent Rights not identified in Annex C as jointly owned and (ii) the Regulatory Files;

     (b) Subject to any rights of the U.S. government, Licensor is the joint owner with JHU of all Licensed Patent Rights identified in Annex C as being jointly owned;

     (c) Licensor has sufficient rights to grant the licenses granted hereunder and the grant of such licenses does not and will not conflict with any agreement to which Licensor is a party or otherwise governing the Licensed Intellectual Property in any material respect;

     (d) To the knowledge of Licensor, no third party is engaging in any activity that infringes or misappropriates the Licensed Intellectual Property;

     (e) The Licensed Intellectual Property have not been adjudged invalid or unenforceable in whole or part, and to the knowledge of Licensor, is valid and enforceable;

     (f) No Actions or Claims have been asserted, or are pending or threatened, against Licensor in writing alleging that the use of the Licensed Intellectual Property misappropriates or infringes the intellectual property right of any third party;

15

     (g) To the knowledge of Licensor, the use of the Licensed Intellectual Property existing as of the Effective Date by SNDC in strict accordance with the licenses herein and other terms of this Agreement will not misappropriate or infringe the intellectual property rights of any third party;

     (h) The Licensed Intellectual Property is the only intellectual property Licensor owns or has the right to sublicense in the Territory that covers the Field; and

     (i) [***]

     Notwithstanding the foregoing, to the extent that any of the representations and warranties in this Section 6.2 conflict with Section 7.7 of the JHU Agreement, Section 7.7 of the JHU Agreement shall govern.

     6.3. Disclaimer and Acknowledgement . EXCEPT AS EXPRESSLY SET FORTH IN THIS ARTICLE 6, THE LICENSED INTELLECTUAL PROPERTY AND REGULATORY FILES ARE PROVIDED “AS IS,” AND LICENSOR EXPRESSLY DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO ANY WARRANTIES OF MERCHANTABILITY, FITNESS FOR PARTICULAR PURPOSE, OR NON-INFRINGEMENT. LICENSOR DOES NOT WARRANT THE PERFORMANCE OF ANY LICENSED PRODUCT OR SERVICE, INCLUDING THEIR SAFETY, EFFECTIVENESS OR COMMERCIAL VIABILITY. SNDC FURTHER ACKNOWLEDGES THAT, EXCEPT AS EXPRESSLY SET FORTH IN SECTION 7.7 OF THE JHU AGREEMENT, JHU MAKES NO WARRANTIES HEREUNDER, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO ANY WARRANTIES OF MERCHANTABILITY, FITNESS FOR PARTICULAR PURPOSE, OR NON-INFRINGEMENT, NOR ANY WARRANTY AS TO THE PERFORMANCE OF ANY LICENSED PRODUCT OR SERVICE, INCLUDING THEIR SAFETY, EFFECTIVENESS OR COMMERCIAL VIABILITY.

ARTICLE 7
INDEMNIFICATION

     7.1. Licensor Indemnification . Licensor shall indemnify and hold harmless SNDC and its Affiliates, and their respective officers, directors, shareholders and Personnel from and against any Claims, Actions, demands, suits, causes of action, losses, damages, liabilities, judgments, costs and expenses (including reasonable attorneys’ fees) by third parties (“Losses”) arising out of any (i) breach of Licensor’s representations and warranties set forth in Article 6, and (ii) [***]

     7.2. SNDC Indemnification . SNDC shall defend, indemnify and hold harmless Licensor and its licensors and Affiliates, and their respective officers, directors, shareholders and Personnel from and against any Losses arising out of (i) any breach of SNDC’s representations and warranties set forth in Article 6, (ii) SNDC’s or sublicensee’s unauthorized use of the

Certain portions of this exhibit have been omitted and will be filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment. The symbol “[***]” has been inserted in place of the portions so omitted.

16

Licensed Intellectual Property, or (iii) the use, development, manufacture, marketing or sale of any Licensed Product or Service developed, marketed, or distributed by or on behalf of SNDC or any of its sublicensees, in each case, except with respect to Losses for which SNDC is entitled to indemnification under Section 7.1.

     7.3. Third-Party Claims . In the event of a claim by a Party for indemnification under this Article 7 based on a third-party claim (a "Third-Party Claim”), such Party shall give the other Party prompt notice of such Third-Party Claim, and copies of all papers served upon or received by such Party relating thereto. The other Party shall have the exclusive right to control the defense of any Third-Party Claim and all negotiations for its settlement or compromise, provided that such other Party shall not have the right to bind the indemnified Party to any non-financial settlement, consent or other agreement without the prior written consent of the indemnified Party, which consent shall not be unreasonably withheld or delayed. The indemnified Party shall provide reasonable assistance to the other Party, at such other Party’s expense, in connection with the defense of any Third-Party Claim. The indemnified Party shall have the right to participate in the defense of such Third-Party Claim, at its expense. Each Party shall provide the other Party with prompt notice of any written threat, warning, or notice of any Third-Party Claim.

