SEPARATION AGREEMENT

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EXHIBIT 10.35

SEPARATION AGREEMENT

THIS SEPARATION AGREEMENT between Access Pharmaceuticals, Inc., a Delaware

corporation (the "Company"), and Kerry Gray (hereinafter referred to as "Gray"),

dated as of May 10, 2005 (the "Effective Date");

WHEREAS, Gray is a member of the Board of Directors of the Company (the

"Board"), and President and Chief Executive Officer of the Company;

WHEREAS, Gray intends to resign and terminate his employment and all other

positions with the Company and its subsidiaries, including the offices of

President and Chief Executive Officer and Gray's membership on the Board;

WHEREAS, the Company intends to accept Gray's resignation and wishes to provide

to Gray certain payments and to provide Gray with certain other benefits upon

such termination and Gray agrees to give certain releases and provide certain

services to the Company;

NOW, THEREFORE, in consideration of the mutual promises set forth herein and for

other good and valuable consideration, the receipt and sufficiency of which are

hereby acknowledged, the parties hereto hereby agree as follows:

1. Resignation and Termination.

1.1. Gray hereby resigns from all positions he currently holds with the

Company and any subsidiary of the Company, including without

limitation the positions of President, Chief Executive Officer and

Director, and member of the Board and any committee thereof,

effective as of the Effective Date. Gray agrees to transfer any

shares of any subsidiary or interest of any trust of the Company

held by him as nominee or in any other capacity to the Company or

its designee.

1.2. The Employment Agreement, dated as of April 1, 1998, by and between

the Company and Gray is hereby terminated in its entirety as of the

Effective Date and neither party thereto shall have any further

rights or owe any further payment, duty or obligation to the other

thereunder; notwithstanding the foregoing, (a) the non-competition

obligation of Gray set forth in Section 7 of the Employment

Agreement as it relates to (i) mucoadhesive film technology and (ii)

products incorporating

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platinum for use as a chemotherapeutic agent and (b) the

non-solicitation obligation of Gray set forth in Section 8 of the

Employment Agreement shall each survive for a period of one year

from the date of this Agreement.

2. Company Covenants.

2.1. Cash Payments. Commencing as of the Effective Date, Gray shall be

entitled to the following cash payments:

(a) On the Effective Date, the Company shall pay to Gray a cash

payment of $225,000; and

(b) For a period of eighteen (18) months following the Effective

Date, the Company shall pay to Gray a payment of $33,333.33 on

the penultimate business day of each calendar month, with the

first such payment due and payable on May 30, 2005 making an

aggregate payment of $600,000 under this Section 2.1(b).

2.2. Common Stock Issuances. For a period of eighteen (18) months

following the Effective Date, the Company shall issue to Gray 3,500

shares of the Company's common stock on the penultimate business day

of each calendar month, with the first such issuance due on May 30,

2005 making an aggregate issuance of 63,000 shares under this

Section 2.2. The Company agrees to register the resale of such

shares on the next registration statement that it files for which

registration of such resale is allowed by the rules of the

Securities and Exchange Commission.

2.3. Vesting and Exercise of Existing Options and Restricted Stock. On

the Effective Date, all outstanding Company stock options and shares

of restricted stock of the Company held by Gray shall immediately

and fully vest. All outstanding Company stock options held by Gray

shall remain exercisable by Gray until June 30, 2007,

notwithstanding anything to the contrary in documents related to

such option grants, and shall expire on such date.

2.4. Consulting. At the Company's sole discretion, Gray and the Company

hereby agree that, beginning on July 1, 2005 and thereafter, the

Company may request that Gray serve the Company in the capacity of a

consultant. The Company shall

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pay to Gray the sum of $2,000 for each day worked by Gray as a

consultant at the request of the Company pursuant to this Agreement.

From the Effective Date until July 1, 2005 Gray agrees to cooperate

with the Company, at no cost to the Company, in connection with the

transition of operations of the Company to a new Chief Executive

Officer of the Company.

2.5. Benefits. For a period of Twenty (20) months following the Effective

Date, the Company shall, at its sole expense, continue to maintain

and provide coverage under Gray's existing health coverage plan. For

a period of Twelve (12) months following the Effective Date, the

Company shall, at its sole expense, provide outplacement services

appropriate to Gray's position.

2.6. Withholding. All payments required to be made by the Company

hereunder to Gray shall be subject to the withholding of such

amounts, if any, relating to tax and other payroll deductions as the

Company may reasonably determine it must withhold pursuant to any

applicable law or regulation.

2.7. No Duty to Mitigate Damages. Gray's payments and benefits under

Sections 2.1, 2.2, 2.3 and 2.5 of this Agreement shall be considered

severance pay in consideration of his past service, and as an

inducement to him to enter into and become bound by this Agreement,

and his entitlement thereto shall not be dependent upon whether or

not Gray provides further services of any type to or for the Company

or any third party.

3. Gray Covenants. Gray hereby covenants with the Company as follows:

3.1. Non-disclosure. Gray recognizes and acknowledges that he has had and

will have access to certain highly sensitive, special, unique

information of the Company that is confidential or proprietary. Gray

hereby covenants and agrees not to use or disclose any Confidential

Information (as hereinafter defined) except for disclosures made

solely (i) to authorized representatives of the Company; or (ii) as

required by any governmental, statutory or judicial authority,

provided that prior to any such disclosure Gray shall provide the

Company with notice of such requirement as is practicable and shall

cooperate with the Company in responding to such requirement,

including assisting the Company in procuring a protective order or

other modification of such required disclosure.

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3.2. Confidential Information. For purposes of this Agreement,

"Confidential Information" means any data or information with

respect to the business conducted by the Company that is material to

the Company and not generally known by the public. To the extent

consistent with the foregoing definition, Confidential Information

includes without limitation; (i) reports, pricing, sales manuals and

training manuals, selling and pricing procedures, and financing

methods of the Company, together with any techniques utilized by the

Company in designing, developing, manufacturing, testing or

marketing its products or in performing services for clients,

customers and accounts of the Company and (ii) the business plans