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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

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<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 9pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">As filed with the
    Securities and Exchange Commission on September 15,
    2009</FONT></B>
</DIV>

<DIV align="right" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 9pt">Registration
    <FONT style="white-space: nowrap">No.&#160;333-&#160;&#160;&#160;&#160;&#160;&#160;</FONT></FONT></B>
</DIV>

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<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 13pt">UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION</FONT></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 11pt">Washington,&#160;D.C.
    20549</FONT></B>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 1pt; font-size: 1pt">&nbsp;</DIV>

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<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 1pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 17pt"><FONT style="white-space: nowrap">Form&#160;S-1</FONT></FONT></B>
</DIV>

<DIV style="margin-top: 1pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 11pt">REGISTRATION
    STATEMENT</FONT></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 11pt">UNDER</FONT></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 11pt">THE SECURITIES ACT OF
    1933</FONT></B>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 1pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 20%; border-bottom: 1pt solid #000000"></CENTER><!-- callerid=999 iwidth=540 length=108 -->

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 1pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 22pt">Anthera Pharmaceuticals,
    Inc.</FONT></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <I><FONT style="font-size: 8pt">(Exact name of registrant as
    specified in its charter)</FONT></I>
</DIV>

<DIV style="margin-top: 2pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 9pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="34%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="32%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="32%">&nbsp;</TD>	<!-- colindex=03 type=maindata -->
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<TR valign="bottom">
<TD nowrap align="center" valign="top">
    <B>Delaware</B>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="top">
    <B>2834</B>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="top">
    <B>20-1852016</B>
</TD>
</TR>
<TR valign="bottom">
<TD align="center" valign="top">
    <I><FONT style="font-size: 8pt">(State or other jurisdiction
    of<BR>
    incorporation or organization)</FONT></I>
</TD>
<TD>
&nbsp;
</TD>
<TD align="center" valign="top">
    <I><FONT style="font-size: 8pt">(Primary Standard Industrial<BR>
    Classification Code Number)</FONT></I>
</TD>
<TD>
&nbsp;
</TD>
<TD align="center" valign="top">
    <I><FONT style="font-size: 8pt">(I.R.S. Employer<BR>
    Identification No.) </FONT></I>
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 9pt">Anthera Pharmaceuticals,
    Inc.</FONT></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 9pt">25801 Industrial Boulevard,
    Suite&#160;B</FONT></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 9pt">Hayward, California
    94545</FONT></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 9pt">(510)&#160;856&#151;5600</FONT></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <I><FONT style="font-size: 8pt">(Address, including zip code and
    telephone number, including area code, of registrant&#146;s
    principal executive offices)</FONT></I>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 20%; border-bottom: 1pt solid #000000"></CENTER><!-- callerid=999 iwidth=540 length=108 -->

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 9pt">Paul F. Truex</FONT></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 9pt">President and Chief Executive
    Officer</FONT></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 9pt">25801 Industrial Boulevard,
    Suite&#160;B</FONT></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 9pt">Hayward, California
    94545</FONT></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 9pt">(510)&#160;856&#151;5600</FONT></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <I><FONT style="font-size: 8pt">(Name, address, including zip
    code and telephone number, including area code, of agent for
    service)</FONT></I>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 20%; border-bottom: 1pt solid #000000"></CENTER><!-- callerid=999 iwidth=540 length=108 -->

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <B><I>Copies to:</I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 9pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="50%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="49%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
</TR>
<!-- Table Width Row END -->
<TR valign="bottom">
<TD align="center" valign="top">
    <B>Bradley A. Bugdanowitz,&#160;Esq.<BR>
    Mitzi Chang,&#160;Esq.<BR>
    Seth D. Greenstein, Esq.<BR>
    Goodwin Procter LLP<BR>
    Three Embarcadero Center,
    24<SUP style="font-size: 85%; vertical-align: top">th</SUP></B>

    <B>Floor<BR>
    San&#160;Francisco, California
    <FONT style="white-space: nowrap">94111-4003</FONT><BR>
    <FONT style="white-space: nowrap">(415)&#160;733-6099</FONT></B>
</TD>
<TD>
&nbsp;
</TD>
<TD align="center" valign="top">
    <B>Alan C. Mendelson,&#160;Esq.<BR>
    Andrew S. Williamson,&#160;Esq.<BR>
    Cindy F. Leeper,&#160;Esq.<BR>
    Latham &#038; Watkins LLP<BR>
    140 Scott Street<BR>
    Menlo Park, CA 94025<BR>
    (650) 328-4600</B>
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 20%; border-bottom: 1pt solid #000000"></CENTER><!-- callerid=999 iwidth=540 length=108 -->

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 3%; font-size: 9pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <B>Approximate date of commencement of proposed sale to
    public:</B>&#160;&#160;as soon as practicable after this
    Registration Statement is declared effective.
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 3%; font-size: 9pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <B>If any of the securities being registered on this Form are to
    be offered on a delayed or continuous basis pursuant to
    Rule&#160;415 under the Securities Act of 1933, check the
    following
    box.&#160;&#160;<FONT style="font-family: Wingdings; font-variant: normal">&#111;</FONT></B>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 3%; font-size: 9pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <B>If this Form is filed to register additional securities for
    an offering pursuant to Rule&#160;462(b) under the Securities
    Act, check the following box and list the Securities Act
    registration statement number of the earlier effective
    registration statement for the same
    offering.&#160;&#160;<FONT style="font-family: Wingdings; font-variant: normal">&#111;</FONT></B><U>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</U>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 3%; font-size: 9pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <B>If this Form is a post-effective amendment filed pursuant to
    Rule&#160;462(c) under the Securities Act, check the following
    box and list the Securities Act registration statement number of
    the earlier effective registration statement for the same
    offering.&#160;&#160;<FONT style="font-family: Wingdings; font-variant: normal">&#111;</FONT></B><U>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</U>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 3%; font-size: 9pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <B>If this Form is a post-effective amendment filed pursuant to
    Rule&#160;462(d) under the Securities Act, check the following
    box and list the Securities Act registration statement number of
    the earlier effective registration statement for the same
    offering.&#160;&#160;<FONT style="font-family: Wingdings; font-variant: normal">&#111;</FONT></B><U>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</U>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 3%; font-size: 9pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <B>Indicate by check mark whether the registrant is a large
    accelerated filer, an accelerated filer, a non-accelerated
    filer, or a smaller reporting company. See the definitions of
    &#147;large accelerated filer,&#148; &#147;accelerated
    filer&#148; and &#147;smaller reporting company&#148; in Rule
    <FONT style="white-space: nowrap">12b-2</FONT> of the
    Exchange Act. (Check one):</B>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="25%"></TD>
    <TD width="25%"></TD>
    <TD width="25%"></TD>
    <TD width="25%"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">    <B><FONT style="font-size: 9pt; font-family: Arial, Helvetica">Large
    accelerated
    filer&#160;<FONT style="font-family: Wingdings; font-variant: normal">&#111;</FONT></FONT></B></TD>
    <TD nowrap align="center">    <B><FONT style="font-size: 9pt; font-family: Arial, Helvetica">
    Accelerated
    filer&#160;<FONT style="font-family: Wingdings; font-variant: normal">&#111;</FONT></FONT></B></TD>
    <TD nowrap align="center">    <B><FONT style="font-size: 9pt; font-family: Arial, Helvetica">
    <FONT style="white-space: nowrap">Non-accelerated</FONT>
    filer&#160;<FONT style="font-family: Wingdings; font-variant: normal">&#111;</FONT></FONT></B></TD>
    <TD nowrap align="right">    <B><FONT style="font-size: 9pt; font-family: Arial, Helvetica">
    Smaller reporting
    company&#160;<FONT style="font-family: Wingdings; font-variant: normal">&#111;</FONT></FONT></B></TD>
</TR>

</TABLE>



<DIV align="center" style="margin-left: 22%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 9pt">(Do not check if a smaller
    reporting company)</FONT></B>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 20%; border-bottom: 1pt solid #000000"></CENTER><!-- callerid=999 iwidth=540 length=108 -->

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 9pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">CALCULATION OF
    REGISTRATION FEE</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 8pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="66%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=gutterleft -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=gutterright -->
    <TD width="7%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="7%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=03 type=gutterleft -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=03 type=gutterright -->
    <TD width="7%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="7%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom" style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-top: 3px double #000000">
    <B>Proposed Maximum<BR>
    </B>
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-top: 3px double #000000">
    <B>Amount of<BR>
    </B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
    <B>Title of Each Class of<BR>
    </B>
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Aggregate<BR>
    </B>
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Registration<BR>
    </B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
    <B>Securities to be Registered</B>
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Offering Price&#160;(1)(2)</B>
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Fee</B>
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top" style="border-top: 1px solid #000000">
    Common Stock, $0.001&#160;par value per share
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="right" valign="top" style="border-top: 1px solid #000000">
    $
</TD>
<TD nowrap align="right" valign="top" style="border-top: 1px solid #000000">
    70,000,000
</TD>
<TD nowrap align="left" valign="top" style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="right" valign="top" style="border-top: 1px solid #000000">
    $
</TD>
<TD nowrap align="right" valign="top" style="border-top: 1px solid #000000">
    3,906
</TD>
<TD nowrap align="left" valign="top" style="border-top: 1px solid #000000">
&nbsp;
</TD>
</TR>
<TR style="font-size: 1pt">
<TD nowrap align="left" valign="bottom" style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom" style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom" style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom" style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom" style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom" style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom" style="border-top: 3px double #000000">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="2%"></TD>
    <TD width="1%"></TD>
    <TD width="97%"></TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT style="font-size: 8pt">(1) </FONT></B></TD>
    <TD></TD>
    <TD valign="bottom">
    <B><FONT style="font-size: 8pt">Estimated solely for the purpose
    of calculating the registration fee pursuant to Rule&#160;457(o)
    under the Securities Act of 1933, as amended.</FONT></B></TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="2%"></TD>
    <TD width="1%"></TD>
    <TD width="97%"></TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT style="font-size: 8pt">(2) </FONT></B></TD>
    <TD></TD>
    <TD valign="bottom">
    <B><FONT style="font-size: 8pt">Includes the offering price of
    shares that the underwriters have the option to purchase to
    cover over-allotments, if any.</FONT></B></TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 3%; font-size: 9pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <B>The Registrant hereby amends this Registration Statement on
    such date or dates as may be necessary to delay its effective
    date until the registrant shall file a further amendment which
    specifically states that this Registration Statement shall
    thereafter become effective in accordance with Section&#160;8(a)
    of the Securities Act of 1933, as amended, or until the
    Registration Statement shall become effective on such date as
    the Securities and Exchange Commission, acting pursuant to said
    Section&#160;8(a), may determine.</B>
</DIV>

<DIV style="margin-top: 5pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 100%; border-bottom: 1pt solid #000000"></CENTER><!-- callerid=999 iwidth=540 length=0 -->

<CENTER style="font-size: 1pt; width: 100%; border-bottom: 2pt solid #000000"></CENTER><!-- callerid=999 iwidth=540 length=0 -->

<P align="left" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 94%; margin-left: 3%"><!-- BEGIN PAGE WIDTH -->

<TABLE style="color: #FF0000" width="100%" border="1" cellpadding="5"><TR><TD>
<FONT style="font-size: 9pt; font-family: Arial, Helvetica; color: #E8112D">The
information in this prospectus is not complete and may be
changed. We may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell these
securities and it is not soliciting offers to buy these
securities in any state where the offer or sale is not
permitted.<BR>
</FONT>
</TD></TR></TABLE>

<DIV style="margin-top: 1pt; font-size: 1pt">&nbsp;</DIV>
</DIV><!-- END PAGE WIDTH -->
<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 36pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica; color: #E8112D">Subject
    To Completion, Dated September 15, 2009</FONT></B>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <B>PROSPECTUS</B>
</DIV>

<DIV style="margin-top: 24pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <IMG src="f53438orf5343813.gif" alt="(ANTHERA COMPANY LOGO)"><B> </B>
</DIV>

<DIV style="margin-top: 24pt; font-size: 1pt">&nbsp;</DIV>
<DIV style="width: 100%; border-top: 1px solid #000000; padding-top: 12pt; border-left: 1px solid #000000; padding-left: 12pt"><!-- Begin box 1 -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 18pt">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Shares</FONT></B>
</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 16pt">Common Stock</FONT></B>
</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV>
</DIV><!-- End box 1 -->

<DIV style="margin-top: 24pt; font-size: 1pt">&nbsp;</DIV>
<DIV style="width: 100%; border-top: 1px solid #000000; padding-top: 12pt; border-left: 1px solid #000000; padding-left: 12pt"><!-- Begin box 1 -->

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We are
    offering&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;shares
    of common stock in this initial public offering. Prior to this
    offering, there has been no public market for our common stock.
    We anticipate that the initial public offering price of the
    common stock will be between $&#160;&#160;&#160;&#160;&#160; and
    $&#160;&#160;&#160;&#160;&#160; per share. We have applied to
    list our common stock on The NASDAQ Global Market under the
    symbol &#147;ANTH.&#148;
</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 12pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <B>Investing in our common stock involves risks. See &#147;Risk
    Factors&#148; on page&#160;8.</B>
</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <B>Neither the Securities and Exchange Commission nor any state
    securities commission has approved or disapproved of these
    securities or determined if this prospectus is truthful or
    complete. Any representation to the contrary is a criminal
    offense.</B>
</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="79%">&nbsp;</TD>         <!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>  <!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>    <!-- colindex=02 type=lead -->
    <TD width="7%" align="right">&nbsp;</TD>    <!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>     <!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>  <!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>    <!-- colindex=03 type=lead -->
    <TD width="5%" align="right">&nbsp;</TD>    <!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>     <!-- colindex=03 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="left" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Per Share</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="left" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Total</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Public offering price
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#160;&#160;&#160;&#160;&#160;&#160;&#160;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#160;&#160;&#160;&#160;&#160;&#160;&#160;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Underwriting discounts and commissions
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Proceeds, before expenses, to Anthera Pharmaceuticals, Inc.
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">

</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The underwriters have a
    <FONT style="white-space: nowrap">30-day</FONT>
    option to purchase up
    to&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
    additional shares of common stock from us at the public offering
    price less the underwriting discount to cover over-allotments,
    if any.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Delivery of the shares of common stock will be made on or
    about&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;,
    2009.
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 23%; border-bottom: 1pt solid #000000"></CENTER><!-- callerid=999 iwidth=456 length=108 -->

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 18pt">Deutsche Bank
    Securities</FONT></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 18pt">Piper Jaffray</FONT></B>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="50%"></TD>
    <TD width="50%"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">    <B><FONT style="font-size: 15pt; font-family: Arial, Helvetica">Wedbush&#160;PacGrow&#160;Life&#160;Sciences</FONT></B></TD>
    <TD nowrap align="right">    <B><FONT style="font-size: 15pt; font-family: Arial, Helvetica">
    Merriman Curhan Ford</FONT></B></TD>
</TR>

</TABLE>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The date of this prospectus
    is&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;,
    2009.
</DIV>
</DIV><!-- End box 1 -->

<P align="left" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">TABLE OF
    CONTENTS</FONT></B>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>
<DIV align="left">
<!-- TOC -->
</DIV>

<DIV align="left">
<A name="tocpage"></A>
</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="97%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=quadleft -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=quadright -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Page</B>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#101'>Prospectus Summary</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    <A HREF='#102'>Risk Factors</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    8
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    <A HREF='#103'>Special Note Regarding Forward-Looking
    Statements</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    32
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    <A HREF='#104'>Use of Proceeds</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    33
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    <A HREF='#105'>Dividend Policy</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    34
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    <A HREF='#106'>Capitalization</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    35
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    <A HREF='#107'>Dilution</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    37
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    <A HREF='#108'>Selected Financial Data</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    39
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    <A HREF='#109'>Management&#146;s Discussion and Analysis of
    Financial Condition and Results of Operations</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    41
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    <A HREF='#110'>Business</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    54
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    <A HREF='#111'>Management</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    93
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    <A HREF='#112'>Compensation</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    99
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    <A HREF='#113'>Certain Relationships and Related Person
    Transactions</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    115
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    <A HREF='#114'>Principal Stockholders</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    122
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    <A HREF='#115'>Description of Capital Stock</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    125
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    <A HREF='#116'>Shares&#160;Eligible for Future Sale</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    130
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    <A HREF='#117'>Material U.S. Federal Income Tax
    Considerations</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    133
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    <A HREF='#118'>Underwriting</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    136
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    <A HREF='#120'>Legal Matters</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    140
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    <A HREF='#121'>Experts</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    140
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    <A HREF='#122'>Where You Can Find More Information</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    140
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    <A HREF='#123'>Index to Financial Statements</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    F-1
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="f53438orexv3w1.htm">Exhibit 3.1</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="f53438orexv3w3.htm">Exhibit 3.3</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="f53438orexv3w4.htm">Exhibit 3.4</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="f53438orexv10w1.htm">Exhibit 10.1</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="f53438orexv10w3.htm">Exhibit 10.3</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="f53438orexv10w6.htm">Exhibit 10.6</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="f53438orexv10w7.htm">Exhibit 10.7</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="f53438orexv10w8.htm">Exhibit 10.8</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="f53438orexv10w9.htm">Exhibit 10.9</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="f53438orexv10w10.htm">Exhibit 10.10</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="f53438orexv10w11.htm">Exhibit 10.11</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="f53438orexv10w12.htm">Exhibit 10.12</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="f53438orexv10w13.htm">Exhibit 10.13</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="f53438orexv10w14.htm">Exhibit 10.14</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="f53438orexv10w15.htm">Exhibit 10.15</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="f53438orexv21w1.htm">Exhibit 21.1</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="f53438orexv23w1.htm">Exhibit 23.1</A></FONT></TD></TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

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<DIV style="margin-top: 15pt; font-size: 1pt">&nbsp;</DIV>

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<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <B>You should rely only on the information contained in this
    document and any free writing prospectus prepared by or on
    behalf of us or to which we have referred you. We have not, and
    the underwriters have not, authorized anyone to provide you with
    additional or different information. This document may only be
    used where it is legal to sell these securities. The information
    in this prospectus is accurate only as of the date of this
    prospectus, regardless of the time of delivery of this
    prospectus or any sale of shares of our common stock.</B>
</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Dealer Prospectus
    Delivery Obligation</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <B>Until&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;,
    2009 (25&#160;days after the commencement of this offering), all
    dealers that effect transactions in these securities, whether or
    not participating in this offering, may be required to deliver a
    prospectus. This is in addition to the dealer&#146;s obligation
    to deliver a prospectus when acting as an underwriter and with
    respect to unsold allotments or subscriptions.</B>
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    i
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<DIV style="width: 100%; height: 9in; border-top: 1px solid #000000; padding-top: 12pt; border-right: 1px solid #000000; padding-right: 12pt; border-bottom: 1px solid #000000; padding-bottom: 12pt; border-left: 1px solid #000000; padding-left: 12pt"><!-- Begin box 1 -->
<A name='101'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">PROSPECTUS
    SUMMARY</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    This summary highlights certain information contained elsewhere
    in this prospectus. Because this is only a summary, it does not
    contain all of the information you should consider before
    investing in our common stock. You should read this entire
    prospectus carefully, especially the information set forth under
    the headings &#147;Risk Factors&#148; and
    &#147;Management&#146;s Discussion and Analysis of Financial
    Condition and Results of Operations&#148; and our financial
    statements and the related notes appearing at the end of this
    prospectus, before making an investment decision.
</DIV>

<DIV style="margin-top: 9pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Our
    Company</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We are a biopharmaceutical company focused on developing and
    commercializing products to treat serious diseases associated
    with inflammation, including cardiovascular and autoimmune
    diseases. We currently have one Phase 3 ready clinical program,
    <FONT style="white-space: nowrap">A-002,</FONT> and
    two Phase 2 clinical programs,
    <FONT style="white-space: nowrap">A-001</FONT> and
    <FONT style="white-space: nowrap">A-623.</FONT>
    <FONT style="white-space: nowrap">A-002</FONT> and
    <FONT style="white-space: nowrap">A-001</FONT>
    inhibit a novel enzyme target known as secretory phospholipase
    A<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>,
    or
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>.
    Elevated levels of
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    have been implicated in a variety of acute inflammatory
    conditions, including acute coronary syndrome and acute chest
    syndrome, as well as chronic diseases such as stable coronary
    artery disease, or CAD. Our Phase&#160;2 ready product
    candidate,
    <FONT style="white-space: nowrap">A-623,</FONT>
    targets elevated levels of
    <FONT style="white-space: nowrap">B-lymphocyte</FONT>
    stimulator, or BLyS, which has been associated with a variety of
    <FONT style="white-space: nowrap">B-cell</FONT>
    mediated autoimmune diseases, including systemic lupus
    erythematosus, or lupus. We have worldwide rights to our product
    candidates, with the exception of Japan, where
    Shionogi&#160;&#038; Co., Ltd. retains commercial rights to our
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    product candidates.
</DIV>

<DIV style="margin-top: 9pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Product
    Development Programs</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We have focused our product development programs on
    anti-inflammatory therapeutics for cardiovascular diseases,
    lupus and other serious diseases for which we believe current
    treatments are either inadequate or non-existent. Our current
    product development programs are listed in the figure below.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <IMG src="f53438orf5343814.gif" alt="(PRODUCT DEVELOPMENT PROGRAMS CHART">
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica"><FONT style="white-space: nowrap">A-002</FONT>
    for Short-Term (16-week) Treatment of Acute Coronary
    Syndrome</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We are preparing to begin a pivotal Phase 3 clinical study for
    our lead product candidate,
    <FONT style="white-space: nowrap">A-002,</FONT> an
    oral
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    inhibitor, in combination with HMG-CoA reductase inhibitor, or
    statin, therapy for short-term (16-week) treatment of patients
    experiencing an acute coronary syndrome. The American Heart
    Association defines acute coronary syndrome as any group of
</DIV>
</DIV><!-- End box 1 -->

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    1
</DIV><!-- END PAGE WIDTH -->
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<DIV style="width: 100%; height: 9in; border-top: 1px solid #000000; padding-top: 12pt; border-right: 1px solid #000000; padding-right: 12pt; border-bottom: 1px solid #000000; padding-bottom: 12pt; border-left: 1px solid #000000; padding-left: 12pt"><!-- Begin box 1 -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    clinical signs and symptoms related to acute myocardial
    ischemia, or heart muscle damage. Patients experiencing an acute
    coronary syndrome suffer from significant inflammatory activity
    and abnormal lipid profiles.
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    enzymes act to directly amplify inflammation and abnormally
    modify lipids.
    <FONT style="white-space: nowrap">A-002,</FONT> when
    combined with lipid-lowering therapies, is one of only a few
    therapeutics in development with the potential to offer a unique
    and synergistic approach targeting inflammation, elevated lipid
    levels and atherosclerosis.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Clinical results from our Phase 2b clinical study enrolling 625
    acute coronary syndrome patients and two Phase 2 clinical
    studies enrolling 534 stable CAD patients demonstrated
    statistically significant reductions in low-density lipoprotein
    cholesterol, or LDL-C, a known predictor of cardiovascular risk.
    Reductions in LDL-C were greater when used in combination with
    commonly prescribed statin therapies. In addition, rapid and
    sustained anti-inflammatory activity was also evident as
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    concentrations were statistically significantly reduced from
    baseline levels throughout dosing in all clinical studies. In
    our Phase 2b clinical study,
    <FONT style="white-space: nowrap">C-reactive</FONT>
    protein, or CRP, and interleukin-6, or IL-6, both independent
    predictors of cardiovascular risk, were lower at all time points
    among <FONT style="white-space: nowrap">A-002</FONT>
    treated patients as compared to those on 80&#160;mg of
    atorvastatin alone. The percent decrease in CRP at week two in
    our Phase&#160;2b clinical study was nearly two-fold greater
    among <FONT style="white-space: nowrap">A-002</FONT>
    treated patients than those treated with placebo and by week 16,
    the difference between the two groups achieved statistical
    significance.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We are in discussions with the U.S.&#160;Food and Drug
    Administration, or FDA, to obtain a Special Protocol Assessment
    agreement, or SPA, for our pivotal Phase 3 acute coronary
    syndrome study. This multinational, randomized, double-blind,
    placebo-controlled Phase 3 clinical study is designed to
    evaluate short-term (16-week) therapy with
    <FONT style="white-space: nowrap">A-002</FONT> in
    combination with statins for the prevention of secondary major
    adverse coronary events in patients who have recently
    experienced an acute coronary syndrome. This Phase 3 clinical
    study is expected to enroll up to 6,500&#160;patients with
    similar characteristics to patients in our Phase 2b acute
    coronary syndrome clinical study. Patients will be randomized
    within 96&#160;hours of an acute coronary syndrome and will
    receive 16&#160;weeks of either once-daily
    <FONT style="white-space: nowrap">A-002</FONT> or
    placebo in addition to any dose of atorvastatin. Assuming we
    reach timely agreement on an SPA with the FDA, we plan to
    initiate the Phase 3 clinical study by the end of 2009 and
    complete enrollment by the second half of 2011.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Pivotal Phase 3
    Acute Coronary Syndrome Clinical Study Design</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <IMG src="f53438orf5343812.gif" alt="(PERFORMANCE GRAPH)"><I> </I>
</DIV>
</DIV><!-- End box 1 -->

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    2
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<DIV style="width: 100%; height: 9in; border-top: 1px solid #000000; padding-top: 12pt; border-right: 1px solid #000000; padding-right: 12pt; border-bottom: 1px solid #000000; padding-bottom: 12pt; border-left: 1px solid #000000; padding-left: 12pt"><!-- Begin box 1 -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The primary endpoint of the Phase&#160;3 clinical study will
    assess the time to the first occurrence of the combined endpoint
    of cardiovascular death, non-fatal myocardial infarction,
    non-fatal stroke, or documented unstable angina with objective
    evidence of ischemia, which is lack of blood to tissues due to a
    blockage of a vessel, requiring hospitalization. Similar to our
    Phase 2b clinical study, changes in
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>,
    CRP and LDL-C will be measured at baseline, 24&#160;hours,
    48&#160;hours and at weeks one, two, four, eight and 16. The
    Data Safety Monitoring Board, or DSMB, will conduct an
    independent data review of these biomarkers after at least
    1,000&#160;patients have completed treatment. This DSMB
    biomarker futility analysis is designed to confirm that our
    biomarkers have met pre-specified reductions from baseline at
    various time-points that were established based on results from
    our earlier Phase 2 clinical studies. Survival status will be
    obtained for patients six months after the completion of dosing.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica"><FONT style="white-space: nowrap">A-001</FONT>
    for Acute Chest Syndrome Associated with Sickle Cell
    Disease</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Our second product candidate, varespladib sodium,
    <FONT style="white-space: nowrap">A-001,</FONT> is an
    intravenously administered inhibitor of
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>,
    which is in a Phase 2 clinical study for the prevention of acute
    chest syndrome associated with sickle cell disease. Acute chest
    syndrome is a form of inflammation-induced lung failure and is
    the most common cause of death in patients with sickle cell
    disease.
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    levels increase substantially in the 24 to 48&#160;hours before
    the onset of acute chest syndrome. According to the Sickle Cell
    Information Center, sickle cell disease is a genetic disorder
    afflicting more than 70,000&#160;people in the United States
    alone. Given the small patient population and lack of approved
    drugs for the prevention of acute chest syndrome associated with
    sickle cell disease, we have received orphan drug designation
    and fast track status from the FDA for
    <FONT style="white-space: nowrap">A-001.</FONT>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    A pre-specified interim review of our Phase 2 clinical study
    results by a DSMB indicate
    <FONT style="white-space: nowrap">A-001,</FONT> at a
    certain dose, reduced
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    activity by more than 80% from baseline within 48&#160;hours.
    Furthermore, the incidence of acute chest syndrome appeared to
    be related to the level of
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    activity. Based on these results, we have scheduled an end of
    Phase 2 meeting with the FDA in late 2009 to review our Phase 2
    interim data and discuss Phase 3 study design.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica"><FONT style="white-space: nowrap">A-623&#160;&#151;</FONT>
    Our BLyS Antagonism Program</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    BLyS has been associated with a wide range of B-cell mediated
    autoimmune diseases including systemic lupus erythematosus. The
    role of BLyS in lupus has been clinically validated in recent
    studies with another BLyS antagonist. We intend to advance the
    development of our BLyS antagonist,
    <FONT style="white-space: nowrap">A-623,</FONT> a
    selective peptibody, to exploit its broad potential clinical
    utility in autoimmune diseases. We licensed
    <FONT style="white-space: nowrap">A-623</FONT> from
    Amgen Inc. in December 2007 and have worldwide product rights in
    all potential indications, and we plan to initiate a Phase 2
    study in systemic lupus erythematosus in the second half of 2010.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Two Phase 1 clinical studies of
    <FONT style="white-space: nowrap">A-623</FONT>
    involving 115 lupus patients have been completed. Results from
    these studies demonstrated
    <FONT style="white-space: nowrap">A-623</FONT>
    generated anti-BLyS activity and was shown to be safe and
    effective in selectively modulating and reducing B-cells in
    lupus patients. We believe
    <FONT style="white-space: nowrap">A-623</FONT> may
    offer a number of potential differentiations over other BLyS
    antagonists, as well as other novel B-cell directed therapies
    given subcutaneous and intravenous dosing opportunities. In
    addition, we believe
    <FONT style="white-space: nowrap">A-623</FONT> offers
    possible improved pharmacodynamic benefits since it binds to
    both membrane bound and soluble forms of BLyS.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Other
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    Inhibitors</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We also have an additional novel
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    inhibitor,
    <FONT style="white-space: nowrap">A-003,</FONT> in
    preclinical development for existing target indications as well
    as other therapeutic areas.
    <FONT style="white-space: nowrap">A-003</FONT> has
    shown increased potency against
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    and favorable characteristics in preclinical studies. We plan to
    file an investigational new drug application for
    <FONT style="white-space: nowrap">A-003</FONT> in the
    future.
</DIV>
</DIV><!-- End box 1 -->

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    3
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<DIV style="width: 100%; height: 9in; border-top: 1px solid #000000; padding-top: 12pt; border-right: 1px solid #000000; padding-right: 12pt; border-bottom: 1px solid #000000; padding-bottom: 12pt; border-left: 1px solid #000000; padding-left: 12pt"><!-- Begin box 1 -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Our
    Strategy</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Our objective is to develop and commercialize our product
    candidates to treat serious diseases associated with
    inflammation, including cardiovascular and autoimmune diseases.
    To achieve these objectives, we intend to initially focus on:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    advancing
    <FONT style="white-space: nowrap">A-002</FONT>
    through Phase 3;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    advancing clinical development of
    <FONT style="white-space: nowrap">A-001</FONT> and
    <FONT style="white-space: nowrap">A-623;</FONT>
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    leveraging our
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    expertise to develop products for additional disease
    indications;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    developing commercial strategies designed to maximize our
    product candidates&#146; market potential.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Our success in achieving our goals, however, depends in part on
    the risks and uncertainties described in this prospectus in the
    section entitled &#147;Risk Factors,&#148; including without
    limitation those relating to our ability to obtain substantial
    additional capital to fund our operations and develop our
    product candidates, our ability to conduct preclinical and
    clinical studies that demonstrate the safety and efficacy of our
    product candidates and our ability to obtain regulatory
    approvals.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Commercialization
    Strategy</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We have worldwide rights to develop and commercialize our
    products in all indications and markets, with the exception of
    Japan, where Shionogi&#160;&#038; Co., Ltd. retains commercial
    rights to our
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    product candidates. Our current development plans are focused on
    acute treatment and orphan indications that may provide an
    accelerated and cost-efficient path to regulatory approval and
    commercialization. We believe that certain of these markets can
    be commercialized through a limited specialty sales force. In
    addition, we believe that our product candidates can also
    address market opportunities in chronic indications and we may
    seek development and commercialization partners to address these
    non-specialty and international markets.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Company
    Information</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We were incorporated in Delaware on September&#160;9, 2004 as
    Anthera Pharmaceuticals, Inc. Our corporate headquarters are
    located at 25801 Industrial Boulevard, Suite&#160;B, Hayward,
    California 94545 and our telephone number is
    (510)&#160;856-5600. Our website address is
    <I>www.anthera.com</I>. The information contained on our website
    or that can be accessed through our website is not incorporated
    by reference into this prospectus and is not part of this
    prospectus.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We use various trademarks, service marks and trade names in our
    business, including without limitation &#147;Anthera
    Pharmaceuticals&#148; and &#147;Anthera.&#148; This prospectus
    also contains trademarks, services marks and trade names of
    other businesses that are the property of their respective
    holders.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Unless the context otherwise requires, we use the terms
    &#147;Anthera Pharmaceuticals,&#148; &#147;Anthera,&#148;
    &#147;we,&#148; &#147;us,&#148; &#147;the Company&#148; and
    &#147;our&#148; in this prospectus to refer to Anthera
    Pharmaceuticals, Inc. and its sole subsidiary.
</DIV>
</DIV><!-- End box 1 -->

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    4
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<DIV style="width: 100%; height: 9in; border-top: 1px solid #000000; padding-top: 12pt; border-right: 1px solid #000000; padding-right: 12pt; border-bottom: 1px solid #000000; padding-bottom: 12pt; border-left: 1px solid #000000; padding-left: 12pt"><!-- Begin box 1 -->

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">THE
    OFFERING</FONT></B>
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>
<DIV align="left">
<!-- TOC -->
</DIV>

<DIV align="left">
<A name="tocpage"></A>
</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="55%"></TD>
    <TD width="1%"></TD>
    <TD width="44%"></TD>
</TR>

<TR>
    <TD valign="top">
    Common stock offered by us</TD>
    <TD></TD>
    <TD valign="bottom">
    &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;shares
    (or&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;shares
    if the underwriters exercise their over-allotment option in full)</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    Common stock to be outstanding after this offering</TD>
    <TD></TD>
    <TD valign="bottom">
    &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;shares
    (or&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;shares
    if the underwriters exercise their over-allotment option in full)</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    Use of proceeds</TD>
    <TD></TD>
    <TD valign="bottom">
    We plan to use the net proceeds of this offering to fund
    continued clinical development of varespladib methyl
    <FONT style="white-space: nowrap">(A-002),</FONT>
    varespladib sodium
    <FONT style="white-space: nowrap">(A-001)</FONT> and
    <FONT style="white-space: nowrap">A-623</FONT> and
    for general corporate purposes, such as general and
    administrative expenses, capital expenditures, working capital,
    prosecution and maintenance of our intellectual property and the
    potential investment in technologies or products that complement
    our business. For a more complete description of our intended
    use of proceeds from this offering, see &#147;Use of
    Proceeds.&#148;</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    Risk factors</TD>
    <TD></TD>
    <TD valign="bottom">
    You should read the &#147;Risk Factors&#148; section of, and all
    of the other information set forth in, this prospectus for a
    discussion of factors to consider carefully before deciding to
    invest in shares of our common stock.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    Proposed NASDAQ Global Market symbol</TD>
    <TD></TD>
    <TD valign="bottom">
    &#147;ANTH&#148;</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The number of shares of our common stock to be outstanding after
    the closing of this offering is based on 16,746,731&#160;shares
    of our common stock outstanding as of August&#160;31, 2009 and
    excludes:
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    2,248,623&#160;shares of common stock issuable upon exercise of
    stock options outstanding and having a weighted-average exercise
    price of $0.50 per share;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
    shares of common stock reserved for future issuance under our
    2009 Stock Option and Incentive Plan, which will become
    effective upon the completion of this offering (plus an
    additional&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;shares
    of common stock reserved for issuance under our 2005 Equity
    Incentive Plan, which shares will be added to the shares
    reserved for future issuance under our 2009 Stock Option and
    Incentive Plan upon effectiveness of our 2009 Stock Option and
    Incentive Plan);&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    411,764&#160;shares of common stock issuable upon the exercise
    of warrants outstanding and having a weighted-average exercise
    price of $0.78 per share.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Unless otherwise indicated, the information in this prospectus
    assumes the following:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the filing of our amended and restated certificate of
    incorporation and the adoption of our amended and restated
    bylaws, which will occur immediately prior to the closing of
    this offering;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    conversion of all of our shares of preferred stock into
    13,946,510&#160;shares of common stock, which we expect to occur
    immediately prior to the closing of this offering;&#160;and
</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    no exercise by the underwriters of their over-allotment option.
</TD>
</TR>

</TABLE>
</DIV><!-- End box 1 -->

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    5
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<DIV style="width: 100%; height: 9in; border-top: 1px solid #000000; padding-top: 12pt; border-right: 1px solid #000000; padding-right: 12pt; border-bottom: 1px solid #000000; padding-bottom: 12pt; border-left: 1px solid #000000; padding-left: 12pt"><!-- Begin box 1 -->

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">SUMMARY FINANCIAL
    DATA</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The following summary financial data should be read together
    with our financial statements and the related notes and
    &#147;Management&#146;s Discussion and Analysis of Financial
    Condition and Results of Operations&#148; appearing elsewhere in
    this prospectus. The summary financial data in this section is
    not intended to replace our financial statements and the related
    notes. Our historical results are not necessarily indicative of
    the results to be expected for any future period.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We were incorporated on September&#160;9, 2004. The following
    statement of operations data, including share data, for the
    years ended December&#160;31, 2006, 2007 and 2008 have been
    derived from our audited financial statements and related notes
    appearing elsewhere in this prospectus. The statement of
    operations data, including share data, for the six months ended
    June&#160;30, 2008 and 2009 and the balance sheet data as of
    June&#160;30, 2009 have been derived from our unaudited
    financial statements appearing elsewhere in this prospectus. The
    unaudited interim financial statements have been prepared on the
    same basis as the audited financial statements and reflect all
    adjustments necessary to fairly state our financial position as
    of June&#160;30, 2009 and results of operations for the six
    months ended June&#160;30, 2008 and 2009. The operating results
    for any interim period are not necessarily indicative of
    financial results that may be expected for any future period.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 8pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF"><!-- TABLE 01 -->
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="44%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="7%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="8%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="8%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=05 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=05 type=lead -->
    <TD width="7%" align="right">&nbsp;</TD>	<!-- colindex=05 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=05 type=hang1 -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=06 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=06 type=lead -->
    <TD width="7%" align="right">&nbsp;</TD>	<!-- colindex=06 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=06 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="10" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Fiscal Year Ended December&#160;31,</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="6" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Six Months Ended June&#160;30,</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2006</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2007</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2008</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2008</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2009</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="6" align="center" valign="bottom">
    <B>(unaudited)</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -8pt; margin-left: 8pt">
    <B>Statement of Operations Data:</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -16pt; margin-left: 16pt">
    <B>Operating expenses</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -16pt; margin-left: 16pt">
    Research and development
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    7,759,106
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    23,921,932
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    10,882,322
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5,363,436
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5,201,181
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -16pt; margin-left: 16pt">
    General and administrative
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    822,732
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,468,607
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,980,170
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,592,243
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,845,574
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -16pt; margin-left: 24pt">
    Total operating expenses
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (8,581,838
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (26,390,539
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (13,862,492
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (6,955,679
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (7,046,755
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -16pt; margin-left: 16pt">
    <B>Other income (expense)</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -16pt; margin-left: 16pt">
    Interest and other income
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    109,987
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    696,962
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    178,129
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    85,330
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    21,637
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -16pt; margin-left: 16pt">
    Interest expense
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (17,395
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (296,303
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (96,704
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (96,298
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -16pt; margin-left: 16pt">
    Beneficial conversion feature
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (190,000
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (4,118,544
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (1,392,601
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -16pt; margin-left: 24pt">
    Total other income (expense)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (97,408
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    696,962
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (4,236,718
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (1,403,975
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (74,661
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -16pt; margin-left: 16pt">
    Net loss
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (8,679,246
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (25,693,577
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (18,099,210
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (8,359,654
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (7,121,416
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -16pt; margin-left: 16pt">
    Net loss per share&#151;basic and diluted&#160;(1)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (7.71
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (16.44
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (7.87
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (3.86
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (2.80
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -16pt; margin-left: 16pt">
    Weighted-average number of shares used in share
    calculation&#151;basic and diluted (2)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,125,065
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,562,670
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,300,090
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,164,630
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,540,033
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 1pt; margin-left: 0%; width: 10%;  align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=999 iwidth=456 length=48 -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF"><!-- TABLE 06 -->

<TR>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="98%"></TD>
</TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(1)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Diluted earnings per share, or EPS,
    is identical to basic EPS since common equivalent and shares are
    excluded from the calculation, as their effect is anti-dilutive.
    </FONT></TD>
</TR>





<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(2)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">For accounting purposes only, the
    number of issued and outstanding shares for the years ended
    December&#160;31, 2006, 2007 and 2008 and the six months ended
    June&#160;30, 2008 and 2009 do not include weighted-average
    shares of unvested stock of 459,399, 447,780, 393,683, 467,519
    and 227,502, respectively. These shares are subject to a risk of
    repurchase by us until such shares are vested. See Note&#160;8
    to our financial statements for more information.
    </FONT></TD>
</TR>

</TABLE>
</DIV><!-- End box 1 -->

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    6
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<DIV style="width: 100%; height: 9in; border-top: 1px solid #000000; padding-top: 12pt; border-right: 1px solid #000000; padding-right: 12pt; border-bottom: 1px solid #000000; padding-bottom: 12pt; border-left: 1px solid #000000; padding-left: 12pt"><!-- Begin box 1 -->

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 8pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="64%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="8%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="7%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="10%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="10" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>As of June&#160;30, 2009</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Pro Forma As<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Actual</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Pro Forma</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Adjusted</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>(unaudited)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -8pt; margin-left: 8pt">
    <B>Balance Sheet Data:</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -16pt; margin-left: 16pt">
    Cash and cash equivalents
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,290,730
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -16pt; margin-left: 16pt">
    Short-term investments
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -16pt; margin-left: 16pt">
    Working capital
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (7,453,556
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -16pt; margin-left: 16pt">
    Total assets
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,389,613
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -16pt; margin-left: 16pt">
    Indebtedness
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    8,817,141
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -16pt; margin-left: 16pt">
    Convertible preferred stock
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    52,123,859
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -16pt; margin-left: 16pt">
    Deficit accumulated during the development stage
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (60,147,876
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -16pt; margin-left: 16pt">
    Total stockholders&#146; deficit
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (7,427,528
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The June&#160;30, 2009 pro forma as adjusted balance sheet data
    reflects the (i)&#160;conversion of all of our outstanding
    shares of preferred stock into an aggregate of
    13,946,510&#160;shares of common stock, which we expect to occur
    immediately prior to the closing of this offering, and
    (ii)&#160;the sale
    of&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;shares
    of common stock in this offering at an assumed initial public
    offering price of
    $&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
    per share, which is the mid-point of the price range listed on
    the cover page of this prospectus), after deducting estimated
    underwriting discounts and commissions and estimated offering
    expenses payable by us.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    In July and September 2009, we sold convertible promissory
    notes, or the 2009 notes, and warrants to purchase shares of our
    preferred stock, or the 2009 warrants, to our existing investors
    for an aggregate purchase price of $10,000,000. The 2009 notes
    and the 2009 warrants are convertible and exercisable,
    respectively, upon the occurrence of certain events. In
    addition, we are in negotiations with certain of our existing
    investors for an aggregate of $20&#160;million in additional
    equity financing. The above table does not reflect the impact of
    the sale of the 2009 notes or the 2009 warrants, or our
    negotiations for additional equity financing.
</DIV>
</DIV><!-- End box 1 -->

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    7
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<A name='102'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">RISK
    FACTORS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <I>Before you decide to invest in our common stock, you should
    carefully consider the risks described below, together with the
    other information contained in this prospectus, including the
    financial statements and the related notes that appear at the
    end of this prospectus. We believe the risks described below are
    the risks that are material to us as of the date of this
    prospectus. If any of the following risks occur, our business,
    financial condition, results of operations and future growth
    prospects would likely be materially and adversely affected. In
    these circumstances, the market price of our common stock could
    decline, and you may lose all or part of your investment.
    Additional risks and uncertainties not presently known to us or
    not believed by us to be material could also adversely impact
    us.</I>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Risks Related to
    Our Financial Condition and Capital Requirements</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: Arial, Helvetica">We have
    incurred significant losses since our inception and anticipate
    that we will incur continued significant losses for the
    foreseeable future.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We are a development stage company with only five years of
    operating history. We have focused primarily on developing our
    three product candidates, varespladib methyl
    <FONT style="white-space: nowrap">(A-002),</FONT>
    varespladib sodium
    <FONT style="white-space: nowrap">(A-001)</FONT> and
    <FONT style="white-space: nowrap">A-623.</FONT> We
    have financed our operations exclusively through private
    placements of preferred stock and convertible debt and we have
    incurred losses in each year since our inception in September
    2004. Our net losses were approximately $15,000 in 2004,
    $540,000 in 2005, $8.7&#160;million in 2006, $25.7&#160;million
    in 2007 and $18.1&#160;million in 2008. For the six months ended
    June&#160;30, 2009, our net loss was $7.1&#160;million and as of
    June&#160;30, 2009, we had an accumulated deficit of
    approximately $60.1&#160;million. Substantially all of our
    losses resulted from costs incurred in connection with our
    product development programs and from general and administrative
    costs associated with our operations.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We expect to incur additional losses over the next several
    years, and these losses may increase if we cannot generate
    revenues. These losses, combined with expected future losses,
    have had and will continue to have an adverse effect on our
    stockholders&#146; equity and working capital. We expect our
    development expenses, as well as our clinical product
    manufacturing expenses, to increase in connection with our
    planned pivotal Phase 3 clinical study for
    <FONT style="white-space: nowrap">A-002,</FONT> our
    ongoing Phase 2 clinical study for
    <FONT style="white-space: nowrap">A-001,</FONT> our
    planned Phase 2 clinical study for
    <FONT style="white-space: nowrap">A-623</FONT> and
    our other product candidates. In addition, we will incur
    additional costs of operating as a public company and, if we
    obtain regulatory approval for any of our product candidates, we
    may incur significant sales, marketing, in-licensing and
    outsourced manufacturing expenses as well as continued product
    development expenses. As a result, we expect to continue to
    incur significant and increasing losses for the foreseeable
    future.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: Arial, Helvetica">We have never
    generated any revenue and may never be profitable.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Our ability to generate revenue and achieve profitability
    depends on our ability, alone or with collaborators, to
    successfully complete the development of our product candidates,
    conduct preclinical tests in animals and clinical studies in
    human beings, obtain the necessary regulatory approvals for our
    product candidates and commercialize any approved products. We
    have not generated any revenue from our development-stage
    product candidates, and we do not know when, or if, we will
    generate any revenue. The commercial success of our
    development-stage product candidates will depend on a number of
    factors, including, but not limited to, our ability to:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    obtain favorable results for and advance the development of our
    lead product candidate,
    <FONT style="white-space: nowrap">A-002,</FONT> for
    the treatment of acute coronary syndrome, including successfully
    launching and completing a pivotal Phase 3 clinical study;
</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    8
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    obtain favorable results for and advance the development of our
    product candidate
    <FONT style="white-space: nowrap">A-001,</FONT> for
    the prevention of acute chest syndrome associated with sickle
    cell disease, including completing a multi-center Phase 2
    clinical study;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    obtain favorable results for and advance the development of our
    product candidate
    <FONT style="white-space: nowrap">A-623,</FONT> for
    the treatment of B-cell mediated autoimmune diseases, including
    successfully launching and completing a Phase 2 clinical study
    in patients with systemic lupus erythematosus, or lupus;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    successfully execute our planned preclinical studies in animals
    and clinical studies in human beings for our other product
    candidates;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    obtain regulatory approval for
    <FONT style="white-space: nowrap">A-002,</FONT>
    <FONT style="white-space: nowrap">A-001,</FONT>
    <FONT style="white-space: nowrap">A-623</FONT> and
    our other product candidates;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    if regulatory approvals are obtained, begin the commercial
    manufacturing of our product candidates with our third-party
    manufacturers;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    launch commercial sales and effectively market our product
    candidates, either independently or in strategic collaborations
    with third parties;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    achieve broad market acceptance of our product candidates in the
    medical community and with third-party payors.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    All of our product candidates are subject to the risks of
    failure inherent in the development of therapeutics based on new
    technologies. Currently, we have three product candidates in
    clinical development:
    <FONT style="white-space: nowrap">A-002,</FONT>
    <FONT style="white-space: nowrap">A-001</FONT> and
    <FONT style="white-space: nowrap">A-623.</FONT> These
    product candidates could fail in clinical studies if we are
    unable to demonstrate that they are effective or if they cause
    unacceptable adverse effects in the patients we treat. Failure
    of our product candidates in clinical studies would have a
    material adverse effect on our ability to generate revenue or
    become profitable. If we are not successful in achieving
    regulatory approval for our product candidates or are
    significantly delayed in doing so, our business will be
    materially harmed.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Additionally, all of our other product candidates are in
    preclinical development. Our drug discovery efforts may not
    produce any other viable or marketable product candidates. We do
    not expect any of our potential product candidates to be
    commercially available until at least 2013.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Even if our product candidates are approved for commercial sale,
    the approved product candidate may not gain market acceptance or
    achieve commercial success. Physicians, patients, payors or the
    medical community in general may be unwilling to accept, utilize
    or recommend any of our products. We would anticipate incurring
    significant costs associated with commercializing any approved
    product. Even if we are able to generate product sales, which we
    cannot guarantee, we may not achieve profitability soon
    thereafter, if ever. If we are unable to generate product
    revenues, we will not become profitable and may be unable to
    continue operations without additional funding.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: Arial, Helvetica">We will need
    substantial additional capital in the future to fund our
    operations and develop our product candidates. If additional
    capital is not available, we will have to delay, reduce or cease
    operations.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We will need to raise substantial additional capital to fund our
    operations and to develop our product candidates. Our future
    capital requirements could be substantial and will depend on
    many factors including:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the rate of progress of our planned pivotal Phase 3 clinical
    study for
    <FONT style="white-space: nowrap">A-002,</FONT> our
    ongoing Phase 2 clinical study for
    <FONT style="white-space: nowrap">A-001</FONT> and
    our planned Phase 2 clinical study for
    <FONT style="white-space: nowrap">A-623;</FONT>
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the scope, size, rate of progress, results and costs of our
    preclinical studies, clinical studies and other development
    activities for one or more of our other product candidates;
</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    9
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the cost, timing and outcomes of regulatory proceedings;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    payments received under any strategic collaborations;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the filing, prosecution and enforcement of patent claims;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the costs associated with commercializing our product candidates
    if they receive regulatory approval, including the cost and
    timing of developing sales and marketing capabilities, or
    entering into strategic collaboration with others relating to
    the commercialization of our product candidates;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    revenues received from approved products, if any, in the future.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    As of the date of this prospectus, we anticipate that the net
    proceeds of this offering and interest earned thereon, together
    with our existing cash, cash equivalents and short-term
    investments, will enable us to maintain our currently planned
    operations through at least the next 12&#160;months. Changing
    circumstances may cause us to consume capital significantly
    faster than we currently anticipate. Additional financing may
    not be available when we need it or may not be available on
    terms that are favorable to us. If adequate funds are not
    available to us on a timely basis, or at all, we may be required
    to:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    terminate, reduce or delay preclinical studies, clinical studies
    or other development activities for one or more of our product
    candidates;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    terminate, reduce or delay our (i)&#160;establishment of sales
    and marketing capabilities, (ii)&#160;pursuit of strategic
    collaborations with others relating to the sales, marketing and
    commercialization of our product candidates or (iii)&#160;other
    activities that may be necessary to commercialize our product
    candidates, if approved for sale.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: Arial, Helvetica">The timing of
    the milestone and royalty payments we are required to make to
    each of Eli Lilly and Company, Shionogi&#160;&#038; Co., Ltd.
    and Amgen Inc. is uncertain and could adversely affect our cash
    flows and results of operations.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    In July 2006, we entered into a license agreement with Eli Lilly
    and Company, or Eli Lilly, and Shionogi&#160;&#038; Co., Ltd. to
    develop and commercialize certain secretory phospholipase
    A<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>,
    or
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>,
    inhibitors for the treatment of cardiovascular disease and other
    diseases. Pursuant to our license agreement with them, we have
    an obligation to pay to each of Eli Lilly and
    Shionogi&#160;&#038; Co., Ltd. significant milestone and royalty
    payments based upon how we develop and commercialize certain
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    inhibitors, including
    <FONT style="white-space: nowrap">A-002</FONT> and
    <FONT style="white-space: nowrap">A-001,</FONT> and
    our achievement of certain significant corporate, clinical and
    financial events. Such milestone payments include a
    $1.75&#160;million payment to each of Eli Lilly and
    Shionogi&#160;&#038; Co., Ltd., which payments are due no later
    than 12&#160;months from the enrollment of the first patient in
    a Phase&#160;3 clinical study for
    <FONT style="white-space: nowrap">A-002.</FONT> In
    addition, in December 2007, we entered into a license agreement
    with Amgen Inc., or Amgen, pursuant to which we obtained an
    exclusive worldwide license to certain technology and compounds
    relating to
    <FONT style="white-space: nowrap">A-623.</FONT>
    Pursuant to our license agreement with Amgen, we are required to
    make various milestone payments upon our achievement of certain
    development, regulatory and commercial objectives for any
    <FONT style="white-space: nowrap">A-623</FONT>
    formulation. We are also required to make tiered quarterly
    royalty payments on net sales. The timing of our achievement of
    these events and corresponding milestone payments becoming due
    to Eli Lilly, Shionogi&#160;&#038; Co., Ltd. and Amgen is
    subject to factors relating to the clinical and regulatory
    development and commercialization of certain
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    inhibitors or
    <FONT style="white-space: nowrap">A-623,</FONT> as
    applicable, many of which are beyond our control. We may become
    obligated to make a milestone payment during a period in which
    we do not have the cash on hand to make such payment, which
    could require us to delay our clinical studies, curtail our
    operations, scale back our commercialization and marketing
    efforts or seek funds to meet these obligations at terms
    unfavorable to us.
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    10
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: Arial, Helvetica">Our ability to
    develop
    <FONT style="white-space: nowrap">A-623</FONT>
    depends on our ability to make payment or agree to alternative
    payment terms with Amgen regarding an unpaid license
    fee.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Our license agreement with Amgen to develop and commercialize
    <FONT style="white-space: nowrap">A-623</FONT>
    obligates us to pay Amgen an upfront license fee of
    $6.0&#160;million. As of the date of this prospectus,
    $4.5&#160;million of this fee is unpaid.  If we do not make this
    payment, our clinical studies and development activities for
    <FONT style="white-space: nowrap">A-623</FONT> may be
    delayed or terminated. If we are unable to make this payment or
    agree to alternative payment terms, Amgen may notify us of its
    intent to terminate the license agreement. We will have 30 days
    from the time of notification to make payment and cure the
    breach. As of the date of this prospectus, we have not been
    notified by Amgen of any intention to claim breach or terminate
    the license agreement.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: Arial, Helvetica">Our limited
    operating history makes it difficult to evaluate our business
    and prospects.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We were incorporated in September 2004. Our operations to date
    have been limited to organizing and staffing our company,
    acquiring product and technology rights, conducting product
    development activities for our primary product candidates,
    <FONT style="white-space: nowrap">A-002,</FONT>
    <FONT style="white-space: nowrap">A-001</FONT> and
    <FONT style="white-space: nowrap">A-623,</FONT> and
    performing research and development. We have not yet
    demonstrated an ability to obtain regulatory approval for or
    commercialize a product candidate. Consequently, any predictions
    about our future performance may not be as accurate as they
    could be if we had a history of successfully developing and
    commercializing pharmaceutical products.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Risks Associated
    with Development and Commercialization of Our Product
    Candidates</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: Arial, Helvetica">We depend
    substantially on the success of our three primary product
    candidates,
    <FONT style="white-space: nowrap">A-002,</FONT>
    <FONT style="white-space: nowrap">A-001</FONT> and
    <FONT style="white-space: nowrap">A-623,</FONT> which
    are still under clinical development. We cannot assure you that
    these product candidates or any of our other product candidates
    will receive regulatory approval or be successfully
    commercialized.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    To date, we have not marketed, distributed or sold any product
    candidates. The success of our business depends primarily upon
    our ability to develop and commercialize our three primary
    product candidates successfully. Our lead product candidate is
    <FONT style="white-space: nowrap">A-002,</FONT> which
    has completed its Phase 2 clinical studies and has received
    (i)&#160;advice on a special protocol assessment, or SPA, from
    the U.S. Food and Drug Administration, or FDA, on a Phase 3
    protocol and (ii)&#160;scientific advice from the European
    Medicines Agency on our European development strategy for
    <FONT style="white-space: nowrap">A-002.</FONT>
    Assuming an SPA agreement is timely obtained, we plan to
    initiate a Phase 3 clinical study for
    <FONT style="white-space: nowrap">A-002</FONT> by the
    end of 2009. Our next product candidate is
    <FONT style="white-space: nowrap">A-001,</FONT> which
    is currently in a Phase 2 clinical study and for which we have
    an end of Phase 2 meeting scheduled with the FDA in late 2009 to
    review the interim data from our Phase&#160;2 clinical study and
    to discuss the Phase&#160;3 clinical study design for the use of
    <FONT style="white-space: nowrap">A-001</FONT> to
    prevent acute chest syndrome associated with sickle cell
    disease. Our third product candidate is
    <FONT style="white-space: nowrap">A-623,</FONT> which
    has completed Phase 1 clinical studies and for which we expect
    to commence a Phase 2 clinical study in the second half of 2010.
    Our product candidates are prone to the risks of failure
    inherent in drug development. Before obtaining regulatory
    approvals for the commercial sale of any product candidate for a
    target indication, we must demonstrate with substantial evidence
    gathered in preclinical and well-controlled clinical studies,
    and, with respect to approval in the United States, to the
    satisfaction of the FDA and, with respect to approval in other
    countries, similar regulatory authorities in those countries,
    that the product candidate is safe and effective for use for
    that target indication and that the manufacturing facilities,
    processes and controls are adequate. Despite our efforts, our
    product candidates may&#160;not:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    offer therapeutic or other improvement over existing, comparable
    therapeutics;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    be proven safe and effective in clinical studies;
</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    11
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    meet applicable regulatory standards;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    be capable of being produced in sufficient quantities at
    acceptable costs;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    be successfully commercialized;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    obtain favorable reimbursement.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We are not permitted to market our
    <FONT style="white-space: nowrap">A-002</FONT> and
    <FONT style="white-space: nowrap">A-001</FONT>
    product candidates in the United&#160;States until we receive
    approval of a new drug application, or NDA, or with respect to
    our <FONT style="white-space: nowrap">A-623</FONT>
    product candidate, approval of a biologics license application,
    or BLA, from the FDA, or in any foreign countries until we
    receive the requisite approval from such countries. We have not
    submitted an NDA or BLA or received marketing approval for any
    of our product candidates.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Preclinical testing and clinical studies are long, expensive and
    uncertain processes. We may spend several years completing our
    testing for any particular product candidate, and failure can
    occur at any stage. Negative or inconclusive results or adverse
    medical events during a clinical study could also cause the FDA
    or us to terminate a clinical study or require that we repeat it
    or conduct additional clinical studies. Additionally, the FDA
    and equivalent foreign regulatory agencies have substantial
    discretion in the approval process and may decide that our data
    is insufficient to support a marketing application and require
    additional preclinical, clinical or other studies.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: Arial, Helvetica">Any
    termination or suspension of, or delays in the commencement or
    completion of, clinical testing of our product candidates could
    result in increased costs to us, delay or limit our ability to
    generate revenue and adversely affect our commercial
    prospects.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Delays in the commencement or completion of clinical testing
    could significantly affect our product development costs. We do
    not know whether planned clinical studies will begin on time or
    be completed on schedule, if at all. The commencement and
    completion of clinical studies can be delayed for a number of
    reasons, including delays related to:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    obtaining regulatory approval to commence a clinical study or
    complying with conditions imposed by a regulatory authority
    regarding the scope or design of a clinical study;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    reaching agreement on acceptable terms with prospective clinical
    research organizations, or CROs, and study sites, the terms of
    which can be subject to extensive negotiation and may vary
    significantly among different CROs and study sites;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    manufacturing, including manufacturing sufficient quantities of
    a product candidate or other materials for use in clinical
    studies;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    obtaining institutional review board, or IRB, approval or the
    approval of other reviewing entities to conduct a clinical study
    at a prospective site;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    recruiting and enrolling patients to participate in clinical
    studies for a variety of reasons, including size of patient
    population, nature of clinical study protocol, the availability
    of approved effective treatments for the relevant disease and
    competition from other clinical study programs for similar
    indications;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    severe or unexpected drug-related adverse effects experienced by
    patients in a clinical study;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    retaining patients who have initiated a clinical study, but may
    withdraw due to treatment protocol, adverse effects from the
    therapy, lack of efficacy from the treatment, personal issues or
    who are lost to further
    <FONT style="white-space: nowrap">follow-up.</FONT>
</TD>
</TR>

</TABLE>

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    <BR>
    12
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Clinical studies may also be delayed, suspended or terminated as
    a result of ambiguous or negative interim results, or results
    that are inconsistent with earlier results. For example, the
    Data Safety Monitoring Board, or DSMB, may recommend that we
    stop our planned Phase&#160;3 clinical study for
    <FONT style="white-space: nowrap">A-002</FONT> if
    certain biomarkers of inflammation and lipid profiles fail to
    meet pre-specified reductions in the first 1,000 or more
    patients. In addition, a clinical study may be suspended or
    terminated by us, the FDA, the IRB or other reviewing entity
    overseeing the clinical study at issue, any of our clinical
    study sites with respect to that site, or other regulatory
    authorities due to a number of factors, including:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    failure to conduct the clinical study in accordance with
    regulatory requirements or our clinical protocols;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    inspection of the clinical study operations or study sites by
    the FDA or other regulatory authorities resulting in the
    imposition of a clinical hold;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    unforeseen safety issues or any determination that a clinical
    study presents unacceptable health risks;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    lack of adequate funding to continue the clinical study,
    including the incurrence of unforeseen costs due to enrollment
    delays, requirements to conduct additional clinical studies and
    increased expenses associated with the services of our CROs and
    other third parties.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Product development costs to us and our collaborators will
    increase if we have delays in testing or approval of our product
    candidates or if we need to perform more or larger clinical
    studies than planned. For example, we may need to increase our
    sample size for our planned Phase&#160;3 clinical study for
    <FONT style="white-space: nowrap">A-002</FONT> if the
    overall major adverse cardiovascular event, or MACE, rate is
    lower than expected. We typically rely on third-party clinical
    investigators at medical institutions and health care facilities
    to conduct our clinical studies and, as a result, we may face
    additional delaying factors outside our control.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Additionally, changes in regulatory requirements and policies
    may occur and we may need to amend clinical study protocols to
    reflect these changes. Amendments may require us to resubmit our
    clinical study protocols to IRBs for reexamination, which may
    impact the costs, timing or successful completion of a clinical
    study. If we experience delays in completion of, or if we, the
    FDA or other regulatory authorities, the IRB or other reviewing
    entities, or any of our clinical study sites suspend or
    terminate any of our clinical studies, the commercial prospects
    for our product candidates may be harmed and our ability to
    generate product revenues will be delayed. In addition, many of
    the factors that cause, or lead to, termination or suspension
    of, or a delay in the commencement or completion of, clinical
    studies may also ultimately lead to the denial of regulatory
    approval of a product candidate. Also, if one or more clinical
    studies are delayed, our competitors may be able to bring
    products to market before we do, and the commercial viability of
    our product candidates could be significantly reduced.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: Arial, Helvetica">The results of
    biomarker assays in earlier clinical studies in
    <FONT style="white-space: nowrap">A-002</FONT> are
    not necessarily predictive of future results, and therefore the
    results of biomarker assays in a Phase 3 clinical study may not
    be similar to those observed previously.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Success in our Phase 2 clinical studies in lowering low-density
    lipoprotein cholesterol, or LDL-C, C-reactive protein, or CRP,
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    and interleukin-6, or IL-6, during treatment with
    <FONT style="white-space: nowrap">A-002</FONT> does
    not ensure that later clinical studies, such as our planned
    Phase 3 clinical study, will demonstrate similar reductions in
    these biomarkers. Each of these biomarkers has been associated
    with an increased risk for secondary MACE following an acute
    coronary syndrome. Our inability to demonstrate similar
    biomarker effects in our planned Phase 3 clinical study may
    reduce our ability to achieve our primary endpoint to reduce
    MACE and to achieve regulatory approval of
    <FONT style="white-space: nowrap">A-002.</FONT>
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    13
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: Arial, Helvetica">Because the
    results of preclinical testing or earlier clinical studies are
    not necessarily predictive of future results,
    <FONT style="white-space: nowrap">A-002,</FONT>
    <FONT style="white-space: nowrap">A-001,</FONT>
    <FONT style="white-space: nowrap">A-623</FONT> or any
    other product candidate we advance into clinical studies may not
    have favorable results in later clinical studies or receive
    regulatory approval.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Success in preclinical testing and early clinical studies does
    not ensure that later clinical studies will generate adequate
    data to demonstrate the efficacy and safety of an
    investigational drug or biologic. A number of companies in the
    pharmaceutical and biotechnology industries, including those
    with greater resources and experience, have suffered significant
    setbacks in Phase 3 clinical studies, even after seeing
    promising results in earlier clinical studies. Despite the
    results reported in earlier clinical studies for our product
    candidates, including
    <FONT style="white-space: nowrap">A-002,</FONT>
    <FONT style="white-space: nowrap">A-001</FONT> and
    <FONT style="white-space: nowrap">A-623,</FONT> we do
    not know whether any Phase 3 or other clinical studies we may
    conduct will demonstrate adequate efficacy and safety to result
    in regulatory approval to market any of our product candidates.
    If later stage clinical studies do not produce favorable
    results, our ability to achieve regulatory approval for any of
    our product candidates may be adversely impacted.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: Arial, Helvetica">If we breach
    the license agreements for our primary product candidates, we
    could lose the ability to continue the development and
    commercialization of our primary product
    candidates.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We are party to an agreement with Eli Lilly and
    Shionogi&#160;&#038; Co., Ltd. containing exclusive, worldwide
    licenses, except for Japan, of the composition of matter,
    methods of making and methods of use for certain
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    inhibitors. We are also party to an agreement with Amgen
    containing exclusive, worldwide licenses of the composition of
    matter and methods of use for
    <FONT style="white-space: nowrap">A-623.</FONT> These
    agreements require us to make timely milestone and royalty
    payments, provide regular information, maintain the
    confidentiality of and indemnify Eli Lilly, Shionogi&#160;&#038;
    Co., Ltd. and Amgen under the terms of the agreements.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    If we fail to meet these obligations, our licensors may
    terminate our exclusive licenses and may be able to re-obtain
    licensed technology and aspects of any intellectual property
    controlled by us that relate to the licensed technology that
    originated from the licensors. Our licensors could effectively
    take control of the development and commercialization of
    <FONT style="white-space: nowrap">A-002,</FONT>
    <FONT style="white-space: nowrap">A-001</FONT> and
    <FONT style="white-space: nowrap">A-623</FONT> after
    an uncured, material breach of our license agreements by us or
    if we voluntarily terminate the agreements. While we would
    expect to exercise all rights and remedies available to us,
    including seeking to cure any breach by us, and otherwise seek
    to preserve our rights under the patents licensed to us, we may
    not be able to do so in a timely manner, at an acceptable cost
    or at all. Any uncured, material breach under the licenses could
    result in our loss of exclusive rights and may lead to a
    complete termination of our product development and any
    commercialization efforts for
    <FONT style="white-space: nowrap">A-002,</FONT>
    <FONT style="white-space: nowrap">A-001</FONT> or
    <FONT style="white-space: nowrap">A-623.</FONT>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: Arial, Helvetica">Our industry
    is subject to intense competition. If we are unable to compete
    effectively, our product candidates may be rendered
    non-competitive or obsolete.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The pharmaceutical industry is highly competitive and subject to
    rapid and significant technological change. Our potential
    competitors include large pharmaceutical and more established
    biotechnology companies, specialty pharmaceutical and generic
    drug companies, academic institutions, government agencies and
    other public and private research organizations that conduct
    research, seek patent protection and establish collaborative
    arrangements for research, development, manufacturing and
    commercialization. All of these competitors currently engage in,
    have engaged in or may engage in the future in the development,
    manufacturing, marketing and commercialization of
    pharmaceuticals and biotechnologies, some of which may compete
    with our present or future product candidates. It is possible
    that any of these competitors could develop technologies or
    products that would render our product candidates obsolete or
    non-competitive, which could adversely affect our revenue
    potential. Key competitive factors affecting the commercial
    success of our product
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    14
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    candidates are likely to be efficacy, safety profile,
    reliability, convenience of dosing, price and reimbursement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The market for inflammatory disease therapeutics is especially
    large and competitive. All of the
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    inhibitor compounds we are currently developing, if approved,
    will face intense competition, either as monotherapies or in
    combination therapies. We are aware of other companies with
    products in development that are being tested for
    anti-inflammatory benefits in patients with acute coronary
    syndrome, such as Via Pharmaceuticals, Inc. and its
    <FONT style="white-space: nowrap">5-lipoxygenase,</FONT>
    or 5-LO, inhibitor, which has been evaluated in Phase 2 clinical
    studies; and GlaxoSmithKline plc and its product candidate,
    darapladib, which is a lipoprotein associated phospholipase
    A<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>,
    or
    Lp-PLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>,
    inhibitor currently being evaluated in Phase 3 clinical studies.
    Although there are no
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    inhibitor compounds currently approved by the FDA for the
    treatment of acute chest syndrome associated with sickle cell
    disease, Droxia, or hydroxyurea, is approved for the prevention
    of vaso-occlusive crisis, or VOC, in sickle cell disease and
    thus could reduce the pool of patients with VOC at risk for
    acute chest syndrome. Further, we are aware of companies with
    other products in development that are being tested for
    potential treatment of lupus, including Human Genome Sciences,
    Inc. and GlaxoSmithKline plc, who have a BLyS antagonist
    monoclonal antibody product candidate, Benlysta, which recently
    reported favorable results from a Phase 3 clinical study in
    lupus; Zymogenetics, Inc. and Merck Serono S.A., whose dual
    BLyS/APRIL antagonist fusion protein, Atacicept, is in a Phase 3
    clinical study for lupus; and Immunomedics, Inc. and UCB S.A.,
    who recently reported favorable results for their CD-22
    antagonist humanized antibody, epratuzumab, which completed a
    Phase 2b clinical study in lupus.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Many of our potential competitors have substantially greater
    financial, technical and human resources than we do and
    significantly greater experience in the discovery and
    development of drug candidates, obtaining FDA and other
    regulatory approvals of products and the commercialization of
    those products. Accordingly, our competitors may be more
    successful than we may be in obtaining FDA approval for drugs
    and achieving widespread market acceptance. Our
    competitors&#146; drugs may be more effective, have fewer
    adverse effects, be less expensive to develop and manufacture or
    be more effectively marketed and sold than any product candidate
    we may commercialize and may render our product candidates
    obsolete or non-competitive before we can recover the expenses
    of developing and commercializing any of our product candidates.
    We anticipate that we will face intense and increasing
    competition as new drugs enter the market and advanced
    technologies become available. These entities may also establish
    collaborative or licensing relationships with our competitors.
    Finally, the development of new treatment methods for the
    diseases we are targeting could render our drugs non-competitive
    or obsolete. All of these factors could adversely affect our
    business.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: Arial, Helvetica">Our product
    candidates may cause undesirable adverse effects or have other
    properties that could delay or prevent their regulatory approval
    or limit the commercial profile of any approved
    label.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Undesirable adverse effects caused by our product candidates
    could cause us, IRBs or other reviewing entities, clinical study
    sites, or regulatory authorities to interrupt, delay or halt
    clinical studies and could result in the denial of regulatory
    approval by the FDA or other regulatory authorities. Phase 2
    clinical studies conducted by us with our product candidates
    have generated differences in adverse effects and serious
    adverse events. The most common adverse effects seen with any of
    our product candidates versus placebo include diarrhea,
    headache, nausea and increases in alanine aminotransferase,
    which is an enzyme that indicates liver cell injury. The most
    common serious adverse events seen with any of our product
    candidates include death, VOC and congestive heart failure.
    While none of these serious adverse events were considered
    related to the administration of our product candidates by the
    clinical investigators, if serious adverse events that are
    considered related to our product candidates are observed in any
    Phase&#160;3 clinical studies,
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    15
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    our ability to obtain regulatory approval for our product
    candidates may be adversely impacted. Further, if any of our
    product candidates receives marketing approval and we or others
    later discover, after approval and use in an increasing number
    of patients, that our products could have adverse effect
    profiles that limit their usefulness or require their withdrawal
    (whether or not the therapies showed the adverse effect profile
    in Phase 1 through Phase 3 clinical studies), a number of
    potentially significant negative consequences could result,
    including:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    regulatory authorities may withdraw their approval of the
    product;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    regulatory authorities may require the addition of labeling
    statements, such as warnings or contraindications;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    we may be required to change the way the product is
    administered, conduct additional clinical studies or change the
    labeling of the product;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    we could be sued and held liable for harm caused to
    patients;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    our reputation may suffer.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Any of these events could prevent us from achieving or
    maintaining market acceptance of the affected product candidate
    and could substantially increase the costs of commercializing
    our product candidates.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: Arial, Helvetica">After the
    completion of our clinical studies, we cannot predict whether or
    when we will obtain regulatory approval to commercialize our
    product candidates and we cannot, therefore, predict the timing
    of any future revenue from these product
    candidates.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We cannot commercialize any of our product candidates until the
    appropriate regulatory authorities have reviewed and approved
    the applications for the product candidates. We cannot assure
    you that the regulatory agencies will complete their review
    processes in a timely manner or that we will obtain regulatory
    approval for any product candidate we develop. Satisfaction of
    regulatory requirements typically takes many years, is dependent
    upon the type, complexity and novelty of the product and
    requires the expenditure of substantial resources. In addition,
    we may experience delays or rejections based upon additional
    government regulation from future legislation or administrative
    action or changes in FDA policy during the period of product
    development, clinical studies and FDA regulatory review.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: Arial, Helvetica">We are in
    discussions with the FDA to obtain an SPA for our planned
    Phase&#160;3 clinical study of
    <FONT style="white-space: nowrap">A-002</FONT> for
    the potential treatment of acute coronary syndrome, which does
    not guarantee any particular outcome from regulatory review of
    the study or the product candidate.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The FDA&#146;s SPA process creates a written agreement between
    the sponsoring company and the FDA regarding clinical study
    design and other clinical study issues that can be used to
    support approval of a product candidate. The SPA is intended to
    provide assurance that if the agreed upon clinical study
    protocols are followed and the clinical study endpoints are
    achieved, the data may serve as the primary basis for an
    efficacy claim in support of an NDA. However, the SPA agreement
    is not a guarantee of an approval of a product or any
    permissible claims about the product. In particular, the SPA is
    not binding on the FDA if public health concerns unrecognized at
    the time of the SPA agreement is entered into become evident,
    other new scientific concerns regarding product safety or
    efficacy arise or if the sponsor company fails to comply with
    the agreed upon clinical study protocols. We are currently in
    discussions with the FDA to obtain an SPA for our planned Phase
    3 clinical study of
    <FONT style="white-space: nowrap">A-002</FONT> for
    the potential short-term (16-week) treatment of acute coronary
    syndrome. We cannot guarantee you that we will obtain an SPA. If
    we reach agreement with the FDA on an SPA, we do not know how
    the FDA will interpret the commitments under an agreed upon SPA
    agreement, how it will interpret the data
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    16
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    and results or whether it will approve our
    <FONT style="white-space: nowrap">A-002</FONT>
    product candidate for the short-term (16-week) treatment of
    acute coronary syndrome. As a result, we cannot guarantee any
    particular outcome from regulatory review of our planned
    Phase&#160;3 clinical&#160;study.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: Arial, Helvetica">Even if our
    product candidates receive regulatory approval, they may still
    face future development and regulatory
    difficulties.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Even if U.S.&#160;regulatory approval is obtained, the FDA may
    still impose significant restrictions on a product&#146;s
    indicated uses or marketing or impose ongoing requirements for
    potentially costly post-approval studies or post-market
    surveillance. For example, the label ultimately approved for
    <FONT style="white-space: nowrap">A-002,</FONT> if
    any, may include restrictions on use. Further, the FDA has
    indicated that long-term safety data on
    <FONT style="white-space: nowrap">A-002</FONT> may
    need to be obtained as a post-market requirement. Our product
    candidates will also be subject to ongoing FDA requirements
    governing the labeling, packaging, storage, distribution, safety
    surveillance, advertising, promotion, recordkeeping and
    reporting of safety and other post-market information. In
    addition, manufacturers of drug products and their facilities
    are subject to continual review and periodic inspections by the
    FDA and other regulatory authorities for compliance with current
    good manufacturing practices, or cGMP, regulations. If we or a
    regulatory agency discovers previously unknown problems with a
    product, such as adverse events of unanticipated severity or
    frequency, or problems with the facility where the product is
    manufactured, a regulatory agency may impose restrictions on
    that product, the manufacturing facility or us, including
    requiring recall or withdrawal of the product from the market or
    suspension of manufacturing. If we, our product candidates or
    the manufacturing facilities for our product candidates fail to
    comply with applicable regulatory requirements, a regulatory
    agency may:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    issue warning letters or untitled letters;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    seek an injunction or impose civil or criminal penalties or
    monetary fines;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    suspend or withdraw regulatory approval;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    suspend any ongoing clinical studies;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    refuse to approve pending applications or supplements to
    applications filed by us;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    suspend or impose restrictions on operations, including costly
    new manufacturing requirements;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    seize or detain products, refuse to permit the import or export
    of products, or require us to initiate a product recall.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The occurrence of any event or penalty described above may
    inhibit our ability to commercialize our products and generate
    revenue.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: Arial, Helvetica">New legal and
    regulatory requirements could make it more difficult for us to
    obtain approvals for our product candidates and could limit or
    make more burdensome our ability to commercialize any approved
    products.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    New federal legislation or regulatory requirements could affect
    the requirements for obtaining regulatory approvals of our
    product candidates or otherwise limit our ability to
    commercialize any approved products or subject our products to
    more rigorous post-approval requirements. For example, the FDA
    Amendments Act of 2007 granted the FDA new authority to impose
    post-approval clinical study requirements, require
    safety-related changes to product labeling and require the
    adoption of risk management plans, referred to in the
    legislation as risk evaluation and mitigation strategies, or
    REMS. The REMS may include requirements for special labeling or
    medication guides for patients, special communication plans to
    health care professionals, and restrictions on distribution and
    use. Pursuant to the FDA Amendments Act of 2007, if the FDA
    makes the requisite findings, it might require that a new
    product be used
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    17
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    only by physicians with specified specialized training, only in
    specified designated health care settings, or only in
    conjunction with special patient testing and monitoring. The
    legislation also included the following: requirements for
    providing the public information on ongoing clinical studies
    through a clinical study registry and for disclosing clinical
    study results to the public through such registry; renewed
    requirements for conducting clinical studies to generate
    information on the use of products in pediatric patients; and
    substantial new penalties, for example, for false or misleading
    consumer advertisements. Other proposals have been made to
    impose additional requirements on drug approvals, further expand
    post-approval requirements, and restrict sales and promotional
    activities. The new legislation, and the additional proposals if
    enacted, may make it more difficult or burdensome for us to
    obtain approval of our product candidates, any approvals we
    receive may be more restrictive or be subject to onerous
    <FONT style="white-space: nowrap">post-approval</FONT>
    requirements, our ability to successfully commercialize approved
    products may be hindered and our business may be harmed as a
    result.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: Arial, Helvetica">If any of our
    product candidates for which we receive regulatory approval does
    not achieve broad market acceptance, the revenue that we
    generate from its sales, if any, will be limited.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The commercial success of our product candidates for which we
    obtain marketing approval from the FDA or other regulatory
    authorities will depend upon the acceptance of these products by
    the medical community, including physicians, patients and health
    care payors. The degree of market acceptance of any of our
    approved products will depend on a number of factors, including:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    demonstration of clinical safety and efficacy compared to other
    products;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the relative convenience, ease of administration and acceptance
    by physicians and payors of
    <FONT style="white-space: nowrap">A-002</FONT> in the
    treatment of acute coronary syndrome,
    <FONT style="white-space: nowrap">A-001</FONT> in the
    prevention of acute chest syndrome associated with sickle cell
    disease and
    <FONT style="white-space: nowrap">A-623</FONT> in the
    treatment of lupus;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


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    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the prevalence and severity of any adverse effects;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


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    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    limitations or warnings contained in a product&#146;s
    FDA-approved labeling;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    availability of alternative treatments, including, in the case
    of <FONT style="white-space: nowrap">A-002,</FONT> a
    number of competitive products being studied for
    anti-inflammatory benefits in patients with acute coronary
    syndrome or expected to be commercially launched in the near
    future;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    pricing and cost-effectiveness;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the effectiveness of our or any future collaborators&#146; sales
    and marketing strategies;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    our ability to obtain and maintain sufficient third-party
    coverage or reimbursement from government health care programs,
    including Medicare and Medicaid;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the willingness of patients to pay
    <FONT style="white-space: nowrap">out-of-pocket</FONT>
    in the absence of third-party coverage.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    If our product candidates are approved but do not achieve an
    adequate level of acceptance by physicians, health care payors
    and patients, we may not generate sufficient revenue from these
    products, and we may not become or remain profitable. In
    addition, our efforts to educate the medical community and
    third-party payors on the benefits of our product candidates may
    require significant resources and may never be successful.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: Arial, Helvetica">Our future
    success depends on our ability to retain our chief executive
    officer and other key executives and to attract, retain and
    motivate qualified personnel.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We are highly dependent on Mr.&#160;Paul F. Truex, our President
    and Chief Executive Officer, Dr.&#160;James E. Pennington, our
    Executive Vice President and Chief Medical Officer,
    Dr.&#160;Colin
</DIV>

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    <BR>
    18
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Hislop, our Senior Vice President of Cardiovascular Products and
    the other principal members of our executive team listed under
    &#147;Management&#148; on page&#160;93. The loss of the services
    of any of these persons might impede the achievement of our
    research, development and commercialization objectives.
    Recruiting and retaining qualified scientific personnel and
    possibly sales and marketing personnel will also be critical to
    our success. We may not be able to attract and retain these
    personnel on acceptable terms given the competition among
    numerous pharmaceutical and biotechnology companies for similar
    personnel. We also experience competition for the hiring of
    scientific personnel from universities and research
    institutions. Failure to succeed in clinical studies may make it
    more challenging to recruit and retain qualified scientific
    personnel. In addition, we rely on consultants and advisors,
    including scientific and clinical advisors, to assist us in
    formulating our research and development and commercialization
    strategy. Our consultants and advisors may be employed by
    employers other than us and may have commitments under
    consulting or advisory contracts with other entities that may
    limit their availability to us.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: Arial, Helvetica">Legislative or
    regulatory reform of the health care system in the United States
    and foreign jurisdictions may affect our ability to sell our
    products profitably.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Our ability to commercialize our future products successfully,
    alone or with collaborators, will depend in part on the extent
    to which reimbursement for the products will be available from
    government and health administration authorities, private health
    insurers and other third-party payors. The continuing efforts of
    the U.S.&#160;and foreign governments, insurance companies,
    managed care organizations and other payors of health care
    services to contain or reduce health care costs may adversely
    affect our ability to set prices for our products which we
    believe are fair, and our ability to generate revenues and
    achieve and maintain profitability.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Specifically, in both the United States and some foreign
    jurisdictions, there have been a number of legislative and
    regulatory proposals to change the health care system in ways
    that could affect our ability to sell our products profitably.
    Congress is considering a number of proposals that are intended
    to reduce or limit the growth of health care costs and which
    could significantly transform the market for pharmaceuticals and
    biological products. We expect further federal and state
    proposals and health care reforms to continue to be proposed by
    legislators, which could limit the prices that can be charged
    for the products we develop and may limit our commercial
    opportunity. In the United States, the Medicare Prescription
    Drug, Improvement, and Modernization Act of 2003, also called
    the Medicare Modernization Act, or MMA, changed the way Medicare
    covers and pays for pharmaceutical products. The legislation
    expanded Medicare coverage for drug purchases by the elderly and
    introduced a new reimbursement methodology based on average
    sales prices for drugs. In addition, this legislation provided
    authority for limiting the number of drugs that will be covered
    in any therapeutic class. As a result of this legislation and
    the expansion of federal coverage of drug products, we expect
    that there will be additional pressure to contain and reduce
    costs. These cost reduction initiatives and other provisions of
    this legislation could decrease the coverage and price that we
    receive for any approved products and could seriously harm our
    business. While the MMA applies only to drug benefits for
    Medicare beneficiaries, private payors often follow Medicare
    coverage policy and payment limitations in setting their own
    reimbursement rates, and any reduction in reimbursement that
    results from the MMA may result in a similar reduction in
    payments from private payors.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The continuing efforts of government and other third-party
    payors to contain or reduce the costs of health care through
    various means may limit our commercial opportunity. It will be
    time-consuming and expensive for us to go through the process of
    seeking reimbursement from Medicare and private payors. Our
    products may not be considered cost-effective, and government
    and third-party private health insurance coverage and
    reimbursement may not be available to patients for any of our
    future products or sufficient to allow us to sell our products
</DIV>

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    <BR>
    19
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    on a competitive and profitable basis. Our results of operations
    could be adversely affected by the MMA and additional
    prescription drug coverage legislation, by the possible effect
    of this legislation on amounts that private insurers will pay
    and by other health care reforms that may be enacted or adopted
    in the future. In addition, increasing emphasis on managed care
    in the United States will continue to put pressure on the
    pricing of pharmaceutical products. Cost control initiatives
    could decrease the price that we or any potential collaborators
    could receive for any of our future products and could adversely
    affect our profitability.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    In some foreign countries, including major markets in the
    European Union and Japan, the pricing of prescription
    pharmaceuticals is subject to governmental control. In these
    countries, pricing negotiations with governmental authorities
    can take six to 12&#160;months or longer after the receipt of
    regulatory marketing approval for a product. To obtain
    reimbursement or pricing approval in some countries, we may be
    required to conduct a clinical study that compares the
    cost-effectiveness of our product candidates to other available
    therapies. Such pharmacoeconomic studies can be costly and the
    results uncertain. Our business could be harmed if reimbursement
    of our products is unavailable or limited in scope or amount or
    if pricing is set at unsatisfactory levels.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: Arial, Helvetica">We face
    potential product liability exposure, and, if successful claims
    are brought against us, we may incur substantial
    liability.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The use of our product candidates in clinical studies and the
    sale of any products for which we obtain marketing approval
    expose us to the risk of product liability claims. Product
    liability claims might be brought against us by consumers,
    health care providers, pharmaceutical companies or others
    selling or otherwise coming into contact with our products. If
    we cannot successfully defend ourselves against product
    liability claims, we could incur substantial liabilities. In
    addition, regardless of merit or eventual outcome, product
    liability claims may result in:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    impairment of our business reputation;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    withdrawal of clinical study participants;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    costs of related litigation;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    distraction of management&#146;s attention from our primary
    business;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    substantial monetary awards to patients or other claimants;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the inability to commercialize our product candidates;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    decreased demand for our product candidates, if approved for
    commercial sale.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Our product liability insurance coverage, with a
    $5.0&#160;million annual aggregate coverage limit, for our
    clinical studies may not be sufficient to reimburse us for any
    expenses or losses we may suffer. Moreover, insurance coverage
    is becoming increasingly expensive, and, in the future, we may
    not be able to maintain insurance coverage at a reasonable cost
    or in sufficient amounts to protect us against losses due to
    liability. If and when we obtain marketing approval for any of
    our product candidates, we intend to expand our insurance
    coverage to include the sale of commercial products; however, we
    may be unable to obtain this product liability insurance on
    commercially reasonable terms. On occasion, large judgments have
    been awarded in class action lawsuits based on drugs that had
    unanticipated adverse effects. A successful product liability
    claim or series of claims brought against us could cause our
    stock price to decline and, if judgments exceed our insurance
    coverage, could decrease our cash and adversely affect our
    business.
</DIV>

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    <BR>
    20
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<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: Arial, Helvetica">If we use
    hazardous and biological materials in a manner that causes
    injury or violates applicable law, we may be liable for
    damages.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Our research and development activities involve the controlled
    use of potentially hazardous substances, including toxic
    chemical and biological materials. We could be held liable for
    any contamination, injury or other damages resulting from these
    hazardous substances. In addition, our operations produce
    hazardous waste products. While third parties are responsible
    for disposal of our hazardous waste, we could be liable under
    environmental laws for any required cleanup of sites at which
    our waste is disposed. Federal, state, foreign and local laws
    and regulations govern the use, manufacture, storage, handling
    and disposal of these hazardous materials. If we fail to comply
    with these laws and regulations at any time, or if they change,
    we may be subject to criminal sanctions and substantial civil
    liabilities, which may harm our business. Even if we continue to
    comply with all applicable laws and regulations regarding
    hazardous materials, we cannot eliminate the risk of accidental
    contamination or discharge and our resultant liability for any
    injuries or other damages caused by these accidents.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: Arial, Helvetica">We rely on
    third parties to conduct, supervise and monitor our clinical
    studies, and those third parties may perform in an
    unsatisfactory manner, such as by failing to meet established
    deadlines for the completion of these clinical studies, or may
    harm our business if they suffer a catastrophic
    event.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We rely on third parties such as CROs, medical institutions and
    clinical investigators to enroll qualified patients and conduct,
    supervise and monitor our clinical studies. Our reliance on
    these third parties for clinical development activities reduces
    our control over these activities. Our reliance on these third
    parties, however, does not relieve us of our regulatory
    responsibilities, including ensuring that our clinical studies
    are conducted in accordance with good clinical practices, or
    GCP, and the investigational plan and protocols contained in the
    relevant regulatory application, such as the investigational new
    drug application, or IND. In addition, the CROs with which we
    contract may not complete activities on schedule, or may not
    conduct our preclinical studies or clinical studies in
    accordance with regulatory requirements or our clinical study
    design. If these third parties do not successfully carry out
    their contractual duties or meet expected deadlines, our efforts
    to obtain regulatory approvals for, and to commercialize, our
    product candidates may be delayed or prevented. In addition, if
    a catastrophe such as an earthquake, fire, flood or power loss
    should affect one of the third parties on which we rely, our
    business prospects could be harmed. For example, if a central
    laboratory holding all of our clinical study samples were to
    suffer a catastrophic loss of their facility, we would lose all
    of our samples and would have to repeat our studies.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: Arial, Helvetica">Any failure by
    our third-party manufacturers on which we rely to produce our
    preclinical and clinical drug supplies and on which we intend to
    rely to produce commercial supplies of any approved product
    candidates may delay or impair our ability to commercialize our
    product candidates.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We have relied upon a small number of third-party manufacturers
    and active pharmaceutical ingredient formulators for the
    manufacture of our material for preclinical and clinical testing
    purposes and intend to continue to do so in the future. We also
    expect to rely upon third parties to produce materials required
    for the commercial production of our product candidates if we
    succeed in obtaining necessary regulatory approvals. If we are
    unable to arrange for third-party manufacturing sources, or to
    do so on commercially reasonable terms, we may not be able to
    complete development of our product candidates or market them.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Reliance on third-party manufacturers entails risks to which we
    would not be subject if we manufactured product candidates
    ourselves, including reliance on the third party for regulatory
    compliance and quality assurance, the possibility of breach of
    the manufacturing agreement by
</DIV>

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    <BR>
    21
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    the third party because of factors beyond our control (including
    a failure to synthesize and manufacture our product candidates
    in accordance with our product specifications) and the
    possibility of termination or nonrenewal of the agreement by the
    third party, based on its own business priorities, at a time
    that is costly or damaging to us. In addition, the FDA and other
    regulatory authorities require that our product candidates be
    manufactured according to cGMP and similar foreign standards.
    Any failure by our third-party manufacturers to comply with cGMP
    or failure to scale up manufacturing processes, including any
    failure to deliver sufficient quantities of product candidates
    in a timely manner, could lead to a delay in, or failure to
    obtain, regulatory approval of any of our product candidates. In
    addition, such failure could be the basis for action by the FDA
    to withdraw approvals for product candidates previously granted
    to us and for other regulatory action, including recall or
    seizure, total or partial suspension of production or injunction.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We rely on our manufacturers to purchase from third-party
    suppliers the materials necessary to produce our product
    candidates for our clinical studies. There are a small number of
    suppliers for certain capital equipment and raw materials that
    we use to manufacture our drugs. Such suppliers may not sell
    these raw materials to our manufacturers at the times we need
    them or on commercially reasonable terms. We do not have any
    control over the process or timing of the acquisition of these
    raw materials by our manufacturers. Moreover, we currently do
    not have any agreements for the commercial production of these
    raw materials. Although we generally do not begin a clinical
    study unless we believe we have a sufficient supply of a product
    candidate to complete the clinical study, any significant delay
    in the supply of a product candidate or the raw material
    components thereof for an ongoing clinical study due to the need
    to replace a third-party manufacturer could considerably delay
    completion of our clinical studies, product testing and
    potential regulatory approval of our product candidates. If our
    manufacturers or we are unable to purchase these raw materials
    after regulatory approval has been obtained for our product
    candidates, the commercial launch of our product candidates
    would be delayed or there would be a shortage in supply, which
    would impair our ability to generate revenues from the sale of
    our product candidates.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Because of the complex nature of our compounds, our
    manufacturers may not be able to manufacture our compounds at a
    cost or in quantities or in a timely manner necessary to make
    commercially successful products. If we successfully
    commercialize any of our drugs, we may be required to establish
    large-scale commercial manufacturing capabilities. In addition,
    as our drug development pipeline increases and matures, we will
    have a greater need for clinical study and commercial
    manufacturing capacity. We have no experience manufacturing
    pharmaceutical products on a commercial scale and some of these
    suppliers will need to increase their scale of production to
    meet our projected needs for commercial manufacturing, the
    satisfaction of which on a timely basis may not be met.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: Arial, Helvetica">If we are
    unable to establish sales and marketing capabilities or enter
    into agreements with third parties to market and sell our
    product candidates, we may be unable to generate any
    revenue.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We do not currently have an organization for the sales,
    marketing and distribution of pharmaceutical products and the
    cost of establishing and maintaining such an organization may
    exceed the cost-effectiveness of doing so. In order to market
    any products that may be approved by the FDA, we must build our
    sales, marketing, managerial and other non-technical
    capabilities or make arrangements with third parties to perform
    these services. If we are unable to establish adequate sales,
    marketing and distribution capabilities, whether independently
    or with third parties, we may not be able to generate product
    revenue and may not become profitable. We will be competing with
    many companies that currently have extensive and well-funded
    marketing and sales operations. Without an internal team or the
</DIV>

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    <BR>
    22
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    support of a third party to perform marketing and sales
    functions, we may be unable to compete successfully against
    these more established companies.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: Arial, Helvetica">Guidelines and
    recommendations published by various organizations may adversely
    affect the use of any products for which we may receive
    regulatory approval.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Government agencies issue regulations and guidelines directly
    applicable to us and to our product candidates. In addition,
    professional societies, practice management groups, private
    health or science foundations and organizations involved in
    various diseases from time to time publish guidelines or
    recommendations to the medical and patient communities. These
    various sorts of recommendations may relate to such matters as
    product usage and use of related or competing therapies. For
    example, organizations like the American Heart Association have
    made recommendations about therapies in the cardiovascular
    therapeutics market. Changes to these recommendations or other
    guidelines advocating alternative therapies could result in
    decreased use of any products for which we may receive
    regulatory approval, which may adversely affect our results of
    operations.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Risks Related to
    Our Intellectual Property</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: Arial, Helvetica">If our or our
    licensors&#146; patent positions do not adequately protect our
    product candidates or any future products, others could compete
    with us more directly, which would harm our
    business.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    As of the date of this prospectus and as described in the
    section entitled &#147;Business&#151;Intellectual Property&#148;
    on page&#160;78, we hold a total of two pending
    U.S.&#160;non-provisional patent applications, four pending
    U.S.&#160;provisional patent applications and one pending Patent
    Cooperation Treaty, or PCT, patent application. We have also
    entered into license agreements for certain composition of
    matter, method of use and method of making patents and patent
    applications for certain of our development compounds. These
    license agreements encompass (i)&#160;13 U.S.&#160;patents, one
    pending U.S.&#160;non-provisional patent application, four
    European Patent, or EP, patents, three pending EP patent
    applications, 14 non-EP foreign patents and eight pending non-EP
    foreign patent applications relating to
    <FONT style="white-space: nowrap">A-002</FONT> and
    <FONT style="white-space: nowrap">A-001;</FONT>
    (ii)&#160;more than 30 U.S.&#160;patents, one pending
    U.S.&#160;non-provisional patent application, five EP patents,
    one pending EP patent applications, eight issued non-EP foreign
    patents and three pending non-EP foreign patent applications
    relating to new
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    compounds; and (iii)&#160;one U.S.&#160;patent, one pending
    U.S.&#160;non-provisional patent application, one EP patent, one
    pending EP patent application, eight non-EP foreign patents and
    17 non-EP foreign patent applications relating to
    <FONT style="white-space: nowrap">A-623.</FONT> Our
    commercial success will depend in part on our and our
    licensors&#146; ability to obtain additional patents and protect
    our existing patent positions, particularly those patents for
    which we have secured exclusive rights, as well as our ability
    to maintain adequate protection of other intellectual property
    for our technologies, product candidates and any future products
    in the United States and other countries. If we or our licensors
    do not adequately protect our intellectual property, competitors
    may be able to use our technologies and erode or negate any
    competitive advantage we may have, which could materially harm
    our business, negatively affect our position in the marketplace,
    limit our ability to commercialize our product candidates and
    delay or render impossible our achievement of profitability. The
    laws of some foreign countries do not protect our proprietary
    rights to the same extent as the laws of the United States, and
    we may encounter significant problems in protecting our
    proprietary rights in these countries.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The patent positions of biotechnology and pharmaceutical
    companies, including our patent position, involve complex legal
    and factual questions, and, therefore, validity and
    enforceability cannot be predicted with certainty. Patents may
    be challenged, deemed unenforceable, invalidated or
    circumvented. We and our licensors will be able to protect our
    proprietary rights from unauthorized use by third parties only
    to the extent that our proprietary
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    23
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    technologies, product candidates and any future products are
    covered by valid and enforceable patents or are effectively
    maintained as trade secrets.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The degree of future protection for our proprietary rights is
    uncertain, and we cannot ensure that:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    we or our licensors were the first to make the inventions
    covered by each of our pending patent applications;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    we or our licensors were the first to file patent applications
    for these inventions;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    others will not independently develop similar or alternative
    technologies or duplicate any of our technologies;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any of our or our licensors&#146; pending patent applications
    will result in issued patents;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any of our or our licensors&#146; patents will be valid or
    enforceable;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any patents issued to us or our licensors and collaborators will
    provide a basis for commercially viable products, will provide
    us with any competitive advantages or will not be challenged by
    third parties;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    we will develop additional proprietary technologies or product
    candidates that are patentable;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the patents of others will not have an adverse effect on our
    business.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: Arial, Helvetica">We may be
    unable to adequately prevent disclosure of trade secrets and
    other proprietary information.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We rely on trade secrets to protect our proprietary know-how and
    technological advances, especially where we do not believe
    patent protection is appropriate or obtainable. However, trade
    secrets are difficult to protect. We rely in part on
    confidentiality agreements with our employees, consultants,
    outside scientific collaborators, sponsored researchers and
    other advisors to protect our trade secrets and other
    proprietary information. These agreements may not effectively
    prevent disclosure of confidential information and may not
    provide an adequate remedy in the event of unauthorized
    disclosure of confidential information. In addition, others may
    independently discover our trade secrets and proprietary
    information. Costly and time-consuming litigation could be
    necessary to enforce and determine the scope of our proprietary
    rights. Failure to obtain or maintain trade secret protection
    could enable competitors to use our proprietary information to
    develop products that compete with our products or cause
    additional, material adverse effects upon our competitive
    business position.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: Arial, Helvetica">We license
    patent rights from third-party owners. If we, or such owners, do
    not properly maintain or enforce the patents underlying such
    licenses, our competitive position and business prospects will
    be harmed.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We have obtained exclusive, worldwide licenses, except for
    Japan, of the composition of matter, methods of making and
    methods of use for certain
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    compounds from Eli Lilly and Shionogi&#160;&#038; Co., Ltd. In
    addition, we are party to a license agreement with Amgen for the
    exclusive and worldwide rights to develop and commercialize
    <FONT style="white-space: nowrap">A-623,</FONT> a
    novel BLyS inhibitor. We may enter into additional licenses to
    third-party intellectual property in the future.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We depend in part on our licensors to protect the proprietary
    rights covering our in-licensed
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    compounds and
    <FONT style="white-space: nowrap">A-623,</FONT>
    respectively. Our licensors are responsible for maintaining
    certain issued patents and prosecuting certain patent
    applications. We have limited, if any, control over the amount
    or timing of resources that our licensors devote on our behalf
    or the priority they place on maintaining these patent rights
    and prosecuting these patent applications to our advantage. Our
    licensors may also be notified of alleged
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    24
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    infringement and be sued for infringement of third-party patents
    or other proprietary rights. We may have limited, if any,
    control or involvement over the defense of these claims, and our
    licensors could be subject to injunctions and temporary or
    permanent exclusionary orders in the United States or other
    countries. Our licensors are not obligated to defend or assist
    in our defense against third-party claims of infringement. We
    have limited, if any, control over the amount or timing of
    resources, if any, that our licensors devote on our behalf or
    the priority they place on defense of such third-party claims of
    infringement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Our success will depend in part on the ability of us or our
    licensors to obtain, maintain and enforce patent protection for
    their intellectual property, in particular, those patents to
    which we have secured exclusive rights. We or our licensors may
    not successfully prosecute the patent applications which we have
    licensed. Even if patents issue in respect of these patent
    applications, we or our licensors may fail to maintain these
    patents, may determine not to pursue litigation against other
    companies that are infringing these patents or may pursue such
    litigation less aggressively than we would. Without protection
    for the intellectual property we license, other companies might
    be able to offer substantially identical products for sale,
    which could adversely affect our competitive business position
    and harm our business prospects.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: Arial, Helvetica">If we do not
    obtain protection under the Hatch-Waxman Act and similar foreign
    legislation to extend our licensed patent terms and to obtain
    market exclusivity for our product candidates, our business will
    be materially harmed.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The United States Drug Price Competition and Patent Term
    Restoration Act of 1984, more commonly known as the
    &#147;Hatch-Waxman Act,&#148; provides for an extension of
    patent terms for drug compounds for a period of up to five years
    to compensate for time spent in development. Assuming we gain a
    five-year patent term extension for each of our current product
    candidates in clinical development, and that we continue to have
    rights under our license agreements with respect to these
    product candidates, we would have exclusive rights to
    <FONT style="white-space: nowrap">A-002&#146;s</FONT>
    U.S. &#147;new chemical entity&#148; patent (the primary patent
    covering the compound as a new composition of matter) until 2019
    and to
    <FONT style="white-space: nowrap">A-623&#146;s</FONT>
    U.S. new chemical entity patent until 2027. In Europe, similar
    legislative enactments allow patent terms in the European Union
    to be extended for up to five years through the grant of a
    Supplementary Protection Certificate. Assuming we gain such a
    five-year extension for each of our current product candidates
    in clinical development, and that we continue to have rights
    under our license agreements with respect to these product
    candidates, we would have exclusive rights to
    <FONT style="white-space: nowrap">A-002&#146;s</FONT>
    European new chemical entity patents until 2020 and to
    <FONT style="white-space: nowrap">A-623&#146;s</FONT>
    European new chemical entity patents until 2027. In addition,
    since <FONT style="white-space: nowrap">A-002</FONT>
    has not been previously approved in the United States,
    <FONT style="white-space: nowrap">A-002</FONT> could
    be eligible for up to five years of New Chemical Entity, or NCE,
    exclusivity from the FDA. NCE exclusivity would prevent the FDA
    from accepting any generic competition following NDA approval
    independent of the patent status of
    <FONT style="white-space: nowrap">A-002.</FONT>
    Similarly, a recent directive in the European Union provides
    that companies who receive regulatory approval for a new
    compound will have a 10-year period of market exclusivity for
    that compound (with the possibility of a further one-year
    extension) in most EU countries, beginning on the date of such
    European regulatory approval, regardless of when the European
    new chemical entity patent covering such compound expires. A
    generic version of the approved drug may not be marketed or sold
    during such market exclusivity period. However, there is no
    assurance that we will receive the extensions of our patents or
    other exclusive rights available under the Hatch-Waxman Act or
    similar foreign legislation. If we fail to receive such
    Hatch-Waxman extensions or marketing exclusivity rights or if we
    receive extensions that are materially shorter than expected,
    our ability to prevent competitors from manufacturing, marketing
    and selling generic versions of our products will be materially
    harmed.
</DIV>