     7.4. Limitation of Liability . EXCEPT AS EXPRESSLY PROVIDED IN THIS SECTION 7.4, IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR INDIRECT, INCIDENTAL, SPECIAL, PUNITIVE OR CONSEQUENTIAL DAMAGES OF ANY KIND ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT, WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. THE LIMITATION SET FORTH IN THIS SECTION SHALL NOT APPLY TO CLAIMS FOR (A) BREACH OF ARTICLE 4 (CONFIDENTIALITY), (B) AMOUNTS PAID WITH RESPECT TO INDEMNIFICATION OF THIRD-PARTY CLAIMS, OR (C) CLAIMS BASED ON GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. SNDC FURTHER ACKNOWLEDGES THAT NEITHER JHU NOR THE JHU INVENTORS SHALL HAVE ANY LIABILITY HEREUNDER FOR ANY DAMAGES, INCLUDING, BUT NOT LIMITED TO, DIRECT, INDIRECT, SPECIAL AND CONSEQUENTIAL DAMAGES, ATTORNEY’S FEES AND EXPERTS’ FEES, AND COURT COSTS (EVEN IF JHU HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, FEES OR COSTS), ARISING OUT OF OR IN CONNECTION WITH THE MANUFACTURE, USE OR SALE OF ANY LICENSED PRODUCTS OR SERVICES COVERED BY THE SUBLICENSED PATENT RIGHTS.

     7.5. Insurance . Each Party shall maintain insurance, including on the part of SNDC, product liability insurance, with respect to its activities under this Agreement. Such insurance shall be in such amounts and subject to such deductibles as are prevailing in the industry from time to time, provided that, each Party shall maintain a minimum of an aggregate of Two Million Dollars ($2,000,000) in directors and officers insurance and an aggregate of Five Million Dollars ($5,000,000) in product liability insurance. Notwithstanding anything to the contrary herein, this Section 7.5 shall survive only for a period of two (2) years following termination or expiration of this Agreement.

17

ARTICLE 8
TERM AND TERMINATION

     8.1. Term . This Agreement shall commence on the Effective Date and shall remain in force until terminated as provided herein (the “Term”). This Agreement shall automatically terminate on expiration of the last to expire of the Licensed Patent Rights.

     8.2. Termination .

(a)	Either Party may terminate this Agreement at any time if the other Party is in material default or breach of this Agreement, and such material default or breach continues unremedied for a period of sixty (60) days after written notice thereof is delivered to the defaulting or breaching party.
(b)	This Agreement shall automatically terminate in the event that any of the Amended and Restated Research and Development Agreement, Purchase Option Agreement, or Guilford Sub-Servicing Agreement, is terminated by Guilford for cause due to a material breach or default by SNDC or Holdings; provided however, that in the event SNDC (i) in good faith and after reasonable investigation, disputes the termination of such other Operative Document, (ii) provides Guilford written notice of such dispute within thirty (30) days after notice of such purported termination, and (iii) promptly, continuously and diligently pursues the resolution of such dispute, whether through settlement negotiations or litigation, then this Agreement shall not terminate under this Section 8.2(c) until the earlier of (x) settlement of mutual resolution of the dispute that provides for the termination of such Operative Document or (y) a court of competent jurisdiction determines that such Operative Document has been terminated.
(c)	Upon any termination of this Agreement, all license rights granted herein shall immediately terminate.
(d)	The licenses granted herein with respect to the Sublicensed Patent Rights related to the JHU Agreement shall automatically terminate in the event the JHU Agreement is terminated for any reason. Notwithstanding the foregoing, Licensor shall fully comply with all obligations of Licensor under the JHU Agreement, and shall notify SNDC immediately in the event Licensor receives a notice of breach or becomes aware of any fact or circumstance that may result in termination of the JHU Agreement.

     8.3. Survival . The following Sections and Articles shall survive expiration or termination of this Agreement: Sections 2.5, 3.1(c), 3.1(d), 3.1(h), 4.1, 4.9, and 6.3, and Articles 5, 7, 8 and 9.

     8.4. Bankruptcy . All rights and licenses granted by Licensor to SNDC under this Agreement are, and shall otherwise be deemed to be, for purposes of Section 365(n) of the United States Bankruptcy Code (the “Code”), licenses to “Intellectual Property” as defined in the

18

Code. The Parties agree that SNDC shall retain and may fully exercise all of its rights and elections under the Code.

