AMENDED AND RESTATED EMPLOYMENT AGREEMENT

Exhibit 10.38

AMENDED AND RESTATED
EMPLOYMENT AGREEMENT

     This Amended and Restated Employment Agreement (this “Agreement”) is made and entered into as of November 10, 2008 (the “Effective Date”) by and between GTx, Inc., located at 3 North Dunlap, 3rd Floor, Memphis, Tennessee 38163 (the “Employer”), and RONALD ALVIN MORTON, Jr., M.D. (the “Employee”), residing at 1588 Kirby Parkway, Memphis, Tennessee 38120.

     WHEREAS, Employee has been providing services to Employer as Vice President, Chief Medical Officer under the terms of an Employment Agreement effective as of April 12, 2007 (the “Prior Employment Agreement”); and

     WHEREAS, the Employer and the Employee wish to amend and restate the Prior Employment Agreement as set forth herein in order to comply with the parties’ intent that the Prior Employment Agreement be interpreted, construed and administered in a manner that satisfies Section 409A of the Internal Revenue Code of 1986, as amended from time to time (the “Code”);

     WHEREAS, during the course of Employee’s employment with the Employer, the Employer will train and continue to train Employee and to impart to Employee proprietary, confidential, and/or trade secret information, data and/or materials of the Employer;

     WHEREAS, the Employer has a vital interest in maintaining its confidential information and trade secrets, as well as rights to inventions, since doing so allows the Employer to compete fairly and enhances the value of the Employer to shareholders and job security for employees; and

     WHEREAS, the Employer desires to procure the services of Employee, and Employee is willing to be employed and continue to be employed with the Employer upon the terms and subject to the conditions set forth in this Agreement;

     NOW, THEREFORE, in consideration of the mutual covenants and agreements contained in this Agreement, the employment and continued employment of Employee in accordance with the terms and conditions of this Agreement, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties, intending to be legally bound, agree and covenant as follows:

     1. DEFINITIONS

     For the purposes of this Agreement, the following terms have the meanings specified or referred to in this Section 1.

      “Agreement” has the meaning set forth in first paragraph of this Agreement.

      “Basic Compensation” means Salary and Benefits.

      “Benefits” means as defined in Section 3.1(b).

      “Board of Directors” means the Board of Directors of the Employer.

      “CEO” has the meaning set forth in Section 2.2.

      “Change of Control” means any of the following events: (a) the sale or other disposition of all or substantially all of the assets of Employer in a single transaction or in a series of transactions (including, without limitation, any liquidation or dissolution of Employer); (b) any Person or group becomes the beneficial owner, directly, or indirectly, of securities of the Employer representing more than fifty percent (50%) of the combined voting power of the Employer’s then outstanding securities other than by virtue of a merger, consolidation or similar transaction. For such purposes, “voting stock” shall mean the capital stock of Employer of any class or classes, the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of members of the Board of Directors (or Persons performing similar functions) of Employer; or (c) a merger or consolidation of Employer with or into any other entity, if immediately after giving effect to such transaction more than fifty percent (50%) of the issued and outstanding voting stock of the surviving entity of such transaction is held by persons who were not holders (taking into account their individual and affiliated holdings) as of the Effective Date of at least twenty percent (20%) of the voting stock of Employer. A Change of Control shall not include: (1) any transfer or issuance of stock of Employer to one or more of Employer’s lenders (or to any agents or representatives thereof) in exchange for debt of Employer owed to any such lenders; (2) any transfer of stock of Employer to or by any person or entity, including but not limited to one or more of the Employer’s lenders (or to any agents or representatives thereof), pursuant to the terms of any pledge of said stock as collateral for any loans or financial accommodations to Employer and/or its subsidiaries; (3) any transfer or issuance to any person or entity, including but not limited to one or more of Employer’s lenders (or to any agents or representatives thereof), in connection with the workout or restructuring of Employer’s debts to any one of Employer’s lenders, including but not limited to the issuance of new stock in exchange for any equity contribution to Employer in connection with the workout or restructuring of such debt; (4) any transfer of stock by a stockholder of Employer which is a partnership or corporation to the partners or stockholders in such stockholder or any transfer of stock by a stockholder of Employer to an entity affiliated with such stockholder or the immediate family of such stockholder or a trust or similar entity for the benefit of such family members; or (5) any transfer or issuance of stock in connection with an offering of the Employer’s stock in a registered public transaction not including a transaction described in Rule 145, promulgated under the Securities Act of 1933, as amended, provided that the Employer’s officers and Board of Directors shall not materially change as a result thereof.