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    <BR>
    25
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: Arial, Helvetica">Our current
    patent positions and license portfolio may not include all
    patent rights needed for the full development and
    commercialization of our product candidates. We cannot be sure
    that patent rights we may need in the future will be available
    for license to us on commercially reasonable terms, or at
    all.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We typically develop our product candidates using compounds for
    which we have in-licensed and original composition of matter
    patents and patents that claim the activities and methods for
    such compounds&#146; production and use to the extent known at
    that time. As we learn more about the mechanisms of action and
    new methods of manufacture and use of these product candidates,
    we may file additional patent applications for these new
    inventions or we may need to ask our licensors to file them. We
    may also need to license additional patent rights or other
    rights on compounds, treatment methods or manufacturing
    processes because we learn that we need such rights during the
    continuing development of our product candidates.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Although our in-licensed and original patents may prevent others
    from making, using or selling similar products, they do not
    ensure that we will not infringe the patent rights of third
    parties. We may not be aware of all patents or patent
    applications that may impact our ability to make, use or sell
    any of our product candidates or proposed product candidates.
    For example, because we sometimes identify the mechanism of
    action or molecular target of a given product candidate after
    identifying its composition of matter and therapeutic use, we
    may not be aware until the mechanism or target is further
    elucidated that a third party has an issued or pending patent
    claiming biological activities or targets that may cover our
    product candidate. U.S.&#160;patent applications filed after
    November&#160;29, 2000 are confidential in the U.S.&#160;Patent
    and Trademark Office for the first 18&#160;months after such
    applications&#146; earliest priority date, and patent offices in
    <FONT style="white-space: nowrap">non-U.S.&#160;countries</FONT>
    often publish patent applications for the first time six months
    or more after filing. Furthermore, we may not be aware of
    published or granted conflicting patent rights. Any conflicts
    resulting from patent applications and patents of others could
    significantly reduce the coverage of our patents and limit our
    ability to obtain meaningful patent protection. If others obtain
    patents with conflicting claims, we may need to obtain licenses
    to these patents or to develop or obtain alternative technology.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We may not be able to obtain any licenses or other rights to
    patents, technology or know-how from third parties necessary to
    conduct our business as described in this prospectus and such
    licenses, if available at all, may not be available on
    commercially reasonable terms. Any failure to obtain such
    licenses could delay or prevent us from developing or
    commercializing our drug candidates or proposed product
    candidates, which would harm our business. Litigation or patent
    interference proceedings may be necessarily brought against
    third parties, as discussed below, to enforce any of our patents
    or other proprietary rights or to determine the scope and
    validity or enforceability of the proprietary rights of such
    third parties.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: Arial, Helvetica">Litigation
    regarding patents, patent applications and other proprietary
    rights may be expensive and time consuming. If we are involved
    in such litigation, it could cause delays in bringing product
    candidates to market and harm our ability to
    operate.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Our commercial success will depend in part on our ability to
    manufacture, use, sell and offer to sell our product candidates
    and proposed product candidates without infringing patents or
    other proprietary rights of third parties. Although we are not
    currently aware of any litigation or other proceedings or
    third-party claims of intellectual property infringement related
    to our product candidates, the pharmaceutical industry is
    characterized by extensive litigation regarding patents and
    other intellectual property rights. Other parties may obtain
    patents in the future and allege that the use of our
    technologies infringes these patent claims or that we are
    employing their proprietary technology without authorization.
    Likewise, third parties may challenge or infringe upon our or
    our licensors&#146; existing or future patents.
</DIV>

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    <BR>
    26
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Proceedings involving our patents or patent applications or
    those of others could result in adverse decisions regarding the
    patentability of our inventions relating to our product
    candidates or the enforceability, validity or scope of
    protection offered by our patents relating to our product
    candidates.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Even if we are successful in these proceedings, we may incur
    substantial costs and divert management time and attention in
    pursuing these proceedings. If we are unable to avoid infringing
    the patent rights of others, we may be required to seek a
    license, defend an infringement action or challenge the validity
    of the patents in court. Patent litigation is costly and
    time-consuming. We may not have sufficient resources to bring
    these actions to a successful conclusion. In addition, if we do
    not obtain a license, develop or obtain non-infringing
    technology, fail to defend an infringement action successfully
    or have infringed patents declared invalid, we may incur
    substantial monetary damages; encounter significant delays in
    bringing our product candidates to market; or be precluded from
    participating in the manufacture, use or sale of our product
    candidates or methods of treatment requiring licenses.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Risks Related to
    This Offering, the Securities Markets and Investment in Our
    Common Stock</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: Arial, Helvetica">Market
    volatility may affect our stock price and the value of your
    investment.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Following the completion of this offering, the market price for
    our common stock is likely to be volatile, in part because our
    shares have not been previously traded publicly. In addition,
    the market price of our common stock may fluctuate significantly
    in response to a number of factors, most of which we cannot
    predict or control, including:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    plans for, progress in and results from clinical studies for
    <FONT style="white-space: nowrap">A-002,</FONT>
    <FONT style="white-space: nowrap">A-001,</FONT>
    <FONT style="white-space: nowrap">A-623</FONT> and
    our other product candidates;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    announcements of new products, services or technologies,
    commercial relationships, acquisitions or other events by us or
    our competitors;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    developments concerning proprietary rights, including those
    pertaining to patents held by Eli Lilly and Shionogi&#160;&#038;
    Co., Ltd. concerning our
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    inhibitors and Amgen concerning
    <FONT style="white-space: nowrap">A-623;</FONT>
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    failure of any of our product candidates, if approved, to
    achieve commercial success;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    fluctuations in stock market prices and trading volumes of
    securities of similar companies;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    general market conditions and overall fluctuations in
    U.S.&#160;equity markets;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    variations in our operating results, or the operating results of
    our competitors;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    changes in our financial guidance or securities analysts&#146;
    estimates of our financial performance;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    changes in accounting principles;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    sales of large blocks of our common stock, including sales by
    our executive officers, directors and significant stockholders;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    additions or departures of any of our key personnel;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    announcements related to litigation;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    changing legal or regulatory developments in the United States
    and other countries;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    discussion of us or our stock price by the financial press and
    in online investor communities.
</TD>
</TR>

</TABLE>

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    <BR>
    27
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    An active public market for our common stock may not develop or
    be sustained after the completion of this offering. We will
    negotiate and determine the initial public offering price with
    representatives of the underwriters and this price may not be
    indicative of prices that will prevail in the trading market. As
    a result, you may not be able to sell your shares of common
    stock at or above the offering price.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    In addition, the stock market in general, and The NASDAQ Global
    Market in particular, have experienced substantial price and
    volume volatility that is often seemingly unrelated to the
    operating performance of particular companies. These broad
    market fluctuations may cause the trading price of our common
    stock to decline. In the past, securities class action
    litigation has often been brought against a company after a
    period of volatility in the market price of its common stock. We
    may become involved in this type of litigation in the future.
    Any securities litigation claims brought against us could result
    in substantial expenses and the diversion of our
    management&#146;s attention from our business.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: Arial, Helvetica">Management has
    discretion in allocating the net proceeds from this offering and
    may do so in ways that you and other stockholders may not
    approve.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We expect to use the net proceeds from this offering to fund
    further clinical development of our current product candidates
    and for general corporate purposes, such as general and
    administrative expenses, capital expenditures, working capital,
    prosecution and maintenance of our intellectual property and the
    potential investment in technologies or products that complement
    our business. Because of the number and variability of factors
    that will determine our use of the proceeds from this offering,
    their ultimate use may vary substantially from their currently
    intended use. As such, our management will have broad discretion
    in the application of the net proceeds from this offering and
    could spend the proceeds in ways that do not necessarily improve
    our operating results or enhance the value of our common stock.
    For a further description of our intended use of the proceeds of
    the offering, see the section entitled &#147;Use of
    Proceeds&#148; beginning on page&#160;33.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: Arial, Helvetica">Because a
    small number of our existing stockholders own a majority of our
    voting stock, your ability to influence corporate matters will
    be limited.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Following the completion of this offering, our executive
    officers, directors and greater than 5% stockholders, in the
    aggregate, will own approximately&#160;&#160;&#160;&#160;&#160;%
    of our outstanding common stock, without giving effect to the
    purchase of shares by any person in this offering. As a result,
    such persons, acting together, will have the ability to control
    our management and affairs and substantially all matters
    submitted to our stockholders for approval, including the
    election and removal of directors and approval of any
    significant transaction. These persons will also have the
    ability to control our management and business affairs. This
    concentration of ownership may have the effect of delaying,
    deferring or preventing a change in control, impeding a merger,
    consolidation, takeover or other business combination involving
    us, or discouraging a potential acquirer from making a tender
    offer or otherwise attempting to obtain control of our business,
    even if such a transaction would benefit other stockholders.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: Arial, Helvetica">Future sales
    of our common stock may cause our stock price to
    decline.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Upon completion of this offering, there will
    be&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;shares
    of our common stock outstanding. Of
    these,&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;shares
    are being sold in this offering
    (or&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;shares,
    if the underwriters exercise their over-allotment option in
    full) and will be freely tradable immediately after this
    offering (except for shares purchased by affiliates)
    and&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
    of the
    remaining&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;shares
    may be sold upon expiration of
    <FONT style="white-space: nowrap">lock-up</FONT>
    agreements 180&#160;days after the date of this prospectus
    (subject in some cases to volume limitations). In addition, as
    of August&#160;31, 2009, we had outstanding options to purchase
    2,248,623&#160;shares of common stock that, if exercised, will
    result in these additional shares becoming available for sale
    upon
</DIV>

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    <BR>
    28
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    expiration of the
    <FONT style="white-space: nowrap">lock-up</FONT>
    agreements. A large portion of these shares and options are held
    by a small number of persons and investment funds. Sales by
    these stockholders or optionholders of a substantial number of
    shares after this offering could significantly reduce the market
    price of our common stock. Moreover, certain holders of shares
    of common stock will have rights, subject to some conditions, to
    require us to file registration statements covering the shares
    they currently hold, or to include these shares in registration
    statements that we may file for ourselves or other stockholders.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We also intend to register all common stock that we may issue
    under our 2005 Equity Incentive Plan and 2009 Stock Option and
    Incentive Plan. Effective upon the completion of this offering,
    an aggregate
    of&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;shares
    of our common stock will be reserved for future issuance under
    this plan, including any shares reserved and unissued under our
    2005 Equity Incentive Plan. Once we register these shares, which
    we plan to do shortly after the completion of this offering,
    they can be freely sold in the public market upon issuance,
    subject to the
    <FONT style="white-space: nowrap">lock-up</FONT>
    agreements referred to above. If a large number of these shares
    are sold in the public market, the sales could reduce the
    trading price of our common stock. See section entitled
    &#147;Shares&#160;Eligible for Future Sale&#148; on
    page&#160;130 for a more detailed description of sales that may
    occur in the future.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: Arial, Helvetica">You will
    suffer immediate and substantial dilution in the net tangible
    book value of the common stock you purchase.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The initial public offering price of our common stock is
    substantially higher than the net tangible book value per share
    of our outstanding common stock immediately after the completion
    of this offering. Purchasers of common stock in this offering
    will experience immediate dilution of approximately
    $&#160;&#160;&#160;&#160;&#160; per share in net tangible book
    value of the common stock. In addition, investors purchasing
    common stock in this offering will contribute
    approximately&#160;&#160;&#160;&#160;&#160;% of the total amount
    invested by stockholders since inception, but will only own
    approximately&#160;&#160;&#160;&#160;&#160;% of the shares of
    common stock outstanding. In the past, we issued restricted
    stock and options to acquire common stock at prices
    significantly below the initial public offering price. To the
    extent these outstanding options are ultimately exercised,
    investors purchasing common stock in this offering will sustain
    further dilution. See section entitled &#147;Dilution&#148; on
    page&#160;37 for a more detailed description of the dilution to
    new investors in this offering.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: Arial, Helvetica">We may need to
    raise additional capital to fund our operations, which may cause
    dilution to our existing stockholders, restrict our operations
    or require us to relinquish rights.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We may seek additional capital through a combination of private
    and public equity offerings, debt financings and collaboration,
    strategic and licensing arrangements. To the extent that we
    raise additional capital through the sale of equity or
    convertible debt securities, your ownership interest will be
    diluted, and the terms may include liquidation or other
    preferences that adversely affect your rights as a stockholder.
    Debt financing, if available, may involve agreements that
    include covenants limiting or restricting our ability to take
    specific actions such as incurring debt, making capital
    expenditures or declaring dividends. If we raise additional
    funds through collaboration, strategic alliance and licensing
    arrangements with third parties, we may have to relinquish
    valuable rights to our technologies or product candidates or
    grant licenses on terms that are not favorable to us.
</DIV>

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    <BR>
    29
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: Arial, Helvetica">We will incur
    significant increased costs as a result of operating as a public
    company, and our management will be required to divert attention
    from product development to devote substantial time to new
    compliance initiatives.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    As a public company, we will incur significant legal, accounting
    and other expenses that we did not incur as a private company.
    In addition, the Sarbanes-Oxley Act of 2002, or the
    Sarbanes-Oxley Act, as well as rules subsequently implemented by
    the Securities and Exchange Commission, or SEC, and The NASDAQ
    Global Market, have imposed various requirements on public
    companies, including establishment and maintenance of effective
    disclosure and financial controls and changes in corporate
    governance practices. Our management and other personnel will
    need to devote a substantial amount of time to these compliance
    initiatives. Moreover, these rules and regulations will increase
    our legal and financial compliance costs and will make some
    activities more time- consuming and costly. For example, we
    expect these rules and regulations to make it more difficult and
    more expensive for us to obtain director and officer liability
    insurance, and we may be required to accept reduced policy
    limits and coverage or incur substantially higher costs to
    obtain the same or similar coverage. As a result, it may be more
    difficult for us to attract and retain qualified people to serve
    on our board of directors, our board committees or as executive
    officers.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The Sarbanes-Oxley Act requires, among other things, that we
    maintain effective internal controls for financial reporting and
    disclosure. In particular, commencing in fiscal year 2010, we
    must perform system and process evaluation and testing of our
    internal controls over financial reporting to allow management
    and our independent registered public accounting firm to report
    on the effectiveness of our internal controls over financial
    reporting, as required by Section&#160;404 of the Sarbanes-Oxley
    Act. Our testing, or the subsequent testing by our independent
    registered public accounting firm, may reveal deficiencies in
    our internal controls over financial reporting that are deemed
    to be material weaknesses. We expect to incur significant
    expenses and devote substantial management effort toward
    ensuring compliance with Section&#160;404. We currently do not
    have an internal audit function, and we will need to hire
    additional accounting and financial staff with appropriate
    public company experience and technical accounting knowledge.
    Moreover, if we are not able to comply with the requirements of
    Section&#160;404 in a timely manner, or if we or our independent
    registered public accounting firm identifies deficiencies in our
    internal controls that are deemed to be material weaknesses, the
    market price of our stock could decline and we could be subject
    to sanctions or investigations by The NASDAQ Global Market, the
    SEC or other regulatory authorities, which would entail
    expenditure of additional financial and management resources.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: Arial, Helvetica">We do not
    intend to pay dividends on our common stock so any returns will
    be limited to the value of our stock.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We have never declared or paid any cash dividend on our common
    stock. We currently anticipate that we will retain future
    earnings for the development, operation and expansion of our
    business and do not anticipate declaring or paying any cash
    dividends for the foreseeable future. Any return to stockholders
    will therefore be limited to the value of their stock.
</DIV>

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    <BR>
    30
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: Arial, Helvetica">Anti-takeover
    provisions in our charter documents and under Delaware law could
    make an acquisition of us, which may be beneficial to our
    stockholders, more difficult and may prevent attempts by our
    stockholders to replace or remove our current
    management.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Provisions in our amended and restated certificate of
    incorporation and amended and restated bylaws may delay or
    prevent an acquisition of us or a change in our management.
    These provisions include:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    a classified and staggered board of directors whose members can
    only be dismissed for cause;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the prohibition on actions by written consent of our
    stockholders;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the limitation on who may call a special meeting of stockholders;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the establishment of advance notice requirements for nominations
    for election to the board of directors or for proposing matters
    that can be acted upon at stockholder meetings;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the ability of our board of directors to issue preferred stock
    without stockholder approval, which would increase the number of
    outstanding shares and could thwart a takeover attempt;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the requirement of at least 75% of the outstanding common stock
    to amend any of the foregoing provisions.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    In addition, because we are incorporated in Delaware, we are
    governed by the provisions of Section&#160;203 of the Delaware
    General Corporation Law, which limits the ability of
    stockholders owning in excess of 15% of our outstanding voting
    stock to merge or combine with us. Although we believe these
    provisions collectively provide for an opportunity to obtain
    greater value for stockholders by requiring potential acquirors
    to negotiate with our board of directors, they would apply even
    if an offer rejected by our board were considered beneficial by
    some stockholders. In addition, these provisions may frustrate
    or prevent any attempts by our stockholders to replace or remove
    our current management by making it more difficult for
    stockholders to replace members of our board of directors, which
    is responsible for appointing the members of our management.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: Arial, Helvetica">Our ability to
    use our net operating loss carryforwards may be subject to
    limitation and may result in increased future tax liability to
    us.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Generally, a change of more than 50% in the ownership of a
    corporation&#146;s stock, by value, over a three-year period
    constitutes an ownership change for U.S.&#160;federal income tax
    purposes. An ownership change may limit a company&#146;s ability
    to use its net operating loss carryforwards attributable to the
    period prior to such change. We have not performed a detailed
    analysis to determine whether an ownership change under
    Section&#160;382 of the Internal Revenue Code has occurred after
    each of our previous private placements of preferred stock and
    convertible debt. In addition, the number of shares of common
    stock that we issue in connection with this offering may be
    sufficient, taking into account prior or future shifts in our
    ownership over a three-year period, to cause us to undergo an
    ownership change. As a result, if we earn net taxable income,
    our ability to use our pre-change net operating loss
    carryforwards to offset U.S.&#160;federal taxable income may
    become subject to limitations, which could potentially result in
    increased future tax liability to us.
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    31
</DIV><!-- END PAGE WIDTH -->
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<A name='103'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">SPECIAL
    NOTE&#160;REGARDING FORWARD-LOOKING STATEMENTS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    This prospectus contains forward-looking statements.
    Forward-looking statements relate to future events or our future
    financial performance. We generally identify forward-looking
    statements by terminology such as &#147;may,&#148;
    &#147;will,&#148; &#147;would,&#148; &#147;should,&#148;
    &#147;expects,&#148; &#147;plans,&#148; &#147;anticipates,&#148;
    &#147;could,&#148; &#147;intends,&#148; &#147;target,&#148;
    &#147;projects,&#148; &#147;contemplates,&#148;
    &#147;believes,&#148; &#147;estimates,&#148;
    &#147;predicts,&#148; &#147;assume,&#148; &#147;intend,&#148;
    &#147;potential,&#148; &#147;continue&#148; or other similar
    words or the negative of these terms. These statements are only
    predictions. We have based these forward-looking statements
    largely on our current expectations and projections about future
    events and financial trends that we believe may affect our
    business, financial condition and results of operations. The
    outcome of the events described in these forward-looking
    statements is subject to risks, uncertainties and other factors
    described in &#147;Risk Factors&#148; and elsewhere in this
    prospectus. Accordingly, you should not place undue reliance
    upon these forward-looking statements. We cannot assure you that
    the events and circumstances reflected in the forward-looking
    statements will be achieved or occur, the timing of events and
    circumstances and actual results could differ materially from
    those projected in the forward looking statements.
    Forward-looking statements contained in this prospectus include,
    but are not limited to, statements about:
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    our expectations related to the use of proceeds from this
    offering;
</TD>
</TR>


<TR style="line-height: 4pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the progress of, timing of and amount of expenses associated
    with our research, development and commercialization activities;
</TD>
</TR>


<TR style="line-height: 4pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the timing, conduct and success of our clinical studies for our
    product candidates;
</TD>
</TR>


<TR style="line-height: 4pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    our ability to obtain U.S.&#160;and foreign regulatory approval
    for our product candidates and the ability of our product
    candidates to meet existing or future regulatory standards;
</TD>
</TR>


<TR style="line-height: 4pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    our expectations regarding federal, state and foreign regulatory
    requirements;
</TD>
</TR>


<TR style="line-height: 4pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the therapeutic benefits and effectiveness of our product
    candidates;
</TD>
</TR>


<TR style="line-height: 4pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the accuracy of our estimates of the size and characteristics of
    the markets that may be addressed by our product candidates;
</TD>
</TR>


<TR style="line-height: 4pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    our ability to manufacture sufficient amounts of our product
    candidates for clinical studies and products for
    commercialization activities;
</TD>
</TR>


<TR style="line-height: 4pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    our intention to seek to establish strategic collaborations or
    partnerships for the development or sale of our product
    candidates;
</TD>
</TR>


<TR style="line-height: 4pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    our expectations as to future financial performance, expense
    levels and liquidity sources;
</TD>
</TR>


<TR style="line-height: 4pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the timing of commercializing our product candidates;
</TD>
</TR>


<TR style="line-height: 4pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    our ability to compete with other companies that are or may be
    developing or selling products that are competitive with our
    product candidates;
</TD>
</TR>


<TR style="line-height: 4pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    anticipated trends and challenges in our potential markets;
</TD>
</TR>


<TR style="line-height: 4pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    our ability to attract and retain key personnel;&#160;and
</TD>
</TR>


<TR style="line-height: 4pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    other factors discussed elsewhere in this prospectus.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The forward-looking statements made in this prospectus relate
    only to events as of the date on which the statements are made.
    We have included important factors in the cautionary statements
    included in this prospectus, particularly in the section
    entitled &#147;Risk Factors&#148; that we believe could cause
    actual results or events to differ materially from the
    forward-looking statements that we make. Our forward-looking
    statements do not reflect the potential impact of any future
    acquisitions, mergers, dispositions, joint ventures or
    investments we may make. Except as required by law, we do not
    assume any intent to update any forward-looking statements after
    the date on which the statement is made, whether as a result of
    new information, future events or circumstances or otherwise.
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    32
</DIV><!-- END PAGE WIDTH -->
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<A name='104'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">USE OF
    PROCEEDS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We estimate that the net proceeds of the sale of the common
    stock that we are offering will be approximately
    $&#160;&#160;&#160;&#160;&#160;&#160;million, or
    $&#160;&#160;&#160;&#160;&#160;&#160;million if the underwriters
    exercise their over-allotment option in full, assuming an
    initial public offering price of $&#160;&#160;&#160;&#160;&#160;
    per share, which is the midpoint of the range listed on the
    cover page of this prospectus, and after deducting estimated
    underwriting discounts and commissions and estimated offering
    expenses that we must pay.
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    A $1.00 increase (decrease) in the assumed initial public
    offering price of $&#160;&#160;&#160;&#160;&#160; per share
    would increase (decrease) the net proceeds to us from this
    offering by approximately
    $&#160;&#160;&#160;&#160;&#160;&#160;million, assuming the
    number of shares offered by us, as set forth on the cover page
    of this prospectus, remains the same and after deducting
    estimated underwriting discounts and commissions and estimated
    offering expenses payable by us.
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The principal purposes of this offering are to obtain additional
    working capital to fund anticipated operating expenses,
    establish a public market for our common stock and facilitate
    future access to the public markets.
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We estimate that we will use the proceeds of this offering as
    follows:
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    approximately $&#160;&#160;&#160;&#160;&#160; to
    $&#160;&#160;&#160;&#160;&#160;&#160;million of these net
    proceeds to fund the continued clinical development of
    <FONT style="white-space: nowrap">A-002,</FONT>
    including our planned initiation by the end of 2009 of a Phase 3
    clinical study;
</TD>
</TR>


<TR style="line-height: 4pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    approximately $&#160;&#160;&#160;&#160;&#160; to
    $&#160;&#160;&#160;&#160;&#160;&#160;million of these net
    proceeds to fund the continued clinical development of
    <FONT style="white-space: nowrap">A-001;</FONT>
</TD>
</TR>


<TR style="line-height: 4pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    approximately $&#160;&#160;&#160;&#160;&#160; to
    $&#160;&#160;&#160;&#160;&#160;&#160;million of these net
    proceeds to fund the clinical development of
    <FONT style="white-space: nowrap">A-623;&#160;and</FONT>
</TD>
</TR>


<TR style="line-height: 4pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    approximately $&#160;&#160;&#160;&#160;&#160;&#160;million for
    general corporate purposes, such as general and administrative
    expenses, capital expenditures, working capital, prosecution and
    maintenance of our intellectual property and the potential
    investment in technologies or products that complement our
    business.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We have no current understandings, commitments or agreements
    with respect to any acquisition of or investment in any
    technologies or products.
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Although we currently anticipate that we will use the net
    proceeds of this offering as described above, there may be
    circumstances where a reallocation of funds may be necessary.
    The amounts and timing of our actual expenditures will depend
    upon numerous factors, including the progress of our development
    and commercialization efforts, the progress of our clinical
    studies, whether or not we enter into strategic collaborations
    or partnerships and our operating costs and expenditures.
    Accordingly, our management will have significant flexibility in
    applying the net proceeds of this offering.
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The costs and timing of drug development and regulatory
    approval, particularly conducting clinical studies, are highly
    uncertain, are subject to substantial risks and can often
    change. Accordingly, we may change the allocation of use of
    these proceeds as a result of contingencies such as the progress
    and results of our clinical studies and other development
    activities, the establishment of collaborations, our
    manufacturing requirements and regulatory or competitive
    developments. In addition, assuming our current clinical
    programs proceed further to the next stage of clinical
    development, we do not expect our existing capital resources and
    the net proceeds from this offering to be sufficient to enable
    us to fund the completion of all such clinical development
    programs through commercial introduction. Accordingly, we expect
    we will need to raise additional funds.
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Pending use of the proceeds from this offering as described
    above or otherwise, we intend to invest the net proceeds in
    short-term interest-bearing, investment-grade securities.
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    33
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<A name='105'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">DIVIDEND
    POLICY</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We have never declared or paid any cash dividends on our common
    stock. We currently intend to retain any future earnings to
    finance the growth and development of our business. Therefore,
    we do not anticipate declaring or paying any cash dividends in
    the foreseeable future. Any future determination as to the
    declaration and payment of dividends, if any, will be at the
    discretion of our board of directors and will depend on then
    existing conditions, including our financial condition,
    operating results, contractual restrictions, capital
    requirements, business prospects and other factors our board of
    directors may deem relevant.
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    34
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<A name='106'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">CAPITALIZATION</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The following table sets forth our capitalization as of
    June&#160;30, 2009:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    on an actual basis;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    on a pro forma basis to give effect to (i)&#160;the conversion
    of all outstanding shares of our preferred stock into an
    aggregate of 13,946,510&#160;shares of our common stock, which
    we expect to occur immediately prior to the closing of this
    offering and (ii)&#160;the filing of an amended and restated
    certificate of incorporation to
    authorize&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
    shares of common stock
    and&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
    shares of undesignated preferred stock;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    on a pro forma as adjusted basis to give further effect to the
    receipt by us of net proceeds of
    $&#160;&#160;&#160;&#160;&#160;&#160;million from the sale
    of&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;shares
    of common stock offered by us in this offering at an assumed
    initial public offering price of $&#160;&#160;&#160;&#160;&#160;
    per share, which is the midpoint of the range listed on the
    cover page of this prospectus, after deducting estimated
    underwriting discounts and commissions and estimated offering
    expenses payable by us.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    In July and September 2009, we sold convertible promissory
    notes, or the 2009 notes, and warrants to purchase shares of our
    preferred stock, or the 2009 warrants, to our existing investors
    for an aggregate purchase price of $10,000,000. The 2009 notes
    and the 2009 warrants are convertible and exercisable,
    respectively, upon the occurrence of certain events. In
    addition, we are in negotiations with certain of our existing
    investors for an aggregate of $20&#160;million in additional
    equity financing. The following table does not reflect the
    impact of the sale of the 2009 notes or the 2009 warrants, or
    our negotiations for additional equity financing.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    You should read the following table in conjunction with our
    financial statements and related notes, &#147;Selected Financial
    Data&#148; and &#147;Management&#146;s Discussion and Analysis
    of Financial Condition and Results of Operations&#148; appearing
    elsewhere in this prospectus.
</DIV>

<DIV style="margin-top: 9pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 9pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="60%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="9%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="9%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="9%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="10" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>As of June&#160;30, 2009</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Pro Forma As<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Actual</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Pro Forma</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Adjusted</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="10" align="center" valign="bottom">
    <B>(unaudited)</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -18pt; margin-left: 18pt">
    Cash, cash equivalents and short-term investments
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,290,730
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,290,730
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -18pt; margin-left: 18pt">
    <FONT style="white-space: nowrap">Series&#160;A-1</FONT>
    convertible preferred stock, $0.001&#160;par value,
    945,939&#160;shares authorized, issued and outstanding at
    June&#160;30, 2009 (aggregate liquidation value of $813,508 as
    of June&#160;30, 2009); 0&#160;shares outstanding pro forma at
    June&#160;30, 2009 (unaudited)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    946
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -18pt; margin-left: 18pt">
    <FONT style="white-space: nowrap">Series&#160;A-2</FONT>
    convertible preferred stock, $0.001&#160;par value,
    2,800,000&#160;shares authorized; 2,774,594, shares issued and
    outstanding at June&#160;30, 2009 (aggregate liquidation value
    of $8,323,782 as of June&#160;30, 2009); 0&#160;shares
    outstanding pro forma at June&#160;30, 2009 (unaudited)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,774
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -18pt; margin-left: 18pt">
    <FONT style="white-space: nowrap">Series&#160;B-1</FONT>
    convertible preferred stock, $0.001&#160;par value,
    4,710,000&#160;shares authorized; 4,702,640&#160;shares issued
    and outstanding at June&#160;30, 2009 (aggregate liquidation
    value of $19,986,220 as of June&#160;30, 2009); 0&#160;shares
    outstanding pro forma at June&#160;30, 2009 (unaudited)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4,703
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -18pt; margin-left: 18pt">
    <FONT style="white-space: nowrap">Series&#160;B-2</FONT>
    convertible preferred stock, $0.001&#160;par value,
    6,175,000&#160;shares authorized; 5,523,337&#160;shares issued
    and outstanding at June&#160;30, 2009 (aggregate liquidation
    value of $23,474,182 as of June&#160;30, 2009); 0&#160;shares
    outstanding pro forma at June&#160;30, 2009 (unaudited)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5,523
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -18pt; margin-left: 18pt">
    Preferred stock, $0.001&#160;par value
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    35
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 9pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF"><!-- TABLE 01 -->
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="60%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="9%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="9%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="9%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="10" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>As of June&#160;30, 2009</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Pro Forma As<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Actual</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Pro Forma</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Adjusted</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="10" align="center" valign="bottom">
    <B>(unaudited)</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -18pt; margin-left: 18pt">
    Common stock, $0.001&#160;par value, 30,000,000&#160;shares
    authorized; 2,578,133&#160;shares issued and outstanding at
    June&#160;30, 2009, respectively; 16,524,643&#160;shares
    outstanding pro forma at June&#160;30, 2009 (unaudited)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,578
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    16,524
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -18pt; margin-left: 18pt">
    Additional paid-in capital
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    52,703,824
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    52,703,824
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -18pt; margin-left: 18pt">
    Deficit accumulated during the development stage
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (60,147,876
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (60,147,876
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -18pt; margin-left: 18pt">
    Total stockholders&#146; deficit
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (7,427,528
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (7,427,528
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -18pt; margin-left: 27pt">
    Total capitalization
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (7,427,528
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (7,427,528
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">

</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    36
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<A name='107'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">DILUTION</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    If you invest in our common stock, your interest will be diluted
    immediately to the extent of the difference between the initial
    offering price per share of our common stock and the pro forma
    as adjusted net tangible book value per share of our common
    stock after this offering. Our pro forma net tangible book value
    as of June&#160;30, 2009 was $&#160;&#160;&#160;&#160;&#160; ,
    or $&#160;&#160;&#160;&#160;&#160;&#160;per share of common
    stock. Pro forma net tangible book value per share represents
    the amount of our total tangible assets less our total
    liabilities, divided by the number of shares of common stock
    outstanding as of June&#160;30, 2009, after giving effect to the
    conversion of all of our preferred stock into
    13,946,510&#160;shares of our common stock, which we expect to
    occur immediately prior to the closing of this offering.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    After giving effect to the sale by us
    of&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;shares
    of common stock in this offering at an assumed initial public
    offering price of $&#160;&#160;&#160;&#160;&#160; per share,
    which is the midpoint of the range listed on the cover page of
    this prospectus, and after deducting estimated underwriting
    discounts and commissions and estimated offering expenses
    payable by us, our pro forma as adjusted net tangible book value
    as of June&#160;30, 2009 would have been approximately
    $&#160;&#160;&#160;&#160;&#160;&#160;million, or approximately
    $&#160;&#160;&#160;&#160;&#160; per share. This amount
    represents an immediate increase in pro forma net tangible book
    value of $&#160;&#160;&#160;&#160;&#160; per share to our
    existing stockholders and an immediate dilution in pro forma net
    tangible book value of approximately
    $&#160;&#160;&#160;&#160;&#160; per share to new investors
    purchasing shares of common stock in this offering at the
    assumed initial public offering price.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The following table illustrates this dilution on a per share
    basis:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="79%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="6%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="6%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Assumed initial public offering price per share
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#160;&#160;&#160;&#160;&#160;&#160;&#160;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 30pt">
    Pro forma net tangible book value per share as of June&#160;30,
    2009
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#160;&#160;&#160;&#160;&#160;&#160;&#160;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 30pt">
    Increase per share attributable to new investors
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Pro forma net tangible book value per share after this offering
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Dilution per share to new investors
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    A $1.00 increase (decrease) in the assumed initial public
    offering price of $&#160;&#160;&#160;&#160;&#160; per share
    would increase (decrease) our adjusted net tangible book value
    per share after this offering by approximately
    $&#160;&#160;&#160;&#160;&#160; and would increase (decrease)
    dilution per share to new investors by approximately
    $&#160;&#160;&#160;&#160;&#160; , assuming that the number of
    shares offered by us, as set forth on the cover page of this
    prospectus, remains the same and after deducting estimated
    underwriting discounts and commissions and estimated offering
    expenses payable by us. In addition, to the extent any
    outstanding options or warrants are exercised, you will
    experience further dilution.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The following table summarizes, as of June&#160;30, 2009, the
    number of shares purchased from us, the total consideration paid
    or to be paid to us, and the average price per share paid or to
    be paid to us by existing stockholders and new investors
    purchasing shares of our common stock in this offering at an
    assumed offering price of $&#160;&#160;&#160;&#160;&#160; per
    share, which is the midpoint of the price range listed on the
    cover page of this prospectus, before deducting estimated
    underwriting discounts and commissions and estimated offering
    expenses payable by us.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="48%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="5%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="5%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="6%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=05 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=05 type=lead -->
    <TD width="5%" align="right">&nbsp;</TD>	<!-- colindex=05 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=05 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=06 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=06 type=lead -->
    <TD width="7%" align="right">&nbsp;</TD>	<!-- colindex=06 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=06 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Average<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="6" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Shares Purchased</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="6" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Total Consideration</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Price per<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Number</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Percent</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Amount</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Percent</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Share</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Existing stockholders
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#160;&#160;&#160;&#160;&#160;&#160;&#160;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    %
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#160;&#160;&#160;&#160;&#160;&#160;&#160;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    %
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#160;&#160;&#160;&#160;&#160;&#160;&#160;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    New Investors
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Total
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    100%
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    100%
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    37
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    A $1.00 increase (decrease) in the assumed initial public
    offering price of $&#160;&#160;&#160;&#160;&#160; per share
    would increase (decrease) the total consideration paid by new
    investors by $&#160;&#160;&#160;&#160;&#160;&#160;million and
    increase (decrease) the percent of total consideration paid by
    new investors by $&#160;&#160;&#160;&#160;&#160; assuming that
    the number of shares offered by us, as set forth on the cover of
    this prospectus, remains the same and after deducting estimated
    underwriting discounts and commissions and estimated offering
    expenses payable by us.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Assuming the underwriters&#146; over-allotment option is
    exercised in full, sales by us in this offering will reduce the
    percentage of shares held by existing stockholders
    to&#160;&#160;&#160;&#160;&#160;% and will increase the number
    of shares held by our new investors
    to&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;,
    or&#160;&#160;&#160;&#160;&#160;%.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The number of shares of our common stock to be outstanding after
    this offering is based on 16,746,731&#160;shares of our common
    stock outstanding as of August 31, 2009 and excludes:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    2,248,623 shares of common stock issuable upon exercise of stock
    options outstanding and having a weighted-average exercise price
    of $0.50 per share;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;shares
    of common stock reserved for future issuance under our 2009
    Stock Option and Incentive Plan, which will become effective
    upon the completion of this offering (plus an
    additional&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;shares
    of common stock reserved for issuance under our 2005 Equity
    Incentive Plan, which shares will be added to the shares
    reserved for future issuance under our 2009 Stock Option and
    Incentive Plan upon effectiveness of our 2009 Stock Option and
    Incentive Plan);&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    411,764 shares of common stock issuable upon the exercise of
    warrants outstanding and having a weighted-average exercise
    price of $0.78 per share.
</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    38
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<A name='108'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">SELECTED
    FINANCIAL DATA</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The following selected financial data should be read together
    with our financial statements and the related notes and
    &#147;Management&#146;s Discussion and Analysis of Financial
    Condition and Results of Operations&#148; appearing elsewhere in
    this prospectus. The selected financial data in this section is
    not intended to replace our financial statements and the related
    notes. Our historical results are not necessarily indicative of
    the results to be expected for any future period.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We were incorporated on September&#160;9, 2004. The following
    statement of operations data, including share data, for the
    years ended December&#160;31, 2006, 2007 and 2008 and the
    balance sheet data as of December&#160;31, 2007 and
    December&#160;31, 2008 have been derived from our audited
    financial statements and related notes appearing elsewhere in
    this prospectus. The statement of operations data for the years
    ended December&#160;31, 2004 and 2005 and the balance sheet data
    as of December&#160;31, 2004, 2005 and 2006 have been derived
    from our audited financial statements not included in this
    prospectus. The statement of operations data, including share
    data, for the six months ended June&#160;30, 2008 and 2009, and
    the period from September&#160;9, 2004 (date of inception)
    through June&#160;30, 2009, and the balance sheet data as of
    June&#160;30, 2009 have been derived from our unaudited
    financial statements appearing elsewhere in this prospectus. The
    unaudited interim financial statements have been prepared on the
    same basis as the audited financial statements and reflect all
    adjustments necessary to fairly state our financial position as
    of June&#160;30, 2009 and results of operations for the six
    months ended June&#160;30, 2008 and 2009, and for the cumulative
    period from September&#160;9, 2004 to June&#160;30, 2009. The
    operating results for any interim period are not necessarily
    indicative of financial results that may be expected for any
    future period.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The pro forma basic and diluted net loss per share and pro forma
    weighted-average number of shares gives effect to the conversion
    of all our outstanding preferred stock into shares of common
    stock as if the conversion occurred on the date of issuance.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 6pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="40%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="3%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="3%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="4%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=05 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=05 type=lead -->
    <TD width="5%" align="right">&nbsp;</TD>	<!-- colindex=05 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=05 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=06 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=06 type=lead -->
    <TD width="5%" align="right">&nbsp;</TD>	<!-- colindex=06 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=06 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=07 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=07 type=lead -->
    <TD width="4%" align="right">&nbsp;</TD>	<!-- colindex=07 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=07 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=08 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=08 type=lead -->
    <TD width="5%" align="right">&nbsp;</TD>	<!-- colindex=08 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=08 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=09 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=09 type=lead -->
    <TD width="7%" align="right">&nbsp;</TD>	<!-- colindex=09 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=09 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 6pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Period from<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 6pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>September&#160;9,<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 6pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>2004 (Date of<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 6pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="6" nowrap align="center" valign="bottom">
    <B>Six Months Ended<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Inception)<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 6pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="18" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Years Ended December&#160;31,</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="6" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>June&#160;30,</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>to June&#160;30,<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 6pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2004</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2005</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2006</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2007</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2008</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2008</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2009</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2009</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 6pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="6" nowrap align="center" valign="bottom">
    <B>(unaudited)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>(unaudited)</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -6pt; margin-left: 6pt">
    <B>Statement of Operations Data:</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -12pt; margin-left: 12pt">
    Operating expenses
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -12pt; margin-left: 24pt">
    Research and development
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    345,208
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    7,759,106
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    23,921,932
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    10,882,322
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5,363,436
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5,201,181
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    48,109,749
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -12pt; margin-left: 24pt">
    General and administrative
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    14,840
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    205,527
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    822,732
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,468,607
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,980,170
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,592,243
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,845,574
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    8,337,450
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -12pt; margin-left: 30pt">
    Total operating expenses
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (14,840
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (550,735
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (8,581,838
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (26,390,539
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (13,862,492
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (6,955,679
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (7,046,755
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (56,447,199
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -12pt; margin-left: 12pt">
    <B>Other Income (Expense)</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -12pt; margin-left: 18pt">
    Interest and other income
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    11,148
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    109,987
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    696,962
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    178,129
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    85,330
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    21,637
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,017,863
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -12pt; margin-left: 18pt">
    Interest expense
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (17,395
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (296,303
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (96,704
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (96,298
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (409,996
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -12pt; margin-left: 18pt">
    Beneficial conversion feature
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (190,000
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (4,118,544
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (1,392,601
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (4,308,544
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -12pt; margin-left: 24pt">
    Total other income (expense)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    11,148
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (97,408
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    696,962
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (4,236,718
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (1,403,975
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (74,661
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (3,700,677
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -12pt; margin-left: 12pt">
    Net loss
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (14,840
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (539,587
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (8,679,246
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (25,693,577
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (18,099,210
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (8,359,654
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (7,121,416
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (60,147,876
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -12pt; margin-left: 12pt">
    Net loss per share&#151;basic and diluted&#160;(1)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (0.20
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (0.81
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (7.71
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (16.44
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (7.87
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (3.86
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (2.80
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -12pt; margin-left: 12pt">
    Weighted-average number of shares used in per share
    calculation&#151;basic and diluted&#160;(2)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    75,057
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    668,193
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,125,065
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,562,670
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,300,090
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,164,630
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,540,033
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -12pt; margin-left: 12pt">
    Pro forma net loss per share&#151;basic and diluted&#160;(1)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (1.39
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (0.42
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -12pt; margin-left: 12pt">
    Pro forma weighted-average number of shares used in per share
    calculation&#151;basic and diluted&#160;(2)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    13,048,521
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    16,898,307
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 2pt; margin-left: 0%; width: 10%;  align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=999 iwidth=456 length=48 -->

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="98%"></TD>
</TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(1)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Diluted earnings per share, or EPS,
    is identical to basic EPS since common equivalent shares are
    excluded from the calculation, as their effect is anti-dilutive.
    </FONT></TD>
</TR>





<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(2)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">For accounting purposes only, the
    number of issued and outstanding shares for the years ended
    December&#160;31, 2004, 2005, 2006, 2007 and 2008 and the six
    months ended June&#160;30, 2008 and 2009 do not include
    weighted-average shares of unvested stock of 167,409, 819,672,
    459,399, 447,780, 393,683, 467,519 and 227,502, respectively.
    These shares are subject to a risk of repurchase by us until
    such shares are vested. See Note&#160;8 to our financial
    statements for more information.
    </FONT></TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    39
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 8pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="32%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="5%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="6%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="8%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=05 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=05 type=lead -->
    <TD width="8%" align="right">&nbsp;</TD>	<!-- colindex=05 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=05 type=hang1 -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=06 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=06 type=lead -->
    <TD width="8%" align="right">&nbsp;</TD>	<!-- colindex=06 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=06 type=hang1 -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=07 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=07 type=lead -->
    <TD width="10%" align="right">&nbsp;</TD>	<!-- colindex=07 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=07 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="18" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>As of December&#160;31,</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>As of June&#160;30,<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2004</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2005</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2006</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2007</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2008</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2009</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>(unaudited)</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -8pt; margin-left: 8pt">
    <B>Balance Sheet Data:</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -16pt; margin-left: 16pt">
    Cash and cash equivalents
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    615,977
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    381,964
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    20,781,916
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    152,744
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    7,895,113
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,290,730
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -16pt; margin-left: 16pt">
    Short-term investments
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5,825,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -16pt; margin-left: 16pt">
    Working capital
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (14,754
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    232,136
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    19,629,639
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (2,907,995
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (495,836
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (7,453,556
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -16pt; margin-left: 16pt">
    Total assets
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    617,390
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    404,091
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    20,856,892
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    6,193,213
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    8,034,154
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,389,613
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -16pt; margin-left: 16pt">
    Indebtedness
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    630,731
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    150,790
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,174,621
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    12,058,184
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    8,494,417
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    8,817,141
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -16pt; margin-left: 16pt">
    Convertible preferred stock
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    804,951
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    28,892,004
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    28,892,004
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    52,123,859
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    52,123,859
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -16pt; margin-left: 16pt">
    Deficit accumulated during the development stage
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (14,840
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (554,427
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (9,233,673
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (34,927,250
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (53,026,460
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (60,147,876
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -16pt; margin-left: 16pt">
    Total stockholders&#146; deficit
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (13,340
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    253,301
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    19,682,271
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (5,864,971
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (460,263
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (7,427,528
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    40
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<A name='109'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">MANAGEMENT&#146;S
    DISCUSSION AND ANALYSIS OF<BR>
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <I>The following discussion and analysis should be read together
    with our financial statements and the related notes appearing
    elsewhere in this prospectus. This discussion contains
    forward-looking statements reflecting our current expectations
    that involve risks and uncertainties. See &#147;Special Note
    Regarding Forward-Looking Statements&#148; for a discussion of
    the uncertainties, risks and assumptions associated with these
    statements. Actual results and the timing of events could differ
    materially from those discussed in our forward-looking
    statements as a result of many factors, including those set
    forth under &#147;Risk Factors&#148; and elsewhere in this
    prospectus.</I>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Overview</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We are a biopharmaceutical company focused on developing and
    commercializing products to treat serious diseases associated
    with inflammation, including cardiovascular and autoimmune
    diseases. We currently have one Phase 3 ready clinical program,
    A-002, and two Phase 2 clinical programs, A-001 and A-623. Two
    of our product candidates,
    <FONT style="white-space: nowrap">A-002</FONT> and
    <FONT style="white-space: nowrap">A-001,</FONT> are
    designed to inhibit a novel enzyme target known as secretory
    phospholipase
    A<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>,
    or
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>.
    Elevated levels of
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    have been implicated in a variety of acute inflammatory
    conditions, including acute coronary syndrome and acute chest
    syndrome associated with sickle cell disease, as well as in
    chronic diseases, including stable coronary artery disease. In
    addition, our Phase 2 ready product candidate,
    <FONT style="white-space: nowrap">A-623,</FONT>
    targets elevated levels of B-lymphocyte stimulator, which has
    been associated with a variety of B-cell mediated autoimmune
    diseases, including systemic lupus erythematosus, or lupus,
    lupus nephritis, rheumatoid arthritis, multiple sclerosis,
    Sj&#246;gren&#146;s Syndrome, Graves&#146; Disease and others.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We were incorporated and commenced operations in September 2004.
    Since our inception, we have generated significant losses. As of
    June&#160;30, 2009, we had an accumulated deficit of
    approximately $60.1&#160;million. As of the date of this
    prospectus, we have never generated any revenue and have
    generated only interest income from cash and cash equivalents
    and short-term investments. We expect to incur substantial and
    increasing losses for at least the next several years as we
    pursue the development and commercialization of our product
    candidates. In their report on our financial statements for the
    year ended December&#160;31, 2008, our independent auditors
    included an explanatory paragraph regarding concerns about our
    ability to continue as a going concern. Our financial statements
    contain additional note disclosures describing the circumstances
    that led to this disclosure. In addition, as of June&#160;30,
    2009, we had unpaid license fees of $4.5&#160;million under our
    license agreement with Amgen Inc., or Amgen, to develop and
    commercialize
    <FONT style="white-space: nowrap">A-623.</FONT>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    To date, we have funded our operations through private
    placements of preferred stock and convertible debt, raising an
    aggregate of approximately $45.4&#160;million through those
    private placements. We will need substantial additional
    financing to continue to develop our product candidates, obtain
    regulatory approvals and to fund operating expenses, which we
    will seek to raise through public or private equity or debt
    financings, collaborative or other arrangements with third
    parties or through other sources of financing. We cannot assure
    you that such funds will be available on terms favorable to us,
    if at all. In addition to the normal risks associated with
    development-stage companies, we may never successfully complete
    development of any of our product candidates, obtain adequate
    patent protection for our technology, obtain necessary
    government regulatory approval for our product candidates or
    achieve commercial viability for any approved product
    candidates. In addition, we may not be profitable even if we
    succeed in commercializing any of our product candidates.
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    41
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 4%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: Arial, Helvetica">Revenue</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    To date, we have not generated any revenue. We do not expect to
    generate revenue unless or until we obtain regulatory approval
    of, and commercialize, our product candidates or in-license
    additional products that generate revenue. We intend to seek to
    generate revenue from a combination of product sales, up-front
    fees and milestone payments in connection with collaborative or
    strategic relationships and royalties resulting from the
    licensing of the commercial rights to our intellectual property.
    We expect that any revenue we generate will fluctuate from
    quarter to quarter as a result of the nature, timing and amount
    of milestone payments we may receive upon the sale of our
    products, to the extent any are successfully commercialized, as
    well as any revenue we may receive from our collaborative or
    strategic relationships.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: Arial, Helvetica">Research and
    Development Expenses</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Since our inception, we have focused our activities on our
    product candidate development programs. We expense research and
    development costs as they are incurred. Research and development
    expenses consist of personnel costs, including salaries,
    benefits and stock-based compensation, clinical studies
    performed by contract research organizations, or CROs, materials
    and supplies, licenses and fees and overhead allocations
    consisting of various administrative and facilities-related
    costs. Research and development activities are also separated
    into three main categories: licensing, clinical development and
    pharmaceutical development. Licensing costs consist primarily of
    fees paid pursuant to license agreements. Historically, our
    clinical development costs have included costs for preclinical
    and clinical studies. We expect to incur substantial clinical
    development costs for our anticipated Phase 3 clinical study for
    <FONT style="white-space: nowrap">A-002,</FONT> as
    well as for the development of our other product candidates.
    Pharmaceutical development costs consist of expenses incurred
    relating to clinical studies and product formulation and
    manufacturing.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We expense both internal and external research and development
    costs as incurred. We are developing our product candidates in
    parallel, and we typically use our employee and infrastructure
    resources across several projects. Thus, some of our research
    and development costs are not attributable to an individually
    named project, but rather are allocated across our clinical
    stage programs. These unallocated costs include salaries,
    stock-based compensation charges and related fringe benefit
    costs for our employees, consulting fees and travel.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The following table shows our total research and development
    expenses for the years ended December&#160;31, 2006, 2007 and
    2008, for the six-month periods ended June&#160;30, 2008 and
    2009, and for the period from September&#160;9, 2004 (date of
    inception) through June&#160;30, 2009:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 9pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="25%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="7%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="9%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="8%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=05 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=05 type=lead -->
    <TD width="7%" align="right">&nbsp;</TD>	<!-- colindex=05 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=05 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=06 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=06 type=lead -->
    <TD width="7%" align="right">&nbsp;</TD>	<!-- colindex=06 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=06 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=07 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=07 type=lead -->
    <TD width="9%" align="right">&nbsp;</TD>	<!-- colindex=07 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=07 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>For the Period<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>September&#160;9,<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>2004 (Date of<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Inception)<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="10" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Years Ended December&#160;31,</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="6" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Six Months Ended June&#160;30,</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>to June&#160;30,<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2006</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2007</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2008</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2008</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2009</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2009</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    Allocated costs:
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -18pt; margin-left: 18pt">
    <FONT style="white-space: nowrap">A-001</FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    3,567,980
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    2,302,454
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    456,633
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    200,606
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    121,460
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    6,448,527
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -18pt; margin-left: 18pt">
    <FONT style="white-space: nowrap">A-002</FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,870,566
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    12,053,943
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    7,370,850
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3,582,737
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3,829,160
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    26,139,883
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -18pt; margin-left: 18pt">
    <FONT style="white-space: nowrap">A-623</FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    6,004,667(1
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    100,851
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    62,255
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    9,958
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    6,115,476
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -18pt; margin-left: 18pt">
    Unallocated costs
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,320,560
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3,560,868
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,953,988
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,517,838
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,240,603
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    9,405,863
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -18pt; margin-left: 18pt">
    Total development
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    7,759,106
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    23,921,932
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    10,882,322
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5,363,436
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5,201,181
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    48,109,749
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 1pt; margin-left: 0%; width: 10%;  align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=999 iwidth=456 length=48 -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="98%"></TD>
</TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(1)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Includes a one-time license
    initiation fee of $6.0&#160;million pursuant to a license
    agreement with Amgen.
    </FONT></TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    42
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We expect our research and development expenses to increase
    significantly as we continue to develop our product candidates.
    Prior to the end of 2009, we expect to initiate a Phase 3
    clinical study of
    <FONT style="white-space: nowrap">A-002</FONT> for
    the treatment of patients experiencing acute coronary syndrome,
    which we expect to fund with proceeds we raised from existing
    investors and from the proceeds raised in this offering.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We expect that a large percentage of our research and
    development expenses in the future will be incurred in support
    of our current and future clinical development programs. These
    expenditures are subject to numerous uncertainties in timing and
    cost to completion. As we obtain results from clinical studies,
    we may elect to discontinue or delay clinical studies for
    certain product candidates or programs in order to focus our
    resources on more promising product candidates or programs.
    Completion of clinical studies may take several years or more,
    but the length of time generally varies according to the type,
    complexity, novelty and intended use of a product candidate. The
    cost of clinical studies may vary significantly over the life of
    a program as a result of differences arising during clinical
    development, including:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the number of sites included in the studies;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the length of time required to enroll suitable patient subjects;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the number of patients that participate in the studies;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the number of doses that patients receive;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the drop-out or discontinuation rates of patients;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the duration of patient
    <FONT style="white-space: nowrap">follow-up.</FONT>
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Our expenses related to clinical studies are based on estimates
    of the services received and efforts expended pursuant to
    contracts with multiple research institutions and clinical
    research organizations that conduct and manage clinical studies
    on our behalf. The financial terms of these agreements are
    subject to negotiation and vary from contract to contract and
    may result in uneven payment flows. Generally, these agreements
    set forth the scope of work to be performed at a fixed fee or
    unit price. Payments under the contracts depend on factors such
    as the successful enrollment of patients or the completion of
    clinical study milestones. Expenses related to clinical studies
    generally are accrued based on contracted amounts and the
    achievement of milestones such as number of patients enrolled.
    If timelines or contracts are modified based upon changes to the
    clinical study design or scope of work to be performed, we
    modify our estimates of accrued expenses accordingly on a
    prospective basis.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    None of our product candidates has received U.S.&#160;Food and
    Drug Administration, or FDA, or foreign regulatory marketing
    approval. In order to grant marketing approval, the FDA or
    foreign regulatory agencies must conclude that clinical data
    establishes the safety and efficacy of our product candidates
    and that the manufacturing facilities, processes and controls
    are adequate. Despite our efforts, our product candidates may
    not offer therapeutic or other improvement over existing,
    comparable drugs, be proven safe and effective in clinical
    studies, or meet applicable regulatory standards.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    As a result of the uncertainties discussed above, we are unable
    to determine the duration and completion costs of our
    development projects or when and to what extent we will receive
    cash inflows from the commercialization and sale of an approved
    product candidate, if ever.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: Arial, Helvetica">General and
    Administrative Expenses</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    General and administrative expenses consist primarily of
    compensation for employees in executive and operational
    functions, including clinical, chemical manufacturing,
    regulatory, finance and business development. Other significant
    costs include professional fees for legal services, including
    legal services associated with obtaining and maintaining
    patents. After
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    43
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    completion of this offering, we anticipate incurring a
    significant increase in general and administrative expenses as
    we operate as a public company. These increases will likely
    include increased costs for insurance, costs related to the
    hiring of additional personnel and payment to outside
    consultants, lawyers and accountants. We also expect to incur
    significant costs to comply with the corporate governance,
    internal controls and similar requirements applicable to public
    companies.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Critical
    Accounting Policies and Estimates</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Our management&#146;s discussion and analysis of our financial
    condition and results of operations is based on our financial
    statements, which have been prepared in accordance with
    accounting principles generally accepted in the United States,
    or GAAP. The preparation of these financial statements requires
    us to make estimates and judgments that affect the reported
    amounts of assets, liabilities and expenses. On an ongoing
    basis, we evaluate these estimates and judgments, including
    those described below. We base our estimates on our historical
    experience and on various other assumptions that we believe to
    be reasonable under the circumstances. These estimates and
    assumptions form the basis for making judgments about the
    carrying values of assets and liabilities that are not readily
    apparent from other sources. Actual results and experiences may
    differ materially from these estimates.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    While our significant accounting policies are more fully
    described in Note&#160;2 to our financial statements included at
    the end of this prospectus, we believe that the following
    accounting policies are the most critical to aid you in fully
    understanding and evaluating our reported financial results and
    affect the more significant judgments and estimates that we use
    in the preparation of our financial statements.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Accrued Clinical
    Expenses</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    As part of the process of preparing our financial statements, we
    are required to estimate our accrued expenses. This process
    involves reviewing open contracts and purchase orders,
    communicating with our applicable personnel to identify services
    that have been performed on our behalf and estimating the level
    of service performed and the associated cost incurred for the
    service when we have not yet been invoiced or otherwise notified
    of actual cost. The majority of our service providers invoice us
    monthly in arrears for services performed. We make estimates of
    our accrued expenses as of each balance sheet date in our
    financial statements based on facts and circumstances known to
    us at that time. We periodically confirm the accuracy of our
    estimates with the service providers and make adjustments if
    necessary. Examples of estimated accrued clinical expenses
    include:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    fees paid to CROs in connection with clinical studies;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    fees paid to investigative sites in connection with clinical
    studies;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    fees paid to contract manufacturers in connection with the
    production of clinical study materials; and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    fees paid to vendors in connection with the preclinical
    development activities.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We base our expenses related to clinical studies on our
    estimates of the services received and efforts expended pursuant
    to contracts with multiple research institutions and CROs that
    conduct and manage clinical studies on our behalf. The financial
    terms of these agreements are subject to negotiation, vary from
    contract to contract and may result in uneven payment flows.
    Payments under some of these contracts depend on factors such as
    the successful enrollment of patients and the completion of
    clinical study milestones. In accruing service fees, we estimate
    the time period over which services will be performed and the
    level of effort to be expended in each period. If the actual
    timing of the performance of services or the level of effort
    varies from our estimate, we adjust the accrual accordingly. If
    we do not identify costs
</DIV>

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    <BR>
    44
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    that we have begun to incur or if we underestimate or
    overestimate the level of services performed or the costs of
    these services, our actual expenses could differ from our
    estimates.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Stock-Based
    Compensation</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Effective January&#160;1, 2006, we adopted Statement of
    Financial Accounting Standard,&#160;No.&#160;123(R),
    <I>Share-Based Payment</I>, or SFAS&#160;123(R), which revised
    SFAS&#160;No.&#160;123, <I>Accounting for Stock-Based
    Compensation</I>, or SFAS&#160;123, and supersedes Accounting
    Principles Board, or APB, Opinion No.&#160;25, <I>Accounting for
    Stock Issued to Employees</I>, or APB 25. Under
    SFAS&#160;123(R), we recognize as compensation expense the fair
    value, for accounting purposes, of stock options issued to
    employees over the requisite service periods, which are
    typically the vesting periods. We adopted SFAS&#160;123(R) using
    the modified-prospective-transition method, which requires us to
    record compensation expense for the non-vested portion of
    previously issued stock-based compensation awards that were
    outstanding at January&#160;1, 2006, and any awards issued or
    modified after January&#160;1, 2006. Equity instruments issued
    to non-employees are recorded at their fair value, for
    accounting purposes, as determined in accordance with
    SFAS&#160;123(R) and Emerging Issues Task Force, or EITF,
    <FONT style="white-space: nowrap">96-18,</FONT>
    <I>Accounting for Equity Instruments That Are Issued to Other
    Than Employees for Acquiring, or in Conjunction with Selling,
    Goods and Services</I>, and are periodically revalued as the
    equity instruments vest and are recognized as expense over the
    related service period.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Prior to the adoption of SFAS&#160;123(R), we accounted for
    stock-based awards to our employees and directors using the
    intrinsic value method in accordance with APB&#160;25, as
    allowed under FASB Statement No.&#160;123. In accordance with
    APB&#160;25, we recognized stock-based compensation expense
    based on the intrinsic value method, whereby we recognized any
    difference between exercise price and fair value of the common
    stock on the date of grant as stock-based compensation expense
    ratably over the vesting period. As all employee stock options
    granted through December&#160;31, 2005 were granted with an
    exercise price equal to the fair value of our common stock at
    the date of grant, we did not recognize any stock-based
    compensation expense through December&#160;31, 2005.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We recognized employee stock-based compensation expense of
    $4,648 in 2006, $74,861 in 2007, $143,406 in 2008, and $66,931
    and $133,524 in the six months ended June&#160;30, 2008 and
    2009, respectively. As of June&#160;30, 2009, we had $577,051 in
    total unrecognized compensation cost related to non-vested
    stock-based compensation arrangements, which we expect to
    recognize over a weighted-average period of approximately
    2.49&#160;years.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Under SFAS&#160;123(R), we calculate the fair value of
    stock-based compensation awards using the Black-Scholes
    option-pricing model. For the year ended December&#160;31, 2008
    and six months ended June&#160;30, 2009, the weighted-average
    assumptions used in the Black-Scholes model were 6.25&#160;years
    for the expected term, 81% and 74% for the expected volatility,
    3.08% and 2.10% for the risk free rate and 0.0% and 0.0% for
    dividend yield, respectively. Expense amounts for future awards
    for any particular quarterly or annual period could be affected
    by changes in our assumptions. The weighted-average expected
    option term for 2008 and for the six months ended June&#160;30,
    2009 reflects the application of the simplified method set out
    in SEC Staff Accounting Bulletin, or SAB, No.&#160;107, which
    was issued in March 2005. The simplified method defines the life
    as the average of the contractual term of the stock-based
    compensation award and the weighted-average vesting period for
    all tranches. Estimated volatility for fiscal 2008 and for the
    six months ended June&#160;30, 2009 also reflects the
    application of SAB&#160;No.&#160;107&#146;s interpretive
    guidance and, accordingly, incorporates historical volatility of
    similar public entities.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The exercise price of options to purchase our common stock
    granted to our employees, directors and consultants was the fair
    value of our common stock on the date of grant. The fair value
    of our common stock was determined by our board of directors.
    Prior to this offering,
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    45
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    there has been no public market for our common stock. Our board
    of directors determined the fair value of our common stock based
    on several factors, including:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the rights, preferences and privileges of our preferred stock
    relative to our common stock;
</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    our performance and stage of development;
</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the likelihood of achieving a liquidity event for the shares of
    our common stock underlying these stock options, such as an
    initial public offering or sale of our company, given prevailing
    market conditions;
</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the trading value of common stock of public companies comparable
    to our company;
</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the sale prices of comparable acquisition transactions of public
    companies comparable to our company;&#160;and
</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the available data resulting from our clinical studies and
    development to date.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    In addition, in the fourth quarters of each of 2006, 2007 and
    2008, we obtained the reports of independent valuation firms
    with respect to their estimates of the fair values of our common
    stock. The most recent independent valuation report was
    delivered in October 2008. In estimating the fair value of our
    common stock, the independent firms used the income approach.
    The income approach is an estimate of the present value of the
    future monetary benefits expected to flow to the owners of a
    business. It requires a projection of the cash flows that the
    business expected to generate over a forecast period and an
    estimate of the present value of cash flows beyond that period,
    which is referred to as residual value. These cash flows are
    converted to present value by means of discounting, using a rate
    of return that accounts for the time value of money and the
    appropriate degree of risks inherent in the business. After
    calculation of the company&#146;s enterprise value using this
    approach, the value of a share of common stock is then
    discounted for lack of marketability, or the inability to
    readily sell shares, which increases the owner&#146;s exposure
    to changing market conditions and increases the risk of
    ownership.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Based on the factors listed above, our board of directors
    determined the fair value of our common stock for option grants
    made in 2009 to be $0.88 per share, and for option grants made
    in 2008 to be $0.78 per share.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    During the year ended December&#160;31, 2008 and the first six
    months of 2009, we granted options to purchase the following
    number of shares of our common stock at the following exercise
    prices:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="83%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="3%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="3%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="2%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="2%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Year ended December&#160;31, 2008
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    561,500
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.78
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Six months ended June&#160;30, 2009
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    674,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.88
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Results of
    Operations</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Comparison of the
    Six Months Ended June&#160;30, 2009 and the Six Months Ended
    June&#160;30, 2008</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <I>Research and Development Expenses.</I>&#160;&#160;Research
    and development expenses were $5.2&#160;million for the six
    months ended June&#160;30, 2009, compared with $5.4&#160;million
    for the six&#160;months ended June&#160;30, 2008. The
    $0.2&#160;million decrease in our research and development
    expenses is due to reduced expenses associated with our
    <FONT style="white-space: nowrap">A-001</FONT>
    program while we await the outcome of our end of Phase 2 meeting
    with the FDA to review the interim data from our Phase&#160;2
    clinical study and to discuss the Phase&#160;3 clinical study
    design for the use of
    <FONT style="white-space: nowrap">A-001</FONT> to
    prevent acute chest syndrome associated with sickle cell disease
    and reduced professional fees for part-time scientific advisors
    who provide various forms of expertise in conducting our
    clinical studies.
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    46
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <I>General and Administrative Expenses.</I>&#160;&#160;General
    and administrative expenses were $1.8&#160;million for the six
    months ended June&#160;30, 2009, compared with $1.6&#160;million
    for the six&#160;months ended June&#160;30, 2008. The
    $0.2&#160;million increase was primarily attributable to
    expenses relating to the expansion of our intellectual property
    portfolio.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <I>Interest and Other Income.</I>&#160;&#160;Interest and other
    income was $22,000 for the six months ended June&#160;30, 2009,
    compared with $85,000 for the six months ended June&#160;30,
    2008. The decrease in interest income was due to lower average
    cash balances.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <I>Interest Expense.</I>&#160;&#160;Interest expense was $96,000
    for the six months ended June&#160;30, 2008, compared with
    $97,000 for the six months ended June&#160;30, 2009.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <I>Beneficial Conversion Feature.</I>&#160;&#160;For the six
    months ended June&#160;30, 2008, we recorded $1.4&#160;million
    in expense related to the beneficial conversion features of our
    convertible promissory notes, which were convertible into shares
    of our
    <FONT style="white-space: nowrap">Series&#160;B-2</FONT>
    convertible preferred stock at a discount of 25% from the
    original issuance price of our
    <FONT style="white-space: nowrap">Series&#160;B-2</FONT>
    convertible preferred stock. There were no outstanding notes
    with similar terms during the six months ended June&#160;30,
    2009.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Comparison of the
    Years Ended December&#160;31, 2008 and December&#160;31,
    2007</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <I>Research and Development Expenses.</I>&#160;&#160;Research
    and development expenses were $10.9&#160;million for the year
    ended December&#160;31, 2008, compared with $23.9&#160;million
    for the year ended December&#160;31, 2007. The
    $13.0&#160;million decrease in our research and development
    expenses reflects a one-time license initiation fee of
    $6.0&#160;million recognized in 2007 in connection with a
    worldwide, exclusive license agreement we entered into with
    Amgen (see Note&#160;5 to our financial statements for further
    details). The remaining decrease of $7.0&#160;million was
    primarily attributable to reduced clinical costs associated with
    our Phase 2 clinical studies for the development of
    <FONT style="white-space: nowrap">A-002.</FONT> In
    2007, we initiated and completed two Phase 2 clinical studies
    for <FONT style="white-space: nowrap">A-002,</FONT>
    while in 2008, we initiated a single Phase 2b clinical study for
    <FONT style="white-space: nowrap">A-002.</FONT>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <I>General and Administrative Expenses.</I>&#160;&#160;General
    and administrative expenses were $3.0&#160;million for the year
    ended December&#160;31, 2008, compared with $2.5&#160;million
    for the year ended December&#160;31, 2007. The $0.5&#160;million
    increase was primarily attributable to our implementation of our
    vacation policy, professional fees relating to the expansion of
    our intellectual property portfolio and travel relating to
    business development activities primarily consisting of
    scientific and industry conferences and symposiums.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <I>Interest and Other Income.</I>&#160;&#160;Interest and other
    income was $178,000 for the year ended December&#160;31, 2008,
    compared with $697,000 for the year ended December&#160;31,
    2007. The decrease in interest and other income of approximately
    $519,000 was primarily attributable to lower average cash
    balances and lower average interest rates during 2008.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <I>Interest Expense.</I>&#160;&#160;Interest expense was
    $296,000 for the year ended December&#160;31, 2008, compared
    with no interest expense for the year ended December&#160;31,
    2007. The interest expense during the year ended
    December&#160;31, 2008 was due to interest recognized in
    connection with issuance of convertible promissory notes in
    February and May 2008, which were converted into shares of our
    <FONT style="white-space: nowrap">Series&#160;B-2</FONT>
    convertible preferred stock in connection with our
    <FONT style="white-space: nowrap">Series&#160;B-2</FONT>
    financing consummated in August 2008 and interest accrued in
    connection with a license fee payable due to Amgen.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <I>Beneficial Conversion Features.</I>&#160;&#160;For the year
    ended December&#160;31, 2008, we recorded $4.1&#160;million in
    expense related to the beneficial conversion features of our
    convertible promissory notes, which were convertible into shares
    of our
    <FONT style="white-space: nowrap">Series&#160;B-2</FONT>
    convertible preferred stock at a discount of 25% from the
    original issue price of our
    <FONT style="white-space: nowrap">Series&#160;B-2</FONT>
    convertible preferred stock. There were no outstanding notes
    with similar terms during 2007.
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    47
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Comparison of the
    Years Ended December&#160;31, 2007 and December&#160;31,
    2006</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <I>Research and Development Expenses.</I>&#160;&#160;Research
    and development expenses were $23.9&#160;million for the year
    ended December&#160;31, 2007, compared with $7.8&#160;million
    for the year ended December&#160;31, 2006. The
    $16.1&#160;million increase in our research and development
    expenses reflects a one-time license initiation fee of
    $6.0&#160;million recognized in 2007 in connection with a
    worldwide, exclusive license agreement we entered into with
    Amgen (see Note&#160;5 to our financial statements for further
    details). The remaining increase of $10.1&#160;million was
    primarily attributable to a full year of clinical costs
    associated with our Phase 2 clinical studies for the development
    of <FONT style="white-space: nowrap">A-002</FONT> and
    increases in salary and other compensation expense associated
    with increased headcount primarily consisting of clinical study
    operations support.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <I>General and Administrative Expenses.</I>&#160;&#160;General
    and administrative expenses were $2.5&#160;million for the year
    ended December&#160;31, 2007, compared with $0.8&#160;million
    for the year ended December&#160;31, 2006. The $1.7&#160;million
    increase was primarily attributable to the hiring of permanent
    finance personnel and increased professional fees for scientific
    advisors, travel for scientific conferences and facility costs.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <I>Interest and Other Income.</I>&#160;&#160;Interest and other
    income was $697,000 for the year ended December&#160;31, 2007,
    compared with $110,000 for the year ended December&#160;31,
    2006. The increase in interest and other income of approximately
    $587,000 was primarily attributable to the higher level of cash
    available during 2007 as a result of proceeds received in August
    and December 2006 from new investors.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <I>Interest Expense.</I>&#160;&#160;We did not incur any
    interest expense for the year ended December&#160;31, 2007,
    compared with $17,000 for the year ended December&#160;31, 2006.
    The interest expense during the year ended December&#160;31,
    2006 was due to interest recognized in connection with issuance
    of convertible promissory notes in 2006, which were converted
    into shares of our
    <FONT style="white-space: nowrap">Series&#160;A-2</FONT>
    convertible preferred stock in connection with our
    <FONT style="white-space: nowrap">Series&#160;A-2</FONT>
    financing consummated in August 2006.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <I>Beneficial Conversion Features.</I>&#160;&#160;For the year
    ended December&#160;31, 2006, we recorded $190,000 in expense
    related to the beneficial conversion features of our convertible
    promissory notes, which were convertible into shares of our
    <FONT style="white-space: nowrap">Series&#160;A-2</FONT>
    convertible preferred stock at a discount of 25% from the
    original issue price per share of our
    <FONT style="white-space: nowrap">Series&#160;A-2</FONT>
    convertible preferred stock. There were no outstanding notes
    with similar terms during 2007.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Liquidity and
    Capital Resources</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    To date, we have funded our operations primarily through private
    placements of preferred stock and convertible debt. As of
    June&#160;30, 2009, we had received approximately
    $32.4&#160;million of cash proceeds from the sale of equity
    securities and $13.2&#160;million from the issuance of
    convertible promissory notes that were converted into preferred
    stock, net of offering expenses. As of June&#160;30, 2009, we
    had cash and cash equivalents of $1.3&#160;million.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    In July 2009 and September 2009, we issued and sold an aggregate
    of $10.0&#160;million principal amount of convertible promissory
    notes to certain of our existing investors. The interest on the
    notes is 8% per annum. The principal and unpaid accrued interest
    of each note is automatically convertible into shares of equity
    securities sold in our next equity financing at a 25% discount
    to the per-share price in such financing or they are
    alternatively convertible into shares of our
    <FONT style="white-space: nowrap">Series&#160;B-2</FONT>
    convertible preferred stock in connection with a change of
    control of our company. In connection with the sale and issuance
    of the promissory notes, we issued warrants, with a term of five
    years, which are exercisable for the type of shares into which
    each note is converted, at the price per share at which such
    shares are sold. The warrants are exercisable for the number of
    shares equal to 25% of the principal amount of the notes should
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    48
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    the accompanying notes be converted prior to April&#160;1, 2010
    and 50% of the principal amount of the notes should the
    accompanying notes be converted on or after April&#160;1, 2010.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We are in negotiations with certain of our existing investors
    for an aggregate of $20&#160;million in additional equity
    financing.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Cash
    Flows</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: Arial, Helvetica">Six Months
    Ended June&#160;30, 2009</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    For the six months ended June&#160;30, 2009, we incurred a net
    loss of $7.1&#160;million.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Net cash used in operating activities totaled $6.6&#160;million.
    The net loss is higher than cash used in operating activities by
    $500,000. The primary drivers for the difference are adjustments
    for non-cash charges such as depreciation and amortization of
    $9,500 and stock-based compensation of $135,000 due to increased
    headcount and corresponding equity grants made to new and
    existing employees, an increase in current liabilities of
    $841,000 due to increased expenses relating to our Phase 2
    clinical study activity and a decrease in license fee payable by
    $500,000, offset by a decrease in current assets of $31,000.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    No cash was used or provided by investing activities and
    financing activities during the six months ended June&#160;30,
    2009.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: Arial, Helvetica">Six Months
    Ended June&#160;30, 2008</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    For the six months ended June&#160;30, 2008, we incurred a net
    loss of $8.4&#160;million.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Net cash used in operating activities totaled
    $10.0&#160;million. The net loss is lower than cash used in
    operating activities by $1.6&#160;million. The primary drivers
    for the difference are adjustments for non-cash charges such as
    depreciation and amortization of $12,000, stock-based
    compensation of $119,000 and beneficial conversion feature of
    $1.4&#160;million, offset by a decrease in current assets of
    $7,000 and a decrease in current liabilities of
    $3.2&#160;million due to payments made to vendors for Phase 2
    clinical study activities previously completed.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Net cash provided by investing activities totaled
    $4.3&#160;million and consisted of proceeds received from the
    sale or maturity of short-term investments.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Net cash provided by financing activities totaled
    $12.3&#160;million and consisted of the issuance of convertible
    promissory notes for $12.2&#160;million and $53,000 of cash
    proceeds from stock option exercises.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: Arial, Helvetica">Fiscal
    2008</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    For the year ended December&#160;31, 2008, we incurred a net
    loss of $18.1&#160;million.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Net cash used in operating activities totaled
    $17.1&#160;million. The net loss is higher than cash used in
    operating activities by $1.0&#160;million. The primary drivers
    for the difference are adjustments for non-cash charges such as
    depreciation and amortization of $22,000 and stock-based
    compensation of $195,000 due to increased headcount and
    corresponding equity grants made to new and existing employees,
    issuance of convertible preferred stock in lieu of interest
    payments of $156,000, beneficial conversion feature of
    $4.1&#160;million and a decrease in current assets of $31,000,
    offset by a decrease in current liabilities of $2.6&#160;million
    due to payments made to vendors for Phase 2 clinical study
    activities previously completed and a decrease in license fee
    payable of $1.0&#160;million due to payments made.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Net cash provided by investing activities totaled
    $5.8&#160;million and consisted of proceeds received from the
    sale or maturity of short-term investments.
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    49
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Net cash provided by financing activities totaled
    $19.0&#160;million and consisted primarily of private placements
    of our convertible preferred stock, through which we received
    net proceeds of $6.8&#160;million, and issuance of convertible
    promissory notes for $12.2&#160;million, which were converted
    into
    <FONT style="white-space: nowrap">Series&#160;B-2</FONT>
    convertible preferred stock during 2008.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: Arial, Helvetica">Fiscal
    2007</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    For the year ended December&#160;31, 2007, we incurred a net
    loss of $25.7&#160;million.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Net cash used in operating activities totaled
    $15.0&#160;million. The net loss is higher than cash used in
    operating activities by $10.7&#160;million. The primary drivers
    for the difference are adjustments for non-cash charges such as
    depreciation and amortization of $19,000, amortization of
    discount on short-term investments of $130,000 and stock-based
    compensation of $87,000, offset by an increase in current
    liabilities of $4.8&#160;million as a result of increased Phase
    2 clinical study expenses, an increase of license fee payable of
    $6.0&#160;million due the completion of a licensing agreement
    with Amgen to acquire the rights to
    <FONT style="white-space: nowrap">A-623</FONT> and an
    increase in current assets of $62,000.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Net cash used in investing activities totaled $5.8&#160;million,
    consisting primarily of purchases of short-term investments of
    $14.8&#160;million, offset by proceeds from the sale or maturity
    of these investments totaling $9.1&#160;million.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Net cash provided by financing activities totaled $119,000,
    which consisted of cash proceeds from the exercise of stock
    options.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: Arial, Helvetica">Fiscal
    2006</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    For the year ended December&#160;31, 2006, we incurred a net
    loss of $8.7&#160;million.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Net cash used in operating activities totaled $5.2&#160;million.
    The net loss is higher than cash used in operating activities by
    $3.5&#160;million. The primary drivers for the difference are
    adjustments for non-cash charges such as depreciation and
    amortization of $8,700, stock-based compensation of $9,000,
    issuance of convertible preferred stock in exchange for license
    fee of $2.3&#160;million to complete the licensing agreement to
    acquire the rights of a portfolio of assets, including
    <FONT style="white-space: nowrap">A-001</FONT> and
    <FONT style="white-space: nowrap">A-002,</FONT> from
    Eli Lilly and Company, or Eli Lilly, and Shionogi&#160;&#038;
    Co., Ltd., beneficial conversion feature of $190,000 and an
    increase in current liabilities of $1.0&#160;million relating
    primarily to the commencement of our first Phase&#160;2 clinical
    study, offset by an increase in current assets of $39,000.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Net cash used in investing activities totaled $22,000,
    consisting primarily of purchases of capital equipment.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Net cash provided by financing activities totaled
    $25.7&#160;million and primarily consisted of funds received
    from the private placements of our convertible preferred stock,
    through which we received net proceeds of $24.7&#160;million,
    and issuance of convertible promissory notes for $960,000, which
    were converted into
    <FONT style="white-space: nowrap">Series&#160;A-2</FONT>
    and B-1 convertible preferred stock during 2006.
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    50
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Contractual
    Obligations and Commitments</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The following table summarizes our long-term contractual
    obligations and commitments as of June&#160;30, 2009:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="44%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="8%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="8%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="6%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=05 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=05 type=lead -->
    <TD width="6%" align="right">&nbsp;</TD>	<!-- colindex=05 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=05 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=06 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=06 type=lead -->
    <TD width="4%" align="right">&nbsp;</TD>	<!-- colindex=06 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=06 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="18" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Payments Due by Period</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Less than<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>After<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Total</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>1&#160;Year</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>1-3&#160;Years</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>4-5&#160;Years</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>5 Years</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Operating lease obligations&#160;(1)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    133,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    106,400
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    26,600
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    License obligations&#160;(2)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4,500,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4,500,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 30pt">
    Total
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    4,633,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    4,606,400
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    26,600
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 1pt; margin-left: 0%; width: 10%;  align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=999 iwidth=456 length=48 -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="98%"></TD>
</TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(1)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Operating lease obligations reflect
    our obligation to make payments in connection with a sublease
    that commenced in October 2008 and will end on
    September&#160;30, 2010 for approximately 7,800&#160;square feet
    of office space and an office equipment lease, which commenced
    in October 2007 and will end in October 2010. Future minimum
    payments under these operating leases total monthly payments of
    $8,900 until the end of the lease terms.
    </FONT></TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(2)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">License obligations reflect our
    obligation to Amgen under our license agreement.
    </FONT></TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The above amounts exclude potential payments to be made under
    our license agreements to our licensors that are based on the
    progress of our product candidates in development, as these
    payments are not determinable. Under our license agreement with
    Eli Lilly and Shionogi&#160;&#038; Co., Ltd. to develop and
    commercialize certain
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    inhibitors, we are obligated to make additional milestone
    payments upon the achievement of certain development,
    regulatory, and commercial objectives, including milestone
    payments of $1.75&#160;million to each of Eli Lilly and Shionogi
    &#038; Co., Ltd. due no later than 12&#160;months from the
    enrollment of the first patient in a Phase&#160;3 clinical study
    for A-002. We are also obligated to pay royalties on future net
    sales of products that are developed and approved as defined by
    this collaboration. Our obligation to pay royalties with respect
    to each licensed product in each country will expire upon the
    later of (a)&#160;10 years following the date of the first
    commercial sale of such licensed product in such country, and
    (b)&#160;the first date on which generic version(s) of the
    applicable licensed product achieve a total market share, in the
    aggregate, of 25% or more of the total unit sales of wholesalers
    to pharmacies of licensed product and all generic versions
    combined in the applicable country.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Also excluded from the table above are potential milestone
    payments on the development of
    <FONT style="white-space: nowrap">A-623.</FONT> Under
    our license agreement with Amgen to develop and commercialize
    <FONT style="white-space: nowrap">A-623,</FONT> we
    are obligated to make additional milestone payments upon the
    achievement of certain development, regulatory, and commercial
    objectives. We are also obligated to pay royalties on future net
    sales of products that are developed and approved as defined by
    this collaboration. Our royalty obligations as to a particular
    licensed product will be payable, on a
    <FONT style="white-space: nowrap">country-by-country</FONT>
    and licensed
    <FONT style="white-space: nowrap">product-by-licensed</FONT>
    product basis, for the longer of (a)&#160;the date of expiration
    of the last to expire valid claim within the licensed patents
    that covers the manufacture, use or sale, offer to sell, or
    import of such licensed product by us or a sublicensee in such
    country, or (b)&#160;10 years after the first commercial sale of
    the applicable licensed product in the applicable country.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Funding
    Requirements</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We expect to incur substantial expenses and generate significant
    operating losses as we continue to advance our product
    candidates into preclinical studies and clinical studies and as
    we:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    initiate a Phase 3 clinical study for
    <FONT style="white-space: nowrap">A-002;</FONT>
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    continue clinical development of
    <FONT style="white-space: nowrap">A-001</FONT> and
    <FONT style="white-space: nowrap">A-623;</FONT>
</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    51
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    hire additional clinical, scientific and management
    personnel;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    implement new operational, financial and management information
    systems.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Our future capital uses and requirements depend on numerous
    forward-looking factors. These factors include the following:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the progress of preclinical development and clinical studies of
    our product candidates;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the time and costs involved in obtaining regulatory approvals;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    delays that may be caused by evolving requirements of regulatory
    agencies;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the costs involved in filing and prosecuting patent applications
    and enforcing or defending patent claims;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    our ability to establish, enforce and maintain selected
    strategic alliances;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the acquisition of technologies, product candidates and other
    business opportunities that require financial commitments.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    To date, we have not generated any revenue. We do not expect to
    generate revenue unless or until we obtain regulatory approval
    of, and commercialize, our product candidates. We expect our
    continuing operating losses to result in increases in cash used
    in operations over the next several years. Our future capital
    requirements will depend on a number of factors including the
    progress and results of our clinical studies, the costs, timing
    and outcome of regulatory review of our product candidates, our
    revenue, if any, from successful development and
    commercialization of our product candidates, the costs of
    commercialization activities, the scope, progress, results and
    costs of preclinical development, laboratory testing and
    clinical studies for other product candidates, the emergence of
    competing therapies and other market developments, the costs of
    preparing, filing and prosecuting patent applications and
    maintaining, enforcing and defending intellectual property
    rights, the extent to which we acquire or invest in other
    product candidates and technologies, and our ability to
    establish collaborations and obtain milestone, royalty or other
    payments from any collaborators.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We expect the proceeds of this offering, together with our
    existing resources as of the date of this prospectus, to be
    sufficient to fund our planned operations, including our
    continued product candidate development, for at least the next
    12&#160;months. However, we may require significant additional
    funds earlier than we currently expect to conduct additional
    clinical studies and seek regulatory approval of our product
    candidates. Because of the numerous risks and uncertainties
    associated with the development and commercialization of our
    product candidates, we are unable to estimate the amounts of
    increased capital outlays and operating expenditures associated
    with our current and anticipated clinical studies.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Additional funding may not be available to us on acceptable
    terms or at all. In addition, the terms of any financing may
    adversely affect the holdings or the rights of our stockholders.
    For example, if we raise additional funds by issuing equity
    securities or by selling debt securities, if convertible,
    further dilution to our existing stockholders may result. To the
    extent our capital resources are insufficient to meet our future
    capital requirements, we will need to finance our future cash
    needs through public or private equity offerings, collaboration
    agreements, debt financings or licensing arrangements.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    If adequate funds are not available, we may be required to
    terminate, significantly modify or delay our development
    programs, reduce our planned commercialization efforts, or
    obtain funds through collaborators that may require us to
    relinquish rights to our technologies or product candidates that
    we might otherwise seek to develop or commercialize
    independently. We may elect to raise additional funds even
    before we need them if the conditions for raising capital are
    favorable.
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    52
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Off-Balance Sheet
    Arrangements</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We do not currently have, nor have we ever had, any
    relationships with unconsolidated entities or financial
    partnerships, such as entities often referred to as structured
    finance or special purpose entities, established for the purpose
    of facilitating off-balance sheet arrangements or other
    contractually narrow or limited purposes. In addition, we do not
    engage in trading activities involving non-exchange traded
    contracts.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Quantitative and
    Qualitative Disclosure About Market Risk</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Our primary exposure to market risk is interest income
    sensitivity, which is affected by changes in the general level
    of U.S.&#160;interest rates. However, since a majority of our
    investments are in short-term certificates of deposit and money
    market funds, we do not believe we are subject to any material
    market risk exposure. We do not have any foreign currency or
    other derivative financial instruments.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Recent Accounting
    Pronouncements</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    In June 2009, the FASB issued Statement No.&#160;168, <I>The
    FASB Accounting Standards Codification and the Hierarchy of
    Generally Accepted Accounting Principles-a replacement of FASB
    Statement No.&#160;162</I>, or SFAS&#160;168. SFAS&#160;168
    establishes the FASB Accounting Standards Codification as the
    sole source of GAAP. Pursuant to the provisions of
    SFAS&#160;168, we will update references to GAAP in our
    financial statements issued for the period ending
    September&#160;30, 2009 and thereafter. The adoption of
    SFAS&#160;168 will have no impact on our financial position or
    results of operations.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    In June 2008, the EITF reached a consensus on EITF Issue
    <FONT style="white-space: nowrap">No.&#160;07-5,</FONT>
    <I>Determining Whether an Instrument (or Embedded Feature) is
    Indexed to an Entity&#146;s Own Stock</I>, or
    <FONT style="white-space: nowrap">EITF&#160;07-5.</FONT>
    <FONT style="white-space: nowrap">EITF&#160;07-5</FONT>
    provides guidance on how to determine if certain instruments (or
    embedded features) are considered indexed to a company&#146;s
    own stock, including instruments similar to warrants to purchase
    the company&#146;s stock.
    <FONT style="white-space: nowrap">EITF&#160;07-5</FONT>
    requires companies to use a two-step approach to evaluate an
    instrument&#146;s contingent exercise provisions and settlement
    provisions in determining whether the instrument is considered
    to be indexed to its own stock and therefore exempt from the
    application of SFAS&#160;No.&#160;133, <I>Accounting for
    Derivative Instruments and Hedging Activities</I>. Although
    <FONT style="white-space: nowrap">EITF&#160;07-5</FONT>
    is effective for fiscal years beginning after December&#160;15,
    2008, any outstanding instrument at the date of adoption will
    require a retrospective application of the accounting through a
    cumulative effect adjustment to retained earnings upon adoption.
    We do not expect the adoption of
    <FONT style="white-space: nowrap">EITF&#160;07-5</FONT>
    to have a material impact on either our financial position or
    results of operations.
</DIV>

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    <BR>
    53
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<A name='110'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">BUSINESS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Overview</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We are a biopharmaceutical company focused on developing and
    commercializing products to treat serious diseases associated
    with inflammation, including cardiovascular and autoimmune
    diseases. We currently have one Phase 3 ready clinical program,
    A-002, and two Phase 2 clinical programs, A-001 and A-623. Two
    of our product candidates,
    <FONT style="white-space: nowrap">A-002</FONT> and
    <FONT style="white-space: nowrap">A-001,</FONT> are
    designed to inhibit a novel enzyme target known as secretory
    phospholipase
    A<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>,
    or
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>.
    Elevated levels of
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    have been implicated in a variety of acute inflammatory
    conditions, including acute coronary syndrome and acute chest
    syndrome associated with sickle cell disease, as well as in
    chronic diseases, including stable coronary artery disease, or
    CAD. In addition, our Phase 2 ready product candidate,
    <FONT style="white-space: nowrap">A-623,</FONT>
    targets elevated levels of B-lymphocyte stimulator, or BLyS,
    which has been associated with a variety of B-cell mediated
    autoimmune diseases, including systemic lupus erythematosus, or
    lupus, lupus nephritis, or LN, rheumatoid arthritis, multiple
    sclerosis, Sj&#246;gren&#146;s Syndrome, Graves&#146; Disease
    and others.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <IMG src="f53438orf5343814a.gif" alt="(PRODUCT DEVELOPMENT PROGRAMS CHART">
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We have worldwide rights to develop and commercialize our
    products in all indications and markets, with the exception of
    Japan where Shionogi&#160;&#038; Co., Ltd. retains commercial
    rights to our
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    product candidates. Our current development plans are focused on
    acute treatment and orphan indications that may provide an
    accelerated and cost-efficient path to regulatory approval and
    commercialization. We believe that certain of these markets can
    be commercialized through a limited specialty sales force. In
    addition, we believe that our product candidates can also
    address market opportunities in chronic indications and we may
    seek development and commercialization partners to address
    chronic, non-specialty and international markets.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Inflammation and
    Diseases</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The inflammatory process is a powerful and essential early line
    of defense for protection against injury and to repair body
    tissue. As a result, it is tightly regulated by the body to
    ensure appropriate activation and prompt resolution. However,
    under certain circumstances, the normal process can malfunction,
    leading to acute or chronic inflammation or inappropriate
    activation directed against the body&#146;s own tissues. All of
    these circumstances can cause significant damage to cells and
    tissues, leading to a range of inflammatory disorders, such as
    cardiovascular and autoimmune diseases.
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    54
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Our
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    Inhibition Portfolio</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Building upon our knowledge of the regulation of inflammatory
    pathways and the growing body of evidence that links
    inflammation to multiple disease states, we believe that we have
    developed a leadership position in the field of
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    inhibition. Our
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    inhibitors have been studied in a number of inflammatory
    disorders in multiple therapeutic areas, which validate the
    effect of our
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    inhibitors on
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    concentration and activity, both of which have been implicated
    in acute coronary syndrome and acute chest syndrome associated
    with sickle cell disease. We currently have the two most
    advanced
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    inhibitors in clinical development.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Our lead product candidate, varespladib methyl,
    <FONT style="white-space: nowrap">A-002</FONT> (a
    prodrug of
    <FONT style="white-space: nowrap">A-001),</FONT> is a
    Phase 3 ready oral broad-spectrum inhibitor of
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    enzymes and is being developed initially for short-term
    (16-week) treatment of patients experiencing an acute coronary
    syndrome. The American Heart Association defines acute coronary
    syndrome as any group of clinical symptoms related to acute
    myocardial ischemia, including unstable angina, or UA.
    <FONT style="white-space: nowrap">A-002,</FONT> when
    combined with lipid-lowering therapies, is one of only a few
    therapeutics in development with the potential to offer a unique
    and synergistic approach targeting inflammation, elevated lipid
    levels and atherosclerosis as part of physician-directed
    standard of care. Through its novel mechanism of action,
    <FONT style="white-space: nowrap">A-002</FONT> may
    have applications in a broad range of acute and chronic
    cardiovascular diseases. Based on the successful results of our
    recently completed Phase 2b clinical study and assuming timely
    agreement with the U.S.&#160;Food and Drug Administration, or
    FDA, on our Special Protocol Assessment, or SPA, we plan to
    initiate a Phase 3 study in patients with acute coronary
    syndrome by the end of 2009.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Our second product candidate, varespladib sodium,
    <FONT style="white-space: nowrap">A-001,</FONT> is an
    intravenously administered inhibitor of
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2,</SUB>which
    is in a Phase 2 clinical study for the prevention of acute chest
    syndrome associated with sickle cell disease. Acute chest
    syndrome is a form of inflammation-induced lung failure and is
    the most common cause of death in patients with sickle cell
    disease. Given that there are currently no approved drugs for
    the prevention of acute chest syndrome associated with sickle
    cell disease, we have received orphan drug designation and fast
    track status from the FDA for
    <FONT style="white-space: nowrap">A-001.</FONT> Based
    on a pre-specified review of our Phase 2 clinical study interim
    results by a Data Safety Monitoring Board, or DSMB, and the
    positive effects observed with the administration of
    <FONT style="white-space: nowrap">A-001,</FONT> we
    have an end of Phase 2 meeting scheduled with the FDA to review
    the interim data from our Phase&#160;2 clinical study and to
    discuss the Phase&#160;3 clinical study design for the use of
    <FONT style="white-space: nowrap">A-001</FONT> to
    prevent acute chest syndrome associated with sickle cell disease.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We also have a broad series of additional
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    inhibitors designed with distinct chemical scaffolds in
    preclinical development. These product candidates are intended
    to provide new
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    inhibitors for our existing target indications as well as new
    candidates for other therapeutic areas. Our lead candidate
    within the series,
    <FONT style="white-space: nowrap">A-003,</FONT> is
    chemically distinct from
    <FONT style="white-space: nowrap">A-001</FONT> and
    <FONT style="white-space: nowrap">A-002</FONT> and
    has shown increased potency against the target enzymes and
    higher drug exposure after dosing in preclinical studies. As a
    result,
    <FONT style="white-space: nowrap">A-003</FONT> may
    confer beneficial pharmacodynamic effects in patients and can be
    formulated for oral or intravenously administered use. We plan
    to file an investigational new drug application, or IND, for
    <FONT style="white-space: nowrap">A-003</FONT> in the
    future and we may continue to assess additional new compounds.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We have explored the use of our
    <FONT style="white-space: nowrap">A-002</FONT> and
    <FONT style="white-space: nowrap">A-001</FONT>
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    inhibitors as both topical and inhalation therapies in animal
    models for the treatment of atopic dermatitis and asthma,
    respectively. Results from a standard mouse model of edema
    demonstrated that topically administered
    <FONT style="white-space: nowrap">A-002</FONT> was
    equivalent to the marketed immunosuppressant Elidel in resolving
    inflammation. In a sheep model of allergen-induced asthma,
    inhaled
    <FONT style="white-space: nowrap">A-002</FONT> and
    <FONT style="white-space: nowrap">A-001</FONT>
    demonstrated an improvement in lung function similar to inhaled
    steroids.
</DIV>

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    <BR>
    55
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 4%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: Arial, Helvetica">sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    Biology</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    is a family of enzymes directly involved in the acute and
    chronic steps of an inflammatory response.
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    activity is highly elevated during the early stages of
    inflammation, and its acute effects serve to substantially
    amplify the inflammatory process. The
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    enzyme catalyzes the first step in the arachidonic acid pathway
    of inflammation, one of the main metabolic processes for the
    production of inflammatory mediators, which, when amplified, are
    responsible for causing damage to cells and tissue.
    Specifically,
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    breaks down phospholipids that result in the formation of fatty
    acids such as arachidonic acid. Arachidonic acid is subsequently
    metabolized to form several pro-inflammatory and thrombogenic
    molecules.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    In cardiovascular diseases such as acute coronary syndrome,
    excess
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    activity has acute and chronic implications on disease
    progression and patient outcomes. In published studies and our
    own clinical studies, significant elevations in
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    activity and mass have been seen from 24&#160;hours to two weeks
    following an acute coronary syndrome and can persist for up to
    an additional 12&#160;weeks thereafter. Shortly after a heart
    attack,
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    is dramatically elevated, amplifying inflammation that is
    associated with more frequent and secondary cardiovascular
    events. This resulting elevated level of inflammation is
    problematic for acute coronary syndrome patients who are already
    at higher risk of complications during the weeks following their
    initial event. For example, increased inflammation can
    destabilize vulnerable vascular lesions or atherosclerotic
    plaque, destroy damaged but viable cardiac cells and adversely
    modify lipids, any of which may lead to the recurrence of a
    major adverse cardiovascular event, or MACE.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Historical and recent clinical results have demonstrated
    circulating levels of
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    are significantly correlated with a well-established
    inflammatory marker, C-reactive protein, or CRP. These and other
    clinical studies have also demonstrated that
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    independently predicts coronary events in patients that have
    recently experienced an acute coronary syndrome and patients
    with stable CAD independent of other standard risk factors. In a
    stable cardiovascular patient,
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    not only sustains chronic vascular inflammation as discussed
    earlier, but it also adversely remodels lipoproteins such as
    low-density lipoprotein cholesterol, or LDL-C.
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    interacts with LDL-C in a series of reactions that result in
    smaller, more pro-atherogenic and pro-inflammatory LDL-C
    particles. Moreover, these modified lipoproteins have a reduced
    affinity for LDL-C receptors, which are responsible for removal
    of cholesterol from the body. As a result, LDL-C remains in
    circulation longer and has a greater tendency to deposit in the
    artery wall. This increased LDL-C deposition and sustained
    chronic vascular inflammation may contribute to the development
    of atherosclerosis.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The family of
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    enzymes includes at least three forms that play a role in
    inflammation and the development of cardiovascular disease or
    lung injury. While
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    enzymes are a member of the phospholipase family that includes a
    lipoprotein associated phospholipase
    A<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>,
    or
    Lp-PLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>,
    there are important distinctions. Although both are present in
    blood,
    Lp-PLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    is mostly bound to LDL-C and high-density lipoprotein, or HDL,
    while
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    enzymes are not. Based on our clinical studies, we believe that
    our
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    inhibitor,
    <FONT style="white-space: nowrap">A-002,</FONT> can
    be distinguished from other
    PLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    enzyme inhibitors such as those targeted at inhibiting
    Lp-PLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    because
    <FONT style="white-space: nowrap">A-002</FONT>
    treatment:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    is synergistic with HMG-CoA reductase inhibitors, or statins, in
    reducing LDL-C, total cholesterol, and non-HDL cholesterol in
    patients with CAD;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    lowers circulating small, dense and pro-atherogenic, or
    plaque-building LDL-C particles, while
    Lp-PLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    inhibition has not demonstrated similar effects;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    has been shown to lower CRP, a well-established marker of
    inflammation in a statistically significant manner;&#160;and
</TD>
</TR>