ARTICLE 9
MISCELLANEOUS

     9.1. Notices . All notices, requests, claims, demands and other communications regarding this Agreement shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by overnight courier service (with signature required), by facsimile, or by registered or certified mail (postage prepaid, return receipt requested) to the respective Parties at the following addresses:

(a)	If to Licensor:
	Craig R. Smith, M.D. Chairman, President and Chief Executive Officer Guilford Pharmaceuticals Inc. 6611 Tributary Street Baltimore, Maryland 21224
	with copies to:
	Corporate Secretary Guilford Pharmaceuticals Inc. 6611 Tributary Street Baltimore, Maryland 21224
	Nancy Linck, Ph.D. Guilford Pharmaceuticals Inc. 611 Tributary Street Baltimore, Maryland 21224
(b)	If to SNDC:
	Charles W. Finn, Ph.D. Chief Executive Officer Symphony Neuro Development Company c/o RRD International 7361 Calhoun Place Suite 325 Rockville, MD 20855
	with a copy to:
	Mark Kessel Chairman Symphony Neuro Development Company c/o Symphony Capital LLC

19

875 Third Avenue
18th Floor
New York, NY 10022

     9.2. Entire Agreement . This Agreement and the agreements referred to herein constitute the entire agreement between the Parties with respect to the subject matter hereof, and no oral or written statement may be used to interpret or vary the meaning of the terms and conditions hereof. This Agreement supersedes any prior or contemporaneous agreements and understandings, whether written or oral, between the Parties with respect to the subject matter hereof.

     9.3. Assignment . Neither Party may assign or otherwise transfer this Agreement without the prior written consent of the other Party; provided, however , that either party may assign this Agreement or any of its rights and obligations hereunder without the consent of the other party to an Affiliate or in connection with a merger or the sale of all or substantially all of the assets of the assigning party to which this Agreement relates. Assignment of this Agreement by either Party shall not relieve the assignor of its obligations hereunder. This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns.

     9.4. Headings. The descriptive headings contained in this Agreement are for convenience of reference only and shall not affect in any way the meaning or interpretation of the Agreement.

     9.5. Independent Contractor. Each Party shall be acting as an independent contractor in performing under this Agreement and shall not be considered or deemed to be an agent, employee, joint venturer or partner of the other Party.

     9.6. Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any law or public policy, all other terms and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any Party.

     9.7. No Third-Party Beneficiaries. Nothing in this Agreement, either express or implied, is intended to or shall confer upon any third party any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

     9.8. Compliance with Laws. In performing under this Agreement, each Party shall comply with all applicable laws rules and regulations, including without limitation, the United States Food and Drug Administration and the United States Export Administration Regulations.

     9.9. Amendment. This Agreement may not be amended or modified except by an instrument in writing signed by authorized representatives of Licensor and SNDC.

     9.10. Governing Law and Venue. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York. The Parties unconditionally

20

and irrevocably agree and consent to the exclusive jurisdiction of the courts located in New York, New York, and waive any objection with respect thereto, for the purpose of any action, suit or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby and further agree not to commence any such action, suit or proceeding except in any such court.

     9.11. Counterparts. This Agreement may be executed in one or more counterparts, and by the respective Parties in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same Agreement.

     9.12. No Waiver. The failure of either Party to enforce at any time for any period the provisions of or any rights deriving from this Agreement shall not be construed to be a waiver of such provisions or rights or the right of such Party thereafter to enforce such provisions.

21

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first written above by their respective duly authorized officers.

SYMPHONY NEURO DEVELOPMENT COMPANY
By:
Name:	Mark Kessel
Title:	Chairman
SNDC HOLDINGS LLC
By:
Name:	Jeffrey S. Edelman
Title:	Managing Member
GUILFORD PHARMACEUTICALS INC.
By:
Name:	Craig R. Smith, M.D.
Title:	Chairman, President and Chief Executive Officer
GPI NIL HOLDINGS, INC.
By:
Name:	Asher Rubin
Title:	Vice President

22

ANNEX A

DEFINITIONS

     Terms not otherwise defined herein have the meanings assigned to them in that certain Purchase Option Agreement dated as of June 17, 2004, among Guilford, Holdings and SNDC.

23

ANNEX B

DESCRIPTION OF GPI 1485

One copy to be provided under strict confidentiality to SNDC upon closing.

Certain portions of this exhibit have been omitted and will be filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment. The symbol “[***]” has been inserted in place of the portions so omitted.

24

ANNEX C

PATENTS COVERING LICENSED PATENT RIGHTS
AND SUBLICENSED PATENT RIGHTS

[***]

Certain portions of this exhibit have been omitted and will be filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment. The symbol “[***]” has been inserted in place of the portions so omitted.

25