      “Change of Control Termination” means (i) a Termination Without Cause of the Employee’s employment by the Employer (other than for death or disability) within six (6) months after a Change of Control or (ii) the Employee’s resignation for Good Reason within six (6) months after a Change of Control.

      “Competing Business” means any individual or entity, other than the Employer, that is engaging in, or proposes to engage in, the development, manufacture, distribution or sale of a Competing Product in any country in North America, South America, Europe and Eastern Europe, and in the countries of Russia, Australia, Japan, China, Taiwan, South Korea and India (the “Territory”); provided; however that an entity that develops, manufactures, distributes or

sells a Competing Product in a separate business unit than the business unit in which Employee is then employed shall not be deemed a Competing Business unless Employee provides Confidential Information and/or Proprietary Information to the business unit that is engaging in or proposes to engage in the development, manufacture, distribution or sale of a Competing Product.

      “Competing Product” means any pharmaceutical or other compound, composition, formulation, method, process, product or material that is competitive with any product of Employer under development, manufacture, distribution or commercialization at any time from and after the effective date of the Prior Employment Agreement through the date of termination of Employee’s employment, including, without limitation, small molecules that target androgen, estrogen, glucocorticoid, and/or other hormone receptors for purposes of treating, diagnosing, or imaging humans in health and disease, including treating cancer, osteoporosis and bone loss and muscle loss.

      “Confidential Information and/or Proprietary Information” means any and all:

     (a) information disclosed to Employee or known by Employee as a consequence of, or through, Employee’s employment with the Employer since his initial date of employment on April 12, 2007 (including information conceived, originated, discovered, or developed in whole or in part by Employee), not generally known in the relevant trade or industry, about the Employer’s business, products, processes, and services; and trade secrets concerning the business and affairs of the Employer, product specifications, data, know-how, formulae, compositions, research, processes, designs, sketches, photographs, graphs, drawings, samples, inventions and ideas, past, current, and planned research and development, current and planned manufacturing or distribution methods and processes, customer lists, current and anticipated customer requirements, price lists, market studies, business plans, computer software and programs (including object code and source code), computer software and database technologies, systems, structures, and architectures (and related formulae, compositions, processes, improvements, devices, know-how, inventions, discoveries, concepts, ideas, designs, methods and information); and any other information, however documented, that is a trade secret within the meaning of Tenn. Code §39-14-138; and

     (b) information concerning the business and affairs of the Employer (which includes historical financial statements, financial projections and budgets, historical and projected sales, capital spending budgets and plans, the names and backgrounds of key personnel, personnel training and techniques and materials), however documented; and

     (c) intellectual property, inventions, methods, processes, techniques, computer programs, devices, products, services, compounds, gene therapy products, pharmaceuticals, substances, vectors, enzymes, genes, concepts, discoveries, improvements, and designs, whether or not patenable in the United States or foreign countries, any trade secrets, information, procedures, technologies, data, results, conclusions, know-how or show-how and business information; and

     (d) notes, analysis, compilations, studies, summaries, and other material prepared by or for the Employer containing or based, in whole or in part, on any information included in the foregoing.

      “Delayed Initial Payment Date” has the meaning stated in Section 9.2 of this Agreement.

      “Effective Date” means the date stated in the first paragraph of the Agreement.

      “Employee” has the meaning stated in the first paragraph of this Agreement.