</TABLE>

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    <BR>
    56
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    reduces plaque volume and aneurysms in standard rodent models of
    atherosclerosis and has demonstrated synergistic reductions of
    plaque volume in standard rodent models of atherosclerosis when
    used in combination with statins.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    In diseases such as acute chest syndrome, a very serious form of
    lung injury associated with sickle cell disease,
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    acts acutely on a number of substrates that amplify the
    inflammatory disease process. Sickle cell disease is a genetic
    disorder which leads to the structural alteration, or
    &#147;sickling,&#148; of otherwise healthy red blood cells.
    Patients with sickle cell disease experience periods of intense
    pain known as vaso-occlusive crisis, or VOC, as structurally
    altered red blood cells bind together and occlude small blood
    vessels that supply blood and nutrients to vital tissue and
    bone.
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    levels are dramatically elevated in sickle cell patients during
    an episode of VOC as well as within 24 to 48&#160;hours of the
    onset of acute chest syndrome. During VOC, microscopic fat
    emboli, or droplets of fat from the bone marrow, are prevalent
    and can break free and become lodged in the lung. These emboli
    are substrates for
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    enzymes and provide fuel for an already established inflammatory
    response, increasing lung injury. In addition,
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    has been demonstrated to degrade human lung surfactant, a
    component necessary in maintaining appropriate lung function,
    which further complicates lung injury.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We believe that early intervention with a drug designed to
    inhibit
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    activity may offer a unique opportunity to reduce the
    complications associated with certain inflammatory diseases such
    as acute coronary syndrome in cardiovascular patients and acute
    chest syndrome in patients with sickle cell disease.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: Arial, Helvetica">Our BLyS
    Antagonism Portfolio</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    BLyS has been associated with a wide range of B-cell mediated
    autoimmune diseases including lupus, LN, rheumatoid arthritis,
    multiple sclerosis, Sj&#246;gren&#146;s Syndrome, Graves&#146;
    Disease and others. The role of BLyS in lupus has recently been
    clinically validated in multiple clinical studies with other
    BLyS antagonists. We intend to advance the development of our
    BLyS antagonist,
    <FONT style="white-space: nowrap">A-623,</FONT> a
    selective peptibody, to exploit its broad potential clinical
    utility in autoimmune diseases. A peptibody is a novel fusion
    protein that is distinct from an antibody. We have worldwide
    rights to
    <FONT style="white-space: nowrap">A-623</FONT> in all
    potential indications, and pending further data from competitor
    clinical studies, we plan to initiate a Phase 2 clinical study
    in lupus in the second half of 2010.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <FONT style="white-space: nowrap">A-623</FONT>
    demonstrates anti-BLyS activity and has been shown to be safe
    and effective in selectively modulating and reducing B-cells in
    two Phase 1 clinical studies in lupus patients. We believe
    <FONT style="white-space: nowrap">A-623</FONT> may
    offer a number of potential differentiations over other BLyS
    antagonists, as well as other novel B-cell directed therapies
    including:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    dosing flexibility with both subcutaneous and intravenous routes
    of delivery;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    selective modulation and reduction of relevant B-cell
    <FONT style="white-space: nowrap">sub-types</FONT> in
    lupus patients;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the ability to bind to both membrane-bound and soluble BLyS;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    a molecular structure, which may confer differentiating
    pharmacokinetic and pharmacodynamic characteristics potentially
    providing efficacy and dosing benefits;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    differentiated intellectual property as a peptibody
    circumventing existing antibody, antibody-fragment and other
    related patents;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    potential safety and manufacturing advantages.
</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    57
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Product
    Development Programs</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We have focused our product development programs on
    anti-inflammatory therapeutics for cardiovascular diseases,
    lupus and other serious diseases for which we believe that
    current treatments are either inadequate or non-existent. Our
    current product development programs are listed in the table
    below.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 8pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="25%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=gutterleft -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=gutterright -->
    <TD width="16%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=03 type=gutterleft -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=03 type=gutterright -->
    <TD width="9%">&nbsp;</TD>	<!-- colindex=03 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=04 type=gutterleft -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=04 type=gutterright -->
    <TD width="21%">&nbsp;</TD>	<!-- colindex=04 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=05 type=gutter -->
    <TD width="21%">&nbsp;</TD>	<!-- colindex=05 type=maindata -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom" style="border-left: 1px solid #000000; padding-left: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-top: 1px solid #000000">
    <B>Worldwide<BR>
    </B>
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom" style="border-left: 1px solid #000000; padding-left: 2pt">
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B>Development<BR>
    </B>
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B>Product<BR>
    </B>
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom" style="border-left: 1px solid #000000; padding-left: 2pt">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Product Candidate</B>
</DIV>
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Phase</B>
</DIV>
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Rights</B>
</DIV>
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-right: 1px solid #000000; padding-right: 2pt">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Description</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-right: 1px solid #000000; padding-right: 2pt">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Next Milestone</B>
</DIV>
</TD>
</TR>
<TR valign="bottom">
<TD rowspan="4" align="left" valign="top" style="border-left: 1px solid #000000; padding-left: 2pt; border-top: 1px solid #000000">
    <FONT style="white-space: nowrap">A-002-varespladib</FONT>
    methyl with atorvastatin, also known as Lipitor in the
    United&#160;States&#160;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="top" style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="top" style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="top" style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="top" style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
<DIV style="text-indent: -8pt; margin-left: 8pt">
    Phase 3 ready
</DIV>
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    Anthera (1)
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top" style="border-right: 1px solid #000000; padding-right: 2pt">
<DIV style="text-indent: -7pt; margin-left: 7pt">
    &#149;&#160;Orally administered
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    inhibitor
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top" style="border-right: 1px solid #000000; padding-right: 2pt">
<DIV style="text-indent: -7pt; margin-left: 7pt">
    &#149;&#160;Initiate Phase 3 clinical study by the end of 2009
</DIV>
</TD>
</TR>
<TR valign="bottom" style="line-height: 6pt">
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top" style="border-right: 1px solid #000000; padding-right: 2pt">
<DIV style="text-indent: -7pt; margin-left: 7pt">
    &#149;&#160;Indicated for the prevention of secondary MACE
    following an acute coronary syndrome (16-week treatment)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top" style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
</TR>
<TR style="font-size: 1pt">
<TD nowrap align="left" valign="top" style="border-left: 1px solid #000000; padding-left: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="top" style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="top" style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="top" style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="top" style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top" style="border-left: 1px solid #000000; padding-left: 2pt">
    <FONT style="white-space: nowrap">A-002-varespladib</FONT>
    methyl with niacin
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Phase 2 ready
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    Anthera (1)
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top" style="border-right: 1px solid #000000; padding-right: 2pt">
<DIV style="text-indent: -7pt; margin-left: 7pt">
    &#149;&#160;Orally administered
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    inhibitor to improve lipid profiles and reduce flushing in
    cardiovascular patients on niacin therapy
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top" style="border-right: 1px solid #000000; padding-right: 2pt">
<DIV style="text-indent: -7pt; margin-left: 7pt">
    &#149;&#160;Initiate initial prospective Phase 2 clinical study
    to explore safety and efficacy
</DIV>
</TD>
</TR>
<TR style="font-size: 1pt">
<TD nowrap align="left" valign="top" style="border-left: 1px solid #000000; padding-left: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="top" style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="top" style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="top" style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="top" style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top" style="border-left: 1px solid #000000; padding-left: 2pt">
    <FONT style="white-space: nowrap">A-002-varespladib</FONT>
    methyl
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Phase 2 investigator<BR>
    study
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    Anthera (1)
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top" style="border-right: 1px solid #000000; padding-right: 2pt">
<DIV style="text-indent: -7pt; margin-left: 7pt">
    &#149;&#160;Orally administered
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    inhibitor to reduce inflammatory markers in patients undergoing
    interventional cardiovascular procedures
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top" style="border-right: 1px solid #000000; padding-right: 2pt">
<DIV style="text-indent: -7pt; margin-left: 7pt">
    &#149;&#160;Enrollment complete. Data publication targeted in
    2010
</DIV>
</TD>
</TR>
<TR style="font-size: 1pt">
<TD nowrap align="left" valign="top" style="border-left: 1px solid #000000; padding-left: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="top" style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="top" style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="top" style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="top" style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top" style="border-left: 1px solid #000000; padding-left: 2pt">
    <FONT style="white-space: nowrap">A-001-varespladib</FONT>
    sodium
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    Phase 2
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    Anthera (1)
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top" style="border-right: 1px solid #000000; padding-right: 2pt">
<DIV style="text-indent: -7pt; margin-left: 7pt">
    &#149;&#160;Intravenous
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    inhibitor with orphan drug and fast track status
</DIV>
</TD>
<TD rowspan="2">
&nbsp;
</TD>
<TD rowspan="2" align="left" valign="top" style="border-right: 1px solid #000000; padding-right: 2pt">
<DIV style="text-indent: -7pt; margin-left: 7pt">
    &#149;&#160;Complete end of Phase 2 meeting with the FDA in late
    2009 to review the interim data from our Phase 2 clinical study
    and to discuss the Phase 3 clinical study design for the use of
    A-001 to prevent acute chest syndrome associated with sickle
    cell disease
</DIV>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top" style="border-left: 1px solid #000000; padding-left: 2pt">
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top" style="border-right: 1px solid #000000; padding-right: 2pt">
<DIV style="text-indent: -7pt; margin-left: 7pt">
    &#149;&#160;Indicated for prevention of acute chest syndrome in
    hospitalized patients with sickle cell disease
</DIV>
</TD>
</TR>
<TR style="font-size: 1pt">
<TD nowrap align="left" valign="top" style="border-left: 1px solid #000000; padding-left: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="top" style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="top" style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="top" style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="top" style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top" style="border-left: 1px solid #000000; padding-left: 2pt">
<DIV style="text-indent: -16pt; margin-left: 16pt">
    <FONT style="white-space: nowrap">A-623</FONT>
</DIV>
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Phase 2 ready
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    Anthera
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top" style="border-right: 1px solid #000000; padding-right: 2pt">
<DIV style="text-indent: -7pt; margin-left: 7pt">
    &#149;&#160;Selective peptibody antagonist of BLyS cytokine
    being developed for the treatment of B-cell mediated autoimmune
    diseases
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top" style="border-right: 1px solid #000000; padding-right: 2pt">
<DIV style="text-indent: -7pt; margin-left: 7pt">
    &#149;&#160;Initiate Phase 2 clinical study in the second half
    of 2010
</DIV>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top" style="border-left: 1px solid #000000; padding-left: 2pt">
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top" style="border-right: 1px solid #000000; padding-right: 2pt">
<DIV style="text-indent: -7pt; margin-left: 7pt">
    &#149;&#160;Indicated for systemic lupus erythematosus
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top" style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
</TR>
<TR style="font-size: 1pt">
<TD nowrap align="left" valign="top" style="border-left: 1px solid #000000; padding-left: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="top" style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="top" style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="top" style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="top" style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top" style="border-left: 1px solid #000000; padding-left: 2pt">
<DIV style="text-indent: -16pt; margin-left: 16pt">
    A-003
</DIV>
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    Preclinical
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    Anthera (1)
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top" style="border-right: 1px solid #000000; padding-right: 2pt">
<DIV style="text-indent: -7pt; margin-left: 7pt">
    &#149;&#160;Under development as a second generation
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>inhibitor
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top" style="border-right: 1px solid #000000; padding-right: 2pt">
<DIV style="text-indent: -7pt; margin-left: 7pt">
    &#149;&#160;Continue preclinical development
</DIV>
</TD>
</TR>
<TR valign="bottom" style="line-height: 6pt">
<TD style="border-left: 1px solid #000000; padding-left: 2pt">
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top" style="border-left: 1px solid #000000; padding-left: 2pt">
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top" style="border-right: 1px solid #000000; padding-right: 2pt">
<DIV style="text-indent: -7pt; margin-left: 7pt">
    &#149;&#160;Indicated for cardiovascular diseases
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top" style="border-right: 1px solid #000000; padding-right: 2pt">
<DIV style="text-indent: -7pt; margin-left: 7pt">
    &#149;&#160;Initiate IND enabling studies
</DIV>
</TD>
</TR>
<TR style="font-size: 1pt">
<TD nowrap align="left" valign="bottom" style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom" style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom" style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom" style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom" style="border-top: 1px solid #000000">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 1pt; margin-left: 0%; width: 10%;  align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=999 iwidth=456 length=48 -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="98%"></TD>
</TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(1)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Shionogi&#160;&#038; Co., Ltd.
    retains product rights in Japan
    </FONT></TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    58
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica"><FONT style="white-space: nowrap">A-002</FONT></FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <FONT style="white-space: nowrap">A-002</FONT> is an
    orally administered pro-drug of
    <FONT style="white-space: nowrap">A-001,</FONT> which
    is a broad-spectrum, once-daily inhibitor of the IIa, V and X
    forms of the
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    enzyme that has demonstrated potent anti-inflammatory,
    lipid-lowering and lipid-modulating treatment effects in
    multiple clinical studies. We plan to initiate a pivotal Phase 3
    clinical study to evaluate
    <FONT style="white-space: nowrap">A-002</FONT> in
    combination with statin therapy for the short-term (16-week)
    treatment of acute coronary syndrome by the end of 2009,
    assuming we reach timely agreement on an SPA with the FDA. An
    SPA provides an opportunity for the clinical study sponsor to
    receive feedback from the FDA regarding the adequacy of a
    clinical study to meet regulatory and scientific requirements if
    conducted in accordance with the SPA agreement. An SPA is not a
    guarantee of an approval of a product candidate or any
    permissible claims about the product candidate.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    To date, a total of 1,107&#160;patients and healthy volunteers
    in at least 15 clinical studies have been exposed to
    <FONT style="white-space: nowrap">A-002.</FONT> The
    administration of
    <FONT style="white-space: nowrap">A-002</FONT> was
    generally safe and well-tolerated in studies where patients were
    exposed to a maximum of 48&#160;weeks of therapy.
    <FONT style="white-space: nowrap">A-002</FONT> has
    been studied in combination with atorvastatin in a Phase 2b
    clinical study in acute coronary syndrome patients and two
    earlier Phase 2 clinical studies in stable CAD patients, the
    majority of whom were on various statin therapies.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We currently have all worldwide product rights to
    <FONT style="white-space: nowrap">A-002,</FONT>
    except in Japan where Shionogi&#160;&#038; Co., Ltd. retains
    rights. We originally licensed our
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    inhibitor portfolio, including
    <FONT style="white-space: nowrap">A-002</FONT> and
    <FONT style="white-space: nowrap">A-001,</FONT> from
    Eli Lilly&#160;&#038; Company, or Eli Lilly, and
    Shionogi&#160;&#038; Co., Ltd. in July&#160;2006.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Market
    Opportunity&#151;Acute Coronary Syndrome</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    According to the American Heart Association, over
    18&#160;million people in the United States have experienced an
    acute coronary syndrome and an estimated 1.5&#160;million
    Americans will have a new or recurrent heart attack. In
    addition, the American Heart Association estimates that
    worldwide, cardiovascular disease kills an estimated
    17.5&#160;million people each year. According to British Heart
    Foundation statistics, CAD, which often leads to acute coronary
    syndrome or heart attacks, accounts for 1.9&#160;million deaths
    in Europe annually. According to the World Health Organization,
    or the WHO, cardiovascular disease is the most common cause of
    death in the western world and a major cause of hospital
    admissions. In addition, the American Heart Association provides
    that for people over the age of 40, 20% of them will die within
    one year following an initial heart attack, and over one-third
    of them will die within the first five years of an initial heart
    attack. These numbers are expected to increase given an aging
    population, as well as the rising epidemics of diabetes and
    obesity, two conditions known to increase the risk of acute
    coronary syndrome.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The American Heart Association defines acute coronary syndrome
    as any group of clinical signs and symptoms related to acute
    myocardial ischemia. Acute myocardial ischemia can often present
    as chest pain due to insufficient blood supply to the heart
    muscle that results from CAD. Acute coronary syndrome covers a
    spectrum of clinical conditions that include ST-elevated
    myocardial infarction, or STEMI, non-ST-elevated myocardial
    infarction, or NSTEMI, and UA. Both STEMI and NSTEMI are forms
    of a heart attack, where damage to the heart muscle occurs due
    to ischemia, which is lack of blood flow to tissues due to a
    blockage of a vessel. Typically, UA results in chest pain from
    ischemia, but does not cause permanent damage to the heart
    muscle.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Furthermore, for any patient who experiences an acute coronary
    syndrome, the risk of a secondary MACE is significantly
    increased immediately following the initial event. Large
    clinical outcome studies such as MIRACL and PROVE-IT have
    previously reported, and data from our own FRANCIS Phase 2b
    clinical study supports, the 16-week rate of secondary MACE in
    acute coronary syndrome patients to be between 6.1% and 14.8%.
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    59
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Current treatments for CAD other than interventional procedures
    include a variety of medications such as aspirin, statins and
    anti-platelet and anti-coagulant therapeutics. These medications
    are used to offer both acute and chronic benefits to patients.
    For patients presenting with acute coronary syndrome,
    therapeutics are administered quickly to improve blood flow to
    the heart and limit the risk associated with continued ischemia
    and thrombosis, which is the formation of a blood clot inside a
    vessel, which obstructs blood flow. In addition, interventional
    procedures and other medications, such as statins that are
    initiated early primarily for lipid benefits, are continued in
    an attempt to provide chronic protection against secondary MACE
    through improvement in lipid profiles such as lowering
    <FONT style="white-space: nowrap">LDL-C.</FONT>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Inflammation in
    Cardiovascular Disease</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    In patients experiencing an acute coronary syndrome, the
    relationship between higher levels of inflammation, as measured
    by CRP,
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    and interleukin-6, or IL-6, and increased risk for MACE has been
    demonstrated extensively. In numerous clinical studies with a
    variety of therapeutic interventions, reductions in CRP have
    been correlated with reductions in subsequent MACE. We believe,
    if our Phase 3 pivotal study is successful, that
    <FONT style="white-space: nowrap">A-002</FONT> would
    represent the first anti-inflammatory therapeutic approved for
    prevention of MACE.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    CRP is the most commonly used marker of inflammation. It has
    been independently and strongly correlated with adverse
    cardiovascular outcomes in multiple clinical studies. Although a
    causative role for CRP has not been established, inflammation is
    known to promote acute coronary syndrome and CRP may play a
    direct role in both vascular inflammation as well as plaque
    rupture.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Statins reduce the level of CRP and other markers of
    inflammation in patients with stable CAD. In April 2001, the
    Journal of the American Medical Association published results
    from the MIRACL study describing the effect of statins in acute
    coronary syndrome, where inflammation is greatly elevated. 3,086
    were randomized within 96&#160;hours of their index event to
    treatment with high-dose atorvastatin or placebo. Atorvastatin
    significantly reduced secondary MACE after 16&#160;weeks. A
    second paper from the same study, published in Circulation in
    2003, described the rapid decline of inflammatory markers in
    patients on statin treatment that was associated with reduced
    MACE. After 16&#160;weeks, atorvastatin reduced CRP levels by
    34%.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    More recently, in 2005, the New England Journal of Medicine
    published data from the PROVE-IT study. A total of
    3,745&#160;patients were randomized to either intensive statin
    therapy with 80&#160;mg atorvastatin or moderate statin therapy
    with 40&#160;mg pravastatin. Patients with low CRP or
    <FONT style="white-space: nowrap">LDL-C</FONT> had
    fewer MACE than those with higher levels of either CRP or LDL-C.
    Patients who had both LDL-C &#060; 70&#160;mg/dL and CRP &#060;
    1&#160;mg/L had the fewest number of secondary events over all.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">LDL-C in
    Cardiovascular Disease</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The direct relationship between lower
    <FONT style="white-space: nowrap">LDL-C</FONT> levels
    and reduced risk for major cardiovascular events has been
    consistently demonstrated for over a decade in 18 outcome
    studies involving over 119,000&#160;patients. Results from large
    clinical outcome studies demonstrate achieving incrementally
    lower <FONT style="white-space: nowrap">LDL-C</FONT>
    levels reduces the risk of future cardiovascular events and
    provides continued patient benefit. As a result, the lipid
    treatment guidelines have been revised to establish more
    aggressive
    <FONT style="white-space: nowrap">LDL-C</FONT>
    treatment goals over time. The most recent guidelines from the
    National Cholesterol Education Program&#146;s Adult Treatment
    Panel&#160;III, or NCEP ATP&#160;III, updated in 2004 advocate
    treatment goals for
    <FONT style="white-space: nowrap">LDL-C</FONT> below
    100&#160;mg/dL for high-risk patients and 70&#160;mg/dL for very
    high-risk patients. Given the breadth of more recent clinical
    data available, we believe that future treatment guidelines from
    the NCEP will likely establish new
    <FONT style="white-space: nowrap">LDL-C</FONT>
    treatment goals that apply the 70&#160;mg/dL standard or lower
    to a broader population of at risk patients. Patients enrolled
    in our FRANCIS Phase 2b clinical study
</DIV>

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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    and our planned Phase 3 acute coronary syndrome study represent
    high-risk patients as defined by the NCEP.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    In order to achieve these more aggressive
    <FONT style="white-space: nowrap">LDL-C</FONT>
    targets, doctors prescribe other approved lipid-lowering
    therapies such as cholesterol absorption inhibitors, nicotinic
    acid and fish oils in combination with statins to further reduce
    LDL-C. Still, many acute coronary syndrome patients who
    represent the NCEP ATP&#160;III guideline categories of
    high-risk and very high-risk do not achieve these recommended
    lipid goals despite maximum lipid-lowering therapies. Moreover,
    substantial residual risk remains even among the group of
    patients that do achieve these aggressive
    <FONT style="white-space: nowrap">LDL-C</FONT> goals
    suggesting additional biological mechanisms, including
    inflammation, may be relevant.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    This is exemplified in a November 2008 publication in the New
    England Journal of Medicine that detailed the results from a
    17,000&#160;patient, multinational, primary prevention study
    named JUPITER. The study randomized patients with relatively
    normal levels of
    <FONT style="white-space: nowrap">LDL-C,</FONT> but
    elevated levels of inflammation based on CRP to statin or
    placebo therapy. The JUPITER study was stopped early because
    those patients randomized to statin therapy demonstrated a
    statistically significant reduction in CRP, which also
    translated to a statistically significant reduction in
    cardiovascular events versus those on placebo. The reduction in
    events was well in excess of that which would be predicted from
    historical data evaluating
    <FONT style="white-space: nowrap">LDL-C</FONT>
    reductions alone. While these results were generated in a
    primary prevention setting, we believe that the benefits of
    reducing inflammation may prove to be even more meaningful in
    settings where patients are in a hyper-inflammatory state, such
    as following an acute coronary syndrome. As a result of these
    studies, we believe that there is a substantial need for novel
    therapies that provide meaningful reductions in inflammation
    while also improving
    <FONT style="white-space: nowrap">LDL-C</FONT> levels
    in high-risk cardiovascular patients beyond the benefits of
    statin therapy. Therefore, it is our belief that targeting
    inflammation and elevated
    <FONT style="white-space: nowrap">LDL-C</FONT> with
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    inhibition during the early phase of an acute coronary syndrome
    will further improve patient outcomes.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We believe that
    <FONT style="white-space: nowrap">A-002</FONT> is one
    of only a few novel drugs in development with the potential to
    offer, through a unique mechanism, anti-inflammatory activity,
    as measured by reductions in
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>,
    CRP and IL-6, lipid-lowering, as measured by
    <FONT style="white-space: nowrap">LDL-C,</FONT> and
    lipid-modulating activity beyond that achievable with statin
    therapy alone. Furthermore, because of their complementary
    mechanisms, we believe that the combination of statins and
    <FONT style="white-space: nowrap">A-002</FONT> can
    provide synergistic anti-inflammatory and lipid-lowering
    benefits. Additionally, we have preliminary data to suggest that
    <FONT style="white-space: nowrap">A-002</FONT> may be
    synergistic with other cardiovascular therapeutic regimens, such
    as niacin.
</DIV>

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<DIV align="left" style="margin-left: 4%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Pivotal Phase 3
    Clinical Study&#151;Acute Coronary Syndrome</FONT></I>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <IMG src="f53438orf5343812.gif" alt="(PERFORMANCE GRAPH)"><I> </I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    In February 2008, based on the results from Phase 2 stable CAD
    studies, as discussed below, we met with the FDA to discuss
    plans for our planned Phase 3 clinical study during our end of
    Phase 2 meeting. As a result of that meeting and the results
    from our recently completed Phase 2b acute coronary syndrome
    study, we are in discussions with the FDA to obtain an SPA
    agreement for a pivotal Phase 3 clinical study of
    <FONT style="white-space: nowrap">A-002</FONT> for
    the acute and short-term
    <FONT style="white-space: nowrap">(16-week)</FONT>
    treatment of patients who have recently experienced an acute
    coronary syndrome. Assuming an SPA agreement is obtained in a
    timely manner, the clinical study is expected to begin by the
    end of 2009 and is expected to be completed in the second half
    of 2011. A DSMB will evaluate the performance of the clinical
    study over time to ensure patient safety and to review certain
    blinded laboratory data from the clinical study. After a minimum
    of 1,000&#160;patients have completed the 16-week treatment in
    the Phase&#160;3 clinical study, the DSMB will conduct a
    biomarker futility analysis to ensure patient levels of
    inflammation, as measured by
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>,
    CRP and IL-6, and lipid profiles, as measured by
    <FONT style="white-space: nowrap">LDL-C,</FONT> have
    met pre-specified reductions from baseline at various
    time-points. These markers of inflammation and lipid profiles
    are well-established in the clinical community and
    pharmaceutical industry as independent predictors of future
    cardiovascular risk and, if positive, will provide additional
    validation of our previous findings from the FRANCIS
    Phase&#160;2b clinical study. Other than being informed by the
    DSMB to continue or stop the clinical study, we will remain
    blinded to all clinical study data including the biomarker
    results.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Our planned multinational, randomized, double-blind,
    placebo-controlled Phase 3 acute coronary syndrome study will
    enroll up to 6,500&#160;patients in up to 15 countries and up to
    500 centers. However, enrollment may be stopped anytime after a
    minimum of 395 adjudicated endpoint events as described in the
    protocol have occurred. We may increase the sample size if the
    adjudicated endpoint events occur at a lower rate than we
    expect. Patients will be randomized at entry to receive either
    500&#160;mg once-daily
    <FONT style="white-space: nowrap">A-002</FONT> or
    placebo in addition to any dose of atorvastatin. The dose of
    atorvastatin may be adjusted after eight weeks based on the
    subjects&#146;
    <FONT style="white-space: nowrap">LDL-C</FONT>
    measurement in accordance with local country treatment
    guidelines. Upon completion of a planned animal combination
    study, the Phase&#160;3 protocol may be amended to allow the use
    of simvastatin, a broadly available generic statin, as an
    alternative to atorvastatin. Patients will be treated with A-002
    or placebo and any dose of atorvastatin for 16&#160;weeks and
    survival status will be obtained for patients six months after
    the completion of dosing. The clinical study will recruit a
    similar population of high-risk cardiovascular patients with
    acute coronary syndrome to those enrolled in the FRANCIS study.
    As in FRANCIS,
</DIV>

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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    randomization must occur within 96&#160;hours of hospitalization
    for the acute coronary syndrome event, or if already
    hospitalized, within 96&#160;hours of event diagnosis. Patient
    blood chemistry will be evaluated at baseline, 24&#160;hours,
    48&#160;hours and weeks one, two, four, eight and 16.
    Randomization will be stratified by the presence or absence of
    lipid-lowering therapy prior to the index event as well as the
    type of acute coronary syndrome event, such as UA, NSTEMI or
    STEMI. The number of subjects who undergo percutaneous coronary
    intervention following the index event and prior to
    randomization will be limited to no more than 40% of the total
    patient population.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The primary endpoint of the clinical study will be to determine
    whether 16&#160;weeks of once-daily treatment with
    <FONT style="white-space: nowrap">A-002</FONT> plus
    any dose of atorvastatin is superior to placebo plus
    atorvastatin in the time to the first occurrence of the combined
    endpoint of cardiovascular death, non-fatal myocardial
    infarction, non-fatal stroke, or documented UA with objective
    evidence of ischemia requiring hospitalization. A secondary
    endpoint for the clinical study is to determine whether
    <FONT style="white-space: nowrap">A-002</FONT> plus
    any dose of atorvastatin is superior to placebo plus
    atorvastatin in the time to the first occurrence of the combined
    endpoint of all cause mortality, non-fatal myocardial
    infarction, non-fatal stroke, or documented UA with objective
    evidence of ischemia requiring hospitalization. A comparison
    between treatment groups will also be made for each component of
    the primary efficacy endpoint. Additionally, the time to
    multiple occurrences of any non-fatal component of the composite
    primary endpoint will also be explored. The biomarkers CRP,
    <FONT style="white-space: nowrap">IL-6,</FONT>
    <FONT style="white-space: nowrap">LDL-C</FONT> and
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>,
    will also be evaluated at each time point of the clinical study.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Historical
    Clinical Studies</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <I><U>Phase 2b Acute Coronary Syndrome Study&#151;FRANCIS (Fewer
    Recurrent Acute coronary events with Near-term Cardiovascular
    Inflammation Suppression)</U></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    In July 2008, we initiated a randomized, double-blind,
    placebo-controlled Phase 2b clinical study that enrolled 625
    acute coronary syndrome patients across 35 centers in three
    countries. Given the drug&#146;s combined anti-inflammatory,
    lipid-lowering and lipid-modulating effects, we evaluated the
    effects of
    <FONT style="white-space: nowrap">A-002</FONT> in
    acute coronary syndrome patients with high levels of
    inflammation and dislipidemia. The clinical study was designed
    to evaluate the safety and efficacy of
    <FONT style="white-space: nowrap">A-002</FONT> when
    co-administered with the highest dose (80&#160;mg) of
    atorvastatin. The clinical study randomized all patients to a
    minimum of 24&#160;weeks of treatment with either 500&#160;mg
    once-daily
    <FONT style="white-space: nowrap">A-002</FONT> or
    placebo in combination with 80&#160;mg atorvastatin and
    physician-directed standard of care.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Patients were eligible for enrollment if they had a diagnosis of
    UA, NSTEMI or STEMI. In addition, they must have had one of the
    following risk factors: diabetes, body mass index (BMI)
    <FONT style="font-family: Symbol; font-variant: normal">&#179;</FONT>&#160;25
    kg/m2, CRP
    <FONT style="font-family: Symbol; font-variant: normal">&#179;</FONT>&#160;2&#160;mg/L
    (NSTEMI/STEMI) or CRP
    <FONT style="font-family: Symbol; font-variant: normal">&#179;</FONT>&#160;3&#160;mg/L
    (UA) and presence of three (pre-defined) characteristics of
    metabolic syndrome. Subjects must have been randomized
    within&#160;96&#160;hours of hospital admission for the index
    event, or, if already hospitalized, within&#160;96&#160;hours of
    index event diagnosis. Any percutaneous revascularization was
    required to occur prior to randomization. In addition, because
    we wanted to assess the effects of
    <FONT style="white-space: nowrap">A-002</FONT> with
    the highest available dose of atorvastatin, patients were not
    allowed to use any other lipid-lowering therapies during the
    clinical study.
    <FONT style="white-space: nowrap">Follow-up</FONT>
    visits for evaluation occurred post-randomization at weeks two,
    four, eight, 12, 16, 20, 24 and then monthly thereafter until
    clinical study completion. All enrolled subjects remained on
    treatment until all subjects had been treated for a minimum of
    24&#160;weeks or until the occurrence of MACE. Patients
    randomized into the FRANCIS study had baseline characteristics
    such as
    <FONT style="white-space: nowrap">LDL-C</FONT>
    indexed-event risk factors and demographics similar to other
    studies of this type. All patients who completed the clinical
    study received a final evaluation.
</DIV>

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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The primary efficacy endpoint evaluated the change in
    <FONT style="white-space: nowrap">LDL-C</FONT> after
    500&#160;patients completed eight weeks of treatment.
    <FONT style="white-space: nowrap">LDL-C</FONT> is the
    most widely recognized surrogate for predicting cardiovascular
    risk where percentage reductions in
    <FONT style="white-space: nowrap">LDL-C</FONT> have
    been highly correlated with reductions in future cardiovascular
    risk. Secondary endpoints included:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    changes in established markers of inflammation such as
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>,
    CRP and IL-6;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the occurrence of secondary MACE (for purposes of this clinical
    study, all-cause mortality, non-fatal myocardial infarction,
    documented UA requiring urgent hospitalization,
    revascularization occurring
    <FONT style="font-family: Symbol; font-variant: normal">&#179;</FONT>&#160;60&#160;days
    post the index event or non-fatal stroke).
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Results of the primary endpoint demonstrated a statistically
    significant incremental
    <FONT style="white-space: nowrap">LDL-C</FONT>
    reduction of 5.7% (p = 0.0023) in
    <FONT style="white-space: nowrap">A-002</FONT>
    treated patients versus those treated with 80&#160;mg
    atorvastatin alone after eight weeks of therapy. In addition a
    statistically significant difference was observed in
    <FONT style="white-space: nowrap">LDL-C</FONT>
    reduction from baseline as early as two weeks after treatment.
    The treatment effect was maintained throughout the observation
    period.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Figure 1: Mean Percentage Change in
    <FONT style="white-space: nowrap">LDL-C</FONT> from
    Baseline
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <IMG src="f53438orf5343802.gif" alt="(PERFORMANCE GRAPH)">
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Treatment with
    <FONT style="white-space: nowrap">A-002</FONT>
    resulted in more subjects with
    <FONT style="white-space: nowrap">LDL-C</FONT> levels
    less than 70&#160;mg/dL than those on placebo (80&#160;mg
    atorvastatin and physician-directed standard of care) alone at
    eight, 16 and 24&#160;weeks of treatment. As discussed above,
    the NCEP ATP III guidelines have established an
    <FONT style="white-space: nowrap">LDL-C</FONT> of 70
    mg/dL as an optional target for very high-risk patients. As
    indicated in the table below, the data suggests
    <FONT style="white-space: nowrap">A-002</FONT>
    treatment helps patients achieve their
    <FONT style="white-space: nowrap">LDL-C</FONT> target
    levels more quickly and maintain them longer than with high-dose
    statin (80&#160;mg atorvastatin) therapy alone.
</DIV>

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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Table 2: Percentage of Patients Achieving
    <FONT style="white-space: nowrap">LDL-C</FONT> &#060;
    70&#160;mg/dL
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <IMG src="f53438orf5343803.gif" alt="(PERFORMANCE GRAPH)">
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Secondary endpoints measured effects of
    <FONT style="white-space: nowrap">A-002</FONT> on
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2,</SUB>CRP
    and IL-6 levels, which are well-established markers of
    inflammation. While the FRANCIS study was not designed to
    demonstrate statistically significant changes in CRP and IL-6,
    the results were consistent with previous studies, which
    demonstrated improvement across these biomarkers and achieved
    statistical significance at some time points.
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    concentration was statistically significantly reduced from the
    earliest time point of two weeks through the 16-week time point
    (p&#160;&#060;&#160;0.0001) as compared to high-dose statin
    (80&#160;mg atorvastatin) therapy alone. While our first
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    measurement in this clinical study occurred at two weeks, data
    from previous clinical studies utilizing
    <FONT style="white-space: nowrap">A-002</FONT> or
    <FONT style="white-space: nowrap">A-001</FONT>
    demonstrated reductions in
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    as early as two days following treatment.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Figure 3: Median Percentage Change in
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    Concentration from Baseline
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <IMG src="f53438orf5343804.gif" alt="(PERFORMANCE GRAPH)">
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    In addition, treatment-related reductions in CRP and IL-6 levels
    were also greater in
    <FONT style="white-space: nowrap">A-002</FONT>
    treated patients compared to those treated with placebo at all
    time points in the clinical study. The percent decrease in CRP
    at week two was nearly two-fold greater among
    <FONT style="white-space: nowrap">A-002</FONT> and
    80&#160;mg
</DIV>

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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    atorvastatin treated patients than those treated with placebo
    and 80&#160;mg atorvastatin alone (-39% versus -20%, p = 0.183),
    and at week 16, the difference between treatment groups was
    statistically significant (-82% versus -73%, p = 0.0067). At
    weeks two, four, eight and 16,
    <FONT style="white-space: nowrap">A-002</FONT>
    treated patients had numerically reduced levels of CRP versus
    patients treated with placebo.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Figure 4: Median Percentage Change in CRP Concentration from
    Baseline
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <IMG src="f53438orf5343805.gif" alt="(PERFORMANCE GRAPH)">
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The percent decrease in IL-6 in patients on
    <FONT style="white-space: nowrap">A-002</FONT> and
    atorvastatin at week two was more than three times the reduction
    in IL-6 in patients on placebo and atorvastatin (-18% versus
    -5.1%, p = 0.18).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Figure 5: Median Percentage Change in IL-6 Concentration from
    Baseline
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <IMG src="f53438orf5343806.gif" alt="(PERFORMANCE GRAPH)">
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Finally, given the importance of reducing inflammation as well
    as <FONT style="white-space: nowrap">LDL-C</FONT>
    following an acute coronary syndrome event, we examined the
    proportion of patients in the clinical study that were able to
    achieve both
    <FONT style="white-space: nowrap">LDL-C</FONT> levels
    less than 70&#160;mg/dL and CRP levels below 3&#160;mg/L. As
    indicated in the figure below, results demonstrated that more
    patients treated with
    <FONT style="white-space: nowrap">A-002</FONT> and
</DIV>

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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    80&#160;mg atorvastatin achieved these dual goals than those
    treated with placebo and 80&#160;mg atorvastatin alone at all
    time points in the clinical study with statistically
    significantly greater percentages of patients achieving these
    levels at week four and week 16 (p = 0.0025 and p = 0.005).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Figure 6: Percentage of Patients Achieving Combined Targets of
    CRP &#060;&#160;3.0&#160;mg/L and
    <FONT style="white-space: nowrap">LDL-C</FONT>
    &#060;&#160;70&#160;mg/dL
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <IMG src="f53438orf5343807.gif" alt="(PERFORMANCE GRAPH)">
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We also conducted an exploratory analysis of MACE in the
    clinical study. At 16&#160;weeks, there were 13 (4.2%) MACE
    events in the
    <FONT style="white-space: nowrap">A-002</FONT>
    treated group as compared to 19 (6.1%) in the placebo group. At
    the completion of the clinical study, all patients had received
    at least six months of therapy and there were 23 (7.4%) MACE in
    the <FONT style="white-space: nowrap">A-002</FONT>
    treated group as compared to 24 (7.7%) MACE in the placebo
    group. While the MACE analysis was not designed to demonstrate
    any statistical differences between the two treatment groups, we
    believe that the results are encouraging and will help us to
    design our Phase 3 clinical study.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Overall,
    <FONT style="white-space: nowrap">A-002</FONT> was
    generally safe and well tolerated in this clinical study and no
    imbalance was seen in dropouts due to drug effects. After
    completing patient treatment, overall exposure to
    <FONT style="white-space: nowrap">A-002</FONT> was a
    mean of 30&#160;weeks and median of 34&#160;weeks. In total, 485
    total patients completed six months of treatment, with 167
    subjects completing 40&#160;weeks and 70 completing
    44&#160;weeks. There was no imbalance of overall adverse events
    between the treatment arms. During the clinical study, at week
    four and week eight, occasional mild and transient elevations in
    liver enzymes, defined as elevations three times the upper limit
    of normal, were seen among more patients taking
    <FONT style="white-space: nowrap">A-002,</FONT> but
    the frequency and magnitude of the elevations were not
    meaningfully different between the active and control groups at
    the end of the clinical study. The frequency of the elevations
    was also similar to that reported for atorvastatin and other
    currently approved lipid-lowering agents. Furthermore, there
    were no effects on blood pressure or the QT interval, an
    electro-cardiographic safety endpoint.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We anticipate publishing detailed results from the FRANCIS study
    in 2010 at a scientific conference and in a scientific journal.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <I><U>Phase 2 Stable Coronary Artery Disease Study&#151;PLASMA
    (Phospholipase Levels and Serological Markers of
    Atherosclerosis):
    <FONT style="white-space: nowrap">A-002</FONT>
    Twice-Daily Versus Placebo</U></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Our Phase 2 PLASMA study was designed to confirm the safety and
    effect of
    <FONT style="white-space: nowrap">A-002</FONT> on
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    concentration, other inflammatory biomarkers and lipids in
    patients with stable CAD. In
</DIV>

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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    October 2007, we completed a randomized, double-blind,
    placebo-controlled study evaluating four doses of
    <FONT style="white-space: nowrap">A-002</FONT>
    administered twice-daily versus placebo among 396&#160;patients
    with stable CAD from 38 centers in two countries. The clinical
    study enrolled patients more than 12&#160;weeks after a
    myocardial infarction or six weeks after an episode of UA. The
    <FONT style="white-space: nowrap">A-002</FONT> doses
    tested were 50&#160;mg, 100&#160;mg, 250&#160;mg and 500&#160;mg
    administered twice per day. Following randomization, patients
    were treated for eight weeks and safety and efficacy evaluations
    were conducted at weeks two, four and eight. Physician-directed
    standard of care therapies were permitted during the clinical
    study, including 259&#160;patients who were on background statin
    therapy.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The primary endpoint of the clinical study was the change in
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    concentration from baseline to week eight in
    <FONT style="white-space: nowrap">A-002,</FONT>
    across all doses, versus placebo patients. Secondary endpoints
    in the clinical study included the change in lipids, including
    LDL-C, lipoprotein subclasses and certain inflammatory
    biomarkers, from baseline to each of weeks two, four and eight.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Our Phase 2 PLASMA results were selected for a late-breaking
    presentation at the American Cardiology Conference and published
    in the Lancet journal in February 2009. Results from the
    clinical study demonstrated that treatment with
    <FONT style="white-space: nowrap">A-002</FONT> led to
    statistically significant reductions in
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>,
    LDL-C and various plaque-building and pro-inflammatory forms of
    LDL-C. In patients receiving
    <FONT style="white-space: nowrap">A-002,</FONT> there
    were incremental reductions in CRP versus placebo (-55.6% versus
    -24.8%, p = 0.47) from baseline to eight weeks.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Among all patients treated with
    <FONT style="white-space: nowrap">A-002,</FONT>
    median
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    concentration decreased by 86.7% from baseline to week eight, as
    compared to 4.8% in the placebo group
    (p&#160;&#060;&#160;0.0001). Median
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    concentration decreased among the A-002 groups in a
    dose-dependent manner.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    At week eight, across all dosage groups, LDL-C was reduced by
    9.7% versus placebo (p&#160;=&#160;0.0035). In a subgroup of
    patients taking statins with LDL-C &#062; 70&#160;mg/dL, LDL-C
    was reduced by 12.0% (p = 0.0065) versus placebo at the eight
    week time point. Notably, the reductions in
    <FONT style="white-space: nowrap">LDL-C</FONT> appear
    to be driven primarily by a shift in the distribution of LDL-C
    particles with fewer pro-atherogenic, pro-inflammatory small
    LDL-C particles present in the circulation. In addition,
    statistically significant reductions from baseline to week eight
    were seen in total cholesterol and non-HDL cholesterol in the
    overall clinical study population treated with
    <FONT style="white-space: nowrap">A-002.</FONT>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <FONT style="white-space: nowrap">A-002</FONT> was
    generally safe and well-tolerated among all patients treated. In
    general, adverse effects were mild or moderate with no imbalance
    of adverse events in the
    <FONT style="white-space: nowrap">A-002</FONT> groups
    as compared to placebo. The most common adverse effects seen in
    the A-002 groups were headache (6.4%) and nausea (5.4%). There
    were mild and transient elevations of liver function tests,
    defined as elevations three times the upper limit of normal, in
    patients taking
    <FONT style="white-space: nowrap">A-002.</FONT>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <I><U>Phase 2 Stable Coronary Artery Disease Study&#151;PLASMA-2
    (Phospholipase Levels and Serological Markers of Atherosclerosis
    -2): Once-Daily
    <FONT style="white-space: nowrap">A-002</FONT> versus
    Placebo</U></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Based on data from our first PLASMA study, we initiated a second
    Phase 2 clinical study (PLASMA-2) to evaluate the effect of
    once-daily
    <FONT style="white-space: nowrap">A-002</FONT>
    treatment on inflammatory and lipid biomarkers. In December
    2007, we completed a randomized, double-blind,
    placebo-controlled Phase 2 clinical study evaluating two doses
    of <FONT style="white-space: nowrap">A-002</FONT>
    versus placebo amongst 138&#160;patients with stable CAD. The
    clinical study, conducted in the United States, involved 13
    clinical sites. Following randomization to one of two doses of
    A-002 or placebo, patients were treated for eight weeks with
    safety and efficacy evaluations at weeks two, four and eight.
    Physician-directed standard of care therapies were permitted
    during the clinical study, including 123&#160;patients (89.1%)
    who were on background statin therapy.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The primary endpoint of the clinical study was a comparison
    between once-daily doses of
    <FONT style="white-space: nowrap">A-002</FONT> and
    placebo in changes in
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    concentration at week eight. Secondary endpoints in
</DIV>

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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    the clinical study included measurements of lipids including
    LDL-C and certain other inflammatory biomarkers from baseline to
    each of weeks two, four and eight.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Results of the primary endpoint,
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>,
    were statistically significant and consistent with those
    generated from the first PLASMA study described above. Patients
    on <FONT style="white-space: nowrap">A-002</FONT>
    demonstrated a 77.8% reduction in
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    concentration as compared to an increase of 8.3% in placebo
    treated patients (p &#060; 0.0001). Pharmacokinetic data
    indicated that once-daily dosing with
    <FONT style="white-space: nowrap">A-002</FONT> would
    be sufficient to achieve over 90% inhibition of
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    mass and activity over a
    <FONT style="white-space: nowrap">24-hour</FONT>
    period.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The anti-inflammatory, lipid-lowering and lipid-modulating
    effects of
    <FONT style="white-space: nowrap">A-002</FONT>
    treatment were consistent with those seen in the first PLASMA
    study: LDL-C was decreased by 8.3% compared to 0.7% in placebo
    (p = 0.014). Due to the small size of this clinical study, and
    the low baseline inflammation present in these patients, no
    meaningful changes with CRP could be detected between the active
    and control groups. As was observed in the first clinical study,
    there were statistically significant reductions from baseline to
    week eight in total cholesterol and non-HDL cholesterol in the
    overall clinical study population treated with
    <FONT style="white-space: nowrap">A-002.</FONT>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The adverse effect profile for
    <FONT style="white-space: nowrap">A-002</FONT> was
    consistent with earlier studies and there was no imbalance of
    adverse events among the
    <FONT style="white-space: nowrap">A-002</FONT> groups
    and placebo.
    <FONT style="white-space: nowrap">A-002</FONT> was
    generally safe and well-tolerated. The most common effects seen
    in the <FONT style="white-space: nowrap">A-002</FONT>
    groups were diarrhea (6.7%), nausea (5.6%), any increase in
    alanine aminotransferase (5.6%), which is an enzyme that
    indicates liver cell injury, and any increase in aspartate
    aminotransferase (5.6%), which is another enzyme that indicates
    liver cell injury. However, mild and transient elevations of
    these liver enzymes, defined as elevations three times the upper
    limit of normal, were infrequent in patients taking
    <FONT style="white-space: nowrap">A-002.</FONT>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Table 7: Placebo-corrected Percent Decrease from Baseline to
    Week Eight in Biomarkers
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

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&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-top: 1px solid #000000">
    <B>LDL<BR>
    </B>
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-top: 1px solid #000000">
    <B>Total<BR>
    </B>
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-top: 1px solid #000000">
    <B>Non-HDL<BR>
    </B>
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
    <B>Oxidized<BR>
    </B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom" style="border-left: 1px solid #000000; padding-left: 2pt">
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B>sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB></B>
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B>Cholesterol</B>
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B>Cholesterol</B>
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B>Cholesterol</B>
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-right: 1px solid #000000; padding-right: 2pt">
    <B>LDL-C</B>
</TD>
</TR>
<TR valign="bottom">
<TD align="center" valign="top" style="border-left: 1px solid #000000; padding-left: 2pt; border-top: 1px solid #000000">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    PLASMA<BR>
    (All doses
    <FONT style="white-space: nowrap">A-002)</FONT>
</DIV>
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD align="center" valign="top" style="border-top: 1px solid #000000">
    81.9%<BR>
    (p &#060; 0.0001)
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD align="center" valign="top" style="border-top: 1px solid #000000">
    9.7%<BR>
    (p = 0.0035)
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD align="center" valign="top" style="border-top: 1px solid #000000">
    4.9%<BR>
    (p = 0.0069)
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD align="center" valign="top" style="border-top: 1px solid #000000">
    7.2%<BR>
    (p = 0.0009)
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD align="center" valign="top" style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
    5.4%<BR>
    (p = 0.0065)
</TD>
</TR>
<TR valign="bottom">
<TD align="center" valign="top" style="border-left: 1px solid #000000; padding-left: 2pt; border-top: 1px solid #000000">
<DIV style="text-indent: -19pt; margin-left: 19pt">
    PLASMA-2 <BR>
    (500&#160;mg
    <FONT style="white-space: nowrap">A-002)*</FONT>
</DIV>
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD align="center" valign="top" style="border-top: 1px solid #000000">
    86.1%<BR>
    (p &#060; 0.0001)
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD align="center" valign="top" style="border-top: 1px solid #000000">
    13.9%<BR>
    (p = 0.0007)
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD align="center" valign="top" style="border-top: 1px solid #000000">
    9.2%<BR>
    (p = 0.0006)
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD align="center" valign="top" style="border-top: 1px solid #000000">
    14.2%<BR>
    (p = 0.0001)
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="center" valign="top" style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
    7.3%<BR>
    (pNS)
</TD>
</TR>
<TR style="font-size: 1pt">
<TD nowrap align="left" valign="bottom" style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom" style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom" style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom" style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom" style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom" style="border-top: 1px solid #000000">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="98%"></TD>
</TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">*
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Dose selected for Phase 3
    </FONT></TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <I><U>Ongoing Investigator-Sponsored Phase 2 Percutaneous
    Intervention Study&#150;SPIDER-PCI
    (sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB></U></I><U>
    <I>Inhibition to Decrease Enzyme Release after PCI):
    <FONT style="white-space: nowrap">A-002</FONT>
    Once-Daily Versus Placebo for up to 10&#160;days.</I></U>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    In May 2007, Dr.&#160;Vladimir Dzavik at University Health
    Network Hospital in Toronto, Ontario, Canada initiated an
    investigator sponsored study with
    <FONT style="white-space: nowrap">A-002</FONT> in
    patients undergoing a percutaneous intervention, or PCI. The
    primary endpoint of this study is to determine if inhibition of
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    with <FONT style="white-space: nowrap">A-002</FONT>
    will result in a decrease in peri-PCI myocardial necrosis, or
    heart muscle damage, as measured by elevations of myocardial
    enzyme markers creatine kinase-MB, or
    <FONT style="white-space: nowrap">CK-MB,</FONT> or
    troponin I. The study was to enroll a maximum of
    164&#160;patients who are scheduled to undergo PCI. Elevated
    levels of troponin I following PCI are associated with an
    increase in in-hospital complications and, in one study, was an
    independent predictor of major cardiac events. After PCI,
    circulating levels of
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    increase and patients with higher levels have an increased risk
    of events after a two-year follow-up. This study supports the
    notion that
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    inhibition may reduce myocardial damage after PCI and improve
    patient outcomes.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    As of August 2009, enrollment and dosing in the SPIDER-PCI study
    was completed with 144&#160;patients evaluated for purposes of
    assessing the primary endpoint. As an investigator-sponsored
    study, we have no access to the data from this study until it is
    announced at an upcoming scientific conference.
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    69
</DIV><!-- END PAGE WIDTH -->
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Previous
    Experience at Eli Lilly and Shionogi&#160;&#038; Co.,
    Ltd.</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Eli Lilly and Shionogi&#160;&#038; Co., Ltd. previously
    conducted a series of clinical studies evaluating
    <FONT style="white-space: nowrap">A-002</FONT> and
    <FONT style="white-space: nowrap">A-001</FONT> in
    various inflammatory conditions. In total, at least 17 Phase 1
    and Phase 2 clinical studies evaluated
    <FONT style="white-space: nowrap">A-002</FONT> and
    <FONT style="white-space: nowrap">A-001</FONT> as a
    treatment in sepsis, rheumatoid arthritis, asthma and ulcerative
    colitis, an inflammatory bowel disease. Results from these
    studies provide a large body of safety data for
    <FONT style="white-space: nowrap">A-002</FONT> and
    <FONT style="white-space: nowrap">A-001</FONT> with
    more than 1,000 healthy volunteers and subjects receiving
    treatment.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Throughout these studies,
    <FONT style="white-space: nowrap">A-002</FONT> was
    generally safe and well-tolerated.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Non-Clinical
    Studies with
    <FONT style="white-space: nowrap">A-002</FONT> and
    <FONT style="white-space: nowrap">A-001</FONT></FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Approximately 150 preclinical pharmacology and toxicology
    studies have been completed with
    <FONT style="white-space: nowrap">A-002</FONT> and
    <FONT style="white-space: nowrap">A-001,</FONT>
    including two-year rat and mouse carcinogenicity studies,
    one-year primate study and three-month rat study in combination
    with atorvastatin.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica"><FONT style="white-space: nowrap">A-001</FONT></FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <FONT style="white-space: nowrap">A-001</FONT> is an
    intravenously administered, potent, broad-spectrum inhibitor of
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>,
    including forms&#160;IIa, V and X.
    <FONT style="white-space: nowrap">A-001</FONT> is
    currently being evaluated in a Phase 2 clinical study for the
    prevention of acute chest syndrome associated with sickle cell
    disease in at-risk patients. Substantial scientific evidence
    implicates
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    activity in the development of acute chest syndrome associated
    with sickle cell disease, as well as other forms of acute lung
    injury. The FDA granted orphan drug and fast-track designation
    for <FONT style="white-space: nowrap">A-001</FONT>
    for the prevention of acute chest syndrome associated with
    sickle cell disease in at-risk patients. We currently retain all
    worldwide product rights, except in Japan where
    Shionogi&#160;&#038; Co., Ltd. retains rights. We also licensed
    <FONT style="white-space: nowrap">A-001</FONT> from
    Eli Lilly and Shionogi&#160;&#038; Co., Ltd. in July 2006.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    levels increase in advance of acute chest syndrome episodes and
    can be used alongside the presence of fever to strongly predict
    an impending episode. There is a strong correlation between
    levels of CRP and
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>in
    this patient population. Patients with acute chest syndrome
    associated with sickle cell disease can exhibit levels of
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    that can be 100&#160;times greater than normal. We believe that
    early intervention with
    <FONT style="white-space: nowrap">A-001</FONT> to
    inhibit
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    activity may offer a novel preventative therapy to improve
    outcome among sickle cell disease patients presenting with a
    high risk of acute chest syndrome.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Market
    Opportunity</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Sickle cell disease is a lifelong genetic, blood disorder
    typically diagnosed during early childhood. According to the
    Sickle Cell Information Center, in the United States, over
    70,000&#160;people currently suffer from the disease and
    approximately 1,000 children are born with the disease annually.
    According to Medtech Insight, in Europe, there are over
    200,000&#160;people suffering from the disease, and the numbers
    increase dramatically in Africa, where, according to the WHO,
    200,000 children alone are born with sickle cell disease each
    year. Life expectancy for these patients is significantly
    shortened, with most expected to live only until their mid-40s.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The disease is characterized by structurally altered red blood
    cells that assume an abnormal shape, similar to a sickle, and
    produce an altered form of hemoglobin. These altered red blood
    cells have a shortened life-cycle, become stiff and have
    difficulty passing through the body&#146;s small blood vessels.
    At times, these abnormal cells may obstruct or block blood flow
    through small blood vessels, leading to significant damage in
    tissue and bone. This damage is more commonly labeled as VOC.
    During VOC, blockage occurs within the circulation of the long
    bones, causing microscopic bone damage. Fragments of bone or
    bone fat may break free and embolize to the lungs, causing lung
    injury.
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    70
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    VOC is a common trigger for the more serious complication of
    acute chest syndrome associated with sickle cell disease. Acute
    chest syndrome exhibits symptoms and characteristics similar to
    acute lung injury. There are an estimated 10,000 episodes of
    acute chest syndrome associated with sickle cell disease per
    year in the United States. It represents the most common cause
    of death in sickle cell patients and the second most common
    cause of hospitalization among such patients. A majority of
    sickle cell patients will experience at least one episode of
    acute chest syndrome and repeated episodes can result in
    progressive lung disease. The disorder is most common in the
    two- to four- year age group and gradually declines in incidence
    with age.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    There are no marketed therapies targeting acute chest syndrome
    associated with sickle cell disease. The most common treatment
    regimen includes heavy doses of corticosteroids, opiates,
    transfusion and antibiotics while the patient suffers through
    the attack. In addition, hydroxyurea, a chemotherapy, was found
    to reduce the frequency of VOC and the need for blood
    transfusions in adult patients with sickle cell disease.
    However, all of these therapeutics are associated with
    significant adverse effects while only offering limited patient
    benefit.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Clinical
    Studies</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <I><U>Phase 2 Acute Chest Syndrome in Patients with Sickle Cell
    Disease Study&#151;Investigation of the Modulation of
    Phospholipase in Acute Chest Syndrome, or IMPACTS.</U></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    In January 2007, we initiated a randomized, double-blind,
    placebo-controlled Phase 2 clinical study to assess the safety
    and tolerability of escalating doses of
    <FONT style="white-space: nowrap">A-001</FONT>
    therapy when administered as a
    <FONT style="white-space: nowrap">48-hour</FONT>
    continuous infusion. The clinical study was designed to enroll
    up to 75&#160;patients across approximately 30 sites in the
    United States. This clinical study enrolls hospitalized sickle
    cell disease patients, at risk for acute chest syndrome on the
    basis of VOC, fever and serum
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    concentration level greater than 50&#160;mg/mL. The primary
    endpoint for the clinical study was designed to assess safety
    and tolerability. Secondary endpoints included the absence of
    acute chest syndrome, suppression of
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>,
    reduced need for blood transfusions and assessment of
    pharmacokinetics.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The first group of patients was randomized 2:1 to receive low
    dose <FONT style="white-space: nowrap">A-001</FONT>
    or placebo as a
    <FONT style="white-space: nowrap">48-hour</FONT>
    continuous infusion. A pre-specified interim analysis was
    conducted in February 2009 after the
    30<SUP style="font-size: 85%; vertical-align: top">th</SUP>

    patient completed treatment to examine safety and adjust dosing
    schedules. The interim data was balanced between two dosing arms
    of 30 mug/kg/hr (n = 11)&#160;and 55 mug/kg/hr (n&#160;= 6).
    Interim results indicated serum levels of
    <FONT style="white-space: nowrap">A-001</FONT> when
    dosed at 55 mug/kg/hr reduced
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    activity levels by more than 80% from baseline within
    48&#160;hours. Furthermore, the prevention of acute chest
    syndrome associated with sickle cell disease appeared to be
    related to the level of
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    activity. The DSMB recommended the clinical study continue based
    on safety and tolerability. In addition, given the safety
    profile, the DSMB approved the addition of a higher dose group
    of 110 mug/kg/hr via continuous infusion during the second half
    of the clinical study. We believe that the data suggest
    <FONT style="white-space: nowrap">A-001</FONT> can
    suppress
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    at levels that may prevent the complication of acute chest
    syndrome associated with sickle cell disease.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Table 8: Reductions of
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    activity from baseline and incidence of acute chest syndrome
    (including placebo patients and patients receiving
    <FONT style="white-space: nowrap">A-001).</FONT>
    Exploratory analysis to determine correlation between degree of
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    suppression and incidence of acute chest syndrome.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="47%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=gutterleft -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=gutterright -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="11%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=03 type=gutterleft -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=03 type=gutterright -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="11%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=04 type=gutterleft -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=04 type=gutterright -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="11%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=05 type=gutterleft -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=05 type=gutterright -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=05 type=lead -->
    <TD width="4%" align="right">&nbsp;</TD>	<!-- colindex=05 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=05 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom" style="border-left: 1px solid #000000; padding-left: 2pt; border-top: 1px solid #000000">
    <B>48-Hour
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    Activity as<BR>
    </B>
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom" style="border-left: 1px solid #000000; padding-left: 2pt">
    <B>a Percentage of Baseline</B>
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>0.0% &#060; 25.0%</B>
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B><FONT style="font-family: Symbol; font-variant: normal">&#179;</FONT>
    25% &#060; 50%</B>
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B><FONT style="font-family: Symbol; font-variant: normal">&#179;</FONT>
    50% &#060; 75%</B>
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B><FONT style="font-family: Symbol; font-variant: normal">&#179;</FONT>
    75%</B>
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top" style="border-left: 1px solid #000000; padding-left: 2pt; border-top: 1px solid #000000">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Number of Subjects
</DIV>
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom" style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom" style="border-top: 1px solid #000000">
    7
</TD>
<TD nowrap align="left" valign="bottom" style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom" style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom" style="border-top: 1px solid #000000">
    7
</TD>
<TD nowrap align="left" valign="bottom" style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom" style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom" style="border-top: 1px solid #000000">
    3
</TD>
<TD nowrap align="left" valign="bottom" style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom" style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom" style="border-top: 1px solid #000000">
    12
</TD>
<TD nowrap align="left" valign="bottom" style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top" style="border-left: 1px solid #000000; padding-left: 2pt; border-top: 1px solid #000000">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Number of Subjects Developing Acute Chest Syndrome (%)
</DIV>
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom" style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom" style="border-top: 1px solid #000000">
    0(0
</TD>
<TD nowrap align="left" valign="bottom" style="border-top: 1px solid #000000">
    )
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom" style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom" style="border-top: 1px solid #000000">
    2(28
</TD>
<TD nowrap align="left" valign="bottom" style="border-top: 1px solid #000000">
    )
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom" style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom" style="border-top: 1px solid #000000">
    1(33
</TD>
<TD nowrap align="left" valign="bottom" style="border-top: 1px solid #000000">
    )
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom" style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom" style="border-top: 1px solid #000000">
    4(25
</TD>
<TD nowrap align="left" valign="bottom" style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
    )
</TD>
</TR>
<TR style="font-size: 1pt">
<TD nowrap align="left" valign="bottom" style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom" style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom" style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom" style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom" style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom" style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom" style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom" style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom" style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom" style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom" style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom" style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom" style="border-top: 1px solid #000000">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    71
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Based upon the DSMB review of our Phase 2 interim results and
    given the significant unmet medical need for these patients, we
    scheduled an end of Phase 2 meeting with the FDA in late 2009 to
    review the interim data from our Phase&#160;2 clinical study and
    to discuss Phase&#160;3 clinical study design for the use of
    <FONT style="white-space: nowrap">A-001</FONT> to
    prevent acute chest syndrome associated with sickle cell
    disease. The meeting is scheduled to take place in late 2009 and
    we plan to finalize our future clinical strategy thereafter.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica"><FONT style="white-space: nowrap">A-623</FONT></FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <FONT style="white-space: nowrap">A-623</FONT> is a
    selective peptibody antagonist of the BLyS cytokine that is
    initially being developed as a treatment for lupus. BLyS, also
    known as B-cell activating factor, or BAFF, is a tumor necrosis
    family member and is critical to the development, maintenance
    and survival of B-cells. It is primarily expressed by
    macrophages, monocytes and dendritic cells and acts through
    interactions with three different receptors on B-cells including
    BAFF receptor, or
    <FONT style="white-space: nowrap">BAFF-R,</FONT>
    B-cell maturation, or BCMA, and transmembrane activator and
    cyclophilin ligand interactor, or TACI. The BAFF-R receptor is
    expressed primarily on peripheral B-cells.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Two Phase 1 clinical studies of
    <FONT style="white-space: nowrap">A-623</FONT> in 115
    lupus patients have been completed and we expect to initiate a
    Phase 2 clinical study for lupus during the second half of 2010.
    We may also study
    <FONT style="white-space: nowrap">A-623</FONT> in
    other B-cell mediated autoimmune diseases such as
    Sj&#246;gren&#146;s Syndrome or orphan indications such as
    myasthenia gravis and pemphigus. We licensed
    <FONT style="white-space: nowrap">A-623</FONT> from
    Amgen in December 2007.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Elevated levels of BLyS have been associated with a variety of
    B-cell mediated autoimmune diseases, including lupus. We believe
    that <FONT style="white-space: nowrap">A-623</FONT>
    may antagonize and reduce BLyS levels offering a novel treatment
    approach for patients with lupus and a wide range of other
    B-cell mediated autoimmune diseases.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <FONT style="white-space: nowrap">A-623,</FONT> as a
    peptibody directed against BlyS, was developed as an alternative
    to antibodies and is produced in <I>escherichia coli </I>versus
    antibodies that are produced in mammalian cells. In addition,
    <FONT style="white-space: nowrap">A-623</FONT> offers
    a number of potential differentiations over other anti-BLyS
    compounds, as well as other novel B-cell directed therapies,
    including:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    both subcutaneous and intravenous dosing, which may offer dosing
    convenience and flexibility;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    selective modulation and reduction of B-cell subsets that are
    relevant in lupus patients, which may offer safety and efficacy
    benefits;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    ability to bind to both membrane-bound and soluble BLyS, which
    may confer differentiating pharmacodynamic
    characteristics;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    non-glycosylated protein that is produced in <I>escherichia
    coli</I>, which may reduce the potential to be immunogenic, and
    may provide manufacturing benefits.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Market
    Opportunity</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Lupus is an autoimmune disorder that involves inflammation that
    causes swelling, pain and tissue damage throughout the body.
    Lupus can affect any part of the body, but especially the skin,
    heart, brain, lungs, joints and the kidneys. The course of the
    disease is unpredictable, with periods of illness, called flares
    alternating with remission. The Lupus Foundation estimates that
    approximately 1.5&#160;million people in the United States and
    five million worldwide suffer from lupus. Although lupus may
    affect people of either sex, women are 10&#160;times more likely
    to suffer from the disease than men, according to the Lupus
    Foundation.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Patients with active lupus may have a broad range of symptoms
    related to the inflammation. Inflammation of the brain may cause
    seizures and other neurologic abnormalities. Inflammation of the
    heart may cause heart failure or sudden death. Lung
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    72
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    inflammation causes shortness of breath. Lupus may also cause
    swollen joints and severe rash. In addition, LN may lead to
    kidney dialysis or transplantation.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Although the cause of lupus is still not completely understood,
    B-cell activation and autoantibody production are known to be
    central to the process. Evidence has emerged that
    over-expression of BLyS plays an important role in this disease
    process. In preclinical studies, transgenic mice created to
    over-express BLyS begin to exhibit symptoms similar to lupus. In
    addition, treatment of these same mice with BLyS antagonists
    appears to ameliorate the disease.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Historical
    Clinical Studies</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Prior to our in-licensing of
    <FONT style="white-space: nowrap">A-623,</FONT> Amgen
    completed two Phase 1 clinical studies of
    <FONT style="white-space: nowrap">A-623</FONT> in
    lupus patients to evaluate the safety and pharmacokinetics of
    single and multiple doses of drug using intravenous and
    subcutaneous formulations. Prior to conducting Phase 1 clinical
    studies in lupus patients, Amgen conducted a pre-Phase 1
    clinical study. In Amgen&#146;s pre-Phase 1 clinical study,
    individual B-cell subsets, such as immature B-cells and mature
    na&#239;ve B-cells, both therapeutic targets for
    <FONT style="white-space: nowrap">A-623,</FONT> were
    quantified in order to characterize the specific B-cell subset
    abnormalities associated with lupus.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The randomized, placebo-controlled, dose-escalation Phase 1a
    clinical study evaluated
    <FONT style="white-space: nowrap">A-623</FONT> as a
    single intravenous or subcutaneous therapy among 54 lupus
    patients. Intravenous doses included 1 and 6&#160;mg/kg, and
    subcutaneous doses included 0.1, 0.3, 1 and 3&#160;mg/kg. The
    primary endpoint was to assess the safety and tolerability of
    single dose administrations of
    <FONT style="white-space: nowrap">A-623.</FONT>
    Secondary endpoints were designed to assess the plasma
    pharmacokinetic profile and immunogenicity of
    <FONT style="white-space: nowrap">A-623.</FONT>
    Results from this clinical study indicated the safety and
    tolerability of
    <FONT style="white-space: nowrap">A-623</FONT>
    administered as single dose of intravenous or subcutaneous was
    comparable to placebo. Single doses of
    <FONT style="white-space: nowrap">A-623</FONT>
    exhibited linear pharmacokinetics after both intravenous and
    subcutaneous administration. There were comparable adverse
    events between the
    <FONT style="white-space: nowrap">A-623</FONT> and
    placebo groups with no deaths reported. In addition, no
    neutralization antibodies were seen across all doses. The most
    common adverse events were nausea (15%), headache (10%), upper
    respiratory tract infection (10%) and diarrhea (8%).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <FONT style="white-space: nowrap">A-623</FONT> was
    evaluated as an intravenous or subcutaneous therapy among 61
    lupus patients. Intravenous doses included 6&#160;mg/kg, and
    subcutaneous doses included 0.3, 1 and 3&#160;mg/kg. Patients
    received their doses of
    <FONT style="white-space: nowrap">A-623</FONT> or
    placebo once-weekly for four weeks. The primary endpoint was to
    assess the safety and tolerability of multiple dose
    administrations of
    <FONT style="white-space: nowrap">A-623.</FONT>
    Secondary endpoints were designed to assess the plasma
    pharmacokinetic profile and immunogenicity of
    <FONT style="white-space: nowrap">A-623</FONT> after
    multiple doses. Results showed that multiple doses of A-623
    exhibited dose-proportional pharmacokinetics after both
    intravenous and subcutaneous administration. Further, results
    demonstrated a dose-dependent decrease in total B-cells as early
    as 15&#160;days of treatment, and total B-cell reduction (up to
    70% of baseline) reached its nadir after about 160&#160;days of
    therapy. By six months after treatment, the B-cell populations
    had returned to baseline levels.
</DIV>

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    <BR>
    73
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Figure 9: Total B-cell Depletion
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <IMG src="f53438orf5343808.gif" alt="(PERFORMANCE GRAPH)">
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    An experimental analysis was also conducted to assess B-cell
    subsets in patients following multiple doses. Results
    demonstrated that
    <FONT style="white-space: nowrap">A-623</FONT>
    selectively modulate certain B-cell subsets and induced trends
    toward normal that are consistent with findings in the pre-Phase
    1 clinical study.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <IMG src="f53438orf5343810.gif" alt="(PERFORMANCE GRAPH)">
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Results indicated that the safety and tolerability of
    <FONT style="white-space: nowrap">A-623</FONT>
    administered as multiple doses of intravenous or subcutaneous
    administration was generally comparable to placebo. There were
    no deaths reported between the
    <FONT style="white-space: nowrap">A-623</FONT> and
    placebo. Few neutralization antibodies were seen, and all
    resolved in subsequent visits. Based on these results and
    pending further data from competitor studies, we expect to
    initiate a Phase 2 clinical study evaluating
    <FONT style="white-space: nowrap">A-623</FONT> in
    lupus patients during the second half of 2010.
</DIV>

<DIV style="margin-top: 9pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Our
    Strategy</FONT></B>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Our objective is to develop and commercialize our product
    candidates to treat serious diseases associated with
    inflammation, including cardiovascular and autoimmune diseases.
    To achieve these objectives, we intend to initially focus on:
</DIV>

<DIV style="margin-top: 9pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Advancing
    <FONT style="white-space: nowrap">A-002</FONT>
    through Phase 3.</FONT></I>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Inflammatory processes and lipid abnormalities are central to
    the onset of acute coronary syndrome and the development of CAD.
    <FONT style="white-space: nowrap">A-002</FONT>
    operates through a novel mechanism of action
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    74
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    to offer both targeted anti-inflammatory activity and
    incremental lipid reductions, including LDL-C, when used in
    combination with statins. Despite the benefits of statin
    therapy, many acute coronary syndrome patients still remain at
    substantial risk of a coronary event, suggesting additional
    biological mechanisms may be relevant, including inflammation.
    We believe that combination therapy with
    <FONT style="white-space: nowrap">A-002</FONT> and
    statins will provide acute coronary syndrome patients with a
    unique, short-term therapeutic option unavailable with existing
    agents today. In addition, we believe that an opportunity exists
    in the future to evaluate
    <FONT style="white-space: nowrap">A-002</FONT> in
    chronic indications such as CAD.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Advancing
    clinical development of
    <FONT style="white-space: nowrap">A-001</FONT> and
    <FONT style="white-space: nowrap">A-623.</FONT></FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We are developing
    <FONT style="white-space: nowrap">A-001,</FONT> an
    intravenous
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    inhibitor for prevention of acute chest syndrome associated with
    sickle cell disease, because we identified that elevations in
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    activity are known to precede and predict disease progression.
    Based upon the DSMB review of our Phase 2 interim results and
    given the significant unmet medical need for these patients, we
    scheduled an end of Phase 2 meeting in late 2009 with the FDA to
    review the interim data from our Phase&#160;2 clinical study and
    to discuss the Phase&#160;3 clinical study design for the use of
    A-001 to prevent acute chest syndrome associated with sickle
    cell disease.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We intend to advance the development of
    <FONT style="white-space: nowrap">A-623</FONT> to
    exploit the broad potential clinical utility of BLyS antagonism.
    We plan to internally develop this compound beginning with a
    Phase 2 clinical study in lupus as resources permit. We may
    opportunistically enter into collaborations with third parties
    for development of this compound in lupus or in other B-cell
    mediated diseases, such as multiple sclerosis, rheumatoid
    arthritis or Sj&#246;gren&#146;s Syndrome, that may benefit from
    BLyS antagonism.
</DIV>

<DIV style="margin-top: 9pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Leveraging our
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    expertise to develop products for additional disease
    indications.</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We believe that we have developed a leadership position in the
    field of
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    inhibition. Beyond our acute coronary syndrome and acute chest
    syndrome program, we believe that
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    inhibition may have applications in other acute disease settings
    where early intervention may have an impact and reduce
    anti-inflammatory activity, such as acute lung injury.
    Additionally, we believe that we can apply our
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    expertise to develop novel therapeutics for a number of chronic
    diseases. For example,
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    has been shown to be involved in the development of such chronic
    inflammatory diseases as atherosclerosis and dermatitis. We plan
    to pursue these indications opportunistically and potentially in
    collaboration with third parties.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We are also developing new and unique
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    inhibitor compounds for additional therapeutic areas.
    <FONT style="white-space: nowrap">A-003</FONT> is our
    second generation lead candidate. We plan to continue
    preclinical development of
    <FONT style="white-space: nowrap">A-003</FONT> for an
    IND filing and we will continue to assess additional new
    compounds.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Developing
    commercial strategies designed to maximize our product
    candidates&#146; market potential.</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Our primary product candidates are focused on either the acute
    care setting in the hospital or highly-specialized physician
    segments, such as rheumatologists. We believe that we can build
    a small, focused sales force capable of marketing our products
    effectively in acute care and orphan indications such as acute
    coronary syndrome and acute chest syndrome associated with
    sickle cell disease. In other chronic indications such as CAD,
    we intend to seek commercial collaborations with companies that
    have a large, dedicated sales force focused on general
    practitioners and cardiologists and we plan to seek
    commercialization partners for products in non-specialty and
    international markets.
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    75
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Competition</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Our industry is highly competitive and subject to rapid and
    significant technological change. Our potential competitors
    include large pharmaceutical and biotechnology companies,
    specialty pharmaceutical and generic drug companies, academic
    institutions, government agencies and research institutions. We
    believe that key competitive factors that will affect the
    development and commercial success of our product candidates are
    efficacy, safety and tolerability profile, reliability,
    convenience of dosing, price and reimbursement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Many of our potential competitors, including many of the
    organizations named below, have substantially greater financial,
    technical and human resources than we do and significantly
    greater experience in the discovery and development of product
    candidates, obtaining FDA and other regulatory approvals of
    products and the commercialization of those products.
    Accordingly, our competitors may be more successful than we may
    be in obtaining FDA approval for drugs and achieving widespread
    market acceptance. Our competitors&#146; drugs may be more
    effective, or more effectively marketed and sold, than any drug
    we may commercialize and may render our product candidates
    obsolete or non-competitive before we can recover the expenses
    of developing and commercializing any of our product candidates.
    We anticipate that we will face intense and increasing
    competition as new drugs enter the market and advanced
    technologies become available. Finally, the development of new
    treatment methods for the diseases we are targeting could render
    our drugs non-competitive or obsolete.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    product candidates we are currently developing, if approved,
    will face intense competition, either as monotherapies or in
    combination therapies. Although there are no
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    inhibitors currently approved by the FDA, we are aware of other
    pharmaceutical companies, as described below, that are
    developing product candidates in this area for separate
    indications.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    in Acute Coronary Syndrome</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Our lead product candidate,
    <FONT style="white-space: nowrap">A-002,</FONT> for
    the short-term (16-week) treatment of acute coronary syndrome
    has a dual mechanism of action that we believe confers
    anti-inflammatory and lipid-lowering and lipid-modulating
    benefits. The market for cardiovascular therapeutics and acute
    coronary syndrome, specifically, is especially large and
    competitive. A wide range of medications are typically
    administered to patients suffering an acute coronary syndrome
    event in order to reduce ischemia and thrombosis and improve
    blood flow. We expect that
    <FONT style="white-space: nowrap">A-002</FONT> for
    the treatment of acute coronary syndrome patients, if approved,
    may compete with the following anti-inflammatory therapeutics in
    development.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 9pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="16%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=gutterleft -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=gutterright -->
    <TD width="6%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=03 type=gutterleft -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=03 type=gutterright -->
    <TD width="22%">&nbsp;</TD>	<!-- colindex=03 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=04 type=gutterleft -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=04 type=gutterright -->
    <TD width="15%">&nbsp;</TD>	<!-- colindex=04 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=05 type=gutterleft -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=05 type=gutterright -->
    <TD width="33%">&nbsp;</TD>	<!-- colindex=05 type=maindata -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom" style="border-left: 1px solid #000000; padding-left: 2pt; border-top: 1px solid #000000">
    <B>Compound</B>
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-top: 1px solid #000000">
    <B>Stage</B>
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-top: 1px solid #000000">
    <B>Company</B>
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-top: 1px solid #000000">
    <B>Indications</B>
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
    <B>Notes</B>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top" style="border-left: 1px solid #000000; padding-left: 2pt; border-top: 1px solid #000000">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    Darapladib
</DIV>
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="top" style="border-top: 1px solid #000000">
    Phase 3
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="top" style="border-top: 1px solid #000000">
    GlaxoSmithKline plc
</TD>
<TD rowspan="3" style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD rowspan="3" style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD rowspan="3" align="left" valign="top" style="border-top: 1px solid #000000">
    Acute coronary syndrome
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="top" style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
<DIV style="text-indent: -4pt; margin-left: 4pt">
    &#149;&#160;&#160;&#160;Lp-PLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    inhibitor
</DIV>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top" style="border-left: 1px solid #000000; padding-left: 2pt">
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top" style="border-right: 1px solid #000000; padding-right: 2pt">
<DIV style="text-indent: -4pt; margin-left: 4pt">
    &#149;&#160;&#160;&#160;Collaboration with Human<BR>
    &#160;&#160;&#160;Genome Sciences, Inc.
</DIV>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top" style="border-left: 1px solid #000000; padding-left: 2pt">
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top" style="border-right: 1px solid #000000; padding-right: 2pt">
<DIV style="text-indent: -4pt; margin-left: 4pt">
    &#149;&#160;&#160;&#160;Various back-up compounds
</DIV>
</TD>
</TR>
<TR style="font-size: 1pt">
<TD nowrap align="left" valign="top" style="border-left: 1px solid #000000; padding-left: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="top" style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="top" style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="top" style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="top" style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top" style="border-left: 1px solid #000000; padding-left: 2pt">
<DIV style="text-indent: -18pt; margin-left: 18pt">
    VIA-2291
</DIV>
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    Phase 2
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Via Pharmaceuticals, Inc.
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Acute coronary syndrome or atherosclerosis
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top" style="border-right: 1px solid #000000; padding-right: 2pt">
<DIV style="text-indent: 0pt; margin-left: 0pt;">

</DIV>
<DIV style="text-indent: -18pt; margin-left: 18pt;">
&#149;&#160;&#160;&#160;5-lipoxygenase inhibitor<BR>
</DIV>
<DIV style="text-indent: -18pt; margin-left: 18pt;">
&#149;&#160;&#160;&#160;Discussions on-going with FDA
</DIV>
</TD>
</TR>
<TR style="font-size: 1pt">
<TD nowrap align="left" valign="top" style="border-left: 1px solid #000000; padding-left: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="top" style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="top" style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="top" style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="top" style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top" style="border-left: 1px solid #000000; padding-left: 2pt">
<DIV style="text-indent: -18pt; margin-left: 18pt">
    <FONT style="white-space: nowrap">E-5555</FONT>
</DIV>
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    Phase 2
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    Eisai Inc.
</TD>
<TD rowspan="2" style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD rowspan="2">
&nbsp;
</TD>
<TD rowspan="2" align="left" valign="top">
    Acute coronary syndrome or atherosclerosis
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top" style="border-right: 1px solid #000000; padding-right: 2pt">
<DIV style="text-indent: 0pt; margin-left: 0pt;">

</DIV>
<DIV style="text-indent: -9pt; margin-left: 9pt;">
&#149;&#160;&#160;&#160;600&#160;patient study to be completed<BR>&#160;October 2009
</DIV>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top" style="border-left: 1px solid #000000; padding-left: 2pt">
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top" style="border-right: 1px solid #000000; padding-right: 2pt">
<DIV style="text-indent: -4pt; margin-left: 4pt">
    &#149;&#160;&#160;&#160;Evaluating biomarkers and events
</DIV>
</TD>
</TR>
<TR style="font-size: 1pt">
<TD nowrap align="left" valign="bottom" style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom" style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom" style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom" style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom" style="border-top: 1px solid #000000">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Other Agents
    Under Development</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Additionally, we are aware of other products in development that
    are being tested for anti-inflammatory benefits in patients with
    acute coronary syndrome such as Via Pharmaceuticals,
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    76
</DIV><!-- END PAGE WIDTH -->
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Inc. and its 5-lipoxygenase, or 5-LO, inhibitor, which has been
    evaluated in Phase 2 clinical studies, GlaxoSmithKline plc and
    its product candidate, darapladib, which is an
    Lp-PLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>inhibitor
    currently being evaluated in Phase 3 clinical studies. If
    approved, these products or others in development may compete
    directly with
    <FONT style="white-space: nowrap">A-002.</FONT>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Approved
    Categories of Drugs</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <I>Statins</I>&#160;&#150; Treatment with
    <FONT style="white-space: nowrap">A-002</FONT> is
    designed to offer anti-inflammatory benefits for acute coronary
    syndrome patients that are additive to treatment with statins.
    However, statin therapy is thought to confer some element of
    anti-inflammatory benefit as monotherapy. In certain
    circumstances, it is possible the anti-inflammatory benefits of
    statin monotherapy with products such as Lipitor (atorvastatin),
    which is marketed by Pfizer Inc., Crestor (rosuvastatin), which
    is marketed by AstraZeneca UK Limited and Zocor (simvastatin),
    which is marketed by Merck&#160;&#038; Co., Inc. may be viewed
    as competitive to that offered by A-002.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <I>Other lipid-lowering therapies</I>&#160;&#150; Increasingly,
    additional lipid-lowering agents are being administered either
    in combination with statins or as monotherapy to help acute
    coronary syndrome patients reduce levels of LDL-C.
    <FONT style="white-space: nowrap">A-002</FONT> has
    demonstrated LDL-C lowering benefits when tested as monotherapy
    and in combination with statin therapy. To the extent acute
    coronary syndrome patients need additional LDL-C lowering,
    <FONT style="white-space: nowrap">A-002</FONT> may
    compete for use with other approved agents such as Vytorin,
    which is a fixed dose combination therapy combining ezetimibe
    and Zocor, Tricor (fenofibrate tablets) and Niaspan (niacin),
    both of which are marketed by Abbott Laboratories, Zetia
    (ezetimibe) and fish oils (omega-3).
</DIV>

<DIV style="margin-top: 9pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    for Acute Chest Syndrome Associated with Sickle Cell
    Disease</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    There are no currently approved agents for treatment or
    prophylaxis of acute chest syndrome associated with sickle cell
    disease. Droxia (hydroxyurea) is approved for prevention of VOC
    in sickle cell disease and thus could reduce the pool of
    patients with VOC at risk for acute chest syndrome. In addition,
    there is evidence in the literature that blood transfusions may
    prevent the occurrence of acute chest syndrome associated with
    sickle cell disease, and a randomized clinical study is underway
    by the National Heart, Lung and Blood Institute to explore this
    possibility.
</DIV>

<DIV style="margin-top: 9pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Lupus</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    No new therapies have been approved for lupus in the last
    50&#160;years. Current therapies such as non-steroidal
    anti-inflammatory drugs, or NSAIDs, corticosteroids and
    immunosuppressants generally act to hold back broadly the
    proliferation of many types of cells, including white blood
    cells. However, use of these agents is associated with
    significant adverse events and broad immune suppression.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Recently, several new biological agents under development have
    targeted BLyS for the treatment of lupus. These product
    candidates include Benlysta (bellimumab) from Human Genome
    Sciences, Inc., atacicept, or TACI-Ig, from ZymoGenetics Inc.
    and what we believe to be more non-specific B-cell depleting
    agents such as Rituxan from Genentech, Inc. and epratuzumab from
    Immunomedics, Inc. We believe that
    <FONT style="white-space: nowrap">A-623</FONT> may
    offer potential differentiation from these agents, including:
    demonstrated dosing flexibility with both subcutaneous and
    intravenous delivery; selective modulation and reduction of
    relevant B-cell types in lupus patients; the ability to bind to
    both membrane-bound and soluble BLyS; its smaller size as
    compared to a full antibody, which may confer differentiating
    pharmacokinetic and pharmacodynamic characteristics; and
    distinct patent protection based on a novel and proprietary
    technology developed and commercialized by Amgen, which may also
    confer safety and manufacturing advantages.
</DIV>

<DIV style="margin-top: 9pt; font-size: 1pt">&nbsp;</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    77
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 9pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="16%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=gutterleft -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=gutterright -->
    <TD width="8%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=03 type=gutterleft -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=03 type=gutterright -->
    <TD width="28%">&nbsp;</TD>	<!-- colindex=03 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=04 type=gutterleft -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=04 type=gutterright -->
    <TD width="13%">&nbsp;</TD>	<!-- colindex=04 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=05 type=gutterleft -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=05 type=gutterright -->
    <TD width="27%">&nbsp;</TD>	<!-- colindex=05 type=maindata -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom" style="border-left: 1px solid #000000; padding-left: 2pt; border-top: 1px solid #000000">
    <B>Compound</B>
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-top: 1px solid #000000">
    <B>Stage</B>
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-top: 1px solid #000000">
    <B>Company</B>
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-top: 1px solid #000000">
    <B>Indications</B>
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
    <B>Notes</B>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top" style="border-left: 1px solid #000000; padding-left: 2pt; border-top: 1px solid #000000">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    Benlysta
</DIV>
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="top" style="border-top: 1px solid #000000">
    Phase 3
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD align="left" valign="top" style="border-top: 1px solid #000000">
    Human Genome Sciences, Inc.
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="top" style="border-top: 1px solid #000000">
    Lupus
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD align="left" valign="top" style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
    Monoclonal antibody against BLyS, an agent that demonstrated
    partial reduction in B-cells; positive results reported in first
    of two Phase 3 clinical studies.
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top" style="border-left: 1px solid #000000; padding-left: 2pt; border-top: 1px solid #000000">
<DIV style="text-indent: -18pt; margin-left: 18pt">
    Atacicept
</DIV>
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="top" style="border-top: 1px solid #000000">
    Phase 3
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="top" style="border-top: 1px solid #000000">
    ZymoGenetics Inc.
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="top" style="border-top: 1px solid #000000">
    Lupus, LN
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD align="left" valign="top" style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
    Fusion protein against BLyS and APRIL; Phase 3 clinical study in
    LN stopped due to safety issues; Phase 3 clinical study in lupus
    <FONT style="white-space: nowrap">on-going.</FONT>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top" style="border-left: 1px solid #000000; padding-left: 2pt; border-top: 1px solid #000000">
<DIV style="text-indent: -18pt; margin-left: 18pt">
    Epratuzumab
</DIV>
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="top" style="border-top: 1px solid #000000">
    Phase 2b
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="top" style="border-top: 1px solid #000000">
    Immunomedics, Inc.
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="top" style="border-top: 1px solid #000000">
    Lupus,<BR>
    Non-Hodgkin&#146;s<BR>
    Lymphoma
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD align="left" valign="top" style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
    Humanized antibody against
    <FONT style="white-space: nowrap">CD-22,</FONT> an
    agent that specifically targets
    <FONT style="white-space: nowrap">B-cells</FONT> and
    leads to partial depletion of peripheral
    <FONT style="white-space: nowrap">B-cells;</FONT>
    positive Phase 2b clinical study results reported.
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top" style="border-left: 1px solid #000000; padding-left: 2pt; border-top: 1px solid #000000">
<DIV style="text-indent: -18pt; margin-left: 18pt">
    Rituxan
</DIV>
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="top" style="border-top: 1px solid #000000">
    Phase 3
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="top" style="border-top: 1px solid #000000">
    Roche/Genentech, Inc.
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="top" style="border-top: 1px solid #000000">
    Lupus, LN,<BR>
    Non-Hodgkin&#146;s<BR>
    Lymphoma
</TD>
<TD style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD align="left" valign="top" style="border-right: 1px solid #000000; padding-right: 2pt; border-top: 1px solid #000000">
    Humanized antibody against
    <FONT style="white-space: nowrap">CD-20,</FONT> an
    agent that leads to rapid and profound depletion of circulating
    <FONT style="white-space: nowrap">B-cells;</FONT>
    both Phase 3 clinical studies in lupus and LN failed.
</TD>
</TR>
<TR style="font-size: 1pt">
<TD nowrap align="left" valign="bottom" style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom" style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom" style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom" style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom" style="border-top: 1px solid #000000">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Intellectual
    Property</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Our policy is to pursue, maintain and defend patent rights,
    developed internally and licensed from third parties, to protect
    the technology, inventions and improvements that are
    commercially important to the development of our business. We
    also rely on trade secrets that may be important to the
    development of our business.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Our success will depend significantly on our ability to:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    obtain and maintain patent and other proprietary protection for
    the technology, inventions and improvements we consider
    important to our business;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    defend our patents;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    preserve the confidentiality of our trade secrets;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    operate our business without infringing the patents and
    proprietary rights of third parties.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica"><FONT style="white-space: nowrap">A-002</FONT>
    and
    <FONT style="white-space: nowrap">A-001</FONT></FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    As of the date of this prospectus, our licensed
    <FONT style="white-space: nowrap">A-002</FONT> and
    <FONT style="white-space: nowrap">A-001</FONT> patent
    portfolio includes:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    13 U.S.&#160;patents;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    One pending U.S.&#160;non-provisional patent application;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Four European Patent, or EP, patents, each validated in one or
    more of Austria, Belgium, Denmark, France, Germany, Greece,
    Ireland, Italy, Liechtenstein, Luxembourg, the Netherlands,
    Portugal, Spain, Sweden, Switzerland and the United Kingdom;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Three pending EP patent applications;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    14 non-EP foreign patents in Argentina, Australia, Brazil,
    Canada, China, Finland, Malaysia, Mexico, the Philippines, South
    Korea, Taiwan and Turkey;&#160;and
</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    78
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Eight pending non-EP foreign patent applications in Brazil,
    Canada, China, India, Mexico, South Korea, Taiwan and Thailand.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We hold exclusive worldwide licenses from Eli Lilly and
    Shionogi&#160;&#038; Co., Ltd. to all of these patents and
    patent applications with the exception of licensing rights in
    Japan, which Shionogi&#160;&#038; Co., Ltd. retains. These
    licenses are described below under &#147;&#151;Licenses.&#148;
    The patents and applications described above contain claims
    directed to
    <FONT style="white-space: nowrap">A-002</FONT> and
    <FONT style="white-space: nowrap">A-001</FONT>
    compositions of matter and to various methods of making and
    using <FONT style="white-space: nowrap">A-002</FONT>
    and <FONT style="white-space: nowrap">A-001,</FONT>
    including methods of treating various inflammatory conditions.
    The issued U.S.&#160;patents are currently scheduled to expire
    between 2014 and 2021.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    As of the date of this prospectus, our internally developed
    <FONT style="white-space: nowrap">A-002</FONT> and
    <FONT style="white-space: nowrap">A-001</FONT> patent
    portfolio includes:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Two pending U.S.&#160;non-provisional patent applications;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Four pending U.S.&#160;provisional patent applications;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    One pending Patent Cooperation Treaty, or PCT, patent
    application.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We own, and therefore hold all worldwide rights in and to, these
    patent applications, which contain claims directed to
    <FONT style="white-space: nowrap">A-002</FONT> and
    <FONT style="white-space: nowrap">A-001</FONT>
    compositions of matter and methods of treating various
    cardiovascular indications.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica"><FONT style="white-space: nowrap">A-003</FONT></FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    As of the date of this prospectus, our licensed
    <FONT style="white-space: nowrap">A-003</FONT> patent
    portfolio includes:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Two licensed U.S.&#160;patents;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    One licensed pending U.S.&#160;non-provisional patent
    application (also listed above as covering
    <FONT style="white-space: nowrap">A-002</FONT> and
    <FONT style="white-space: nowrap">A-001);</FONT>
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Four licensed EP patents (one also listed above as covering
    <FONT style="white-space: nowrap">A-002</FONT> and
    <FONT style="white-space: nowrap">A-001),</FONT> each
    validated in one or more of Albania, Austria, Belgium, Denmark,
    Finland, France, Germany, Greece, Ireland, Italy, Latvia,
    Liechtenstein, Lithuania, Luxembourg, the Netherlands, Portugal,
    Romania, Slovenia, Spain, Sweden, Switzerland and the United
    Kingdom;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Two licensed pending EP patent applications (both also listed
    above as covering
    <FONT style="white-space: nowrap">A-002</FONT> and
    <FONT style="white-space: nowrap">A-001);</FONT>
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Eight licensed non-EP foreign patents (one also listed above as
    covering
    <FONT style="white-space: nowrap">A-002</FONT> and
    <FONT style="white-space: nowrap">A-001)</FONT> in
    Argentina, Australia, Canada, China, Mexico, South Korea and
    Taiwan;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Eight licensed pending non-EP foreign patent applications (six
    also listed above as covering
    <FONT style="white-space: nowrap">A-002</FONT> and
    <FONT style="white-space: nowrap">A-001)</FONT> in
    Argentina, Brazil, Canada, China, India, Mexico, South Korea and
    Taiwan.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We hold exclusive worldwide licenses from Eli Lilly and
    Shionogi&#160;&#038; Co., Ltd. to these patents and patent
    applications with the exception of licensing rights in Japan,
    which Shionogi&#160;&#038; Co., Ltd. retains. These licenses are
    described below under &#147;&#151;&#160;Licenses.&#148; The
    patents and applications listed above contain claims directed to
    <FONT style="white-space: nowrap">A-003</FONT>
    compositions of matter and to various methods of making and
    using <FONT style="white-space: nowrap">A-003,</FONT>
    including methods of treating various inflammatory indications.
    The issued U.S.&#160;patents are currently scheduled to expire
    between 2017 and 2018.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    As of the date of this prospectus, our internally developed
    <FONT style="white-space: nowrap">A-003</FONT> patent
    portfolio includes:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Two U.S.&#160;non-provisional patent applications (both also
    listed above as covering
    <FONT style="white-space: nowrap">A-002</FONT> and
    <FONT style="white-space: nowrap">A-001);</FONT>
</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    79
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Four pending U.S.&#160;provisional patent applications (all also
    listed above as covering
    <FONT style="white-space: nowrap">A-002</FONT> and
    <FONT style="white-space: nowrap">A-001);&#160;and</FONT>
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    One pending PCT patent application (also listed above as
    covering
    <FONT style="white-space: nowrap">A-002</FONT> and
    <FONT style="white-space: nowrap">A-001).</FONT>
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We own, and therefore hold all worldwide rights in and to, these
    patent applications, which contain claims directed to
    <FONT style="white-space: nowrap">A-002</FONT> and
    <FONT style="white-space: nowrap">A-001</FONT>
    compositions of matter and methods of treating various
    cardiovascular indications.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">New
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    Compounds</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    As of the date of this prospectus, our new
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    compound patent portfolio includes over 30&#160;licensed
    U.S.&#160;patents and one EP patent not listed above as covering
    <FONT style="white-space: nowrap">A-001,</FONT>
    <FONT style="white-space: nowrap">A-002</FONT> or
    <FONT style="white-space: nowrap">A-003.</FONT> We
    hold exclusive worldwide licenses from Eli Lilly and
    Shionogi&#160;&#038; Co., Ltd. to these patents and patent
    applications with the exception of licensing rights in Japan,
    which Shionogi&#160;&#038; Co., Ltd. retains. These licenses are
    described below under &#147;&#151;&#160;Licenses.&#148; The
    patents and applications listed above contain claims directed to
    various
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    second generation compounds, as well as methods of making and
    using these new
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    compounds. The issued U.S.&#160;patents are currently scheduled
    to expire between 2013 and 2024.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <I><FONT style="white-space: nowrap">A-623</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    As of the date of this prospectus, our
    <FONT style="white-space: nowrap">A-623</FONT> patent
    portfolio includes:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    One U.S.&#160;patent;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    One pending U.S.&#160;non-provisional patent application;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    One EP patent validated in Albania, Austria, Belgium, Cyprus,
    Denmark, Finland, France, Germany, Greece, Ireland, Italy,
    Latvia, Liechtenstein, Lithuania, Luxembourg, Monaco, the
    Netherlands, Portugal, Romania, Slovenia, Spain, Sweden,
    Switzerland, Turkey and the United Kingdom;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    One pending EP patent application;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Eight non-EP foreign patents in Australia, China, Eurasia
    (validated in all nine Eurasian countries), New Zealand,
    Singapore, South Korea and South Africa;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    17 pending non-EP foreign patent applications in Brazil,
    Bulgaria, Canada, China, the Czech Republic, Estonia, Hong Kong,
    Hungary, Israel, Japan, Mexico, Norway, the Philippines, Poland,
    Serbia/Yugoslavia and Slovakia.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We hold exclusive worldwide licenses from Amgen to all of these
    patents and patent applications.
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The U.S.&#160;patent system permits the filing of provisional
    and non-provisional patent applications. A non-provisional
    patent application is examined by the U.S.&#160;Patent Office,
    or USPTO, and can mature into a patent once the USPTO determines
    that the claimed invention meets the standards for
    patentability. A provisional patent application is not examined,
    and automatically expires 12&#160;months after its filing date.
    As a result, a provisional patent application cannot mature into
    a patent. The requirements for filing a provisional patent
    application are not as strict as those for filing a
    non-provisional patent application. Provisional applications are
    often used, among other things, to establish an early filing
    date for a subsequent non-provisional patent application.
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The filing date of a non-provisional patent application is used
    by the USPTO to determine what information is prior art when it
    considers the patentability of a claimed invention. If certain
    requirements are satisfied, a non-provisional patent application
    can claim the benefit of the filing date of an earlier filed
    provisional patent application. As a result, the filing date
</DIV>

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    <BR>
    80
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    accorded by the provisional patent application may remove
    information that otherwise could preclude the patentability of
    an invention.
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Depending upon the timing, duration and specifics of FDA
    approval of
    <FONT style="white-space: nowrap">A-002,</FONT>
    <FONT style="white-space: nowrap">A-001,</FONT>
    <FONT style="white-space: nowrap">A-623,</FONT>
    <FONT style="white-space: nowrap">A-003</FONT> or one
    or more new
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    compounds, one or more of the U.S.&#160;patents listed above may
    be eligible for limited patent term restoration under the Drug
    Price Competition and Patent Term Restoration Act of 1984,
    commonly referred to as the Hatch-Waxman Act. See
    &#147;&#151;Regulatory Matters&#151;Patent Term Restoration and
    Marketing Exclusivity.&#148;
</DIV>

<DIV style="margin-top: 9pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Licenses</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Eli Lilly and
    Shionogi&#160;&#038; Co., Ltd.</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    In July 2006, we entered into a license agreement with Eli Lilly
    and Shionogi&#160;&#038; Co., Ltd., pursuant to which we
    obtained an exclusive license in all countries except for Japan
    to certain technology and compounds relating to
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    inhibitors. The licensed technology was largely developed under
    a research and development agreement between Eli Lilly and
    Shionogi&#160;&#038; Co., Ltd., which was entered into between
    the two parties in August 1992 and terminated in December 2004.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Under the agreement, we obtained exclusive rights to
    (i)&#160;use licensed patent rights and know-how to identify and
    develop
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>inhibitors,
    (ii)&#160;develop, make, have made, use, import, offer for sale,
    and sell licensed compounds and pharmaceutical formulations
    thereof, including
    <FONT style="white-space: nowrap">A-002,</FONT>
    <FONT style="white-space: nowrap">A-001,</FONT>
    <FONT style="white-space: nowrap">A-003</FONT> and
    other
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    inhibitors and (iii)&#160;grant sublicenses. The licensed patent
    rights include a specific set of previously filed U.S.&#160;and
    foreign patents and applications, as well as any applications
    filed after the execution date by Eli Lilly or
    Shionogi&#160;&#038; Co., Ltd. that relate to licensed know-how.
    Certain patents and applications within the licensed patent
    rights are defined as &#147;core patents.&#148; Although the
    agreement does not allow us to sell or offer for sale licensed
    products in Japan, it does allow us to conduct preclinical and
    clinical studies in Japan in support of applications for
    marketing authorization outside of Japan, and to make and have
    made licensed products in Japan for use or sale outside of
    Japan. Eli Lilly and Shionogi&#160;&#038; Co., Ltd. retain the
    right to use licensed products for research purposes only. Eli
    Lilly also retains the right to conduct studies of specific
    compounds in animals for research purposes, but only with our
    prior written approval. In addition, Shionogi&#160;&#038; Co.,
    Ltd. retains the non-exclusive right to make and have made
    licensed products for supply to us, as well as its rights to
    continue research, development and marketing of licensed
    technology in Japan.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Upon entering into the license agreement, we took over all
    prosecution and maintenance of core patents prosecuted and
    maintained by Eli Lilly prior to the agreement. All core patents
    prosecuted and maintained by Shionogi&#160;&#038; Co., Ltd.
    prior to the agreement remained under the control of
    Shionogi&#160;&#038; Co., Ltd. Licensed patent rights that were
    not classified as core remained under the control of Eli Lilly
    and Shionogi&#160;&#038; Co., Ltd. However, control of certain
    of these patents and applications has since been transferred to
    us following the decision by Eli Lilly or Shionogi&#160;&#038;
    Co., Ltd. to discontinue prosecution and maintenance.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Upon entering into the license agreement, we made one-time
    payments of cash in the amount of $250,000 and issued shares of
    convertible preferred stock with a total aggregate value of
    $2.25&#160;million to Eli Lilly and Shionogi&#160;&#038; Co.,
    Ltd. In addition, we are required to make various milestone
    payments, including payment upon initiation of the first Phase 3
    clinical study for a particular product. We amended the
    milestone payment terms with each of Eli Lilly and
    Shionogi&#160;&#038; Co., Ltd. to no later than 12&#160;months
    from the enrollment of the first patient in a Phase 3 clinical
    study for
    <FONT style="white-space: nowrap">A-002.</FONT> In
    consideration for the extension, the milestone payments
    increased to $1.75&#160;million to each party. We are also
    required to pay tiered royalty payments on net sales. Both the
    milestone and royalty payment schedules vary depending on the
    specific formulation (e.g., oral versus intravenously
    administered). Our royalty payment obligations for a particular
    licensed product in a particular country begin on the date of
    the
</DIV>

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    <BR>
    81
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    first commercial sale of the licensed product in that country,
    and end upon the later of 10&#160;years from the date of first
    commercial sale in that country or the first date on which a
    generic version of the licensed product reaches a 25% total
    market share in that country.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The license agreement will remain in effect for the length of
    our royalty obligation on a
    <FONT style="white-space: nowrap">product-by-product</FONT>
    and
    <FONT style="white-space: nowrap">country-by-country</FONT>
    basis, unless we elect to terminate earlier or until termination
    by mutual agreement. Upon expiration of the agreement, our
    license will remain in effect and will convert to an
    irrevocable, perpetual royalty-free license. If we fail to meet
    our obligations under the agreement, Eli Lilly or
    Shionogi&#160;&#038; Co., Ltd. can terminate the agreement,
    resulting in a loss of our exclusive rights to the licensed
    technology.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Amgen</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    In December 2007, we entered into a license agreement with
    Amgen, pursuant to which we obtained an exclusive worldwide
    license to certain technology and compounds relating to
    <FONT style="white-space: nowrap">A-623.</FONT>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Under the agreement, we obtained exclusive rights under the
    licensed patents and know-how to research, develop, make, have
    made, use, sell, offer for sale and import pharmaceutical
    products containing
    <FONT style="white-space: nowrap">A-623,</FONT> as
    well as the right to grant sublicenses. The licensed patents
    included a specific set of previously filed U.S.&#160;and
    foreign patents and applications, as well as any applications
    filed after the execution date by Amgen and covering licensed
    know-how. During the period of the agreement, we are responsible
    for the filing, prosecution, defense and maintenance of all
    licensed
    <FONT style="white-space: nowrap">A-623</FONT>
    patents and applications. Amgen retains the right to review all
    documents relating to said filing, prosecution, defense and
    maintenance, and we are required to incorporate all reasonable
    comments or suggestions that Amgen makes with regard to these.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    During the seven-year period after execution of the agreement,
    Amgen is prohibited from clinically developing or
    commercializing any BAFF peptibody. Similarly, we are prohibited
    during the term of the agreement from clinically developing or
    commercializing any molecule other than
    <FONT style="white-space: nowrap">A-623</FONT> that
    modulates BAFF as the primary intended therapeutic mechanism of
    action.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The license agreement provided for a first installment fee in
    cash of $3.0&#160;million, of which we have paid
    $1.5&#160;million. In addition, the license agreement provides
    for a second cash installment fee of $3.0&#160;million upon the
    earlier of our termination of the agreement or February&#160;1,
    2009. We have made no payments in respect of the second
    installment fee. If we are unable to make this $4.5 million
    payment or agree to alternative payment terms, Amgen may notify
    us of its intent to terminate the license agreement. We will
    have 30&#160;days from the time of notification to make payment
    and cure the breach. As of the date of this prospectus, we have
    not been notified by Amgen of any intention to claim breach or
    terminate the license agreement. In addition, we are required to
    make various milestone payments upon the achievement of certain
    development, regulatory and commercial objectives, including
    payment upon initiation of the first Phase 3 clinical study for
    any <FONT style="white-space: nowrap">A-623</FONT>
    formulation. We are also required to make tiered quarterly
    royalty payments on net sales. Our royalty payment obligations
    for a particular product in a particular country begin on the
    date of the first commercial sale of the licensed product in
    that country, and end upon the later of 10&#160;years from the
    date of first commercial sale in that country or the expiration
    date of the last valid claim of a licensed patent that covers
    the manufacture, use or sale, offer to sell or import of the
    product.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The license agreement will remain in effect until we elect to
    terminate, or until termination for material breach by either
    party or insolvency on our part. Under these terms, Amgen can
</DIV>

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    <BR>
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    terminate the agreement if we fail to meet our obligations,
    resulting in a loss of our exclusive rights to the licensed
    technology.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Manufacturing and
    Supply</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We currently rely on contract manufacturers to produce drug
    substances and drug products required for our clinical studies
    under current good manufacturing practices, or cGMP, with
    oversight by our internal managers. We plan to continue to rely
    upon contract manufacturers and, potentially, collaboration
    partners to manufacture commercial quantities of our product
    candidates if and when approved for marketing by the FDA. We
    currently rely on a single manufacturer for the preclinical and
    clinical supplies of each of our product candidates and do not
    currently have agreements in place for redundant supply or a
    second source for any of our product candidates. We believe that
    there are alternate sources of supply that can satisfy our
    clinical study requirements without significant delay or
    material additional costs.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Sales and
    Marketing</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Given our stage of development, we have not developed a
    commercial organization or distribution capabilities. We expect
    that we would develop these capabilities once we receive Phase 3
    data in contemplation of FDA approval and the commercial launch
    of our product candidates. In order to commercialize any of our
    product candidates, we must develop these capabilities
    internally or through collaboration with third parties. In
    selected therapeutic areas where we feel that any approved
    products can be commercialized by a specialty sales force that
    calls on a limited and focused group of physicians, acute care
    and orphan indications such as acute coronary syndrome and acute
    chest syndrome associated with sickle cell disease, we may seek
    to commercialize these product candidates alone. In therapeutic
    areas that require a large sales force selling to a large and
    diverse prescribing population, such as chronic indications such
    as CAD, we currently plan to partner with third parties to
    commercialize our product candidates while retaining rights to
    co-promote our products to a select audience of high prescribing
    physicians in the United States only, thereby supplementing or
    enhancing the efforts of a commercial partner. We also plan to
    seek commercialization partners for products in non-specialty
    and international markets.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    In North America and Western Europe, patients in the target
    markets for our product candidates are largely managed by
    medical specialists in the areas of cardiology and internal
    medicine. Historically, companies have experienced substantial
    commercial success through the deployment of specialized sales
    forces that can address a majority of key prescribers,
    particularly within the cardiovascular disease marketplace.
    Therefore, we expect to utilize a specialized sales force in
    North America for the sales and marketing of product candidates
    that we may successfully develop. Based upon sales models, we
    estimate that we could effectively promote (supplementing a
    commercial partner&#146;s sales efforts) the treatment of acute
    coronary syndrome to 3,000 cardiologists with approximately 300
    sales representatives in North America and Western Europe. If we
    obtain additional label indications for
    <FONT style="white-space: nowrap">A-002</FONT> or
    <FONT style="white-space: nowrap">A-001,</FONT> we
    may choose to increase our sales force size to promote these new
    uses. Due to their concentrated and focused nature, specialty
    target audiences may be reached with more focused and
    cost-effective marketing campaigns. Outside of North America,
    and in situations or markets where a more favorable return may
    be realized through licensing commercial rights to a third
    party, we may license a portion or all of our commercial rights
    in a territory to a third party in exchange for one or more of
    the following: up-front payments, research funding, development
    funding, milestone payments and royalties on drug sales.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We intend to build the commercial infrastructure necessary to
    bring <FONT style="white-space: nowrap">A-002,</FONT>
    <FONT style="white-space: nowrap">A-001</FONT> and
    <FONT style="white-space: nowrap">A-623</FONT> to
    market alone or in collaboration with a co-development or
    co-promotion partner. In addition to a specialty sales force,
    sales management, internal sales support and an internal
    marketing group, we will need to establish capabilities to
    manage key accounts, such as
</DIV>

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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    managed care organizations, group-purchasing organizations,
    specialty pharmacies and government accounts. We may also choose
    to employ medical sales liaisons personnel to support the
    product.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Regulatory
    Matters</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Government
    Regulation and Product Approval</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Government authorities in the United States at the federal,
    state and local level, and other countries, extensively
    regulate, among other things, the research, development,
    testing, manufacture, quality control, approval, labeling,
    packaging, storage, record-keeping, promotion, advertising,
    distribution, marketing, export and import of products such as
    those we are developing. Our product candidates must be approved
    by the FDA through the new drug application, or NDA, process,
    and our biological product candidate,
    <FONT style="white-space: nowrap">A-623,</FONT> must
    be approved by the FDA through the biologics license
    application, or BLA, process before they may legally be marketed
    in the United States.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">United States
    Drug Development Process</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    In the United States, the FDA regulates drugs under the Federal
    Food, Drug, and Cosmetic Act, or FDCA, and implementing
    regulations and biological products under both the FDCA and the
    Public Health Service Act, or the PHSA, and implementing
    regulations. The process of obtaining regulatory approvals and
    compliance with appropriate federal, state, local and foreign
    statutes and regulations require the expenditure of substantial
    time and financial resources. Failure to comply with the
    applicable U.S. requirements at any time during the product
    development process, approval process, or after approval, may
    subject an applicant to administrative or judicial sanctions.
    These sanctions could include the FDA&#146;s refusal to approve
    pending applications, withdrawal of an approval, a clinical
    hold, warning letters, product recalls, product seizures, total
    or partial suspension of production or distribution,
    injunctions, fines, refusals of government contracts,
    restitution, disgorgement or civil or criminal penalties. The
    process required by the FDA before a drug or biological product
    may be marketed in the United States generally involves the
    following:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    completion of preclinical laboratory tests, animal studies and
    formulation studies according to Good Laboratory Practices
    regulations;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    submission to the FDA of an IND, which must become effective
    before human clinical studies may begin;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    performance of adequate and well-controlled human clinical
    studies according to Good Clinical Practices, or GCP, to
    establish the safety and efficacy of the proposed drug or
    biological product for its intended use;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    submission to the FDA of an NDA for a new drug or BLA for a
    biological product;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    satisfactory completion of an FDA inspection of the
    manufacturing facility or facilities at which the drug or
    biological product is produced to assess compliance with
    cGMP;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    FDA review and approval of the NDA or BLA.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The testing and approval process requires substantial time,
    effort and financial resources and we cannot be certain that any
    approvals for our product candidates will be granted on a timely
    basis, if at all.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Once a pharmaceutical or biological product candidate is
    identified for development, it enters the preclinical testing
    stage. Preclinical tests include laboratory evaluations of
    product chemistry, toxicity, formulation and stability, as well
    as animal studies to assess its potential safety and efficacy.
    An IND sponsor must submit the results of the preclinical tests,
    together
</DIV>

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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    with manufacturing information, analytical data and any
    available clinical data or literature, to the FDA as part of the
    IND. The sponsor will also include a protocol detailing, among
    other things, the objectives of the initial clinical study, the
    parameters to be used in monitoring safety and the effectiveness
    criteria to be evaluated if the initial clinical study lends
    itself to an efficacy evaluation. Some preclinical testing may
    continue even after the IND is submitted. The IND automatically
    becomes effective 30&#160;days after receipt by the FDA, unless
    the FDA places the clinical study on a clinical hold within that
    <FONT style="white-space: nowrap">30-day</FONT> time
    period. In such a case, the IND sponsor and the FDA must resolve
    any outstanding concerns before the clinical study can begin.
    Clinical holds also may be imposed by the FDA at any time before
    or during studies due to safety concerns or non-compliance.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    All clinical studies must be conducted under the supervision of
    one or more qualified investigators in accordance with GCP
    regulations. These regulations include the requirement that all
    research subjects provide informed consent. Further, an
    institutional review board, or IRB, must review and approve the
    plan for any clinical study before it commences at any
    institution. An IRB considers, among other things, whether the
    risks to individuals participating in the studies are minimized
    and are reasonable in relation to anticipated benefits. The IRB
    also approves the information regarding the clinical study and
    the consent form that must be provided to each clinical study
    subject or his or her legal representative and must monitor the
    clinical study until completed.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Each new clinical protocol and any amendments to the protocol
    must be submitted to the IND for FDA review, and to the IRBs for
    approval. Protocols detail, among other things, the objectives
    of the clinical study, dosing procedures, subject selection and
    exclusion criteria, and the parameters to be used to monitor
    subject safety.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Human clinical studies are typically conducted in three
    sequential phases that may overlap or be combined:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>Phase 1.</I>&#160;&#160;The product is initially introduced
    into healthy human subjects and tested for safety, dosage
    tolerance, absorption, metabolism, distribution and excretion.
    In the case of some products for severe or life-threatening
    diseases, especially when the product may be too inherently
    toxic to ethically administer to healthy volunteers, the initial
    human testing is often conducted in patients.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>Phase 2.</I>&#160;&#160;Involves studies in a limited patient
    population to identify possible adverse effects and safety
    risks, to preliminarily evaluate the efficacy of the product for
    specific targeted diseases and to determine dosage tolerance and
    optimal dosage and schedule.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


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    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>Phase 3.</I>&#160;&#160;Clinical studies are undertaken to
    further evaluate dosage, clinical efficacy and safety in an
    expanded patient population at geographically dispersed clinical
    study sites. These studies are intended to establish the overall
    risk/benefit ratio of the product and provide an adequate basis
    for product labeling.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Progress reports detailing the results of the clinical studies
    must be submitted at least annually to the FDA and safety
    reports must be submitted to the FDA and the investigators for
    serious and unexpected adverse events. Phase 1, Phase 2 and
    Phase 3 testing may not be completed successfully within any
    specified period, if at all. The FDA or the sponsor may suspend
    or terminate a clinical study at any time on various grounds,
    including a finding that the research subjects or patients are
    being exposed to an unacceptable health risk. Similarly, an IRB
    can suspend or terminate approval of a clinical study at its
    institution if the clinical study is not being conducted in
    accordance with the IRB&#146;s requirements or if the drug or
    biological product has been associated with unexpected serious
    harm to patients.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Concurrent with clinical studies, companies usually complete
    additional animal studies and must also develop additional
    information about the chemistry and physical characteristics of
    the product and finalize a process for manufacturing the product
    in commercial quantities in
</DIV>

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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    accordance with cGMP requirements. The manufacturing process
    must be capable of consistently producing quality batches of the
    product candidate and, among other things, the manufacturer must
    develop methods for testing the identity, strength, quality and
    purity of the final product. Additionally, appropriate packaging
    must be selected and tested and stability studies must be
    conducted to demonstrate that the product candidate does not
    undergo unacceptable deterioration over its shelf life.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">U.S. Review and
    Approval Processes</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The results of product development, preclinical studies and
    clinical studies, along with descriptions of the manufacturing
    process, analytical tests conducted on the drug or biological
    product, proposed labeling and other relevant information, are
    submitted to the FDA as part of an NDA for a new drug or BLA for
    a biological product, requesting approval to market the product.
    The submission of an NDA or BLA is subject to the payment of a
    substantial user fee; a waiver of such fee may be obtained under
    certain limited circumstances.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    In addition, under the Pediatric Research Equity Act of 2003, or
    PREA, which was reauthorized under the Food and Drug
    Administration Amendments Act of 2007, an NDA or BLA or
    supplement to an NDA or BLA must contain data to assess the
    safety and effectiveness of the drug or biological product for
    the claimed indications in all relevant pediatric subpopulations
    and to support dosing and administration for each pediatric
    subpopulation for which the product is safe and effective. The
    FDA may grant deferrals for submission of data or full or
    partial waivers. Unless otherwise required by regulation, PREA
    does not apply to any drug or biological product for an
    indication for which orphan designation has been granted.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The FDA reviews all NDAs and BLAs submitted to ensure that they
    are sufficiently complete for substantive review before it
    accepts them for filing. The FDA may request additional
    information rather than accept a NDA or BLA for filing. In this
    event, the NDA or BLA must be re-submitted with the additional
    information. The re-submitted application also is subject to
    review before the FDA accepts it for filing. Once the submission
    is accepted for filing, the FDA begins an in-depth substantive
    review. The FDA reviews an NDA to determine, among other things,
    whether a product is safe and effective for its intended use and
    whether its manufacturing is cGMP-compliant to assure and
    preserve the product&#146;s identity, strength, quality and
    purity. The FDA reviews a BLA to determine, among other things,
    whether the product is safe, has an acceptable purity profile
    and is adequately potent, and whether its manufacturing meets
    standards designed to assure the product&#146;s continued
    identity, sterility, safety, purity and potency. Before
    approving an NDA or BLA, the FDA will inspect the facility or
    facilities where the product is manufactured. The FDA will not
    approve an application unless it determines that the
    manufacturing processes and facilities are in compliance with
    cGMP requirements and adequate to assure consistent production
    of the product within required specifications. The FDA may refer
    the NDA or BLA to an advisory committee for review, evaluation
    and recommendation as to whether the application should be
    approved and under what conditions. An advisory committee is a
    panel of experts who provide advice and recommendations when
    requested by the FDA on matters of importance that come before
    the agency. The FDA is not bound by the recommendation of an
    advisory committee but it generally follows such recommendations.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The approval process is lengthy and difficult and the FDA may
    refuse to approve an NDA or BLA if the applicable regulatory
    criteria are not satisfied or may require additional clinical
    data or other data and information. Even if such data and
    information is submitted, the FDA may ultimately decide that the
    NDA or BLA does not satisfy the criteria for approval. Data
    obtained from clinical studies are not always conclusive and the
    FDA may interpret data differently than we interpret the same
    data. The FDA will issue a complete response letter if the
    agency decides not to approve the NDA or BLA in its present
    form. The complete response letter usually describes all of the
    specific deficiencies in the NDA or BLA identified by the FDA.
</DIV>

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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The deficiencies identified may be minor, for example, requiring
    labeling changes, or major, for example, requiring additional
    clinical studies. Additionally, the complete response letter may
    include recommended actions that the applicant might take to
    place the application in a condition for approval. If a complete
    response letter is issued, the applicant may either resubmit the
    NDA or BLA, addressing all of the deficiencies identified in the
    letter, or withdraw the application
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    If a product receives regulatory approval, the approval may be
    significantly limited to specific diseases and dosages or the
    indications for use may otherwise be limited, which could
    restrict the commercial value of the product. Further, the FDA
    may require that certain contraindications, warnings or
    precautions be included in the product labeling. In addition,
    the FDA may require Phase 4 testing which involves clinical
    studies designed to further assess a drug or biological
    product&#146;s safety and effectiveness after NDA or BLA
    approval and may require testing and surveillance programs to
    monitor the safety of approved products that have been
    commercialized.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Patent Term
    Restoration and Marketing Exclusivity</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Depending upon the timing, duration, and specifics of FDA
    approval of the use of our product candidates, some of our
    U.S.&#160;patents may be eligible for limited patent term
    extension under the Drug Price Competition and Patent Term
    Restoration Act of 1984, commonly referred to as the
    Hatch-Waxman Amendments. The Hatch-Waxman Amendments permit a
    patent restoration term of up to five years as compensation for
    patent term lost during product development and the FDA
    regulatory review process. However, patent term restoration
    cannot extend the remaining term of a patent beyond a total of
    14&#160;years from the product&#146;s approval date. The patent
    term restoration period is generally one-half the time between
    the effective date of an IND and the submission date of an NDA
    plus the time between the submission date of an NDA and the
    approval of that application. Only one patent applicable to an
    approved drug is eligible for the extension and the application
    for the extension must be submitted prior to the expiration of
    the patent. The USPTO, in consultation with the FDA, reviews and
    approves the application for any patent term extension or
    restoration. In the future, we intend to apply for restorations
    of patent term for some of our currently owned or licensed
    patents to add patent life beyond their current expiration
    dates, depending on the expected length of the clinical studies
    and other factors involved in the filing of the relevant NDA.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Market exclusivity provisions under the FDCA can also delay the
    submission or the approval of certain applications. The FDCA
    provides a five-year period of non-patent marketing exclusivity
    within the United States to the first applicant to gain approval
    of an NDA for a new chemical entity. A drug is a new chemical
    entity if the FDA has not previously approved any other new drug
    containing the same active moiety, which is the molecule or ion
    responsible for the action of the drug substance. During the
    exclusivity period, the FDA may not accept for review an
    abbreviated new drug application, or ANDA, or a 505(b)(2) NDA
    submitted by another company for another version of such drug
    where the applicant does not own or have a legal right of
    reference to all the data required for approval. However, an
    application may be submitted after four years if it contains a
    certification of patent invalidity or non-infringement. The FDCA
    also provides three years of marketing exclusivity for an NDA,
    505(b)(2) NDA or supplement to an existing NDA if new clinical
    investigations, other than bioavailability studies, that were
    conducted or sponsored by the applicant are deemed by the FDA to
    be essential to the approval of the application, for example new
    indications, dosages or strengths of an existing drug. This
    <FONT style="white-space: nowrap">three-year</FONT>
    exclusivity covers only the conditions associated with the new
    clinical investigations and does not prohibit the FDA from
    approving ANDAs for drugs containing the original active agent.
    Five-year and three-year exclusivity will not delay the
    submission or approval of a full NDA. However, an applicant
    submitting a full NDA would be
</DIV>

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    required to conduct or obtain a right of reference to all of the
    preclinical studies and adequate and well-controlled clinical
    studies necessary to demonstrate safety and effectiveness.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Pediatric exclusivity is another type of exclusivity in the
    United States. Pediatric exclusivity, if granted, provides an
    additional six months to an existing exclusivity or statutory
    delay in approval resulting from a patent certification. This
    six-month exclusivity, which runs from the end of other
    exclusivity protection or patent delay, may be granted based on
    the voluntary completion of a pediatric study in accordance with
    an FDA-issued &#147;Written Request&#148; for such a study. The
    current pediatric exclusivity provision was reauthorized in
    September 2007.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Orphan Drug
    Designation</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Under the Orphan Drug Act, the FDA may grant orphan designation
    to a drug or biological product intended to treat a rare disease
    or condition, which is generally a disease or condition that
    affects fewer than 200,000 individuals in the United States, or
    more than 200,000 individuals in the United States and for which
    there is no reasonable expectation that the cost of developing
    and making a drug or biological product available in the United
    States for this type of disease or condition will be recovered
    from sales of the product. Orphan product designation must be
    requested before submitting an NDA or BLA. After the FDA grants
    orphan product designation, the identity of the therapeutic
    agent and its potential orphan use are disclosed publicly by the
    FDA. Orphan product designation does not convey any advantage in
    or shorten the duration of the regulatory review and approval
    process.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    If a product that has orphan designation subsequently receives
    the first FDA approval for the disease or condition for which it
    has such designation, the product is entitled to orphan product
    exclusivity, which means that the FDA may not approve any other
    applications to market the same drug or biological product for
    the same indication, except in very limited circumstances, for
    seven years. Competitors, however, may receive approval of
    different products for the indication for which the orphan
    product has exclusivity or obtain approval for the same product
    but for a different indication for which the orphan product has
    exclusivity. Orphan product exclusivity also could block the
    approval of one of our products for seven years if a competitor
    obtains approval of the same drug or biological product as
    defined by the FDA or if our product candidate is determined to
    be contained within the competitor&#146;s product for the same
    indication or disease. If a drug or biological product
    designated as an orphan product receives marketing approval for
    an indication broader than what is designated, it may not be
    entitled to orphan product exclusivity.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The FDA also administers a clinical research grants program,
    whereby researchers may compete for funding to conduct clinical
    studies to support the approval of drugs, biologics, medical
    devices and medical foods for rare diseases and conditions. A
    product does not have to be designated as an orphan product to
    be eligible for the grant program. An application for an orphan
    grant should propose one discrete clinical study to facilitate
    FDA approval of the product for a rare disease or condition. The
    clinical study may address an unapproved new product or an
    unapproved new use for a product already on the market.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Expedited
    Development and Review Programs</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The FDA has a fast track program that is intended to expedite or
    facilitate the process for reviewing new drugs and biological
    products that meet certain criteria. Specifically, new drugs and
    biological products are eligible for fast track designation if
    they are intended to treat a serious or life-threatening
    condition and demonstrate the potential to address unmet medical
    needs for the condition. Fast track designation applies to the
    combination of the product and the specific indication for which
    it is being studied. For a fast track product, the FDA may
    consider for review on a rolling basis sections of the NDA or
    BLA before the complete application is submitted, if the sponsor
    provides a schedule for the submission of the sections
</DIV>

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    <BR>
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    of the NDA or BLA, the FDA agrees to accept sections of the NDA
    or BLA and determines that the schedule is acceptable, and the
    sponsor pays any required user fees upon submission of the first
    section of the NDA or BLA.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    A fast track product may also be eligible for other types of FDA
    programs intended to expedite development and review, such as
    priority review and accelerated approval. A fast track product
    is eligible for priority review if it has the potential to
    provide safe and effective therapy where no satisfactory
    alternative therapy exists or a significant improvement in the
    treatment, diagnosis or prevention of a disease compared to
    marketed products. The FDA will attempt to direct additional
    resources to the evaluation of an application for a new drug or
    biological product designated for priority review in an effort
    to facilitate the review. Additionally, a fast track product may
    be eligible for accelerated approval. Drug or biological
    products studied for their safety and effectiveness in treating
    serious or life-threatening illnesses and that provide
    meaningful therapeutic benefit over existing treatments may
    receive accelerated approval, which means that they may be
    approved on the basis of adequate and well-controlled clinical
    studies establishing that the product has an effect on a
    surrogate endpoint that is reasonably likely to predict a
    clinical benefit, or on the basis of an effect on a clinical
    endpoint other than survival or irreversible morbidity. As a
    condition of approval, the FDA may require that a sponsor of a
    drug or biological product receiving accelerated approval
    perform adequate and well-controlled post-marketing clinical
    studies. Fast track designation, priority review and accelerated
    approval do not change the standards for approval but may
    expedite the development or approval process.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We have been granted fast track designation for our product
    candidate,
    <FONT style="white-space: nowrap">A-001,</FONT> for
    the prevention of acute chest syndrome associated with sickle
    cell disease in at-risk patients. Even though we have received
    fast track designation for
    <FONT style="white-space: nowrap">A-001,</FONT> the
    FDA may later decide that
    <FONT style="white-space: nowrap">A-001</FONT> no
    longer meets the conditions for qualification. In addition,
    obtaining fast track designation may not provide us with a
    material commercial advantage.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Post-Approval
    Requirements</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Any drug or biological products for which we receive FDA
    approvals are subject to continuing regulation by the FDA,
    including, among other things, record-keeping requirements,
    reporting of adverse experiences with the product, providing the
    FDA with updated safety and efficacy information, product
    sampling and distribution requirements, complying with certain
    electronic records and signature requirements and complying with
    FDA promotion and advertising requirements. The FDA strictly
    regulates labeling, advertising, promotion and other types of
    information on products that are placed on the market. Drugs and
    biological products may be promoted only for the approved
    indications and in accordance with the provisions of the
    approved label. Further, manufacturers of drugs and biological
    products must continue to comply with cGMP requirements, which
    are extensive and require considerable time, resources and
    ongoing investment to ensure compliance. In addition, changes to
    the manufacturing process generally require prior FDA approval
    before being implemented and other types of changes to the
    approved product, such as adding new indications and additional
    labeling claims, are also subject to further FDA review and
    approval.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Drug and biological product manufacturers and other entities
    involved in the manufacturing and distribution of approved drugs
    or biological products are required to register their
    establishments with the FDA and certain state agencies, and are
    subject to periodic unannounced inspections by the FDA and
    certain state agencies for compliance with cGMP and other laws.
    The cGMP requirements apply to all stages of the manufacturing
    process, including the production, processing, sterilization,
    packaging, labeling, storage and shipment of the drug or
    biological product. Manufacturers must establish validated
    systems to ensure that products meet specifications and
    regulatory standards, and test each product batch or lot prior
    to its release.
</DIV>

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    <BR>
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Manufacturers of biological products must also report to the FDA
    any deviations from cGMP that may affect the safety, purity or
    potency of a distributed product; or any unexpected or
    unforeseeable event that may affect the safety, purity or
    potency of a distributed product. The regulations also require
    investigation and correction of any deviations from cGMP and
    impose documentation requirements.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We rely, and expect to continue to rely, on third parties for
    the production of clinical and commercial quantities of our
    products. Future FDA and state inspections may identify
    compliance issues at the facilities of our contract
    manufacturers that may disrupt production or distribution or may
    require substantial resources to correct.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The FDA may withdraw a product approval if compliance with
    regulatory standards is not maintained or if problems occur
    after the product reaches the market. Later discovery of
    previously unknown problems with a product may result in
    restrictions on the product or even complete withdrawal of the
    product from the market. Further, the failure to maintain
    compliance with regulatory requirements may result in
    administrative or judicial actions, such as fines, warning
    letters, holds on clinical studies, product recalls or seizures,
    product detention or refusal to permit the import or export of
    products, refusal to approve pending applications or
    supplements, restrictions on marketing or manufacturing,
    injunctions or civil or criminal penalties.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    In addition, from time to time, legislation is drafted,
    introduced, and passed in Congress that could significantly
    change the statutory provisions governing the approval,
    manufacturing, and marketing of products regulated by the FDA.
    For example, in September 2007, the Food and Drug Administration
    Amendments Act of 2007 was enacted, giving the FDA enhanced
    post-market authority, including the authority to require
    post-market studies and clinical studies, labeling changes based
    on new safety information and compliance with a risk evaluation
    and mitigation strategy, or REMS, approved by the FDA. In
    determining whether a REMS is necessary, the FDA must consider
    the size of the population likely to use the drug or biological
    product, the seriousness of the disease or condition to be
    treated, the expected benefit of the product, the duration of
    treatment, the seriousness of known or potential adverse events
    for <FONT style="white-space: nowrap">A-002</FONT>
    and whether the product is a new molecular entity. We have
    submitted a REMS as an appendix to the SPA. If the FDA
    determines our REMS is necessary, we must submit a REMS plan as
    part of an NDA or BLA. The FDA may require that a REMS include
    various elements, such as a medication guide, patient package
    insert, a communication plan to educate health care providers,
    limitations on who may prescribe or dispense the product, or
    other measures. Failure to comply with any requirements under
    the new law may result in significant penalties. The new law
    also authorizes significant civil money penalties for the
    dissemination of false or misleading
    <FONT style="white-space: nowrap">direct-to-consumer</FONT>
    advertisements and allows the FDA to require companies to submit
    <FONT style="white-space: nowrap">direct-to-consumer</FONT>
    television drug advertisements for FDA review prior to public
    dissemination. Additionally, the new law expands the clinical
    study registry so that sponsors of all clinical studies, except
    for Phase 1 clinical studies, are required to submit certain
    clinical study information for inclusion in the clinical study
    registry data bank. In addition to new legislation, the FDA
    regulations and policies are often revised or reinterpreted by
    the agency in ways that may significantly affect our business
    and our products. It is impossible to predict whether further
    legislative or FDA regulation or policy changes will be enacted
    or implemented and what the impact of such changes, if any, may
    be.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Foreign
    Regulation</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    In addition to regulations in the United States, we will be
    subject to a variety of foreign regulations governing clinical
    studies and commercial sales and distribution of our products to
    the extent we choose to sell any products outside of the United
    States. Whether or not we obtain FDA approval for a product, we
    must obtain approval of a product by the comparable regulatory
    authorities of foreign countries before we can commence clinical
    studies or marketing of the product in those countries. The
    approval process varies from country to
</DIV>

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    <BR>
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    country and the time may be longer or shorter than that required
    for FDA approval. The requirements governing the conduct of
    clinical studies, product licensing, pricing and reimbursement
    vary greatly from country to country.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    In the European Union, our products are subject to extensive
    regulatory requirements, which provide, among other things, that
    no medicinal product may be placed on the market of a European
    Union member state unless a marketing authorization has been
    issued by the European Medicines Agency or a national competent
    authority. European Union member states require both regulatory
    clearance by the national competent authority and a favorable
    ethics committee opinion prior to the commencement of a clinical
    study.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Under the European Union regulatory systems, we may submit
    marketing authorization applications either under a centralized
    or decentralized procedure. The centralized procedure provides
    for the grant of a single marketing authorization that is valid
    for all European Union member states. The centralized procedure
    is compulsory for medicines produced by certain biotechnological
    processes, products with a new active substance indicated for
    the treatment of certain diseases such as neurodegenerative
    disorder or diabetes and products designated as orphan medicinal
    products, and optional for those products which are highly
    innovative or for which a centralized process is in the interest
    of patients. The decentralized procedure of approval provides
    for approval by one or more other, or concerned, member states
    of an assessment of an application performed by one member
    state, known as the reference member state. Under the
    decentralized approval procedure, an applicant submits an
    application, or dossier, and related materials (draft summary of
    product characteristics, draft labeling and package leaflet) to
    the reference member state and concerned member states. The
    reference member state prepares a draft assessment and drafts of
    the related materials within 120&#160;days after receipt of a
    valid application. Within 90&#160;days of receiving the
    reference member state&#146;s assessment report, each concerned
    member state must decide whether to approve the assessment
    report and related materials. If a member state cannot approve
    the assessment report and related materials on the grounds of
    potential serious risk to public health, the disputed points may
    eventually be referred to the European Commission, whose
    decision is binding on all member states.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Reimbursement</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Sales of pharmaceutical products depend significantly on the
    availability of third-party reimbursement. Third-party payors
    include government health administrative authorities, managed
    care providers, private health insurers and other organizations.
    We anticipate third-party payors will provide reimbursement for
    our products. However, these third-party payors are increasingly
    challenging the price and examining the cost-effectiveness of
    medical products and services. In addition, significant
    uncertainty exists as to the reimbursement status of newly
    approved health care products. We may need to conduct expensive
    pharmacoeconomic studies in order to demonstrate the
    cost-effectiveness of our products. Our product candidates may
    not be considered cost-effective. It is time consuming and
    expensive for us to seek reimbursement from third-party payors.
    Reimbursement may not be available or sufficient to allow us to
    sell our products on a competitive and profitable basis.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The passage of the Medicare Prescription Drug, Improvement, and
    Modernization Act of 2003, or the MMA, imposes new requirements
    for the distribution and pricing of prescription drugs for
    Medicare beneficiaries, and includes a major expansion of the
    prescription drug benefit under a new Medicare Part&#160;D.
    Medicare Part&#160;D went into effect on January&#160;1, 2006.
    Under Part&#160;D, Medicare beneficiaries may enroll in
    prescription drug plans offered by private entities which will
    provide coverage of outpatient prescription drugs. Part&#160;D
    plans include both stand-alone prescription drug benefit plans
    and prescription drug coverage as a supplement to Medicare
    Advantage plans. Unlike Medicare Part&#160;A and B, Part&#160;D
    coverage is not standardized. Part&#160;D prescription drug plan
    sponsors are not required to pay for all covered Part&#160;D
    drugs, and each drug plan can develop its own drug formulary
    that identifies which drugs it will cover
</DIV>

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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    and at what tier or level. However, Part&#160;D prescription
    drug formularies must include drugs within each therapeutic
    category and class of covered Part&#160;D drugs, though not
    necessarily all the drugs in each category or class. Any
    formulary used by a Part&#160;D prescription drug plan must be
    developed and reviewed by a pharmacy and therapeutic committee.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    It is not clear what effect the MMA will have on the prices paid
    for currently approved drugs and the pricing options for new
    drugs approved after January&#160;1, 2006. Government payment
    for some of the costs of prescription drugs may increase demand
    for products for which we receive marketing approval. However,
    any negotiated prices for our products covered by a Part&#160;D
    prescription drug plan will likely be lower than the prices we
    might otherwise obtain. Moreover, while the MMA applies only to
    drug benefits for Medicare beneficiaries, private payors often
    follow Medicare coverage policy and payment limitations in
    setting their own payment rates. Any reduction in payment that
    results from the MMA may result in a similar reduction in
    payments from non-governmental payors.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    There are also laws that govern a company&#146;s eligibility to
    participate in Medicare and Medicaid reimbursements. For
    example, a company may be debarred from participation if it is
    found to have violated federal anti-kickback laws, which could
    have a significant effect on a company&#146;s ability to operate
    its business.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    In addition, Congress is considering a number of legislative and
    regulatory proposals which are intended to reduce or limit the
    growth of health care costs and which could significantly
    transform the market for pharmaceuticals and biological
    products. Legislative and regulatory proposals under
    consideration include health care reform initiatives, such as
    private health insurance expansion or the creation of competing
    public health insurance plans. Further, Congress is considering
    passing legislation that would allow Medicare to negotiate
    directly with pharmaceutical companies. While we cannot predict
    whether such legislative or regulatory proposals will be
    adopted, the adoption of such proposals could harm our business,
    financial condition and results of operations. In addition, in
    some foreign countries, the proposed pricing for a drug must be
    approved before it may be lawfully marketed. The requirements
    governing drug pricing vary widely from country to country. For
    example, the European Union provides options for its member
    states to restrict the range of medicinal products for which
    their national health insurance systems provide reimbursement
    and to control the prices of medicinal products for human use. A
    member state may approve a specific price for the medicinal
    product or it may instead adopt a system of direct or indirect
    controls on the profitability of the company placing the
    medicinal product on the market. There can be no assurance that
    any country that has price controls or reimbursement limitations
    for pharmaceutical products will allow favorable reimbursement
    and pricing arrangements for any of our products.
</DIV>

<DIV style="margin-top: 9pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Employees</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    As of September&#160;1, 2009, we had 16&#160;employees, seven of
    which hold an M.D.,&#160;Ph.D. or Pharm. D. All of our employees
    are engaged in administration, finance, clinical, regulatory and
    business development functions. None of our employees are
    represented by a labor union, and we believe that our relations
    with our employees are good.
</DIV>

<DIV style="margin-top: 9pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Property and
    Facilities</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We are currently subleasing approximately 7,800&#160;square feet
    of office space in Hayward, California, which we occupy under a
    sublease that commenced on October&#160;1, 2008 and will expire
    on September&#160;30, 2010. We believe our existing facilities
    are adequate for our current needs and that any additional space
    we need will be available in the future on commercially
    reasonable terms.
</DIV>

<DIV style="margin-top: 9pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Legal
    Proceedings</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We are not currently subject to any material legal proceedings.
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    92
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<A name='111'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">MANAGEMENT</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Executive
    Officers and Directors</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The following table sets forth information regarding our
    executive officers and directors, including their ages as of
    September&#160;4, 2009.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="47%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="45%">&nbsp;</TD>	<!-- colindex=03 type=maindata -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Name</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Age</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Position</B>
</DIV>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Paul F. Truex
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    40
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    President, Chief Executive Officer and Director
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Christopher P. Lowe
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    41
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Chief Financial Officer and Vice President of Administration
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    James E. Pennington,&#160;M.D.&#160;
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    66
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Executive Vice President and Chief Medical Officer
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Colin Hislop,&#160;M.D.&#160;
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    52
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Senior Vice President, Cardiovascular Products
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Debra Odink,&#160;Ph.D.&#160;
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    45
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Vice President, Pharmaceutical Research and Development
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Joaquim Trias,&#160;Ph.D.&#160;
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    49
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Senior Vice President, Preclinical Development
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Stephen Lau
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    37
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Vice President, Corporate and Business Development
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Ursula Fritsch, Pharm. D
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    49
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Vice President, Global Regulatory and Compliance
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Christopher S. Henney,&#160;Ph.D.&#160;(1) (2)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    68
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Director and Chairman of the Board of Directors
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Annette Bianchi&#160;(1) (3)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    50
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Director
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    James I. Healy,&#160;M.D.,&#160;Ph.D. (1)&#160;(2) (3)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    44
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Director
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    A. Rachel Leheny,&#160;Ph.D.&#160;
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    46
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Director
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Donald J. Santel&#160;(2) (3)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    49
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Director
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    David E. Thompson
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    62
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Director
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 1pt; margin-left: 0%; width: 10%;  align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=999 iwidth=456 length=48 -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="98%"></TD>
</TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(1)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Member of nominating and corporate
    governance committee.
    </FONT></TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(2)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Member of audit committee.
    </FONT></TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(3)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Member of compensation committee.
    </FONT></TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <I>Paul F. Truex.</I> Mr.&#160;Truex has served as our President
    and Chief Executive Officer since our inception in September
    2004 and as a member of our board of directors since November
    2004. Prior to founding Anthera, Mr.&#160;Truex served as a
    Director, President and Chief Executive Officer of Peninsula
    Pharmaceuticals, Inc., a biopharmaceutical company, from the
    commencement of its operations in October 2001. Prior to
    Peninsula, Mr.&#160;Truex was Vice President of Commercial
    Development for Vicuron, Inc. from April 2000 to September 2001.
    From July 1997 to April 2000, Mr.&#160;Truex held various
    positions at Eli Lilly and Company. Mr.&#160;Truex holds an
    M.B.A. in marketing and finance from Indiana University and a
    B.A. in economics from the University of Waterloo.
    Mr.&#160;Truex is a director of Trius Therapeutics, Inc. and
    Eiger Biopharmaceuticals, Inc.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <I>Christopher P. Lowe.</I>&#160;&#160;Mr.&#160;Lowe has served
    as our Chief Financial Officer and Vice President of
    Administration since November 2007. Beginning in September 2005
    and up until he joined the Company, Mr.&#160;Lowe served as
    Vice-President of Finance&#160;&#038; Administration and,
    beginning in January 2006, as Chief Financial Officer of
    Asthmatx, Inc., a medical technology company. Previously,
    Mr.&#160;Lowe was with Peninsula Pharmaceuticals, Inc., as
    Corporate Controller from June 2004 to October 2004 and Chief
    Accounting Officer from October 2004 until June&#160;2005.
    Mr.&#160;Lowe holds a B.S. in business administration from
    California Polytechnic
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    93
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    State University, San&#160;Luis Obispo and an M.B.A. from Saint
    Mary&#146;s University, Texas. Mr.&#160;Lowe is a director of
    Hansen Medical Corporation, a medical device company.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <I>James E. Pennington,&#160;M.D.</I> Dr.&#160;Pennington has
    served as our Executive Vice President and Chief Medical Officer
    since March 2007. Dr.&#160;Pennington came to Anthera from
    CoTherix, Inc. where, since February 2004, he served as
    Executive Vice President and Chief Medical Officer, focusing on
    licensing and developing and commercializing therapeutic
    products for the treatment of cardiovascular diseases. He holds
    a B.A. in General Science from the University of Oregon and an
    M.D. from the University of Oregon School of Medicine and is
    board certified in internal medicine and infectious disease.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <I>Colin Hislop,&#160;M.D.</I> Dr.&#160;Hislop has served as our
    Senior Vice President of Cardiovascular Products since November
    2005 and also served as a consultant to the Company from July
    2005 through November 2005. From October 2004 until June 2005,
    Dr.&#160;Hislop was Vice President, Clinical Development for
    Peninsula Pharmaceuticals, Inc. where he oversaw three global
    development programs for Peninsula&#146;s anti-infective product
    portfolio. From September 2001 until September 2004,
    Dr.&#160;Hislop served as Vice President of Clinical Development
    at CV Therapeutics, Inc., a biopharmaceutical company.
    Dr.&#160;Hislop holds a B.Sc. in medical biochemistry from the
    University of Surrey, and a degree in medicine from the
    University of London.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <I>Debra Odink,&#160;Ph.D.</I> Dr.&#160;Odink has served as our
    Vice President of Pharmaceutical Research and Development since
    December 2005. From September 2002 until July 2005,
    Dr.&#160;Odink served as Vice President of Pharmaceutical
    Chemistry and Product Development at Peninsula Pharmaceuticals,
    Inc., a biopharmaceutical company, where she was responsible for
    manufacturing and product development strategies for assets
    licensed to Peninsula. Dr.&#160;Odink holds a B.S. in chemistry
    from California State University, Stanislaus and a Ph.D. in
    inorganic chemistry from the University of California at Davis.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <I>Joaquim Trias,&#160;Ph.D.</I> Dr.&#160;Trias has served as
    our Senior Vice President of Preclinical Development since
    December 2004. From July 1996 until July 2004, Dr.&#160;Trias
    was Vice President of Drug Discovery Research at Vicuron
    Pharmaceuticals Inc. where he directed internal discovery
    projects, from concept to clinical candidate, and participated
    in its clinical development programs. Dr.&#160;Trias holds a
    B.S. in Biology and a Ph.D. in microbiology from the University
    of Barcelona and completed his training at the University of
    California at Berkeley.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <I>Stephen Lau.</I> Mr.&#160;Lau has served as our Vice
    President of Corporate and Business Development since February
    2008. From October 2003 until February 2008, Mr.&#160;Lau
    managed and negotiated in- and out-licensing opportunities at
    Amgen Inc., a biopharmaceutical company. From March 2001 until
    September 2003, Mr.&#160;Lau was an investment banker at Adams,
    Harkness&#160;&#038; Hill. Prior to that, Mr.&#160;Lau was a
    management consultant at Strategic Decisions Group and Deloitte
    Consulting. Mr.&#160;Lau holds a B.A. in microbiology and an
    M.S. in immunology from the University of California at Davis,
    and a Master&#146;s degree in health care management from
    Harvard University.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <I>Ursula Fritsch, Pharm.D.</I> Dr.&#160;Fritsch has served as
    our Vice President, Global Regulatory and Compliance since April
    2005. Prior to joining the Company, from 2003 to 2005,
    Dr.&#160;Fritsch was Senior Director of Regulatory Affairs at
    Peninsula Pharmaceuticals, Inc., where she oversaw both early
    and late stage regulatory strategy and operations for their
    antibiotic portfolio. Prior to Peninsula, Dr.&#160;Fritsch held
    various management positions and oversaw several new drug
    application approvals at Genentech, Inc. and Oclassen
    Pharmaceuticals, Inc. and was head of regulatory at Onyx
    Pharmaceuticals, Inc. Dr.&#160;Fritsch holds a B.A. from the
    University of Nebraska and a Pharm. D. from Creighton University.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <I>Christopher S. Henney,&#160;Ph.D.</I> Dr.&#160;Henney has
    served as the Chairman of our board of directors since August
    2008 and has been a member of our board of directors since April
    2005.
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    94
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Dr.&#160;Henney served as Chairman and Chief Executive Officer
    of Dendreon Corporation, a biotechnology company he co-founded,
    from 1997 until his retirement in July 2004. Dr.&#160;Henney was
    previously a founder of Immunex Corp. and Icos Corp.
    Dr.&#160;Henney holds a B.Sc with honors in medical
    biochemistry, a Ph.D. in experimental pathology and a D.Sc. for
    contributions to the field of immunology, all from the
    University of Birmingham, England. Dr.&#160;Henney is currently
    the Chairman and a director of Oncothyreon, Inc., is
    vice-chairman and a director of Cyclacel Pharmaceuticals, Inc.,
    and is a director of AVI BioPharma Inc.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <I>Annette Bianchi.</I> Ms.&#160;Bianchi has served as a member
    of our board of directors since August 2006. Ms.&#160;Bianchi
    has served as a Managing Director at VantagePoint Venture
    Partners, a venture capital firm, since 2004. From 1999 to 2004,
    Ms.&#160;Bianchi served as a Managing Director at Pacific
    Venture Group, a dedicated health care fund. From 1992 to 1999,
    Ms.&#160;Bianchi served as a General Partner at Weiss,
    Peck&#160;&#038; Greer Venture Partners, a venture capital firm.
    From 1985 to 1999, Ms.&#160;Bianchi served as an associate and a
    General Partner of Burr, Egan, Deleage&#160;&#038; Co., a
    venture capital firm. Ms.&#160;Bianchi holds a B.S.E. and an
    M.S.E. in Biomedical Engineering from the University of
    Pennsylvania and an M.B.A. from The Wharton School of the
    University of Pennsylvania.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <I>James I. Healy,&#160;M.D.,&#160;Ph.D.</I> Dr.&#160;Healy has
    served as a member of our board of directors since August 2006.
    Dr.&#160;Healy is a Managing Partner of Sofinnova Management VI,
    LLC, the general partner of Sofinnova Venture Partners VI, L.P.,
    a venture capital firm, a position he has held since June 2000.
    Dr.&#160;Healy holds a B.A. in molecular biology and a B.A. in
    Scandinavian studies from the University of California at
    Berkeley, an M.D. from Stanford University School of Medicine
    and a Ph.D. in immunology from Stanford University.
    Dr.&#160;Healy is a director of InterMune, Inc. and Amarin
    Corporation plc, both biopharmaceutical companies.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <I>A. Rachel Leheny,&#160;Ph.D.</I> Dr.&#160;Leheny has served
    as a member of our board of directors since August 2008.
    Dr.&#160;Leheny is (i)&#160;a Managing Director of Caxton
    Advantage Venture Partners, L.P., which is the General Partner
    of Caxton Advantage Life Sciences Fund, L.P., a life-sciences
    venture capital fund that she co-founded in 2006 and (ii)&#160;a
    member of Advantage Life Sciences Partners LLC, the Managing
    General Partner of Caxton Advantage Venture Partners, L.P. Prior
    to that, from April 2000 to June 2002, she was head of the
    biotechnology research team at Lehman Brothers. Before Lehman,
    from April 1998 to April 2000, Dr.&#160;Leheny headed the
    biotechnology research team at UBS Warburg and before that, from
    April 1993 to April 1998, worked at Hambrecht&#160;&#038; Quist,
    most recently as Managing Director and Senior Analyst.
    Dr.&#160;Leheny holds an A.B. in chemistry from Harvard and a
    Ph.D. from Columbia University. She did post-doctoral work at
    the University of California at Berkeley, where she was a
    National Institutes of Health fellow and lecturer.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <I>Donald J. Santel.</I> Mr.&#160;Santel has served as a member
    of our board of directors since October 2007. From February 2000
    until January 2007, Mr.&#160;Santel held various positions in
    and was a member of the board of directors of CoTherix, Inc., a
    pharmaceutical company he
    <FONT style="white-space: nowrap">co-founded.</FONT>
    From October 2003 to August 2004, Mr.&#160;Santel served as
    President and Chief Operating Officer of CoTherix and from
    August 2004 until January 2007, Mr.&#160;Santel served as Chief
    Executive Officer. From November 2006 until the present,
    Mr.&#160;Santel has served as the Chief Executive Officer of
    Hyperion Therapeutics, Inc., a pharmaceutical company.
    Mr.&#160;Santel holds a B.S.E. in biomedical engineering from
    Purdue University and an M.S. in electrical engineering from the
    University of Minnesota.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <I>David E. Thompson.</I> Mr.&#160;Thompson has served as a
    member of our board of directors since November 2005.
    Mr.&#160;Thompson served as Vice President of Corporate Strategy
    Business Development for Eli Lilly and Company from January 2001
    until his retirement in July 2005. Thereafter, he was a partner
    at VantagePoint Venture Partners from 2006 through 2008.
    Mr.&#160;Thompson holds a B.S. and an M.B.A. from Michigan State
    University.
</DIV>

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    <BR>
    95
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Board
    Composition</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Upon completion of this offering, our board of directors will
    consist of seven&#160;directors, six of whom will qualify as
    &#147;independent&#148; directors according to the rules and
    regulations of The NASDAQ Global Market. Our amended and
    restated certificate of incorporation, which will be effective
    upon the completion of this offering, will provide for a
    classified board of directors divided into three classes with
    members of each class of directors serving staggered three-year
    terms. As a result, a portion of our board of directors will be
    elected each
    year.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
    and&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
    have been designated Class&#160;I directors whose terms will
    expire at the 2010 annual meeting of
    stockholders.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
    and&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
    have been designated Class&#160;II directors whose terms will
    expire at the 2011 annual meeting of
    stockholders.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;,&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
    and&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
    have been designated Class&#160;III directors whose terms will
    expire at the 2012 annual meeting of stockholders.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Our amended and restated certificate of incorporation will also
    provide that the number of authorized directors will be
    determined from time to time by resolution of the board of
    directors and any vacancies in our board and newly created
    directorships may be filled only by our board of directors. Any
    additional directorships resulting from an increase in the
    number of directors will be distributed among the three classes,
    so that, as nearly as possible, each class will consist of
    one-third of the total number of directors. Our amended and
    restated certificate of incorporation will further provide for
    the removal of a director only for cause or by the affirmative
    vote of the holders of 75% or more of the shares then entitled
    to vote at an election of our directors. These provisions and
    the classification of our board of directors may have the effect
    of delaying or preventing changes in the control or management
    of the Company.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    There are no family relationships among any of our directors or
    executive officers.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Our board of directors has considered the relationships of all
    directors and, where applicable, the transactions involving them
    described below under &#147;Certain Relationships and Related
    Person Transactions,&#148; and determined that each of them does
    not have any relationship which would interfere with the
    exercise of independent judgment in carrying out his or her
    responsibility as a director and that each non-employee director
    qualifies as an independent director under the applicable rules
    of The NASDAQ Global Market.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Committees of the
    Board of Directors</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Our board of directors has established an audit committee, a
    compensation committee and a nominating and corporate governance
    committee, each of which operates pursuant to a separate charter
    adopted by our board of directors. The composition and
    responsibilities of each committee are described below. Members
    serve on these committees until their resignation or until
    otherwise determined by our board of directors.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The composition and function of our board of directors and all
    of our committees will comply with all applicable requirements
    of the Sarbanes-Oxley Act of 2002, The NASDAQ Global Market and
    SEC rules and regulations.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Audit
    Committee</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Mr.&#160;Santel, Dr.&#160;Healy and Dr.&#160;Henney currently
    serve on our audit committee. Mr.&#160;Santel chairs the audit
    committee. All members of our audit committee meet the
    requirements for financial literacy under the applicable rules
    and regulations of the SEC and The NASDAQ Global Market. Our
    board has determined that Mr.&#160;Santel is an &#147;audit
    committee financial expert&#148; as defined under the applicable
    rules of the SEC and has the requisite financial sophistication
    as defined under the applicable rules and regulations of The
    NASDAQ Global Market. Mr.&#160;Santel, Dr.&#160;Healy and
    Dr.&#160;Henney are independent directors as defined under the
</DIV>

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    <BR>
    96
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    applicable rules and regulations of the SEC and The NASDAQ
    Global Market. The audit committee will operate under a written
    charter that will satisfy the applicable standards of the SEC
    and The NASDAQ Global Market.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The audit committee&#146;s responsibilities include:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    appointing, approving the compensation of, and assessing the
    independence of our independent registered public accounting
    firm;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    pre-approving auditing and permissible non-audit services, and
    the terms of such services, to be provided by our independent
    registered public accounting firm;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    reviewing and discussing with management and the independent
    registered public accounting firm our annual and quarterly
    financial statements and related disclosures;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    coordinating the oversight and reviewing the adequacy of our
    internal controls over financial reporting;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    establishing policies and procedures for the receipt and
    retention of accounting-related complaints and concerns;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    preparing the audit committee report required by SEC rules to be
    included in our annual proxy statement.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Compensation
    Committee</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Ms.&#160;Bianchi, Dr.&#160;Healy and Mr.&#160;Santel currently
    serve on our compensation committee. Mr.&#160;Santel chairs the
    compensation committee. All of the members of our compensation
    committee are independent under the applicable rules and
    regulations of the SEC, The NASDAQ Global Market and the
    Internal Revenue Code.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The compensation committee&#146;s responsibilities include:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    annually reviewing and approving corporate goals and objectives
    relevant to compensation of our chief executive officer;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    evaluating the performance of our chief executive officer in
    light of such corporate goals and objectives and determining the
    compensation of our chief executive officer;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    reviewing and approving the compensation of all our other
    officers;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    overseeing and administering our incentive-based compensation
    and equity plans;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    reviewing and making recommendations to the board with respect
    to director compensation.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Nominating and
    Corporate Governance Committee</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Dr.&#160;Henney, Dr.&#160;Healy and Ms.&#160;Bianchi currently
    serve on our nominating and corporate governance committee.
    Dr.&#160;Henney chairs the nominating and corporate governance
    committee. All of the members of our nominating and corporate
    governance committee are independent under the applicable rules
    and regulations of the SEC and The NASDAQ Global Market.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The nominating and corporate governance committee&#146;s
    responsibilities include:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    developing and recommending to the board criteria for selecting
    board and committee membership;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    establishing procedures for identifying and evaluating director
    candidates, including nominees recommended by stockholders;
</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    97
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    identifying individuals qualified to become board members;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    recommending to the board the persons to be nominated for
    election as directors and each of the board&#146;s committees;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    developing and recommending to the board a set of corporate
    governance guidelines;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    overseeing the evaluation of the board, its committees and
    management.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Compensation
    Committee Interlocks and Insider Participation</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    None of the members of the compensation committee is or has at
    any time during the past fiscal year been an officer or employee
    of the Company. None of the members of the compensation
    committee has formerly been an officer of the Company. None of
    our executive officers serve or in the past fiscal year has
    served as a member of the board of directors or compensation
    committee of any other entity that has one or more executive
    officers serving as a member of our board of directors or
    compensation committee.
</DIV>

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    <BR>
    98
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<A name='112'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">COMPENSATION</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Compensation
    Discussion and Analysis</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    This section discusses our executive compensation policies and
    arrangements as they relate to our named executive officers who
    are listed in the compensation tables set forth below. The
    following discussion should be read together with the
    compensation tables and related disclosures set forth below.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Background and
    Objectives</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We are a biopharmaceutical company focused on developing and
    commercializing products to treat serious diseases associated
    with inflammation, including cardiovascular and autoimmune
    diseases. The success of development companies is significantly
    influenced by the quality and motivation of their work forces.
    As a result, we face significant competition for executives and
    other talented employees from numerous pharmaceutical research
    and development companies in the San&#160;Francisco Bay Area.
    With this in mind, we strive to provide what we believe is a
    competitive total compensation package to our executive officers
    through a combination of base salary, short-term cash incentives
    and long-term equity compensation, in addition to broad-based
    employee benefits programs, in order to closely align the
    interests of our executive officers with those of our
    stockholders, to attract talented individuals to manage and
    operate all aspects of our business, to reward these individuals
    fairly and to retain those individuals who meet our high
    expectations and support the achievement of our business
    objectives.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Role of
    Compensation Committee and Executive Officers</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Our executive compensation program is administered by our
    compensation committee of our board of directors. Our
    compensation committee is responsible for overseeing our
    executive compensation policies, plans and programs, reviewing
    our achievements as a company and the achievements of our
    individual officers, recommending to our board of directors the
    type and level of compensation for our named executive officers
    and our directors. The primary goal of our compensation
    committee is to closely align the interests of our named
    executive officers with those of our stockholders. To achieve
    this goal, our compensation committee relies on compensation
    that is designed to attract and retain executives whose
    abilities are critical to our long-term success, that motivates
    individuals to perform at their highest level and that rewards
    achievement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The annual responsibilities of our compensation committee
    include the following:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    reviewing and approving corporate goals and objectives relevant
    to the compensation of our Chief Executive Officer;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    evaluating the performance of our Chief Executive Officer in
    light of such corporate goals and objectives and determining the
    compensation of our Chief Executive Officer;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    reviewing and approving the level of equity awards, annual
    salary and bonuses for our named executive officers and other
    employees.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    In reviewing and approving these matters, our compensation
    committee considers such matters as it deems appropriate,
    including our financial and operating performance, the alignment
    of interests of our executive officers and our stockholders and
    our ability to attract and retain qualified individuals. For
    executive compensation decisions, including decisions relating
    to the grant of stock options and other equity awards to our
    named executive officers, our compensation committee typically
    considers the recommendations of Mr.&#160;Truex, our Chief
    Executive Officer. Mr.&#160;Truex also generally participates in
    our compensation committee&#146;s
</DIV>

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    deliberations about executive compensation matters. However,
    Mr.&#160;Truex does not participate in the deliberation or
    determination of his own compensation.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Our compensation committee has not established any formal
    policies or guidelines for allocating compensation between
    current and long-term equity compensation, or between cash and
    non-cash compensation. In determining the amount and mix of
    compensation elements and whether each element provides the
    correct incentives and rewards for performance consistent with
    our short-term and long-term goals and objectives, our
    compensation committee relies on its judgment about each
    individual&#146;s performance in a rapidly changing business
    environment rather than adopting a formulaic approach to
    compensatory decisions that are too narrowly responsive to
    short-term changes in business performance. In making
    determinations about performance, our compensation committee
    does not solely rely on formal goals or metrics, but rather
    takes into account input from appropriate members of management
    with respect to an individual&#146;s performance, as well as its
    own observations.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Role of
    Compensation Consultant</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Our compensation committee has the authority under its charter
    to engage the services of any consulting firm or other outside
    advisor to assist it. While our compensation committee did not
    utilize the services of any outside advisors in 2008, in late
    2007, our compensation committee engaged J. Thelander
    Consulting, an independent consulting firm selected by our
    compensation committee, to review the compensation of our named
    executive officers and other key employees. J. Thelander
    Consulting compared the base salary, bonus and equity awards
    offered to these employees with aggregated data from 193 pre-IPO
    companies in the biotechnology, medical device, IT/software,
    cleantech and health care space. These 193&#160;companies were
    selected because they were at a similar stage of development as
    us and the majority of such companies were also based on the
    west coast and had levels of funding ranging from
    $15&#160;million to $70&#160;million. Accordingly, our
    compensation committee determined that these companies
    represented the types of companies with which we compete for
    executive employees. Based on our goal of attracting and
    retaining talented individuals to serve as executive officers in
    a competitive market, J. Thelander Consulting recommended
    targeting the 75th percentile of base salary, bonus and equity
    compensation offered by this group of companies. J. Thelander
    Consulting recommended targeting the 75th percentile of
    compensation at comparable companies in order to attract
    above-average executives, since attracting and retaining top
    talent is important to a smaller company like ours. To that end,
    J.&#160;Thelander Consulting recommended that we increase our
    offered base salary and bonus compensation for executive
    officers, and maintain the current level of offered equity
    compensation. Our compensation committee considered the
    recommendations and determined that the current compensation
    packages for our executive officers were sufficient in light of
    current market conditions, input from management and the desire
    to allocate resources to our clinical development study instead.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    J. Thelander Consulting also reviewed the change in control and
    severance benefits we had in place at the time for our
    executives, which included all of our named executive officers.
    J. Thelander Consulting recommended that we maintain our current
    benefit levels for cash severance and health benefits, which are
    12&#160;months cash severance and benefits continuation for our
    Chief Executive Officer and six months cash severance and
    benefits continuation for our other executive officers, but
    provide for 100% acceleration of equity awards vesting in
    connection with the termination of employment of our executive
    officers in certain circumstances. At the time of J. Thelander
    Consulting&#146;s review, our change of control and severance
    benefits provided acceleration of 12&#160;months of equity award
    vesting for our Chief Executive Officer and Chief Medical
    Officer and six months of equity award vesting for our other
    executive officers. Our compensation committee considered the
    recommendations and
</DIV>

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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    determined that the existing change of control and severance
    provisions for our executive officers were adequate to provide
    security to our executive officers whose leadership and
    experience would be crucial to maximize stockholder value during
    the course of ordinary business.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    J. Thelander Consulting was retained by and reported directly to
    our compensation committee.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Compensation
    Elements</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <I>Base Salary.</I>&#160;&#160;The base salaries of our named
    executive officers are primarily established based on the scope
    of their responsibilities and performance, taking into account
    the J.&#160;Thelander Consulting comparable company data and
    based upon our compensation committee&#146;s understanding of
    compensation paid to similarly situated executives, and adjusted
    as necessary to recruit or retain specific individuals. In
    making determinations about the performance of our named
    executive officers, our compensation committee takes into
    account corporate goals, which are set annually by our
    compensation committee and generally include milestones related
    to our preclinical studies and clinical studies and fundraising,
    as well as informal individual goals, which are
    position-specific and are communicated to the named executive
    officer over the course of the year. In 2008, our corporate
    goals focused on clinical development of
    <FONT style="white-space: nowrap">A-002,</FONT>
    including achieving full enrollment in our Phase&#160;2b
    clinical study and receiving advice from the FDA on a special
    protocol assessment for a Phase&#160;3 clinical study protocol.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We typically review the base salaries of our named executive
    officers annually. We may also increase the base salary of an
    executive officer at other times if a change in the scope of the
    executive&#146;s responsibilities, such as promotion, justifies
    such consideration. Although we do not target a specific
    percentile range, we believe that a competitive base salary
    relative to the companies with which we compete for executives
    is a necessary element of any compensation program that is
    designed to attract and retain talented and experienced
    executives. We also believe that attractive base salaries can
    motivate and reward executives for their overall performance.
    Base salaries are established in part based on experience,
    skills and expected contributions of our executives and our
    executives&#146; performance during the prior year.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    As part of its annual evaluation of salaries in 2008 for our
    named executive officers, our board of directors elected to
    maintain salaries for Mr.&#160;Truex and our other named
    executive officers at then-current levels. This determination
    was based on the recommendation of our compensation committee
    that such base salary provided adequate fixed income as compared
    to comparable company data and our compensation committee&#146;s
    own understanding of compensation at other pre-IPO companies in
    comparable industries, based in part on their respective
    experience on the board of directors of such companies, as well
    as management&#146;s view that base salaries should generally
    stay at the same level.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    In February 2009, upon our compensation committee&#146;s
    recommendation, the board of directors approved temporary
    reduction in cash compensation of approximately 14% on average
    for all of our employees, including our named executive
    officers, which compensation reduction was reinstated in August
    2009. This measure was taken in connection with the redeployment
    of resources to our research and development activities and the
    elimination of four positions in light of the financing and
    economic environment. In connection with this salary reduction,
    Mr.&#160;Truex was granted special authority by our board of
    directors to allocate in his sole discretion options to purchase
    an aggregate of 45,000&#160;shares to individuals, including our
    named executive officers, who had demonstrated high achievement
    toward our goals.
</DIV>

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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <I>Cash Bonuses.</I>&#160;&#160;We do not currently have a
    formal cash incentive program. While we have paid cash bonuses
    based on the achievement of approved operational milestones in
    the past, we did not establish a formal cash incentive program,
    nor did we pay any bonuses based on corporate goals in 2008. Our
    compensation committee made the decision not to pay annual
    bonuses for 2008 based on the need to manage expenses and
    allocate resources to our clinical development programs, and did
    not formally evaluate whether our 2008 corporate goals had been
    achieved. Our compensation committee has the authority to award
    discretionary performance-based cash bonuses to our executive
    officers and certain non-executive employees. Our compensation
    committee considers awarding such discretionary bonuses in the
    event of extraordinary short-term efforts and achievements by
    our executives and employees, as recommended by management. No
    such discretionary bonuses were awarded in 2008. We expect that
    our compensation committee will put a formal cash incentive
    program into place in the future, and that our named executive
    officers will participate in that program.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <I>Equity Incentive Compensation.</I>&#160;&#160;We generally
    grant stock options to our employees, including our named
    executive officers, in connection with their initial employment
    with us. We also typically grant stock options on an annual
    basis as part of annual performance reviews of our employees.
    Our compensation committee has established grant guidelines for
    our employees, other than our Chief Executive Officer, based on
    an employee&#146;s position. These guidelines specify a range of
    equity grant amounts, expressed as a percentage of our common
    stock outstanding on a fully-diluted basis, which range from
    0.02% to 2.75%, depending on position. Grant guidelines for our
    named executive officers range from 1.0% to 2.75%.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Each of our named executive officers has either purchased
    restricted shares of common stock or received stock options to
    purchase shares of common stock in connection with their initial
    employment with us. We grant equity incentive compensation to
    our executive officers because we believe doing so will motivate
    our executives by aligning their interests more closely with the
    interests of our stockholders. Certain employees, including
    Mr.&#160;Truex, were granted restricted stock in 2004 and 2005
    because we believed that it was appropriate for our initial key
    employees to have an immediate equity stake, and because we
    believed owning restricted stock would more closely align the
    interests of the recipient with those of our stockholders. Now
    that we are a more mature company with over 15&#160;employees,
    we believe it is generally more appropriate to grant options to
    employees, as is the practice at other companies with which we
    compete for talent, although we may continue to grant restricted
    stock when we deem it appropriate and in our stockholders&#146;
    best interests.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    In connection with their initial employment, each of our named
    executive officers was granted stock options to purchase shares
    of our common stock, for an aggregate of 445,000&#160;shares at
    an exercise price of the fair value of such shares at the dates
    of grant, which ranged from $0.08 to $0.78 per share. The
    options held by each named executive officer are subject to
    vesting in order to encourage each named executive officer to
    remain with us for several years, and subject to the other
    provisions of their respective option agreements, which are
    described below.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Equity incentive grants to our named executive officers and
    other employees are currently made at the discretion of our
    board of directors with the recommendation of our compensation
    committee out of our 2005 Equity Incentive Plan, or 2005 Equity
    Plan. In determining equity incentive grants, the compensation
    committee considers the grant guidelines it has established for
    each position, along with the equity incentives already provided
    to an employee. Our compensation committee also considers
    individual performance, based on informal goals and input
    received from management. Under the 2005 Equity Plan, we may
    grant equity incentive awards in the form of stock options,
    restricted stock awards or stock appreciation rights. In 2008,
    our board of directors granted options to purchase a total of
    561,500&#160;shares of common stock to our employees and
    directors, including options to purchase a total of
    210,000&#160;shares of common stock to our named executive
</DIV>

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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    officers, all at an exercise price of $0.78 per share, which
    represented the fair value of our common stock on the dates of
    grant, as determined by our board of directors. These grants
    were made to further motivate the recipients by aligning their
    interests more closely with our stockholders over the next
    several years by providing them with an equity interest in the
    Company.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The exercise price of each stock option granted under our 2005
    Equity Plan is based on the fair value of our common stock on
    the date of grant. Historically, the fair value of our common
    stock for purposes of determining the exercise price of stock
    options has been determined by our board of directors based on
    its analysis of a number of factors including, among others, the
    total company valuation implied by our rounds of financing, the
    market value of similarly situated public companies, our
    anticipated future risks and opportunities, the rights and
    preferences of our preferred stock and the discounts customarily
    applicable to common stock of privately-held companies. We
    engaged independent valuation firms to assess the fair value of
    our common stock during 2006, 2007 and 2008. Based on several
    factors considered by our board of directors, including the
    valuation reports prepared by such firms, we determined the fair
    value of our common stock or option grants made in 2009 to be
    $0.88 per share, and for options grants made in 2008 to be $0.78
    per share. Following this offering, we expect that all stock
    options will continue to be granted with an exercise price equal
    to the fair value of our common stock on the date of grant, but
    fair value will be defined as the closing market price of a
    share of our common stock on the date of grant. We do not
    currently have any program, plan or practice of setting the
    exercise price based on a date or price other than the fair
    value of our common stock on the grant date.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Stock option awards provide our named executive officers and
    other employees with the right to purchase shares of our common
    stock at a fixed exercise price, subject to their continued
    employment. Stock options are earned on the basis of continued
    service and generally vest over four years, beginning with
    vesting as to 25% of the award on the one-year anniversary of
    the date of grant, and pro-rata vesting monthly thereafter. Our
    stock options may also be exercised prior to the award vesting
    in full, subject to our right of repurchase pursuant to the 2005
    Equity Plan. In addition, we have also granted options to
    purchase smaller amounts of stock, typically fewer than
    10,000&#160;shares, which are immediately vested to recognize
    employee contributions, including those of our named executive
    officers. Furthermore, we generally grant incentive stock
    options to employees up to the statutory limit, then
    non-statutory options thereafter and non-statutory options to
    non-employees. See the section entitled &#147;&#151;Potential
    Payments Upon Termination or Change in Control&#148; for a
    discussion of the change in control provisions related to stock
    options.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    While we have only granted restricted stock awards to certain of
    our initial key employees, we have the authority to do so under
    our 2005 Equity Plan and our 2009 Stock Option and Incentive
    Plan, or 2009 Equity Plan. Restricted stock awards provide our
    named executive officers and other employees with the ability to
    purchase shares of our common stock at a fixed purchase price at
    the time of grant by entering into a restricted stock purchase
    agreement. Similar to stock options, shares of restricted stock
    are earned on the basis of continued service and generally vest
    over four years, beginning with vesting as to 25% of the award
    on the one year anniversary of the date of grant and pro-rata
    vesting quarterly thereafter. See the section entitled
    &#147;&#151;Potential Payments Upon Termination or Change in
    Control&#148; for a discussion of the change in control
    provisions related to restricted stock.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We plan to adopt an equity award grant policy that will
    formalize how we grant equity-based awards to officers and
    employees after this offering. We anticipate that under our
    equity award grant policy all grants must be approved by our
    board of directors or compensation committee. All stock options
    will be awarded with an exercise price equal to the fair value
    of our common stock and calculated based on our closing market
    price on the grant date.
</DIV>

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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Under our equity award grant policy, equity awards will
    typically be made on a regularly scheduled basis, as follows:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    grants made in conjunction with the hiring of a new employee or
    the promotion of an existing employee will be made on the first
    trading day of the month following the later of (i)&#160;the
    hire date or the promotion date or (ii)&#160;the date on which
    such grant is approved;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    grants made to existing employees other than in connection with
    a promotion will be made, if at all, on an annual basis.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <I>Other Compensation.</I>&#160;&#160;We currently maintain
    broad-based benefits that are provided to all employees,
    including health insurance, life and disability insurance,
    dental insurance and a 401(k) plan.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    As discussed below in &#147;&#151;Severance and Change in
    Control Agreements&#148; and in &#147;&#151;Potential Payments
    Upon Termination or Change in Control,&#148; we have agreements
    with our named executive officers providing certain benefits to
    them upon termination of their employment and, for all named
    executive officers other than Dr.&#160;Pennington, our Chief
    Medical Officer, in relation to a change in control, including
    the acceleration of vesting of restricted stock and options. Our
    goal in providing severance and change in control benefits is to
    offer sufficient cash continuity protection such that our
    executives will focus their full time and attention on the
    requirements of the business rather than the potential
    implications for their respective positions. We prefer to have
    certainty regarding the potential severance amounts payable to
    the named executive officers under certain circumstances, rather
    than negotiating severance at the time that a named executive
    officer&#146;s employment terminates. We have also determined
    that accelerated vesting provisions in connection with a
    termination following a change of control are appropriate
    because they will encourage our restricted stock and option
    holders, including our named executive officers, to stay focused
    in such circumstances, rather than the potential implications
    for them.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    All of our named executive officers, except for
    Dr.&#160;Pennington, are party to severance agreements that
    provide benefits upon termination of employment in connection
    with a change of control. Dr.&#160;Pennington&#146;s severance
    agreement provides benefits in the event of termination of his
    employment, whether or not based on a change of control. Our
    compensation committee recommended and our board of directors
    agreed that Dr.&#160;Pennington should be provided severance
    benefits regardless of whether a change of control occurred
    because of his critical role in our success. In addition, in
    December 2007, our compensation committee recommended and the
    board of directors agreed that Mr.&#160;Lowe, our chief
    financial officer, should be offered the same change of control
    severance benefit levels as our chief executive officer, in
    light of his role in the Company.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <I>Tax and Accounting Treatment of
    Compensation.</I>&#160;&#160;Section&#160;162(m) of the Internal
    Revenue Code places a limit of $1.0&#160;million per person on
    the amount of compensation that we may deduct in any one year
    with respect to each of our named executive officers other than
    the chief financial officer. There is an exemption from the
    $1.0&#160;million limitation for performance-based compensation
    that meets certain requirements. Grants of stock options and
    stock appreciation rights under our 2009 Equity Plan are
    intended to qualify for the exemption. Restricted stock awards
    and restricted stock unit awards under our 2009 Equity Plan, as
    well as performance cash awards, may qualify for the exemption
    if certain additional requirements are satisfied. To maintain
    flexibility in compensating officers in a manner designed to
    promote varying corporate goals, our compensation committee has
    not adopted a policy requiring all compensation to be
    deductible. Although tax deductions for some amounts that we pay
    to our named executive officers as compensation may be limited
    by section&#160;162(m), that limitation does not result in the
    current payment of increased federal income taxes by us due to
    our significant net operating loss carry-forwards. Our
    compensation committee may approve
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    104
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    compensation or changes to plans, programs or awards that may
    cause the compensation or awards to exceed the limitation under
    section&#160;162(m) if it determines that such action is
    appropriate and in our best interests.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We account for equity compensation paid to our employees under
    the rules of SFAS&#160;123(R), which requires us to estimate and
    record an expense for each award of equity compensation over the
    service period of the award. Accounting rules also require us to
    record cash compensation as an expense at the time the
    obligation is incurred.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Summary
    Compensation Table&#151;2008</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The following table summarizes the compensation that we paid to
    our Chief Executive Officer, Chief Financial Officer and each of
    our three other most highly compensated executive officers
    during the year ended December&#160;31, 2008. We refer to these
    officers in this prospectus as our named executive officers.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="52%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="3%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="7%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="12%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=05 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=05 type=lead -->
    <TD width="7%" align="right">&nbsp;</TD>	<!-- colindex=05 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=05 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Option<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Name and Principal Position</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Year</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Salary&#160;($)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Awards ($) (1)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Total&#160;($)</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Paul F. Truex
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2008
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    300,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    25,956
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    325,956
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: 0pt; margin-left: 10pt">
    President, Chief<BR>
    Executive Officer, and Director
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Christopher P. Lowe
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2008
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    250,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    26,832
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    276,832
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: 0pt; margin-left: 10pt">
    Chief Financial Officer and <BR>
    Vice President of Administration
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    James E. Pennington,&#160;M.D.
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2008
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    290,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    7,029
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    297,029
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: 0pt; margin-left: 10pt">
    Executive Vice President and Chief Medical Officer
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Colin Hislop,&#160;M.D.&#160;
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2008
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    270,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    9,573
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    279,573
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: 0pt; margin-left: 10pt">
    Senior Vice President,<BR>
    Cardiovascular Products
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Debra Odink,&#160;Ph.D.&#160;
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2008
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    200,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    4,787
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    204,787
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: 0pt; margin-left: 10pt">
    Vice President, Pharmaceutical Research and Development
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 1pt; margin-left: 0%; width: 10%;  align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=999 iwidth=456 length=48 -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="98%"></TD>
</TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(1)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">This column reflects the
    compensation expense recognized in 2008 and calculated in
    accordance with SFAS&#160;123(R). See Note&#160;8 to our
    financial statements for a discussion of the assumptions made in
    determining the valuation of option awards.
    </FONT></TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Grants of
    Plan-Based Awards&#151;2008</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The following table sets forth certain information with respect
    to awards under our equity and non-equity incentive plans made
    by us to our named executive officers and stock options awarded
    to our named executive officers for the year ended
    December&#160;31, 2008.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="40%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="9%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="9%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="11%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=05 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=05 type=lead -->
    <TD width="12%" align="right">&nbsp;</TD>	<!-- colindex=05 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=05 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>All Other<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Option<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Awards:<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Grant Date<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Number of<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Exercise or<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Fair Value of<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Securities<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Base Price of<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Stock and<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Underlying<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Option<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Option<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Name</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Grant Date</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Options (1)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Awards ($/sh)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Awards ($) (2)</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Paul F. Truex
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Christopher P. Lowe
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2/21/2008
</TD>
<TD nowrap align="left" valign="bottom">
     (3)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    128,205
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.78
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    71,679
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2/21/2008
</TD>
<TD nowrap align="left" valign="bottom">
     (4)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    81,795
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.78
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    45,732
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    James E. Pennington,&#160;M.D.&#160;
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Colin Hislop,&#160;M.D.&#160;
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Debra Odink,&#160;Ph.D.&#160;
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    105
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="font-size: 1pt; margin-left: 0%; width: 10%;  align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=999 iwidth=456 length=48 -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="98%"></TD>
</TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(1)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">These options vest over four years
    as follows: 25% of the shares vest one year following the
    vesting commencement date, with the remaining 75% vesting in
    equal monthly installments over the next three years.
    </FONT></TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(2)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">The grant date fair value of each
    equity owned award is computed in accordance with
    SFAS&#160;123(R). See Note&#160;8 to our financial statements
    for a discussion of the assumptions made in determining the
    valuation of option awards.
    </FONT></TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(3)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">The vesting commencement date of
    this incentive stock option is November&#160;26, 2007.
    </FONT></TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(4)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">The vesting commencement date of
    this non-statutory stock option is November&#160;26, 2007.
    </FONT></TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Outstanding
    Equity Awards at Fiscal Year End</FONT></B>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The following table sets forth certain information with respect
    to outstanding equity awards as of December&#160;31, 2008 with
    respect to our named executive officers.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 7pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="29%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="9%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="12%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="4%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=05 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=05 type=lead -->
    <TD width="6%" align="right">&nbsp;</TD>	<!-- colindex=05 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=05 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=06 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=06 type=lead -->
    <TD width="11%" align="right">&nbsp;</TD>	<!-- colindex=06 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=06 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=07 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=07 type=lead -->
    <TD width="11%" align="right">&nbsp;</TD>	<!-- colindex=07 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=07 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="14" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Option Awards</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="6" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Stock Awards</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Number of<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Number of<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Number<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Market<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Securities<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Securities<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>of Shares<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Value of<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Underlying<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Underlying<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>or Units<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Shares or<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Unexercised<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Unexercised<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Option<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Option<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>of Stock<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Units of Stock<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Options<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Options<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Exercise<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Expiration<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>That Have<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>That Have<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Name</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Exercisable (#)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Unexercisable (#)*</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Price ($)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Date</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Not Vested (#)(1)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Not Vested ($)(2)</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -7pt; margin-left: 7pt">
    Paul F. Truex
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    26,666
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    13,334
</TD>
<TD nowrap align="left" valign="bottom">
     (3)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.08
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4/06/2016
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    491,751
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    129,408
</TD>
<TD nowrap align="left" valign="bottom">
     (4)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.15
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1/23/2017
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -15pt; margin-left: 15pt">
    Christopher P. Lowe
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.08
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3/6/2016
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    34,722
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    93,483
</TD>
<TD nowrap align="left" valign="bottom">
     (5)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.78
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2/21/2018
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    22,153
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    59,642
</TD>
<TD nowrap align="left" valign="bottom">
     (6)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.78
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2/21/2018
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -15pt; margin-left: 15pt">
    James E. Pennington,&#160;M.D.&#160;
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    28,437
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    36,563
</TD>
<TD nowrap align="left" valign="bottom">
     (7)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.15
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    10/24/2017
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    101,250
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    89,100
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -15pt; margin-left: 15pt">
    Colin Hislop,&#160;M.D.&#160;
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    186,348
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    62,116
</TD>
<TD nowrap align="left" valign="bottom">
     (8)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.15
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1/23/2017
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -15pt; margin-left: 15pt">
    Debra Odink,&#160;Ph.D.&#160;
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    31,058
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    27,331
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 1pt; margin-left: 0%; width: 10%;  align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=999 iwidth=456 length=48 -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="98%"></TD>
</TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">&#160;*
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">These options vest over four years
    as follows: 25% of the shares vest one year following the
    vesting commencement date, with the remaining 75% vesting in
    equal monthly installments over the next three years. All
    unvested options contain an early exercise feature subject to
    the Company&#146;s right of repurchase pursuant to the 2005
    Equity Plan.
    </FONT></TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(1)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">The number in this column
    represents shares of unvested stock options that were acquired
    upon exercise of stock options prior to the stock option vesting
    in full and which remain subject to the Company&#146;s right of
    repurchase as of December&#160;31, 2008.
    </FONT></TD>
</TR>

<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(2)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">The fair value of our common stock
    as of December&#160;31, 2008 was $0.88.
    </FONT></TD>
</TR>

<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(3)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">The vesting commencement date of
    this incentive stock option is April&#160;6, 2006.
    </FONT></TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(4)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">The vesting commencement date of
    this incentive stock option is October&#160;3, 2005.
    </FONT></TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(5)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">The vesting commencement date of
    this incentive stock option is November&#160;26, 2007.
    </FONT></TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(6)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">The vesting commencement date of
    this non-statutory stock option is November&#160;26, 2007.
    </FONT></TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(7)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">The vesting commencement date of
    this incentive stock option is March&#160;19, 2007.
    </FONT></TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(8)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">The vesting commencement date of
    this incentive stock option is December&#160;1, 2005.
    </FONT></TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Option Exercises
    and Stock Vested</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Stock
    Vested&#160;&#150; 2008</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The following table sets forth certain information with respect
    to the stock vested during the year ended December&#160;31, 2008
    with respect to our named executive officers. There were no
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    106
</DIV><!-- END PAGE WIDTH -->
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    exercised stock options during the year ended December&#160;31,
    2008 with respect to our named executive officers.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 7pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="77%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="7%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="9%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="6" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Stock Awards</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Number<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>of Shares<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Value<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Acquired on<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Realized on<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Name</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Vesting&#160;(#)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Exercise&#160;($)(3)</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -7pt; margin-left: 7pt">
    Paul F. Truex
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -7pt; margin-left: 7pt">
    Christopher P. Lowe
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -7pt; margin-left: 7pt">
    James E. Pennington,&#160;M.D.&#160;
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    78,750
</TD>
<TD nowrap align="left" valign="bottom">
    &#160;(1)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    57,488
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -7pt; margin-left: 7pt">
    Colin Hislop,&#160;M.D.&#160;
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -7pt; margin-left: 7pt">
    Debra Odink,&#160;Ph.D.&#160;
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    31,058
</TD>
<TD nowrap align="left" valign="bottom">
    &#160;(2)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    22,672
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 1pt; margin-left: 0%; width: 10%;  align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=999 iwidth=456 length=48 -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="98%"></TD>
</TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(1)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">On April&#160;23, 2007,
    Dr.&#160;Pennington exercised 180,000&#160;shares underlying a
    stock option award prior to the award vesting in full. During
    the year ended December&#160;31, 2008, the Company&#146;s right
    of repurchase lapsed with respect to the number of shares in
    this column.
    </FONT></TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(2)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">On October&#160;19, 2007,
    Dr.&#160;Odink exercised 124,232&#160;shares underlying a stock
    option award prior to the award vesting in full. During the year
    ended December&#160;31, 2008, the Company&#146;s right of
    repurchase lapsed with respect to the number of shares in this
    column.
    </FONT></TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(3)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">This column reflects the intrinsic
    value realized for shares vested in 2008, which represents the
    difference between the fair value of our common stock as of
    December&#160;31, 2008 and the exercise price of the stock
    option.
    </FONT></TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Stock and Benefit
    Plans</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">2005 Equity
    Incentive Plan</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Our 2005 Equity Plan was adopted by our board of directors and
    approved by our stockholders in April 2005. We have reserved
    3,725,000&#160;shares of our common stock for the issuance of
    awards under the 2005 Equity Plan.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Our 2005 Equity Plan is administered by our board of directors,
    which has the authority to delegate full power and authority to
    a committee of the board. Our board of directors or any
    committee delegated by our board of directors has the power to
    select the individuals to whom awards will be granted, to make
    any combination of awards to participants, to accelerate the
    exercisability or vesting of any award, to provide substitute
    awards and to determine the specific terms and conditions of
    each award, subject to the provisions of the 2005 Equity Plan.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The 2005 Equity Plan permits us to make grants of incentive
    stock options, non-qualified stock options, restricted stock
    awards and stock appreciation rights to employees, directors and
    consultants. Stock options granted under the 2005 Equity Plan
    have a maximum term of 10&#160;years from the date of grant and
    incentive stock options have an exercise price of no less than
    the fair market value of our common stock on the date of grant.
    Upon a sale event in which all awards are not assumed or
    substituted by the successor entity, the vesting of awards under
    the 2005 Equity Plan shall be accelerated in full prior to the
    sale event and all stock options issued thereunder will
    terminate.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    All stock option awards that are granted to our named executive
    officers are covered by a stock option agreement. Except as
    noted above, under the stock option agreements, 25% of the
    shares vest on the first anniversary of the grant date and the
    remaining shares vest monthly over the following three years.
    Our board of directors may accelerate the vesting schedule in
    its discretion. We did not engage in any option repricing or
    other modification to any of our outstanding equity awards
    during the fiscal year ended December&#160;31, 2008.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Our board of directors has determined not to grant any further
    awards under the 2005 Equity Plan. We intend to adopt the 2009
    Equity Plan, under which we expect to make all future awards.
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    107
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">2009 Stock Option
    and Incentive Plan</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Prior to completion of this offering, our board of directors,
    upon the recommendation of our compensation committee, intends
    to adopt the 2009 Equity Plan, which will be approved by our
    stockholders. The 2009 Equity Plan will replace the 2005 Equity
    Plan, as our board of directors has determined not to make
    additional awards under that plan once the 2009 Equity Plan is
    adopted. The 2009 Equity Plan provides flexibility to our
    compensation committee to use various equity-based incentive
    awards as compensation tools to motivate our workforce.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We intend to initially
    reserve&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;shares
    of our common stock for the issuance of awards under the 2009
    Equity Plan plus an
    additional&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;shares
    of common stock available for grant under our 2005 Equity Plan,
    which shares will be added to the shares reserved under our 2009
    Equity Plan. The 2009 Equity Plan provides that the number of
    shares reserved and available for issuance under the plan will
    automatically increase each January&#160;1, beginning in 2010,
    by&#160;&#160;&#160;&#160;&#160;% of the outstanding number of
    shares of common stock on the immediately preceding
    December&#160;31. This number is subject to adjustment in the
    event of a stock split, stock dividend or other change in our
    capitalization.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The shares we issue under the 2009 Equity Plan will be
    authorized but unissued shares or shares that we reacquire. The
    shares of common stock underlying any awards that are forfeited,
    canceled, held back upon exercise or settlement of an award to
    satisfy the exercise price or tax withholding, reacquired by us
    prior to vesting, satisfied without any issuance of stock,
    expire or are otherwise terminated (other than by exercise)
    under the 2009 Equity Plan will be added back to the shares of
    common stock available for issuance under the 2009 Equity Plan.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The 2009 Equity Plan will be administered by our compensation
    committee. Our compensation committee will have full power to
    select, from among the individuals eligible for awards, the
    individuals to whom awards will be granted, to make any
    combination of awards to participants and to determine the
    specific terms and conditions of each award, subject to the
    provisions of the 2009 Equity Plan. The compensation committee
    may delegate to our Chief Executive Officer the authority to
    grant options to certain individuals. Persons eligible to
    participate in the 2009 Equity Plan will be those full or
    part-time officers, employees, non-employee directors and other
    key persons (including consultants and prospective employees) of
    the Company and its subsidiary as selected from time to time by
    our compensation committee in its discretion.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The 2009 Equity Plan will permit the granting of
    (i)&#160;options to purchase common stock intended to qualify as
    incentive stock options under Section&#160;422 of the Internal
    Revenue Code and (ii)&#160;options that do not so qualify. The
    option exercise price of each option will be determined by our
    compensation committee but may not be less than 100% of the fair
    market value of the common stock on the date of grant. The term
    of each option will be fixed by our compensation committee and
    may not exceed 10 years from the date of grant. Our compensation
    committee will determine at what time or times each option may
    be exercised.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Our compensation committee may award stock appreciation rights
    subject to such conditions and restrictions as our compensation
    committee may determine. Stock appreciation rights entitle the
    recipient to shares of common stock equal to the value of the
    appreciation in the stock price over the exercise price. The
    exercise price shall not be less than the fair market value of
    the common stock on the date of grant.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Our compensation committee may award restricted shares of common
    stock to participants subject to such conditions and
    restrictions as our compensation committee may determine. These
    conditions and restrictions may include the achievement of
    certain performance goals
    <FONT style="white-space: nowrap">and/or</FONT>
    continued employment with us through a specified restricted
    period. Our compensation committee may award restricted stock
    units to any participants. Restricted
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    108
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    stock units are ultimately payable in the form of shares of
    common stock and may be subject to such conditions and
    restrictions as our compensation committee may determine. These
    conditions and restrictions may include the achievement of
    certain performance goals
    <FONT style="white-space: nowrap">and/or</FONT>
    continued employment through a specified vesting period. Our
    compensation committee may also grant shares of common stock
    which are free from any restrictions under the 2009 Equity Plan.
    Unrestricted stock may be granted to any participant in
    recognition of past services or other valid consideration and
    may be issued in lieu of cash compensation due to such
    participant.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Our compensation committee may grant performance share awards to
    any participant which entitles the recipient to receive shares
    of common stock upon the achievement of certain performance
    goals and such other conditions as our compensation committee
    shall determine.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Our compensation committee may grant dividend equivalent rights
    to participants which entitle the recipient to receive credits
    for dividends that would be paid if the recipient had held
    specified shares of common stock.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Our compensation committee may grant cash bonuses under the 2009
    Equity Plan to participants. The cash bonuses may be subject to
    the achievement of certain performance goals.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The 2009 Equity Plan will provide that upon the effectiveness of
    a &#147;sale event&#148; as defined in the 2009 Equity Plan,
    except as otherwise provided by our compensation committee in
    the award agreement, all stock options and stock appreciation
    rights will automatically become fully exercisable and the
    restrictions and conditions on all other awards with time-based
    conditions will automatically be deemed waived, unless the
    parties to the sale event agree that such awards will be assumed
    or continued by the successor entity. Awards with conditions and
    restrictions relating to the attainment of performance goals may
    become vested and non-forfeitable in connection with a sale
    event in the compensation committee&#146;s discretion. In
    addition, in the case of a sale event in which our stockholders
    will receive cash consideration, we may make or provide for a
    cash payment to participants holding options and stock
    appreciation rights equal to the difference between the per
    share cash consideration and the exercise price of the options
    or stock appreciation rights.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    No other awards may be granted under the 2009 Equity Plan after
    the date that is 10&#160;years from the date of stockholder
    approval. No awards under the 2009 Equity Plan have been made
    prior to the date hereof.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">401(k) Savings
    Plan</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We have established a 401(k) plan to allow our employees to save
    on a tax-favorable basis for their retirement. We do not match
    any contributions made by any employees, including our named
    executive officers, pursuant to the plan.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Pension
    Benefits</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    None of our named executive officers participate in or have
    account balances in pension benefit plans sponsored by us.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Nonqualified
    Defined Contribution and Other Nonqualified Defined Compensation
    Plans</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    None of our named executive officers participate in or have
    account balances in non-qualified defined contribution plans or
    other deferred compensation plans maintained by us.
</DIV>

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    <BR>
    109
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Proprietary
    Information and Inventions Agreements</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Each of our named executive officers has also entered into a
    standard form agreement with respect to proprietary information
    and inventions. Among other things, this agreement obligates
    each named executive officer to refrain from disclosing any of
    our proprietary information received during the course of
    employment and, with some exceptions, to assign to us any
    inventions conceived or developed during the course of
    employment.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Severance and
    Change in Control Agreements</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We consider it essential to the best interests of our
    stockholders to foster the continuous employment of our key
    management personnel. In this regard, we recognize that the
    possibility of a change in control may exist and that the
    uncertainty and questions that it may raise among management
    could result in the departure or distraction of management
    personnel to the detriment of the Company and our stockholders.
    In order to reinforce and encourage the continued attention and
    dedication of certain key members of management, we have entered
    into several change in control agreements and severance
    agreements with certain of our executive officers.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    In these agreements, the definition of &#147;change in
    control&#148; generally means the occurrence, in a single
    transaction or in a series of related transactions of any one or
    more of the following events, subject to specified events:
    (a)&#160;any Exchange Act Person (defined in the change in
    control agreements generally as any natural person, entity, or
    group not including the Company or any subsidiaries) becomes the
    owner of securities representing more than 50% of the combined
    voting power of our then outstanding securities; (b)&#160;a
    merger, consolidation or similar transaction involving the
    Company is consummated and immediately after the consummation of
    such merger, consolidation, or similar transaction, our
    stockholders immediately prior thereto do not own either
    outstanding voting securities representing more than 50% of the
    combined outstanding voting power of the surviving entity or
    more than 50% of the combined outstanding voting power of the
    parent of the surviving entity in such merger, consolidation, or
    similar transaction; or (c)&#160;a sale, lease, license or other
    disposition of all or substantially all of our consolidated
    assets is consummated.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    In these agreements, &#147;cause&#148; means: (a)&#160;gross
    negligence or willful misconduct in the performance of duties
    that is not cured within 30&#160;days of written notice, where
    such gross negligence or willful misconduct has resulted or is
    likely to result in substantial and material damage to the
    Company; (b)&#160;repeated unexplained or unjustified absence;
    c)&#160;a material and willful violation of any federal or state
    law; (d)&#160;commission of any act of fraud with respect to the
    Company; or (e)&#160;commission of an act of moral turpitude or
    conviction of or entry of a plea of nolo contendere to a felony.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    &#147;Constructive termination&#148; means an officer&#146;s
    resignation within 60&#160;days of the occurrence of any of the
    following events without the officer&#146;s prior written
    consent, which event remains uncured 30&#160;days after delivery
    of the written notice: (a)&#160;any change in position that
    materially reduces the officer&#146;s title, duties, level of
    responsibility, reporting relationship or the requirements of
    such officer&#146;s position; (b)&#160;any reduction of base
    compensation; (c)&#160;the elimination or reduction of
    eligibility to participate in our benefit programs that is
    inconsistent with the general eligibility of our officers; or
    (d)&#160;the relocation of our offices to a location more than
    25&#160;miles away from the original office.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Paul F.
    Truex</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    On June&#160;4, 2007, we entered into a change in control
    agreement with Mr.&#160;Truex, our President and Chief Executive
    Officer. Upon the occurrence of a change in control or within
    12&#160;months thereafter, if we terminate Mr.&#160;Truex&#146;s
    employment for any reason other than for cause or if there is a
    constructive termination, in either case, Mr.&#160;Truex is
    entitled to receive as
</DIV>