      “Employee Invention” means any idea, invention, technique, modification, process, improvement (whether patentable or not), industrial design (whether registerable or not), work of authorship (whether or not copyright protection may be obtained for it), design, copyrightable work, discovery, trademark, copyright, trade secret, formula, device, method, compound, gene, prodrug, pharmaceutical, structure, product concept, marketing plan, strategy, customer list, technique, blueprint, sketch, record, note, drawing, know-how, data, patent application, continuation application, continuation-in-part application, file wrapper continuation application or divisional application, created, conceived, or developed by the Employee, either solely or in conjunction with others, during the Employee’s employment, or a period that includes a portion of the Employee’s employment, that relates in any way to, or is useful in any manner in, the business then being conducted or proposed to be conducted by the Employer, and any such item created by the Employee, either solely or in conjunction with others, following termination of the Employee’s employment with the Employer, that is based upon or uses Confidential Information and/or Proprietary Information.

      “Employer” means GTx, Inc., its successors and assigns, and any of its current or future subsidiaries, or organizations controlled by, controlling, or under common control with it.

      “Expenses” has the meaning stated in Section 4.1 of this Agreement.

      “Good Reason” for termination means that Employee voluntarily resigns from all positions he then holds with Employer if and only if:

      (a)  one of the following actions have been taken without Employee’s express written consent:

                (i)  following a Change of Control, an adverse change in the Employee’s authority, duties or responsibilities (including reporting responsibilities) which, without Employee’s consent, represents a material reduction in or a material demotion of the Employee’s authority, duties or responsibilities as in effect immediately prior to a Change of Control or the assignment to the Employee of any duties or responsibilities which are materially inconsistent with and materially adverse to such authority, duties or responsibilities;

                (ii)  following a Change of Control, a material reduction in the then current Salary of Employee;

                (iii)  following a Change of Control, the relocation of the Employer’s principal Employee offices to a location that increases Employee’s one-way commute by more than twenty (20) miles;

                (iv)  following a Change of Control, the failure of the Employer to obtain an agreement reasonably satisfactory to Employee from any successor or assign of the Employer to assume and agree to perform this Agreement in all material respects; or

                (v)  Employer materially breaches its obligations under this Agreement or any other then-effective agreement with Employee (including any agreement or arrangement providing for incentive compensation or employee benefits, including the Benefits provided in this Agreement).

      (b)  Employee provides written notice to the Employer’s Board within the thirty (30) day period immediately following such action; and

      (c)  Such action is not remedied by the Employer within thirty (30) days following the Employer’s receipt of such written notice; and

      (d)  Employee’s resignation is effective not later than sixty (60) days after the expiration of such thirty (30)-day cure period.

      “Person” means any individual, corporation (including any non-profit corporation), general or limited partnership, limited liability company, joint venture, estate, trust, association, organization, or governmental body.

      “Proprietary Items” means any Proprietary and/or Confidential Information embodied in any document, record, recording, electronic media, formulae, notebook, plan, model, component, device, or computer software or code, whether embodied in a disk or in any other form.

      “Release” means a general release of claims, which shall specifically relate to all of Employee’s rights and claims in existence at the time of such execution and shall confirm Employee’s continuing obligations to the Employer (including but not limited to obligations under Section 7 and Section 8 of this Agreement and any other confidentiality and/or non-competition agreement with the Employer).

      “Salary” has the meaning stated in Section 3.1(a) of this Agreement.

      “Section 409A” has the meaning stated in Section 9.2 of this Agreement.

      “Termination Date” has the meaning stated in Section 6.3 of this Agreement.

      “Termination With Cause” means the termination of the Employee’s employment by act of the Board for any of the following reasons:

          (a) the Employee’s conviction for a felony;

          (b) the Employee’s theft, embezzlement, misappropriation of or intentional infliction of material damage to the Employer’s property or business opportunities;

          (c) the Employee’s breach of the provisions contained in Section 7 or Section 8 of this Agreement; or

          (d) the Employee’s ongoing willful neglect of or failure to perform his duties hereunder or his ongoing willful failure or refusal to follow any reasonable, unambiguous duly adopted written direction of the CEO that is not inconsistent with the description of the Employee’s duties set forth in Section 2.3, if such willful neglect or failure is materially damaging or materially detrimental to the business and operations of the Employer; provided that Employee shall have received written notice of such failure and shall have continued to engage in such failure after 30 days following receipt of such notice from the CEO, which notice specifically identifies the manner in which the CEO believes that Employee has engaged in such failure. For purposes of this subsection, no act, or failure to act, shall be deemed “willful” unless done, or omitted to be done, by Employee not in good faith, and without reasonable belief that such action or omission was in the best interest of the Employer.