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    <BR>
    110
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    severance compensation 100% of his then-current base salary for
    a period of up to 12&#160;months and payment of continuation
    coverage premiums for health, dental, and vision benefits for
    Mr. Truex and his covered dependants, if any, for a period of
    12&#160;months pursuant to COBRA. In addition, Mr.&#160;Truex is
    entitled to receive (i)&#160;12&#160;months accelerated vesting
    of any unvested options to purchase our common stock and
    (ii)&#160;the immediate lapsing of any vesting restrictions on
    any restricted stock awards as of the date of termination.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Christopher P.
    Lowe</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    On December&#160;20, 2007, we entered into a change in control
    agreement with Mr.&#160;Lowe, our Chief Financial Officer and
    Vice President of Administration. Upon the occurrence of a
    change in control or within 12&#160;months thereafter, if we
    terminate Mr.&#160;Lowe&#146;s employment for any reason other
    than for cause or if there is a constructive termination, in
    either case, Mr.&#160;Lowe is entitled to receive as severance
    compensation 100% of his then-current base salary for a period
    of up to 12&#160;months and payment of continuation coverage
    premiums for health, dental, and vision benefits for Mr. Lowe
    and his covered dependants, if any, for a period of
    12&#160;months pursuant to COBRA. In addition, Mr.&#160;Lowe is
    entitled to receive (i)&#160;12&#160;months accelerated vesting
    of any unvested options to purchase our common stock and
    (ii)&#160;the immediate lapsing of any vesting restrictions on
    any restricted stock awards as of the date of termination.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">James E.
    Pennington,&#160;M.D.</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    On July&#160;30, 2007, we entered into a severance benefits
    agreement with Dr.&#160;Pennington, our Executive Vice President
    and Chief Medical Officer, which provides certain benefits upon
    the termination of employment. If we terminate
    Dr.&#160;Pennington&#146;s employment for any reason other than
    for cause or if there is a constructive termination, in either
    case, Dr.&#160;Pennington is entitled to receive as severance
    compensation 100% of his then-current base salary and payment of
    continuation coverage premiums for health, dental, and vision
    benefits for Dr. Pennington and his covered dependants, if any,
    for a period of 12&#160;months pursuant to COBRA. In addition,
    Dr.&#160;Pennington is entitled to receive:
    (i)&#160;12&#160;months accelerated vesting of his unvested
    options to purchase our common stock and (ii)&#160;the immediate
    lapsing of any vesting restrictions on any restricted stock
    awards as of the date of termination.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Colin
    Hislop,&#160;M.D.</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    On July&#160;12, 2007, we entered into a change in control
    agreement with Dr.&#160;Hislop, our Senior Vice President,
    Cardiovascular Products. Upon the occurrence of a change in
    control or within 12&#160;months thereafter, if we terminate
    Dr.&#160;Hislop&#146;s for any reason other than for cause or if
    there is a constructive termination, in either case,
    Dr.&#160;Hislop is entitled to receive as severance compensation
    100% of his then-current base salary for a period of up to six
    months and payment of continuation coverage premiums for health,
    dental, and vision benefits for Dr.&#160;Hislop and his covered
    dependants, if any, for a period of six months pursuant to
    COBRA. In addition, Dr.&#160;Hislop is entitled to receive
    (i)&#160;six months accelerated vesting of any unvested options
    to purchase our common stock and (ii)&#160;the immediate lapsing
    of any vesting restrictions on any restricted stock awards as of
    the date of termination.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Debra
    Odink,&#160;Ph.D.</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    On July&#160;12, 2007, we entered into a change in control
    agreement with Dr.&#160;Odink, our Vice President,
    Pharmaceutical Research and Development. Upon the occurrence of
    a change in control or within 12&#160;months thereafter, if we
    terminate Dr.&#160;Odink&#146;s employment for any reason other
    than for cause or if there is a constructive termination, in
    either case, Dr.&#160;Odink is entitled to receive as severance
    compensation 100% of her then-current base salary for a period
    of up to six months and payment of continuation coverage
    premiums for health, dental, and vision benefits for Dr. Odink
    and her covered dependants, if any, for a period of six months
    pursuant
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    111
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    to COBRA. In addition, Dr.&#160;Odink is entitled to receive
    (i)&#160;six months accelerated vesting of any unvested options
    to purchase our common stock and (ii)&#160;the immediate lapsing
    of any vesting restrictions on any restricted stock awards as of
    the date of termination.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    All payments and benefits are conditioned on the
    executive&#146;s execution and non-revocation of a general
    release agreement at the time of termination. All payments due
    upon termination (as discussed in this entire section) may be
    delayed up to six months from the termination date if necessary
    to avoid adverse tax treatment under Section&#160;409A of the
    Internal Revenue Code.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Potential
    Payments Upon Termination or Change in Control</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The tables below reflect potential payments and benefits
    available for each of our named executive officers upon
    termination in connection with a change in control or
    termination, assuming the date of occurrence is
    December&#160;31, 2008. See section entitled
    &#147;&#151;Severance and Change in Control Agreements&#148;
    above.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Named Executive
    Officer Benefits and Payments Upon Termination (1)</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="60%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="13%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="18%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Involuntary<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Termination within<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Involuntary<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>One Year of Change<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Name</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Termination&#160;(2)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>in Control&#160;(3)</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Paul F. Truex
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    314,413
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Christopher P. Lowe
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    260,026
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    James E. Pennington,&#160;M.D.&#160;
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    303,584
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    303,584
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Colin Hislop,&#160;M.D.&#160;
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    141,614
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Debra Odink,&#160;Ph.D.&#160;
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    105,606
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 1pt; margin-left: 0%; width: 10%;  align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=999 iwidth=456 length=48 -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="98%"></TD>
</TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(1)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Assumes triggering event effective
    as of December&#160;31, 2008. Upon a voluntary termination or
    termination for cause, each named executive officer would
    receive any earned but unpaid base salary and unpaid vacation
    accrued until December&#160;31, 2008. These payments would be
    available to all employees upon termination.
    </FONT></TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(2)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Includes continuation of base
    salary and health, dental and vision benefits for 12 months for
    Dr.&#160;Pennington.
    </FONT></TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(3)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Includes continuation of base
    salary and health, dental and vision benefits for 12 months for
    Mr.&#160;Truex, Mr.&#160;Lowe and Dr.&#160;Pennington. All other
    named executive officers receive six months continuation of base
    salary and benefits.
    </FONT></TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Acceleration of
    Vesting of Options upon Termination (1)</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="47%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="22%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="22%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Number of Shares of<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Number of Shares of<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Vested Stock and Value<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Vested Stock and Value<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>upon Involuntary<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>upon Involuntary<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Termination and in<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Termination and not in<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Connection with a<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Connection with a<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Name</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Change in Control (2)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Change in Control (3)</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Paul F. Truex
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">

</TD>
<TD nowrap align="left" valign="bottom">
     (4)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Christopher P. Lowe
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">

</TD>
<TD nowrap align="left" valign="bottom">
     (5)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    James E. Pennington,&#160;M.D.&#160;
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">

</TD>
<TD nowrap align="left" valign="bottom">
     (6)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">

</TD>
<TD nowrap align="left" valign="bottom">
     (6)
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Colin Hislop,&#160;M.D.&#160;
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">

</TD>
<TD nowrap align="left" valign="bottom">
     (7)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Debra Odink,&#160;Ph.D.&#160;
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">

</TD>
<TD nowrap align="left" valign="bottom">
     (8)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 1pt; margin-left: 0%; width: 10%;  align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=999 iwidth=456 length=48 -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="98%"></TD>
</TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(1)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Assumes triggering event effective
    as of December&#160;31, 2008. There was no public market for our
    common stock in 2008. We have estimated the market value of the
    unvested option shares based on our assumed initial public
    offering price of $&#160;&#160;&#160;&#160;&#160; per share,
    which is the midpoint of the range listed on the cover page of
    this prospectus.
    </FONT></TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(2)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Includes acceleration of options
    for 12 months for Mr.&#160;Truex, Mr.&#160;Lowe and
    Dr.&#160;Pennington. All other named executive officers have six
    months acceleration of options.
    </FONT></TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(3)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Includes acceleration of options
    for 12 months for Dr.&#160;Pennington.
    </FONT></TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    112
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="98%"></TD>
</TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(4)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">139,408 of Mr.&#160;Truex&#146;s
    options would accelerate upon involuntary termination and in
    connection with a change of control.
    </FONT></TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(5)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">52,500 of Mr.&#160;Lowe&#146;s
    options would accelerate upon involuntary termination and in
    connection with a change of control.
    </FONT></TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(6)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">61,250 of
    Dr.&#160;Pennington&#146;s options would accelerate upon
    involuntary termination, including 45,000&#160;shares with
    respect to which the Company&#146;s right of repurchase would
    lapse, which shares were acquired by Dr. Pennington upon
    exercise of options containing an early exercise feature.
    </FONT></TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(7)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">31,058 of Dr.&#160;Hislop&#146;s
    options would accelerate upon involuntary termination and in
    connection with a change of control.
    </FONT></TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(8)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Dr.&#160;Odink held
    15,529&#160;shares for which the Company&#146;s right of
    repurchase would lapse upon involuntary termination and in
    connection with a change in control. Such shares were acquired
    by Dr. Odink upon exercise of options containing an early
    exercise feature.
    </FONT></TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Director
    Compensation</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    On June&#160;26, 2008, our board of directors, upon the
    recommendation of our compensation committee, adopted a formal
    compensation program for the chairman of our board of directors
    and our independent directors. Pursuant to this program, the
    current chairman of our board of directors, Dr.&#160;Henney,
    receives a $20,000 annual retainer fee plus an additional
    $60,000 as consideration for his services as chairman. Prior to
    Dr.&#160;Henney&#146;s appointment as the chairman of our board,
    his predecessor, Lowell Sears, received a $30,000 annual
    retainer fee. Pursuant to this program, each of our independent
    board members, Mr.&#160;Santel and Mr.&#160;Thompson, receives a
    $20,000 annual retainer fee, as well as $2,000 for each board
    meeting attended in person ($1,000 for meetings attended by
    telephone conference). All members of our board are eligible to
    receive full reimbursement for travel expenses arising from
    their attendance of our board meetings.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Under the director compensation program, each non-employee
    member of our board of directors initially receives (i)&#160;a
    nonqualified stock option to purchase 25,000&#160;shares of our
    common stock upon election and (ii)&#160;each year thereafter an
    additional nonqualified stock option to purchase
    10,000&#160;shares of our common stock. One quarter of the
    shares issuable pursuant to each such option shall vest upon the
    completion of one year of continuous service by such director
    following the date of commencement of the vesting of such
    option; the remaining three quarters of the shares issuable
    pursuant to each such option shall vest in equal monthly
    installments over a period of three years until the date that is
    the fourth anniversary of the date of the option grant. All of
    these options have an exercise price equal to the fair market
    value of our common stock on the date of the grant.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Director
    Compensation Table&#151;2008</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The following table sets forth information with respect to the
    compensation earned by our non-employee directors during the
    fiscal year ended December&#160;31, 2008.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="45%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="10%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="5%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="15%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=05 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=05 type=lead -->
    <TD width="6%" align="right">&nbsp;</TD>	<!-- colindex=05 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=05 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Fees Earned<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Option<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>or Paid<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Awards<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>All Other<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Name</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>in Cash&#160;($)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>($) (1)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Compensation&#160;($)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Total&#160;($)</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Christopher S. Henney,&#160;Ph.D. (Chairman)&#160;(2)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    70,667
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    4,373
</TD>
<TD nowrap align="left" valign="bottom">
     (4)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    75,040
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Annette Bianchi
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    3,050
</TD>
<TD nowrap align="left" valign="bottom">
     (5)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    3,050
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    James I. Healy,&#160;M.D., Ph.D.&#160;
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    3,050
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    3,050
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    A. Rachel Leheny, Ph.D
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Donald J. Santel
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    34,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    684
</TD>
<TD nowrap align="left" valign="bottom">
     (6)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    34,684
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    David E. Thompson
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    34,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    2,034
</TD>
<TD nowrap align="left" valign="bottom">
     (7)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    36,034
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Lowell Sears&#160;(3)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    7,500
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    482
</TD>
<TD nowrap align="left" valign="bottom">
     (8)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    44,360
</TD>
<TD nowrap align="left" valign="bottom">
     (9)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    52,342
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    113
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="font-size: 1pt; margin-left: 0%; width: 10%;  align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=999 iwidth=456 length=48 -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="98%"></TD>
</TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(1)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">This column reflects the
    compensation expense recognized in 2008 and calculated in
    accordance with SFAS&#160;123(R). See Note&#160;8 to our
    financial statements for a discussion of the assumptions made in
    determining the valuation of option awards.
    </FONT></TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(2)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Dr.&#160;Henney was appointed as
    the chairman of our board of directors, effective June&#160;26,
    2008.
    </FONT></TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(3)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Mr.&#160;Sears resigned from our
    board of directors and as chairman of the board of directors,
    effective April&#160;23, 2008.
    </FONT></TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(4)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Dr.&#160;Henney held
    60,000&#160;shares underlying stock options as of
    December&#160;31, 2008.
    </FONT></TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(5)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Ms.&#160;Bianchi held
    25,000&#160;shares underlying stock options as of
    December&#160;31, 2008.
    </FONT></TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(6)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Mr.&#160;Santel held
    25,000&#160;shares underlying stock options as of
    December&#160;31, 2008.
    </FONT></TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(7)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Mr.&#160;Thompson held
    20,000&#160;shares underlying stock options as of
    December&#160;31, 2008.
    </FONT></TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(8)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">The value shown reflects the
    compensation expense recognized in 2008 for Mr.&#160;Sears&#146;
    options that were granted in 2007 in connection with his board
    membership, which were accelerated pursuant to his resignation
    from our board of directors in 2008.
    </FONT></TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(9)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">The value shown reflects the
    compensation expense recognized in 2008 for Mr.&#160;Sears&#146;
    options that were granted in 2007 in connection with his role as
    Chief Financial Officer, which were accelerated pursuant to his
    resignation from our board of directors in 2008.
    </FONT></TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    114
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<A name='113'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">CERTAIN
    RELATIONSHIPS AND RELATED PERSON TRANSACTIONS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Since January&#160;1, 2006, we have engaged in the following
    transactions with our directors, executive officers, holders of
    more than 5% of our voting securities, each of whom we refer to
    as a Beneficial Owner, or any member of the immediate family of
    any of the foregoing persons.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Private
    Placements of Securities</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">2006 Note
    Financing</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    On April&#160;8, 2006 and June&#160;30, 2006, we sold in a
    private placement convertible promissory notes, or the 2006
    notes, to certain of our existing and new investors for an
    aggregate purchase price of $960,000. The 2006 notes accrued
    interest at a rate of 7% per annum for these notes sold on
    April&#160;18, 2006 and 8% per annum for these notes sold on
    June&#160;30, 2006. In August 2006, in connection with our
    <FONT style="white-space: nowrap">Series&#160;A-2</FONT>
    preferred stock financing described below, the aggregate
    principal amount of the 2006 notes, along with accrued but
    unpaid interest thereon of $1,751, were automatically converted
    into an aggregate of 383,918&#160;shares of our
    <FONT style="white-space: nowrap">Series&#160;A-2</FONT>
    convertible preferred stock. Except as noted in the table below,
    the 2006 notes were converted at a conversion price of $2.25, or
    75% of the issue price of our
    <FONT style="white-space: nowrap">Series&#160;A-2</FONT>
    convertible preferred stock sold in our
    <FONT style="white-space: nowrap">Series&#160;A-2</FONT>
    preferred stock financing.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The following table summarizes the participation in the sale of
    the 2006 notes by any of our current directors, executive
    officers, Beneficial Owners or any member of the immediate
    family of any of the foregoing persons:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="57%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="12%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="22%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Series A-2 Convertible<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Aggregate<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Preferred Shares Issued<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Consideration<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Upon Conversion of<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Name</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Paid</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Principal of Notes</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    VantagePoint Venture Partners IV, L.P. and affiliated entities,
    or VantagePoint (1)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    250,000
</TD>
<TD nowrap align="left" valign="bottom">
     (1)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    83,333
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Sofinnova Venture Partners VI, L.P. and affiliated entities, or
    Sofinnova (2)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    140,000
</TD>
<TD nowrap align="left" valign="bottom">
     (2)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    46,667
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    The Sears Trust dtd. 3/11/91
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    150,000
</TD>
<TD nowrap align="left" valign="bottom">
     (3)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    66,667
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Christopher S. Henney,&#160;Ph.D.&#160;
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    50,000
</TD>
<TD nowrap align="left" valign="bottom">
     (4)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    22,222
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Paul F. Truex
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    33,000
</TD>
<TD nowrap align="left" valign="bottom">
     (5)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    14,667
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    BioVest III
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    312,000
</TD>
<TD nowrap align="left" valign="bottom">
     (6)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    138,667
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    TOTAL:
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    935,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    372,223
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 1pt; margin-left: 0%; width: 10%;  align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=999 iwidth=456 length=48 -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="98%"></TD>
</TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(1)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Consists of a convertible
    promissory note with a principal amount of $250,000 purchased by
    VantagePoint Venture Partners&#160;IV (Q), L.P. on June&#160;30,
    2006. This note was converted at a conversion price of $3.00, or
    100% of the issue price of our
    <FONT style="white-space: nowrap">Series&#160;A-2</FONT>
    convertible preferred stock sold in our
    <FONT style="white-space: nowrap">Series&#160;A-2</FONT>
    preferred financing. Annette Bianchi, a member of our board of
    directors, is a Managing Director at VantagePoint. Alan E.
    Salzman and James D. Marver are managing members of the general
    partner of the limited partnerships that directly hold such
    shares, and as such, they may be deemed to have voting and
    investment power with respect to such shares.
    Messrs.&#160;Salzman and Marver disclaim beneficial ownership
    with respect to such shares and other shares as described in
    this section, except to the extent of their pecuniary interest
    therein.
    </FONT></TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(2)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Consists of a convertible
    promissory note with a principal amount of $140,000 purchased by
    Sofinnova Venture Partners&#160;VI, L.P. on June&#160;30, 2006.
    This note was converted at a conversion price of $3.00, or 100%
    of the issue price of our
    <FONT style="white-space: nowrap">Series&#160;A-2</FONT>
    convertible preferred stock sold in our
    <FONT style="white-space: nowrap">Series&#160;A-2</FONT>
    preferred stock financing. Dr.&#160;James Healy, a member of our
    board of directors, is the managing member of the general
    partner of the limited partnership that directly holds such
    shares, and as such, may be deemed to share voting and
    investment power with respect to such shares. Dr.&#160;Healy
    disclaims beneficial ownership with regard to such shares and
    other shares as described in this section, except to the extent
    of his proportionate pecuniary interest in Sofinnova.
    </FONT></TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(3)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Consists of a convertible
    promissory note with a principal amount of $150,000 purchased by
    The Sears Trust dtd. 3/11/91 on April&#160;8, 2006.
    Mr.&#160;Sears was chairman of our board of directors until
    April 2008.
    </FONT></TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    115
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="98%"></TD>
</TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(4)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Consists of a convertible
    promissory note with a principal amount of $50,000 purchased by
    Dr.&#160;Henney on April&#160;8, 2006. Dr.&#160;Henney served as
    an independent director of our board of directors since 2006 and
    became chairman of our board of directors in June 2008.
    </FONT></TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(5)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Consists of a convertible
    promissory note with a principal amount of $33,000 purchased by
    Mr.&#160;Truex on April&#160;8, 2006. Mr.&#160;Truex has been
    our Chief Executive Officer since 2006.
    </FONT></TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(6)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Consists of a convertible
    promissory note with a principal amount of $312,000 purchased by
    BioVest&#160;III on April&#160;8, 2006. Christopher Lowe, our
    Chief Financial Officer and Vice President of Administration,
    has sole voting and sole investment power with respect to the
    shares owned of record by BioVest III. Mr.&#160;Lowe disclaims
    beneficial ownership with respect to such shares except to the
    extent of his pecuniary interest therein.
    </FONT></TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica"><FONT style="white-space: nowrap">Series&#160;A-2</FONT>
    Preferred Stock Financing</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    On August&#160;4, 2006, we sold in a private placement an
    aggregate of 2,774,594&#160;shares of our
    <FONT style="white-space: nowrap">Series&#160;A-2</FONT>
    convertible preferred stock, $0.001&#160;par value per share,
    for cash consideration, consideration received upon the
    conversion of the 2006 notes and in exchange for licensed
    technology, which transaction we refer to as our
    <FONT style="white-space: nowrap">Series&#160;A-2</FONT>
    preferred stock financing. Excluding the 383,918&#160;shares of
    our
    <FONT style="white-space: nowrap">Series&#160;A-2</FONT>
    convertible preferred stock that were issued upon the conversion
    of $960,000 of principal and interest accrued on the 2006 notes,
    as described in the notes below and 441,260&#160;shares issued
    in exchange for licensed technology, the remaining
    1,949,416&#160;shares were sold at a per share price of $3.00.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The following table summarizes the participation in our
    <FONT style="white-space: nowrap">Series&#160;A-2</FONT>
    preferred stock financing by any of our current directors,
    executive officers, Beneficial Owners or any member of the
    immediate family of any of the foregoing persons:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="59%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="12%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="20%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Aggregate<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Shares of Series A-2<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Consideration<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Convertible Preferred<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Name</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Paid</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Stock</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    VantagePoint
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    3,526,957
</TD>
<TD nowrap align="left" valign="bottom">
     (1)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,175,652
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Sofinnova
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,973,123
</TD>
<TD nowrap align="left" valign="bottom">
     (2)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    657,708
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    A.M.&#160;Pappas Life Science Ventures III, L.P. and affiliated
    entities, or Pappas
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    493,281
</TD>
<TD nowrap align="left" valign="bottom">
     (3)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    164,427
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    The Sears Trust dtd. 3/11/91
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    200,000
</TD>
<TD nowrap align="left" valign="bottom">
     (4)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    66,667
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Christopher S. Henney, Ph.D.
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    66,667
</TD>
<TD nowrap align="left" valign="bottom">
     (5)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    22,222
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Paul F. Truex
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    44,000
</TD>
<TD nowrap align="left" valign="bottom">
     (6)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    14,667
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    BioVest III
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    416,000
</TD>
<TD nowrap align="left" valign="bottom">
     (7)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    138,667
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    TOTAL:
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    6,720,028
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,240,010
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 1pt; margin-left: 0%; width: 10%;  align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=999 iwidth=456 length=48 -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="98%"></TD>
</TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(1)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">This aggregate consideration was
    paid by (i)&#160;conversion of a convertible promissory note in
    a total principal amount of $250,000 issued to VantagePoint
    Venture Partners&#160;IV (Q), L.P. on June&#160;30, 2006 and
    $1,751 in accrued and unpaid interest thereon at a conversion
    price of $3.00, or 100% of the issue price of our
    <FONT style="white-space: nowrap">Series&#160;A-2</FONT>
    convertible preferred stock sold in our
    <FONT style="white-space: nowrap">Series&#160;A-2</FONT>
    preferred stock financing and (ii)&#160;cash payments totaling
    $3,275,205. Includes 1,065,141&#160;shares of Series
    <FONT style="white-space: nowrap">A-2</FONT>
    convertible preferred stock owned of record by VantagePoint
    Venture Partners&#160;IV&#160;(Q), L.P., 106,632&#160;shares of
    Series <FONT style="white-space: nowrap">A-2</FONT>
    convertible preferred stock owned of record by VantagePoint
    Venture Partners&#160;IV, L.P. and 3,879&#160;shares of
    <FONT style="white-space: nowrap">Series&#160;A-2</FONT>
    convertible preferred stock owned of record by VantagePoint
    Venture Partners&#160;IV Principals Fund, L.P.
    </FONT></TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(2)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">This aggregate consideration was
    paid by (i)&#160;conversion of a convertible promissory note in
    a total principal amount of $140,000 issued to Sofinnova Venture
    Partners VI, L.P. on June&#160;30, 2006 and no accrued and
    unpaid interest thereon at a conversion price of $3.00, or 100%
    of the issue price of our
    <FONT style="white-space: nowrap">Series&#160;A-2</FONT>
    convertible preferred stock sold in our
    <FONT style="white-space: nowrap">Series&#160;A-2</FONT>
    preferred stock financing and (ii)&#160;cash payments totaling
    $1,833,123.
    </FONT></TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(3)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">This aggregate consideration was
    paid by cash payments totaling $493,281. Includes
    154,803&#160;shares of Series
    <FONT style="white-space: nowrap">A-2</FONT>
    convertible preferred stock owned of record by
    A.&#160;M.&#160;Pappas Life Science Ventures&#160;III, L.P. and
    9,624&#160;shares of
    <FONT style="white-space: nowrap">Series&#160;A-2</FONT>
    convertible preferred stock owned of record by PV&#160;III CEO
    Fund, L.P. Arthur M. Pappas, in his role as chairman of the
    investment committee of AMP&#038;A Management&#160;III, LLC, the
    general partner of A.&#160;M.&#160;Pappas Life Science
    Ventures&#160;III, L.P. and PV&#160;III CEO Fund, L.P., has
    voting and investment authority over these shares.
    </FONT></TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    116
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="98%"></TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Mr.&#160;Pappas disclaims
    beneficial ownership of these shares except to the extent of his
    pecuniary interest arising therein.
    </FONT></TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(4)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">This number reflects the value of
    the shares issued, taking into consideration the discount upon
    conversion of a convertible promissory note. This aggregate
    consideration was paid by conversion of such note in a principal
    amount of $150,000 issued to The Sears Trust dtd. 3/11/91 and no
    accrued and unpaid interest thereon at a conversion price of
    $2.25, or 75% of the issue price of our
    <FONT style="white-space: nowrap">Series&#160;A-2</FONT>
    convertible preferred stock sold in our
    <FONT style="white-space: nowrap">Series&#160;A-2</FONT>
    preferred stock financing.
    </FONT></TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(5)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">This number reflects the value of
    the shares issued, taking into consideration the discount upon
    conversion of a convertible promissory note. This aggregate
    consideration was paid by conversion of such note in a principal
    amount of $50,000 issued to Dr.&#160;Henney and no accrued and
    unpaid interest thereon at a conversion price of $2.25, or 75%
    of the issue price of our
    <FONT style="white-space: nowrap">Series&#160;A-2</FONT>
    convertible preferred stock sold in our
    <FONT style="white-space: nowrap">Series&#160;A-2</FONT>
    preferred stock financing.
    </FONT></TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(6)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">This number reflects the value of
    the shares issued, taking into consideration the discount upon
    conversion of a convertible promissory note. This aggregate
    consideration was paid by conversion of such note in a principal
    amount of $33,000 issued to Mr.&#160;Truex and no accrued and
    unpaid interest thereon at a conversion price of $2.25, or 75%
    of the issue price of our
    <FONT style="white-space: nowrap">Series&#160;A-2</FONT>
    convertible preferred stock sold in our
    <FONT style="white-space: nowrap">Series&#160;A-2</FONT>
    preferred stock financing.
    </FONT></TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(7)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">This number reflects the value of
    the shares issued, taking into consideration the discount upon
    conversion of a convertible promissory note. This aggregate
    consideration was paid by conversion of such note in a principal
    amount of $312,000 issued to BioVest&#160;III and no accrued and
    unpaid interest thereon at a conversion price of $2.25, or 75%
    of the issue price of our
    <FONT style="white-space: nowrap">Series&#160;A-2</FONT>
    convertible preferred stock sold in our
    <FONT style="white-space: nowrap">Series&#160;A-2</FONT>
    preferred stock financing.
    </FONT></TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Series&#160;B
    Preferred Stock Financing</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    On December&#160;15, 2006, we sold in a private placement an
    aggregate of 4,702,640&#160;shares of our Series&#160;B
    convertible preferred stock, $0.001&#160;par value per share,
    which transaction we refer to as our Series&#160;B preferred
    stock financing. 4,484,706 shares of our Series&#160;B
    convertible preferred stock were sold at a per share price of
    $4.25 and 217,934 shares were issued in exchange for licensed
    technology. All shares of our Series&#160;B convertible
    preferred stock were subsequently reclassified into our
    <FONT style="white-space: nowrap">Series&#160;B-1</FONT>
    convertible preferred stock at a ratio of 1:1 in connection with
    our
    <FONT style="white-space: nowrap">Series&#160;B-2</FONT>
    convertible preferred stock financing described below.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The following table summarizes the participation in our
    Series&#160;B preferred stock financing by any of our current
    directors, executive officers, Beneficial Owners or any member
    of the immediate family of any of the foregoing persons:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="59%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="12%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="20%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Aggregate<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Shares of Series B<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Consideration<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Convertible Preferred<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Name</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Paid</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Stock</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    VantagePoint&#160;(1)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    10,773,043
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,534,834
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Sofinnova&#160;(2)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    6,026,877
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,418,089
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Pappas&#160;(3)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,506,719
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    354,522
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    TOTAL:
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    18,306,639
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4,307,445
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 1pt; margin-left: 0%; width: 10%;  align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=999 iwidth=456 length=48 -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="98%"></TD>
</TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(1)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Includes 2,296,560 shares of Series
    <FONT style="white-space: nowrap">B-1</FONT>
    convertible preferred stock owned of record by VantagePoint
    Venture Partners&#160;IV&#160;(Q), L.P., 229,909&#160;shares of
    Series <FONT style="white-space: nowrap">B-1</FONT>
    convertible preferred stock owned of record by VantagePoint
    Venture Partners&#160;IV, L.P. and 8,365&#160;shares of
    <FONT style="white-space: nowrap">Series&#160;B-1</FONT>
    convertible preferred stock owned of record by VantagePoint
    Venture Partners&#160;IV Principals Fund,&#160;L.P.
    </FONT></TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(2)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Includes 1,418,089&#160;shares of
    <FONT style="white-space: nowrap">Series&#160;B-1</FONT>
    convertible preferred stock owned of record by Sofinnova Venture
    Partners&#160;VI,&#160;L.P.
    </FONT></TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(3)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Includes 333,771&#160;shares of
    <FONT style="white-space: nowrap">Series&#160;B-1</FONT>
    convertible preferred stock owned of record by
    A.&#160;M.&#160;Pappas Life Science Ventures&#160;III, L.P. and
    20,751&#160;shares of Series
    <FONT style="white-space: nowrap">B-1</FONT>
    convertible preferred stock owned of record by PV&#160;III CEO
    Fund,&#160;L.P.
    </FONT></TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    117
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">2008 Note
    Financing</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    On February&#160;15, 2008 and May&#160;14, 2008, we sold
    convertible promissory notes, or the 2008 notes, to certain of
    our existing investors for an aggregate purchase price of
    $12,200,000. The 2008 notes accrued interest at a rate of 4.2%
    per annum and had a maturity date of the earliest of
    (i)&#160;September&#160;30, 2008, (ii)&#160;immediately prior to
    (A)&#160;our underwritten public offering pursuant to the
    Securities Act of 1933, as amended, or the Securities Act,
    (B)&#160;any consolidation or merger of the Company with or into
    another into any other corporation or entity or (C)&#160;a sale
    of all or substantially of the assets or intellectual property
    of the Company or (iii)&#160;an event of default pursuant to the
    terms of the 2008 notes. In August 2008, in connection with our
    <FONT style="white-space: nowrap">Series&#160;B-2</FONT>
    preferred stock financing described below, the full principal
    amount of the 2008 notes, along with accrued but unpaid interest
    thereon of $155,630, were automatically converted into an
    aggregate of 3,876,277&#160;shares of our
    <FONT style="white-space: nowrap">Series&#160;B-2</FONT>
    convertible preferred stock at a conversion price of
    approximately $3.19, or 75% of the issue price of our
    <FONT style="white-space: nowrap">Series&#160;B-2</FONT>
    convertible preferred stock sold in our
    <FONT style="white-space: nowrap">Series&#160;B-2</FONT>
    preferred stock financing.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The following table summarizes the participation in the sale of
    the 2008 notes by any of our current directors, executive
    officers, Beneficial Owners or any member of the immediate
    family of any of the foregoing persons:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="48%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="12%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="31%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Aggregate<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Series B-2 Convertible Preferred<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Consideration<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Shares Issued Upon Conversion<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Name</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Paid</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>of Principal of Notes</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    VantagePoint
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5,652,174
</TD>
<TD nowrap align="left" valign="bottom">
     (1)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,773,231
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Sofinnova
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    4,662,056
</TD>
<TD nowrap align="left" valign="bottom">
     (2)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,462,606
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Pappas
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,290,512
</TD>
<TD nowrap align="left" valign="bottom">
     (3)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    404,867
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    TOTAL:
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    11,604,742
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3,640,704
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 1pt; margin-left: 0%; width: 10%;  align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=999 iwidth=456 length=48 -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="98%"></TD>
</TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(1)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Consists of (i)&#160;a note with a
    principal amount of $1,536,261 purchased by VantagePoint Venture
    Partners&#160;IV (Q), L.P. on February&#160;15, 2008,
    (ii)&#160;a note with a principal amount of $3,584,609 purchased
    by VantagePoint Venture Partners&#160;IV (Q), L.P. on
    May&#160;14, 2008, (iii)&#160;a note with a principal amount of
    $153,795 purchased by VantagePoint Venture Partners IV, L.P. on
    February&#160;15, 2008, (iv)&#160;a note with a principal amount
    of $358,857 purchased by VantagePoint Venture Partners IV, L.P.
    on May&#160;14, 2008, (v)&#160;a note with a principal amount of
    $5,596 purchased by VantagePoint Venture Partners&#160;IV
    Principals Fund, L.P. on February&#160;15, 2008 and (vi)&#160;a
    note with a principal amount of $13,057 purchased by
    VantagePoint Venture Partners&#160;IV Principals Fund, L.P. on
    May&#160;14, 2008.
    </FONT></TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(2)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Consists of (i)&#160;a note with a
    principal amount of $948,617 purchased by Sofinnova Venture
    Partners VI, L.P. on February&#160;15, 2008 and (ii)&#160;a note
    with a principal amount of $3,713,439 purchased by Sofinnova
    Venture Partners VI, L.P. on May&#160;14, 2008.
    </FONT></TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(3)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Consists of (i)&#160;a note with a
    principal amount of $223,272 purchased by A.M.&#160;Pappas Life
    Science Ventures III, L.P. on February&#160;15, 2008,
    (ii)&#160;a note with a principal amount of $13,881 purchased by
    PV III CEO Fund, L.P. on February&#160;15, 2008, (iii)&#160;a
    note with a principal amount of $991,704 purchased by
    A.M.&#160;Pappas Life Science Ventures III, L.P. on May&#160;14,
    2008 and (iv)&#160;a note with a principal amount of $61,655
    purchased by PV III CEO Fund, L.P. on May&#160;14, 2008.
    </FONT></TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica"><FONT style="white-space: nowrap">Series&#160;B-2</FONT>
    Preferred Stock Financing</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    On August&#160;12, 2008, we sold in a private placement
    (i)&#160;an aggregate of 5,523,337&#160;shares of our
    <FONT style="white-space: nowrap">Series&#160;B-2</FONT>
    convertible preferred stock, $0.001&#160;par value per share,
    and (ii)&#160;warrants, which we refer to as the 2008 warrants,
    to purchase an aggregate of 411,764&#160;shares of our common
    stock, par value $0.001 per share, at an exercise price of $0.78
    per share, which transaction we refer to as our
    <FONT style="white-space: nowrap">Series&#160;B-2</FONT>
    preferred stock financing. Excluding the 3,876,277&#160;shares
    of our
    <FONT style="white-space: nowrap">Series&#160;B-2</FONT>
    convertible preferred stock that were issued upon the conversion
    of $12,200,000 of principal and $155,630 interest accrued on the
    2008 notes at a conversion price of approximately $3.19, or 75%
    of the issue price of our
    <FONT style="white-space: nowrap">Series&#160;B-2</FONT>
    convertible preferred stock, the remaining 1,647,060&#160;shares
    were sold at a per share price of $4.25.
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    118
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The following table summarizes the participation in our
    <FONT style="white-space: nowrap">Series&#160;B-2</FONT>
    preferred stock financing by any of our current directors,
    executive officers, Beneficial Owners or any member of the
    immediate family of any of the foregoing persons:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="46%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="10%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="13%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="17%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Shares of Common<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Aggregate<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Shares of Series<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Stock Issuable Upon<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Consideration<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>B-2 Convertible<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>the Exercise of 2008<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Name</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Paid</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Preferred Stock</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Warrants</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    VantagePoint
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5,727,421
</TD>
<TD nowrap align="left" valign="bottom">
     (1)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,796,838
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Sofinnova
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    4,719,515
</TD>
<TD nowrap align="left" valign="bottom">
     (2)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,480,632
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Pappas
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,306,155
</TD>
<TD nowrap align="left" valign="bottom">
     (3)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    409,774
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Caxton Advantage Life Sciences Fund, L.P.&#160;(4)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    3,500,003
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    823,530
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    205,882
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    HBM BioCapital, L.P. and affiliated entities, or HBM
    BioCapital&#160;(5)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    3,500,003
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    823,530
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    205,882
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    TOTAL:
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    18,753,097
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5,334,304
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    411,764
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 1pt; margin-left: 0%; width: 10%;  align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=999 iwidth=456 length=48 -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="98%"></TD>
</TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(1)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">This aggregate consideration was
    paid by conversion of (i)&#160;convertible promissory notes in a
    total principal amount of $5,120,870 issued to VantagePoint
    Venture Partners&#160;IV (Q), L.P. on February&#160;15, 2008 and
    May&#160;14, 2008 and $68,176 accrued but unpaid interest
    thereon, (ii)&#160;convertible promissory notes in a total
    principal amount of $512,652 issued to VantagePoint Venture
    Partners IV, L.P. on February&#160;15, 2008 and May&#160;14,
    2008 and $6,825 accrued but unpaid interest thereon and
    (iii)&#160;convertible promissory notes in a total principal
    amount of $18,652 issued to VantagePoint Venture
    Partners&#160;IV Principals Fund, L.P. on February&#160;15, 2008
    and May&#160;14, 2008 and $246 accrued but unpaid interest
    thereon. Includes 1,627,936&#160;shares of
    <FONT style="white-space: nowrap">Series&#160;B-2</FONT>
    convertible preferred stock owned of record by VantagePoint
    Venture Partners&#160;IV&#160;(Q), L.P., 162,973&#160;shares of
    <FONT style="white-space: nowrap">Series&#160;B-2</FONT>
    convertible preferred stock owned of record by VantagePoint
    Venture Partners&#160;IV, L.P. and 5,929&#160;shares of
    <FONT style="white-space: nowrap">Series&#160;B-2</FONT>
    convertible preferred stock owned of record by VantagePoint
    Venture Partners&#160;IV Principals Fund,&#160;L.P.
    </FONT></TD>
</TR>


<TR style="line-height: 4pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(2)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">This aggregate consideration was
    paid by conversion of convertible promissory notes in a total
    principal amount of $4,662,056 issued to Sofinnova Venture
    Partners VI, L.P. on February&#160;15, 2008 and May&#160;14,
    2008 and $57,459 accrued but unpaid interest thereon.
    </FONT></TD>
</TR>


<TR style="line-height: 4pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(3)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">This aggregate consideration was
    paid by conversion of (i)&#160;convertible promissory notes in a
    total principal amount of $1,214,977 issued to A.M.&#160;Pappas
    Life Science Ventures III, L.P. on February&#160;15, 2008 and
    May&#160;14, 2008 and $14,729 accrued but unpaid interest
    thereon and (ii) convertible promissory notes in a total
    principal amount of $75,536 issued to PV III CEO Fund, L.P. on
    February&#160;15, 2008 and May&#160;14, 2008 and $913 accrued
    but unpaid interest thereon. Includes 385,790&#160;shares of
    <FONT style="white-space: nowrap">Series&#160;B-2</FONT>
    convertible preferred stock owned of record by
    A.&#160;M.&#160;Pappas Life Science Ventures&#160;III, L.P. and
    23,984&#160;shares of
    <FONT style="white-space: nowrap">Series&#160;B-2</FONT>
    convertible preferred stock owned of record by PV&#160;III CEO
    Fund, L.P.
    </FONT></TD>
</TR>


<TR style="line-height: 4pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(4)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Dr.&#160;A.&#160;Rachel Leheny, a
    member of our board of directors, is (i)&#160;a Managing
    Director of Caxton Advantage Venture Partners, L.P., which is
    the General Partner of Caxton Advantage Life Sciences Fund,
    L.P., a life-sciences venture capital fund that she co-founded
    in 2006 and (ii)&#160;a member of Advantage Life Sciences
    Partners LLC, the Managing General Partner of Caxton Advantage
    Venture Partners, L.P. Dr.&#160;Leheny disclaims beneficial
    ownership with regard to the shares and other shares as
    described in this section, except to the extent of her
    proportionate pecuniary interests, either directly or indirectly
    through Caxton Advantage Venture Partners, L.P., in Caxton
    Advantage Life Sciences Fund, L.P.
    </FONT></TD>
</TR>


<TR style="line-height: 4pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(5)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Includes 700,000&#160;shares of
    <FONT style="white-space: nowrap">Series&#160;B-2</FONT>
    convertible preferred stock owned of record by HBM BioCapital
    (EUR) L.P. and 123,530&#160;shares of
    <FONT style="white-space: nowrap">Series&#160;B-2</FONT>
    convertible preferred stock owned of record by HBM
    BioCapital&#160;(USD) L.P. The board of directors of HBM
    BioCapital Ltd., the general partner of both HBM BioCapital
    (EUR) L.P. and HBM BioCapital (USD) L.P., together the HBM
    BioCapital Funds, has sole voting and dispositive power with
    respect to such shares. The board of directors of HBM BioCapital
    Ltd. consists of John Arnold, Sophia Harris, Richard Coles,
    Dr.&#160;Andreas Wicki and John Urquhart, each of whom disclaims
    beneficial ownership with regard to the shares and other shares
    as described in this section, except to the extent of their
    proportionate pecuniary interests in HBM BioCapital Ltd.
    </FONT></TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">2009 Bridge
    Financing</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    In July and September 2009, we sold convertible promissory
    notes, or the 2009 notes, that are secured by a first priority
    security interest in all of our assets, and warrants, or the
    2009 warrants, to purchase shares of our preferred stock to
    certain of our existing investors for an
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    119
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    aggregate purchase price of $10,000,000. We refer to these
    transactions collectively as our 2009 bridge financing. The 2009
    notes accrue interest at a rate of 8% per annum and have a
    maturity date of the earliest of (i)&#160;July&#160;17, 2010,
    (ii)&#160;the date of the sale of all or substantially of our
    equity interests or assets or (iii)&#160;an event of default
    pursuant to the terms of the 2009 notes. The 2009 notes are
    automatically convertible into the securities that are sold in
    our next equity financing at a 25% discount to the price to
    which such securities are sold to other investors, or they are
    alternatively convertible into shares of our
    <FONT style="white-space: nowrap">Series&#160;B-2</FONT>
    convertible preferred stock in connection with a change of
    control of the Company. Each 2009 warrant is exercisable for the
    security into which each 2009 note is converted, at the price at
    which that security is sold to other investors. Depending on
    when the 2009 notes are converted, each 2009 warrant may be
    exercisable for a number of shares equal to the quotient
    obtained by dividing (x) (i)&#160;25% of the principal amount of
    the accompanying 2009 notes, in the event the conversion occurs
    prior to April&#160;1, 2010, or (ii)&#160;50% of the principal
    amount of the accompanying 2009 notes, in the event the
    conversion occurs on or after April&#160;1, 2010, by
    (y)&#160;the purchase price of the securities into which the
    note is ultimately converted.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The following table summarizes the participation in the 2009
    bridge financing by any of our current directors, executive
    officers, Beneficial Owners or any member of the immediate
    family of any of the foregoing persons:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="48%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="10%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="14%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="14%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Aggregate<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Warrant Coverage<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Warrant Coverage<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Consideration<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Amount Prior to<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Amount After<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Name</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Paid</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>April&#160;1, 2010</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>April&#160;1, 2010</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    VantagePoint
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    4,569,675
</TD>
<TD nowrap align="left" valign="bottom">
     (1)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,142,419
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    2,284,839
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Sofinnova
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    2,951,720
</TD>
<TD nowrap align="left" valign="bottom">
     (2)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    737,930
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,475,860
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Pappas
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    770,225
</TD>
<TD nowrap align="left" valign="bottom">
     (3)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    192,556
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    385,111
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Caxton Advantage Life Sciences Fund, L.P.&#160;
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    854,190
</TD>
<TD nowrap align="left" valign="bottom">
     (4)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    213,548
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    427,095
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    HBM BioCapital
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    854,190
</TD>
<TD nowrap align="left" valign="bottom">
     (5)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    213,547
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    427,095
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    TOTAL:
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    10,000,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    2,500,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5,000,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 1pt; margin-left: 0%; width: 10%;  align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=999 iwidth=456 length=48 -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="98%"></TD>
</TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(1)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Consists of (i)&#160;a note with a
    principal amount of $1,656,051 purchased by VantagePoint Venture
    Partners&#160;IV (Q), L.P. on July&#160;17, 2009, (ii)&#160;a
    note with a principal amount of $2,484,076 purchased by
    VantagePoint Venture Partners&#160;IV (Q), L.P. on
    September&#160;9, 2009, (iii)&#160;a note with a principal
    amount of $165,788 purchased by VantagePoint Venture Partners
    IV, L.P. on July&#160;17, 2009, (iv)&#160;a note with a
    principal amount of $248,681 purchased by VantagePoint Venture
    Partners IV, L.P. on September&#160;9, 2009, (v)&#160;a note
    with a principal amount of $6,031 purchased by VantagePoint
    Venture Partners&#160;IV Principals Fund, L.P. on July&#160;17,
    2009 and (vi)&#160;a note with a principal amount of $9,047
    purchased by VantagePoint Venture Partners&#160;IV Principals
    Fund, L.P. on September&#160;9, 2009.
    </FONT></TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(2)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Consists of (i)&#160;a note with a
    principal amount of $1,180,688 purchased by Sofinnova Venture
    Partners VI, L.P. on July&#160;17, 2009 and (ii)&#160;a note
    with a principal amount of $1,771,032 purchased by Sofinnova
    Venture Partners VI, L.P. on September&#160;9, 2009.
    </FONT></TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(3)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Consists of (i)&#160;a note with a
    principal amount of $290,058 purchased by A.M.&#160;Pappas Life
    Science Ventures III, L.P. on July&#160;17, 2009, (ii)&#160;a
    note with a principal amount of $435,086 purchased by
    A.M.&#160;Pappas Life Science Ventures III, L.P. on
    September&#160;9, 2009, (iii)&#160;a note with a principal
    amount of $18,032 purchased by PV III CEO Fund, L.P. on
    July&#160;17, 2009 and (iv)&#160;a note with a principal amount
    of $27,049 purchased by PV III CEO Fund, L.P. on
    September&#160;9, 2009.
    </FONT></TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(4)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Consists of (i)&#160;a note with a
    principal amount of $341,676 purchased by Caxton Advantage Life
    Sciences Fund, L.P. on July&#160;17, 2009 and (ii)&#160;a note
    with a principal amount of $512,514 purchased by Caxton
    Advantage Life Sciences Fund, L.P. on September&#160;9, 2009.
    </FONT></TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(5)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Consists of (i)&#160;a note with a
    principal amount of $290,424 purchased by HBM BioCapital (EUR)
    L.P. on July&#160;17, 2009, (ii)&#160;a note with a principal
    amount of $435,637 purchased by HBM BioCapital (EUR) L.P. on
    September&#160;9, 2009, (iii)&#160;a note with a principal
    amount of $51,252 purchased by HBM BioCapital (USD) L.P. on
    July&#160;17, 2009 and (iv)&#160;a note with a principal amount
    of $76,877 purchased by HBM BioCapital (USD) L.P. on
    September&#160;9, 2009.
    </FONT></TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    120
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Transactions with
    Our Executive Officers, Directors and Beneficial
    Owners</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Indemnification
    Agreements</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We have entered into indemnification agreements with each of our
    directors and certain of our executive officers. These
    agreements require us to indemnify these individuals and, in
    certain cases, affiliates of such individuals, to the fullest
    extent permitted under Delaware law against liabilities that may
    arise by reason of their service to us, and to advance expenses
    incurred as a result of any proceeding against them as to which
    they could be indemnified.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Registration
    Rights</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Certain of our directors, executive officers and Beneficial
    Owners are party to agreements providing for rights to register
    under the Securities Act certain shares of our capital stock.
    For more information regarding the registration rights granted
    pursuant to these agreements, see the section entitled
    &#147;Description of Capital Stock&#151;Registration
    Rights.&#148;
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Change in Control
    and Severance Agreements</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We have entered into change in control agreements and severance
    agreements with certain of our officers, which provide for
    severance benefits and acceleration of the vesting of awards.
    For more information regarding these agreements, see the
    sections entitled &#147;Compensation&#151;Severance and Change
    in Control Agreements&#148; and
    &#147;Compensation&#151;Potential Payments Upon Termination or
    Change in Control.&#148;
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Restricted Stock
    and Stock Option Awards</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    For more information regarding restricted stock and stock option
    awards granted to our named executive officers and directors,
    see the sections entitled &#147;Compensation&#151;Outstanding
    Equity Awards at Year End&#148; and
    &#147;Compensation&#151;Director Compensation.&#148;
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Review, Approval
    and Ratification of Transactions with Related Parties</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Our board of directors reviews and approves transactions with
    directors, officers and Beneficial Owners, each, a related
    party. Prior to this offering, before our board of
    directors&#146; consideration of a transaction with a related
    party, the material facts as to the related party&#146;s
    relationship or interest in the transaction have been disclosed
    to our board of directors, and the transaction has not been
    considered approved by our board of directors unless a majority
    of the directors who are not interested in the transaction
    approve the transaction. Following this offering, such
    transactions must be approved by our audit committee or another
    independent body of our board of directors.
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    121
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<A name='114'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">PRINCIPAL
    STOCKHOLDERS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The following table sets forth information with respect to the
    beneficial ownership of our common stock, as of August&#160;31,
    2009, the most recent practicable date, and as adjusted to
    reflect the sale of common stock offered by us in this offering,
    for:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    each beneficial owner of more than 5% of our outstanding common
    stock;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    each of our named executive officers and directors;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    all of our executive officers and directors as a group.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Beneficial ownership is determined in accordance with the rules
    of the SEC. These rules generally attribute beneficial ownership
    of securities to persons who possess sole or shared voting power
    or investment power with respect to those securities and include
    shares of common stock issuable upon the exercise of stock
    options that are immediately exercisable or exercisable within
    60&#160;days after August&#160;31, 2009, but excludes unvested
    stock options, which contain an early exercise feature. Except
    as otherwise indicated, all of the shares reflected in the table
    are shares of common stock and all persons listed below have
    sole voting and investment power with respect to the shares
    beneficially owned by them, subject to applicable community
    property laws. The information is not necessarily indicative of
    beneficial ownership for any other purpose.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Percentage ownership calculations for beneficial ownership prior
    to this offering are based on 16,746,731&#160;shares outstanding
    as of August&#160;31, 2009, assuming the conversion of all of
    the outstanding convertible preferred stock and the exercise of
    certain warrants to purchase shares of our common stock.
    Percentage ownership calculations for beneficial ownership after
    this offering also include the shares we are offering hereby and
    additional shares we expect to issue prior to the closing of
    this offering pursuant to stock option exercises. Except as
    otherwise indicated in the table below, addresses of named
    beneficial owners are in care of Anthera Pharmaceuticals, Inc.,
    25801 Industrial Blvd., Suite&#160;B, Hayward, California 94545.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    In computing the number of shares of common stock beneficially
    owned by a person and the percentage ownership of that person,
    we deemed outstanding shares of common stock subject to options
    held by that person that are currently exercisable or
    exercisable within 60&#160;days of August&#160;31, 2009. We did
    not deem these shares outstanding, however, for the purpose of
    computing the percentage ownership of any other person.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="65%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="9%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="6%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="6%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="6" nowrap align="center" valign="bottom">
    <B>Percentage of Common Stock<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Shares<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="6" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Beneficially Owned</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Beneficially<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Before<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>After<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Name of Beneficial Owner</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Owned</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Offering</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Offering</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <B>5% or Greater Stockholders:</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    VantagePoint Venture Partners IV, L.P. and affiliated entities,
    or VantagePoint (1)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5,521,177
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    32.97
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Sofinnova Venture Partners VI, L.P. and affiliated entities, or
    Sofinnova (2)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3,556,429
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    21.24
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Caxton Advantage Life Sciences Fund, L.P.&#160;(3)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,033,058
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    6.09
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    HBM BioCapital, L.P. and affiliated entities&#160;(4)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,029,412
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    6.07
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    A.M.&#160;Pappas Life Science Ventures III, L.P. and affiliated
    entities&#160;(5)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    928,723
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5.55
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    All 5% or greater stockholders as a group
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    12,068,799
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    70.32
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    <B>Named Executive Officers and Directors:</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Paul F. Truex&#160;(6)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,938,175
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    11.08
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Christopher P. Lowe&#160;(7)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    315,429
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.87
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    James E. Pennington,&#160;M.D.&#160;(8)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    254,272
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.51
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    122
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="65%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="9%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="6%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="6%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="6" nowrap align="center" valign="bottom">
    <B>Percentage of Common Stock<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Shares<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="6" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Beneficially Owned</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Beneficially<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Before<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>After<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Name of Beneficial Owner</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Owned</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Offering</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Offering</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Colin Hislop,&#160;M.D.&#160;(9)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    282,947
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.66
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Debra Odink,&#160;Ph.D.&#160;(10)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    196,525
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.17
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Christopher S. Henney,&#160;Ph.D.&#160;(11)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    137,028
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    *
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Annette Bianchi&#160;(12)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    13,853
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    *
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    James&#160;I. Healy,&#160;M.D.,&#160;Ph.D.&#160;(2) (13)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3,591,429
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    21.45
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    A. Rachel Leheny,&#160;Ph.D.&#160;(3)&#160;(14)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,036,703
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    6.11
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Donald J. Santel&#160;(15)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    15,416
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    *
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    David E. Thompson&#160;(16)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    41,249
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    *
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    All named executive officers and directors as a
    group&#160;(11&#160;persons)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    7,823,026
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    42.73
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 1pt; margin-left: 0%; width: 10%;  align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=999 iwidth=456 length=48 -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">&#160;*
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Represents beneficial ownership of
    less than 1% of the shares of common stock.
    </FONT></TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(1)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Includes
    (i)&#160;1,065,141&#160;shares of common stock issuable upon
    conversion of
    <FONT style="white-space: nowrap">Series&#160;A-2</FONT>
    convertible preferred stock, 2,296,560&#160;shares of common
    stock issuable upon conversion of
    <FONT style="white-space: nowrap">Series&#160;B-1</FONT>
    convertible preferred stock and 1,627,936&#160;shares of common
    stock issuable upon conversion of
    <FONT style="white-space: nowrap">Series&#160;B-2</FONT>
    convertible preferred stock all owned of record by VantagePoint
    Venture Partners&#160;IV (Q), L.P.,
    (ii)&#160;106,632&#160;shares of common stock issuable upon
    conversion of
    <FONT style="white-space: nowrap">Series&#160;A-2</FONT>
    convertible preferred stock, 229,909&#160;shares of common stock
    issuable upon conversion of
    <FONT style="white-space: nowrap">Series&#160;B-1</FONT>
    convertible preferred stock and 162,973&#160;shares of common
    stock issuable upon conversion of
    <FONT style="white-space: nowrap">Series&#160;B-2</FONT>
    convertible preferred stock all owned of record by VantagePoint
    Venture Partners IV, L.P., (iii)&#160;3,879&#160;shares of
    common stock issuable upon conversion of
    <FONT style="white-space: nowrap">Series&#160;A-2</FONT>
    convertible preferred stock, 8,365&#160;shares of common stock
    issuable upon conversion of
    <FONT style="white-space: nowrap">Series&#160;B-1</FONT>
    convertible preferred stock and 5,929&#160;shares of common
    stock issuable upon conversion of
    <FONT style="white-space: nowrap">Series&#160;B-2</FONT>
    convertible preferred stock all owned of record by VantagePoint
    Venture Partners&#160;IV Principals Fund, L.P., and (iv) options
    to purchase an additional 13,853 shares of common stock that are
    exercisable within 60&#160;days of August&#160;31, 2009 that are
    owned of record by Annette Bianchi over which VantagePoint has
    sole voting and investment power. Ms. Bianchi, a director of
    Anthera, is a Managing Director at VantagePoint. Alan E. Salzman
    and James D. Marver are managing members of the general partner
    of the limited partnerships that directly hold such shares, and
    as such, they may be deemed to have voting and investment power
    with respect to such shares. Messrs.&#160;Salzman and Marver
    disclaim beneficial ownership with respect to such shares except
    to the extent of their pecuniary interest therein. The address
    for VantagePoint Venture Partners is 1001 Bayhill Drive,
    Suite&#160;300, San&#160;Bruno, CA 94066.
    </FONT></TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(2)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Includes 657,708&#160;shares of
    common stock issuable upon conversion of
    <FONT style="white-space: nowrap">Series&#160;A-2</FONT>
    convertible preferred stock, 1,418,089&#160;shares of common
    stock issuable upon conversion of
    <FONT style="white-space: nowrap">Series&#160;B-1</FONT>
    convertible preferred stock and 1,480,632&#160;shares of common
    stock issuable upon conversion of
    <FONT style="white-space: nowrap">Series&#160;B-2</FONT>
    convertible preferred stock all owned of record by Sofinnova
    Venture Partners VI, L.P. Dr.&#160;James Healy, a director of
    Anthera, is the managing member of the general partner of the
    limited partnership that directly holds such shares, and as
    such, may be deemed to share voting and investment power with
    respect to such shares. Dr.&#160;Healy disclaims beneficial
    ownership except to the extent of his proportionate pecuniary
    interest in Sofinnova. The address for Sofinnova Ventures is 850
    Oak Grove Ave., Menlo Park, CA 94025.
    </FONT></TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(3)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Includes
    (i)&#160;823,530&#160;shares of common stock issuable upon
    conversion of
    <FONT style="white-space: nowrap">Series&#160;B-2</FONT>
    convertible preferred stock and 205,882&#160;shares of common
    stock issuable upon exercise of outstanding warrants all owned
    of record by Caxton Advantage Life Sciences Fund, L.P. and
    (ii)&#160;options to purchase an additional 3,646&#160;shares of
    common stock that are exercisable within 60&#160;days of
    August&#160;31, 2009 that are owned of record by Dr.&#160;A.
    Rachel Leheny over which Caxton Advantage Life Sciences Fund,
    L.P. may be deemed to hold voting power. Dr.&#160;Leheny, a
    member of the board of directors, is (i)&#160;a Managing
    Director of Caxton Advantage Venture Partners, L.P., which is
    the General Partner of Caxton Advantage Life Sciences Fund,
    L.P., a life-sciences venture capital fund that she co-founded
    in 2006 and (ii)&#160;a member of Advantage Life Sciences
    Partners LLC, the Managing General Partner of Caxton Advantage
    Venture Partners, L.P. Dr.&#160;Leheny disclaims beneficial
    ownership except to the extent of her proportionate pecuniary
    interests, either directly or indirectly through Caxton
    Advantage Venture Partners, L.P., in Caxton Advantage Life
    Sciences Fund, L.P. The address for Caxton Advantage Life
    Sciences Fund, L.P. is 500&#160;Park Avenue, New York, NY 10022.
    </FONT></TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(4)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Includes
    (i)&#160;700,000&#160;shares of common stock issuable upon
    conversion of
    <FONT style="white-space: nowrap">Series&#160;B-2</FONT>
    convertible preferred stock and 175,000&#160;shares of common
    stock issuable upon exercise of outstanding warrants all owned
    of record by HBM BioCapital (EUR) L.P. and
    (ii)&#160;123,530&#160;shares of common stock issuable upon
    conversion of
    <FONT style="white-space: nowrap">Series&#160;B-2</FONT>
    convertible preferred stock and 30,882&#160;shares of common
    stock issuable upon exercise of outstanding warrants
    </FONT></TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    123
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">all owned of record by HBM
    BioCapital (USD) L.P., collectively, the HBM BioCapital Funds.
    The board of directors of HBM BioCapital Ltd., the general
    partner of the HBM BioCapital Funds, has sole voting and
    dispositive power with respect to such shares. The board of
    directors of HBM BioCapital Ltd. consists of John Arnold, Sophia
    Harris, Richard Coles, Dr.&#160;Andreas Wicki and John Urquhart,
    none of whom has individual voting or investment power with
    respect to the shares. The address for the HBM BioCapital Funds
    is
    <FONT style="white-space: nowrap">c/o&#160;HBM</FONT>
    BioCapital Ltd., Centennial Towers, 3rd Floor, 2454&#160;West
    Bay Road, Grand Cayman, Cayman Islands.
    </FONT></TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(5)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Includes
    (i)&#160;154,803&#160;shares of common stock issuable upon
    conversion of
    <FONT style="white-space: nowrap">Series&#160;A-2</FONT>
    convertible preferred stock, 333,771&#160;shares of common stock
    issuable upon conversion of
    <FONT style="white-space: nowrap">Series&#160;B-1</FONT>
    preferred stock and 385,790&#160;shares of common stock issuable
    upon conversion of
    <FONT style="white-space: nowrap">Series&#160;B-2</FONT>
    convertible preferred stock all owned of record by A. M. Pappas
    Life Science Ventures III, L.P. and (ii)&#160;9,624&#160;shares
    of common stock issuable upon conversion of
    <FONT style="white-space: nowrap">Series&#160;A-2</FONT>
    convertible preferred stock, 20,751&#160;shares of common stock
    issuable upon conversion of
    <FONT style="white-space: nowrap">Series&#160;B-1</FONT>
    convertible preferred stock and 23,984&#160;shares of common
    stock issuable upon conversion of
    <FONT style="white-space: nowrap">Series&#160;B-2</FONT>
    convertible preferred stock all owned of record by PV III CEO
    Fund, L.P. Arthur M. Pappas, in his role as chairman of the
    investment committee of AMP&#038;A Management III, LLC, the
    general partner of A. M. Pappas Life Science Ventures III, L.P.
    and PV III CEO Fund, L.P., has voting and investment authority
    over these shares. Mr.&#160;Pappas disclaims beneficial
    ownership of these shares except to the extent of his pecuniary
    interest arising therein. The address for both A. M. Pappas Life
    Science Ventures III, L.P. and PV III CEO Fund, L.P. is 2520
    Meridian Parkway, Suite&#160;400, Durham, NC 27713.
    </FONT></TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(6)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Includes 1,135,000&#160;shares of
    common stock subject to vesting pursuant to the terms of
    Mr.&#160;Truex&#146;s restricted stock agreement, all of which
    has vested, options to purchase an additional
    753,037&#160;shares of common stock that are exercisable within
    60&#160;days of August&#160;31, 2009, 35,471&#160;shares of
    common stock issuable upon conversion of
    <FONT style="white-space: nowrap">Series&#160;A-1</FONT>
    convertible preferred stock and 14,667&#160;shares of common
    stock issuable upon conversion of
    <FONT style="white-space: nowrap">Series&#160;A-2</FONT>
    convertible preferred stock all owned of record by Paul F. Truex.
    </FONT></TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(7)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Includes (i)&#160;options to
    purchase 131,012&#160;shares of common stock that are
    exercisable within 60&#160;days of August&#160;31, 2009 and
    30,000&#160;shares of common stock issuable upon conversion of
    <FONT style="white-space: nowrap">Series&#160;A-1</FONT>
    convertible preferred stock owned of record by Mr.&#160;Lowe,
    (ii)&#160;138,667&#160;shares of common stock issuable upon
    conversion of
    <FONT style="white-space: nowrap">Series&#160;A-2</FONT>
    convertible preferred stock owned of record by BioVest&#160;III
    and (iii)&#160;options to purchase 15,750&#160;shares of common
    stock that are exercisable within 60&#160;days of
    August&#160;31, 2009 owned of record by Dina Gonzalez,
    Mr.&#160;Lowe&#146;s spouse. Mr.&#160;Lowe has sole voting and
    sole investment power with respect to the shares owned of record
    by BioVest III. Mr.&#160;Lowe disclaims beneficial ownership
    with respect to such shares except to the extent of his
    pecuniary interest therein. The address for BioVest&#160;III is
    25801 Industrial Blvd., Suite&#160;B, Hayward, CA 94545.
    </FONT></TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(8)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Includes 180,000&#160;shares of
    common stock 63,750 shares of which are subject to the
    Company&#146;s right of repurchase, and options to purchase an
    additional 74,272&#160;shares of common stock that are
    exercisable within 60&#160;days of August&#160;31, 2009 owned of
    record by Dr.&#160;Pennington.
    </FONT></TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(9)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Includes 10,000&#160;shares of
    common stock and options to purchase an additional
    272,947&#160;shares of common stock that are exercisable within
    60&#160;days of August&#160;31, 2009 owned of record by
    Dr.&#160;Hislop.
    </FONT></TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(10)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Includes 134,232&#160;shares of
    common stock, 5,177 shares of which are subject to the
    Company&#146;s right of repurchase, options to purchase an
    additional 32,293&#160;shares of common stock that are
    exercisable within 60&#160;days of August&#160;31, 2009 and
    30,000&#160;shares of common stock issuable upon conversion of
    <FONT style="white-space: nowrap">Series&#160;A-1</FONT>
    convertible preferred stock all owned of record by the Debra
    Odink Living Trust, for which Dr.&#160;Odink serves as trustee.
    </FONT></TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(11)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Includes 25,000&#160;shares of
    common stock, options to purchase an additional
    31,666&#160;shares of common stock that are exercisable within
    60&#160;days of August&#160;31, 2009, 58,140&#160;shares of
    common stock issuable upon conversion of
    <FONT style="white-space: nowrap">Series&#160;A-1</FONT>
    convertible preferred stock and 22,222&#160;shares of common
    stock issuable upon conversion of
    <FONT style="white-space: nowrap">Series&#160;A-2</FONT>
    convertible preferred stock all owned of record by
    Dr.&#160;Henney.
    </FONT></TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(12)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Includes options to purchase
    13,853&#160;shares of common stock that are exercisable within
    60&#160;days of August&#160;31, 2009 owned of record by
    Ms.&#160;Bianchi. VantagePoint has sole voting and investment
    power with respect to these shares, and Ms.&#160;Bianchi
    disclaims beneficial ownership thereof except to the extent of
    her pecuniary interest in the shares of common stock issuable
    upon exercise of the option.
    </FONT></TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(13)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Includes 35,000&#160;shares of
    common stock owned of record by Dr.&#160;Healy, 21,147 shares of
    which are subject to the Company&#146;s right of repurchase.
    </FONT></TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(14)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Includes options to purchase
    7,291&#160;shares of common stock that are exercisable within
    60&#160;days of August&#160;31, 2009 owned of record by
    Dr.&#160;Leheny. Caxton Advantage Life Sciences Fund, L.P. may
    be deemed to hold voting power with respect to 3,646 of these
    shares.
    </FONT></TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(15)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Includes options to purchase
    15,416&#160;shares of common stock that are exercisable within
    60&#160;days of August&#160;31, 2009 owned of record by the
    Mr.&#160;Santel.
    </FONT></TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">(16)
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Includes 35,000&#160;shares of
    common stock and options to purchase an additional
    6,249&#160;shares of common stock that are exercisable within
    60&#160;days of August&#160;31, 2009 owned of record by
    Mr.&#160;Thompson.
    </FONT></TD>
</TR>

</TABLE>

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    <BR>
    124
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<A name='115'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">DESCRIPTION OF
    CAPITAL STOCK</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">General</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The following description of our capital stock is intended as a
    summary only and is qualified in its entirety by reference to
    our amended and restated certificate of incorporation and
    amended and restated bylaws to be in effect at the closing of
    this offering, which are filed as exhibits to the registration
    statement of which this prospectus forms a part, and to the
    applicable provisions of the Delaware General Corporation Law.
    We refer in this section to our amended and restated certificate
    of incorporation as our certificate of incorporation, and we
    refer to our amended and restated bylaws as our bylaws.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Upon completion of this offering, our authorized capital stock
    will consist
    of&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;shares
    of common stock, par value $0.001 per share,
    and&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;shares
    of preferred stock, par value $0.001 per share, all of which
    shares of preferred stock will be undesignated.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    As of August&#160;31, 2009, 16,746,731&#160;shares of our common
    stock were outstanding and held by 38&#160;stockholders of
    record. This amount assumes the conversion of all outstanding
    shares of our preferred stock into common stock, which will
    occur immediately prior to the closing of this offering. In
    addition, as of August&#160;31, 2009, we had outstanding options
    to purchase 2,248,623&#160;shares of our common stock under our
    2005 Stock Option Plan at a weighted-average exercise price of
    $0.50 per share, all of which were exercisable, and outstanding
    warrants to purchase 411,764&#160;shares of our common stock.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Common
    Stock</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The holders of our common stock are entitled to one vote for
    each share held on all matters submitted to a vote of the
    stockholders. The holders of our common stock do not have any
    cumulative voting rights. Holders of our common stock are
    entitled to receive ratably any dividends declared by the board
    of directors out of funds legally available for that purpose,
    subject to any preferential dividend rights of any outstanding
    preferred stock. Our common stock has no preemptive rights,
    conversion rights or other subscription rights or redemption or
    sinking fund provisions.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    In the event of our liquidation, dissolution or winding up,
    holders of our common stock will be entitled to share ratably in
    all assets remaining after payment of all debts and other
    liabilities and any liquidation preference of any outstanding
    preferred stock. The shares to be issued by us in this offering
    will be, when issued and paid for, validly issued, fully paid
    and non-assessable.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Preferred
    Stock</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Our board of directors is authorized, subject to any limitations
    prescribed by law, without stockholder approval, to issue from
    time to time up to an aggregate
    of&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;shares
    of preferred stock, in one or more series, each series to have
    such rights and preferences, including voting rights, dividend
    rights, conversion rights, redemption privileges and liquidation
    preferences as our board of directors determines. The rights of
    the holders of common stock will be subject to, and may be
    adversely affected by, the rights of holders of any preferred
    stock that may be issued in the future. Issuance of preferred
    stock, while providing desirable flexibility in connection with
    possible acquisitions and other corporate purposes, could have
    the effect of making it more difficult for a third party to
    acquire, or of discouraging a third party from attempting to
    acquire, a majority of our outstanding voting stock. We
    currently have no shares of preferred stock outstanding and we
    have no present plans to issue any shares of preferred stock.
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    125
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Warrants</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    As of August&#160;31, 2009, warrants exercisable for an
    aggregate of up to 411,764&#160;shares of our common stock were
    outstanding. Of these, warrants exercisable for
    411,764&#160;shares of our common stock were issued in
    connection with a preferred stock financing, are immediately
    exercisable at an exercise price of $0.78 per share and will
    expire upon the earlier of (i)&#160;August&#160;12, 2015,
    (ii)&#160;an authorized warrant cancellation in accordance with
    the terms of the warrants, (iii)&#160;the closing of this
    offering or (iv)&#160;the sale of a majority of our equity
    interests or assets. Warrants were issued in connection with a
    bridge financing arrangement, are exercisable for shares issued
    in our next equity financing or, alternatively shares of our
    <FONT style="white-space: nowrap">Series&#160;B-2</FONT>
    convertible preferred stock in connection with a change in
    control of our company, at an exercise price of the price per
    share of such securities and will expire upon the earlier of
    July 2014 and September 2014 or upon the date of the sale of all
    or substantially of our equity interests or assets. Each of the
    warrants contains a customary net issuance feature, which allows
    the warrant holder to pay the exercise price of the warrant by
    forfeiting a portion of the exercised warrant shares with a
    value equal to the aggregate exercise&#160;price.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Registration
    Rights</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Holders
    of&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;shares
    of our common stock, after giving effect to the conversion of
    our outstanding preferred stock into common stock upon
    completion of this offering, have rights, under the terms of an
    investor rights agreement between us and these holders, to
    require us to file registration statements under the Securities
    Act, subject to limitations and restrictions, or request that
    their shares be covered by a registration statement that we are
    otherwise filing, subject to specified exceptions. We refer to
    these shares as registrable securities. The investor rights
    agreement does not provide for any liquidated damages, penalties
    or other rights in the event we do not file a registration
    statement. These rights will continue in effect following this
    offering.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <I>Demand Registration Rights.</I>&#160;&#160;At any time after
    the earlier of (i)&#160;180&#160;days following the effective
    date of this registration statement or (ii)&#160;July&#160;17,
    2012, subject to certain exceptions, the holders of (a)&#160;a
    majority of the registrable securities issuable upon the
    conversion of our
    <FONT style="white-space: nowrap">Series&#160;A-1</FONT>
    convertible preferred stock or (b)&#160;two-thirds of the
    then-outstanding registrable securities issuable upon the
    conversion of our
    <FONT style="white-space: nowrap">Series&#160;A-2</FONT>
    convertible preferred stock,
    <FONT style="white-space: nowrap">Series&#160;B-1</FONT>
    convertible preferred stock and
    <FONT style="white-space: nowrap">Series&#160;B-2</FONT>
    convertible preferred stock have the right to demand that we
    file a registration statement covering the offering and sale of
    at least a majority of the registrable securities then
    outstanding (or a lesser percent if the anticipated aggregate
    offering price, net of underwriting discounts and commissions,
    would exceed $5,000,000).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We have the ability to delay the filing of such registration
    statement under specified conditions, such as during the period
    starting with the date of filing of and ending on the date
    180&#160;days following the effective date of this offering or
    if our board of directors deems it advisable to delay such
    filing or if we are in possession of material nonpublic
    information that would be in our best interests not to disclose.
    Postponements at the discretion of our board of directors cannot
    exceed 120&#160;days during any twelve-month period. We are not
    obligated to file a registration statement on more than one
    occasion upon the request of the holders of a majority of the
    registrable securities issuable upon the conversion of our
    <FONT style="white-space: nowrap">Series&#160;A-1</FONT>
    convertible preferred stock, and we are not obligated to file a
    registration statement on more than two occasions upon the
    request of the holders of two-thirds of the then-outstanding
    registrable securities issuable upon the conversion of our
    <FONT style="white-space: nowrap">Series&#160;A-2</FONT>
    convertible preferred stock,
    <FONT style="white-space: nowrap">Series&#160;B-1</FONT>
    convertible preferred stock and
    <FONT style="white-space: nowrap">Series&#160;B-2</FONT>
    convertible preferred stock.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <I><FONT style="white-space: nowrap">Form&#160;S-3</FONT>
    Registration Rights.</I>&#160;&#160;If we are eligible to file a
    registration statement on
    <FONT style="white-space: nowrap">Form&#160;S-3,</FONT>
    the holders of the registrable securities described above have
    the right, on one or
</DIV>

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    <BR>
    126
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    more occasions, to request registration on
    <FONT style="white-space: nowrap">Form&#160;S-3</FONT>
    of the sale of the registrable securities held by such holder
    provided such securities are anticipated to have an aggregate
    sale price (net of underwriting discounts and commissions, if
    any) in excess of $1,000,000.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We have the ability to delay the filing of such registration
    statement under specified conditions, such as for a period of
    time prior to our intention to make a public offering, if our
    board of directors deems it advisable to delay such filing or if
    we are in possession of material nonpublic information that
    would be in our best interests not to disclose. Such
    postponements cannot exceed 120&#160;days during any 12-month
    period. We are not obligated to effect more than two
    registrations of registrable securities on
    <FONT style="white-space: nowrap">Form&#160;S-3</FONT>
    in any twelve-month period.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <I>Piggyback Registration Rights.</I>&#160;&#160;The holders of
    the registrable securities described above have piggyback
    registration rights. Under these provisions, if we register any
    securities for public sale, including pursuant to any
    stockholder-initiated demand registration, these holders will
    have the right to include their shares in the registration
    statement, subject to customary exceptions. The underwriters of
    any underwritten offering will have the right to limit the
    number of shares having registration rights to be included in
    the registration statement, and piggyback registration rights
    are also subject to the priority rights of stockholders having
    demand registration rights in any demand registration.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <I>Expenses of Registration.</I>&#160;&#160;We will pay all
    registration expenses, other than underwriting discounts and
    commissions, related to any demand,
    <FONT style="white-space: nowrap">Form&#160;S-3</FONT>
    or piggyback registration, including reasonable attorneys&#146;
    fees and disbursements of one counsel for the holders of
    registrable securities in an amount not to exceed an aggregate
    of $25,000.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <I>Indemnification.</I>&#160;&#160;The investor rights agreement
    contains customary cross-indemnification provisions, under which
    we are obligated to indemnify the selling stockholders in the
    event of material misstatements or omissions in the registration
    statement attributable to us, and each selling stockholder is
    obligated to indemnify us for material misstatements or
    omissions in the registration statement due to information
    provided by such stockholder provided that such information was
    not changed or altered by us.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <I>Expiration of Registration Rights.</I>&#160;&#160;The
    registration rights granted under the investor rights agreement
    will terminate on the seventh anniversary of the completion of
    this offering.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Anti-Takeover
    Effects of Delaware Law and Provisions of Our Certificate of
    Incorporation and Bylaws</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Upon completion of this offering, our certificate of
    incorporation and bylaws will include a number of provisions
    that may have the effect of delaying, deferring or preventing
    another party from acquiring control of us and encouraging
    persons considering unsolicited tender offers or other
    unilateral takeover proposals to negotiate with our board of
    directors rather than pursue non-negotiated takeover attempts.
    These provisions include the items described below.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <I>Board Composition and Filling Vacancies.</I>&#160;&#160;In
    accordance with our certificate of incorporation, our board is
    divided into three classes serving staggered three-year terms,
    with one class being elected each year. Our certificate of
    incorporation also provides that directors may be removed only
    for cause and then only by the affirmative vote of the holders
    of 75% or more of the shares then entitled to vote at an
    election of directors. Furthermore, any vacancy on our board of
    directors, however occurring, including a vacancy resulting from
    an increase in the size of our board, may only be filled by the
    affirmative vote of a majority of our directors then in office
    even if less than a quorum. The classification of directors,
    together with the limitations on removal of directors and
    treatment of vacancies, has the effect of making it more
    difficult for stockholders to change the composition of our
    board of directors.
</DIV>

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    <BR>
    127
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <I>No Written Consent of Stockholders.</I>&#160;&#160;Our
    certificate of incorporation provides that all stockholder
    actions are required to be taken by a vote of the stockholders
    at an annual or special meeting, and that stockholders may not
    take any action by written consent in lieu of a meeting. This
    limit may lengthen the amount of time required to take
    stockholder actions and would prevent the amendment of our
    bylaws or removal of directors by our stockholders without
    holding a meeting of stockholders.
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <I>Meetings of Stockholders.</I>&#160;&#160;Our certificate of
    incorporation and bylaws provide that only a majority of the
    members of our board of directors then in office may call
    special meetings of stockholders and only those matters set
    forth in the notice of the special meeting may be considered or
    acted upon at a special meeting of stockholders. Our bylaws
    limit the business that may be conducted at an annual meeting of
    stockholders to those matters properly brought before the
    meeting.
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <I>Advance Notice Requirements.</I>&#160;&#160;Our bylaws
    establish advance notice procedures with regard to stockholder
    proposals relating to the nomination of candidates for election
    as directors or new business to be brought before meetings of
    our stockholders. These procedures provide that notice of
    stockholder proposals must be timely given in writing to our
    corporate secretary prior to the meeting at which the action is
    to be taken. Generally, to be timely, notice must be received at
    our principal executive offices not less than 90&#160;days nor
    more than 120&#160;days prior to the first anniversary date of
    the annual meeting for the preceding year. Our bylaws specify
    the requirements as to form and content of all
    stockholders&#146; notices. These requirements may preclude
    stockholders from bringing matters before the stockholders at an
    annual or special meeting.
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <I>Amendment to Certificate of Incorporation and
    Bylaws.</I>&#160;&#160;As required by the Delaware General
    Corporation Law, any amendment of our certificate of
    incorporation must first be approved by a majority of our board
    of directors, and if required by law or our certificate of
    incorporation, must thereafter be approved by a majority of the
    outstanding shares entitled to vote on the amendment and a
    majority of the outstanding shares of each class entitled to
    vote thereon as a class, except that the amendment of the
    provisions relating to stockholder action, board composition,
    limitation of liability and the amendment of our certificate of
    incorporation must be approved by not less than 75% of the
    outstanding shares entitled to vote on the amendment, and not
    less than 75% of the outstanding shares of each class entitled
    to vote thereon as a class. Our bylaws may be amended by the
    affirmative vote of a majority of the directors then in office,
    subject to any limitations set forth in the bylaws; and may also
    be amended by the affirmative vote of at least 75% of the
    outstanding shares entitled to vote on the amendment, or, if our
    board of directors recommends that the stockholders approve the
    amendment, by the affirmative vote of the majority of the
    outstanding shares entitled to vote on the amendment, in each
    case voting together as a single class.
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <I>Undesignated Preferred Stock.</I>&#160;&#160;Our certificate
    of incorporation provides
    for&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;authorized
    shares of preferred stock. The existence of authorized but
    unissued shares of preferred stock may enable our board of
    directors to render more difficult or to discourage an attempt
    to obtain control of us by means of a merger, tender offer,
    proxy contest or otherwise. For example, if in the due exercise
    of its fiduciary obligations, our board of directors were to
    determine that a takeover proposal is not in the best interests
    of our stockholders, our board of directors could cause shares
    of preferred stock to be issued without stockholder approval in
    one or more private offerings or other transactions that might
    dilute the voting or other rights of the proposed acquirer or
    insurgent stockholder or stockholder group. In this regard, our
    certificate of incorporation grants our board of directors broad
    power to establish the rights and preferences of authorized and
    unissued shares of preferred stock. The issuance of shares of
    preferred stock could decrease the amount of earnings and assets
    available for distribution to holders of shares of common stock.
    The issuance may also adversely affect the rights and powers,
    including voting rights, of these holders and may have the
    effect of delaying, deterring or preventing a change in control
    of us.
</DIV>

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    <BR>
    128
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Section&#160;203
    of the Delaware General Corporation Law</FONT></B>
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Upon completion of this offering, we will be subject to the
    provisions of Section&#160;203 of the Delaware General
    Corporation Law. In general, Section&#160;203 prohibits a
    publicly held Delaware corporation from engaging in a
    &#147;business combination&#148; with an &#147;interested
    stockholder&#148; for a three-year period following the time
    that this stockholder becomes an interested stockholder, unless
    the business combination is approved in a prescribed manner. A
    &#147;business combination&#148; includes, among other things, a
    merger, asset or stock sale or other transaction resulting in a
    financial benefit to the interested stockholder. An
    &#147;interested stockholder&#148; is a person who, together
    with affiliates and associates, owns, or did own within three
    years prior to the determination of interested stockholder
    status, 15% or more of the corporation&#146;s voting stock.
    Under Section&#160;203, a business combination between a
    corporation and an interested stockholder is prohibited unless
    it satisfies one of the following conditions:
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    before the stockholder became interested, our board of directors
    approved either the business combination or the transaction
    which resulted in the stockholder becoming an interested
    stockholder;
</TD>
</TR>


<TR style="line-height: 4pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    upon consummation of the transaction which resulted in the
    stockholder becoming an interested stockholder, the interested
    stockholder owned at least 85% of the voting stock of the
    corporation outstanding at the time the transaction commenced,
    excluding for purposes of determining the voting stock
    outstanding, shares owned by persons who are directors and also
    officers, and employee stock plans, in some instances, but not
    the outstanding voting stock owned by the interested
    stockholder;&#160;or
</TD>
</TR>


<TR style="line-height: 4pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    at or after the time the stockholder became interested, the
    business combination was approved by our board of directors of
    the corporation and authorized at an annual or special meeting
    of the stockholders by the affirmative vote of at least
    two-thirds of the outstanding voting stock which is not owned by
    the interested stockholder.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Section&#160;203 defines a business combination to include:
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any merger or consolidation involving the corporation and the
    interested stockholder;
</TD>
</TR>


<TR style="line-height: 4pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any sale, transfer, pledge or other disposition involving the
    interested stockholder of 10% or more of the assets of the
    corporation;
</TD>
</TR>


<TR style="line-height: 4pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    subject to exceptions, any transaction that results in the
    issuance of transfer by the corporation of any stock of the
    corporation to the interested stockholder;
</TD>
</TR>


<TR style="line-height: 4pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    subject to exceptions, any transaction involving the corporation
    that has the effect of increasing the proportionate share of the
    stock of any class or series of the corporation beneficially
    owned by the interest stockholder;&#160;and
</TD>
</TR>


<TR style="line-height: 4pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the receipt by the interested stockholder of the benefit of any
    loans, advances, guarantees, pledges or other financial benefits
    provided by or through the corporation.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    In general, Section&#160;203 defines an interested stockholder
    as any entity or person beneficially owing 15% or more of the
    outstanding voting stock of the corporation and any entity or
    person affiliated with or controlling or controlled by the
    entity or person.
</DIV>

<DIV style="margin-top: 8pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">The NASDAQ Global
    Market Listing</FONT></B>
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We have applied to have our common stock approved for listing on
    The NASDAQ Global Market under the trading symbol
    &#147;ANTH.&#148;
</DIV>

<DIV style="margin-top: 8pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Transfer Agent
    and Registrar</FONT></B>
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The transfer agent and registrar for our common stock will be
    American Stock Transfer&#160;&#038; Trust&#160;Company, LLC.
</DIV>

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    <BR>
    129
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<A name='116'>
<DIV style="margin-top: 24pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">SHARES&#160;ELIGIBLE
    FOR FUTURE SALE</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 8pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Immediately prior to this offering, there was no public market
    for our common stock. Future sales of substantial amounts of
    common stock in the public market, or the perception that such
    sales may occur, could adversely affect the market price of our
    common stock. Although we have applied to have our common stock
    approved for listing on The NASDAQ Global Market, we cannot
    assure you that there will be an active public market for our
    common stock.
</DIV>

<DIV style="margin-top: 8pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Upon completion of this offering, we will have outstanding an
    aggregate
    of&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;shares
    of common stock, assuming no exercise of the underwriters&#146;
    over-allotment option and no exercise of outstanding stock
    options. Of these shares, the shares sold in this offering will
    be freely tradable without restriction or further registration
    under the Securities Act, except for any shares purchased by our
    &#147;affiliates,&#148; as that term is defined in Rule&#160;144
    under the Securities Act, whose sales would be subject to
    certain limitations and restrictions described below. The
    remaining&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;shares
    of common stock held by existing stockholders will be restricted
    securities as that term is defined in Rule&#160;144 under the
    Securities Act. Restricted securities may be sold in the public
    market only if registered or if they qualify for exemption under
    Rules&#160;144 or 701 under the Securities Act, which rules are
    summarized below, or another exemption.
</DIV>

<DIV style="margin-top: 8pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    As a result of the lock-up agreements described below and the
    provisions of Rule&#160;144 and Rule&#160;701 under the
    Securities Act, the shares of our common stock (excluding the
    shares sold in this offering) that will be available for sale in
    the public market are as follows:
</DIV>

<DIV style="margin-top: 8pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="85%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="13%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B>Approximate<BR>
    </B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B>Number of<BR>
    </B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Date of Availability of Sale</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Shares</B>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    As of the date of this prospectus
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    90&#160;days after the date of this prospectus
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    180&#160;days after the date of this prospectus, or longer if
    the lock-up period is extended, although a portion of such
    shares will be subject to volume limitations pursuant to
    Rule&#160;144
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Stock
    Plans</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We intend to file one or more registration statements on
    <FONT style="white-space: nowrap">Form&#160;S-8</FONT>
    under the Securities Act to register shares of our common stock
    issued or reserved for issuance under our stock option plans.
    The first such registration statement is expected to be filed
    soon after the date of this prospectus and will automatically
    become effective upon filing with the SEC. Accordingly, shares
    registered under such registration statement will be available
    for sale in the open market, unless such shares are subject to
    vesting restrictions with us or the
    <FONT style="white-space: nowrap">lock-up</FONT>
    restrictions described above.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica"><FONT style="white-space: nowrap">Lock-Up</FONT>
    Agreements</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Each of our officers and directors, and greater than 2%
    stockholders, have agreed not to offer, sell, contract to sell
    or otherwise dispose of, or enter into any transaction that is
    designed to, or could be expected to, result in the disposition
    of any shares of our common stock or other securities
    convertible into or exchangeable or exercisable for shares of
    our common stock or derivatives of our common stock owned by
    these persons prior to this offering or common stock issuable
    upon exercise of options or warrants held by these persons for a
    period of 180&#160;days after the effective date of the
    registration statement of which this prospectus is a part
    without the prior written consent of Deutsche Bank Securities
    Inc. This
    <FONT style="white-space: nowrap">180-day</FONT>
    period may be extended if (i)&#160;during the last 17&#160;days
    of the
    <FONT style="white-space: nowrap">180-day</FONT>
    period we issue an
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    130
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    earnings release or material news or a material event relating
    to us occurs; or (ii)&#160;prior to the expiration of the
    <FONT style="white-space: nowrap">180-day</FONT>
    period, we announce that we will release earnings results during
    the <FONT style="white-space: nowrap">16-day</FONT>
    period following the last day of the
    <FONT style="white-space: nowrap">180-day</FONT>
    period. The period of such extension will be 18&#160;days,
    beginning on the issuance of the earnings release or the
    occurrence of the material news or material event. Deutsche Bank
    Securities Inc. may, in its sole discretion as representative of
    the underwriters, and at any time without notice release some or
    all of the shares subject to
    <FONT style="white-space: nowrap">lock-up</FONT>
    agreements prior to the expiration of the
    <FONT style="white-space: nowrap">180-day</FONT>
    period. When determining whether or not to release shares from
    the <FONT style="white-space: nowrap">lock-up</FONT>
    agreements, Deutsche Bank Securities Inc. will consider, among
    other factors, the stockholder&#146;s reasons for requesting the
    release, the number of shares for which the release is being
    requested and market conditions at the time.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Transfers can be made during the
    <FONT style="white-space: nowrap">lock-up</FONT>
    period in the case of (a)&#160;shares of common stock acquired
    in open market transactions after the completion of this
    offering, (b)&#160;gifts or for estate planning purposes and
    distributions to partners, members or stockholders of the
    transferor where the transferee signs a
    <FONT style="white-space: nowrap">lock-up</FONT>
    agreement, and (c)&#160;shares of common stock (i)&#160;as
    forfeitures of common stock to satisfy tax withholding
    obligations of the stockholder in connection with the vesting or
    exercise of equity awards by the stockholder pursuant to our
    2005 Equity Incentive Plan, or 2005 Equity Plan, and 2009 Stock
    Option and Incentive Plan, or 2009 Equity Plan, or pursuant to a
    net exercise or cashless exercise by the stockholder of
    outstanding equity awards pursuant to our 2005 Equity Plan and
    2009 Equity Plan, or (ii)&#160;pursuant to the conversion or
    sale of, or an offer to purchase, all or substantially all of
    our outstanding common stock, whether pursuant to a merger,
    tender offer or otherwise; provided that in the case of a
    transfer in clause (c)(i) above, no filing under
    Section&#160;16(a) of the Exchange Act shall be required or
    shall be voluntarily made in connection with such transactions.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Rule&#160;144</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    In general, under Rule&#160;144, beginning 90&#160;days after
    the date of this prospectus, a person who is not our affiliate
    and has not been our affiliate at any time during the preceding
    three months will be entitled to sell any shares of our common
    stock that such person has beneficially owned for at least six
    months, including the holding period of any prior owner other
    than one of our affiliates, without regard to volume
    limitations. Sales of our common stock by any such person would
    be subject to the availability of current public information
    about us if the shares to be sold were beneficially owned by
    such person for less than one year.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    In addition, under Rule&#160;144, a person may sell shares of
    our common stock acquired from us immediately upon the closing
    of this offering, without regard to volume limitations or the
    availability of public information about us, if:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the person is not our affiliate and has not been our affiliate
    at any time during the preceding three months;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the person has beneficially owned the shares to be sold for at
    least one year, including the holding period of any prior owner
    other than one of our affiliates.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Beginning 90&#160;days after the date of this prospectus, our
    affiliates who have beneficially owned shares of our common
    stock for at least six months, including the holding period of
    any prior owner other than one of our affiliates, would be
    entitled to sell within any three-month period a number of
    shares that does not exceed the greater of:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    1% of the number of shares of our common stock then outstanding,
    which will equal
    approximately&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;shares
    immediately after this offering;&#160;and
</TD>
</TR>

</TABLE>

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    <BR>
    131
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the average weekly trading volume in our common stock on The
    NASDAQ Global Market during the four calendar weeks preceding
    the date of filing of a Notice of Proposed Sale of Securities
    Pursuant to Rule&#160;144 with respect to the sale.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Sales under Rule&#160;144 by our affiliates are also subject to
    manner of sale provisions and notice requirements and to the
    availability of current public information about us.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Rule&#160;701</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    In general, under Rule&#160;701, any of our employees,
    directors, officers, consultants or advisors who purchase shares
    from us in connection with a compensatory stock or option plan
    or other written agreement before the effective date of this
    offering is entitled to sell such shares 90&#160;days after the
    effective date of this offering in reliance on Rule&#160;144,
    without having to comply with the holding period and notice
    filing requirements of Rule&#160;144 and, in the case of
    non-affiliates, without having to comply with the public
    information, volume limitation or notice filing provisions of
    Rule&#160;144. The SEC has indicated that Rule&#160;701 will
    apply to typical stock options granted by an issuer before it
    becomes subject to the reporting requirements of the Exchange
    Act, as amended, along with the shares acquired upon exercise of
    such options, including exercises after the date of this
    prospectus.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Registration
    Rights</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Upon completion of this offering, the holders of at
    least&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;shares
    of our common stock have certain rights with respect to the
    registration of such shares under the Securities Act. See the
    section entitled &#147;Description of Capital
    Stock&#151;Registration Rights.&#148; Upon the effectiveness of
    a registration statement covering these shares, the shares would
    become freely tradable.
</DIV>

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    <BR>
    132
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<A name='117'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">MATERIAL U.S.
    FEDERAL INCOME TAX CONSIDERATIONS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The following is a summary of certain U.S.&#160;federal income
    tax considerations relating to the acquisition, ownership and
    disposition of common stock. Except where noted, this summary
    deals only with common stock held as a capital asset by a
    stockholder, and does not discuss the U.S.&#160;federal income
    tax considerations applicable to a stockholder that is subject
    to special treatment under U.S.&#160;federal income tax laws,
    including: a dealer in securities or currencies; a financial
    institution; a regulated investment company; a real estate
    investment trust; a tax-exempt organization; an insurance
    company; a person holding common stock as part of a hedging,
    integrated, conversion or straddle transaction or a person
    deemed to sell common stock under the constructive sale
    provisions of the Internal Revenue Code of 1986, as amended, the
    Tax Code; a trader in securities that has elected the
    <FONT style="white-space: nowrap">mark-to-market</FONT>
    method of accounting; a person liable for alternative minimum
    tax; an entity that is treated as a partnership for
    U.S.&#160;federal income tax purposes; a person that received
    such common stock in connection with services provided; a
    U.S.&#160;person whose &#147;functional currency&#148; is not
    the U.S.&#160;dollar; a &#147;controlled foreign
    corporation&#148;; a &#147;passive foreign investment
    company&#148;; or a U.S.&#160;expatriate.
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    This summary is based upon provisions of the Tax Code, and
    applicable regulations, rulings and judicial decisions in effect
    as of the date hereof. Those authorities may be changed, perhaps
    retroactively, or may be subject to differing interpretations,
    so as to result in U.S.&#160;federal income tax consequences
    different from those discussed below. This summary does not
    address all aspects of U.S.&#160;federal income tax, does not
    deal with all tax considerations that may be relevant to
    stockholders in light of their personal circumstances and does
    not address any state, local, foreign, gift, estate or
    alternative minimum tax considerations.
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    For purposes of this discussion, a &#147;U.S.&#160;holder&#148;
    is a beneficial holder of common stock that is: an individual
    citizen or resident of the United States; a corporation (or any
    other entity treated as a corporation for U.S.&#160;federal
    income tax purposes) created or organized in or under the laws
    of the United States, any state thereof or the District of
    Columbia; an estate the income of which is subject to
    U.S.&#160;federal income taxation regardless of its source; a
    trust if it (1)&#160;is subject to the primary supervision of a
    court within the United States and one or more U.S.&#160;persons
    have the authority to control all substantial decisions of the
    trust or (2)&#160;has a valid election in effect under
    applicable U.S.&#160;Treasury regulations to be treated as a
    U.S.&#160;person.
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    For purposes of this discussion, a
    <FONT style="white-space: nowrap">&#147;non-U.S.&#160;holder&#148;</FONT>
    is a beneficial holder of common stock (other than a partnership
    or any other entity that is treated as a partnership for
    U.S.&#160;federal income tax purposes) that is not a
    U.S.&#160;holder.
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    If a partnership (or an entity that is treated as a partnership
    for U.S.&#160;federal income tax purposes) holds common stock,
    the tax treatment of a partner will generally depend upon the
    status of the partner and the activities of the partnership. A
    partner of a partnership holding common stock is particularly
    urged to consult its own tax advisors.
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <B>Holders of common stock are urged to consult their own tax
    advisors concerning their particular U.S.&#160;federal income
    tax consequences in light of their specific situations, as well
    as the tax consequences arising under the laws of any other
    taxing jurisdiction.</B>
</DIV>

<DIV style="margin-top: 8pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">U.S.
    Holders</FONT></B>
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <I>Ownership and Disposition of Common Stock.</I>&#160;&#160;The
    following discussion is a summary of certain U.S.&#160;federal
    income tax considerations relevant to a U.S.&#160;holder of
    common stock.
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Distributions with respect to common stock, if any, will be
    includible in the gross income of a U.S.&#160;holder as ordinary
    dividend income to the extent paid out of current or accumulated
    earnings and profits, as determined for U.S.&#160;federal income
    tax purposes. Any portion of a distribution in excess of current
    or accumulated earnings and profits would be treated as a return
    of the holder&#146;s tax basis in its common stock and then as
    gain from the sale or
</DIV>

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    <BR>
    133
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    exchange of the common stock. Under current law, if certain
    requirements are met, a maximum 15% U.S.&#160;federal income tax
    rate will apply to any dividends paid to a holder of common
    stock who is a U.S.&#160;individual and that is included in the
    U.S.&#160;holder&#146;s income prior to January&#160;1, 2011.
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Distributions to U.S.&#160;holders that are corporate
    stockholders, constituting dividends for U.S.&#160;federal
    income tax purposes, may qualify for the 70% dividends received
    deduction, or DRD, which is generally available to corporate
    stockholders that own less than 20% of the voting power or value
    of the outstanding stock of the distributing corporation. A
    U.S.&#160;holder that is a corporate stockholder holding 20% or
    more of the distributing corporation may be eligible for an 80%
    DRD. No assurance can be given that we will have sufficient
    earnings and profits (as determined for U.S.&#160;federal income
    tax purposes) to cause any distributions to be eligible for a
    DRD. In addition, a DRD is available only if certain holding
    periods and other taxable income requirements are satisfied. The
    length of time that a stockholder has held stock is reduced by
    any period during which the stockholder&#146;s risk of loss with
    respect to the stock is diminished by reason of the existence of
    certain options, contracts to sell, short sales, or other
    similar transactions. Also, to the extent that a corporation
    incurs indebtedness that is directly attributable to an
    investment in the stock on which the dividend is paid, all or a
    portion of the DRD may be disallowed. In addition, any dividend
    received by a corporation may also be subject to the
    extraordinary distribution provisions of the Tax Code.
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    A U.S.&#160;holder of common stock will generally recognize gain
    or loss on the taxable sale, exchange, or other disposition of
    such stock in an amount equal to the difference between such
    U.S.&#160;holder&#146;s amount realized on the sale and its tax
    basis in the common stock sold. A U.S.&#160;holder&#146;s amount
    realized should equal the amount of cash and the fair market
    value of any property received in consideration of its stock.
    The gain or loss should be capital gain or loss if the
    U.S.&#160;holder holds the common stock as a capital asset, and
    should be long-term capital gain or loss if the common stock is
    held for more than one year at the time of disposition. Capital
    loss can generally only be used to offset capital gain
    (individuals may also offset excess capital losses against up to
    $3,000 of ordinary income per tax year). Under current law,
    long-term capital gain recognized by an individual
    U.S.&#160;holder prior to January&#160;1, 2011 is subject to a
    maximum 15% U.S.&#160;federal income tax rate.
</DIV>

<DIV style="margin-top: 8pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica"><FONT style="white-space: nowrap">Non-U.S.</FONT>
    Holders</FONT></B>
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <I>Ownership and Disposition of Common Stock.</I>&#160;&#160;The
    following is a summary of the U.S.&#160;federal tax
    considerations applicable to a
    <FONT style="white-space: nowrap">non-U.S.&#160;holder</FONT>
    of common stock.
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Distributions treated as dividends that are paid to a
    <FONT style="white-space: nowrap">non-U.S.&#160;holder,</FONT>
    if any, with respect to the shares of common stock will be
    subject to withholding tax at a 30% rate (or lower applicable
    income tax treaty rate) unless the dividends are effectively
    connected with the
    <FONT style="white-space: nowrap">non-U.S.&#160;holder&#146;s</FONT>
    conduct of a trade or business in the United States. If a
    <FONT style="white-space: nowrap">non-U.S.&#160;holder</FONT>
    is engaged in a trade or business in the United States and
    dividends with respect to the common stock are effectively
    connected with the conduct of that trade or business and, if
    required by an applicable income tax treaty, are attributable to
    a U.S.&#160;permanent establishment, then the
    <FONT style="white-space: nowrap">non-U.S.&#160;holder</FONT>
    will be subject to U.S.&#160;federal income tax on those
    dividends on a net income basis (although the dividends will be
    exempt from the 30% U.S.&#160;federal withholding tax, provided
    certain certification requirements are satisfied) in the same
    manner as if received by a U.S.&#160;person as defined under the
    Tax Code. Any such effectively connected income received by a
    foreign corporation may, under certain circumstances, be subject
    to an additional branch profits tax at a 30% rate (or lower
    applicable income tax treaty rate). To claim the exemption from
    withholding, the
    <FONT style="white-space: nowrap">non-U.S.&#160;holder</FONT>
    must generally furnish to us or our paying agent a properly
    executed IRS
    <FONT style="white-space: nowrap">Form&#160;W-8ECI</FONT>
    (or applicable successor form).
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    A
    <FONT style="white-space: nowrap">non-U.S.&#160;holder</FONT>
    of shares of common stock who wishes to claim the benefit of an
    applicable treaty must furnish to us or our paying agent a valid
    IRS
    <FONT style="white-space: nowrap">Form&#160;W-8BEN</FONT>
    (or applicable successor form) certifying such holder&#146;s
    qualification for the reduced rate. If a
</DIV>

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    <BR>
    134
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <FONT style="white-space: nowrap">non-U.S.&#160;holder</FONT>
    is eligible for a reduced rate of U.S.&#160;withholding tax
    pursuant to an income tax treaty, it may obtain a refund of any
    excess amounts withheld by filing an appropriate claim for
    refund with the Internal Revenue Service.
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <FONT style="white-space: nowrap">Non-U.S.&#160;holders</FONT>
    may recognize gain upon the sale, exchange, redemption or other
    taxable disposition of common stock. Such gain generally will
    not be subject to U.S.&#160;federal income tax unless:
    (i)&#160;that gain is effectively connected with the conduct of
    a trade or business in the United States (and, if required by an
    applicable income tax treaty, is attributable to a
    U.S.&#160;permanent establishment) by a
    <FONT style="white-space: nowrap">non-U.S.&#160;holder;</FONT>
    (ii)&#160;the
    <FONT style="white-space: nowrap">non-U.S.&#160;holder</FONT>
    is a non-resident alien individual who is present in the United
    States for 183&#160;days or more in the taxable year of that
    disposition, and certain other conditions are met; or
    (iii)&#160;we are or have been a &#147;U.S.&#160;real property
    holding corporation&#148; for U.S.&#160;federal income tax
    purposes. We believe that we are not and do not anticipate
    becoming a &#147;U.S.&#160;real property holding
    corporation&#148; for U.S.&#160;federal income tax purposes.
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    If a
    <FONT style="white-space: nowrap">non-U.S.&#160;holder</FONT>
    is an individual described in clause&#160;(i) of the preceding
    paragraph, the
    <FONT style="white-space: nowrap">non-U.S.&#160;holder</FONT>
    will generally be subject to tax on the net gain at regular
    graduated U.S.&#160;federal income tax rates. If the
    <FONT style="white-space: nowrap">non-U.S.&#160;holder</FONT>
    is an individual described in clause&#160;(ii) of the preceding
    paragraph, the
    <FONT style="white-space: nowrap">non-U.S.&#160;holder</FONT>
    will generally be subject to a flat 30% tax on the gain, which
    may be offset by U.S.&#160;source capital losses even though the
    <FONT style="white-space: nowrap">non-U.S.&#160;holder</FONT>
    is not considered a resident of the United States. If a
    <FONT style="white-space: nowrap">non-U.S.&#160;holder</FONT>
    is a foreign corporation that falls under clause&#160;(i) of the
    preceding paragraph, it will be subject to tax on its net gain
    in the same manner as if it were a U.S.&#160;person as defined
    under the Tax Code and, in addition, the
    <FONT style="white-space: nowrap">non-U.S.&#160;holder</FONT>
    may be subject to the branch profits tax at a rate equal to 30%
    of its effectively connected earnings and profits or at such
    lower rate as may be specified by an applicable income tax
    treaty.
</DIV>

<DIV style="margin-top: 8pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Information
    Reporting and Backup Withholding Tax</FONT></B>
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We report to our U.S.&#160;holders and the IRS the amount of
    dividends paid during each calendar year, and the amount of any
    tax withheld. All distributions to stockholders of common stock
    are subject to any applicable withholding. Under
    U.S.&#160;federal income tax law, interest, dividends, and other
    reportable payments may, under certain circumstances, be subject
    to &#147;backup withholding&#148; at the then applicable rate
    (currently 28%). Backup withholding generally applies to a
    U.S.&#160;holder if the holder (i)&#160;fails to furnish its
    social security number or other taxpayer identification number,
    or TIN, (ii)&#160;furnishes an incorrect TIN, (iii)&#160;fails
    to properly report interest or dividends, or (iv)&#160;under
    certain circumstances, fails to provide a certified statement,
    signed under penalty of perjury, that the TIN provided is its
    correct number and that it is a U.S.&#160;person that is not
    subject to backup withholding. Backup withholding is not an
    additional tax but merely an advance payment, which may be
    refunded to the extent it results in an overpayment of tax and
    the appropriate information is supplied to the IRS. Certain
    persons are exempt from backup withholding, including, in
    certain circumstances, corporations and financial institutions.
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We also report to our
    <FONT style="white-space: nowrap">non-U.S.</FONT>
    holders and the IRS the amount of dividends paid during each
    calendar year, and the amount of any tax withheld. These
    information reporting requirements apply even if no withholding
    was required because the distributions were effectively
    connected with the
    <FONT style="white-space: nowrap">non-U.S.</FONT>
    holder&#146;s conduct of a United States trade or business, or
    withholding was reduced or eliminated by an applicable income
    tax treaty. This information also may be made available under a
    specific treaty or agreement with the tax authorities in the
    country in which the
    <FONT style="white-space: nowrap">non-U.S.</FONT>
    holder resides or is established. Backup withholding, however,
    generally will not apply to distributions to a
    <FONT style="white-space: nowrap">non-U.S.</FONT>
    holder of our common stock provided the
    <FONT style="white-space: nowrap">non-U.S.</FONT>
    holder furnishes to us or our paying agent the required
    certification as to its
    <FONT style="white-space: nowrap">non-U.S.</FONT>
    status, such as by providing a valid IRS Form
    <FONT style="white-space: nowrap">W-8BEN</FONT> or
    IRS
    <FONT style="white-space: nowrap">Form&#160;W-8ECI,</FONT>
    or certain other requirements are met. Notwithstanding the
    foregoing, backup withholding may apply if either we or our
    paying agent has actual knowledge, or reason to know, that the
    holder is a U.S. person that is not an exempt recipient.
</DIV>

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    <BR>
    135
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<A name='118'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">UNDERWRITING</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Subject to the terms and conditions of the underwriting
    agreement, the underwriters named below, through their
    representative Deutsche Bank Securities Inc., have severally
    agreed to purchase from us the following respective numbers of
    shares of common stock at a public offering price less the
    underwriting discounts and commissions set forth on the cover
    page of this prospectus:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="89%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="7%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Number<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
    <B><FONT style="font-size: 10pt">Underwriters</FONT></B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>of Shares</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <B>Deutsche Bank Securities Inc.</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <B>Piper Jaffray&#160;&#038; Co.</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <B>Wedbush Securities Inc.</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <B>Merriman Curhan Ford &#038; Co.</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 50pt">
    Total
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The underwriting agreement provides that the obligations of the
    several underwriters to purchase the shares of common stock
    offered hereby are subject to certain conditions precedent and
    that the underwriters will purchase all of the shares of common
    stock offered by this prospectus, other than those covered by
    the over-allotment option described below, if any of these
    shares are purchased.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We have been advised by Deutsche Bank Securities Inc., as
    representative of the underwriters, that the underwriters
    propose to offer the shares of common stock to the public at the
    public offering price set forth on the cover of this prospectus
    and to dealers at a price that represents a concession not in
    excess of $&#160;&#160;&#160;&#160;&#160; per share under the
    public offering price. The underwriters may allow, and these
    dealers may re-allow, a concession of not more than
    $&#160;&#160;&#160;&#160;&#160;&#160;per share to other dealers.
    After the initial public offering, Deutsche Bank Securities
    Inc., as representative of the underwriters, may change the
    offering price and other selling terms.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We have granted to the underwriters an option, exercisable not
    later than 30&#160;days after the date of this prospectus, to
    purchase up
    to&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
    additional shares of common stock at the public offering price
    less the underwriting discounts and commissions set forth on the
    cover page of this prospectus. The underwriters may exercise
    this option only to cover over-allotments made in connection
    with the sale of the common stock offered by this prospectus. To
    the extent that the underwriters exercise this option, each of
    the underwriters will become obligated, subject to conditions,
    to purchase approximately the same percentage of these
    additional shares of common stock as the number of shares of
    common stock to be purchased by it in the above table bears to
    the total number of shares of common stock offered by this
    prospectus. We will be obligated, pursuant to the option, to
    sell these additional shares of common stock to the underwriters
    to the extent the option is exercised. If any additional shares
    of common stock are purchased, the underwriters will offer the
    additional shares on the same terms as those on which the shares
    are being offered.
</DIV>

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    <BR>
    136
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The underwriting discounts and commissions per share are equal
    to the public offering price per share of common stock less the
    amount paid by the underwriters to us per share of common stock.
    The underwriting discounts and commissions
    are&#160;&#160;&#160;&#160;&#160;% of the initial public
    offering price. We have agreed to pay the underwriters the
    following discounts and commissions, assuming either no exercise
    or full exercise by the underwriters of the underwriters&#146;
    over-allotment option:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="37%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="5%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="5%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="10%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="10%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="11%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="11%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="7" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Total Fees</B>
</TD>
</TR>
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Without Exercise of Over-<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>With Full Exercise of Over-<BR>
    </B>
</TD>
</TR>
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Fee per Share</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Allotment Option</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Allotment Option</B>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <B>Discounts and commissions paid by us</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    In addition, we estimate that our share of the total expenses of
    this offering, excluding underwriting discounts and commissions,
    will be approximately $&#160;&#160;&#160;&#160;&#160;.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We have agreed to indemnify the underwriters against some
    specified types of liabilities, including liabilities under the
    Securities Act, and to contribute to payments the underwriters
    may be required to make in respect of any of these liabilities.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Each of our officers and directors, and greater than 2%
    stockholders, have agreed not to offer, sell, contract to sell
    or otherwise dispose of, or enter into any transaction that is
    designed to, or could be expected to, result in the disposition
    of any shares of our common stock or other securities
    convertible into or exchangeable or exercisable for shares of
    our common stock or derivatives of our common stock owned by
    these persons prior to this offering or common stock issuable
    upon exercise of options or warrants held by these persons for a
    period of 180&#160;days after the effective date of the
    registration statement of which this prospectus is a part
    without the prior written consent of Deutsche Bank Securities
    Inc. This consent may be given at any time without public
    notice. Transfers can be made during the
    <FONT style="white-space: nowrap">lock-up</FONT>
    period in the case of (a)&#160;shares of common stock acquired
    in open market transactions after the completion of this
    offering, (b)&#160;gifts or for estate planning purposes and
    distributions to partners, members or stockholders of the
    transferor where the transferee signs a
    <FONT style="white-space: nowrap">lock-up</FONT>
    agreement, and (c)&#160;shares of common stock (i)&#160;as
    forfeitures of common stock to satisfy tax withholding
    obligations of the stockholder in connection with the vesting or
    exercise of equity awards by the stockholder pursuant to our
    2005 Equity Incentive Plan, or 2005 Equity Plan, and 2009 Stock
    Option and Incentive Plan, or 2009 Equity Plan, or pursuant to a
    net exercise or cashless exercise by the stockholder of
    outstanding equity awards pursuant to our 2005 Equity Plan and
    2009 Equity Plan, or (ii)&#160;pursuant to the conversion or
    sale of, or an offer to purchase, all or substantially all of
    our outstanding common stock, whether pursuant to a merger,
    tender offer or otherwise; provided that in the case of a
    transfer in clause (c)(i) above, no filing under
    Section&#160;16(a) of the Exchange Act shall be required or
    shall be voluntarily made in connection with such transactions.
    We have entered into a similar agreement with Deutsche Bank
    Securities Inc., as representative of the underwriters, except
    that without such consent we may grant options and sell shares
    pursuant to our 2005 Equity Plan and 2009 Equity Plan. There are
    no agreements between Deutsche Bank Securities Inc. and any of
    our stockholders or affiliates releasing them from these
    <FONT style="white-space: nowrap">lock-up</FONT>
    agreements prior to the expiration of the
    <FONT style="white-space: nowrap">180-day</FONT>
    period.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Deutsche Bank Securities Inc. has advised us that the
    underwriters do not intend to confirm sales to any account over
    which they exercise discretionary authority.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    In connection with the offering, the underwriters may purchase
    and sell shares of our common stock in the open market. These
    transactions may include short sales, purchases to cover
    positions created by short sales and stabilizing transactions.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Short sales involve the sale by the underwriters of a greater
    number of shares than they are required to purchase in the
    offering. Covered short sales are sales made in an amount not
    greater than the underwriters&#146; option to purchase
    additional shares of common stock from us
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    137
</DIV><!-- END PAGE WIDTH -->
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    in the offering. The underwriters may close out any covered
    short position by either exercising their option to purchase
    additional shares or purchasing shares in the open market. In
    determining the source of shares to close out the covered short
    position, the underwriters will consider, among other things,
    the price of shares available for purchase in the open market as
    compared to the price at which they may purchase shares through
    the over-allotment option.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Naked short sales are any sales in excess of the over-allotment
    option. The underwriters must close out any naked short position
    by purchasing shares in the open market. A naked short position
    is more likely to be created if underwriters are concerned that
    there may be downward pressure on the price of the shares in the
    open market prior to the completion of the offering.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Stabilizing transactions consist of various bids for or
    purchases of our common stock made by the underwriters in the
    open market prior to the completion of the offering.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The underwriters may impose a penalty bid. This occurs when a
    particular underwriter repays to the other underwriters a
    portion of the underwriting discount received by it because
    Deutsche Bank Securities Inc., as representative of the
    underwriters, has repurchased shares sold by or for the account
    of that underwriter in stabilizing or short covering
    transactions.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Purchases to cover a short position and stabilizing transactions
    may have the effect of preventing or slowing a decline in the
    market price of our common stock. Additionally, these purchases,
    along with the imposition of the penalty bid, may stabilize,
    maintain or otherwise affect the market price of our common
    stock. As a result, the price of our common stock may be higher
    than the price that might otherwise exist in the open market.
    These transactions may be effected on The NASDAQ Global Market,
    in the
    <FONT style="white-space: nowrap">over-the-counter</FONT>
    market or otherwise.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    A prospectus in electronic format is being made available on
    Internet web sites maintained by one or more of the lead
    underwriters of this offering and may be made available on web
    sites maintained by other underwriters. Other than the
    prospectus in electronic format, the information on any
    underwriter&#146;s web site and any information contained in any
    other web site maintained by an underwriter is not part of the
    prospectus or the registration statement of which the prospectus
    forms a part.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Pricing of this
    Offering</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Prior to this offering, there has been no public market for our
    common stock. Consequently, the initial public offering price of
    our common stock will be determined by negotiation among us and
    Deutsche Bank Securities Inc., as representative of the
    underwriters. Among the primary factors that will be considered
    in determining the public offering price are:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    prevailing market conditions;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    our results of operations in recent periods;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the present stage of our development;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the market capitalizations and stages of development of other
    companies that we and Deutsche Bank Securities Inc., as
    representative of the underwriters, believe to be comparable to
    our business;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    estimates of our business potential.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">European Economic
    Area</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    In relation to each member state of the European Economic Area
    which has implemented the Prospectus Directive (each, a Relevant
    Member State), with effect from and including the date on which
    the Prospectus Directive is implemented in that Relevant Member
    State (the Relevant Implementation Date) an offer of the shares
    to the public may not be made in that
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    138
</DIV><!-- END PAGE WIDTH -->
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Relevant Member State prior to the publication of a prospectus
    in relation to the shares which has been approved by the
    competent authority in that Relevant Member State or, where
    appropriate, approved in another Relevant Member State and
    notified to the competent authority in that Relevant Member
    State, all in accordance with the Prospectus Directive, except
    that an offer to the public in that Relevant Member State of any
    shares may be made at any time under the following exemptions
    under the Prospectus Directive if they have been implemented in
    the Relevant Member State:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    (a)&#160;to legal entities which are authorized or regulated to
    operate in the financial markets or, if not so authorized or
    regulated, whose corporate purpose is solely to invest in
    securities;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    (b)&#160;to any legal entity which has two or more of
    (i)&#160;an average of at least 250&#160;employees during the
    last financial year; (ii)&#160;a total balance sheet of more
    than &#128;43,000,000 and (iii)&#160;an annual net turnover of
    more than &#128;50,000,000, as shown in its last annual or
    consolidated accounts;&#160;or
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    (c)&#160;in any other circumstances falling within
    Article&#160;3(2) of the Prospectus Directive;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    provided that no such offer of shares shall result in a
    requirement for the publication by us or any underwriter of a
    prospectus pursuant to Article&#160;3 of the Prospectus
    Directive.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    For the purposes of this provision, the expression an
    &#147;offer of shares to the public&#148; in relation to any
    shares in any Relevant Member State means the communication in
    any form and by any means of sufficient information on the terms
    of the offer and the shares to be offered so as to enable an
    investor to decide to purchase or subscribe the shares, as the
    same may be varied in that Member State by any measure
    implementing the Prospectus Directive in that Member State and
    the expression Prospectus Directive means Directive 2003/71/EC
    and includes any relevant implementing measure in each Relevant
    Member State.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">United
    Kingdom</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Each underwriter has represented and agreed that (i)&#160;it has
    not offered or sold and, prior to the expiration of the period
    of six months from the closing date of this offering, will not
    offer or sell any shares of our common stock to persons in the
    United Kingdom except to persons whose ordinary activities
    involve them in acquiring, holding, managing or disposing of
    investments (as principal or agent) for the purposes of their
    businesses or otherwise in circumstances which have not resulted
    and will not result in an offer to the public in the
    United&#160;Kingdom within the meaning of the Public Offers of
    Securities Regulations 1995; (ii)&#160;it has complied with and
    will comply with all applicable provisions of the Financial
    Services Act 1986 with respect to anything done by it in
    relation to the shares of our common stock in, from or otherwise
    involving the United Kingdom; and (iii)&#160;it has only issued
    or passed on and will only issue or pass on in the United
    Kingdom, any document received by it in connection with the
    issue of the shares of our common stock to a person who is of a
    kind described in Article&#160;11(3) of the Financial Services
    Act 1986 (Investment Advertisements) (Exemptions) Order 1996 or
    is a person to whom such document may otherwise lawfully be
    issued or passed on.
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    139
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<A name='120'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">LEGAL
    MATTERS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The validity of the shares of common stock offered by this
    prospectus will be passed upon for us by Goodwin Procter LLP,
    San&#160;Francisco, California. Certain legal matters relating
    to this offering will be passed upon for the underwriters by
    Latham&#160;&#038; Watkins LLP, Menlo Park, California.
</DIV>
<A name='121'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">EXPERTS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The financial statements as of December&#160;31, 2007 and 2008
    and for each of the three years in the period ended
    December&#160;31, 2008 included in this prospectus have been
    audited by Deloitte&#160;&#038; Touche LLP, an independent
    registered public accounting firm, as stated in their report
    appearing herein (which report expresses an unqualified opinion
    and includes an explanatory paragraph regarding our development
    stage status and our ability to continue as a going concern, and
    have been so included on reliance upon the report of such firm
    given upon their authority as experts in auditing and accounting.
</DIV>
<A name='122'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">WHERE YOU CAN
    FIND MORE INFORMATION</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We have filed with the SEC a registration statement on
    <FONT style="white-space: nowrap">Form&#160;S-1</FONT>
    under the Securities Act, as amended, with respect to the shares
    of common stock we are offering by this prospectus. This
    prospectus does not contain all of the information included in
    the registration statement. For further information pertaining
    to us and our common stock, you should refer to the registration
    statement and the exhibits and schedules filed with the
    registration statement. Whenever we make reference in this
    prospectus to any of our contracts, agreements or other
    documents, the references are not necessarily complete, and you
    should refer to the exhibits attached to the registration
    statement for copies of the actual contract, agreement or other
    document.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Upon the closing of the offering, we will be subject to the
    informational requirements of the Securities Exchange Act and
    will file annual, quarterly and current reports, proxy
    statements and other information with the SEC. You can read our
    SEC filings, including the registration statement, over the
    Internet at the SEC&#146;s website at www.sec.gov. You may also
    read and copy any document we file with the SEC at its Public
    Reference Room at 100&#160;F&#160;Street, N.E.,
    Washington,&#160;D.C., 20549.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    You may also obtain copies of the documents at prescribed rates
    by writing to the Public Reference Room of the SEC at
    100&#160;F&#160;Street, N.E., Washington,&#160;D.C., 20549.
    Please call the SEC at
    <FONT style="white-space: nowrap">1-800-SEC-0330</FONT>
    for further information on the operation of the public reference
    facility.
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    140
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<A name='123'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Anthera
    Pharmaceuticals, Inc.<BR>
    (A Development Stage Company)<BR>
    <BR>
    INDEX TO FINANCIAL STATEMENTS<BR>
    </A> <BR>
    CONTENTS</FONT></B>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>
<DIV align="left">
<!-- TOC -->
</DIV>

<DIV align="left">
<A name="tocpage"></A>
</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="97%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=quadleft -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=quadright -->
</TR>
<!-- Table Width Row END -->
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#300'>Report of Independent Registered Public
    Accounting Firm</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    F-2
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    <A HREF='#301'>Balance Sheets as of December&#160;31, 2007 and
    2008 and June&#160;30, 2009 (Unaudited) and June&#160;30, 2009
    pro forma (Unaudited)</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    F-3
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    <A HREF='#302'>Statements of Operations for the years ended
    December&#160;31, 2006, 2007 and 2008, the six months ended
    June&#160;30, 2008 and 2009 (Unaudited) and for the period from
    September&#160;9, 2004 (Date of Inception) to June&#160;30, 2009
    (Unaudited)</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    F-4
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    <A HREF='#303'>Statements of Stockholders&#146; Equity (Deficit)
    and Comprehensive Loss for the period from September&#160;9,
    2004 (Date of Inception) to December&#160;31, 2008 and
    January&#160;1, 2009 to June&#160;30, 2009 (Unaudited)</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    F-5
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    <A HREF='#304'>Statements of Cash Flows for the years ended
    December&#160;31, 2006, 2007 and 2008, and the six months ended
    June&#160;30, 2008 and 2009 (Unaudited) and the period from
    September&#160;9, 2004 (Date of Inception) to June&#160;30, 2009
    (Unaudited)</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    F-7
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    <A HREF='#305'>Notes to Financial Statements</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    F-8
</TD>
<TD>&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV>

<DIV align="left">
<!-- /TOC -->
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    F-1
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<A name='300'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</FONT></B>
</DIV>
</A>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    To the Board of Directors and Stockholders of
</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Anthera Pharmaceuticals, Inc.
</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Hayward, California
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We have audited the accompanying balance sheets of Anthera
    Pharmaceuticals, Inc. (a development stage company)(the
    &#147;Company&#148;) as of December&#160;31, 2008 and 2007, and
    the related statements of operations, stockholders&#146; equity
    (deficit) and comprehensive income (loss), and cash flows for
    each of the three years in the period ended December&#160;31,
    2008. These financial statements are the responsibility of the
    Company&#146;s management. Our responsibility is to express an
    opinion on the financial statements based on our audits.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We conducted our audits in accordance with the standards of the
    Public Company Accounting Oversight Board (United States). Those
    standards require that we plan and perform the audit to obtain
    reasonable assurance about whether the financial statements are
    free of material misstatement. The Company was not required to
    have, nor were we engaged to perform, an audit of its internal
    control over financial reporting. Our audits included
    consideration of internal control over financial reporting as a
    basis for designing audit procedures that are appropriate in the
    circumstances, but not for the purpose of expressing an opinion
    on the effectiveness of the Company&#146;s internal control over
    financial reporting. Accordingly, we express no such opinion. An
    audit also includes examining, on a test basis, evidence
    supporting the amounts and disclosures in the financial
    statements, assessing the accounting principles used and
    significant estimates made by management, as well as evaluating
    the overall financial statement presentation. We believe that
    our audits provide a reasonable basis for our opinion.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    In our opinion, such financial statements present fairly, in all
    material respects, the financial position of the Company as of
    December&#160;31, 2008 and 2007, and the results of its
    operations and its cash flows for each of the three years in the
    period ended December&#160;31, 2008, in conformity with
    accounting principles generally accepted in the
    United&#160;States of America.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The accompanying financial statements have been prepared
    assuming that the Company will continue as a going concern. The
    Company is a development stage enterprise engaged in developing
    therapeutics to treat diseases associated with inflammation. As
    discussed in Note&#160;1 to the financial statements, the
    deficiency in working capital at December&#160;31, 2008 and the
    Company&#146;s operating losses since inception raise
    substantial doubt about its ability to continue as a going
    concern. Management&#146;s plans concerning these matters are
    also described in Note&#160;1 to the financial statements. The
    financial statements do not include any adjustments that might
    result from the outcome of these uncertainties.
</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    /s/ Deloitte &#038; Touche LLP
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    San&#160;Francisco, California
</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    September&#160;15, 2009
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    F-2
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<A name='301'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Anthera
    Pharmaceuticals, Inc.<BR>
    (A Development Stage Company)<BR>
    <BR>
    BALANCE SHEETS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 7pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="58%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="7%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="7%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="6%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=05 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=05 type=lead -->
    <TD width="7%" align="right">&nbsp;</TD>	<!-- colindex=05 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=05 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 6pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>June&#160;30, 2009<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 6pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>December&#160;31,<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>December&#160;31,<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>June&#160;30,<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Pro Forma<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 6pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2007</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2008</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2009</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>(Note 2)</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 6pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>(unaudited)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>(unaudited)</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -7pt; margin-left: 7pt">
    <B>ASSETS</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    CURRENT ASSETS:
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 21pt">
    Cash and cash equivalents
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    152,744
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    7,895,113
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,290,730
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 21pt">
    Short-term investments
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5,825,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 21pt">
    Restricted cash
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    70,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    40,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    40,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 21pt">
    Prepaid expenses and other current assets
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    102,445
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    63,468
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    32,855
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 35pt">
    Total current assets
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    6,150,189
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    7,998,581
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,363,585
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    Property and equipment&#151;net
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    43,024
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    27,779
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    18,234
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    Other assets
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    7,794
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    7,794
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    TOTAL
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    6,193,213
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    8,034,154
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,389,613
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="line-height: 9pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
    <B>LIABILITIES AND STOCKHOLDERS&#146; DEFICIT</B>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    CURRENT LIABILITIES:
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 28pt">
    Accounts payable
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    3,774,281
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,597,300
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    3,085,066
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 28pt">
    Accrued clinical study
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,396,166
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,461,179
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    801,588
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 28pt">
    Accrued liabilities
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    192,782
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    319,893
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    284,786
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 28pt">
    Accrued payroll and related costs
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    694,955
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    116,045
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    145,701
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 28pt">
    License fee payable
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3,000,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5,000,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4,500,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 35pt">
    Total current liabilities
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    9,058,184
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    8,494,417
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    8,817,141
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    License fee payable&#151;noncurrent
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3,000,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 35pt">
    Total liabilities
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    12,058,184
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    8,494,417
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    8,817,141
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    Commitments and Contingencies (Note&#160;5)&#160;
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    Stockholders&#146; equity (deficit)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    <FONT style="white-space: nowrap">Series&#160;A-1</FONT>
    convertible preferred stock, $0.001&#160;par value,
    945,939&#160;shares authorized, issued and outstanding at
    December&#160;31, 2007 and 2008 and June&#160;30, 2009;
    (aggregate liquidation value of $813,508 as of December&#160;31,
    2007, 2008 and June&#160;30, 2009); 0&#160;shares outstanding
    pro forma at June&#160;30, 2009 (unaudited)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    946
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    946
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    946
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    <FONT style="white-space: nowrap">Series&#160;A-2</FONT>
    convertible preferred stock, $0.001&#160;par value,
    2,800,000&#160;shares authorized; 2,774,594, shares issued and
    outstanding at December&#160;31, 2007 and 2008 and June&#160;30,
    2009; (aggregate liquidation value of $8,323,782 as of
    December&#160;31, 2007, 2008 and June&#160;30, 2009);
    0&#160;shares outstanding pro forma at June&#160;30, 2009
    (unaudited)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,774
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,774
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,774
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    <FONT style="white-space: nowrap">Series&#160;B-1</FONT>
    convertible preferred stock, $0.001&#160;par value,
    4,710,000&#160;shares authorized; 4,702,640&#160;shares issued
    and outstanding at December&#160;31, 2007 and 2008 and
    June&#160;30, 2009; (aggregate liquidation value of $19,986,220
    as of December&#160;31, 2007, 2008 and June&#160;30, 2009);
    0&#160;shares outstanding pro forma at June&#160;30, 2009
    (unaudited)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4,703
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4,703
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4,703
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    <FONT style="white-space: nowrap">Series&#160;B-2</FONT>
    convertible preferred stock, $0.001&#160;par value,
    6,175,000&#160;shares authorized; 5,523,337&#160;shares issued
    and outstanding at December&#160;31, 2008 and June&#160;30,
    2009; (aggregate liquidation value of $23,474,182 as of
    December&#160;31, 2008 and June&#160;30, 2009); 0&#160;shares
    outstanding pro forma at June&#160;30, 2009 (unaudited)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5,523
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5,523
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    Preferred stock, $0.001&#160;par value
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    Common stock, $0.001&#160;par value, 30,000,000&#160;shares
    authorized; 1,995,877, 2,490,790, 2,578,133&#160;shares issued
    and outstanding at December&#160;31, 2007, 2008 and
    June&#160;30, 2009, respectively; 16,524,643&#160;shares
    outstanding pro forma at June&#160;30, 2009 (unaudited)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,996
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,491
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,578
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    16,524
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 21pt">
    Additional paid-in capital
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    29,053,672
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    52,550,920
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    52,703,824
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    52,703,824
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 21pt">
    Accumulated other comprehensive loss
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (1,812
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (1,160
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 21pt">
    Deficit accumulated the during the development stage
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (34,927,250
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (53,026,460
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (60,147,876
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (60,147,876
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 35pt">
    Total stockholders&#146; deficit
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (5,864,971
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (460,263
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (7,427,528
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (7,427,528
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    TOTAL
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    6,193,213
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    8,034,154
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,389,613
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    See accompanying notes to financial statements
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    F-3
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<A name='302'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Anthera
    Pharmaceuticals, Inc.<BR>
    (A Development Stage Company)<BR>
    <BR>
    STATEMENTS OF OPERATIONS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 8pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
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<TR style="font-size: 1pt" valign="bottom">
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    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="8%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
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    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=07 type=hang1 -->
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<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
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&nbsp;
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<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
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&nbsp;
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&nbsp;
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&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Cumulative<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
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&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Period<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>from<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>September 9,<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>2004<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>(Date of<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Inception)<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>to<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="10" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Years Ended December&#160;31,</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="6" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Six Months Ended June&#160;30,</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>June&#160;30,<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2006</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2007</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2008</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2008</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2009</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2009</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="6" align="center" valign="bottom">
    <B>(unaudited)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>(unaudited)</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -8pt; margin-left: 8pt">
    OPERATING EXPENSES:
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -16pt; margin-left: 24pt">
    Research and development
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    7,759,106
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    23,921,932
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    10,882,322
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5,363,436
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5,201,181
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    48,109,749
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -16pt; margin-left: 24pt">
    General and administrative
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    822,732
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,468,607
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,980,170
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,592,243
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,845,574
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    8,337,450
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -16pt; margin-left: 32pt">
    Total operating expenses
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    8,581,838
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    26,390,539
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    13,862,492
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    6,955,679
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    7,046,755
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    56,447,199
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -16pt; margin-left: 16pt">
    LOSS FROM OPERATIONS
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (8,581,838
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (26,390,539
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (13,862,492
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (6,955,679
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (7,046,755
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (56,447,199
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -16pt; margin-left: 16pt">
    OTHER INCOME (EXPENSE):
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -16pt; margin-left: 24pt">
    Interest and other income
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    109,987
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    696,962
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    178,129
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    85,330
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    21,637
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,017,863
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -16pt; margin-left: 24pt">
    Interest expense
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (17,395
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (296,303
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (96,704
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (96,298
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (409,996
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -16pt; margin-left: 24pt">
    Beneficial conversion features
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (190,000
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (4,118,544
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (1,392,601
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (4,308,544
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -16pt; margin-left: 16pt">
    Total other income (expense)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (97,408
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    696,962
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (4,236,718
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (1,403,975
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (74,661
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (3,700,677
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -16pt; margin-left: 16pt">
    NET LOSS
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (8,679,246
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (25,693,577
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (18,099,210
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (8,359,654
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (7,121,416
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (60,147,876
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -16pt; margin-left: 16pt">
    Net loss per share&#151;basic and diluted
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (7.71
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (16.44
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (7.87
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (3.86
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (2.80
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -16pt; margin-left: 16pt">
    Weighted-average number of shares used in per share
    calculation&#151;basic and diluted
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,125,065
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,562,670
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,300,090
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,164,630
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,540,033
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -16pt; margin-left: 16pt">
    Pro forma net loss per share&#151;basic and diluted (unaudited)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (1.39
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (0.42
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -16pt; margin-left: 16pt">
    Pro forma weighted-average number of shares used in per share
    calculation&#151;basic and diluted (unaudited)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    13,048,521
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    16,898,307
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    See accompanying notes to financial statements.
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    F-4
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- landscape -->
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>
<A name='303'>
<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Anthera
    Pharmaceuticals, Inc.<BR>
    (A Development Stage Company)<BR>
    <BR>
    STATEMENTS OF STOCKHOLDERS&#146; EQUITY (DEFICIT) AND
    COMPREHENSIVE LOSS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 7pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="54%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="2%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="2%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=05 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=05 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=05 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=05 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=06 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=06 type=lead -->
    <TD width="3%" align="right">&nbsp;</TD>	<!-- colindex=06 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=06 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=07 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=07 type=lead -->
    <TD width="5%" align="right">&nbsp;</TD>	<!-- colindex=07 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=07 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=08 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=08 type=lead -->
    <TD width="4%" align="right">&nbsp;</TD>	<!-- colindex=08 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=08 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=09 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=09 type=lead -->
    <TD width="4%" align="right">&nbsp;</TD>	<!-- colindex=09 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=09 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 6pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Deficit<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 6pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Accumulated<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Accumulated<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Total<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 6pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="6" nowrap align="center" valign="bottom">
    <B>Convertible<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Additional<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Other<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>During<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Stockholders&#146;<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 6pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="6" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Preferred Stock</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="6" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Common Stock</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Paid-In<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Comprehensive<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Development<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Equity<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 6pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Shares</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Amount</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Shares</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Amount</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Capital</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Loss</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Stage</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>(Deficit)</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -7pt; margin-left: 7pt">
    DATE OF INCEPTION&#151;September&#160;9, 2004
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -7pt; margin-left: 7pt">
    Issuance of common stock to founders for cash
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    240,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    240
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    240
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    Issuance of common stock to founders for service
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,260,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,260
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,260
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    Repurchase of common stock from founder
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (125,000
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (125
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (125
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    Issuance of Series&#160;A convertible preferred stock for cash
    at $0.86 per share, net of issuance cost of $8,555
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    902,153
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    902
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    766,393
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    767,295
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    Issuance of Series&#160;A convertible preferred stock in
    exchange for service at $0.86 per share
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    43,786
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    44
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    37,612
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    37,656
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    Issuance of common stock upon exercise of stock options
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    57,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    57
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4,503
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4,560
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    Reclass of early exercise of stock options to liability
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (50,000
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (50
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (3,950
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (4,000
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    Stock-based compensation expense related to consultant options
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    842
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    842
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    Net loss
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (554,427
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (554,427
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    BALANCE&#151;December&#160;31, 2005
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    945,939
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    946
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,382,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,382
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    805,400
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (554,427
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    253,301
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    Conversion of Series&#160;A convertible preferred stock to
    <FONT style="white-space: nowrap">Series&#160;A-1</FONT>
    convertible preferred stock at a ratio of 1:1
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    Issuance of
    <FONT style="white-space: nowrap">Series&#160;A-2</FONT>
    convertible preferred stock for cash at $3.00 per share&#151;net
    of issuance cost of $202,019
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,949,416
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,949
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5,644,283
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5,646,232
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    Issuance of
    <FONT style="white-space: nowrap">Series&#160;A-2</FONT>
    convertible preferred stock upon conversion of convertible
    promissory notes at $2.25 and $3.00 per share
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    383,918
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    384
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    961,367
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    961,751
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    Issuance of
    <FONT style="white-space: nowrap">Series&#160;A-2</FONT>
    convertible preferred stock in exchange for licensed technology
    at $3.00 per share
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    441,260
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    441
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,323,341
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,323,782
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    Beneficial conversion feature related to conversion of
    convertible promissory notes into
    <FONT style="white-space: nowrap">Series&#160;A-1</FONT>
    convertible preferred stock
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    190,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    190,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    Issuance of Series&#160;B convertible preferred stock for cash
    at $4.25 per share&#151;net of issuance cost of $20,930
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4,484,706
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4,485
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    19,034,585
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    19,039,070
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    Issuance of Series&#160;B convertible preferred stock in
    exchange for licensed technology at $4.25 per share
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    217,934
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    218
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    926,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    926,218
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    Issuance of common stock upon exercise of stock options
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    215,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    215
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    16,985
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    17,200
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    Reclass of early exercise of stock options to liability
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (63,024
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (63
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (4,980
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (5,043
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    Stock-based compensation expense related to consultant options
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4,358
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4,358
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    Stock-based compensation expense related to employee options
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4,648
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4,648
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    Net loss
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (8,679,246
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (8,679,246
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    BALANCE&#151;December&#160;31, 2006
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    8,423,173
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    8,423
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,533,976
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,534
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    28,905,987
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (9,233,673
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    19,682,271
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    See accompanying notes to financial statements.
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    F-5
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Anthera
    Pharmaceuticals, Inc.<BR>
    (A Development Stage Company)<BR>
    <BR>
    STATEMENTS OF STOCKHOLDERS&#146; EQUITY (DEFICIT) AND
    COMPREHENSIVE LOSS&#151;(Continued)</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 7pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="53%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="3%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="2%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=05 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=05 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=05 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=05 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=06 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=06 type=lead -->
    <TD width="3%" align="right">&nbsp;</TD>	<!-- colindex=06 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=06 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=07 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=07 type=lead -->
    <TD width="5%" align="right">&nbsp;</TD>	<!-- colindex=07 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=07 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=08 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=08 type=lead -->
    <TD width="4%" align="right">&nbsp;</TD>	<!-- colindex=08 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=08 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=09 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=09 type=lead -->
    <TD width="4%" align="right">&nbsp;</TD>	<!-- colindex=09 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=09 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 6pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Deficit<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 6pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Accumulated<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Accumulated<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Total<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 6pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="6" nowrap align="center" valign="bottom">
    <B>Convertible<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Additional<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Other<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>During<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Stockholders&#146;<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 6pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="6" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Preferred Stock</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="6" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Common Stock</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Paid-In<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Comprehensive<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Development<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Equity<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 6pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Shares</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Amount</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Shares</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Amount</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Capital</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Loss</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Stage</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>(Deficit)</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -7pt; margin-left: 7pt">
    BALANCE&#151;December&#160;31, 2006
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    8,423,173
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    8,423
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,533,976
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,534
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    28,905,987
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (9,233,673
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    19,682,271
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    Issuance of common stock upon exercise of stock options
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    817,065
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    817
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    118,103
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    118,920
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    Reclass of early exercise of stock options liability
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (383,164
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (383
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (60,190
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (60,573
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    Issuance of common stock for service
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    28,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    28
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,422
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,450
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    Stock-based compensation expense related to consultant options
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    12,489
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    12,489
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    Stock-based compensation expense related to employee options
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    74,861
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    74,861
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    Change in other comprehensive loss&#151;unrealized (loss) gain
    on investments
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (1,812
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (1,812
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    Net loss
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (25,693,577
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (25,693,577
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 21pt">
    Comprehensive loss
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (25,695,389
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    BALANCE&#151;December&#160;31, 2007
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    8,423,173
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    8,423
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,995,877
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,996
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    29,053,672
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (1,812
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (34,927,250
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (5,864,971
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    Conversion of Series&#160;B convertible preferred stock to
    <FONT style="white-space: nowrap">Series&#160;B-1</FONT>
    convertible preferred stock at a ratio of 1:1
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    Issuance of
    <FONT style="white-space: nowrap">Series&#160;B-2</FONT>
    convertible preferred stock for cash at $4.25 per share&#151;net
    of issuance cost of $242,327 and warrants issuance (below)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,647,060
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,647
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    6,511,556
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    6,513,203
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    Issuance of
    <FONT style="white-space: nowrap">Series&#160;B-2</FONT>
    convertible preferred stock upon conversion of convertible
    promissory notes at $3.19 per share
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3,827,452
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3,827
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    12,196,173
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    12,200,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    Issuance of
    <FONT style="white-space: nowrap">Series&#160;B-2</FONT>
    convertible preferred stock in lieu of interest payment at $3.19
    per share
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    48,825
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    49
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    155,581
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    155,630
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    Issuance of warrants in connection with issuance of
    <FONT style="white-space: nowrap">Series&#160;B-2</FONT>
    convertible preferred stock
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    244,478
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    244,478
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    Beneficial conversion feature related to conversion of
    convertible promissory notes into
    <FONT style="white-space: nowrap">Series&#160;B-2</FONT>
    convertible preferred stock
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4,118,544
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4,118,544
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    Issuance of common stock upon exercise of stock options
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    307,970
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    308
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    67,797
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    68,105
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    Release of early exercise of stock options liability
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    219,443
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    219
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    12,682
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    12,901
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    Repurchase of common stock upon employee termination
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (32,500
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (32
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (4,843
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (4,875
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    Stock-based compensation expense related to consultant options
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    51,874
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    51,874
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    Stock-based compensation expense related to employee options
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    143,406
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    143,406
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    Change in other comprehensive loss&#151;unrealized (loss) gain
    on investments
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    652
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    652
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    Net loss
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (18,099,210
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (18,099,210
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 21pt">
    Comprehensive loss
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (18,098,558
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    BALANCE&#151;December&#160;31, 2008
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    13,946,510
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    13,946
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,490,790
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,491
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    52,550,920
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (1,160
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (53,026,460
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (460,263
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    Release of early exercise of stock options liability*
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    87,343
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    87
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    18,227
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    18,314
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    Stock-based compensation expense related to consultant options*
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,153
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,153
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    Stock-based compensation expense related to employee options*
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    133,524
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    133,524
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    Change in other comprehensive loss&#151;unrealized (loss) gain
    on investments*
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,160
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,160
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    Net loss*
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (7,121,416
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (7,121,416
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 21pt">
    Comprehensive loss*
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (7,120,256
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    Balance June&#160;30, 2009 (unaudited)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    13,946,510
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    13,946
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,578,133
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    2,578
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    52,703,824
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (60,147,876
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (7,427,528
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="font-size: 1pt; margin-left: 0%; width: 10%;  align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=999 iwidth=456 length=48 -->

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="98%"></TD>
</TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">*
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">unaudited
    </FONT></TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    See accompanying notes to financial statements
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    F-6
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
</DIV><!-- END PAGE WIDTH -->
<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>
<A name='304'>
<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Anthera
    Pharmaceuticals, Inc.<BR>
    (A Development Stage Company)<BR>
    <BR>
    STATEMENTS OF CASH FLOWS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 7pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="42%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="6%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="7%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="7%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=05 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=05 type=lead -->
    <TD width="6%" align="right">&nbsp;</TD>	<!-- colindex=05 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=05 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=06 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=06 type=lead -->
    <TD width="6%" align="right">&nbsp;</TD>	<!-- colindex=06 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=06 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=07 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=07 type=lead -->
    <TD width="8%" align="right">&nbsp;</TD>	<!-- colindex=07 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=07 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>September&#160;9,<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>2004<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>(Date of<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="6" nowrap align="center" valign="bottom">
    <B>Six Months<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Inception) to<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="10" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Years Ended December&#160;31,</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="6" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Ended June&#160;30,</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>June&#160;30,<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2006</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2007</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2008</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2008</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2009</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2009</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="6" nowrap align="center" valign="bottom">
    <B>(unaudited)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>(unaudited)</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -7pt; margin-left: 7pt">
    CASH FLOW FROM OPERATING ACTIVITIES:
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 21pt">
    Net loss
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (8,679,246
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (25,693,577
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (18,099,210
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (8,359,654
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (7,121,416
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (60,147,876
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 21pt">
    Adjustments to reconcile net loss to net cash used in operating
    activities:
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 28pt">
    Depreciation
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    8,742
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    18,922
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    21,997
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    11,669
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    9,545
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    63,421
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 28pt">
    Amortization of discount on short-term investments
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (130,248
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (130,248
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 28pt">
    Realized loss on short-term investments
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    7,522
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,160
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    8,682
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 28pt">
    Stock-based compensation expense&#151;employees
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4,648
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    74,861
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    143,406
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    66,931
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    133,524
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    356,439
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 28pt">
    Stock-based compensation expense&#151;consultants
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4,358
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    12,489
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    51,874
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    51,874
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,153
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    70,716
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 28pt">
    Issuance of common stock for consulting service
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,450
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    41,366
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 28pt">
    Issuance of preferred stock for service and license fee
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,250,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,250,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 28pt">
    Issuance of preferred stock in lieu of interest payment
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,751
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    155,630
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    157,381
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 28pt">
    Beneficial conversion feature
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    190,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4,118,544
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,392,601
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4,308,544
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 28pt">
    Changes in assets and liabilities:
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 28pt">
    Prepaid expenses and other assets
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (39,214
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (62,269
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    31,182
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    7,207
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    30,614
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (40,649
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 28pt">
    Accounts payable
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    686,168
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3,002,254
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (2,176,982
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (2,156,338
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,487,765
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3,085,066
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 28pt">
    Accrued clinical study
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    235,449
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,160,717
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    65,013
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (679,942
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (659,591
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    801,588
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 28pt">
    Accrued liabilities
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    53,746
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    8,489
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    135,137
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    261,015
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (16,792
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    241,508
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 28pt">
    Accrued payroll and related costs
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    43,426
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    651,529
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (578,910
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (579,956
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    29,655
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    145,701
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 28pt">
    License fee payable
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    6,000,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (1,000,000
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (500,000
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4,500,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    Net cash used in operating activities
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (5,240,172
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (14,954,383
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (17,124,797
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (9,984,593
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (6,604,383
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (44,288,361
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    INVESTING ACTIVITIES:
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 21pt">
    Property and equipment purchases
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (22,378
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (27,145
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (6,752
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (4,447
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (81,655
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 21pt">
    Purchase of short-term investments
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (14,800,564
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (14,800,564
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 21pt">
    Proceeds from sale of short-term investments
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    9,104,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5,818,132
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4,325,636
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    14,922,132
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 21pt">
    Restricted cash
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (70,000
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    30,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (40,000
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    Net cash provided by (used in) investing activities
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (22,378
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (5,793,709
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5,841,380
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4,321,189
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (87
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    FINANCING ACTIVITIES:
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 21pt">
    Net proceeds from issuance of convertible notes
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    960,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    12,200,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    12,200,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    13,160,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 21pt">
    Net proceeds from issuance of preferred stock
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    24,685,302
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    6,757,681
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    32,210,278
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 21pt">
    Proceeds from issuance of common stock&#151;net of repurchase
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    115
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 21pt">
    Proceeds from exercise of stock options
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    17,200
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    118,920
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    68,105
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    53,145
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    208,785
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    Net cash provided by financing activities
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    25,662,502
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    118,920
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    19,025,786
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    12,253,145
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    45,579,178
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    20,399,952
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (20,629,172
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    7,742,369
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    6,589,741
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (6,604,383
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,290,730
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    CASH AND CASH EQUIVALENTS&#151;Beginning of period
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    381,964
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    20,781,916
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    152,744
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    152,744
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    7,895,113
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    CASH AND CASH EQUIVALENTS&#151;End of period
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    20,781,916
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    152,744
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    7,895,113
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    6,742,485
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,290,730
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,290,730
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    SUPPLEMENTAL CASH DISCLOSURES OF CASH FLOW INFORMATION:
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 21pt">
    Interest paid
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    13,816
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,413
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    15,229
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 21pt">
    Taxes paid
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    11,098
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    8,235
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    4,379
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,681
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    24,687
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 14pt">
    NONCASH INVESTMENT AND FINANCING ACTIVITIES:
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 21pt">
    Conversion of convertible promissory notes and accrued interest
    into
    <FONT style="white-space: nowrap">Series&#160;A-2</FONT>
    convertible preferred stock and
    <FONT style="white-space: nowrap">Series&#160;B-2</FONT>
    convertible preferred stock
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    961,751
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    12,355,630
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    13,317,381
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -14pt; margin-left: 21pt">
    Beneficial conversion feature
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    190,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    4,118,544
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,392,601
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    4,308,544
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    See accompanying notes to financial statements.
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    F-7
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Anthera
    Pharmaceuticals, Inc.<BR>
    (A Development Stage Company)<BR>
    <BR>
    <A name='305'>NOTES&#160;TO FINANCIAL STATEMENTS<BR>
    </A>FOR THE YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008, AND
    FOR THE PERIOD FROM SEPTEMBER 9, 2004 (DATE OF INCEPTION) TO
    JUNE 30, 2009 (UNAUDITED)</FONT></B>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>
    <B><FONT style="font-family: Arial, Helvetica">1.&#160;&#160;</FONT></B>
</TD>
    <TD>
    <B><FONT style="font-family: Arial, Helvetica">ORGANIZATION AND
    DESCRIPTION OF BUSINESS</FONT></B>
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Anthera Pharmaceuticals, Inc., the Company or Anthera, was
    incorporated on September&#160;9, 2004 in the state of Delaware.
    During 2006, the Company opened its headquarters in
    San&#160;Mateo, California, and subsequently moved to Hayward,
    California. Anthera is a biopharmaceutical company focused on
    developing and commercializing therapeutics to treat serious
    diseases associated with inflammation, including cardiovascular
    and autoimmune diseases. Two of the Company&#146;s primary
    product candidates,
    <FONT style="white-space: nowrap">A-002</FONT> and
    <FONT style="white-space: nowrap">A-001,</FONT> are
    inhibitors of the family of human enzymes known as secretory
    phospholipase
    A<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>,
    or
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>.
    The Company&#146;s other primary product candidate,
    <FONT style="white-space: nowrap">A-623,</FONT>
    targets elevated levels of
    <FONT style="white-space: nowrap">B-lymphocyte</FONT>
    stimulator. The Company&#146;s activities since inception have
    consisted principally of acquiring product and technology
    rights, raising capital, and performing research and
    development. Accordingly, the Company is considered to be in the
    development stage as of June&#160;30, 2009, as defined by FASB
    Statement No.&#160;7, <I>Accounting and Reporting by Development
    Stage Enterprises</I>. Successful completion of the
    Company&#146;s development programs and, ultimately, the
    attainment of profitable operations are dependent on future
    events, including, among other things, its ability to access
    potential markets; secure financing, develop a customer base;
    attract, retain and motivate qualified personnel; and develop
    strategic alliances. To date, the Company has been funded by
    private equity and debt financings. Although management believes
    that the Company will be able to successfully fund its
    operations, there can be no assurance that the Company will be
    able to do so or that the Company will ever operate profitably.
    The Company has evaluated subsequent events through September
    15, 2008.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The Company expects to continue to incur substantial losses over
    the next several years during its development phase. To fully
    execute its business plan, the Company will need to complete
    certain research and development activities and clinical
    studies. Further, the Company&#146;s product candidates will
    require regulatory approval prior to commercialization. These
    activities may span many years and require substantial
    expenditures to complete and may ultimately be unsuccessful. Any
    delays in completing these activities could adversely impact the
    Company. The Company plans to meet its capital requirements
    primarily through issuances of equity securities and, in the
    longer term, revenue from product sales.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The accompanying financial statements have been prepared in
    conformity with accounting principles generally accepted in the
    United States, or GAAP, which contemplate continuation of the
    Company as a going concern. During the year ended
    December&#160;31, 2008, the Company incurred a net loss of
    $18,099,210 and had negative cash flows from operations of
    $17,124,797. In addition, the Company had an accumulated deficit
    of $53,026,460 at December&#160;31, 2008. The Company expects to
    incur additional operating losses and negative cash flows for
    the foreseeable future. Failure to generate revenue or raise
    additional capital would adversely affect the Company&#146;s
    ability to achieve its intended business objectives.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Going
    Concern</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The Company has historically incurred losses, and through
    June&#160;30, 2009 has incurred losses of $60,147,876
    (unaudited) since inception. Because of these historical losses,
    the Company will require additional working capital to develop
    business operations. The Company
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    F-8
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Anthera
    Pharmaceuticals, Inc.<BR>
    (A Development Stage Company)<BR>
    <BR>
    NOTES&#160;TO FINANCIAL STATEMENTS&#151;(Continued)</FONT></B>
</DIV>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    intends to raise additional working capital through private
    placements, public offerings, bank financing or advances from
    related parties or shareholder loans.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The continuation of the Company&#146;s business is dependent
    upon obtaining further financing and ultimately achieving a
    profitable level of operations. The issuance of additional
    equity securities by the Company could result in a significant
    dilution in the equity interests of the Company&#146;s current
    or future stockholders. Obtaining commercial loans, assuming
    those loans would be available, will increase liabilities and
    future cash commitments.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    There are no assurances that the Company will be able to either
    (i)&#160;achieve a level of revenues adequate to generate
    sufficient cash flow from operations; or (ii)&#160;obtain
    additional financing through either private placements, public
    offerings or bank financing necessary to support the
    Company&#146;s working capital requirements. To the extent that
    funds generated from operations and any private placements,
    public offerings or bank financing are insufficient, the Company
    will have to raise additional working capital. No assurance can
    be given that additional financing will be available, or if
    available, will be on terms acceptable to the Company. If
    adequate working capital is not available, the Company may cease
    operations.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    These conditions raise substantial doubt about the
    Company&#146;s ability to continue as a going concern. The
    financial statements do not include any adjustments relating to
    the recoverability and classification of asset carrying amounts
    or the amount and classification of liabilities that might be
    necessary should the Company be unable to continue as a going
    concern.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>
    <B><FONT style="font-family: Arial, Helvetica">2.&#160;&#160;</FONT></B>
</TD>
    <TD>
    <B><FONT style="font-family: Arial, Helvetica">SUMMARY OF
    SIGNIFICANT ACCOUNTING POLICIES</FONT></B>
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Unaudited Interim
    Financial Information</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The accompanying interim balance sheet as of June&#160;30, 2009,
    the statements of operations and cash flows for the six months
    ended June&#160;30, 2008 and 2009, and for the cumulative period
    from September&#160;9, 2004 (date of inception) to June&#160;30,
    2009 and the statements of stockholders&#146; equity (deficit)
    and comprehensive loss for the six months ended June&#160;30,
    2009, are unaudited. The unaudited interim financial statements
    have been prepared in accordance with GAAP. The unaudited
    interim financial statements have been prepared on the same
    basis as the audited financial statements. In the opinion of
    management, the unaudited interim financial statements include
    all adjustments, consisting of normal recurring adjustments,
    necessary for the fair presentation of the Company&#146;s
    financial position at June&#160;30, 2006 and the Company&#146;s
    results of operations, cash flows and stockholders&#146; equity
    (deficit) for the six months ended June&#160;30, 2008 and 2009
    and for the cumulative period from September&#160;9, 2004 (date
    of inception) to June&#160;30, 2009. The results for the six
    months ended June&#160;30, 2009 are not necessarily indicative
    of the results to be expected for the year ending
    December&#160;31, 2009 or for any future period. The Company has
    evaluated subsequent events through September&#160;15, 2009.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Unaudited Pro
    Forma Balance Sheet and Net Loss Per Share</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The unaudited pro forma balance sheet data presented as of
    June&#160;30, 2009, reflects the conversion of all outstanding
    shares of convertible stock as of that date into
    13,946&#160;shares of common stock, which will occur immediately
    prior to closing of the proposed initial public offering, as if
    the conversion had occurred on June&#160;30, 2009. The unaudited
    pro forma basic and diluted net loss per common share and the
    pro forma weighted-average number of shares
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    F-9
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Anthera
    Pharmaceuticals, Inc.<BR>
    (A Development Stage Company)<BR>
    <BR>
    NOTES&#160;TO FINANCIAL STATEMENTS&#151;(Continued)</FONT></B>
</DIV>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    for the year ended December&#160;31, 2008 and six months ended
    June&#160;30, 2009, have been computed to give effect to the
    conversion of the Company&#146;s convertible preferred stock
    (using the as-if-converted method) into common stock as though
    the conversion had occurred on the original dates of issuance.
    The June&#160;30, 2009 balance sheet data also reflects the
    Company&#146;s authorization
    of&#160;&#160;&#160;&#160;&#160;&#160;million preferred shares
    upon completion of the initial public offering.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Use of
    Estimates</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The preparation of financial statements in conformity with
    accounting principles generally accepted in the United States of
    America requires management to make estimates and assumptions
    that affect the reported amounts of assets and liabilities and
    disclosure of contingent assets and liabilities at the date of
    the financial statements and the reported amounts of expenses
    during the reporting period. Significant estimates include
    assumptions made in the accrual of clinical costs and
    stock-based compensation. Actual results could differ from those
    estimates.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Cash and Cash
    Equivalents</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The Company considers all highly liquid instruments purchased
    with an original maturity or remaining maturities of three
    months or less at the date of purchase to be cash equivalents.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Short-Term
    Investments</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The Company has designated its investments as available for sale
    and the investments are carried at fair value. The Company
    determines the appropriate classification of securities at the
    time of purchase and reevaluates such classification as of each
    balance sheet date. Realized gains and losses and declines in
    value judged to be other than temporary are determined based on
    the specific identification method and are reported in the
    statements of operations.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Restricted
    Cash</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    At December&#160;31, 2008, and June&#160;30, 2009, the Company
    had restricted cash of $40,000 to collateralize the
    Company&#146;s corporate credit card.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Concentration of
    Credit Risk</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Financial instruments that potentially subject the Company to
    concentrations of credit risk consist primarily of cash and cash
    equivalents. The Company&#146;s cash equivalents consist of
    cash, certificates of deposits, and treasury money market funds.
    The Company has not experienced any losses in such accounts. The
    Company believes it is not exposed to significant credit risk
    related to cash and cash equivalents.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Property and
    Equipment&#151;Net</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Property and equipment are stated at cost, less accumulated
    depreciation. Depreciation is computed over the estimated useful
    lives of the respective assets, which range from three to five
    years, using the straight-line method. Repairs and maintenance
    costs are expensed as incurred.
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    F-10
</DIV><!-- END PAGE WIDTH -->
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Anthera
    Pharmaceuticals, Inc.<BR>
    (A Development Stage Company)<BR>
    <BR>
    NOTES&#160;TO FINANCIAL STATEMENTS&#151;(Continued)</FONT></B>
</DIV>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Long-Lived
    Assets</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The Company&#146;s long-lived assets and other assets are
    reviewed for impairment in accordance with FASB Statement
    No.&#160;144, <I>Accounting for the Impairment or Disposal of
    Long-Lived Assets</I>, whenever events or changes in
    circumstances indicate that the carrying amount of the asset may
    not be recoverable. Recoverability of an asset to be held and
    used is measured by a comparison of the carrying amount of an
    asset to the future undiscounted cash flows expected to be
    generated by the asset. If such asset is considered to be
    impaired, the impairment to be recognized is measured by the
    amount by which the carrying amount of the asset exceeds its
    fair value. Through June&#160;30, 2009, the Company had not
    experienced impairment losses on its long-lived assets.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Fair Value of
    Financial Instruments</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The Company adopted the provisions of the FASB Statement
    No.&#160;157, <I>Fair Value Measurements</I>, or SFAS&#160;157,
    effective January&#160;1, 2008. SFAS&#160;157 defines fair
    value, establishes a framework for measuring fair value under
    generally accepted accounting principles and enhances
    disclosures about fair value measurements.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Fair value is defined under SFAS&#160;157 as the exchange price
    that would be received for an asset or paid to transfer a
    liability (an exit price) in the principal or most advantageous
    market for the asset or liability in an orderly transaction
    between market participants on the measurement date. Valuation
    techniques used to measure fair value under SFAS&#160;157 must
    maximize the use of observable inputs and minimize the use of
    unobservable inputs.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The standard describes a fair value hierarchy based on three
    levels of inputs, of which the first two are considered
    observable and the last unobservable, that may be used to
    measure fair value. The Company&#146;s assessment of the
    significance of a particular input to the fair value
    measurements requires judgment, and may affect the valuation of
    the assets and liabilities being measured and their placement
    within the fair value hierarchy. The three levels of input are:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <I>Level&#160;1</I>&#151;Quoted prices in active markets for
    identical assets or liabilities.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <I>Level&#160;2</I>&#151;Inputs other than Level&#160;1 that are
    observable, either directly or indirectly, such as quoted prices
    for similar assets or liabilities; quoted prices in markets that
    are not active; or other inputs that are observable or can be
    corroborated by observable market data for substantially the
    full term of the assets or liabilities.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <I>Level&#160;3</I>&#151;Unobservable inputs that are supported
    by little or no market activity and that are significant to the
    fair value of the assets or liabilities.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The adoption of this statement did not have a material impact on
    the Company&#146;s results of operations and financial condition.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Following is a description of the Company&#146;s valuation
    methodologies for assets and liabilities measured at fair value.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Where quoted prices are available in an active market, fair
    value is based upon quoted market prices, and are classified in
    level&#160;1 of the valuation hierarchy. If quoted market prices
    are not available, fair value is based upon observable inputs
    such as quoted prices for similar assets or liabilities, quoted
    prices in markets that are not active, or other inputs that are
    observable or can be corroborated by observable market data, the
    assets or liabilities are
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    F-11
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Anthera
    Pharmaceuticals, Inc.<BR>
    (A Development Stage Company)<BR>
    <BR>
    NOTES&#160;TO FINANCIAL STATEMENTS&#151;(Continued)</FONT></B>
</DIV>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    classified in level&#160;2 of the valuation hierarchy. When
    quoted prices and observable inputs are unavailable, fair values
    are based on internally developed cash flow models and are
    classified in level&#160;3 of the valuation hierarchy. The
    internally developed cash flow models primarily use, as inputs,
    estimates for interest rates and discount rates including yields
    of comparable traded instruments adjusted for illiquidity and
    other risk factors, amount of cash flows and expected holding
    periods of the assets. These inputs reflect the Company&#146;s
    own assumptions about the assumptions market participants would
    use in pricing the assets including assumptions about risk
    developed based on the best information available in the
    circumstances.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Other financial instruments, including accounts payable and
    accrued liabilities, are carried at cost, which the Company
    believes approximates fair value because of the short-term
    maturity of these instruments.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Research and
    Development Costs</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Research and development expenses consist of personnel costs,
    including salaries, benefits and stock-based compensation,
    clinical studies performed by contract research organizations,
    or CROs, materials and supplies, licenses and fees, and overhead
    allocations consisting of various administrative and facilities
    related costs. Research and development activities are also
    separated into three main categories: research, clinical
    development, and pharmaceutical development. Research costs
    typically consist of preclinical and toxicology costs. Clinical
    development costs include costs for Phase 1 and 2 clinical
    studies. Pharmaceutical development costs consist of expenses
    incurred in connection with product formulation and chemical
    analysis.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The Company charges research and development costs, including
    clinical study costs, to expense when incurred, consistent with
    FASB Statement No.&#160;2, <I>Accounting for Research and
    Development Costs</I>. Clinical study costs are a significant
    component of research and development expenses. All of the
    Company&#146;s clinical studies are performed by third-party
    CROs. The Company accrues costs for clinical studies performed
    by CROs on a straight-line basis over the service periods
    specified in the contracts and adjusts the estimates, if
    required, based upon the Company&#146;s ongoing review of the
    level of effort and costs actually incurred by the CROs. The
    Company monitors levels of performance under each significant
    contract, including the extent of patient enrollment and other
    activities through communications with the CROs, and adjusts the
    estimates, if required, on a quarterly basis so that clinical
    expenses reflect the actual effort expended by each CRO.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    All material CRO contracts are terminable by the Company upon
    written notice and the Company is generally only liable for
    actual effort expended by the CROs and certain noncancelable
    expenses incurred at any point of termination.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Amounts paid in advance related to incomplete services will be
    refunded if a contract is terminated. Some contracts include
    additional termination payments that become due and payable if
    the Company terminates the contract. Such additional termination
    payments are only recorded if a contract is terminated.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Comprehensive
    Income (Loss)</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Comprehensive income (loss) consists of other comprehensive
    income and net loss. Other comprehensive income includes certain
    changes in equity that are excluded from net income (loss).
    Specifically, the Company includes unrealized gains (losses) on
    available for sale
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    F-12
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Anthera
    Pharmaceuticals, Inc.<BR>
    (A Development Stage Company)<BR>
    <BR>
    NOTES&#160;TO FINANCIAL STATEMENTS&#151;(Continued)</FONT></B>
</DIV>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    securities in other comprehensive income (loss). Comprehensive
    income (loss) for each period presented is set forth in the
    Statement of Stockholders&#146; Equity (Deficit) and
    Comprehensive Loss.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Income
    Taxes</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The Company accounts for income taxes in accordance with FASB
    Statement No.&#160;109, <I>Accounting for Income Taxes</I>. FASB
    Statement No.&#160;109 prescribes the use of the liability
    method whereby deferred tax asset and liability account balances
    are determined based on differences between the financial
    reporting and tax bases of assets and liabilities and are
    measured using the enacted tax rates and laws that will be in
    effect when the differences are expected to reverse. The Company
    provides a valuation allowance, if necessary, to reduce deferred
    tax assets to their estimated realizable value.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    In June 2006, the FASB issued Interpretation No.&#160;48,
    <I>Accounting for Uncertainty in Income Taxes&#151;an
    Interpretation of FASB Statement No.&#160;109</I>, or
    FIN&#160;48, to create a single model to address accounting for
    uncertainty in tax positions. FIN&#160;48 clarifies the
    accounting for income taxes, by prescribing a minimum
    recognition threshold a tax position is required to meet before
    being recognized in the financial statements. FIN&#160;48 also
    provides guidance on derecognition, measurement and
    classification of amounts relating to uncertain tax positions,
    accounting for and disclosure of interest and penalties,
    accounting in interim periods, disclosures and transition
    relating to the adoption of the new accounting standard.
    FIN&#160;48 is effective for fiscal years beginning after
    December&#160;15, 2006. The Company adopted FIN&#160;48 as of
    January&#160;1, 2007, as required, and determined that the
    adoption of FIN&#160;48 did not have a material impact on the
    Company&#146;s financial position and results of operations.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Net Loss Per
    Common Share</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The Company computes net loss per share in accordance with
    Statement of Financial Accounting Standards No.&#160;128,
    <I>Earnings per Share</I>, or SFAS&#160;128. Under the
    provisions of SFAS&#160;128, basic net loss attributable to
    common stockholders per share, or Basic EPS, is computed by
    dividing net loss by the weighted-average number of common
    shares outstanding (excluding unvested shares subject to
    repurchase). Diluted net loss attributable to common
    stockholders, or diluted EPS, is computed by dividing net loss
    by the weighted-average number of common shares and dilutive
    common shares equivalents then outstanding. Common equivalent
    shares consist of the incremental common shares issuable upon
    the conversion of preferred stock, shares issuable upon the
    exercise of stock options, and unvested shares subject to
    repurchase. Diluted EPS is identical to Basic EPS since common
    equivalent shares are excluded from the calculation, as their
    effect is anti-dilutive.
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    F-13
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Anthera
    Pharmaceuticals, Inc.<BR>
    (A Development Stage Company)<BR>
    <BR>
    NOTES&#160;TO FINANCIAL STATEMENTS&#151;(Continued)</FONT></B>
</DIV>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The following table summarizes the Company&#146;s calculation of
    net loss per common share:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 9pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="43%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="8%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="9%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="9%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=05 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=05 type=lead -->
    <TD width="8%" align="right">&nbsp;</TD>	<!-- colindex=05 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=05 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=06 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=06 type=lead -->
    <TD width="8%" align="right">&nbsp;</TD>	<!-- colindex=06 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=06 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="10" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Years Ended December&#160;31,</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="6" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Six Months Ended June&#160;30,</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2006</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2007</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2008</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2008</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2009</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="6" align="center" valign="bottom">
    <B>(unaudited)</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    <B>Historical net loss per share</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -18pt; margin-left: 18pt">
    Numerator
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -18pt; margin-left: 27pt">
    Net loss
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (8,679,246
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (25,693,577
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (18,099,210
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (8,359,654
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (7,121,416
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -18pt; margin-left: 18pt">
    Denominator
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -18pt; margin-left: 18pt">
    Weighted-average common shares outstanding
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,584,464
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,010,450
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,693,773
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,632,149
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,767,535
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -18pt; margin-left: 18pt">
    Less: Weighted-average shares subject to repurchase
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (459,399
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (447,780
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (393,683
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (467,519
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (227,502
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -18pt; margin-left: 18pt">
    Denominator for basic and diluted net loss per share
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,125,065
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,562,670
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,300,090
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,164,630
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,540,033
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -18pt; margin-left: 18pt">
    Basic and diluted net loss per share
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (7.71
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (16.44
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (7.87
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (3.86
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (2.80
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -18pt; margin-left: 18pt">
    <B>Pro forma net loss per share (unaudited):</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -18pt; margin-left: 18pt">
    Net loss attributed to common stockholders
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (18,099,210
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (7,121,416
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -18pt; margin-left: 18pt">
    Pro forma adjustment
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -18pt; margin-left: 18pt">
    Net loss used to compute pro forma net loss per share
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (18,099,210
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (7,121,416
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 27pt">
    <B>Denominator</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -18pt; margin-left: 36pt">
    Basic and diluted weighted-average common shares, as used above
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,300,090
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,540,033
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -18pt; margin-left: 36pt">
    Add: Pro forma adjustments to reflect assumed weighted-average
    effect of conversion of convertible preferred stock
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    10,748,431
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    14,358,274
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -18pt; margin-left: 36pt">
    Weighted-average shares used in computing pro forma basic and
    diluted net loss per common share
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    13,048,521
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    16,898,307
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -18pt; margin-left: 36pt">
    Pro forma basic and diluted net loss per share
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (1.39
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (0.42
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    F-14
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Anthera
    Pharmaceuticals, Inc.<BR>
    (A Development Stage Company)<BR>
    <BR>
    NOTES&#160;TO FINANCIAL STATEMENTS&#151;(Continued)</FONT></B>
</DIV>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The following table shows weighted-average historical dilutive
    common share equivalents outstanding, which are not included in
    the above historical calculation, as the effect of their
    inclusion is anti-dilutive during each period.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 9pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="43%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="7%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="7%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="8%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=05 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=05 type=lead -->
    <TD width="7%" align="right">&nbsp;</TD>	<!-- colindex=05 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=05 type=hang1 -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=06 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=06 type=lead -->
    <TD width="8%" align="right">&nbsp;</TD>	<!-- colindex=06 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=06 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="10" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Years Ended December&#160;31,</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="6" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Six Month Ended June&#160;30,</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2006</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2007</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2008</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2008</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2009</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="6" align="center" valign="bottom">
    <B>(unaudited)</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    Options to purchase common stock
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    7,189
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    176,888
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    923,170
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    959,719
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    900,334
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -19pt; margin-left: 19pt">
    Common stock subject to repurchase
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    459,399
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    447,779
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    393,683
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    467,519
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    227,502
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -19pt; margin-left: 19pt">
    Warrants to purchase common stock
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    161,321
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    411,764
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -19pt; margin-left: 19pt">
    Convertible preferred stock (on an
    <FONT style="white-space: nowrap">as-if-converted</FONT>
    basis)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,305,210
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    8,423,173
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    10,587,110
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    8,423,173
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    13,946,510
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,771,798
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    9,047,840
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    12,065,284
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    9,850,411
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    15,486,110
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Stock-Based
    Compensation</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Effective January&#160;1, 2006, the Company adopted the
    provisions of SFAS&#160;123(R) using the modified prospective
    method. SFAS&#160;123(R) supersedes Accounting Principles Board
    (APB) Opinion No.&#160;25, <I>Accounting for Stock Issued to
    Employees</I>, and its related interpretations, and revises
    guidance in FASB Statement No.&#160;123, <I>Accounting for
    Stock-Based Compensation</I>. Compensation costs related to all
    equity instruments granted after January&#160;1, 2006, are
    recognized at the grant-date fair value of the awards in
    accordance with the provisions of SFAS&#160;123(R).
    Additionally, under the provisions of SFAS&#160;123(R), the
    Company is required to include an estimate of the number of
    awards that will be forfeited in calculating compensation costs,
    which are recognized over the requisite service period of the
    awards on a straight-line basis. SFAS&#160;123(R) requires
    companies to estimate the fair value of share-based payment
    awards on the date of grant using an option-pricing model.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Prior to the adoption of SFAS&#160;123(R), the Company accounted
    for stock-based awards to employees and directors using the
    intrinsic value method in accordance with APB Opinion
    No.&#160;25 as allowed under FASB Statement No.&#160;123. In
    accordance with APB Opinion No.&#160;25, stock-based
    compensation expense was recognized based on the intrinsic value
    method whereby any difference between exercise price and fair
    value of the common stock on the date of grant was recognized as
    stock-based compensation expense ratably over the vesting
    period. As all employee stock options granted through
    December&#160;31, 2005 were granted with an exercise price equal
    to the fair value of the common stock at the date of grant, no
    expense was recognized through December&#160;31, 2005.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The Company uses the Black-Scholes option-pricing model as the
    method for determining the estimated fair value of stock
    options. The Black-Scholes model requires the use of highly
    subjective and complex assumptions which determine the fair
    value of share-based awards, including the option&#146;s
    expected term and the price volatility of the underlying stock.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <I>Expected Term</I>&#151;The Company&#146;s expected term
    represents the period that the Company&#146;s stock-based awards
    are expected to be outstanding and is determined using the
    simplified method described in the Staff Accounting Bulletin
    (SAB) No.&#160;107, <I>Share-Based Payment</I>, as amended by
    SAB&#160;No.&#160;110.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <I>Expected Volatility</I>&#151;Expected volatility is estimated
    using comparable public company volatility for similar terms.
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    F-15
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Anthera
    Pharmaceuticals, Inc.<BR>
    (A Development Stage Company)<BR>
    <BR>
    NOTES&#160;TO FINANCIAL STATEMENTS&#151;(Continued)</FONT></B>
</DIV>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <I>Expected Dividend</I>&#151;The Black-Scholes valuation model
    calls for a single expected dividend yield as an input and the
    Company has never paid dividends and has no plans to pay
    dividends.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <I>Risk-Free Interest Rate</I>&#151;The risk-free interest rate
    used in the Black-Scholes valuation method is based on the
    U.S.&#160;Treasury zero-coupon issues in effect at the time of
    grant for periods corresponding with the expected term of option.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <I>Estimated Forfeitures</I>&#151;The estimated forfeiture rate
    is determined based on the Company&#146;s historical forfeiture
    rates to date. The Company will monitor actual expenses and
    periodically update the estimate.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Equity instruments issued to nonemployees are recorded at their
    fair value as determined in accordance with FASB Statement
    No.&#160;123 and Emerging Issues Task Force Issue, or EITF,
    <FONT style="white-space: nowrap">No.&#160;96-18,</FONT>
    <I>Accounting for Equity Instruments That Are Issued to Other
    Than Employees for Acquiring, or in Conjunction with Selling
    Goods and Services</I>, and are periodically revalued as the
    equity instruments vest and are recognized as expense over the
    related service period.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Recently Issued
    Accounting Standards</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    In June 2009, the FASB issued Statement No.&#160;168, <I>The
    FASB Accounting Standards Codification and the Hierarchy of
    Generally Accepted Accounting Principles-a replacement of FASB
    Statement No.&#160;162</I>, or SFAS&#160;168. SFAS&#160;168
    establishes the FASB Accounting Standards Codification as the
    sole source of authoritative generally accepted accounting
    principles. Pursuant to the provisions of SFAS&#160;168, the
    Company will update references to GAAP in their financial
    statements issued for the period ended September&#160;30, 2009
    and thereafter. The adoption of SFAS&#160;168 will have no
    impact on the Company&#146;s financial position or results of
    operations.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    In June 2008, the EITF reached a consensus on EITF Issue
    <FONT style="white-space: nowrap">No.&#160;07-5,</FONT>
    <I>Determining Whether an Instrument (or Embedded Feature) is
    Indexed to an Entity&#146;s Own Stock</I>, or
    <FONT style="white-space: nowrap">EITF&#160;07-5.</FONT>
    <FONT style="white-space: nowrap">EITF&#160;07-5</FONT>
    provides guidance on how to determine if certain instruments (or
    embedded features) are considered indexed to a company&#146;s
    own stock, including instruments similar to warrants to purchase
    the company&#146;s stock.
    <FONT style="white-space: nowrap">EITF&#160;07-5</FONT>
    requires companies to use a two-step approach to evaluate an
    instrument&#146;s contingent exercise provisions and settlement
    provisions in determining whether the instrument is considered
    to be indexed to its own stock and therefore exempt from the
    application of SFAS&#160;No.&#160;133, <I>Accounting for
    Derivative Instruments and Hedging Activities</I>. Although
    <FONT style="white-space: nowrap">EITF&#160;07-5</FONT>
    is effective for fiscal years beginning after December&#160;15,
    2008, any outstanding instrument at the date of adoption will
    require a retrospective application of the accounting through a
    cumulative effect adjustment to retained earnings upon adoption.
    The Company does not expect the adoption of
    <FONT style="white-space: nowrap">EITF&#160;07-5</FONT>
    to have a material impact on the Company&#146;s financial
    position or results of operations.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>
    <B><FONT style="font-family: Arial, Helvetica">3.&#160;&#160;</FONT></B>
</TD>
    <TD>
    <B><FONT style="font-family: Arial, Helvetica">FAIR VALUE OF
    FINANCIAL INSTRUMENTS</FONT></B>
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    As of December&#160;31, 2008 and June&#160;30, 2009, the Company
    held no short-term investments. As of December&#160;31, 2007,
    the Company held $5.8&#160;million short-term investments, which
    consisted of auction rate securities and municipal securities.
    These securities were classified as short-term based on their
    highly liquid nature due to the frequency with which the
    interest rate is reset and because such marketable securities
    represent the investment of cash that is available for current
    operations. The Company included any unrealized gains and losses
    on
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    F-16
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Anthera
    Pharmaceuticals, Inc.<BR>
    (A Development Stage Company)<BR>
    <BR>
    NOTES&#160;TO FINANCIAL STATEMENTS&#151;(Continued)</FONT></B>
</DIV>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    short-term investments in stockholders&#146; equity as a
    component of other comprehensive income (loss). Individual
    securities with a fair value below the cost basis at
    December&#160;31, 2007 were evaluated to determine if they were
    <FONT style="white-space: nowrap">other-than-temporarily</FONT>
    impaired.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The aggregate market value, cost basis and gross unrealized
    gains and losses on the Company&#146;s short-term investments as
    of December&#160;31, 2007, by major security type, are as
    follows:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="57%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="9%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="11%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="9%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Gross<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Amortized<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Unrealized<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Fair<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Cost</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Gain/(Losses)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Value</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Municipal bonds
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,824,991
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    9
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,825,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Auction rate securities
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4,001,821
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (1,821
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4,000,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Total short-term investments
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5,826,812
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (1,812
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5,825,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    All of the Company&#146;s municipal bonds and auction rate
    securities were sold during 2008.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The following table provides a summary of changes in fair value
    of the Company&#146;s level&#160;3 financial assets for the year
    ended December&#160;31, 2008:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="85%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="11%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Auction Rate<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Securities</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Balance at December&#160;31, 2007 reflected as other short-term
    investments
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    4,000,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Total realized gain included in net loss
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,484
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Sales, net of purchases
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (4,001,484
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Balance at December&#160;31, 2008
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>
    <B><FONT style="font-family: Arial, Helvetica">4.&#160;&#160;</FONT></B>
</TD>
    <TD>
    <B><FONT style="font-family: Arial, Helvetica">PROPERTY AND
    EQUIPMENT</FONT></B>
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    At December&#160;31, 2007 and 2008 and June&#160;30, 2009,
    property and equipment consist of the following:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="63%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="7%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="7%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="9%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="6" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>December&#160;31,</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>June&#160;30,<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2007</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2008</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2009</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>(unaudited)</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Computers and software
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    58,173
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    64,925
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    64,925
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Office equipment and furniture
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    16,730
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    16,730
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    16,730
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 30pt">
    Total property and equipment
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    74,903
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    81,655
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    81,655
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Less accumulated depreciation
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (31,879
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (53,876
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (63,421
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Property and equipment, net
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    43,024
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    27,779
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    18,234
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Depreciation expense for the years ended December&#160;31, 2006,
    2007 and 2008, for the six months ended June&#160;30, 2008 and
    2009, and for the period from September&#160;9, 2004 (date of
    inception) to June&#160;30, 2009, was $8,742, $18,922, $21,997,
    $11,669, $9,545 and $63,421, respectively.
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    F-17
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Anthera
    Pharmaceuticals, Inc.<BR>
    (A Development Stage Company)<BR>
    <BR>
    NOTES&#160;TO FINANCIAL STATEMENTS&#151;(Continued)</FONT></B>
</DIV>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>
    <B><FONT style="font-family: Arial, Helvetica">5.&#160;&#160;</FONT></B>
</TD>
    <TD>
    <B><FONT style="font-family: Arial, Helvetica">COMMITMENTS AND
    CONTINGENCIES</FONT></B>
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Leases</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The Company leases its office facilities under an operating
    lease that expires in September 2010. Rent expense for the years
    ended December&#160;31, 2006, 2007 and 2008, for the six months
    ended June&#160;30, 2008 and 2009, and for the period from
    September&#160;9, 2004 (date of inception) to June&#160;30,
    2009, were $20,189, $97,314, $115,506, $50,960, $80,577 and
    $313,586, respectively. Future minimum payments under the
    operating lease for the years ending December&#160;31, 2009 and
    2010 are $93,528 and $70,146, respectively.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    In addition to the facility lease, the Company leases office
    equipment under an operating lease, which began in 2007 and ends
    in 2010. Rental expense for the years ended December&#160;31,
    2007 and 2008, for the six months ended June&#160;30, 2008 and
    2009, and the period from September&#160;9, 2004 (date of
    inception) to June&#160;30, 2009, was $2,910, $15,216, $7,550,
    $7,645 and $25,050, respectively. Future minimum payments under
    the operating lease for the years ending December&#160;31, 2009
    and 2010 are $12,840 and $9,630, respectively.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Other
    Commitments</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    In July 2006, the Company entered into a license agreement with
    Shionogi&#160;&#038; Co., Ltd. and Eli Lilly and Company, or Eli
    Lilly, to develop and commercialize certain
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    inhibitors for the treatment of inflammatory diseases. The
    agreement granted the Company commercialization rights to
    Shionogi&#160;&#038; Co., Ltd.&#146;s and Eli Lilly&#146;s
    sPLA<SUB style="font-size: 85%; vertical-align: text-bottom">2</SUB>
    inhibitors, including
    <FONT style="white-space: nowrap">A-002</FONT> and
    <FONT style="white-space: nowrap">A-001.</FONT> Under
    the terms of the agreement, the Company&#146;s license is
    worldwide, with the exception of Japan where
    Shionogi&#160;&#038; Co., Ltd. has retained rights. Pursuant to
    this license agreement, the Company paid Shionogi&#160;&#038;
    Co., Ltd. and Eli Lilly a one-time license initiation fee of
    $250,000. Additionally, in consideration for the licensed
    technology, the Company issued 441,260&#160;shares of
    <FONT style="white-space: nowrap">Series&#160;A-2</FONT>
    convertible preferred stock, or
    <FONT style="white-space: nowrap">Series&#160;A-2,</FONT>
    at $3 per share and 217,934&#160;shares of
    <FONT style="white-space: nowrap">Series&#160;B-1</FONT>
    convertible preferred stock at $4.25 per share with a total
    aggregate value of $2.25&#160;million to Shionogi&#160;&#038;
    Co., Ltd. and Eli Lilly. As there is no future alternative use
    for the technology and in accordance with FASB Statement
    No.&#160;2, the Company recorded the initiation and license fees
    in research and development expenses during the year ended
    December&#160;31, 2006. There was no outstanding obligation
    pursuant to the license agreement in the years ended
    December&#160;31, 2007 and 2008 and for the six months ended
    June&#160;30, 2009. The Company is obligated to make additional
    milestone payments upon the achievement of certain development,
    regulatory, and commercial objectives, which includes a
    $3&#160;million milestone payment due upon the start of a
    Phase&#160;3 clinical study. See Note&#160;12. The Company is
    also obligated to pay royalties on future net sales of products
    that are developed and approved as defined by this
    collaboration. The Company&#146;s obligation to pay royalties
    with respect to each licensed product in each country will
    expire upon the later of (a)&#160;10&#160;years following the
    date of the first commercial sale of such licensed product in
    such country, and (b)&#160;the first date on which generic
    version(s) of the applicable licensed product achieve a total
    market share, in the aggregate, of 25% or more of the total unit
    sales of wholesalers to pharmacies of licensed product and all
    generic versions combined in the applicable country.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    In December 2007, the Company entered into with Amgen Inc., or
    Amgen, a worldwide, exclusive license agreement, or the Amgen
    Agreement, to develop and commercialize
    <FONT style="white-space: nowrap">A-623</FONT> for
    the treatment of systemic lupus erythematosus, or lupus. Under
    the terms of the Amgen Agreement, the Company was required to
    pay a nonrefundable, upfront license fee of $6&#160;million,
    payable in two installments with the first installment due
    within 90&#160;days from the
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    F-18
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Anthera
    Pharmaceuticals, Inc.<BR>
    (A Development Stage Company)<BR>
    <BR>
    NOTES&#160;TO FINANCIAL STATEMENTS&#151;(Continued)</FONT></B>
</DIV>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    effective date of the agreement and the second installment due
    on the earlier of (i)&#160;termination of the agreement by the
    Company or (ii)&#160;February&#160;1, 2009. As there is no
    future alternative use for the technology and in accordance with
    FASB Statement No.&#160;2, the Company expensed the license fee
    in research and development expenses during the year ended
    December&#160;31, 2007. The outstanding obligation pursuant to
    the license agreement was $6&#160;million, $5&#160;million and
    $4.5&#160;million as of December&#160;31, 2007 and 2008 and
    June&#160;30, 2009, respectively. Pursuant the terms of the
    Amgen Agreement, if the Company fails to make any payment to
    Amgen under the agreement, interest will accrue on a daily basis
    equal to 2% above the then applicable prime rate. As of
    December&#160;31, 2008 and June&#160;30, 2009, the Company had
    accrued $140,243 and $236,541 in interest, respectively, in
    respect of unpaid license fees under the Amgen Agreement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Under the terms of the Amgen Agreement, the Company is obligated
    to make additional milestone payments to Amgen upon the
    achievement of certain development, regulatory and commercial
    objectives. The Company is also obligated to pay royalties on
    future net sales of products that are developed and approved as
    defined by this collaboration. The Company&#146;s royalty
    obligations as to a particular licensed product will be payable,
    on a
    <FONT style="white-space: nowrap">country-by-country</FONT>
    and licensed
    <FONT style="white-space: nowrap">product-by-licensed</FONT>
    product basis, for the longer of (a)&#160;the date of expiration
    of the last to expire valid claim within the licensed patents
    that covers the manufacture, use or sale, offer to sell, or
    import of such licensed product by the Company or a sublicense
    in such country, or (b)&#160;10&#160;years after the first
    commercial sale of the applicable licensed product in the
    applicable country.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>
    <B><FONT style="font-family: Arial, Helvetica">6.&#160;&#160;</FONT></B>
</TD>
    <TD>
    <B><FONT style="font-family: Arial, Helvetica">CONVERTIBLE
    PROMISSORY NOTES</FONT></B>
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    In April 2006, the Company issued convertible promissory notes
    to a group of individuals, or Holders, in exchange for an
    aggregate principal amount of $570,000, or Bridge Loan. The
    Bridge Loan was converted into
    <FONT style="white-space: nowrap">Series&#160;A-2</FONT>
    convertible preferred stock at a discount of 25% resulting in a
    $2.25 per share price in August 2006. The interest on these
    loans was 7% per annum and accrued interest of $13,816 was paid
    out to the Holders upon closing of our
    <FONT style="white-space: nowrap">Series&#160;A-2</FONT>
    convertible preferred stock. In connection with the conversion
    of the Bridge Loan, a beneficial conversion feature of $190,000
    representing the difference between the conversion price and the
    fair value of the preferred shares multiplied by the number of
    shares converted was recorded as noncash interest expense and an
    increase in additional paid-in capital.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    In June 2006, the Company issued two additional convertible
    promissory notes to two new investors for an aggregate principal
    amount of $390,000. The notes were converted into
    <FONT style="white-space: nowrap">Series&#160;A-2</FONT>
    convertible preferred stock at the issuance price of our
    <FONT style="white-space: nowrap">Series&#160;A-2</FONT>
    convertible preferred stock, or $3.00 per share, in August 2006.
    The interest on these loans was 8% per annum. A portion of
    accrued interest in the amount of $1,751 was converted into
    <FONT style="white-space: nowrap">Series&#160;A-2</FONT>
    convertible preferred stock and the remainder of accrued
    interest was paid out to the investors.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    During February and May 2008, the Company issued convertible
    promissory notes to its existing investors in exchange for an
    aggregate principal amount of $12.2&#160;million. The interest
    on these loans was 4.2% per annum. The notes and accrued
    interest of $155,630 were converted into
    <FONT style="white-space: nowrap">Series&#160;B-2</FONT>
    convertible preferred stock at the issuance price of our
    <FONT style="white-space: nowrap">Series&#160;B-2</FONT>
    convertible preferred stock, or $3.19 per share, in August 2008.
    In connection with the terms of the convertible promissory
    notes, a charge for the beneficial conversion feature of
    $4.1&#160;million representing the difference between the
    conversion price and the fair value of the preferred
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    F-19
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Anthera
    Pharmaceuticals, Inc.<BR>
    (A Development Stage Company)<BR>
    <BR>
    NOTES&#160;TO FINANCIAL STATEMENTS&#151;(Continued)</FONT></B>
</DIV>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    shares multiplied by the number of shares converted was recorded
    as noncash interest expense and an increase to additional
    paid-in capital.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    On August&#160;12, 2008, the Company issued
    3,876,277&#160;shares of its
    <FONT style="white-space: nowrap">Series&#160;B-2</FONT>
    convertible preferred stock to certain of its existing investors
    in exchange for conversion of $12,200,000 of aggregate principal
    amount of and $155,630 of aggregate interest accrued upon
    convertible promissory notes and 1,647,060&#160;shares of its
    <FONT style="white-space: nowrap">Series&#160;B-2</FONT>
    convertible preferred stock to two new investors in exchange for
    $7,000,005 of cash. In connection with the issuance of our
    <FONT style="white-space: nowrap">Series&#160;B-2</FONT>
    convertible preferred stock, the Company issued warrants to
    purchase 411,764&#160;shares of the Company&#146;s common stock
    to those investors purchasing shares for cash.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>
    <B><FONT style="font-family: Arial, Helvetica">7.&#160;&#160;</FONT></B>
</TD>
    <TD>
    <B><FONT style="font-family: Arial, Helvetica">CAPITAL
    STRUCTURE</FONT></B>
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Common
    Stock</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    At December&#160;31, 2007 and 2008 and June&#160;30, 2009, the
    Company was authorized to issue 30,000,000&#160;shares of common
    stock and had reserved the following shares for future issuance:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="53%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="12%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="12%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="9%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>December&#160;31,<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>December&#160;31,<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>June&#160;30,<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2007</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2008</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2009</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>(unaudited)</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Conversion of
    <FONT style="white-space: nowrap">Series&#160;A-1</FONT>
    convertible preferred stock
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    945,939
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    945,939
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    945,939
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Conversion of
    <FONT style="white-space: nowrap">Series&#160;A-2</FONT>
    convertible preferred stock
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,774,594
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,774,594
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,774,594
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Conversion of
    <FONT style="white-space: nowrap">Series&#160;B-1</FONT>
    convertible preferred stock
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4,702,640
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4,702,640
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4,702,640
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Conversion of
    <FONT style="white-space: nowrap">Series&#160;B-2</FONT>
    convertible preferred stock
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5,523,337
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5,523,337
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Warrants for purchase of common stock
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    411,764
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    411,764
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Common stock options outstanding
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,451,343
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,638,623
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,281,309
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Common stock options available for future grant under stock
    option plan
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    556,592
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    693,842
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    51,156
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Total
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    10,431,108
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    16,690,739
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    16,690,739
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    In November 2004, the Company issued 1,500,000&#160;shares of
    restricted common stock to founders of the Company for $0.001
    per share. The restricted common stock vested over a three-year
    period ending December&#160;31, 2007.
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    F-20
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Anthera
    Pharmaceuticals, Inc.<BR>
    (A Development Stage Company)<BR>
    <BR>
    NOTES&#160;TO FINANCIAL STATEMENTS&#151;(Continued)</FONT></B>
</DIV>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Convertible
    Preferred Stock</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    At December&#160;31, 2007, December&#160;31, 2008 and
    June&#160;30, 2009, the Company was authorized to issue the
    following shares of preferred stock:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="53%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="12%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="12%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="9%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>December&#160;31,<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>December&#160;31,<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>June&#160;30,<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2007</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2008</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2009</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>(unaudited)</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Shares designated Series&#160;A convertible preferred stock
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    945,939
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Shares designated
    <FONT style="white-space: nowrap">Series&#160;A-1</FONT>
    convertible preferred stock
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    945,939
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    945,939
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    945,939
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Shares designated
    <FONT style="white-space: nowrap">Series&#160;A-2</FONT>
    convertible preferred stock
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,800,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,800,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,800,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Shares designated Series&#160;B convertible preferred stock
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    7,200,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    8,700,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    8,700,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Shares designated
    <FONT style="white-space: nowrap">Series&#160;B-1</FONT>
    convertible preferred stock
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4,710,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4,710,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Shares designated
    <FONT style="white-space: nowrap">Series&#160;B-2</FONT>
    convertible preferred stock
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    6,175,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    6,175,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Total authorized shares of preferred stock
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    11,891,878
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    23,330,939
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    23,330,939
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The
    <FONT style="white-space: nowrap">Series&#160;A-1</FONT>
    convertible preferred stock,
    <FONT style="white-space: nowrap">Series&#160;A-2</FONT>
    convertible preferred stock, Series&#160;B convertible preferred
    stock,
    <FONT style="white-space: nowrap">Series&#160;B-1</FONT>
    convertible preferred stock and
    <FONT style="white-space: nowrap">Series&#160;B-2</FONT>
    convertible preferred stock are collectively referred to as
    series preferred. The holders of the series preferred have
    various rights and privileges. In fiscal year 2005, the Company
    issued 945,939&#160;shares of Series&#160;A convertible
    preferred stock that was subsequently reclassified into
    <FONT style="white-space: nowrap">Series&#160;A-1</FONT>
    convertible preferred stock, or
    <FONT style="white-space: nowrap">Series&#160;A-1</FONT>
    preferred, at a ratio of 1:1 in fiscal year 2006. In fiscal year
    2006, the Company issued 4,702,640&#160;shares of Series&#160;B
    convertible preferred stock that was subsequently reclassified
    into
    <FONT style="white-space: nowrap">Series&#160;B-1</FONT>
    convertible preferred stock, or
    <FONT style="white-space: nowrap">Series&#160;B-1</FONT>
    preferred, at a ratio of 1:1 in fiscal year 2008. In fiscal
    2008, the Company issued 5,523,337&#160;shares of
    <FONT style="white-space: nowrap">Series&#160;B-2</FONT>
    convertible preferred stock.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Voting</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Each holder of shares of the series preferred is entitled to the
    number of votes equal to the number of shares of common stock
    into which such shares of series preferred could be converted
    and have equal voting rights and powers of the common stock.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Dividend
    Rights</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Holders of series preferred, in preference to the holders of
    common stock, are entitled to receive, when and as declared by
    the board of directors, but only out of funds that are legally
    available therefor, cash dividends at the rate of 7% of the
    original issuance price per annum on each outstanding share of
    series preferred. The original issuance prices for
    <FONT style="white-space: nowrap">Series&#160;A-1</FONT>
    preferred,
    <FONT style="white-space: nowrap">Series&#160;A-2</FONT>
    convertible preferred stock, or
    <FONT style="white-space: nowrap">Series&#160;A-2</FONT>
    preferred,
    <FONT style="white-space: nowrap">Series&#160;B-1</FONT>
    preferred and
    <FONT style="white-space: nowrap">Series&#160;B-2</FONT>
    convertible preferred stock, or
    <FONT style="white-space: nowrap">Series&#160;B-2</FONT>
    preferred, were $0.86, $3.00, $4.25 and $4.25 per share,
    respectively. Such dividends are payable only when, as and if
    declared by the board and are noncumulative.
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    F-21
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Anthera
    Pharmaceuticals, Inc.<BR>
    (A Development Stage Company)<BR>
    <BR>
    NOTES&#160;TO FINANCIAL STATEMENTS&#151;(Continued)</FONT></B>
</DIV>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Conversion</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Holders of series preferred are entitled, at any time, to cause
    their shares to be converted into fully paid and nonassessable
    shares of common stock. The conversion rate in effect at any
    time for conversion of each series of series preferred is
    determined by dividing (i)&#160;the original issuance price of
    the series preferred with respect to such series by
    (ii)&#160;the applicable series preferred conversion price. The
    conversion price of the series preferred is the original issue
    price for such series (subject to adjustment). Additionally, the
    preferred stock will automatically convert into shares of common
    stock based on the then-effective series preferred conversion
    price (i)&#160;at any time upon the affirmative election of the
    holders of at least two-thirds of the outstanding shares of
    preferred stock, or (ii)&#160;immediately upon the closing of a
    public offering pursuant to an effective registration statement
    under the Securities Act of 1933, as amended, covering the offer
    and sale of common stock for the account of the Company in which
    the valuation of the Company, before giving effect to such
    offering, is at least $200&#160;million and the aggregate
    proceeds to the Company (after underwriting discounts,
    commission and fees) are at least $50&#160;million. Upon such
    automatic conversion, any declared and unpaid dividends are
    payable in cash to the preferred shareholders.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Liquidation</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Upon any liquidation, dissolution, or winding up of the Company,
    whether voluntary or involuntary, a Liquidation Event, before
    any distribution or payment is made to holders of common stock,
    the holders of series preferred are entitled to be paid, with
    equal priority and pro rata, out of the assets of the Company
    legally available for distribution, or the consideration
    received in such transaction, for each share of series preferred
    held by them, an amount equal to the original issuance price per
    share, plus all accrued or declared but unpaid dividends
    (appropriately adjusted for any stock dividend, stock split,
    recapitalization and the like). After payment of the full
    liquidation preference of the series preferred, the remaining
    assets of the Company, if any, shall be distributed ratably to
    the holders of the common stock, our
    <FONT style="white-space: nowrap">Series&#160;A-2</FONT>
    preferred,
    <FONT style="white-space: nowrap">Series&#160;B-1</FONT>
    preferred and
    <FONT style="white-space: nowrap">Series&#160;B-2</FONT>
    preferred stockholders, on an as-converted-to-common-stock
    basis, until such time as such holders of
    <FONT style="white-space: nowrap">Series&#160;A-2</FONT>
    preferred,
    <FONT style="white-space: nowrap">Series&#160;B-1</FONT>
    preferred and
    <FONT style="white-space: nowrap">Series&#160;B-2</FONT>
    preferred have received a distribution equal to
    <FONT style="white-space: nowrap">three-and-a-half</FONT>
    times the original issue price of such series. If there are
    still assets left to be distributed by the Company, then the
    remaining assets shall be distributed ratably to the holders of
    the common stock.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Redemption</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Shares of series preferred are not redeemable by the Company.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Warrants</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    In August 2008, in connection with the issuance of
    <FONT style="white-space: nowrap">Series&#160;B-2</FONT>
    preferred, the Company issued 411,764 warrants to two new
    investors for the purchase of common stock at $0.78 per share.
    The warrants have a term of seven years. The Company valued the
    warrants using the Black-Scholes valuation model with the
    following assumptions: expected volatility of 72%, risk-free
    interest rate of 3.46% and expected term of seven years. The
    fair value of the warrants was calculated to be $224,478 and
    recorded as issuance cost and an increase to additional paid-in
    capital. As of June&#160;30, 2009, the warrants remain
    outstanding.
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    F-22
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Anthera
    Pharmaceuticals, Inc.<BR>
    (A Development Stage Company)<BR>
    <BR>
    NOTES&#160;TO FINANCIAL STATEMENTS&#151;(Continued)</FONT></B>
</DIV>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>
    <B><FONT style="font-family: Arial, Helvetica">8.&#160;&#160;</FONT></B>
</TD>
    <TD>
    <B><FONT style="font-family: Arial, Helvetica">STOCK
    OPTIONS</FONT></B>
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Option
    Plan</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The Company&#146;s 2005 Equity Incentive Plan, or the 2005
    Equity Plan, was adopted by the board of directors in January
    2005. The 2005 Equity Plan permits the granting of incentive and
    non-statutory stock options, restricted stock, stock
    appreciation rights, performance units, performance shares and
    other stock awards to eligible employees, directors and
    consultants. The Company grants options to purchase shares of
    common stock under the 2005 Equity Plan at no less than the fair
    market value of the underlying common stock as of the date of
    grant. Options granted under the 2005 Equity Plan have a maximum
    term of 10&#160;years and generally vest over four years at the
    rate of 25% of total shares underlying the option. Selected
    grants vest immediately or over a shorter vesting period.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The 2005 Equity Plan allows the option holders to exercise their
    options prior to vesting. Unvested shares are subject to
    repurchase by the Company at the option of the Company. Unvested
    shares subject to repurchase have been excluded from the number
    of shares outstanding. Option activity in the table below
    includes options exercised prior to vesting. At
    December&#160;31, 2007, 2008 and June&#160;30, 2009, 496,118,
    276,745 and 189,402&#160;shares were subject to repurchase with
    a corresponding liability of $69,615, $56,715 and $38,399,
    respectively.
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    F-23
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Anthera
    Pharmaceuticals, Inc.<BR>
    (A Development Stage Company)<BR>
    <BR>
    NOTES&#160;TO FINANCIAL STATEMENTS&#151;(Continued)</FONT></B>
</DIV>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The following table summarizes stock option activity for the
    Company:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 9pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="46%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="9%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="7%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="7%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=05 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=05 type=lead -->
    <TD width="9%" align="right">&nbsp;</TD>	<!-- colindex=05 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=05 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=06 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=06 type=lead -->
    <TD width="7%" align="right">&nbsp;</TD>	<!-- colindex=06 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=06 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Weighted-<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Weighted-<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Average<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Shares<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Average<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Remaining<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Aggregate<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Available for<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Number of<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Exercise<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Contractual<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Intrinsic<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Grant</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Options</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Price</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Life in Years</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Value</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -19pt; margin-left: 19pt">
    Balance at September&#160;9, 2004 (date of inception)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -19pt; margin-left: 19pt">
    Shares authorized
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    425,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -19pt; margin-left: 19pt">
    Options granted
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (320,500
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    320,500
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.08
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -19pt; margin-left: 19pt">
    Options exercised
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (57,000
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.08
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -19pt; margin-left: 19pt">
    Balance at December&#160;31, 2005
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    104,500
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    263,500
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.08
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    8.42
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -19pt; margin-left: 19pt">
    Shares authorized
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,200,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -19pt; margin-left: 19pt">
    Options granted
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (113,000
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    113,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.08
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -19pt; margin-left: 19pt">
    Options exercised
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (215,000
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.08
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -19pt; margin-left: 19pt">
    Balance at December&#160;31, 2006
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,191,500
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    161,500
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.08
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    6.89
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    11,305
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -19pt; margin-left: 19pt">
    Shares authorized
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    500,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -19pt; margin-left: 19pt">
    Options granted
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (2,293,515
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,293,515
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.15
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -19pt; margin-left: 19pt">
    Options exercised
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (845,065
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.14
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -19pt; margin-left: 19pt">
    Options cancelled
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    158,607
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (158,607
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.14
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -19pt; margin-left: 19pt">
    Balance at December&#160;31, 2007
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    556,592
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,451,343
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.15
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    8.86
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    918,511
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -19pt; margin-left: 19pt">
    Shares authorized
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    600,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -19pt; margin-left: 19pt">
    Options granted
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (561,500
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    561,500
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.78
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -19pt; margin-left: 19pt">
    Options exercised
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (307,970
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.22
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -19pt; margin-left: 19pt">
    Options cancelled
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    66,250
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (66,250
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.25
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -19pt; margin-left: 19pt">
    Repurchase
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    32,500
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.15
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -19pt; margin-left: 19pt">
    Balance at December&#160;31, 2008
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    693,842
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,638,623
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.35
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    8.29
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    874,825
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -19pt; margin-left: 19pt">
    Options granted*
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (674,000
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    674,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.88
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -19pt; margin-left: 19pt">
    Options cancelled*
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    31,314
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (31,314
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.57
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -19pt; margin-left: 19pt">
    Balance as of June&#160;30, 2009*
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    51,156
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,281,309
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.50
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    8.36
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    865,015
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -19pt; margin-left: 19pt">
    Ending Outstanding, Exercisable and Expected to Vest as of
    December&#160;31, 2008
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,638,623
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.35
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    8.29
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    874,825
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -19pt; margin-left: 19pt">
    Ending Vested as of December&#160;31, 2008
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    905,470
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.20
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    8.04
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    611,599
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -19pt; margin-left: 19pt">
    Ending Outstanding, Exercisable and Expected to Vest as of
    June&#160;30, 2009*
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,281,309
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.50
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    8.36
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    865,015
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -19pt; margin-left: 19pt">
    Ending Vested as of June&#160;30, 2009*
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,457,009
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.39
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    8.05
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    720,152
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 1pt; margin-left: 0%; width: 13%;  align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=999 iwidth=455 length=60 -->