      “Termination Without Cause” means the termination of the Employee’s employment by the Employer for any reason other than (i) Termination With Cause, or (ii) a termination by the Employer due to Employee’s death or disability.

     2. EMPLOYMENT TERMS AND DUTIES

          2.1 Employment

          The Employer hereby continues the employment of the Employee, and the Employee hereby accepts continued employment by the Employer, upon the terms and conditions set forth in this Agreement.

          2.2 Term

          Either the Employee or the Employer may terminate this Agreement at any time and the Employee’s employment and compensation with or without Cause or notice, at any time, at either the Employer’s or the Employee’s option. No company officer or manager has the authority to enter into any other agreement for employment for a specified period of time, or to modify or to make any agreement contrary to the foregoing, except by written amendment to this Agreement, dated and signed by the Chief Executive Officer (“CEO”) or the President of the Employer.

          2.3 Duties

          The Employee will continue to have such duties as are assigned or delegated to the Employee by the Board of Directors, CEO or the President, and will initially serve as Vice President, Chief Medical Officer for the Employer, provided that the Board of Directors shall have approved his appointment as an officer of the company. During the term of this Agreement, the Employee will devote 100% of his full time, attention, skill and energy to the business of the Employer. Additionally, Employee agrees that he will use his best efforts to promote the success

of the Employer’s business, and will cooperate fully with the Board of Directors, CEO and the President in the advancement of the best interest of the Employer. Employee commits that, without first obtaining the prior written approval of Employer, he will refrain from publishing, and he will not allow those working for him to publish, any abstracts, articles or other publications arising from research conducted for or on behalf of Employer that pertain to Employer’s products or business, including specifically compounds that are being tested from time to time by Employer and any developmental work or other services that are being undertaken by Employee for Employer, except as may be approved in accordance with the policies of Employer.

          As an employee of the Employer, the responsibilities and duties of the Employee shall include managing and overseeing and being personally responsible for the departments of medical affairs, including the regional medical scientists who will report to the head of medical affairs, biostatistics, safety, project management, and clinical research and development strategy. Employee agrees to abide by all bylaws, policies, practices, procedures or rules of Employer.

     3. COMPENSATION

     3.1 Basic Compensation

          (a) Salary . As of the Effective Date, the Employee will be paid for each of the twenty-six pay periods approximately $16,558, which is the equivalent of $430,500 per calendar year (the “Salary”). Additionally, Employee’s Salary may be adjusted from time to time by agreement of the Employee and the CEO.

          (b) Benefits . The Employee will, during his employment with the Employer, be permitted to participate in such life insurance, hospitalization, major medical, short term disability, long term disability, 401K plan and other employee benefit plans of the Employer that may be in effect from time to time (collectively, the “Benefits”). The Employer may withhold from any Salary or Benefits payable to Employee all federal, state, local, and other taxes and other amounts as permitted or required pursuant to law, rules or regulations.

     4. FACILITIES AND EXPENSES

          4.1 General

          The Employer will furnish the Employee office space, equipment, supplies, and such other facilities and personnel as the Employer deems necessary or appropriate for the performance of the Employee’s duties under this Agreement, including sufficient capital equipment as determined by the CEO to support the needs of a preclinical research & development department. The Employer will pay on behalf of the Employee (or reimburse the Employee for) reasonable expenses incurred by the Employee at the request of, or on behalf of, the Employer in the performance of the Employee’s duties pursuant to this Agreement, and in accordance with the Employer’s employment policies, and all reasonable expenses incurred by the Employee in attending conventions, seminars, and other business meetings and appropriate business entertainment activities, and for promotional expenses (the “Expenses”). To the extent that any reimbursements payable pursuant to this Agreement are subject to the provisions of Section 409A of the Code, any such reimbursements payable pursuant to this Agreement shall be paid no later than December 31 of the year following the y