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="98%"></TD>
</TR>

<TR>
    <TD valign="top">
    * </TD>
    <TD></TD>
    <TD valign="bottom">
    unaudited</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The grant date total fair value of employee options vested
    during the years ended December&#160;31, 2007 and 2008 and for
    the six months ended June&#160;30, 2009 was $95,439, $113,166
    and $268,624, respectively. The total intrinsic value of options
    exercised during the years ended December&#160;31, 2007 and 2008
    was $5,390 and $109,741, respectively. Total proceeds received
    for options exercised during years ended December&#160;31, 2007
    and 2008 was $118,920 and $68,105. No options were exercised
    during the six months ended June&#160;30, 2009.
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    F-24
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Anthera
    Pharmaceuticals, Inc.<BR>
    (A Development Stage Company)<BR>
    <BR>
    NOTES&#160;TO FINANCIAL STATEMENTS&#151;(Continued)</FONT></B>
</DIV>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Information about stock options outstanding, exercisable and
    vested as of June&#160;30, 2009 (unaudited), is as follows:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="12%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="6%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="3%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="6%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="7%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="6%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="11%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
    <TD width="6%">&nbsp;</TD>	<!-- colindex=05 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=05 type=lead -->
    <TD width="6%" align="right">&nbsp;</TD>	<!-- colindex=05 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=05 type=hang1 -->
    <TD width="6%">&nbsp;</TD>	<!-- colindex=06 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=06 type=lead -->
    <TD width="7%" align="right">&nbsp;</TD>	<!-- colindex=06 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=06 type=hang1 -->
    <TD width="6%">&nbsp;</TD>	<!-- colindex=07 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=07 type=lead -->
    <TD width="6%" align="right">&nbsp;</TD>	<!-- colindex=07 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=07 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD colspan="12" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Outstanding &#038; Exercisable</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD colspan="4" align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Weighted-<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="10" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Options Vested</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD colspan="4" align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Average<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Weighted-<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Weighted-<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD colspan="4" align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Remaining<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Average<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Average<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Number of<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Contractual Life<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Exercise<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Number of<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Exercise<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 7pt" valign="bottom" align="center">
<TD colspan="4" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Range of Exercise Price</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Shares</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>(in Years)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Price</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Shares</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Price</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    $0.08
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.08
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    57,500
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    6.73
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.08
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    49,166
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.08
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    $0.15
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.15
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,051,185
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    7.52
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.15
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    906,862
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.15
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    $0.78
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.78
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    516,500
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    8.70
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.78
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    188,102
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.78
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    $0.88
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.88
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    656,124
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    9.59
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.88
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    312,879
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.88
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    $0.08
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.88
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,281,309
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    8.36
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.50
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,457,009
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.39
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Early Exercise of
    Employee Options</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Stock options granted under the Company&#146;s stock option plan
    provide employee option holders the right to elect to exercise
    unvested options in exchange for restricted common stock.
    Unvested shares, which amounted to 496,118 and 276,745 at
    December&#160;31, 2007 and 2008, respectively, and 189,402 at
    June&#160;30, 2009 were subject to a repurchase right held by
    the Company at the original issuance price in the event the
    optionees&#146; employment is terminated either voluntarily or
    involuntarily. For exercises of employee options, this right
    lapses 25% on the first anniversary of the vesting start date
    and in 36 equal monthly amounts thereafter. These repurchase
    terms are considered to be a forfeiture provision and do not
    result in variable accounting. In accordance with EITF
    <FONT style="white-space: nowrap">No.&#160;00-23,</FONT>
    <I>Issues Related to the Accounting for Stock Compensation under
    APB No.&#160;25, </I>the shares purchased by the employees
    pursuant to the early exercise of stock options are not deemed
    to be outstanding until those shares vest. In addition, cash
    received from employees for exercise of unvested options is
    treated as a refundable deposit shown as a liability in the
    Company&#146;s financial statements. For the periods ended
    December&#160;31, 2007 and 2008 and June&#160;30, 2009 cash
    received for early exercise of options totaled to $72,352,
    $30,953 and $0, respectively. As the shares vest, the shares and
    liability are released into common stock and additional paid-in
    capital.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The activity of unvested shares for the six months ended
    June&#160;30, 2009 (unaudited) as a result of early exercise of
    options granted to employees is as follows:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="75%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="7%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="9%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Weighted-<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Average<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Unvested Shares</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Shares</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Grant Price</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Balance as of December&#160;31, 2007
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    496,188
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.14
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Early exercise of options
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    101,356
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.36
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Vested
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (288,299
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.13
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Repurchases
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (32,500
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.15
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Balance as of December&#160;31, 2008
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    276,745
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.20
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Early exercise of options*
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Vested*
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (87,343
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.21
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Balance as of June&#160;30, 2009*
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    189,402
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.20
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 1pt; margin-left: 0%; width: 13%;  align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=999 iwidth=455 length=60 -->

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="98%"></TD>
</TR>

<TR>
    <TD valign="top">
    * </TD>
    <TD></TD>
    <TD valign="bottom">
    unaudited</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    F-25
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Anthera
    Pharmaceuticals, Inc.<BR>
    (A Development Stage Company)<BR>
    <BR>
    NOTES&#160;TO FINANCIAL STATEMENTS&#151;(Continued)</FONT></B>
</DIV>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Stock-Based
    Compensation Expense</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Total employee stock-based compensation expense recognized under
    SFAS&#160;123(R) was as follows:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="44%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="4%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="5%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="7%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=05 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=05 type=lead -->
    <TD width="5%" align="right">&nbsp;</TD>	<!-- colindex=05 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=05 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=06 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=06 type=lead -->
    <TD width="7%" align="right">&nbsp;</TD>	<!-- colindex=06 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=06 type=hang1 -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=07 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=07 type=lead -->
    <TD width="10%" align="right">&nbsp;</TD>	<!-- colindex=07 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=07 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Period from<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>September&#160;9,<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>2004<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>(Date of<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Inception)<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="10" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Years Ended December&#160;31,</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="6" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Six Months Ended June&#160;30,</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>to June&#160;30,<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2006</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2007</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2008</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2008</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2009</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2009</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="6" align="center" valign="bottom">
    <B>(unaudited)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>(unaudited)</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Research and development
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    2,996
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    44,066
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    45,544
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    23,036
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    57,616
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    150,222
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    General and administrative
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,652
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    30,795
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    97,862
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    43,895
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    75,908
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    206,217
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Total stock-based compensation
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    4,648
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    74,861
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    143,406
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    66,931
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    133,524
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    356,439
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    As of December&#160;31, 2006, 2007 and 2008 and June&#160;30,
    2009, total compensation cost related to unvested stock options
    not yet recognized was $9,516, $161,996, $330,381 and $577,051,
    which is expected to be allocated to expenses over a
    weighted-average period of 2.94, 2.25, 2.33 and 2.49&#160;years,
    respectively.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The assumptions used in the Block-Scholes option-pricing model
    for the years ended December&#160;31, 2006, 2007 and 2008, the
    six months ended June&#160;30, 2008 and 2009 and for the period
    from September&#160;9, 2004 (date of inception) to June&#160;30,
    2009, are as follows:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="44%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="3%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="3%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="3%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=05 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=05 type=lead -->
    <TD width="3%" align="right">&nbsp;</TD>	<!-- colindex=05 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=05 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=06 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=06 type=lead -->
    <TD width="3%" align="right">&nbsp;</TD>	<!-- colindex=06 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=06 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=07 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=07 type=lead -->
    <TD width="12%" align="right">&nbsp;</TD>	<!-- colindex=07 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=07 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Period from<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>September&#160;9,<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>2004 (Date of<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="10" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Years Ended December&#160;31,</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="6" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Six Months Ended, June&#160;30,</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Inception) to<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2006</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2007</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2008</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2008</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2009</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>June&#160;30, 2009</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="6" align="center" valign="bottom">
    <B>(unaudited)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>(unaudited)</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Expected Volatility
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    81
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    81
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    81
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    81
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    74
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    80
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Dividend Yield
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Risk-Free Interest Rate
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.89
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.54
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3.08
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3.08
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2.10
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3.96
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Expected Term (years)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    6.25
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    6.25
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    6.25
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    6.25
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    6.25
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    6.25
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The weighted-average grant date fair values of stock options
    granted during the years ended December&#160;31, 2006, 2007 and
    2008, the six months ended June&#160;30, 2008 and 2009, and for
    the period from September&#160;9, 2004 (date of inception) to
    June&#160;30, 2009 were $0.04, $0.10, $0.56, $0.56, $0.59 and
    $0.26 per share, respectively.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: Arial, Helvetica">Nonemployee
    Stock-Based Compensation</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    In connection with stock options granted to consultants, the
    Company recorded $4,358, $12,489, $51,874, $51,874, $1,153 and
    $70,716 for nonemployee stock-based compensation during the
    years ended December&#160;31, 2006, 2007 and 2008, for the six
    months ended June&#160;30, 2008 and 2009, and for the period
    from September&#160;9, 2004 (date of inception) to June&#160;30,
    2009, respectively. These amounts were based upon the fair value
    of the vested portion of the grants.
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    F-26
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Anthera
    Pharmaceuticals, Inc.<BR>
    (A Development Stage Company)<BR>
    <BR>
    NOTES&#160;TO FINANCIAL STATEMENTS&#151;(Continued)</FONT></B>
</DIV>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The assumptions used in the Black-Scholes option-pricing model
    for the years ended December&#160;31, 2006, 2007 and 2008, the
    six months ended June&#160;30, 2008 and 2009, and for the period
    from September&#160;9, 2004 (date of inception) to June&#160;30,
    2009, are as follows:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="48%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="3%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="3%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="2%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=05 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=05 type=lead -->
    <TD width="2%" align="right">&nbsp;</TD>	<!-- colindex=05 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=05 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=06 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=06 type=lead -->
    <TD width="2%" align="right">&nbsp;</TD>	<!-- colindex=06 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=06 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=07 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=07 type=lead -->
    <TD width="11%" align="right">&nbsp;</TD>	<!-- colindex=07 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=07 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Period from<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>September&#160;9,<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="6" nowrap align="center" valign="bottom">
    <B>Six Months Ended<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>2004 (Date of<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="10" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Years Ended December&#160;31,</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="6" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>June&#160;30,</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Inception) to<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2006</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2007</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2008</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2008</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2009</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>June&#160;30, 2009</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="6" nowrap align="center" valign="bottom">
    <B>(unaudited)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>(unaudited)</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <B>Expected Volatility</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    98
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    98
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    98
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    98
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    98
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    98
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    <B>Dividend Yield</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    <B>Risk-Free Interest Rate</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.77
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.40
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3.67
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3.67
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2.85
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3.86
</TD>
<TD nowrap align="left" valign="bottom">
    %
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    <B>Expected Term (years)</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    10.00
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    10.00
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    9.26
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    9.26
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    9.52
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    9.45
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Amounts expensed during the remaining vesting period will be
    determined based on the fair value at the time of vesting.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>
    <B><FONT style="font-family: Arial, Helvetica">9.&#160;&#160;</FONT></B>
</TD>
    <TD>
    <B><FONT style="font-family: Arial, Helvetica">EMPLOYEE BENEFIT
    PLAN</FONT></B>
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The Company maintains a defined contribution 401(k) plan, or the
    401(k) Plan. Employee contributions are voluntary and are
    determined on an individual basis, limited by the maximum
    amounts allowable under federal tax regulations. The Company has
    made no contributions to the 401(k) Plan since its inception.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>
    <B><FONT style="font-family: Arial, Helvetica">10.&#160;&#160;</FONT></B>
</TD>
    <TD>
    <B><FONT style="font-family: Arial, Helvetica">INCOME
    TAXES</FONT></B>
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The Company has incurred net operating losses since inception.
    The Company has not reflected any benefit of such net operating
    loss carryforwards in the accompanying financial statements and
    has established a full valuation allowance against its deferred
    tax assets.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Deferred income taxes reflect the net tax effects of
    (a)&#160;temporary differences between the carrying amounts of
    assets and liabilities for financial reporting purposes and the
    amounts used for income tax purposes, and (b)&#160;operating
    losses and tax credit carryforwards.
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    F-27
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Anthera
    Pharmaceuticals, Inc.<BR>
    (A Development Stage Company)<BR>
    <BR>
    NOTES&#160;TO FINANCIAL STATEMENTS&#151;(Continued)</FONT></B>
</DIV>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The significant components of the Company&#146;s deferred tax
    assets for the years ended December&#160;31, 2007 and 2008 are
    as follows:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="67%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="12%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="12%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="6" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>December&#160;31,</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2007</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2008</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Deferred tax assets:
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 30pt">
    Net operating loss carryforwards
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    9,864,070
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    15,550,186
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 30pt">
    Tax credits
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,713,935
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,158,679
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 30pt">
    Intangible assets
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3,810,824
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3,545,262
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 30pt">
    Accrued bonus
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    85,048
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    46,226
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 30pt">
    Accrued liabilities
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    31,510
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    133,486
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 30pt">
    Stock-based compensation
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    7,047
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    12,913
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 30pt">
    Other
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    398
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,366
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 40pt">
    Total deferred tax assets
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    15,512,832
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    21,448,118
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 30pt">
    Deferred tax liabilities&#151;fixed assets
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (669
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 40pt">
    Subtotal
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    15,512,163
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    21,448,118
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 30pt">
    Valuation allowance
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (15,512,163
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (21,448,118
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Net deferred tax asset
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    A reconciliation of the statutory tax rates and the effective
    tax rates for the years ended December&#160;31, 2006, 2007 and
    2008 is as follows:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="74%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="4%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="4%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="4%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2006</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2007</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2008</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Statutory rate
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    34%
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    34%
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    34%
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    State tax
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    7%
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    7%
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5%
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Tax credit
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1%
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5%
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2%
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Beneficial conversion feature
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (1)%
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0%
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (8)%
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Valuation allowance
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (41)%
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (46)%
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (33)%
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Effective tax rates
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0%
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0%
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0%
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Realization of the future tax benefits is dependent on the
    Company&#146;s ability to generate sufficient taxable income
    within the carryforward period. Because of the Company&#146;s
    recent history of operating losses, management believes that the
    deferred tax assets arising from the above-mentioned future tax
    benefits are currently not likely to be realized and,
    accordingly, has provided a full valuation allowance. The net
    valuation allowance increased by $11,720,154 and $5,935,955 for
    the years ended December&#160;31, 2007 and 2008, and $21,448,118
    for the period from September&#160;9, 2004 (date of inception)
    to December&#160;31, 2008.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Net operating losses and tax credit carryforwards as of
    December&#160;31, 2008, are as follows:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="65%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="11%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="17%">&nbsp;</TD>	<!-- colindex=03 type=maindata -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Amount</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Expiration Years</B>
</DIV>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Net operating losses&#151;federal
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    39,037,547
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    Beginning 2024
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Net operating losses&#151;state
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    39,034,347
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    Beginning 2016
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Tax credits&#151;federal
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,640,372
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    Beginning 2024
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Tax credits&#151;state
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    785,343
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Not applicable
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Utilization of the net operating loss carryforwards and credits
    may be subject to a substantial annual limitation due to the
    ownership change limitations provided by the Internal
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    F-28
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Anthera
    Pharmaceuticals, Inc.<BR>
    (A Development Stage Company)<BR>
    <BR>
    NOTES&#160;TO FINANCIAL STATEMENTS&#151;(Continued)</FONT></B>
</DIV>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Revenue Code of 1986, as amended, or the IRC, and similar state
    provisions. The Company has not performed a detailed analysis to
    determine whether an ownership change under Section&#160;382 of
    the IRC has occurred. The effect of an ownership change would be
    the imposition of an annual limitation on the use of net
    operating loss carryforwards attributable to periods before the
    change.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The Company adopted the provisions of FASB Interpretation
    No.&#160;48, &#147;Accounting for Uncertainty in Income
    Taxes,&#148; or FIN&#160;48, on January&#160;1, 2007. As a
    result of the implementation of FIN&#160;48, the Company did not
    record any changes to the liability for unrecognized tax
    benefits related to tax positions taken in prior periods, and no
    corresponding change in accumulated deficit was recorded. At the
    adoption date of January&#160;2, 2007, the Company had $80,000
    unrecognized tax benefits, none of which would affect its income
    tax expense if recognized to the extent the Company continues to
    maintain a full valuation allowance against its deferred tax
    assets.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    As of December&#160;31, 2008, the Company had unrecognized tax
    benefits of $808,562, all of which would not currently affect
    the Company&#146;s effective tax rate if recognized due to the
    Company&#146;s deferred tax assets being fully offset by a
    valuation allowance. The Company did not anticipate any
    significant change to the unrecognized tax benefit balance as of
    June&#160;30, 2009. A reconciliation of the beginning and ending
    amount of unrecognized tax benefits is as follows:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="89%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="7%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Amount</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Balance as January&#160;1, 2007
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    79,855
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Additions based on tax positions related to current year
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    566,326
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Balance as December&#160;31, 2007
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    646,181
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Additions based on tax positions related to current year
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    162,381
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Balance as of December&#160;31, 2008
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    808,562
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Additions based on tax positions related to current year
    (unaudited)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Balance as of June&#160;30, 2009 (unaudited)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    808,562
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The Company would classify interest and penalties related to
    uncertain tax positions in income tax expense, if applicable.
    There was no interest expense or penalties related to
    unrecognized tax benefits recorded through June&#160;30, 2009.
    The tax years 2004 through 2008 remain open to examination by
    one or more major taxing jurisdictions to which the Company is
    subject.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The Company does not anticipate that total unrecognized net tax
    benefits will significantly change prior to the end of 2009.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>
    <B><FONT style="font-family: Arial, Helvetica">11.&#160;&#160;</FONT></B>
</TD>
    <TD>
    <B><FONT style="font-family: Arial, Helvetica">RELATED PARTY
    TRANSACTIONS</FONT></B>
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    For the years ended December&#160;31, 2006, 2007 and 2008, the
    six months ended June&#160;30, 2008 and 2009, and for the period
    from September&#160;9, 2004 (date of inception) to June&#160;30,
    2009, the Company paid $0, $71,100, $22,200, $20,800, $38,274
    and $131,574, respectively, for clinical management services
    rendered by an outside organization where one of the founders is
    employed.
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    F-29
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">Anthera
    Pharmaceuticals, Inc.<BR>
    (A Development Stage Company)<BR>
    <BR>
    NOTES&#160;TO FINANCIAL STATEMENTS&#151;(Continued)</FONT></B>
</DIV>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>
    <B><FONT style="font-family: Arial, Helvetica">12.&#160;&#160;</FONT></B>
</TD>
    <TD>
    <B><FONT style="font-family: Arial, Helvetica">SUBSEQUENT
    EVENTS</FONT></B>
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    On July&#160;17, 2009 and September&#160;9, 2009, the Company
    sold (i)&#160;convertible promissory notes, or the 2009 notes,
    that are secured by a first priority security interest in all of
    the Company&#146;s assets, and (ii)&#160;warrants, or the 2009
    warrants, to purchase shares of the Company&#146;s preferred
    stock to certain of its existing investors for an aggregate
    purchase price of $10,000,000. These transactions are
    collectively referred to as the 2009 bridge financing. The 2009
    notes accrue interest at a rate of 8% per annum and have a
    maturity date of the earliest of (i)&#160;July&#160;17, 2010,
    (ii)&#160;the date of the sale of all or substantially all of
    the Company&#146;s equity interests or assets or (iii)&#160;an
    event of default pursuant to the terms of the 2009 notes. The
    2009 notes are automatically convertible into the securities
    that are sold in the next equity financing at a 25% discount to
    the price to which such securities are sold to other investors,
    or they are alternatively convertible into shares of the
    Company&#146;s
    <FONT style="white-space: nowrap">Series&#160;B-2</FONT>
    convertible preferred stock in connection with a change of
    control of the Company. Each 2009 warrant is exercisable for the
    security into which each 2009 note is converted, at the price at
    which that security is sold to other investors. Depending on
    when the 2009 notes are converted, each 2009 warrant may be
    exercisable for a number of shares equal to the quotient
    obtained by dividing (x) (i)&#160;25% of the principal amount of
    the accompanying 2009 notes, in the event the conversion occurs
    prior to April&#160;1, 2010, or (ii)&#160;50% of the principal
    amount of the accompanying 2009 notes, in the event the
    conversion occurs on or after April&#160;1, 2010, by
    (y)&#160;the purchase price of the securities into which the
    note is ultimately converted.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Under the terms of a license agreement with Eli Lilly and
    Shionogi&#160;&#038; Co., Ltd. executed in July 2006, the
    Company is obligated to make a $1.5&#160;million milestone
    payment to each party upon the start of a Phase&#160;3 clinical
    study with A-001 or A-002. The Company amended the milestone
    payment terms with each of Eli Lilly and Shionogi&#160;&#038;
    Co., Ltd. to no later than 12&#160;months from the enrollment of
    the first patient in a Phase&#160;3 clinical study for A-002. In
    consideration for the extension, the milestone payments
    increased to $1.75&#160;million to each party.
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    F-30
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">[Back Cover Page
    of Prospectus]</FONT></B>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <IMG src="f53438orf5343813.gif" alt="(ANTHERA LOGO)">
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<P align="left" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">PART&#160;II<BR>
    </FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">INFORMATION NOT
    REQUIRED IN PROSPECTUS</FONT></B>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="11%"></TD>
    <TD width="89%"></TD>
</TR>

<TR valign="top">
    <TD>
    <B><FONT style="font-family: Arial, Helvetica">Item&#160;13.<I>&#160;&#160;</I></FONT></B>
</TD>
    <TD>
    <B><I><FONT style="font-family: Arial, Helvetica">Other Expenses
    of Issuance and Distribution.</FONT></I></B>
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The expenses (other than underwriting discounts and commissions)
    payable by us in connection with this offering are as follows:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="88%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="8%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Amount</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Securities and Exchange Commission Registration fee
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Financial Industry Regulatory Authority, Inc. fee
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    NASDAQ Global Market listing fee
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Accountants&#146; fees and expenses
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Legal fees and expenses
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Blue Sky fees and expenses
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Transfer Agent&#146;s fees and expenses
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Printing and engraving expenses
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Miscellaneous
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">

</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -20pt; margin-left: 20pt">
    Total Expenses
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">

</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    All expenses are estimated except for the Securities and
    Exchange Commission fee and the Financial Industry Regulatory
    Authority, Inc. fee.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="11%"></TD>
    <TD width="89%"></TD>
</TR>

<TR valign="top">
    <TD>
    <B><FONT style="font-family: Arial, Helvetica">Item&#160;14.<I>&#160;&#160;</I></FONT></B>
</TD>
    <TD>
    <B><I><FONT style="font-family: Arial, Helvetica">Indemnification
    of Directors and Officers.</FONT></I></B>
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Section&#160;145 of the Delaware General Corporation Law, or the
    DGCL, authorizes a corporation to indemnify its directors and
    officers against liabilities arising out of actions, suits and
    proceedings to which they are made or threatened to be made a
    party by reason of the fact that they have served or are
    currently serving as a director or officer to a corporation. The
    indemnity may cover expenses (including attorneys&#146; fees)
    judgments, fines and amounts paid in settlement actually and
    reasonably incurred by the director or officer in connection
    with any such action, suit or proceeding. Section&#160;145
    permits corporations to pay expenses (including attorneys&#146;
    fees) incurred by directors and officers in advance of the final
    disposition of such action, suit or proceeding. In addition,
    Section&#160;145 provides that a corporation has the power to
    purchase and maintain insurance on behalf of its directors and
    officers against any liability asserted against them and
    incurred by them in their capacity as a director or officer, or
    arising out of their status as such, whether or not the
    corporation would have the power to indemnify the director or
    officer against such liability under Section&#160;145.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We have adopted provisions in our certificate of incorporation
    and bylaws to be in effect at the completion of this offering
    that limit or eliminate the personal liability of our directors
    to the fullest extent permitted by the DGCL, as it now exists or
    may in the future be amended. Consequently, a director will not
    be personally liable to us or our stockholders for monetary
    damages or breach of fiduciary duty as a director, except for
    liability for:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any breach of the director&#146;s duty of loyalty to us or our
    stockholders;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any act or omission not in good faith or that involves
    intentional misconduct or a knowing violation of law;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any unlawful payments related to dividends or unlawful stock
    purchases, redemptions or other distributions;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any transaction from which the director derived an improper
    personal benefit.
</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    II-1
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    These limitations of liability do not alter director liability
    under the federal securities laws and do not affect the
    availability of equitable remedies such as an injunction or
    rescission.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    In addition, our bylaws provide that:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    we will indemnify our directors, officers and, in the discretion
    of our board of directors, certain employees to the fullest
    extent permitted by the DGCL, as it now exists or may in the
    future be amended;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    we will advance reasonable expenses, including attorneys&#146;
    fees, to our directors and, in the discretion of our board of
    directors, to our officers and certain employees, in connection
    with legal proceedings relating to their service for or on
    behalf of us, subject to limited exceptions.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We have entered into indemnification agreements with each of our
    directors and our executive officers and, in several cases,
    amended and restated indemnification agreements with certain of
    their affiliates. These agreements provide that we will
    indemnify each of our directors, executive officers and, at
    times, their affiliates to the fullest extent permitted by
    Delaware law. We will advance expenses, including
    attorneys&#146; fees, judgments, fines and settlement amounts,
    to each indemnified director, executive officer or affiliate in
    connection with any proceeding in which indemnification is
    available and we will indemnify our directors and officers for
    any action or proceeding arising out of that person&#146;s
    services as an officer or director brought on behalf of the
    Company or in furtherance of our rights. Additionally, each of
    our directors may have certain rights to indemnification,
    advancement of expenses or insurance provided by their
    affiliates, which indemnification relates to and might apply to
    the same proceedings arising out of such director&#146;s
    services as a director referenced herein. Nonetheless, we have
    agreed in the indemnification agreements that the Company&#146;s
    obligations to those same directors are primary and any
    obligation of the affiliates of those directors to advance
    expenses or to provide indemnification for the expenses or
    liabilities incurred by those directors are secondary.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We also maintain general liability insurance which covers
    certain liabilities of our directors and officers arising out of
    claims based on acts or omissions in their capacities as
    directors or officers, including liabilities under the
    Securities Act.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The underwriting agreement filed as Exhibit&#160;1.1 to this
    registration statement provides for indemnification of us and
    our directors and officers by the underwriters against certain
    liabilities under the Securities Act and the Exchange Act.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="11%"></TD>
    <TD width="89%"></TD>
</TR>

<TR valign="top">
    <TD>
    <B><FONT style="font-family: Arial, Helvetica">Item&#160;15.<I>&#160;&#160;</I></FONT></B>
</TD>
    <TD>
    <B><I><FONT style="font-family: Arial, Helvetica">Recent Sales
    of Unregistered Securities.</FONT></I></B>
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    In the three years preceding the filing of this registration
    statement, we have sold and issued the following unregistered
    securities:
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>
    <I><FONT style="font-family: Arial, Helvetica">(a)&#160;&#160;</FONT></I>
</TD>
    <TD>
    <I><FONT style="font-family: Arial, Helvetica">Issuances of
    Capital Stock</FONT></I>
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    On December&#160;15, 2006, we issued 4,702,640&#160;shares of
    our Series&#160;B convertible preferred stock to eight investors
    for an aggregate purchase price of $19,986,217. This aggregate
    purchase price was comprised of (i)&#160;consideration in
    satisfaction of our obligations under a technology transfer
    agreement filed as Exhibit 10.8 to this registration statement,
    by and between the Company and Eli Lilly and Company, dated as
    of July&#160;31, 2006, the value of which consideration was
    $926,218 and (ii)&#160;cash payments to the Company, which
    totaled $19,059,999.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    On February&#160;15, 2008, we issued convertible promissory
    notes and warrants to purchase shares of the Company&#146;s
    common stock to seven investors for an aggregate principal
    amount of $3,000,000.
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    II-2
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    On May&#160;14, 2008, we issued convertible promissory notes to
    seven investors for an aggregate principal amount of $9,000,000
    and we cancelled all warrants to purchase shares of the
    Company&#146;s stock that were issued on February&#160;15, 2008.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    On August&#160;12, 2008, we issued 5,523,337&#160;shares of our
    <FONT style="white-space: nowrap">Series&#160;B-2</FONT>
    convertible preferred stock to 10&#160;investors for an
    aggregate purchase price of $19,355,638. This aggregate purchase
    price was comprised of (i)&#160;conversion of indebtedness of
    the Company and interest accrued thereupon, the value of which
    conversion was $12,355,630 and (ii)&#160;cash payments to the
    Company, which totaled $7,000,005. In addition, we issued
    warrants to three investors to purchase 411,764&#160;shares of
    our common stock at an exercise price of $0.78 per share. We
    have filed a Form&#160;D to ensure that all securities issued in
    this transaction fall within the safe harbor provided pursuant
    to Rule&#160;506 of Regulation&#160;D, which is promulgated
    under the Securities Act.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    On July&#160;17, 2009, we issued convertible promissory notes to
    nine investors for an aggregate principal amount of $4,000,000.
    In addition, we issued warrants to purchase either shares of
    convertible preferred stock of the Company to be issued in the
    next equity financing or shares of our
    <FONT style="white-space: nowrap">Series&#160;B-2</FONT>
    convertible preferred stock. Depending on when these convertible
    promissory notes are converted, the warrants may be exercisable
    for a number of shares of convertible preferred stock to be
    issued in the next equity financing or shares of our
    <FONT style="white-space: nowrap">Series&#160;B-2</FONT>
    convertible preferred stock, at the price which each such
    security is sold, for a number of shares equaling 25% of the
    principal amount of the notes or 50% of the principal amount of
    the notes.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    On September&#160;9, 2009, we issued convertible promissory
    notes to nine investors for an aggregate principal amount of
    $6,000,000. In addition, we issued warrants to purchase either
    shares of convertible preferred stock of the company to be
    issued in the next equity financing or shares of our
    <FONT style="white-space: nowrap">Series&#160;B-2</FONT>
    convertible preferred stock. Depending on when these convertible
    promissory notes are converted, the warrants may be exercisable
    for a number of shares of convertible preferred stock to be
    issued in the next equity financing or shares of our
    <FONT style="white-space: nowrap">Series&#160;B-2</FONT>
    convertible preferred stock, at the price which each such
    security is sold, for a number of shares equaling 25% of the
    principal amount of the notes or 50% of the principal amount of
    the notes.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    No underwriters were used in the foregoing transactions. Unless
    otherwise stated, the sales of securities described above were
    deemed to be exempt from registration pursuant to
    Section&#160;4(2) of the Securities Act as transactions by an
    issuer not involving a public offering. All of the purchasers in
    these transactions represented to us in connection with their
    purchase that they were acquiring the securities for investment
    and not distribution, that they could bear the risks of the
    investment and could hold the securities for an indefinite
    period of time. Such purchasers received written disclosures
    that the securities had not been registered under the Securities
    Act and that any resale must be made pursuant to a registration
    or an available exemption from such registration. All of the
    foregoing securities are deemed restricted securities for the
    purposes of the Securities Act.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>
    <I><FONT style="font-family: Arial, Helvetica">(b)&#160;&#160;</FONT></I>
</TD>
    <TD>
    <I><FONT style="font-family: Arial, Helvetica">Grants and
    Exercises of Stock Options and Grants of Restricted
    Stock</FONT></I>
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    In the three years preceding the filing of this registration
    statement, we have issued under our 2005 Equity Plan, options to
    purchase an aggregate of 3,529,015&#160;shares of our common
    stock to certain of our directors, employees and service
    providers at exercise prices ranging from $0.15 to $0.88 per
    share. Of these options, 1,106,721 have been exercised.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    In the three years preceding the filing of this registration
    statement, we have not issued any restricted stock under our
    2005 Equity Plan to our directors, employees or service
    providers.
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    II-3
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The issuances of the securities described above were deemed to
    be exempt from registration pursuant to Rule&#160;701
    promulgated under the Securities Act as transactions pursuant to
    compensatory benefit plans. The shares of common stock issued
    upon the exercise of options are deemed to be restricted
    securities for purposes of the Securities Act.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="11%"></TD>
    <TD width="89%"></TD>
</TR>

<TR valign="top">
    <TD>
    <B><FONT style="font-family: Arial, Helvetica">Item&#160;16.<I>&#160;&#160;</I></FONT></B>
</TD>
    <TD>
    <B><I><FONT style="font-family: Arial, Helvetica">Exhibits and
    Financial Statement Schedules.</FONT></I></B>
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    (a)&#160;Exhibits.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    See the Exhibit&#160;Index on the page immediately following the
    signature page for a list of exhibits filed as part of this
    registration statement on
    <FONT style="white-space: nowrap">Form&#160;S-1,</FONT>
    which Exhibit&#160;Index is incorporated herein by reference.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="11%"></TD>
    <TD width="89%"></TD>
</TR>

<TR valign="top">
    <TD>
    <B><FONT style="font-family: Arial, Helvetica">Item&#160;17.<I>&#160;&#160;</I></FONT></B>
</TD>
    <TD>
    <B><I><FONT style="font-family: Arial, Helvetica">Undertakings.</FONT></I></B>
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The undersigned registrant hereby undertakes to provide to the
    underwriter at the closing specified in the underwriting
    agreements, certificates in such denominations and registered in
    such names as required by the underwriter to permit prompt
    delivery to each purchaser.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Insofar as indemnification for liabilities arising under the
    Securities Act may be permitted to directors, officers and
    controlling persons of the registrant pursuant to the foregoing
    provisions, or otherwise, the registrant has been advised that
    in the opinion of the Securities and Exchange Commission such
    indemnification is against public policy as expressed in the
    Securities Act, and is, therefore, unenforceable. In the event
    that a claim for indemnification by the registrant against such
    liabilities (other than the payment by the registrant of
    expenses incurred or paid by a director, officer or controlling
    person of the registrant in the successful defense of any
    action, suit or proceeding) is asserted by such director,
    officer or controlling person in connection with the securities
    being registered, the registrant will, unless in the opinion of
    its counsel the matter has been settled by the controlling
    precedent, submit to a court of appropriate jurisdiction the
    question whether such indemnification by it is against public
    policy as expressed in the Securities Act and will be governed
    by the final adjudication of such issue.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    The undersigned registrant hereby undertakes that:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    For purposes of determining any liability under the Securities
    Act, the information omitted from the form of Prospectus filed
    as part of this Registration Statement in reliance upon
    Rule&#160;430A and contained in a form of prospectus filed by
    the registrant pursuant to Rule&#160;424(b)(1) or (4), or 497(h)
    under the Securities Act shall be deemed to be part of this
    registration statement as of the time it was declared effective.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    For the purpose of determining any liability under the
    Securities Act, each post-effective amendment that contains a
    form of prospectus shall be deemed to be a new registration
    statement relating to the securities offered therein and the
    offering of such securities at that time shall be deemed to be
    the initial <I>bona fide </I>offering thereof.
</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    II-4
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">SIGNATURES</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Pursuant to the requirements of the Securities Act of 1933, as
    amended, the registrant has duly caused this registration
    statement to be signed on its behalf by the undersigned,
    thereunto duly authorized, in the city of Hayward, state of
    California, on this 15th&#160;day of September, 2009.
</DIV>

<DIV style="margin-top: 24pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 49%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Anthera Pharmaceuticals, Inc.
</DIV>

<DIV style="margin-top: 48pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="49%"></TD>
    <TD width="4%"></TD>
    <TD width="47%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    By:&#160;
</TD>
    <TD align="left">
    <DIV style="display:inline; text-align:left;">/s/&#160;&#160;<FONT style="font-variant: SMALL-CAPS">Paul
    F. Truex</FONT></DIV>
</TD>
</TR>

</TABLE>

<DIV style="font-size: 2pt; margin-left: 53%; width: 100%;  align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=999 iwidth=455 length=0 -->

<DIV align="left" style="margin-left: 53%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Paul F. Truex, President and Chief Executive
</DIV>

<DIV align="left" style="margin-left: 53%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Officer
</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">SIGNATURES AND
    POWER OF ATTORNEY</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    We, the undersigned officers and directors of Anthera
    Pharmaceuticals, Inc., hereby severally constitute and appoint
    Paul F. Truex and Christopher P. Lowe, and each of them singly
    (with full power to each of them to act alone), our true and
    lawful attorneys-in-fact and agents, with full power of
    substitution and resubstitution in each of them for him and in
    his name, place and stead, and in any and all capacities, to
    sign for us and in our names in the capacities indicated below
    any and all amendments (including post-effective amendments) to
    this registration statement (or any other registration statement
    for the same offering that is to be effective upon filing
    pursuant to Rule&#160;462(b) under the Securities Act of 1933,
    as amended), and to file the same, with all exhibits thereto and
    other documents in connection therewith, with the Securities and
    Exchange Commission, granting unto said attorneys-in-fact and
    agents, and each of them, full power and authority to do and
    perform each and every act and thing requisite or necessary to
    be done in and about the premises, as full to all intents and
    purposes as he might or could do in person, hereby ratifying and
    confirming all that said attorneys-in-fact and agents or any of
    them, or their or his substitute or substitutes, may lawfully do
    or cause to be done by virtue hereof.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    Pursuant to the requirements of the Securities Act of 1933, as
    amended, this Registration Statement has been signed by the
    following persons in the capacities and on the dates indicated.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="3%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="35%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="35%">&nbsp;</TD>	<!-- colindex=03 type=maindata -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="20%">&nbsp;</TD>	<!-- colindex=04 type=maindata -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD colspan="3" nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Signature</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Title</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Date</B>
</DIV>
</TD>
</TR>
<TR style="line-height: 12pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="line-height: 12pt">
<TD colspan="3">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD colspan="3" align="center" valign="top">
    <DIV style="display:inline; text-align:center; width:90%">/s/&#160;&#160;<FONT style="font-variant: SMALL-CAPS">Paul
    F. Truex</FONT></DIV><BR>
    <DIV style="font-size: 2pt; margin-left: 0%; width: 100%;  align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=201 iwidth=173 length=0 -->Paul
    F. Truex
</TD>
<TD>
&nbsp;
</TD>
<TD align="center" valign="top">
    President and Chief Executive Officer and Director (Principal
    Executive Officer)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="top">
    September&#160;15, 2009
</TD>
</TR>
<TR valign="bottom" style="line-height: 12pt">
<TD colspan="3">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD colspan="3" align="center" valign="top">
    <DIV style="display:inline; text-align:center; width:90%">/s/&#160;&#160;<FONT style="font-variant: SMALL-CAPS">Christopher
    P. Lowe</FONT></DIV><BR>
    <DIV style="font-size: 2pt; margin-left: 0%; width: 100%;  align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=201 iwidth=173 length=0 -->Christopher
    P. Lowe
</TD>
<TD>
&nbsp;
</TD>
<TD align="center" valign="top">
    Chief Financial Officer and Vice President of Administration
    (Principal Financial and Accounting Officer)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="top">
    September&#160;15, 2009
</TD>
</TR>
<TR valign="bottom" style="line-height: 12pt">
<TD colspan="3">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD colspan="3" align="center" valign="top">
    <DIV style="display:inline; text-align:center; width:90%">/s/&#160;&#160;<FONT style="font-variant: SMALL-CAPS">Christopher
    S. Henney</FONT></DIV><BR>
    <DIV style="font-size: 2pt; margin-left: 0%; width: 100%;  align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=201 iwidth=173 length=0 -->Christopher
    S. Henney
</TD>
<TD>
&nbsp;
</TD>
<TD align="center" valign="top">
    Director, Chairman of the Board of Directors
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="top">
    September&#160;15, 2009
</TD>
</TR>
<TR valign="bottom" style="line-height: 12pt">
<TD colspan="3">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD colspan="3" align="center" valign="top">
    <DIV style="display:inline; text-align:center; width:90%">/s/&#160;&#160;<FONT style="font-variant: SMALL-CAPS">Annette
    Bianchi</FONT></DIV><BR>
    <DIV style="font-size: 2pt; margin-left: 0%; width: 100%;  align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=201 iwidth=173 length=0 -->Annette
    Bianchi
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="top">
    Director
</TD>
<TD>
&nbsp;
</TD>
<TD align="center" valign="top">
    September&#160;15, 2009
</TD>
</TR>
</TABLE>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    II-5
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF"><!-- TABLE 01 -->
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="3%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="35%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="35%">&nbsp;</TD>	<!-- colindex=03 type=maindata -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="20%">&nbsp;</TD>	<!-- colindex=04 type=maindata -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD colspan="3" nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Signature</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Title</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Date</B>
</DIV>
</TD>
</TR>
<TR style="line-height: 12pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="line-height: 12pt">
<TD colspan="3">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD colspan="3" align="center" valign="top">
    <DIV style="display:inline; text-align:center; width:90%">/s/&#160;&#160;<FONT style="font-variant: SMALL-CAPS">James
    I. Healy</FONT></DIV><BR>
    <DIV style="font-size: 2pt; margin-left: 0%; width: 100%;  align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=201 iwidth=173 length=0 -->James
    I. Healy
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="top">
    Director
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="top">
    September&#160;15, 2009
</TD>
</TR>
<TR valign="bottom" style="line-height: 12pt">
<TD colspan="3">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD colspan="3" align="center" valign="top">
    <DIV style="display:inline; text-align:center; width:90%">/s/&#160;&#160;<FONT style="font-variant: SMALL-CAPS">A.
    Rachel Leheny</FONT></DIV><BR>
    <DIV style="font-size: 2pt; margin-left: 0%; width: 100%;  align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=201 iwidth=173 length=0 -->A.
    Rachel Leheny
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="top">
    Director
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="top">
    September&#160;15, 2009
</TD>
</TR>
<TR valign="bottom" style="line-height: 12pt">
<TD colspan="3">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD colspan="3" align="center" valign="top">
    <DIV style="display:inline; text-align:center; width:90%">/s/&#160;&#160;<FONT style="font-variant: SMALL-CAPS">Donald
    J. Santel</FONT></DIV><BR>
    <DIV style="font-size: 2pt; margin-left: 0%; width: 100%;  align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=201 iwidth=173 length=0 -->Donald
    J. Santel
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="top">
    Director
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="top">
    September&#160;15, 2009
</TD>
</TR>
<TR valign="bottom" style="line-height: 12pt">
<TD colspan="3">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD colspan="3" align="center" valign="top">
    <DIV style="display:inline; text-align:center; width:90%">/s/&#160;&#160;<FONT style="font-variant: SMALL-CAPS">David
    E. Thompson</FONT></DIV><BR>
    <DIV style="font-size: 2pt; margin-left: 0%; width: 100%;  align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=201 iwidth=173 length=0 -->David
    E. Thompson
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="top">
    Director
</TD>
<TD>
&nbsp;
</TD>
<TD align="center" valign="top">
    September&#160;15, 2009
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    II-6
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: Arial, Helvetica">EXHIBIT&#160;LIST</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="3%" align="right">&nbsp;</TD>	<!-- colindex=01 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=01 type=body -->
    <TD width="3%" align="left">&nbsp;</TD>	<!-- colindex=01 type=align1 -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="90%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD colspan="3" nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Number</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Description</B>
</DIV>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    1
</TD>
<TD nowrap align="left" valign="top">
    .1*
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Form of Underwriting Agreement
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    3
</TD>
<TD nowrap align="left" valign="top">
    .1
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Fourth Amended and Restated Certificate of Incorporation, as
    currently in effect
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    3
</TD>
<TD nowrap align="left" valign="top">
    .2*
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Form of Fifth Amended and Restated Certificate of Incorporation
    (to be effective upon completion of this offering)
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    3
</TD>
<TD nowrap align="left" valign="top">
    .3
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Bylaws, as currently in effect
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    3
</TD>
<TD nowrap align="left" valign="top">
    .4
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Certificate of Amendment of Bylaws, as currently in effect
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    3
</TD>
<TD nowrap align="left" valign="top">
    .5*
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Form of Amended and Restated Bylaws (to be effective immediately
    prior to the closing of this offering)
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    4
</TD>
<TD nowrap align="left" valign="top">
    .1*
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Specimen certificate evidencing shares of common stock
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    5
</TD>
<TD nowrap align="left" valign="top">
    .1*
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Opinion of Goodwin Procter LLP
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    # 10
</TD>
<TD nowrap align="left" valign="top">
    .1
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    2005 Equity Incentive Plan and form agreements thereunder
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    # 10
</TD>
<TD nowrap align="left" valign="top">
    .2*
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    2009 Stock Option and Incentive Plan and form agreements
    thereunder
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    10
</TD>
<TD nowrap align="left" valign="top">
    .3
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Form of Amended and Restated Indemnification Agreement
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    # 10
</TD>
<TD nowrap align="left" valign="top">
    .4*
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Form of Amended and Restated Change in Control Agreement
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    # 10
</TD>
<TD nowrap align="left" valign="top">
    .5*
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Form of Amended and Restated Severance Benefits Agreement
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    + 10
</TD>
<TD nowrap align="left" valign="top">
    .6
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    License Agreement among Eli Lilly and Company,
    Shionogi&#160;&#038; Co., Ltd. and the Company, dated as of
    July&#160;31, 2006.
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    + 10
</TD>
<TD nowrap align="left" valign="top">
    .7
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Agreement between Shionogi &#038; Co., Ltd. and the Company,
    dated September&#160;7, 2009 (amending License Agreement among
    Eli Lilly and Company, Shionogi&#160;&#038; Co., Ltd. and the
    Company, dated as of July&#160;31, 2006)
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    + 10
</TD>
<TD nowrap align="left" valign="top">
    .8
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Agreement between Eli Lilly and Company and the Company, dated
    September&#160;15, 2009 (amending License Agreement among Eli
    Lilly Company, Shionogi &#038; Co., Ltd. and the Company, dated
    as of July&#160;31, 2006)
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    + 10
</TD>
<TD nowrap align="left" valign="top">
    .9
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Amended and Restated Technology Transfer Letter Agreement
    between Eli Lilly and Company and the Company, dated as of
    July&#160;12, 2006.
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    + 10
</TD>
<TD nowrap align="left" valign="top">
    .10
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    License Agreement between Amgen Inc. and the Company, dated as
    of December&#160;18, 2007
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    10
</TD>
<TD nowrap align="left" valign="top">
    .11
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Consent to Sublease, by and among the Company, NewTower
    Trust&#160;Company Multi-Employer Property Trust and Guava
    Technologies, dated as of September&#160;12, 2008
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    10
</TD>
<TD nowrap align="left" valign="top">
    .12
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Sublease by and between the Company and Guava Technologies,
    dated as of August&#160;1, 2008
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    10
</TD>
<TD nowrap align="left" valign="top">
    .13
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Note and Warrant Purchase Agreement by and among the Company and
    the persons and entities party thereto, dated July&#160;17, 2009
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    10
</TD>
<TD nowrap align="left" valign="top">
    .14
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Form of Senior Secured Promissory note sold pursuant to that
    Note and Warrant Purchase Agreement, dated July&#160;17, 2009
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    10
</TD>
<TD nowrap align="left" valign="top">
    .15
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Form of Stock Purchase Warrant sold pursuant to that Note and
    Warrant Purchase Agreement, dated July&#160;17, 2009
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    21
</TD>
<TD nowrap align="left" valign="top">
    .1
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Subsidiary of Anthera Pharmaceuticals, Inc.
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    23
</TD>
<TD nowrap align="left" valign="top">
    .1
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Consent of Deloitte&#160;&#038; Touche LLP, independent
    registered public accounting firm
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    23
</TD>
<TD nowrap align="left" valign="top">
    .2*
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Consent of Goodwin Procter LLP (included in Exhibit&#160;5.1)
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    24
</TD>
<TD nowrap align="left" valign="top">
    .1
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Power of Attorney (included in page&#160;II-5)
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 1pt; margin-left: 0%; width: 10%;  align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=999 iwidth=455 length=48 -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="98%"></TD>
</TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">*
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">To be filed by amendment
    </FONT></TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">+
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Certain provisions of this Exhibit
    have been omitted pursuant to a request for confidential
    treatment
    </FONT></TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 8pt">#
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 8pt">Indicates management contract or
    compensatory plan, contract or agreement
    </FONT></TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
    <BR>
    II-7
</DIV><!-- END PAGE WIDTH -->
</BODY>
</HTML>
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sv1
Table of Contents
As filed with the
    Securities and Exchange Commission on September 15,
    2009
Registration
No. 333-
UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
Washington, D.C.
    20549
Form S-1
REGISTRATION
    STATEMENT
UNDER
THE SECURITIES ACT OF
    1933
Anthera Pharmaceuticals,
    Inc.
(Exact name of registrant as
    specified in its charter)
Delaware
2834
20-1852016
(State or other jurisdiction
    of
incorporation or organization)
(Primary Standard Industrial
Classification Code Number)
(I.R.S. Employer
Identification No.)
Anthera Pharmaceuticals,
    Inc.
25801 Industrial Boulevard,
    Suite B
Hayward, California
    94545
(510) 856—5600
(Address, including zip code and
    telephone number, including area code, of registrant's
    principal executive offices)
Paul F. Truex
President and Chief Executive
    Officer
25801 Industrial Boulevard,
    Suite B
Hayward, California
    94545
(510) 856—5600
(Name, address, including zip
    code and telephone number, including area code, of agent for
    service)
Copies to:
Bradley A. Bugdanowitz, Esq.
Mitzi Chang, Esq.
Seth D. Greenstein, Esq.
Goodwin Procter LLP
Three Embarcadero Center,
    24
th
Floor
San Francisco, California
94111-4003
(415) 733-6099
Alan C. Mendelson, Esq.
Andrew S. Williamson, Esq.
Cindy F. Leeper, Esq.
Latham & Watkins LLP
140 Scott Street
Menlo Park, CA 94025
(650) 328-4600
Approximate date of commencement of proposed sale to
    public:
as soon as practicable after this
    Registration Statement is declared effective.
If any of the securities being registered on this Form are to
    be offered on a delayed or continuous basis pursuant to
    Rule 415 under the Securities Act of 1933, check the
    following
    box.
o
If this Form is filed to register additional securities for
    an offering pursuant to Rule 462(b) under the Securities
    Act, check the following box and list the Securities Act
    registration statement number of the earlier effective
    registration statement for the same
    offering.
o
If this Form is a post-effective amendment filed pursuant to
    Rule 462(c) under the Securities Act, check the following
    box and list the Securities Act registration statement number of
    the earlier effective registration statement for the same
    offering.
o
If this Form is a post-effective amendment filed pursuant to
    Rule 462(d) under the Securities Act, check the following
    box and list the Securities Act registration statement number of
    the earlier effective registration statement for the same
    offering.
o
Indicate by check mark whether the registrant is a large
    accelerated filer, an accelerated filer, a non-accelerated
    filer, or a smaller reporting company. See the definitions of
    "large accelerated filer," "accelerated
    filer" and "smaller reporting company" in Rule
12b-2
of the
    Exchange Act. (Check one):
Large
    accelerated
    filer
o
Accelerated
    filer
o
Non-accelerated
filer
o
Smaller reporting
    company
o
(Do not check if a smaller
    reporting company)
CALCULATION OF
    REGISTRATION FEE
Proposed Maximum
Amount of
Title of Each Class of
Aggregate
Registration
Securities to be Registered
Offering Price (1)(2)
Fee
Common Stock, $0.001 par value per share
$
70,000,000
$
3,906
(1)
Estimated solely for the purpose
    of calculating the registration fee pursuant to Rule 457(o)
    under the Securities Act of 1933, as amended.
(2)
Includes the offering price of
    shares that the underwriters have the option to purchase to
    cover over-allotments, if any.
The Registrant hereby amends this Registration Statement on
    such date or dates as may be necessary to delay its effective
    date until the registrant shall file a further amendment which
    specifically states that this Registration Statement shall
    thereafter become effective in accordance with Section 8(a)
    of the Securities Act of 1933, as amended, or until the
    Registration Statement shall become effective on such date as
    the Securities and Exchange Commission, acting pursuant to said
    Section 8(a), may determine.
Table of Contents
The
information in this prospectus is not complete and may be
changed. We may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell these
securities and it is not soliciting offers to buy these
securities in any state where the offer or sale is not
permitted.
Subject
    To Completion, Dated September 15, 2009
PROSPECTUS
Shares
Common Stock
We are
    offering           shares
    of common stock in this initial public offering. Prior to this
    offering, there has been no public market for our common stock.
    We anticipate that the initial public offering price of the
    common stock will be between $      and
    $      per share. We have applied to
    list our common stock on The NASDAQ Global Market under the
    symbol "ANTH."
Investing in our common stock involves risks. See "Risk
    Factors" on page 8.
Neither the Securities and Exchange Commission nor any state
    securities commission has approved or disapproved of these
    securities or determined if this prospectus is truthful or
    complete. Any representation to the contrary is a criminal
    offense.
Per Share
Total
Public offering price
$
$
Underwriting discounts and commissions
$
$
Proceeds, before expenses, to Anthera Pharmaceuticals, Inc.
$
$
The underwriters have a
30-day
option to purchase up
    to          
    additional shares of common stock from us at the public offering
    price less the underwriting discount to cover over-allotments,
    if any.
Delivery of the shares of common stock will be made on or
    about          ,
    2009.
Deutsche Bank
    Securities
Piper Jaffray
Wedbush PacGrow Life Sciences
Merriman Curhan Ford
The date of this prospectus
    is          ,
    2009.
TABLE OF
    CONTENTS
Page
Prospectus Summary
1
Risk Factors
8
Special Note Regarding Forward-Looking
    Statements
32
Use of Proceeds
33
Dividend Policy
34
Capitalization
35
Dilution
37
Selected Financial Data
39
Management's Discussion and Analysis of
    Financial Condition and Results of Operations
41
Business
54
Management
93
Compensation
99
Certain Relationships and Related Person
    Transactions
115
Principal Stockholders
122
Description of Capital Stock
125
Shares Eligible for Future Sale
130
Material U.S. Federal Income Tax
    Considerations
133
Underwriting
136
Legal Matters
140
Experts
140
Where You Can Find More Information
140
Index to Financial Statements
F-1
Exhibit 3.1
Exhibit 3.3
Exhibit 3.4
Exhibit 10.1
Exhibit 10.3
Exhibit 10.6
Exhibit 10.7
Exhibit 10.8
Exhibit 10.9
Exhibit 10.10
Exhibit 10.11
Exhibit 10.12
Exhibit 10.13
Exhibit 10.14
Exhibit 10.15
Exhibit 21.1
Exhibit 23.1
You should rely only on the information contained in this
    document and any free writing prospectus prepared by or on
    behalf of us or to which we have referred you. We have not, and
    the underwriters have not, authorized anyone to provide you with
    additional or different information. This document may only be
    used where it is legal to sell these securities. The information
    in this prospectus is accurate only as of the date of this
    prospectus, regardless of the time of delivery of this
    prospectus or any sale of shares of our common stock.
Dealer Prospectus
    Delivery Obligation
Until          ,
    2009 (25 days after the commencement of this offering), all
    dealers that effect transactions in these securities, whether or
    not participating in this offering, may be required to deliver a
    prospectus. This is in addition to the dealer's obligation
    to deliver a prospectus when acting as an underwriter and with
    respect to unsold allotments or subscriptions.
i
Table of Contents
PROSPECTUS
    SUMMARY
This summary highlights certain information contained elsewhere
    in this prospectus. Because this is only a summary, it does not
    contain all of the information you should consider before
    investing in our common stock. You should read this entire
    prospectus carefully, especially the information set forth under
    the headings "Risk Factors" and
    "Management's Discussion and Analysis of Financial
    Condition and Results of Operations" and our financial
    statements and the related notes appearing at the end of this
    prospectus, before making an investment decision.
Our
    Company
We are a biopharmaceutical company focused on developing and
    commercializing products to treat serious diseases associated
    with inflammation, including cardiovascular and autoimmune
    diseases. We currently have one Phase 3 ready clinical program,
A-002,
and
    two Phase 2 clinical programs,
A-001
and
A-623.
A-002
and
A-001
inhibit a novel enzyme target known as secretory phospholipase
    A
2
,
    or
    sPLA
2
.
    Elevated levels of
    sPLA
2
have been implicated in a variety of acute inflammatory
    conditions, including acute coronary syndrome and acute chest
    syndrome, as well as chronic diseases such as stable coronary
    artery disease, or CAD. Our Phase 2 ready product
    candidate,
A-623,
targets elevated levels of
B-lymphocyte
stimulator, or BLyS, which has been associated with a variety of
B-cell
mediated autoimmune diseases, including systemic lupus
    erythematosus, or lupus. We have worldwide rights to our product
    candidates, with the exception of Japan, where
    Shionogi & Co., Ltd. retains commercial rights to our
    sPLA
2
product candidates.
Product
    Development Programs
We have focused our product development programs on
    anti-inflammatory therapeutics for cardiovascular diseases,
    lupus and other serious diseases for which we believe current
    treatments are either inadequate or non-existent. Our current
    product development programs are listed in the figure below.
A-002
for Short-Term (16-week) Treatment of Acute Coronary
    Syndrome
We are preparing to begin a pivotal Phase 3 clinical study for
    our lead product candidate,
A-002,
an
    oral
    sPLA
2
inhibitor, in combination with HMG-CoA reductase inhibitor, or
    statin, therapy for short-term (16-week) treatment of patients
    experiencing an acute coronary syndrome. The American Heart
    Association defines acute coronary syndrome as any group of
1
Table of Contents
clinical signs and symptoms related to acute myocardial
    ischemia, or heart muscle damage. Patients experiencing an acute
    coronary syndrome suffer from significant inflammatory activity
    and abnormal lipid profiles.
    sPLA
2
enzymes act to directly amplify inflammation and abnormally
    modify lipids.
A-002,
when
    combined with lipid-lowering therapies, is one of only a few
    therapeutics in development with the potential to offer a unique
    and synergistic approach targeting inflammation, elevated lipid
    levels and atherosclerosis.
Clinical results from our Phase 2b clinical study enrolling 625
    acute coronary syndrome patients and two Phase 2 clinical
    studies enrolling 534 stable CAD patients demonstrated
    statistically significant reductions in low-density lipoprotein
    cholesterol, or LDL-C, a known predictor of cardiovascular risk.
    Reductions in LDL-C were greater when used in combination with
    commonly prescribed statin therapies. In addition, rapid and
    sustained anti-inflammatory activity was also evident as
    sPLA
2
concentrations were statistically significantly reduced from
    baseline levels throughout dosing in all clinical studies. In
    our Phase 2b clinical study,
C-reactive
protein, or CRP, and interleukin-6, or IL-6, both independent
    predictors of cardiovascular risk, were lower at all time points
    among
A-002
treated patients as compared to those on 80 mg of
    atorvastatin alone. The percent decrease in CRP at week two in
    our Phase 2b clinical study was nearly two-fold greater
    among
A-002
treated patients than those treated with placebo and by week 16,
    the difference between the two groups achieved statistical
    significance.
We are in discussions with the U.S. Food and Drug
    Administration, or FDA, to obtain a Special Protocol Assessment
    agreement, or SPA, for our pivotal Phase 3 acute coronary
    syndrome study. This multinational, randomized, double-blind,
    placebo-controlled Phase 3 clinical study is designed to
    evaluate short-term (16-week) therapy with
A-002
in
    combination with statins for the prevention of secondary major
    adverse coronary events in patients who have recently
    experienced an acute coronary syndrome. This Phase 3 clinical
    study is expected to enroll up to 6,500 patients with
    similar characteristics to patients in our Phase 2b acute
    coronary syndrome clinical study. Patients will be randomized
    within 96 hours of an acute coronary syndrome and will
    receive 16 weeks of either once-daily
A-002
or
    placebo in addition to any dose of atorvastatin. Assuming we
    reach timely agreement on an SPA with the FDA, we plan to
    initiate the Phase 3 clinical study by the end of 2009 and
    complete enrollment by the second half of 2011.
Pivotal Phase 3
    Acute Coronary Syndrome Clinical Study Design
2
Table of Contents
The primary endpoint of the Phase 3 clinical study will
    assess the time to the first occurrence of the combined endpoint
    of cardiovascular death, non-fatal myocardial infarction,
    non-fatal stroke, or documented unstable angina with objective
    evidence of ischemia, which is lack of blood to tissues due to a
    blockage of a vessel, requiring hospitalization. Similar to our
    Phase 2b clinical study, changes in
    sPLA
2
,
    CRP and LDL-C will be measured at baseline, 24 hours,
    48 hours and at weeks one, two, four, eight and 16. The
    Data Safety Monitoring Board, or DSMB, will conduct an
    independent data review of these biomarkers after at least
    1,000 patients have completed treatment. This DSMB
    biomarker futility analysis is designed to confirm that our
    biomarkers have met pre-specified reductions from baseline at
    various time-points that were established based on results from
    our earlier Phase 2 clinical studies. Survival status will be
    obtained for patients six months after the completion of dosing.
A-001
for Acute Chest Syndrome Associated with Sickle Cell
    Disease
Our second product candidate, varespladib sodium,
A-001,
is an
    intravenously administered inhibitor of
    sPLA
2
,
    which is in a Phase 2 clinical study for the prevention of acute
    chest syndrome associated with sickle cell disease. Acute chest
    syndrome is a form of inflammation-induced lung failure and is
    the most common cause of death in patients with sickle cell
    disease.
    sPLA
2
levels increase substantially in the 24 to 48 hours before
    the onset of acute chest syndrome. According to the Sickle Cell
    Information Center, sickle cell disease is a genetic disorder
    afflicting more than 70,000 people in the United States
    alone. Given the small patient population and lack of approved
    drugs for the prevention of acute chest syndrome associated with
    sickle cell disease, we have received orphan drug designation
    and fast track status from the FDA for
A-001.
A pre-specified interim review of our Phase 2 clinical study
    results by a DSMB indicate
A-001,
at a
    certain dose, reduced
    sPLA
2
activity by more than 80% from baseline within 48 hours.
    Furthermore, the incidence of acute chest syndrome appeared to
    be related to the level of
    sPLA
2
activity. Based on these results, we have scheduled an end of
    Phase 2 meeting with the FDA in late 2009 to review our Phase 2
    interim data and discuss Phase 3 study design.
A-623 —
Our BLyS Antagonism Program
BLyS has been associated with a wide range of B-cell mediated
    autoimmune diseases including systemic lupus erythematosus. The
    role of BLyS in lupus has been clinically validated in recent
    studies with another BLyS antagonist. We intend to advance the
    development of our BLyS antagonist,
A-623,
a
    selective peptibody, to exploit its broad potential clinical
    utility in autoimmune diseases. We licensed
A-623
from
    Amgen Inc. in December 2007 and have worldwide product rights in
    all potential indications, and we plan to initiate a Phase 2
    study in systemic lupus erythematosus in the second half of 2010.
Two Phase 1 clinical studies of
A-623
involving 115 lupus patients have been completed. Results from
    these studies demonstrated
A-623
generated anti-BLyS activity and was shown to be safe and
    effective in selectively modulating and reducing B-cells in
    lupus patients. We believe
A-623
may
    offer a number of potential differentiations over other BLyS
    antagonists, as well as other novel B-cell directed therapies
    given subcutaneous and intravenous dosing opportunities. In
    addition, we believe
A-623
offers
    possible improved pharmacodynamic benefits since it binds to
    both membrane bound and soluble forms of BLyS.
Other
    sPLA
2
Inhibitors
We also have an additional novel
    sPLA
2
inhibitor,
A-003,
in
    preclinical development for existing target indications as well
    as other therapeutic areas.
A-003
has
    shown increased potency against
    sPLA
2
and favorable characteristics in preclinical studies. We plan to
    file an investigational new drug application for
A-003
in the
    future.
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Our
    Strategy
Our objective is to develop and commercialize our product
    candidates to treat serious diseases associated with
    inflammation, including cardiovascular and autoimmune diseases.
    To achieve these objectives, we intend to initially focus on:
•
advancing
A-002
through Phase 3;
•
advancing clinical development of
A-001
and
A-623;
•
leveraging our
    sPLA
2
expertise to develop products for additional disease
    indications; and
•
developing commercial strategies designed to maximize our
    product candidates' market potential.
Our success in achieving our goals, however, depends in part on
    the risks and uncertainties described in this prospectus in the
    section entitled "Risk Factors," including without
    limitation those relating to our ability to obtain substantial
    additional capital to fund our operations and develop our
    product candidates, our ability to conduct preclinical and
    clinical studies that demonstrate the safety and efficacy of our
    product candidates and our ability to obtain regulatory
    approvals.
Commercialization
    Strategy
We have worldwide rights to develop and commercialize our
    products in all indications and markets, with the exception of
    Japan, where Shionogi & Co., Ltd. retains commercial
    rights to our
    sPLA
2
product candidates. Our current development plans are focused on
    acute treatment and orphan indications that may provide an
    accelerated and cost-efficient path to regulatory approval and
    commercialization. We believe that certain of these markets can
    be commercialized through a limited specialty sales force. In
    addition, we believe that our product candidates can also
    address market opportunities in chronic indications and we may
    seek development and commercialization partners to address these
    non-specialty and international markets.
Company
    Information
We were incorporated in Delaware on September 9, 2004 as
    Anthera Pharmaceuticals, Inc. Our corporate headquarters are
    located at 25801 Industrial Boulevard, Suite B, Hayward,
    California 94545 and our telephone number is
    (510) 856-5600. Our website address is
www.anthera.com
. The information contained on our website
    or that can be accessed through our website is not incorporated
    by reference into this prospectus and is not part of this
    prospectus.
We use various trademarks, service marks and trade names in our
    business, including without limitation "Anthera
    Pharmaceuticals" and "Anthera." This prospectus
    also contains trademarks, services marks and trade names of
    other businesses that are the property of their respective
    holders.
Unless the context otherwise requires, we use the terms
    "Anthera Pharmaceuticals," "Anthera,"
    "we," "us," "the Company" and
    "our" in this prospectus to refer to Anthera
    Pharmaceuticals, Inc. and its sole subsidiary.
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Table of Contents
THE
    OFFERING
Common stock offered by us
shares
    (or           shares
    if the underwriters exercise their over-allotment option in full)
Common stock to be outstanding after this offering
shares
    (or           shares
    if the underwriters exercise their over-allotment option in full)
Use of proceeds
We plan to use the net proceeds of this offering to fund
    continued clinical development of varespladib methyl
(A-002),
varespladib sodium
(A-001)
and
A-623
and
    for general corporate purposes, such as general and
    administrative expenses, capital expenditures, working capital,
    prosecution and maintenance of our intellectual property and the
    potential investment in technologies or products that complement
    our business. For a more complete description of our intended
    use of proceeds from this offering, see "Use of
    Proceeds."
Risk factors
You should read the "Risk Factors" section of, and all
    of the other information set forth in, this prospectus for a
    discussion of factors to consider carefully before deciding to
    invest in shares of our common stock.
Proposed NASDAQ Global Market symbol
"ANTH"
The number of shares of our common stock to be outstanding after
    the closing of this offering is based on 16,746,731 shares
    of our common stock outstanding as of August 31, 2009 and
    excludes:
•
2,248,623 shares of common stock issuable upon exercise of
    stock options outstanding and having a weighted-average exercise
    price of $0.50 per share;
•
shares of common stock reserved for future issuance under our
    2009 Stock Option and Incentive Plan, which will become
    effective upon the completion of this offering (plus an
    additional           shares
    of common stock reserved for issuance under our 2005 Equity
    Incentive Plan, which shares will be added to the shares
    reserved for future issuance under our 2009 Stock Option and
    Incentive Plan upon effectiveness of our 2009 Stock Option and
    Incentive Plan); and
•
411,764 shares of common stock issuable upon the exercise
    of warrants outstanding and having a weighted-average exercise
    price of $0.78 per share.
Unless otherwise indicated, the information in this prospectus
    assumes the following:
•
the filing of our amended and restated certificate of
    incorporation and the adoption of our amended and restated
    bylaws, which will occur immediately prior to the closing of
    this offering;
•
conversion of all of our shares of preferred stock into
    13,946,510 shares of common stock, which we expect to occur
    immediately prior to the closing of this offering; and
•
no exercise by the underwriters of their over-allotment option.
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Table of Contents
SUMMARY FINANCIAL
    DATA
The following summary financial data should be read together
    with our financial statements and the related notes and
    "Management's Discussion and Analysis of Financial
    Condition and Results of Operations" appearing elsewhere in
    this prospectus. The summary financial data in this section is
    not intended to replace our financial statements and the related
    notes. Our historical results are not necessarily indicative of
    the results to be expected for any future period.
We were incorporated on September 9, 2004. The following
    statement of operations data, including share data, for the
    years ended December 31, 2006, 2007 and 2008 have been
    derived from our audited financial statements and related notes
    appearing elsewhere in this prospectus. The statement of
    operations data, including share data, for the six months ended
    June 30, 2008 and 2009 and the balance sheet data as of
    June 30, 2009 have been derived from our unaudited
    financial statements appearing elsewhere in this prospectus. The
    unaudited interim financial statements have been prepared on the
    same basis as the audited financial statements and reflect all
    adjustments necessary to fairly state our financial position as
    of June 30, 2009 and results of operations for the six
    months ended June 30, 2008 and 2009. The operating results
    for any interim period are not necessarily indicative of
    financial results that may be expected for any future period.
Fiscal Year Ended December 31,
Six Months Ended June 30,
2006
2007
2008
2008
2009
(unaudited)
Statement of Operations Data:
Operating expenses
Research and development
$
7,759,106
$
23,921,932
$
10,882,322
$
5,363,436
$
5,201,181
General and administrative
822,732
2,468,607
2,980,170
1,592,243
1,845,574
Total operating expenses
(8,581,838
)
(26,390,539
)
(13,862,492
)
(6,955,679
)
(7,046,755
)
Other income (expense)
Interest and other income
109,987
696,962
178,129
85,330
21,637
Interest expense
(17,395
)
—
(296,303
)
(96,704
)
(96,298
)
Beneficial conversion feature
(190,000
)
—
(4,118,544
)
(1,392,601
)
—
Total other income (expense)
(97,408
)
696,962
(4,236,718
)
(1,403,975
)
(74,661
)
Net loss
$
(8,679,246
)
$
(25,693,577
)
$
(18,099,210
)
$
(8,359,654
)
$
(7,121,416
)
Net loss per share—basic and diluted (1)
$
(7.71
)
$
(16.44
)
$
(7.87
)
$
(3.86
)
$
(2.80
)
Weighted-average number of shares used in share
    calculation—basic and diluted (2)
1,125,065
1,562,670
2,300,090
2,164,630
2,540,033
(1)
Diluted earnings per share, or EPS,
    is identical to basic EPS since common equivalent and shares are
    excluded from the calculation, as their effect is anti-dilutive.
(2)
For accounting purposes only, the
    number of issued and outstanding shares for the years ended
    December 31, 2006, 2007 and 2008 and the six months ended
    June 30, 2008 and 2009 do not include weighted-average
    shares of unvested stock of 459,399, 447,780, 393,683, 467,519
    and 227,502, respectively. These shares are subject to a risk of
    repurchase by us until such shares are vested. See Note 8
    to our financial statements for more information.
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Table of Contents
As of June 30, 2009
Pro Forma As
Actual
Pro Forma
Adjusted
(unaudited)
Balance Sheet Data:
Cash and cash equivalents
$
1,290,730
$
$
Short-term investments
—
Working capital
(7,453,556
)
Total assets
1,389,613
Indebtedness
8,817,141
Convertible preferred stock
52,123,859
Deficit accumulated during the development stage
(60,147,876
)
Total stockholders' deficit
(7,427,528
)
The June 30, 2009 pro forma as adjusted balance sheet data
    reflects the (i) conversion of all of our outstanding
    shares of preferred stock into an aggregate of
    13,946,510 shares of common stock, which we expect to occur
    immediately prior to the closing of this offering, and
    (ii) the sale
    of           shares
    of common stock in this offering at an assumed initial public
    offering price of
    $          
    per share, which is the mid-point of the price range listed on
    the cover page of this prospectus), after deducting estimated
    underwriting discounts and commissions and estimated offering
    expenses payable by us.
In July and September 2009, we sold convertible promissory
    notes, or the 2009 notes, and warrants to purchase shares of our
    preferred stock, or the 2009 warrants, to our existing investors
    for an aggregate purchase price of $10,000,000. The 2009 notes
    and the 2009 warrants are convertible and exercisable,
    respectively, upon the occurrence of certain events. In
    addition, we are in negotiations with certain of our existing
    investors for an aggregate of $20 million in additional
    equity financing. The above table does not reflect the impact of
    the sale of the 2009 notes or the 2009 warrants, or our
    negotiations for additional equity financing.
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Table of Contents
RISK
    FACTORS
Before you decide to invest in our common stock, you should
    carefully consider the risks described below, together with the
    other information contained in this prospectus, including the
    financial statements and the related notes that appear at the
    end of this prospectus. We believe the risks described below are
    the risks that are material to us as of the date of this
    prospectus. If any of the following risks occur, our business,
    financial condition, results of operations and future growth
    prospects would likely be materially and adversely affected. In
    these circumstances, the market price of our common stock could
    decline, and you may lose all or part of your investment.
    Additional risks and uncertainties not presently known to us or
    not believed by us to be material could also adversely impact
    us.
Risks Related to
    Our Financial Condition and Capital Requirements
We have
    incurred significant losses since our inception and anticipate
    that we will incur continued significant losses for the
    foreseeable future.
We are a development stage company with only five years of
    operating history. We have focused primarily on developing our
    three product candidates, varespladib methyl
(A-002),
varespladib sodium
(A-001)
and
A-623.
We
    have financed our operations exclusively through private
    placements of preferred stock and convertible debt and we have
    incurred losses in each year since our inception in September
    2004. Our net losses were approximately $15,000 in 2004,
    $540,000 in 2005, $8.7 million in 2006, $25.7 million
    in 2007 and $18.1 million in 2008. For the six months ended
    June 30, 2009, our net loss was $7.1 million and as of
    June 30, 2009, we had an accumulated deficit of
    approximately $60.1 million. Substantially all of our
    losses resulted from costs incurred in connection with our
    product development programs and from general and administrative
    costs associated with our operations.
We expect to incur additional losses over the next several
    years, and these losses may increase if we cannot generate
    revenues. These losses, combined with expected future losses,
    have had and will continue to have an adverse effect on our
    stockholders' equity and working capital. We expect our
    development expenses, as well as our clinical product
    manufacturing expenses, to increase in connection with our
    planned pivotal Phase 3 clinical study for
A-002,
our
    ongoing Phase 2 clinical study for
A-001,
our
    planned Phase 2 clinical study for
A-623
and
    our other product candidates. In addition, we will incur
    additional costs of operating as a public company and, if we
    obtain regulatory approval for any of our product candidates, we
    may incur significant sales, marketing, in-licensing and
    outsourced manufacturing expenses as well as continued product
    development expenses. As a result, we expect to continue to
    incur significant and increasing losses for the foreseeable
    future.
We have never
    generated any revenue and may never be profitable.
Our ability to generate revenue and achieve profitability
    depends on our ability, alone or with collaborators, to
    successfully complete the development of our product candidates,
    conduct preclinical tests in animals and clinical studies in
    human beings, obtain the necessary regulatory approvals for our
    product candidates and commercialize any approved products. We
    have not generated any revenue from our development-stage
    product candidates, and we do not know when, or if, we will
    generate any revenue. The commercial success of our
    development-stage product candidates will depend on a number of
    factors, including, but not limited to, our ability to:
•
obtain favorable results for and advance the development of our
    lead product candidate,
A-002,
for
    the treatment of acute coronary syndrome, including successfully
    launching and completing a pivotal Phase 3 clinical study;
8
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•
obtain favorable results for and advance the development of our
    product candidate
A-001,
for
    the prevention of acute chest syndrome associated with sickle
    cell disease, including completing a multi-center Phase 2
    clinical study;
•
obtain favorable results for and advance the development of our
    product candidate
A-623,
for
    the treatment of B-cell mediated autoimmune diseases, including
    successfully launching and completing a Phase 2 clinical study
    in patients with systemic lupus erythematosus, or lupus;
•
successfully execute our planned preclinical studies in animals
    and clinical studies in human beings for our other product
    candidates;
•
obtain regulatory approval for
A-002,
A-001,
A-623
and
    our other product candidates;
•
if regulatory approvals are obtained, begin the commercial
    manufacturing of our product candidates with our third-party
    manufacturers;
•
launch commercial sales and effectively market our product
    candidates, either independently or in strategic collaborations
    with third parties; and
•
achieve broad market acceptance of our product candidates in the
    medical community and with third-party payors.
All of our product candidates are subject to the risks of
    failure inherent in the development of therapeutics based on new
    technologies. Currently, we have three product candidates in
    clinical development:
A-002,
A-001
and
A-623.
These
    product candidates could fail in clinical studies if we are
    unable to demonstrate that they are effective or if they cause
    unacceptable adverse effects in the patients we treat. Failure
    of our product candidates in clinical studies would have a
    material adverse effect on our ability to generate revenue or
    become profitable. If we are not successful in achieving
    regulatory approval for our product candidates or are
    significantly delayed in doing so, our business will be
    materially harmed.
Additionally, all of our other product candidates are in
    preclinical development. Our drug discovery efforts may not
    produce any other viable or marketable product candidates. We do
    not expect any of our potential product candidates to be
    commercially available until at least 2013.
Even if our product candidates are approved for commercial sale,
    the approved product candidate may not gain market acceptance or
    achieve commercial success. Physicians, patients, payors or the
    medical community in general may be unwilling to accept, utilize
    or recommend any of our products. We would anticipate incurring
    significant costs associated with commercializing any approved
    product. Even if we are able to generate product sales, which we
    cannot guarantee, we may not achieve profitability soon
    thereafter, if ever. If we are unable to generate product
    revenues, we will not become profitable and may be unable to
    continue operations without additional funding.
We will need
    substantial additional capital in the future to fund our
    operations and develop our product candidates. If additional
    capital is not available, we will have to delay, reduce or cease
    operations.
We will need to raise substantial additional capital to fund our
    operations and to develop our product candidates. Our future
    capital requirements could be substantial and will depend on
    many factors including:
•
the rate of progress of our planned pivotal Phase 3 clinical
    study for
A-002,
our
    ongoing Phase 2 clinical study for
A-001
and
    our planned Phase 2 clinical study for
A-623;
•
the scope, size, rate of progress, results and costs of our
    preclinical studies, clinical studies and other development
    activities for one or more of our other product candidates;
9
Table of Contents
•
the cost, timing and outcomes of regulatory proceedings;
•
payments received under any strategic collaborations;
•
the filing, prosecution and enforcement of patent claims;
•
the costs associated with commercializing our product candidates
    if they receive regulatory approval, including the cost and
    timing of developing sales and marketing capabilities, or
    entering into strategic collaboration with others relating to
    the commercialization of our product candidates; and
•
revenues received from approved products, if any, in the future.
As of the date of this prospectus, we anticipate that the net
    proceeds of this offering and interest earned thereon, together
    with our existing cash, cash equivalents and short-term
    investments, will enable us to maintain our currently planned
    operations through at least the next 12 months. Changing
    circumstances may cause us to consume capital significantly
    faster than we currently anticipate. Additional financing may
    not be available when we need it or may not be available on
    terms that are favorable to us. If adequate funds are not
    available to us on a timely basis, or at all, we may be required
    to:
•
terminate, reduce or delay preclinical studies, clinical studies
    or other development activities for one or more of our product
    candidates; or
•
terminate, reduce or delay our (i) establishment of sales
    and marketing capabilities, (ii) pursuit of strategic
    collaborations with others relating to the sales, marketing and
    commercialization of our product candidates or (iii) other
    activities that may be necessary to commercialize our product
    candidates, if approved for sale.
The timing of
    the milestone and royalty payments we are required to make to
    each of Eli Lilly and Company, Shionogi & Co., Ltd.
    and Amgen Inc. is uncertain and could adversely affect our cash
    flows and results of operations.
In July 2006, we entered into a license agreement with Eli Lilly
    and Company, or Eli Lilly, and Shionogi & Co., Ltd. to
    develop and commercialize certain secretory phospholipase
    A
2
,
    or
    sPLA
2
,
    inhibitors for the treatment of cardiovascular disease and other
    diseases. Pursuant to our license agreement with them, we have
    an obligation to pay to each of Eli Lilly and
    Shionogi & Co., Ltd. significant milestone and royalty
    payments based upon how we develop and commercialize certain
    sPLA
2
inhibitors, including
A-002
and
A-001,
and
    our achievement of certain significant corporate, clinical and
    financial events. Such milestone payments include a
    $1.75 million payment to each of Eli Lilly and
    Shionogi & Co., Ltd., which payments are due no later
    than 12 months from the enrollment of the first patient in
    a Phase 3 clinical study for
A-002.
In
    addition, in December 2007, we entered into a license agreement
    with Amgen Inc., or Amgen, pursuant to which we obtained an
    exclusive worldwide license to certain technology and compounds
    relating to
A-623.
Pursuant to our license agreement with Amgen, we are required to
    make various milestone payments upon our achievement of certain
    development, regulatory and commercial objectives for any
A-623
formulation. We are also required to make tiered quarterly
    royalty payments on net sales. The timing of our achievement of
    these events and corresponding milestone payments becoming due
    to Eli Lilly, Shionogi & Co., Ltd. and Amgen is
    subject to factors relating to the clinical and regulatory
    development and commercialization of certain
    sPLA
2
inhibitors or
A-623,
as
    applicable, many of which are beyond our control. We may become
    obligated to make a milestone payment during a period in which
    we do not have the cash on hand to make such payment, which
    could require us to delay our clinical studies, curtail our
    operations, scale back our commercialization and marketing
    efforts or seek funds to meet these obligations at terms
    unfavorable to us.
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Our ability to
    develop
A-623
depends on our ability to make payment or agree to alternative
    payment terms with Amgen regarding an unpaid license
    fee.
Our license agreement with Amgen to develop and commercialize
A-623
obligates us to pay Amgen an upfront license fee of
    $6.0 million. As of the date of this prospectus,
    $4.5 million of this fee is unpaid.  If we do not make this
    payment, our clinical studies and development activities for
A-623
may be
    delayed or terminated. If we are unable to make this payment or
    agree to alternative payment terms, Amgen may notify us of its
    intent to terminate the license agreement. We will have 30 days
    from the time of notification to make payment and cure the
    breach. As of the date of this prospectus, we have not been
    notified by Amgen of any intention to claim breach or terminate
    the license agreement.
Our limited
    operating history makes it difficult to evaluate our business
    and prospects.
We were incorporated in September 2004. Our operations to date
    have been limited to organizing and staffing our company,
    acquiring product and technology rights, conducting product
    development activities for our primary product candidates,
A-002,
A-001
and
A-623,
and
    performing research and development. We have not yet
    demonstrated an ability to obtain regulatory approval for or
    commercialize a product candidate. Consequently, any predictions
    about our future performance may not be as accurate as they
    could be if we had a history of successfully developing and
    commercializing pharmaceutical products.
Risks Associated
    with Development and Commercialization of Our Product
    Candidates
We depend
    substantially on the success of our three primary product
    candidates,
A-002,
A-001
and
A-623,
which
    are still under clinical development. We cannot assure you that
    these product candidates or any of our other product candidates
    will receive regulatory approval or be successfully
    commercialized.
To date, we have not marketed, distributed or sold any product
    candidates. The success of our business depends primarily upon
    our ability to develop and commercialize our three primary
    product candidates successfully. Our lead product candidate is
A-002,
which
    has completed its Phase 2 clinical studies and has received
    (i) advice on a special protocol assessment, or SPA, from
    the U.S. Food and Drug Administration, or FDA, on a Phase 3
    protocol and (ii) scientific advice from the European
    Medicines Agency on our European development strategy for
A-002.
Assuming an SPA agreement is timely obtained, we plan to
    initiate a Phase 3 clinical study for
A-002
by the
    end of 2009. Our next product candidate is
A-001,
which
    is currently in a Phase 2 clinical study and for which we have
    an end of Phase 2 meeting scheduled with the FDA in late 2009 to
    review the interim data from our Phase 2 clinical study and
    to discuss the Phase 3 clinical study design for the use of
A-001
to
    prevent acute chest syndrome associated with sickle cell
    disease. Our third product candidate is
A-623,
which
    has completed Phase 1 clinical studies and for which we expect
    to commence a Phase 2 clinical study in the second half of 2010.
    Our product candidates are prone to the risks of failure
    inherent in drug development. Before obtaining regulatory
    approvals for the commercial sale of any product candidate for a
    target indication, we must demonstrate with substantial evidence
    gathered in preclinical and well-controlled clinical studies,
    and, with respect to approval in the United States, to the
    satisfaction of the FDA and, with respect to approval in other
    countries, similar regulatory authorities in those countries,
    that the product candidate is safe and effective for use for
    that target indication and that the manufacturing facilities,
    processes and controls are adequate. Despite our efforts, our
    product candidates may not:
•
offer therapeutic or other improvement over existing, comparable
    therapeutics;
•
be proven safe and effective in clinical studies;
11
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•
meet applicable regulatory standards;
•
be capable of being produced in sufficient quantities at
    acceptable costs;
•
be successfully commercialized; or
•
obtain favorable reimbursement.
We are not permitted to market our
A-002
and
A-001
product candidates in the United States until we receive
    approval of a new drug application, or NDA, or with respect to
    our
A-623
product candidate, approval of a biologics license application,
    or BLA, from the FDA, or in any foreign countries until we
    receive the requisite approval from such countries. We have not
    submitted an NDA or BLA or received marketing approval for any
    of our product candidates.
Preclinical testing and clinical studies are long, expensive and
    uncertain processes. We may spend several years completing our
    testing for any particular product candidate, and failure can
    occur at any stage. Negative or inconclusive results or adverse
    medical events during a clinical study could also cause the FDA
    or us to terminate a clinical study or require that we repeat it
    or conduct additional clinical studies. Additionally, the FDA
    and equivalent foreign regulatory agencies have substantial
    discretion in the approval process and may decide that our data
    is insufficient to support a marketing application and require
    additional preclinical, clinical or other studies.
Any
    termination or suspension of, or delays in the commencement or
    completion of, clinical testing of our product candidates could
    result in increased costs to us, delay or limit our ability to
    generate revenue and adversely affect our commercial
    prospects.
Delays in the commencement or completion of clinical testing
    could significantly affect our product development costs. We do
    not know whether planned clinical studies will begin on time or
    be completed on schedule, if at all. The commencement and
    completion of clinical studies can be delayed for a number of
    reasons, including delays related to:
•
obtaining regulatory approval to commence a clinical study or
    complying with conditions imposed by a regulatory authority
    regarding the scope or design of a clinical study;
•
reaching agreement on acceptable terms with prospective clinical
    research organizations, or CROs, and study sites, the terms of
    which can be subject to extensive negotiation and may vary
    significantly among different CROs and study sites;
•
manufacturing, including manufacturing sufficient quantities of
    a product candidate or other materials for use in clinical
    studies;
•
obtaining institutional review board, or IRB, approval or the
    approval of other reviewing entities to conduct a clinical study
    at a prospective site;
•
recruiting and enrolling patients to participate in clinical
    studies for a variety of reasons, including size of patient
    population, nature of clinical study protocol, the availability
    of approved effective treatments for the relevant disease and
    competition from other clinical study programs for similar
    indications;
•
severe or unexpected drug-related adverse effects experienced by
    patients in a clinical study; and
•
retaining patients who have initiated a clinical study, but may
    withdraw due to treatment protocol, adverse effects from the
    therapy, lack of efficacy from the treatment, personal issues or
    who are lost to further
follow-up.
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Clinical studies may also be delayed, suspended or terminated as
    a result of ambiguous or negative interim results, or results
    that are inconsistent with earlier results. For example, the
    Data Safety Monitoring Board, or DSMB, may recommend that we
    stop our planned Phase 3 clinical study for
A-002
if
    certain biomarkers of inflammation and lipid profiles fail to
    meet pre-specified reductions in the first 1,000 or more
    patients. In addition, a clinical study may be suspended or
    terminated by us, the FDA, the IRB or other reviewing entity
    overseeing the clinical study at issue, any of our clinical
    study sites with respect to that site, or other regulatory
    authorities due to a number of factors, including:
•
failure to conduct the clinical study in accordance with
    regulatory requirements or our clinical protocols;
•
inspection of the clinical study operations or study sites by
    the FDA or other regulatory authorities resulting in the
    imposition of a clinical hold;
•
unforeseen safety issues or any determination that a clinical
    study presents unacceptable health risks; and
•
lack of adequate funding to continue the clinical study,
    including the incurrence of unforeseen costs due to enrollment
    delays, requirements to conduct additional clinical studies and
    increased expenses associated with the services of our CROs and
    other third parties.
Product development costs to us and our collaborators will
    increase if we have delays in testing or approval of our product
    candidates or if we need to perform more or larger clinical
    studies than planned. For example, we may need to increase our
    sample size for our planned Phase 3 clinical study for
A-002
if the
    overall major adverse cardiovascular event, or MACE, rate is
    lower than expected. We typically rely on third-party clinical
    investigators at medical institutions and health care facilities
    to conduct our clinical studies and, as a result, we may face
    additional delaying factors outside our control.
Additionally, changes in regulatory requirements and policies
    may occur and we may need to amend clinical study protocols to
    reflect these changes. Amendments may require us to resubmit our
    clinical study protocols to IRBs for reexamination, which may
    impact the costs, timing or successful completion of a clinical
    study. If we experience delays in completion of, or if we, the
    FDA or other regulatory authorities, the IRB or other reviewing
    entities, or any of our clinical study sites suspend or
    terminate any of our clinical studies, the commercial prospects
    for our product candidates may be harmed and our ability to
    generate product revenues will be delayed. In addition, many of
    the factors that cause, or lead to, termination or suspension
    of, or a delay in the commencement or completion of, clinical
    studies may also ultimately lead to the denial of regulatory
    approval of a product candidate. Also, if one or more clinical
    studies are delayed, our competitors may be able to bring
    products to market before we do, and the commercial viability of
    our product candidates could be significantly reduced.
The results of
    biomarker assays in earlier clinical studies in
A-002
are
    not necessarily predictive of future results, and therefore the
    results of biomarker assays in a Phase 3 clinical study may not
    be similar to those observed previously.
Success in our Phase 2 clinical studies in lowering low-density
    lipoprotein cholesterol, or LDL-C, C-reactive protein, or CRP,
    sPLA
2
and interleukin-6, or IL-6, during treatment with
A-002
does
    not ensure that later clinical studies, such as our planned
    Phase 3 clinical study, will demonstrate similar reductions in
    these biomarkers. Each of these biomarkers has been associated
    with an increased risk for secondary MACE following an acute
    coronary syndrome. Our inability to demonstrate similar
    biomarker effects in our planned Phase 3 clinical study may
    reduce our ability to achieve our primary endpoint to reduce
    MACE and to achieve regulatory approval of
A-002.
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Because the
    results of preclinical testing or earlier clinical studies are
    not necessarily predictive of future results,
A-002,
A-001,
A-623
or any
    other product candidate we advance into clinical studies may not
    have favorable results in later clinical studies or receive
    regulatory approval.
Success in preclinical testing and early clinical studies does
    not ensure that later clinical studies will generate adequate
    data to demonstrate the efficacy and safety of an
    investigational drug or biologic. A number of companies in the
    pharmaceutical and biotechnology industries, including those
    with greater resources and experience, have suffered significant
    setbacks in Phase 3 clinical studies, even after seeing
    promising results in earlier clinical studies. Despite the
    results reported in earlier clinical studies for our product
    candidates, including
A-002,
A-001
and
A-623,
we do
    not know whether any Phase 3 or other clinical studies we may
    conduct will demonstrate adequate efficacy and safety to result
    in regulatory approval to market any of our product candidates.
    If later stage clinical studies do not produce favorable
    results, our ability to achieve regulatory approval for any of
    our product candidates may be adversely impacted.
If we breach
    the license agreements for our primary product candidates, we
    could lose the ability to continue the development and
    commercialization of our primary product
    candidates.
We are party to an agreement with Eli Lilly and
    Shionogi & Co., Ltd. containing exclusive, worldwide
    licenses, except for Japan, of the composition of matter,
    methods of making and methods of use for certain
    sPLA
2
inhibitors. We are also party to an agreement with Amgen
    containing exclusive, worldwide licenses of the composition of
    matter and methods of use for
A-623.
These
    agreements require us to make timely milestone and royalty
    payments, provide regular information, maintain the
    confidentiality of and indemnify Eli Lilly, Shionogi &
    Co., Ltd. and Amgen under the terms of the agreements.
If we fail to meet these obligations, our licensors may
    terminate our exclusive licenses and may be able to re-obtain
    licensed technology and aspects of any intellectual property
    controlled by us that relate to the licensed technology that
    originated from the licensors. Our licensors could effectively
    take control of the development and commercialization of
A-002,
A-001
and
A-623
after
    an uncured, material breach of our license agreements by us or
    if we voluntarily terminate the agreements. While we would
    expect to exercise all rights and remedies available to us,
    including seeking to cure any breach by us, and otherwise seek
    to preserve our rights under the patents licensed to us, we may
    not be able to do so in a timely manner, at an acceptable cost
    or at all. Any uncured, material breach under the licenses could
    result in our loss of exclusive rights and may lead to a
    complete termination of our product development and any
    commercialization efforts for
A-002,
A-001
or
A-623.
Our industry
    is subject to intense competition. If we are unable to compete
    effectively, our product candidates may be rendered
    non-competitive or obsolete.
The pharmaceutical industry is highly competitive and subject to
    rapid and significant technological change. Our potential
    competitors include large pharmaceutical and more established
    biotechnology companies, specialty pharmaceutical and generic
    drug companies, academic institutions, government agencies and
    other public and private research organizations that conduct
    research, seek patent protection and establish collaborative
    arrangements for research, development, manufacturing and
    commercialization. All of these competitors currently engage in,
    have engaged in or may engage in the future in the development,
    manufacturing, marketing and commercialization of
    pharmaceuticals and biotechnologies, some of which may compete
    with our present or future product candidates. It is possible
    that any of these competitors could develop technologies or
    products that would render our product candidates obsolete or
    non-competitive, which could adversely affect our revenue
    potential. Key competitive factors affecting the commercial
    success of our product
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candidates are likely to be efficacy, safety profile,
    reliability, convenience of dosing, price and reimbursement.
The market for inflammatory disease therapeutics is especially
    large and competitive. All of the
    sPLA
2
inhibitor compounds we are currently developing, if approved,
    will face intense competition, either as monotherapies or in
    combination therapies. We are aware of other companies with
    products in development that are being tested for
    anti-inflammatory benefits in patients with acute coronary
    syndrome, such as Via Pharmaceuticals, Inc. and its
5-lipoxygenase,
or 5-LO, inhibitor, which has been evaluated in Phase 2 clinical
    studies; and GlaxoSmithKline plc and its product candidate,
    darapladib, which is a lipoprotein associated phospholipase
    A
2
,
    or
    Lp-PLA
2
,
    inhibitor currently being evaluated in Phase 3 clinical studies.
    Although there are no
    sPLA
2
inhibitor compounds currently approved by the FDA for the
    treatment of acute chest syndrome associated with sickle cell
    disease, Droxia, or hydroxyurea, is approved for the prevention
    of vaso-occlusive crisis, or VOC, in sickle cell disease and
    thus could reduce the pool of patients with VOC at risk for
    acute chest syndrome. Further, we are aware of companies with
    other products in development that are being tested for
    potential treatment of lupus, including Human Genome Sciences,
    Inc. and GlaxoSmithKline plc, who have a BLyS antagonist
    monoclonal antibody product candidate, Benlysta, which recently
    reported favorable results from a Phase 3 clinical study in
    lupus; Zymogenetics, Inc. and Merck Serono S.A., whose dual
    BLyS/APRIL antagonist fusion protein, Atacicept, is in a Phase 3
    clinical study for lupus; and Immunomedics, Inc. and UCB S.A.,
    who recently reported favorable results for their CD-22
    antagonist humanized antibody, epratuzumab, which completed a
    Phase 2b clinical study in lupus.
Many of our potential competitors have substantially greater
    financial, technical and human resources than we do and
    significantly greater experience in the discovery and
    development of drug candidates, obtaining FDA and other
    regulatory approvals of products and the commercialization of
    those products. Accordingly, our competitors may be more
    successful than we may be in obtaining FDA approval for drugs
    and achieving widespread market acceptance. Our
    competitors' drugs may be more effective, have fewer
    adverse effects, be less expensive to develop and manufacture or
    be more effectively marketed and sold than any product candidate
    we may commercialize and may render our product candidates
    obsolete or non-competitive before we can recover the expenses
    of developing and commercializing any of our product candidates.
    We anticipate that we will face intense and increasing
    competition as new drugs enter the market and advanced
    technologies become available. These entities may also establish
    collaborative or licensing relationships with our competitors.
    Finally, the development of new treatment methods for the
    diseases we are targeting could render our drugs non-competitive
    or obsolete. All of these factors could adversely affect our
    business.
Our product
    candidates may cause undesirable adverse effects or have other
    properties that could delay or prevent their regulatory approval
    or limit the commercial profile of any approved
    label.
Undesirable adverse effects caused by our product candidates
    could cause us, IRBs or other reviewing entities, clinical study
    sites, or regulatory authorities to interrupt, delay or halt
    clinical studies and could result in the denial of regulatory
    approval by the FDA or other regulatory authorities. Phase 2
    clinical studies conducted by us with our product candidates
    have generated differences in adverse effects and serious
    adverse events. The most common adverse effects seen with any of
    our product candidates versus placebo include diarrhea,
    headache, nausea and increases in alanine aminotransferase,
    which is an enzyme that indicates liver cell injury. The most
    common serious adverse events seen with any of our product
    candidates include death, VOC and congestive heart failure.
    While none of these serious adverse events were considered
    related to the administration of our product candidates by the
    clinical investigators, if serious adverse events that are
    considered related to our product candidates are observed in any
    Phase 3 clinical studies,
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our ability to obtain regulatory approval for our product
    candidates may be adversely impacted. Further, if any of our
    product candidates receives marketing approval and we or others
    later discover, after approval and use in an increasing number
    of patients, that our products could have adverse effect
    profiles that limit their usefulness or require their withdrawal
    (whether or not the therapies showed the adverse effect profile
    in Phase 1 through Phase 3 clinical studies), a number of
    potentially significant negative consequences could result,
    including:
•
regulatory authorities may withdraw their approval of the
    product;
•
regulatory authorities may require the addition of labeling
    statements, such as warnings or contraindications;
•
we may be required to change the way the product is
    administered, conduct additional clinical studies or change the
    labeling of the product;
•
we could be sued and held liable for harm caused to
    patients; and
•
our reputation may suffer.
Any of these events could prevent us from achieving or
    maintaining market acceptance of the affected product candidate
    and could substantially increase the costs of commercializing
    our product candidates.
After the
    completion of our clinical studies, we cannot predict whether or
    when we will obtain regulatory approval to commercialize our
    product candidates and we cannot, therefore, predict the timing
    of any future revenue from these product
    candidates.
We cannot commercialize any of our product candidates until the
    appropriate regulatory authorities have reviewed and approved
    the applications for the product candidates. We cannot assure
    you that the regulatory agencies will complete their review
    processes in a timely manner or that we will obtain regulatory
    approval for any product candidate we develop. Satisfaction of
    regulatory requirements typically takes many years, is dependent
    upon the type, complexity and novelty of the product and
    requires the expenditure of substantial resources. In addition,
    we may experience delays or rejections based upon additional
    government regulation from future legislation or administrative
    action or changes in FDA policy during the period of product
    development, clinical studies and FDA regulatory review.
We are in
    discussions with the FDA to obtain an SPA for our planned
    Phase 3 clinical study of
A-002
for
    the potential treatment of acute coronary syndrome, which does
    not guarantee any particular outcome from regulatory review of
    the study or the product candidate.
The FDA's SPA process creates a written agreement between
    the sponsoring company and the FDA regarding clinical study
    design and other clinical study issues that can be used to
    support approval of a product candidate. The SPA is intended to
    provide assurance that if the agreed upon clinical study
    protocols are followed and the clinical study endpoints are
    achieved, the data may serve as the primary basis for an
    efficacy claim in support of an NDA. However, the SPA agreement
    is not a guarantee of an approval of a product or any
    permissible claims about the product. In particular, the SPA is
    not binding on the FDA if public health concerns unrecognized at
    the time of the SPA agreement is entered into become evident,
    other new scientific concerns regarding product safety or
    efficacy arise or if the sponsor company fails to comply with
    the agreed upon clinical study protocols. We are currently in
    discussions with the FDA to obtain an SPA for our planned Phase
    3 clinical study of
A-002
for
    the potential short-term (16-week) treatment of acute coronary
    syndrome. We cannot guarantee you that we will obtain an SPA. If
    we reach agreement with the FDA on an SPA, we do not know how
    the FDA will interpret the commitments under an agreed upon SPA
    agreement, how it will interpret the data
16
Table of Contents
and results or whether it will approve our
A-002
product candidate for the short-term (16-week) treatment of
    acute coronary syndrome. As a result, we cannot guarantee any
    particular outcome from regulatory review of our planned
    Phase 3 clinical study.
Even if our
    product candidates receive regulatory approval, they may still
    face future development and regulatory
    difficulties.
Even if U.S. regulatory approval is obtained, the FDA may
    still impose significant restrictions on a product's
    indicated uses or marketing or impose ongoing requirements for
    potentially costly post-approval studies or post-market
    surveillance. For example, the label ultimately approved for
A-002,
if
    any, may include restrictions on use. Further, the FDA has
    indicated that long-term safety data on
A-002
may
    need to be obtained as a post-market requirement. Our product
    candidates will also be subject to ongoing FDA requirements
    governing the labeling, packaging, storage, distribution, safety
    surveillance, advertising, promotion, recordkeeping and
    reporting of safety and other post-market information. In
    addition, manufacturers of drug products and their facilities
    are subject to continual review and periodic inspections by the
    FDA and other regulatory authorities for compliance with current
    good manufacturing practices, or cGMP, regulations. If we or a
    regulatory agency discovers previously unknown problems with a
    product, such as adverse events of unanticipated severity or
    frequency, or problems with the facility where the product is
    manufactured, a regulatory agency may impose restrictions on
    that product, the manufacturing facility or us, including
    requiring recall or withdrawal of the product from the market or
    suspension of manufacturing. If we, our product candidates or
    the manufacturing facilities for our product candidates fail to
    comply with applicable regulatory requirements, a regulatory
    agency may:
•
issue warning letters or untitled letters;
•
seek an injunction or impose civil or criminal penalties or
    monetary fines;
•
suspend or withdraw regulatory approval;
•
suspend any ongoing clinical studies;
•
refuse to approve pending applications or supplements to
    applications filed by us;
•
suspend or impose restrictions on operations, including costly
    new manufacturing requirements; or
•
seize or detain products, refuse to permit the import or export
    of products, or require us to initiate a product recall.
The occurrence of any event or penalty described above may
    inhibit our ability to commercialize our products and generate
    revenue.
New legal and
    regulatory requirements could make it more difficult for us to
    obtain approvals for our product candidates and could limit or
    make more burdensome our ability to commercialize any approved
    products.
New federal legislation or regulatory requirements could affect
    the requirements for obtaining regulatory approvals of our
    product candidates or otherwise limit our ability to
    commercialize any approved products or subject our products to
    more rigorous post-approval requirements. For example, the FDA
    Amendments Act of 2007 granted the FDA new authority to impose
    post-approval clinical study requirements, require
    safety-related changes to product labeling and require the
    adoption of risk management plans, referred to in the
    legislation as risk evaluation and mitigation strategies, or
    REMS. The REMS may include requirements for special labeling or
    medication guides for patients, special communication plans to
    health care professionals, and restrictions on distribution and
    use. Pursuant to the FDA Amendments Act of 2007, if the FDA
    makes the requisite findings, it might require that a new
    product be used
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Table of Contents
only by physicians with specified specialized training, only in
    specified designated health care settings, or only in
    conjunction with special patient testing and monitoring. The
    legislation also included the following: requirements for
    providing the public information on ongoing clinical studies
    through a clinical study registry and for disclosing clinical
    study results to the public through such registry; renewed
    requirements for conducting clinical studies to generate
    information on the use of products in pediatric patients; and
    substantial new penalties, for example, for false or misleading
    consumer advertisements. Other proposals have been made to
    impose additional requirements on drug approvals, further expand
    post-approval requirements, and restrict sales and promotional
    activities. The new legislation, and the additional proposals if
    enacted, may make it more difficult or burdensome for us to
    obtain approval of our product candidates, any approvals we
    receive may be more restrictive or be subject to onerous
post-approval
requirements, our ability to successfully commercialize approved
    products may be hindered and our business may be harmed as a
    result.
If any of our
    product candidates for which we receive regulatory approval does
    not achieve broad market acceptance, the revenue that we
    generate from its sales, if any, will be limited.
The commercial success of our product candidates for which we
    obtain marketing approval from the FDA or other regulatory
    authorities will depend upon the acceptance of these products by
    the medical community, including physicians, patients and health
    care payors. The degree of market acceptance of any of our
    approved products will depend on a number of factors, including:
•
demonstration of clinical safety and efficacy compared to other
    products;
•
the relative convenience, ease of administration and acceptance
    by physicians and payors of
A-002
in the
    treatment of acute coronary syndrome,
A-001
in the
    prevention of acute chest syndrome associated with sickle cell
    disease and
A-623
in the
    treatment of lupus;
•
the prevalence and severity of any adverse effects;
•
limitations or warnings contained in a product's
    FDA-approved labeling;
•
availability of alternative treatments, including, in the case
    of
A-002,
a
    number of competitive products being studied for
    anti-inflammatory benefits in patients with acute coronary
    syndrome or expected to be commercially launched in the near
    future;
•
pricing and cost-effectiveness;
•
the effectiveness of our or any future collaborators' sales
    and marketing strategies;
•
our ability to obtain and maintain sufficient third-party
    coverage or reimbursement from government health care programs,
    including Medicare and Medicaid; and
•
the willingness of patients to pay
out-of-pocket
in the absence of third-party coverage.
If our product candidates are approved but do not achieve an
    adequate level of acceptance by physicians, health care payors
    and patients, we may not generate sufficient revenue from these
    products, and we may not become or remain profitable. In
    addition, our efforts to educate the medical community and
    third-party payors on the benefits of our product candidates may
    require significant resources and may never be successful.
Our future
    success depends on our ability to retain our chief executive
    officer and other key executives and to attract, retain and
    motivate qualified personnel.
We are highly dependent on Mr. Paul F. Truex, our President
    and Chief Executive Officer, Dr. James E. Pennington, our
    Executive Vice President and Chief Medical Officer,
    Dr. Colin
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Hislop, our Senior Vice President of Cardiovascular Products and
    the other principal members of our executive team listed under
    "Management" on page 93. The loss of the services
    of any of these persons might impede the achievement of our
    research, development and commercialization objectives.
    Recruiting and retaining qualified scientific personnel and
    possibly sales and marketing personnel will also be critical to
    our success. We may not be able to attract and retain these
    personnel on acceptable terms given the competition among
    numerous pharmaceutical and biotechnology companies for similar
    personnel. We also experience competition for the hiring of
    scientific personnel from universities and research
    institutions. Failure to succeed in clinical studies may make it
    more challenging to recruit and retain qualified scientific
    personnel. In addition, we rely on consultants and advisors,
    including scientific and clinical advisors, to assist us in
    formulating our research and development and commercialization
    strategy. Our consultants and advisors may be employed by
    employers other than us and may have commitments under
    consulting or advisory contracts with other entities that may
    limit their availability to us.
Legislative or
    regulatory reform of the health care system in the United States
    and foreign jurisdictions may affect our ability to sell our
    products profitably.
Our ability to commercialize our future products successfully,
    alone or with collaborators, will depend in part on the extent
    to which reimbursement for the products will be available from
    government and health administration authorities, private health
    insurers and other third-party payors. The continuing efforts of
    the U.S. and foreign governments, insurance companies,
    managed care organizations and other payors of health care
    services to contain or reduce health care costs may adversely
    affect our ability to set prices for our products which we
    believe are fair, and our ability to generate revenues and
    achieve and maintain profitability.
Specifically, in both the United States and some foreign
    jurisdictions, there have been a number of legislative and
    regulatory proposals to change the health care system in ways
    that could affect our ability to sell our products profitably.
    Congress is considering a number of proposals that are intended
    to reduce or limit the growth of health care costs and which
    could significantly transform the market for pharmaceuticals and
    biological products. We expect further federal and state
    proposals and health care reforms to continue to be proposed by
    legislators, which could limit the prices that can be charged
    for the products we develop and may limit our commercial
    opportunity. In the United States, the Medicare Prescription
    Drug, Improvement, and Modernization Act of 2003, also called
    the Medicare Modernization Act, or MMA, changed the way Medicare
    covers and pays for pharmaceutical products. The legislation
    expanded Medicare coverage for drug purchases by the elderly and
    introduced a new reimbursement methodology based on average
    sales prices for drugs. In addition, this legislation provided
    authority for limiting the number of drugs that will be covered
    in any therapeutic class. As a result of this legislation and
    the expansion of federal coverage of drug products, we expect
    that there will be additional pressure to contain and reduce
    costs. These cost reduction initiatives and other provisions of
    this legislation could decrease the coverage and price that we
    receive for any approved products and could seriously harm our
    business. While the MMA applies only to drug benefits for
    Medicare beneficiaries, private payors often follow Medicare
    coverage policy and payment limitations in setting their own
    reimbursement rates, and any reduction in reimbursement that
    results from the MMA may result in a similar reduction in
    payments from private payors.
The continuing efforts of government and other third-party
    payors to contain or reduce the costs of health care through
    various means may limit our commercial opportunity. It will be
    time-consuming and expensive for us to go through the process of
    seeking reimbursement from Medicare and private payors. Our
    products may not be considered cost-effective, and government
    and third-party private health insurance coverage and
    reimbursement may not be available to patients for any of our
    future products or sufficient to allow us to sell our products
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on a competitive and profitable basis. Our results of operations
    could be adversely affected by the MMA and additional
    prescription drug coverage legislation, by the possible effect
    of this legislation on amounts that private insurers will pay
    and by other health care reforms that may be enacted or adopted
    in the future. In addition, increasing emphasis on managed care
    in the United States will continue to put pressure on the
    pricing of pharmaceutical products. Cost control initiatives
    could decrease the price that we or any potential collaborators
    could receive for any of our future products and could adversely
    affect our profitability.
In some foreign countries, including major markets in the
    European Union and Japan, the pricing of prescription
    pharmaceuticals is subject to governmental control. In these
    countries, pricing negotiations with governmental authorities
    can take six to 12 months or longer after the receipt of
    regulatory marketing approval for a product. To obtain
    reimbursement or pricing approval in some countries, we may be
    required to conduct a clinical study that compares the
    cost-effectiveness of our product candidates to other available
    therapies. Such pharmacoeconomic studies can be costly and the
    results uncertain. Our business could be harmed if reimbursement
    of our products is unavailable or limited in scope or amount or
    if pricing is set at unsatisfactory levels.
We face
    potential product liability exposure, and, if successful claims
    are brought against us, we may incur substantial
    liability.
The use of our product candidates in clinical studies and the
    sale of any products for which we obtain marketing approval
    expose us to the risk of product liability claims. Product
    liability claims might be brought against us by consumers,
    health care providers, pharmaceutical companies or others
    selling or otherwise coming into contact with our products. If
    we cannot successfully defend ourselves against product
    liability claims, we could incur substantial liabilities. In
    addition, regardless of merit or eventual outcome, product
    liability claims may result in:
•
impairment of our business reputation;
•
withdrawal of clinical study participants;
•
costs of related litigation;
•
distraction of management's attention from our primary
    business;
•
substantial monetary awards to patients or other claimants;
•
the inability to commercialize our product candidates; and
•
decreased demand for our product candidates, if approved for
    commercial sale.
Our product liability insurance coverage, with a
    $5.0 million annual aggregate coverage limit, for our
    clinical studies may not be sufficient to reimburse us for any
    expenses or losses we may suffer. Moreover, insurance coverage
    is becoming increasingly expensive, and, in the future, we may
    not be able to maintain insurance coverage at a reasonable cost
    or in sufficient amounts to protect us against losses due to
    liability. If and when we obtain marketing approval for any of
    our product candidates, we intend to expand our insurance
    coverage to include the sale of commercial products; however, we
    may be unable to obtain this product liability insurance on
    commercially reasonable terms. On occasion, large judgments have
    been awarded in class action lawsuits based on drugs that had
    unanticipated adverse effects. A successful product liability
    claim or series of claims brought against us could cause our
    stock price to decline and, if judgments exceed our insurance
    coverage, could decrease our cash and adversely affect our
    business.
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If we use
    hazardous and biological materials in a manner that causes
    injury or violates applicable law, we may be liable for
    damages.
Our research and development activities involve the controlled
    use of potentially hazardous substances, including toxic
    chemical and biological materials. We could be held liable for
    any contamination, injury or other damages resulting from these
    hazardous substances. In addition, our operations produce
    hazardous waste products. While third parties are responsible
    for disposal of our hazardous waste, we could be liable under
    environmental laws for any required cleanup of sites at which
    our waste is disposed. Federal, state, foreign and local laws
    and regulations govern the use, manufacture, storage, handling
    and disposal of these hazardous materials. If we fail to comply
    with these laws and regulations at any time, or if they change,
    we may be subject to criminal sanctions and substantial civil
    liabilities, which may harm our business. Even if we continue to
    comply with all applicable laws and regulations regarding
    hazardous materials, we cannot eliminate the risk of accidental
    contamination or discharge and our resultant liability for any
    injuries or other damages caused by these accidents.
We rely on
    third parties to conduct, supervise and monitor our clinical
    studies, and those third parties may perform in an
    unsatisfactory manner, such as by failing to meet established
    deadlines for the completion of these clinical studies, or may
    harm our business if they suffer a catastrophic
    event.
We rely on third parties such as CROs, medical institutions and
    clinical investigators to enroll qualified patients and conduct,
    supervise and monitor our clinical studies. Our reliance on
    these third parties for clinical development activities reduces
    our control over these activities. Our reliance on these third
    parties, however, does not relieve us of our regulatory
    responsibilities, including ensuring that our clinical studies
    are conducted in accordance with good clinical practices, or
    GCP, and the investigational plan and protocols contained in the
    relevant regulatory application, such as the investigational new
    drug application, or IND. In addition, the CROs with which we
    contract may not complete activities on schedule, or may not
    conduct our preclinical studies or clinical studies in
    accordance with regulatory requirements or our clinical study
    design. If these third parties do not successfully carry out
    their contractual duties or meet expected deadlines, our efforts
    to obtain regulatory approvals for, and to commercialize, our
    product candidates may be delayed or prevented. In addition, if
    a catastrophe such as an earthquake, fire, flood or power loss
    should affect one of the third parties on which we rely, our
    business prospects could be harmed. For example, if a central
    laboratory holding all of our clinical study samples were to
    suffer a catastrophic loss of their facility, we would lose all
    of our samples and would have to repeat our studies.
Any failure by
    our third-party manufacturers on which we rely to produce our
    preclinical and clinical drug supplies and on which we intend to
    rely to produce commercial supplies of any approved product
    candidates may delay or impair our ability to commercialize our
    product candidates.
We have relied upon a small number of third-party manufacturers
    and active pharmaceutical ingredient formulators for the
    manufacture of our material for preclinical and clinical testing
    purposes and intend to continue to do so in the future. We also
    expect to rely upon third parties to produce materials required
    for the commercial production of our product candidates if we
    succeed in obtaining necessary regulatory approvals. If we are
    unable to arrange for third-party manufacturing sources, or to
    do so on commercially reasonable terms, we may not be able to
    complete development of our product candidates or market them.
Reliance on third-party manufacturers entails risks to which we
    would not be subject if we manufactured product candidates
    ourselves, including reliance on the third party for regulatory
    compliance and quality assurance, the possibility of breach of
    the manufacturing agreement by
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the third party because of factors beyond our control (including
    a failure to synthesize and manufacture our product candidates
    in accordance with our product specifications) and the
    possibility of termination or nonrenewal of the agreement by the
    third party, based on its own business priorities, at a time
    that is costly or damaging to us. In addition, the FDA and other
    regulatory authorities require that our product candidates be
    manufactured according to cGMP and similar foreign standards.
    Any failure by our third-party manufacturers to comply with cGMP
    or failure to scale up manufacturing processes, including any
    failure to deliver sufficient quantities of product candidates
    in a timely manner, could lead to a delay in, or failure to
    obtain, regulatory approval of any of our product candidates. In
    addition, such failure could be the basis for action by the FDA
    to withdraw approvals for product candidates previously granted
    to us and for other regulatory action, including recall or
    seizure, total or partial suspension of production or injunction.
We rely on our manufacturers to purchase from third-party
    suppliers the materials necessary to produce our product
    candidates for our clinical studies. There are a small number of
    suppliers for certain capital equipment and raw materials that
    we use to manufacture our drugs. Such suppliers may not sell
    these raw materials to our manufacturers at the times we need
    them or on commercially reasonable terms. We do not have any
    control over the process or timing of the acquisition of these
    raw materials by our manufacturers. Moreover, we currently do
    not have any agreements for the commercial production of these
    raw materials. Although we generally do not begin a clinical
    study unless we believe we have a sufficient supply of a product
    candidate to complete the clinical study, any significant delay
    in the supply of a product candidate or the raw material
    components thereof for an ongoing clinical study due to the need
    to replace a third-party manufacturer could considerably delay
    completion of our clinical studies, product testing and
    potential regulatory approval of our product candidates. If our
    manufacturers or we are unable to purchase these raw materials
    after regulatory approval has been obtained for our product
    candidates, the commercial launch of our product candidates
    would be delayed or there would be a shortage in supply, which
    would impair our ability to generate revenues from the sale of
    our product candidates.
Because of the complex nature of our compounds, our
    manufacturers may not be able to manufacture our compounds at a
    cost or in quantities or in a timely manner necessary to make
    commercially successful products. If we successfully
    commercialize any of our drugs, we may be required to establish
    large-scale commercial manufacturing capabilities. In addition,
    as our drug development pipeline increases and matures, we will
    have a greater need for clinical study and commercial
    manufacturing capacity. We have no experience manufacturing
    pharmaceutical products on a commercial scale and some of these
    suppliers will need to increase their scale of production to
    meet our projected needs for commercial manufacturing, the
    satisfaction of which on a timely basis may not be met.
If we are
    unable to establish sales and marketing capabilities or enter
    into agreements with third parties to market and sell our
    product candidates, we may be unable to generate any
    revenue.
We do not currently have an organization for the sales,
    marketing and distribution of pharmaceutical products and the
    cost of establishing and maintaining such an organization may
    exceed the cost-effectiveness of doing so. In order to market
    any products that may be approved by the FDA, we must build our
    sales, marketing, managerial and other non-technical
    capabilities or make arrangements with third parties to perform
    these services. If we are unable to establish adequate sales,
    marketing and distribution capabilities, whether independently
    or with third parties, we may not be able to generate product
    revenue and may not become profitable. We will be competing with
    many companies that currently have extensive and well-funded
    marketing and sales operations. Without an internal team or the
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support of a third party to perform marketing and sales
    functions, we may be unable to compete successfully against
    these more established companies.
Guidelines and
    recommendations published by various organizations may adversely
    affect the use of any products for which we may receive
    regulatory approval.
Government agencies issue regulations and guidelines directly
    applicable to us and to our product candidates. In addition,
    professional societies, practice management groups, private
    health or science foundations and organizations involved in
    various diseases from time to time publish guidelines or
    recommendations to the medical and patient communities. These
    various sorts of recommendations may relate to such matters as
    product usage and use of related or competing therapies. For
    example, organizations like the American Heart Association have
    made recommendations about therapies in the cardiovascular
    therapeutics market. Changes to these recommendations or other
    guidelines advocating alternative therapies could result in
    decreased use of any products for which we may receive
    regulatory approval, which may adversely affect our results of
    operations.
Risks Related to
    Our Intellectual Property
If our or our
    licensors' patent positions do not adequately protect our
    product candidates or any future products, others could compete
    with us more directly, which would harm our
    business.
As of the date of this prospectus and as described in the
    section entitled "Business—Intellectual Property"
    on page 78, we hold a total of two pending
    U.S. non-provisional patent applications, four pending
    U.S. provisional patent applications and one pending Patent
    Cooperation Treaty, or PCT, patent application. We have also
    entered into license agreements for certain composition of
    matter, method of use and method of making patents and patent
    applications for certain of our development compounds. These
    license agreements encompass (i) 13 U.S. patents, one
    pending U.S. non-provisional patent application, four
    European Patent, or EP, patents, three pending EP patent
    applications, 14 non-EP foreign patents and eight pending non-EP
    foreign patent applications relating to
A-002
and
A-001;
(ii) more than 30 U.S. patents, one pending
    U.S. non-provisional patent application, five EP patents,
    one pending EP patent applications, eight issued non-EP foreign
    patents and three pending non-EP foreign patent applications
    relating to new
    sPLA
2
compounds; and (iii) one U.S. patent, one pending
    U.S. non-provisional patent application, one EP patent, one
    pending EP patent application, eight non-EP foreign patents and
    17 non-EP foreign patent applications relating to
A-623.
Our
    commercial success will depend in part on our and our
    licensors' ability to obtain additional patents and protect
    our existing patent positions, particularly those patents for
    which we have secured exclusive rights, as well as our ability
    to maintain adequate protection of other intellectual property
    for our technologies, product candidates and any future products
    in the United States and other countries. If we or our licensors
    do not adequately protect our intellectual property, competitors
    may be able to use our technologies and erode or negate any
    competitive advantage we may have, which could materially harm
    our business, negatively affect our position in the marketplace,
    limit our ability to commercialize our product candidates and
    delay or render impossible our achievement of profitability. The
    laws of some foreign countries do not protect our proprietary
    rights to the same extent as the laws of the United States, and
    we may encounter significant problems in protecting our
    proprietary rights in these countries.
The patent positions of biotechnology and pharmaceutical
    companies, including our patent position, involve complex legal
    and factual questions, and, therefore, validity and
    enforceability cannot be predicted with certainty. Patents may
    be challenged, deemed unenforceable, invalidated or
    circumvented. We and our licensors will be able to protect our
    proprietary rights from unauthorized use by third parties only
    to the extent that our proprietary
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technologies, product candidates and any future products are
    covered by valid and enforceable patents or are effectively
    maintained as trade secrets.
The degree of future protection for our proprietary rights is
    uncertain, and we cannot ensure that:
•
we or our licensors were the first to make the inventions
    covered by each of our pending patent applications;
•
we or our licensors were the first to file patent applications
    for these inventions;
•
others will not independently develop similar or alternative
    technologies or duplicate any of our technologies;
•
any of our or our licensors' pending patent applications
    will result in issued patents;
•
any of our or our licensors' patents will be valid or
    enforceable;
•
any patents issued to us or our licensors and collaborators will
    provide a basis for commercially viable products, will provide
    us with any competitive advantages or will not be challenged by
    third parties;
•
we will develop additional proprietary technologies or product
    candidates that are patentable; or
•
the patents of others will not have an adverse effect on our
    business.
We may be
    unable to adequately prevent disclosure of trade secrets and
    other proprietary information.
We rely on trade secrets to protect our proprietary know-how and
    technological advances, especially where we do not believe
    patent protection is appropriate or obtainable. However, trade
    secrets are difficult to protect. We rely in part on
    confidentiality agreements with our employees, consultants,
    outside scientific collaborators, sponsored researchers and
    other advisors to protect our trade secrets and other
    proprietary information. These agreements may not effectively
    prevent disclosure of confidential information and may not
    provide an adequate remedy in the event of unauthorized
    disclosure of confidential information. In addition, others may
    independently discover our trade secrets and proprietary
    information. Costly and time-consuming litigation could be
    necessary to enforce and determine the scope of our proprietary
    rights. Failure to obtain or maintain trade secret protection
    could enable competitors to use our proprietary information to
    develop products that compete with our products or cause
    additional, material adverse effects upon our competitive
    business position.
We license
    patent rights from third-party owners. If we, or such owners, do
    not properly maintain or enforce the patents underlying such
    licenses, our competitive position and business prospects will
    be harmed.
We have obtained exclusive, worldwide licenses, except for
    Japan, of the composition of matter, methods of making and
    methods of use for certain
    sPLA
2
compounds from Eli Lilly and Shionogi & Co., Ltd. In
    addition, we are party to a license agreement with Amgen for the
    exclusive and worldwide rights to develop and commercialize
A-623,
a
    novel BLyS inhibitor. We may enter into additional licenses to
    third-party intellectual property in the future.
We depend in part on our licensors to protect the proprietary
    rights covering our in-licensed
    sPLA
2
compounds and
A-623,
respectively. Our licensors are responsible for maintaining
    certain issued patents and prosecuting certain patent
    applications. We have limited, if any, control over the amount
    or timing of resources that our licensors devote on our behalf
    or the priority they place on maintaining these patent rights
    and prosecuting these patent applications to our advantage. Our
    licensors may also be notified of alleged
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infringement and be sued for infringement of third-party patents
    or other proprietary rights. We may have limited, if any,
    control or involvement over the defense of these claims, and our
    licensors could be subject to injunctions and temporary or
    permanent exclusionary orders in the United States or other
    countries. Our licensors are not obligated to defend or assist
    in our defense against third-party claims of infringement. We
    have limited, if any, control over the amount or timing of
    resources, if any, that our licensors devote on our behalf or
    the priority they place on defense of such third-party claims of
    infringement.
Our success will depend in part on the ability of us or our
    licensors to obtain, maintain and enforce patent protection for
    their intellectual property, in particular, those patents to
    which we have secured exclusive rights. We or our licensors may
    not successfully prosecute the patent applications which we have
    licensed. Even if patents issue in respect of these patent
    applications, we or our licensors may fail to maintain these
    patents, may determine not to pursue litigation against other
    companies that are infringing these patents or may pursue such
    litigation less aggressively than we would. Without protection
    for the intellectual property we license, other companies might
    be able to offer substantially identical products for sale,
    which could adversely affect our competitive business position
    and harm our business prospects.
If we do not
    obtain protection under the Hatch-Waxman Act and similar foreign
    legislation to extend our licensed patent terms and to obtain
    market exclusivity for our product candidates, our business will
    be materially harmed.
The United States Drug Price Competition and Patent Term
    Restoration Act of 1984, more commonly known as the
    "Hatch-Waxman Act," provides for an extension of
    patent terms for drug compounds for a period of up to five years
    to compensate for time spent in development. Assuming we gain a
    five-year patent term extension for each of our current product
    candidates in clinical development, and that we continue to have
    rights under our license agreements with respect to these
    product candidates, we would have exclusive rights to
A-002's
U.S. "new chemical entity" patent (the primary patent
    covering the compound as a new composition of matter) until 2019
    and to
A-623's
U.S. new chemical entity patent until 2027. In Europe, similar
    legislative enactments allow patent terms in the European Union
    to be extended for up to five years through the grant of a
    Supplementary Protection Certificate. Assuming we gain such a
    five-year extension for each of our current product candidates
    in clinical development, and that we continue to have rights
    under our license agreements with respect to these product
    candidates, we would have exclusive rights to
A-002's
European new chemical entity patents until 2020 and to
A-623's
European new chemical entity patents until 2027. In addition,
    since
A-002
has not been previously approved in the United States,
A-002
could
    be eligible for up to five years of New Chemical Entity, or NCE,
    exclusivity from the FDA. NCE exclusivity would prevent the FDA
    from accepting any generic competition following NDA approval
    independent of the patent status of
A-002.
Similarly, a recent directive in the European Union provides
    that companies who receive regulatory approval for a new
    compound will have a 10-year period of market exclusivity for
    that compound (with the possibility of a further one-year
    extension) in most EU countries, beginning on the date of such
    European regulatory approval, regardless of when the European
    new chemical entity patent covering such compound expires. A
    generic version of the approved drug may not be marketed or sold
    during such market exclusivity period. However, there is no
    assurance that we will receive the extensions of our patents or
    other exclusive rights available under the Hatch-Waxman Act or
    similar foreign legislation. If we fail to receive such
    Hatch-Waxman extensions or marketing exclusivity rights or if we
    receive extensions that are materially shorter than expected,
    our ability to prevent competitors from manufacturing, marketing
    and selling generic versions of our products will be materially
    harmed.
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Our current
    patent positions and license portfolio may not include all
    patent rights needed for the full development and
    commercialization of our product candidates. We cannot be sure
    that patent rights we may need in the future will be available
    for license to us on commercially reasonable terms, or at
    all.
We typically develop our product candidates using compounds for
    which we have in-licensed and original composition of matter
    patents and patents that claim the activities and methods for
    such compounds' production and use to the extent known at
    that time. As we learn more about the mechanisms of action and
    new methods of manufacture and use of these product candidates,
    we may file additional patent applications for these new
    inventions or we may need to ask our licensors to file them. We
    may also need to license additional patent rights or other
    rights on compounds, treatment methods or manufacturing
    processes because we learn that we need such rights during the
    continuing development of our product candidates.
Although our in-licensed and original patents may prevent others
    from making, using or selling similar products, they do not
    ensure that we will not infringe the patent rights of third
    parties. We may not be aware of all patents or patent
    applications that may impact our ability to make, use or sell
    any of our product candidates or proposed product candidates.
    For example, because we sometimes identify the mechanism of
    action or molecular target of a given product candidate after
    identifying its composition of matter and therapeutic use, we
    may not be aware until the mechanism or target is further
    elucidated that a third party has an issued or pending patent
    claiming biological activities or targets that may cover our
    product candidate. U.S. patent applications filed after
    November 29, 2000 are confidential in the U.S. Patent
    and Trademark Office for the first 18 months after such
    applications' earliest priority date, and patent offices in
non-U.S. countries
often publish patent applications for the first time six months
    or more after filing. Furthermore, we may not be aware of
    published or granted conflicting patent rights. Any conflicts
    resulting from patent applications and patents of others could
    significantly reduce the coverage of our patents and limit our
    ability to obtain meaningful patent protection. If others obtain
    patents with conflicting claims, we may need to obtain licenses
    to these patents or to develop or obtain alternative technology.
We may not be able to obtain any licenses or other rights to
    patents, technology or know-how from third parties necessary to
    conduct our business as described in this prospectus and such
    licenses, if available at all, may not be available on
    commercially reasonable terms. Any failure to obtain such
    licenses could delay or prevent us from developing or
    commercializing our drug candidates or proposed product
    candidates, which would harm our business. Litigation or patent
    interference proceedings may be necessarily brought against
    third parties, as discussed below, to enforce any of our patents
    or other proprietary rights or to determine the scope and
    validity or enforceability of the proprietary rights of such
    third parties.
Litigation
    regarding patents, patent applications and other proprietary
    rights may be expensive and time consuming. If we are involved
    in such litigation, it could cause delays in bringing product
    candidates to market and harm our ability to
    operate.
Our commercial success will depend in part on our ability to
    manufacture, use, sell and offer to sell our product candidates
    and proposed product candidates without infringing patents or
    other proprietary rights of third parties. Although we are not
    currently aware of any litigation or other proceedings or
    third-party claims of intellectual property infringement related
    to our product candidates, the pharmaceutical industry is
    characterized by extensive litigation regarding patents and
    other intellectual property rights. Other parties may obtain
    patents in the future and allege that the use of our
    technologies infringes these patent claims or that we are
    employing their proprietary technology without authorization.
    Likewise, third parties may challenge or infringe upon our or
    our licensors' existing or future patents.
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Proceedings involving our patents or patent applications or
    those of others could result in adverse decisions regarding the
    patentability of our inventions relating to our product
    candidates or the enforceability, validity or scope of
    protection offered by our patents relating to our product
    candidates.
Even if we are successful in these proceedings, we may incur
    substantial costs and divert management time and attention in
    pursuing these proceedings. If we are unable to avoid infringing
    the patent rights of others, we may be required to seek a
    license, defend an infringement action or challenge the validity
    of the patents in court. Patent litigation is costly and
    time-consuming. We may not have sufficient resources to bring
    these actions to a successful conclusion. In addition, if we do
    not obtain a license, develop or obtain non-infringing
    technology, fail to defend an infringement action successfully
    or have infringed patents declared invalid, we may incur
    substantial monetary damages; encounter significant delays in
    bringing our product candidates to market; or be precluded from
    participating in the manufacture, use or sale of our product
    candidates or methods of treatment requiring licenses.
Risks Related to
    This Offering, the Securities Markets and Investment in Our
    Common Stock
Market
    volatility may affect our stock price and the value of your
    investment.
Following the completion of this offering, the market price for
    our common stock is likely to be volatile, in part because our
    shares have not been previously traded publicly. In addition,
    the market price of our common stock may fluctuate significantly
    in response to a number of factors, most of which we cannot
    predict or control, including:
•
plans for, progress in and results from clinical studies for
A-002,
A-001,
A-623
and
    our other product candidates;
•
announcements of new products, services or technologies,
    commercial relationships, acquisitions or other events by us or
    our competitors;
•
developments concerning proprietary rights, including those
    pertaining to patents held by Eli Lilly and Shionogi &
    Co., Ltd. concerning our
    sPLA
2
inhibitors and Amgen concerning
A-623;
•
failure of any of our product candidates, if approved, to
    achieve commercial success;
•
fluctuations in stock market prices and trading volumes of
    securities of similar companies;
•
general market conditions and overall fluctuations in
    U.S. equity markets;
•
variations in our operating results, or the operating results of
    our competitors;
•
changes in our financial guidance or securities analysts'
    estimates of our financial performance;
•
changes in accounting principles;
•
sales of large blocks of our common stock, including sales by
    our executive officers, directors and significant stockholders;
•
additions or departures of any of our key personnel;
•
announcements related to litigation;
•
changing legal or regulatory developments in the United States
    and other countries; and
•
discussion of us or our stock price by the financial press and
    in online investor communities.
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An active public market for our common stock may not develop or
    be sustained after the completion of this offering. We will
    negotiate and determine the initial public offering price with
    representatives of the underwriters and this price may not be
    indicative of prices that will prevail in the trading market. As
    a result, you may not be able to sell your shares of common
    stock at or above the offering price.
In addition, the stock market in general, and The NASDAQ Global
    Market in particular, have experienced substantial price and
    volume volatility that is often seemingly unrelated to the
    operating performance of particular companies. These broad
    market fluctuations may cause the trading price of our common
    stock to decline. In the past, securities class action
    litigation has often been brought against a company after a
    period of volatility in the market price of its common stock. We
    may become involved in this type of litigation in the future.
    Any securities litigation claims brought against us could result
    in substantial expenses and the diversion of our
    management's attention from our business.
Management has
    discretion in allocating the net proceeds from this offering and
    may do so in ways that you and other stockholders may not
    approve.
We expect to use the net proceeds from this offering to fund
    further clinical development of our current product candidates
    and for general corporate purposes, such as general and
    administrative expenses, capital expenditures, working capital,
    prosecution and maintenance of our intellectual property and the
    potential investment in technologies or products that complement
    our business. Because of the number and variability of factors
    that will determine our use of the proceeds from this offering,
    their ultimate use may vary substantially from their currently
    intended use. As such, our management will have broad discretion
    in the application of the net proceeds from this offering and
    could spend the proceeds in ways that do not necessarily improve
    our operating results or enhance the value of our common stock.
    For a further description of our intended use of the proceeds of
    the offering, see the section entitled "Use of
    Proceeds" beginning on page 33.
Because a
    small number of our existing stockholders own a majority of our
    voting stock, your ability to influence corporate matters will
    be limited.
Following the completion of this offering, our executive
    officers, directors and greater than 5% stockholders, in the
    aggregate, will own approximately     %
    of our outstanding common stock, without giving effect to the
    purchase of shares by any person in this offering. As a result,
    such persons, acting together, will have the ability to control
    our management and affairs and substantially all matters
    submitted to our stockholders for approval, including the
    election and removal of directors and approval of any
    significant transaction. These persons will also have the
    ability to control our management and business affairs. This
    concentration of ownership may have the effect of delaying,
    deferring or preventing a change in control, impeding a merger,
    consolidation, takeover or other business combination involving
    us, or discouraging a potential acquirer from making a tender
    offer or otherwise attempting to obtain control of our business,
    even if such a transaction would benefit other stockholders.
Future sales
    of our common stock may cause our stock price to
    decline.
Upon completion of this offering, there will
    be           shares
    of our common stock outstanding. Of
    these,           shares
    are being sold in this offering
    (or           shares,
    if the underwriters exercise their over-allotment option in
    full) and will be freely tradable immediately after this
    offering (except for shares purchased by affiliates)
    and          
    of the
    remaining           shares
    may be sold upon expiration of
lock-up
agreements 180 days after the date of this prospectus
    (subject in some cases to volume limitations). In addition, as
    of August 31, 2009, we had outstanding options to purchase
    2,248,623 shares of common stock that, if exercised, will
    result in these additional shares becoming available for sale
    upon
28
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expiration of the
lock-up
agreements. A large portion of these shares and options are held
    by a small number of persons and investment funds. Sales by
    these stockholders or optionholders of a substantial number of
    shares after this offering could significantly reduce the market
    price of our common stock. Moreover, certain holders of shares
    of common stock will have rights, subject to some conditions, to
    require us to file registration statements covering the shares
    they currently hold, or to include these shares in registration
    statements that we may file for ourselves or other stockholders.
We also intend to register all common stock that we may issue
    under our 2005 Equity Incentive Plan and 2009 Stock Option and
    Incentive Plan. Effective upon the completion of this offering,
    an aggregate
    of           shares
    of our common stock will be reserved for future issuance under
    this plan, including any shares reserved and unissued under our
    2005 Equity Incentive Plan. Once we register these shares, which
    we plan to do shortly after the completion of this offering,
    they can be freely sold in the public market upon issuance,
    subject to the
lock-up
agreements referred to above. If a large number of these shares
    are sold in the public market, the sales could reduce the
    trading price of our common stock. See section entitled
    "Shares Eligible for Future Sale" on
    page 130 for a more detailed description of sales that may
    occur in the future.
You will
    suffer immediate and substantial dilution in the net tangible
    book value of the common stock you purchase.
The initial public offering price of our common stock is
    substantially higher than the net tangible book value per share
    of our outstanding common stock immediately after the completion
    of this offering. Purchasers of common stock in this offering
    will experience immediate dilution of approximately
    $      per share in net tangible book
    value of the common stock. In addition, investors purchasing
    common stock in this offering will contribute
    approximately     % of the total amount
    invested by stockholders since inception, but will only own
    approximately     % of the shares of
    common stock outstanding. In the past, we issued restricted
    stock and options to acquire common stock at prices
    significantly below the initial public offering price. To the
    extent these outstanding options are ultimately exercised,
    investors purchasing common stock in this offering will sustain
    further dilution. See section entitled "Dilution" on
    page 37 for a more detailed description of the dilution to
    new investors in this offering.
We may need to
    raise additional capital to fund our operations, which may cause
    dilution to our existing stockholders, restrict our operations
    or require us to relinquish rights.
We may seek additional capital through a combination of private
    and public equity offerings, debt financings and collaboration,
    strategic and licensing arrangements. To the extent that we
    raise additional capital through the sale of equity or
    convertible debt securities, your ownership interest will be
    diluted, and the terms may include liquidation or other
    preferences that adversely affect your rights as a stockholder.
    Debt financing, if available, may involve agreements that
    include covenants limiting or restricting our ability to take
    specific actions such as incurring debt, making capital
    expenditures or declaring dividends. If we raise additional
    funds through collaboration, strategic alliance and licensing
    arrangements with third parties, we may have to relinquish
    valuable rights to our technologies or product candidates or
    grant licenses on terms that are not favorable to us.
29
Table of Contents
We will incur
    significant increased costs as a result of operating as a public
    company, and our management will be required to divert attention
    from product development to devote substantial time to new
    compliance initiatives.
As a public company, we will incur significant legal, accounting
    and other expenses that we did not incur as a private company.
    In addition, the Sarbanes-Oxley Act of 2002, or the
    Sarbanes-Oxley Act, as well as rules subsequently implemented by
    the Securities and Exchange Commission, or SEC, and The NASDAQ
    Global Market, have imposed various requirements on public
    companies, including establishment and maintenance of effective
    disclosure and financial controls and changes in corporate
    governance practices. Our management and other personnel will
    need to devote a substantial amount of time to these compliance
    initiatives. Moreover, these rules and regulations will increase
    our legal and financial compliance costs and will make some
    activities more time- consuming and costly. For example, we
    expect these rules and regulations to make it more difficult and
    more expensive for us to obtain director and officer liability
    insurance, and we may be required to accept reduced policy
    limits and coverage or incur substantially higher costs to
    obtain the same or similar coverage. As a result, it may be more
    difficult for us to attract and retain qualified people to serve
    on our board of directors, our board committees or as executive
    officers.
The Sarbanes-Oxley Act requires, among other things, that we
    maintain effective internal controls for financial reporting and
    disclosure. In particular, commencing in fiscal year 2010, we
    must perform system and process evaluation and testing of our
    internal controls over financial reporting to allow management
    and our independent registered public accounting firm to report
    on the effectiveness of our internal controls over financial
    reporting, as required by Section 404 of the Sarbanes-Oxley
    Act. Our testing, or the subsequent testing by our independent
    registered public accounting firm, may reveal deficiencies in
    our internal controls over financial reporting that are deemed
    to be material weaknesses. We expect to incur significant
    expenses and devote substantial management effort toward
    ensuring compliance with Section 404. We currently do not
    have an internal audit function, and we will need to hire
    additional accounting and financial staff with appropriate
    public company experience and technical accounting knowledge.
    Moreover, if we are not able to comply with the requirements of
    Section 404 in a timely manner, or if we or our independent
    registered public accounting firm identifies deficiencies in our
    internal controls that are deemed to be material weaknesses, the
    market price of our stock could decline and we could be subject
    to sanctions or investigations by The NASDAQ Global Market, the
    SEC or other regulatory authorities, which would entail
    expenditure of additional financial and management resources.
We do not
    intend to pay dividends on our common stock so any returns will
    be limited to the value of our stock.
We have never declared or paid any cash dividend on our common
    stock. We currently anticipate that we will retain future
    earnings for the development, operation and expansion of our
    business and do not anticipate declaring or paying any cash
    dividends for the foreseeable future. Any return to stockholders
    will therefore be limited to the value of their stock.
30
Table of Contents
Anti-takeover
    provisions in our charter documents and under Delaware law could
    make an acquisition of us, which may be beneficial to our
    stockholders, more difficult and may prevent attempts by our
    stockholders to replace or remove our current
    management.
Provisions in our amended and restated certificate of
    incorporation and amended and restated bylaws may delay or
    prevent an acquisition of us or a change in our management.
    These provisions include:
•
a classified and staggered board of directors whose members can
    only be dismissed for cause;
•
the prohibition on actions by written consent of our
    stockholders;
•
the limitation on who may call a special meeting of stockholders;
•
the establishment of advance notice requirements for nominations
    for election to the board of directors or for proposing matters
    that can be acted upon at stockholder meetings;
•
the ability of our board of directors to issue preferred stock
    without stockholder approval, which would increase the number of
    outstanding shares and could thwart a takeover attempt; and
•
the requirement of at least 75% of the outstanding common stock
    to amend any of the foregoing provisions.
In addition, because we are incorporated in Delaware, we are
    governed by the provisions of Section 203 of the Delaware
    General Corporation Law, which limits the ability of
    stockholders owning in excess of 15% of our outstanding voting
    stock to merge or combine with us. Although we believe these
    provisions collectively provide for an opportunity to obtain
    greater value for stockholders by requiring potential acquirors
    to negotiate with our board of directors, they would apply even
    if an offer rejected by our board were considered beneficial by
    some stockholders. In addition, these provisions may frustrate
    or prevent any attempts by our stockholders to replace or remove
    our current management by making it more difficult for
    stockholders to replace members of our board of directors, which
    is responsible for appointing the members of our management.
Our ability to
    use our net operating loss carryforwards may be subject to
    limitation and may result in increased future tax liability to
    us.
Generally, a change of more than 50% in the ownership of a
    corporation's stock, by value, over a three-year period
    constitutes an ownership change for U.S. federal income tax
    purposes. An ownership change may limit a company's ability
    to use its net operating loss carryforwards attributable to the
    period prior to such change. We have not performed a detailed
    analysis to determine whether an ownership change under
    Section 382 of the Internal Revenue Code has occurred after
    each of our previous private placements of preferred stock and
    convertible debt. In addition, the number of shares of common
    stock that we issue in connection with this offering may be
    sufficient, taking into account prior or future shifts in our
    ownership over a three-year period, to cause us to undergo an
    ownership change. As a result, if we earn net taxable income,
    our ability to use our pre-change net operating loss
    carryforwards to offset U.S. federal taxable income may
    become subject to limitations, which could potentially result in
    increased future tax liability to us.
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SPECIAL
    NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements.
    Forward-looking statements relate to future events or our future
    financial performance. We generally identify forward-looking
    statements by terminology such as "may,"
    "will," "would," "should,"
    "expects," "plans," "anticipates,"
    "could," "intends," "target,"
    "projects," "contemplates,"
    "believes," "estimates,"
    "predicts," "assume," "intend,"
    "potential," "continue" or other similar
    words or the negative of these terms. These statements are only
    predictions. We have based these forward-looking statements
    largely on our current expectations and projections about future
    events and financial trends that we believe may affect our
    business, financial condition and results of operations. The
    outcome of the events described in these forward-looking
    statements is subject to risks, uncertainties and other factors
    described in "Risk Factors" and elsewhere in this
    prospectus. Accordingly, you should not place undue reliance
    upon these forward-looking statements. We cannot assure you that
    the events and circumstances reflected in the forward-looking
    statements will be achieved or occur, the timing of events and
    circumstances and actual results could differ materially from
    those projected in the forward looking statements.
    Forward-looking statements contained in this prospectus include,
    but are not limited to, statements about:
•
our expectations related to the use of proceeds from this
    offering;
•
the progress of, timing of and amount of expenses associated
    with our research, development and commercialization activities;
•
the timing, conduct and success of our clinical studies for our
    product candidates;
•
our ability to obtain U.S. and foreign regulatory approval
    for our product candidates and the ability of our product
    candidates to meet existing or future regulatory standards;
•
our expectations regarding federal, state and foreign regulatory
    requirements;
•
the therapeutic benefits and effectiveness of our product
    candidates;
•
the accuracy of our estimates of the size and characteristics of
    the markets that may be addressed by our product candidates;
•
our ability to manufacture sufficient amounts of our product
    candidates for clinical studies and products for
    commercialization activities;
•
our intention to seek to establish strategic collaborations or
    partnerships for the development or sale of our product
    candidates;
•
our expectations as to future financial performance, expense
    levels and liquidity sources;
•
the timing of commercializing our product candidates;
•
our ability to compete with other companies that are or may be
    developing or selling products that are competitive with our
    product candidates;
•
anticipated trends and challenges in our potential markets;
•
our ability to attract and retain key personnel; and
•
other factors discussed elsewhere in this prospectus.
The forward-looking statements made in this prospectus relate
    only to events as of the date on which the statements are made.
    We have included important factors in the cautionary statements
    included in this prospectus, particularly in the section
    entitled "Risk Factors" that we believe could cause
    actual results or events to differ materially from the
    forward-looking statements that we make. Our forward-looking
    statements do not reflect the potential impact of any future
    acquisitions, mergers, dispositions, joint ventures or
    investments we may make. Except as required by law, we do not
    assume any intent to update any forward-looking statements after
    the date on which the statement is made, whether as a result of
    new information, future events or circumstances or otherwise.
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USE OF
    PROCEEDS
We estimate that the net proceeds of the sale of the common
    stock that we are offering will be approximately
    $      million, or
    $      million if the underwriters
    exercise their over-allotment option in full, assuming an
    initial public offering price of $     
    per share, which is the midpoint of the range listed on the
    cover page of this prospectus, and after deducting estimated
    underwriting discounts and commissions and estimated offering
    expenses that we must pay.
A $1.00 increase (decrease) in the assumed initial public
    offering price of $      per share
    would increase (decrease) the net proceeds to us from this
    offering by approximately
    $      million, assuming the
    number of shares offered by us, as set forth on the cover page
    of this prospectus, remains the same and after deducting
    estimated underwriting discounts and commissions and estimated
    offering expenses payable by us.
The principal purposes of this offering are to obtain additional
    working capital to fund anticipated operating expenses,
    establish a public market for our common stock and facilitate
    future access to the public markets.
We estimate that we will use the proceeds of this offering as
    follows:
•
approximately $      to
    $      million of these net
    proceeds to fund the continued clinical development of
A-002,
including our planned initiation by the end of 2009 of a Phase 3
    clinical study;
•
approximately $      to
    $      million of these net
    proceeds to fund the continued clinical development of
A-001;
•
approximately $      to
    $      million of these net
    proceeds to fund the clinical development of
A-623; and
•
approximately $      million for
    general corporate purposes, such as general and administrative
    expenses, capital expenditures, working capital, prosecution and
    maintenance of our intellectual property and the potential
    investment in technologies or products that complement our
    business.
We have no current understandings, commitments or agreements
    with respect to any acquisition of or investment in any
    technologies or products.
Although we currently anticipate that we will use the net
    proceeds of this offering as described above, there may be
    circumstances where a reallocation of funds may be necessary.
    The amounts and timing of our actual expenditures will depend
    upon numerous factors, including the progress of our development
    and commercialization efforts, the progress of our clinical
    studies, whether or not we enter into strategic collaborations
    or partnerships and our operating costs and expenditures.
    Accordingly, our management will have significant flexibility in
    applying the net proceeds of this offering.
The costs and timing of drug development and regulatory
    approval, particularly conducting clinical studies, are highly
    uncertain, are subject to substantial risks and can often
    change. Accordingly, we may change the allocation of use of
    these proceeds as a result of contingencies such as the progress
    and results of our clinical studies and other development
    activities, the establishment of collaborations, our
    manufacturing requirements and regulatory or competitive
    developments. In addition, assuming our current clinical
    programs proceed further to the next stage of clinical
    development, we do not expect our existing capital resources and
    the net proceeds from this offering to be sufficient to enable
    us to fund the completion of all such clinical development
    programs through commercial introduction. Accordingly, we expect
    we will need to raise additional funds.
Pending use of the proceeds from this offering as described
    above or otherwise, we intend to invest the net proceeds in
    short-term interest-bearing, investment-grade securities.
33
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DIVIDEND
    POLICY
We have never declared or paid any cash dividends on our common
    stock. We currently intend to retain any future earnings to
    finance the growth and development of our business. Therefore,
    we do not anticipate declaring or paying any cash dividends in
    the foreseeable future. Any future determination as to the
    declaration and payment of dividends, if any, will be at the
    discretion of our board of directors and will depend on then
    existing conditions, including our financial condition,
    operating results, contractual restrictions, capital
    requirements, business prospects and other factors our board of
    directors may deem relevant.
34
Table of Contents
CAPITALIZATION
The following table sets forth our capitalization as of
    June 30, 2009:
•
on an actual basis;
•
on a pro forma basis to give effect to (i) the conversion
    of all outstanding shares of our preferred stock into an
    aggregate of 13,946,510 shares of our common stock, which
    we expect to occur immediately prior to the closing of this
    offering and (ii) the filing of an amended and restated
    certificate of incorporation to
    authorize          
    shares of common stock
    and          
    shares of undesignated preferred stock; and
•
on a pro forma as adjusted basis to give further effect to the
    receipt by us of net proceeds of
    $      million from the sale
    of           shares
    of common stock offered by us in this offering at an assumed
    initial public offering price of $     
    per share, which is the midpoint of the range listed on the
    cover page of this prospectus, after deducting estimated
    underwriting discounts and commissions and estimated offering
    expenses payable by us.
In July and September 2009, we sold convertible promissory
    notes, or the 2009 notes, and warrants to purchase shares of our
    preferred stock, or the 2009 warrants, to our existing investors
    for an aggregate purchase price of $10,000,000. The 2009 notes
    and the 2009 warrants are convertible and exercisable,
    respectively, upon the occurrence of certain events. In
    addition, we are in negotiations with certain of our existing
    investors for an aggregate of $20 million in additional
    equity financing. The following table does not reflect the
    impact of the sale of the 2009 notes or the 2009 warrants, or
    our negotiations for additional equity financing.
You should read the following table in conjunction with our
    financial statements and related notes, "Selected Financial
    Data" and "Management's Discussion and Analysis
    of Financial Condition and Results of Operations" appearing
    elsewhere in this prospectus.
As of June 30, 2009
Pro Forma As
Actual
Pro Forma
Adjusted
(unaudited)
Cash, cash equivalents and short-term investments
$
1,290,730
$
1,290,730
$
Series A-1
convertible preferred stock, $0.001 par value,
    945,939 shares authorized, issued and outstanding at
    June 30, 2009 (aggregate liquidation value of $813,508 as
    of June 30, 2009); 0 shares outstanding pro forma at
    June 30, 2009 (unaudited)
946
—
Series A-2
convertible preferred stock, $0.001 par value,
    2,800,000 shares authorized; 2,774,594, shares issued and
    outstanding at June 30, 2009 (aggregate liquidation value
    of $8,323,782 as of June 30, 2009); 0 shares
    outstanding pro forma at June 30, 2009 (unaudited)
2,774
—
Series B-1
convertible preferred stock, $0.001 par value,
    4,710,000 shares authorized; 4,702,640 shares issued
    and outstanding at June 30, 2009 (aggregate liquidation
    value of $19,986,220 as of June 30, 2009); 0 shares
    outstanding pro forma at June 30, 2009 (unaudited)
4,703
—
Series B-2
convertible preferred stock, $0.001 par value,
    6,175,000 shares authorized; 5,523,337 shares issued
    and outstanding at June 30, 2009 (aggregate liquidation
    value of $23,474,182 as of June 30, 2009); 0 shares
    outstanding pro forma at June 30, 2009 (unaudited)
5,523
—
Preferred stock, $0.001 par value
—
—
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Table of Contents
As of June 30, 2009
Pro Forma As
Actual
Pro Forma
Adjusted
(unaudited)
Common stock, $0.001 par value, 30,000,000 shares
    authorized; 2,578,133 shares issued and outstanding at
    June 30, 2009, respectively; 16,524,643 shares
    outstanding pro forma at June 30, 2009 (unaudited)
2,578
16,524
Additional paid-in capital
52,703,824
52,703,824
Deficit accumulated during the development stage
(60,147,876
)
(60,147,876
)
Total stockholders' deficit
(7,427,528
)
(7,427,528
)
Total capitalization
$
(7,427,528
)
$
(7,427,528
)
$
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Table of Contents
DILUTION
If you invest in our common stock, your interest will be diluted
    immediately to the extent of the difference between the initial
    offering price per share of our common stock and the pro forma
    as adjusted net tangible book value per share of our common
    stock after this offering. Our pro forma net tangible book value
    as of June 30, 2009 was $      ,
    or $      per share of common
    stock. Pro forma net tangible book value per share represents
    the amount of our total tangible assets less our total
    liabilities, divided by the number of shares of common stock
    outstanding as of June 30, 2009, after giving effect to the
    conversion of all of our preferred stock into
    13,946,510 shares of our common stock, which we expect to
    occur immediately prior to the closing of this offering.
After giving effect to the sale by us
    of           shares
    of common stock in this offering at an assumed initial public
    offering price of $      per share,
    which is the midpoint of the range listed on the cover page of
    this prospectus, and after deducting estimated underwriting
    discounts and commissions and estimated offering expenses
    payable by us, our pro forma as adjusted net tangible book value
    as of June 30, 2009 would have been approximately
    $      million, or approximately
    $      per share. This amount
    represents an immediate increase in pro forma net tangible book
    value of $      per share to our
    existing stockholders and an immediate dilution in pro forma net
    tangible book value of approximately
    $      per share to new investors
    purchasing shares of common stock in this offering at the
    assumed initial public offering price.
The following table illustrates this dilution on a per share
    basis:
Assumed initial public offering price per share
$
Pro forma net tangible book value per share as of June 30,
    2009
$
Increase per share attributable to new investors
Pro forma net tangible book value per share after this offering
Dilution per share to new investors
$
A $1.00 increase (decrease) in the assumed initial public
    offering price of $      per share
    would increase (decrease) our adjusted net tangible book value
    per share after this offering by approximately
    $      and would increase (decrease)
    dilution per share to new investors by approximately
    $      , assuming that the number of
    shares offered by us, as set forth on the cover page of this
    prospectus, remains the same and after deducting estimated
    underwriting discounts and commissions and estimated offering
    expenses payable by us. In addition, to the extent any
    outstanding options or warrants are exercised, you will
    experience further dilution.
The following table summarizes, as of June 30, 2009, the
    number of shares purchased from us, the total consideration paid
    or to be paid to us, and the average price per share paid or to
    be paid to us by existing stockholders and new investors
    purchasing shares of our common stock in this offering at an
    assumed offering price of $      per
    share, which is the midpoint of the price range listed on the
    cover page of this prospectus, before deducting estimated
    underwriting discounts and commissions and estimated offering
    expenses payable by us.
Average
Shares Purchased
Total Consideration
Price per
Number
Percent
Amount
Percent
Share
Existing stockholders
%
$
%
$
New Investors
Total
100%
100%
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Table of Contents
A $1.00 increase (decrease) in the assumed initial public
    offering price of $      per share
    would increase (decrease) the total consideration paid by new
    investors by $      million and
    increase (decrease) the percent of total consideration paid by
    new investors by $      assuming that
    the number of shares offered by us, as set forth on the cover of
    this prospectus, remains the same and after deducting estimated
    underwriting discounts and commissions and estimated offering
    expenses payable by us.
Assuming the underwriters' over-allotment option is
    exercised in full, sales by us in this offering will reduce the
    percentage of shares held by existing stockholders
    to     % and will increase the number
    of shares held by our new investors
    to          ,
    or     %.
The number of shares of our common stock to be outstanding after
    this offering is based on 16,746,731 shares of our common
    stock outstanding as of August 31, 2009 and excludes:
•
2,248,623 shares of common stock issuable upon exercise of stock
    options outstanding and having a weighted-average exercise price
    of $0.50 per share;
•
shares
    of common stock reserved for future issuance under our 2009
    Stock Option and Incentive Plan, which will become effective
    upon the completion of this offering (plus an
    additional           shares
    of common stock reserved for issuance under our 2005 Equity
    Incentive Plan, which shares will be added to the shares
    reserved for future issuance under our 2009 Stock Option and
    Incentive Plan upon effectiveness of our 2009 Stock Option and
    Incentive Plan); and
•
411,764 shares of common stock issuable upon the exercise of
    warrants outstanding and having a weighted-average exercise
    price of $0.78 per share.
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SELECTED
    FINANCIAL DATA
The following selected financial data should be read together
    with our financial statements and the related notes and
    "Management's Discussion and Analysis of Financial
    Condition and Results of Operations" appearing elsewhere in
    this prospectus. The selected financial data in this section is
    not intended to replace our financial statements and the related
    notes. Our historical results are not necessarily indicative of
    the results to be expected for any future period.
We were incorporated on September 9, 2004. The following
    statement of operations data, including share data, for the
    years ended December 31, 2006, 2007 and 2008 and the
    balance sheet data as of December 31, 2007 and
    December 31, 2008 have been derived from our audited
    financial statements and related notes appearing elsewhere in
    this prospectus. The statement of operations data for the years
    ended December 31, 2004 and 2005 and the balance sheet data
    as of December 31, 2004, 2005 and 2006 have been derived
    from our audited financial statements not included in this
    prospectus. The statement of operations data, including share
    data, for the six months ended June 30, 2008 and 2009, and
    the period from September 9, 2004 (date of inception)
    through June 30, 2009, and the balance sheet data as of
    June 30, 2009 have been derived from our unaudited
    financial statements appearing elsewhere in this prospectus. The
    unaudited interim financial statements have been prepared on the
    same basis as the audited financial statements and reflect all
    adjustments necessary to fairly state our financial position as
    of June 30, 2009 and results of operations for the six
    months ended June 30, 2008 and 2009, and for the cumulative
    period from September 9, 2004 to June 30, 2009. The
    operating results for any interim period are not necessarily
    indicative of financial results that may be expected for any
    future period.
The pro forma basic and diluted net loss per share and pro forma
    weighted-average number of shares gives effect to the conversion
    of all our outstanding preferred stock into shares of common
    stock as if the conversion occurred on the date of issuance.
Period from
September 9,
2004 (Date of
Six Months Ended
Inception)
Years Ended December 31,
June 30,
to June 30,
2004
2005
2006
2007
2008
2008
2009
2009
(unaudited)
(unaudited)
Statement of Operations Data:
Operating expenses
Research and development
$
—
$
345,208
$
7,759,106
$
23,921,932
$
10,882,322
$
5,363,436
$
5,201,181
$
48,109,749
General and administrative
14,840
205,527
822,732
2,468,607
2,980,170
1,592,243
1,845,574
8,337,450
Total operating expenses
(14,840
)
(550,735
)
(8,581,838
)
(26,390,539
)
(13,862,492
)
(6,955,679
)
(7,046,755
)
(56,447,199
)
Other Income (Expense)
Interest and other income
—
11,148
109,987
696,962
178,129
85,330
21,637
1,017,863
Interest expense
—
—
(17,395
)
—
(296,303
)
(96,704
)
(96,298
)
(409,996
)
Beneficial conversion feature
—
—
(190,000
)
—
(4,118,544
)
(1,392,601
)
—
(4,308,544
)
Total other income (expense)
—
11,148
(97,408
)
696,962
(4,236,718
)
(1,403,975
)
(74,661
)
(3,700,677
)
Net loss
$
(14,840
)
$
(539,587
)
$
(8,679,246
)
$
(25,693,577
)
$
(18,099,210
)
$
(8,359,654
)
$
(7,121,416
)
$
(60,147,876
)
Net loss per share—basic and diluted (1)
$
(0.20
)
$
(0.81
)
$
(7.71
)
$
(16.44
)
$
(7.87
)
$
(3.86
)
$
(2.80
)
Weighted-average number of shares used in per share
    calculation—basic and diluted (2)
75,057
668,193
1,125,065
1,562,670
2,300,090
2,164,630
2,540,033
Pro forma net loss per share—basic and diluted (1)
$
(1.39
)
$
(0.42
)
Pro forma weighted-average number of shares used in per share
    calculation—basic and diluted (2)
13,048,521
16,898,307
(1)
Diluted earnings per share, or EPS,
    is identical to basic EPS since common equivalent shares are
    excluded from the calculation, as their effect is anti-dilutive.
(2)
For accounting purposes only, the
    number of issued and outstanding shares for the years ended
    December 31, 2004, 2005, 2006, 2007 and 2008 and the six
    months ended June 30, 2008 and 2009 do not include
    weighted-average shares of unvested stock of 167,409, 819,672,
    459,399, 447,780, 393,683, 467,519 and 227,502, respectively.
    These shares are subject to a risk of repurchase by us until
    such shares are vested. See Note 8 to our financial
    statements for more information.
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Table of Contents
As of December 31,
As of June 30,
2004
2005
2006
2007
2008
2009
(unaudited)
Balance Sheet Data:
Cash and cash equivalents
$
615,977
$
381,964
$
20,781,916
$
152,744
$
7,895,113
$
1,290,730
Short-term investments
—
—
—
5,825,000
—
—
Working capital
(14,754
)
232,136
19,629,639
(2,907,995
)
(495,836
)
(7,453,556
)
Total assets
617,390
404,091
20,856,892
6,193,213
8,034,154
1,389,613
Indebtedness
630,731
150,790
1,174,621
12,058,184
8,494,417
8,817,141
Convertible preferred stock
—
804,951
28,892,004
28,892,004
52,123,859
52,123,859
Deficit accumulated during the development stage
(14,840
)
(554,427
)
(9,233,673
)
(34,927,250
)
(53,026,460
)
(60,147,876
)
Total stockholders' deficit
(13,340
)
253,301
19,682,271
(5,864,971
)
(460,263
)
(7,427,528
)
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Table of Contents
MANAGEMENT'S
    DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read together
    with our financial statements and the related notes appearing
    elsewhere in this prospectus. This discussion contains
    forward-looking statements reflecting our current expectations
    that involve risks and uncertainties. See "Special Note
    Regarding Forward-Looking Statements" for a discussion of
    the uncertainties, risks and assumptions associated with these
    statements. Actual results and the timing of events could differ
    materially from those discussed in our forward-looking
    statements as a result of many factors, including those set
    forth under "Risk Factors" and elsewhere in this
    prospectus.
Overview
We are a biopharmaceutical company focused on developing and
    commercializing products to treat serious diseases associated
    with inflammation, including cardiovascular and autoimmune
    diseases. We currently have one Phase 3 ready clinical program,
    A-002, and two Phase 2 clinical programs, A-001 and A-623. Two
    of our product candidates,
A-002
and
A-001,
are
    designed to inhibit a novel enzyme target known as secretory
    phospholipase
    A
2
,
    or
    sPLA
2
.
    Elevated levels of
    sPLA
2
have been implicated in a variety of acute inflammatory
    conditions, including acute coronary syndrome and acute chest
    syndrome associated with sickle cell disease, as well as in
    chronic diseases, including stable coronary artery disease. In
    addition, our Phase 2 ready product candidate,
A-623,
targets elevated levels of B-lymphocyte stimulator, which has
    been associated with a variety of B-cell mediated autoimmune
    diseases, including systemic lupus erythematosus, or lupus,
    lupus nephritis, rheumatoid arthritis, multiple sclerosis,
    Sjögren's Syndrome, Graves' Disease and others.
We were incorporated and commenced operations in September 2004.
    Since our inception, we have generated significant losses. As of
    June 30, 2009, we had an accumulated deficit of
    approximately $60.1 million. As of the date of this
    prospectus, we have never generated any revenue and have
    generated only interest income from cash and cash equivalents
    and short-term investments. We expect to incur substantial and
    increasing losses for at least the next several years as we
    pursue the development and commercialization of our product
    candidates. In their report on our financial statements for the
    year ended December 31, 2008, our independent auditors
    included an explanatory paragraph regarding concerns about our
    ability to continue as a going concern. Our financial statements
    contain additional note disclosures describing the circumstances
    that led to this disclosure. In addition, as of June 30,
    2009, we had unpaid license fees of $4.5 million under our
    license agreement with Amgen Inc., or Amgen, to develop and
    commercialize
A-623.
To date, we have funded our operations through private
    placements of preferred stock and convertible debt, raising an
    aggregate of approximately $45.4 million through those
    private placements. We will need substantial additional
    financing to continue to develop our product candidates, obtain
    regulatory approvals and to fund operating expenses, which we
    will seek to raise through public or private equity or debt
    financings, collaborative or other arrangements with third
    parties or through other sources of financing. We cannot assure
    you that such funds will be available on terms favorable to us,
    if at all. In addition to the normal risks associated with
    development-stage companies, we may never successfully complete
    development of any of our product candidates, obtain adequate
    patent protection for our technology, obtain necessary
    government regulatory approval for our product candidates or
    achieve commercial viability for any approved product
    candidates. In addition, we may not be profitable even if we
    succeed in commercializing any of our product candidates.
41
Table of Contents
Revenue
To date, we have not generated any revenue. We do not expect to
    generate revenue unless or until we obtain regulatory approval
    of, and commercialize, our product candidates or in-license
    additional products that generate revenue. We intend to seek to
    generate revenue from a combination of product sales, up-front
    fees and milestone payments in connection with collaborative or
    strategic relationships and royalties resulting from the
    licensing of the commercial rights to our intellectual property.
    We expect that any revenue we generate will fluctuate from
    quarter to quarter as a result of the nature, timing and amount
    of milestone payments we may receive upon the sale of our
    products, to the extent any are successfully commercialized, as
    well as any revenue we may receive from our collaborative or
    strategic relationships.
Research and
    Development Expenses
Since our inception, we have focused our activities on our
    product candidate development programs. We expense research and
    development costs as they are incurred. Research and development
    expenses consist of personnel costs, including salaries,
    benefits and stock-based compensation, clinical studies
    performed by contract research organizations, or CROs, materials
    and supplies, licenses and fees and overhead allocations
    consisting of various administrative and facilities-related
    costs. Research and development activities are also separated
    into three main categories: licensing, clinical development and
    pharmaceutical development. Licensing costs consist primarily of
    fees paid pursuant to license agreements. Historically, our
    clinical development costs have included costs for preclinical
    and clinical studies. We expect to incur substantial clinical
    development costs for our anticipated Phase 3 clinical study for
A-002,
as
    well as for the development of our other product candidates.
    Pharmaceutical development costs consist of expenses incurred
    relating to clinical studies and product formulation and
    manufacturing.
We expense both internal and external research and development
    costs as incurred. We are developing our product candidates in
    parallel, and we typically use our employee and infrastructure
    resources across several projects. Thus, some of our research
    and development costs are not attributable to an individually
    named project, but rather are allocated across our clinical
    stage programs. These unallocated costs include salaries,
    stock-based compensation charges and related fringe benefit
    costs for our employees, consulting fees and travel.
The following table shows our total research and development
    expenses for the years ended December 31, 2006, 2007 and
    2008, for the six-month periods ended June 30, 2008 and
    2009, and for the period from September 9, 2004 (date of
    inception) through June 30, 2009:
For the Period
September 9,
2004 (Date of
Inception)
Years Ended December 31,
Six Months Ended June 30,
to June 30,
2006
2007
2008
2008
2009
2009
Allocated costs:
A-001
$
3,567,980
$
2,302,454
$
456,633
$
200,606
$
121,460
$
6,448,527
A-002
2,870,566
12,053,943
7,370,850
3,582,737
3,829,160
26,139,883
A-623
—
6,004,667(1
)
100,851
62,255
9,958
6,115,476
Unallocated costs
1,320,560
3,560,868
2,953,988
1,517,838
1,240,603
9,405,863
Total development
$
7,759,106
$
23,921,932
$
10,882,322
$
5,363,436
$
5,201,181
$
48,109,749
(1)
Includes a one-time license
    initiation fee of $6.0 million pursuant to a license
    agreement with Amgen.
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We expect our research and development expenses to increase
    significantly as we continue to develop our product candidates.
    Prior to the end of 2009, we expect to initiate a Phase 3
    clinical study of
A-002
for
    the treatment of patients experiencing acute coronary syndrome,
    which we expect to fund with proceeds we raised from existing
    investors and from the proceeds raised in this offering.
We expect that a large percentage of our research and
    development expenses in the future will be incurred in support
    of our current and future clinical development programs. These
    expenditures are subject to numerous uncertainties in timing and
    cost to completion. As we obtain results from clinical studies,
    we may elect to discontinue or delay clinical studies for
    certain product candidates or programs in order to focus our
    resources on more promising product candidates or programs.
    Completion of clinical studies may take several years or more,
    but the length of time generally varies according to the type,
    complexity, novelty and intended use of a product candidate. The
    cost of clinical studies may vary significantly over the life of
    a program as a result of differences arising during clinical
    development, including:
•
the number of sites included in the studies;
•
the length of time required to enroll suitable patient subjects;
•
the number of patients that participate in the studies;
•
the number of doses that patients receive;
•
the drop-out or discontinuation rates of patients; and
•
the duration of patient
follow-up.
Our expenses related to clinical studies are based on estimates
    of the services received and efforts expended pursuant to
    contracts with multiple research institutions and clinical
    research organizations that conduct and manage clinical studies
    on our behalf. The financial terms of these agreements are
    subject to negotiation and vary from contract to contract and
    may result in uneven payment flows. Generally, these agreements
    set forth the scope of work to be performed at a fixed fee or
    unit price. Payments under the contracts depend on factors such
    as the successful enrollment of patients or the completion of
    clinical study milestones. Expenses related to clinical studies
    generally are accrued based on contracted amounts and the
    achievement of milestones such as number of patients enrolled.
    If timelines or contracts are modified based upon changes to the
    clinical study design or scope of work to be performed, we
    modify our estimates of accrued expenses accordingly on a
    prospective basis.
None of our product candidates has received U.S. Food and
    Drug Administration, or FDA, or foreign regulatory marketing
    approval. In order to grant marketing approval, the FDA or
    foreign regulatory agencies must conclude that clinical data
    establishes the safety and efficacy of our product candidates
    and that the manufacturing facilities, processes and controls
    are adequate. Despite our efforts, our product candidates may
    not offer therapeutic or other improvement over existing,
    comparable drugs, be proven safe and effective in clinical
    studies, or meet applicable regulatory standards.
As a result of the uncertainties discussed above, we are unable
    to determine the duration and completion costs of our
    development projects or when and to what extent we will receive
    cash inflows from the commercialization and sale of an approved
    product candidate, if ever.
General and
    Administrative Expenses
General and administrative expenses consist primarily of
    compensation for employees in executive and operational
    functions, including clinical, chemical manufacturing,
    regulatory, finance and business development. Other significant
    costs include professional fees for legal services, including
    legal services associated with obtaining and maintaining
    patents. After
43
Table of Contents
completion of this offering, we anticipate incurring a
    significant increase in general and administrative expenses as
    we operate as a public company. These increases will likely
    include increased costs for insurance, costs related to the
    hiring of additional personnel and payment to outside
    consultants, lawyers and accountants. We also expect to incur
    significant costs to comply with the corporate governance,
    internal controls and similar requirements applicable to public
    companies.
Critical
    Accounting Policies and Estimates
Our management's discussion and analysis of our financial
    condition and results of operations is based on our financial
    statements, which have been prepared in accordance with
    accounting principles generally accepted in the United States,
    or GAAP. The preparation of these financial statements requires
    us to make estimates and judgments that affect the reported
    amounts of assets, liabilities and expenses. On an ongoing
    basis, we evaluate these estimates and judgments, including
    those described below. We base our estimates on our historical
    experience and on various other assumptions that we believe to
    be reasonable under the circumstances. These estimates and
    assumptions form the basis for making judgments about the
    carrying values of assets and liabilities that are not readily
    apparent from other sources. Actual results and experiences may
    differ materially from these estimates.
While our significant accounting policies are more fully
    described in Note 2 to our financial statements included at
    the end of this prospectus, we believe that the following
    accounting policies are the most critical to aid you in fully
    understanding and evaluating our reported financial results and
    affect the more significant judgments and estimates that we use
    in the preparation of our financial statements.
Accrued Clinical
    Expenses
As part of the process of preparing our financial statements, we
    are required to estimate our accrued expenses. This process
    involves reviewing open contracts and purchase orders,
    communicating with our applicable personnel to identify services
    that have been performed on our behalf and estimating the level
    of service performed and the associated cost incurred for the
    service when we have not yet been invoiced or otherwise notified
    of actual cost. The majority of our service providers invoice us
    monthly in arrears for services performed. We make estimates of
    our accrued expenses as of each balance sheet date in our
    financial statements based on facts and circumstances known to
    us at that time. We periodically confirm the accuracy of our
    estimates with the service providers and make adjustments if
    necessary. Examples of estimated accrued clinical expenses
    include:
•
fees paid to CROs in connection with clinical studies;
•
fees paid to investigative sites in connection with clinical
    studies;
•
fees paid to contract manufacturers in connection with the
    production of clinical study materials; and
•
fees paid to vendors in connection with the preclinical
    development activities.
We base our expenses related to clinical studies on our
    estimates of the services received and efforts expended pursuant
    to contracts with multiple research institutions and CROs that
    conduct and manage clinical studies on our behalf. The financial
    terms of these agreements are subject to negotiation, vary from
    contract to contract and may result in uneven payment flows.
    Payments under some of these contracts depend on factors such as
    the successful enrollment of patients and the completion of
    clinical study milestones. In accruing service fees, we estimate
    the time period over which services will be performed and the
    level of effort to be expended in each period. If the actual
    timing of the performance of services or the level of effort
    varies from our estimate, we adjust the accrual accordingly. If
    we do not identify costs
44
Table of Contents
that we have begun to incur or if we underestimate or
    overestimate the level of services performed or the costs of
    these services, our actual expenses could differ from our
    estimates.
Stock-Based
    Compensation
Effective January 1, 2006, we adopted Statement of
    Financial Accounting Standard, No. 123(R),
Share-Based Payment
, or SFAS 123(R), which revised
    SFAS No. 123,
Accounting for Stock-Based
    Compensation
, or SFAS 123, and supersedes Accounting
    Principles Board, or APB, Opinion No. 25,
Accounting for
    Stock Issued to Employees
, or APB 25. Under
    SFAS 123(R), we recognize as compensation expense the fair
    value, for accounting purposes, of stock options issued to
    employees over the requisite service periods, which are
    typically the vesting periods. We adopted SFAS 123(R) using
    the modified-prospective-transition method, which requires us to
    record compensation expense for the non-vested portion of
    previously issued stock-based compensation awards that were
    outstanding at January 1, 2006, and any awards issued or
    modified after January 1, 2006. Equity instruments issued
    to non-employees are recorded at their fair value, for
    accounting purposes, as determined in accordance with
    SFAS 123(R) and Emerging Issues Task Force, or EITF,
96-18,
Accounting for Equity Instruments That Are Issued to Other
    Than Employees for Acquiring, or in Conjunction with Selling,
    Goods and Services
, and are periodically revalued as the
    equity instruments vest and are recognized as expense over the
    related service period.
Prior to the adoption of SFAS 123(R), we accounted for
    stock-based awards to our employees and directors using the
    intrinsic value method in accordance with APB 25, as
    allowed under FASB Statement No. 123. In accordance with
    APB 25, we recognized stock-based compensation expense
    based on the intrinsic value method, whereby we recognized any
    difference between exercise price and fair value of the common
    stock on the date of grant as stock-based compensation expense
    ratably over the vesting period. As all employee stock options
    granted through December 31, 2005 were granted with an
    exercise price equal to the fair value of our common stock at
    the date of grant, we did not recognize any stock-based
    compensation expense through December 31, 2005.
We recognized employee stock-based compensation expense of
    $4,648 in 2006, $74,861 in 2007, $143,406 in 2008, and $66,931
    and $133,524 in the six months ended June 30, 2008 and
    2009, respectively. As of June 30, 2009, we had $577,051 in
    total unrecognized compensation cost related to non-vested
    stock-based compensation arrangements, which we expect to
    recognize over a weighted-average period of approximately
    2.49 years.
Under SFAS 123(R), we calculate the fair value of
    stock-based compensation awards using the Black-Scholes
    option-pricing model. For the year ended December 31, 2008
    and six months ended June 30, 2009, the weighted-average
    assumptions used in the Black-Scholes model were 6.25 years
    for the expected term, 81% and 74% for the expected volatility,
    3.08% and 2.10% for the risk free rate and 0.0% and 0.0% for
    dividend yield, respectively. Expense amounts for future awards
    for any particular quarterly or annual period could be affected
    by changes in our assumptions. The weighted-average expected
    option term for 2008 and for the six months ended June 30,
    2009 reflects the application of the simplified method set out
    in SEC Staff Accounting Bulletin, or SAB, No. 107, which
    was issued in March 2005. The simplified method defines the life
    as the average of the contractual term of the stock-based
    compensation award and the weighted-average vesting period for
    all tranches. Estimated volatility for fiscal 2008 and for the
    six months ended June 30, 2009 also reflects the
    application of SAB No. 107's interpretive
    guidance and, accordingly, incorporates historical volatility of
    similar public entities.
The exercise price of options to purchase our common stock
    granted to our employees, directors and consultants was the fair
    value of our common stock on the date of grant. The fair value
    of our common stock was determined by our board of directors.
    Prior to this offering,
45
Table of Contents
there has been no public market for our common stock. Our board
    of directors determined the fair value of our common stock based
    on several factors, including:
•
the rights, preferences and privileges of our preferred stock
    relative to our common stock;
•
our performance and stage of development;
•
the likelihood of achieving a liquidity event for the shares of
    our common stock underlying these stock options, such as an
    initial public offering or sale of our company, given prevailing
    market conditions;
•
the trading value of common stock of public companies comparable
    to our company;
•
the sale prices of comparable acquisition transactions of public
    companies comparable to our company; and
•
the available data resulting from our clinical studies and
    development to date.
In addition, in the fourth quarters of each of 2006, 2007 and
    2008, we obtained the reports of independent valuation firms
    with respect to their estimates of the fair values of our common
    stock. The most recent independent valuation report was
    delivered in October 2008. In estimating the fair value of our
    common stock, the independent firms used the income approach.
    The income approach is an estimate of the present value of the
    future monetary benefits expected to flow to the owners of a
    business. It requires a projection of the cash flows that the
    business expected to generate over a forecast period and an
    estimate of the present value of cash flows beyond that period,
    which is referred to as residual value. These cash flows are
    converted to present value by means of discounting, using a rate
    of return that accounts for the time value of money and the
    appropriate degree of risks inherent in the business. After
    calculation of the company's enterprise value using this
    approach, the value of a share of common stock is then
    discounted for lack of marketability, or the inability to
    readily sell shares, which increases the owner's exposure
    to changing market conditions and increases the risk of
    ownership.
Based on the factors listed above, our board of directors
    determined the fair value of our common stock for option grants
    made in 2009 to be $0.88 per share, and for option grants made
    in 2008 to be $0.78 per share.
During the year ended December 31, 2008 and the first six
    months of 2009, we granted options to purchase the following
    number of shares of our common stock at the following exercise
    prices:
Year ended December 31, 2008
561,500
$
0.78
Six months ended June 30, 2009
674,000
$
0.88
Results of
    Operations
Comparison of the
    Six Months Ended June 30, 2009 and the Six Months Ended
    June 30, 2008
Research and Development Expenses.
Research
    and development expenses were $5.2 million for the six
    months ended June 30, 2009, compared with $5.4 million
    for the six months ended June 30, 2008. The
    $0.2 million decrease in our research and development
    expenses is due to reduced expenses associated with our
A-001
program while we await the outcome of our end of Phase 2 meeting
    with the FDA to review the interim data from our Phase 2
    clinical study and to discuss the Phase 3 clinical study
    design for the use of
A-001
to
    prevent acute chest syndrome associated with sickle cell disease
    and reduced professional fees for part-time scientific advisors
    who provide various forms of expertise in conducting our
    clinical studies.
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Table of Contents
General and Administrative Expenses.
General
    and administrative expenses were $1.8 million for the six
    months ended June 30, 2009, compared with $1.6 million
    for the six months ended June 30, 2008. The
    $0.2 million increase was primarily attributable to
    expenses relating to the expansion of our intellectual property
    portfolio.
Interest and Other Income.
Interest and other
    income was $22,000 for the six months ended June 30, 2009,
    compared with $85,000 for the six months ended June 30,
    2008. The decrease in interest income was due to lower average
    cash balances.
Interest Expense.
Interest expense was $96,000
    for the six months ended June 30, 2008, compared with
    $97,000 for the six months ended June 30, 2009.
Beneficial Conversion Feature.
For the six
    months ended June 30, 2008, we recorded $1.4 million
    in expense related to the beneficial conversion features of our
    convertible promissory notes, which were convertible into shares
    of our
Series B-2
convertible preferred stock at a discount of 25% from the
    original issuance price of our
Series B-2
convertible preferred stock. There were no outstanding notes
    with similar terms during the six months ended June 30,
    2009.
Comparison of the
    Years Ended December 31, 2008 and December 31,
    2007
Research and Development Expenses.
Research
    and development expenses were $10.9 million for the year
    ended December 31, 2008, compared with $23.9 million
    for the year ended December 31, 2007. The
    $13.0 million decrease in our research and development
    expenses reflects a one-time license initiation fee of
    $6.0 million recognized in 2007 in connection with a
    worldwide, exclusive license agreement we entered into with
    Amgen (see Note 5 to our financial statements for further
    details). The remaining decrease of $7.0 million was
    primarily attributable to reduced clinical costs associated with
    our Phase 2 clinical studies for the development of
A-002.
In
    2007, we initiated and completed two Phase 2 clinical studies
    for
A-002,
while in 2008, we initiated a single Phase 2b clinical study for
A-002.
General and Administrative Expenses.
General
    and administrative expenses were $3.0 million for the year
    ended December 31, 2008, compared with $2.5 million
    for the year ended December 31, 2007. The $0.5 million
    increase was primarily attributable to our implementation of our
    vacation policy, professional fees relating to the expansion of
    our intellectual property portfolio and travel relating to
    business development activities primarily consisting of
    scientific and industry conferences and symposiums.
Interest and Other Income.
Interest and other
    income was $178,000 for the year ended December 31, 2008,
    compared with $697,000 for the year ended December 31,
    2007. The decrease in interest and other income of approximately
    $519,000 was primarily attributable to lower average cash
    balances and lower average interest rates during 2008.
Interest Expense.
Interest expense was
    $296,000 for the year ended December 31, 2008, compared
    with no interest expense for the year ended December 31,
    2007. The interest expense during the year ended
    December 31, 2008 was due to interest recognized in
    connection with issuance of convertible promissory notes in
    February and May 2008, which were converted into shares of our
Series B-2
convertible preferred stock in connection with our
Series B-2
financing consummated in August 2008 and interest accrued in
    connection with a license fee payable due to Amgen.
Beneficial Conversion Features.
For the year
    ended December 31, 2008, we recorded $4.1 million in
    expense related to the beneficial conversion features of our
    convertible promissory notes, which were convertible into shares
    of our
Series B-2
convertible preferred stock at a discount of 25% from the
    original issue price of our
Series B-2
convertible preferred stock. There were no outstanding notes
    with similar terms during 2007.
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Table of Contents
Comparison of the
    Years Ended December 31, 2007 and December 31,
    2006
Research and Development Expenses.
Research
    and development expenses were $23.9 million for the year
    ended December 31, 2007, compared with $7.8 million
    for the year ended December 31, 2006. The
    $16.1 million increase in our research and development
    expenses reflects a one-time license initiation fee of
    $6.0 million recognized in 2007 in connection with a
    worldwide, exclusive license agreement we entered into with
    Amgen (see Note 5 to our financial statements for further
    details). The remaining increase of $10.1 million was
    primarily attributable to a full year of clinical costs
    associated with our Phase 2 clinical studies for the development
    of
A-002
and
    increases in salary and other compensation expense associated
    with increased headcount primarily consisting of clinical study
    operations support.
General and Administrative Expenses.
General
    and administrative expenses were $2.5 million for the year
    ended December 31, 2007, compared with $0.8 million
    for the year ended December 31, 2006. The $1.7 million
    increase was primarily attributable to the hiring of permanent
    finance personnel and increased professional fees for scientific
    advisors, travel for scientific conferences and facility costs.
Interest and Other Income.
Interest and other
    income was $697,000 for the year ended December 31, 2007,
    compared with $110,000 for the year ended December 31,
    2006. The increase in interest and other income of approximately
    $587,000 was primarily attributable to the higher level of cash
    available during 2007 as a result of proceeds received in August
    and December 2006 from new investors.
Interest Expense.
We did not incur any
    interest expense for the year ended December 31, 2007,
    compared with $17,000 for the year ended December 31, 2006.
    The interest expense during the year ended December 31,
    2006 was due to interest recognized in connection with issuance
    of convertible promissory notes in 2006, which were converted
    into shares of our
Series A-2
convertible preferred stock in connection with our
Series A-2
financing consummated in August 2006.
Beneficial Conversion Features.
For the year
    ended December 31, 2006, we recorded $190,000 in expense
    related to the beneficial conversion features of our convertible
    promissory notes, which were convertible into shares of our
Series A-2
convertible preferred stock at a discount of 25% from the
    original issue price per share of our
Series A-2
convertible preferred stock. There were no outstanding notes
    with similar terms during 2007.
Liquidity and
    Capital Resources
To date, we have funded our operations primarily through private
    placements of preferred stock and convertible debt. As of
    June 30, 2009, we had received approximately
    $32.4 million of cash proceeds from the sale of equity
    securities and $13.2 million from the issuance of
    convertible promissory notes that were converted into preferred
    stock, net of offering expenses. As of June 30, 2009, we
    had cash and cash equivalents of $1.3 million.
In July 2009 and September 2009, we issued and sold an aggregate
    of $10.0 million principal amount of convertible promissory
    notes to certain of our existing investors. The interest on the
    notes is 8% per annum. The principal and unpaid accrued interest
    of each note is automatically convertible into shares of equity
    securities sold in our next equity financing at a 25% discount
    to the per-share price in such financing or they are
    alternatively convertible into shares of our
Series B-2
convertible preferred stock in connection with a change of
    control of our company. In connection with the sale and issuance
    of the promissory notes, we issued warrants, with a term of five
    years, which are exercisable for the type of shares into which
    each note is converted, at the price per share at which such
    shares are sold. The warrants are exercisable for the number of
    shares equal to 25% of the principal amount of the notes should
48
Table of Contents
the accompanying notes be converted prior to April 1, 2010
    and 50% of the principal amount of the notes should the
    accompanying notes be converted on or after April 1, 2010.
We are in negotiations with certain of our existing investors
    for an aggregate of $20 million in additional equity
    financing.
Cash
    Flows
Six Months
    Ended June 30, 2009
For the six months ended June 30, 2009, we incurred a net
    loss of $7.1 million.
Net cash used in operating activities totaled $6.6 million.
    The net loss is higher than cash used in operating activities by
    $500,000. The primary drivers for the difference are adjustments
    for non-cash charges such as depreciation and amortization of
    $9,500 and stock-based compensation of $135,000 due to increased
    headcount and corresponding equity grants made to new and
    existing employees, an increase in current liabilities of
    $841,000 due to increased expenses relating to our Phase 2
    clinical study activity and a decrease in license fee payable by
    $500,000, offset by a decrease in current assets of $31,000.
No cash was used or provided by investing activities and
    financing activities during the six months ended June 30,
    2009.
Six Months
    Ended June 30, 2008
For the six months ended June 30, 2008, we incurred a net
    loss of $8.4 million.
Net cash used in operating activities totaled
    $10.0 million. The net loss is lower than cash used in
    operating activities by $1.6 million. The primary drivers
    for the difference are adjustments for non-cash charges such as
    depreciation and amortization of $12,000, stock-based
    compensation of $119,000 and beneficial conversion feature of
    $1.4 million, offset by a decrease in current assets of
    $7,000 and a decrease in current liabilities of
    $3.2 million due to payments made to vendors for Phase 2
    clinical study activities previously completed.
Net cash provided by investing activities totaled
    $4.3 million and consisted of proceeds received from the
    sale or maturity of short-term investments.
Net cash provided by financing activities totaled
    $12.3 million and consisted of the issuance of convertible
    promissory notes for $12.2 million and $53,000 of cash
    proceeds from stock option exercises.
Fiscal
    2008
For the year ended December 31, 2008, we incurred a net
    loss of $18.1 million.
Net cash used in operating activities totaled
    $17.1 million. The net loss is higher than cash used in
    operating activities by $1.0 million. The primary drivers
    for the difference are adjustments for non-cash charges such as
    depreciation and amortization of $22,000 and stock-based
    compensation of $195,000 due to increased headcount and
    corresponding equity grants made to new and existing employees,
    issuance of convertible preferred stock in lieu of interest
    payments of $156,000, beneficial conversion feature of
    $4.1 million and a decrease in current assets of $31,000,
    offset by a decrease in current liabilities of $2.6 million
    due to payments made to vendors for Phase 2 clinical study
    activities previously completed and a decrease in license fee
    payable of $1.0 million due to payments made.
Net cash provided by investing activities totaled
    $5.8 million and consisted of proceeds received from the
    sale or maturity of short-term investments.
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Table of Contents
Net cash provided by financing activities totaled
    $19.0 million and consisted primarily of private placements
    of our convertible preferred stock, through which we received
    net proceeds of $6.8 million, and issuance of convertible
    promissory notes for $12.2 million, which were converted
    into
Series B-2
convertible preferred stock during 2008.
Fiscal
    2007
For the year ended December 31, 2007, we incurred a net
    loss of $25.7 million.
Net cash used in operating activities totaled
    $15.0 million. The net loss is higher than cash used in
    operating activities by $10.7 million. The primary drivers
    for the difference are adjustments for non-cash charges such as
    depreciation and amortization of $19,000, amortization of
    discount on short-term investments of $130,000 and stock-based
    compensation of $87,000, offset by an increase in current
    liabilities of $4.8 million as a result of increased Phase
    2 clinical study expenses, an increase of license fee payable of
    $6.0 million due the completion of a licensing agreement
    with Amgen to acquire the rights to
A-623
and an
    increase in current assets of $62,000.
Net cash used in investing activities totaled $5.8 million,
    consisting primarily of purchases of short-term investments of
    $14.8 million, offset by proceeds from the sale or maturity
    of these investments totaling $9.1 million.
Net cash provided by financing activities totaled $119,000,
    which consisted of cash proceeds from the exercise of stock
    options.
Fiscal
    2006
For the year ended December 31, 2006, we incurred a net
    loss of $8.7 million.
Net cash used in operating activities totaled $5.2 million.
    The net loss is higher than cash used in operating activities by
    $3.5 million. The primary drivers for the difference are
    adjustments for non-cash charges such as depreciation and
    amortization of $8,700, stock-based compensation of $9,000,
    issuance of convertible preferred stock in exchange for license
    fee of $2.3 million to complete the licensing agreement to
    acquire the rights of a portfolio of assets, including
A-001
and
A-002,
from
    Eli Lilly and Company, or Eli Lilly, and Shionogi &
    Co., Ltd., beneficial conversion feature of $190,000 and an
    increase in current liabilities of $1.0 million relating
    primarily to the commencement of our first Phase 2 clinical
    study, offset by an increase in current assets of $39,000.
Net cash used in investing activities totaled $22,000,
    consisting primarily of purchases of capital equipment.
Net cash provided by financing activities totaled
    $25.7 million and primarily consisted of funds received
    from the private placements of our convertible preferred stock,
    through which we received net proceeds of $24.7 million,
    and issuance of convertible promissory notes for $960,000, which
    were converted into
Series A-2
and B-1 convertible preferred stock during 2006.
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Table of Contents
Contractual
    Obligations and Commitments
The following table summarizes our long-term contractual
    obligations and commitments as of June 30, 2009:
Payments Due by Period
Less than
After
Total
1 Year
1-3 Years
4-5 Years
5 Years
Operating lease obligations (1)
$
133,000
$
106,400
$
26,600
$
—
$
—
License obligations (2)
4,500,000
4,500,000
—
—
—
Total
$
4,633,000
$
4,606,400
$
26,600
$
—
$
—
(1)
Operating lease obligations reflect
    our obligation to make payments in connection with a sublease
    that commenced in October 2008 and will end on
    September 30, 2010 for approximately 7,800 square feet
    of office space and an office equipment lease, which commenced
    in October 2007 and will end in October 2010. Future minimum
    payments under these operating leases total monthly payments of
    $8,900 until the end of the lease terms.
(2)
License obligations reflect our
    obligation to Amgen under our license agreement.
The above amounts exclude potential payments to be made under
    our license agreements to our licensors that are based on the
    progress of our product candidates in development, as these
    payments are not determinable. Under our license agreement with
    Eli Lilly and Shionogi & Co., Ltd. to develop and
    commercialize certain
    sPLA
2
inhibitors, we are obligated to make additional milestone
    payments upon the achievement of certain development,
    regulatory, and commercial objectives, including milestone
    payments of $1.75 million to each of Eli Lilly and Shionogi
    & Co., Ltd. due no later than 12 months from the
    enrollment of the first patient in a Phase 3 clinical study
    for A-002. We are also obligated to pay royalties on future net
    sales of products that are developed and approved as defined by
    this collaboration. Our obligation to pay royalties with respect
    to each licensed product in each country will expire upon the
    later of (a) 10 years following the date of the first
    commercial sale of such licensed product in such country, and
    (b) the first date on which generic version(s) of the
    applicable licensed product achieve a total market share, in the
    aggregate, of 25% or more of the total unit sales of wholesalers
    to pharmacies of licensed product and all generic versions
    combined in the applicable country.
Also excluded from the table above are potential milestone
    payments on the development of
A-623.
Under
    our license agreement with Amgen to develop and commercialize
A-623,
we
    are obligated to make additional milestone payments upon the
    achievement of certain development, regulatory, and commercial
    objectives. We are also obligated to pay royalties on future net
    sales of products that are developed and approved as defined by
    this collaboration. Our royalty obligations as to a particular
    licensed product will be payable, on a
country-by-country
and licensed
product-by-licensed
product basis, for the longer of (a) the date of expiration
    of the last to expire valid claim within the licensed patents
    that covers the manufacture, use or sale, offer to sell, or
    import of such licensed product by us or a sublicensee in such
    country, or (b) 10 years after the first commercial sale of
    the applicable licensed product in the applicable country.
Funding
    Requirements
We expect to incur substantial expenses and generate significant
    operating losses as we continue to advance our product
    candidates into preclinical studies and clinical studies and as
    we:
•
initiate a Phase 3 clinical study for
A-002;
•
continue clinical development of
A-001
and
A-623;
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Table of Contents
•
hire additional clinical, scientific and management
    personnel; and
•
implement new operational, financial and management information
    systems.
Our future capital uses and requirements depend on numerous
    forward-looking factors. These factors include the following:
•
the progress of preclinical development and clinical studies of
    our product candidates;
•
the time and costs involved in obtaining regulatory approvals;
•
delays that may be caused by evolving requirements of regulatory
    agencies;
•
the costs involved in filing and prosecuting patent applications
    and enforcing or defending patent claims;
•
our ability to establish, enforce and maintain selected
    strategic alliances; and
•
the acquisition of technologies, product candidates and other
    business opportunities that require financial commitments.
To date, we have not generated any revenue. We do not expect to
    generate revenue unless or until we obtain regulatory approval
    of, and commercialize, our product candidates. We expect our
    continuing operating losses to result in increases in cash used
    in operations over the next several years. Our future capital
    requirements will depend on a number of factors including the
    progress and results of our clinical studies, the costs, timing
    and outcome of regulatory review of our product candidates, our
    revenue, if any, from successful development and
    commercialization of our product candidates, the costs of
    commercialization activities, the scope, progress, results and
    costs of preclinical development, laboratory testing and
    clinical studies for other product candidates, the emergence of
    competing therapies and other market developments, the costs of
    preparing, filing and prosecuting patent applications and
    maintaining, enforcing and defending intellectual property
    rights, the extent to which we acquire or invest in other
    product candidates and technologies, and our ability to
    establish collaborations and obtain milestone, royalty or other
    payments from any collaborators.
We expect the proceeds of this offering, together with our
    existing resources as of the date of this prospectus, to be
    sufficient to fund our planned operations, including our
    continued product candidate development, for at least the next
    12 months. However, we may require significant additional
    funds earlier than we currently expect to conduct additional
    clinical studies and seek regulatory approval of our product
    candidates. Because of the numerous risks and uncertainties
    associated with the development and commercialization of our
    product candidates, we are unable to estimate the amounts of
    increased capital outlays and operating expenditures associated
    with our current and anticipated clinical studies.
Additional funding may not be available to us on acceptable
    terms or at all. In addition, the terms of any financing may
    adversely affect the holdings or the rights of our stockholders.
    For example, if we raise additional funds by issuing equity
    securities or by selling debt securities, if convertible,
    further dilution to our existing stockholders may result. To the
    extent our capital resources are insufficient to meet our future
    capital requirements, we will need to finance our future cash
    needs through public or private equity offerings, collaboration
    agreements, debt financings or licensing arrangements.
If adequate funds are not available, we may be required to
    terminate, significantly modify or delay our development
    programs, reduce our planned commercialization efforts, or
    obtain funds through collaborators that may require us to
    relinquish rights to our technologies or product candidates that
    we might otherwise seek to develop or commercialize
    independently. We may elect to raise additional funds even
    before we need them if the conditions for raising capital are
    favorable.
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Table of Contents
Off-Balance Sheet
    Arrangements
We do not currently have, nor have we ever had, any
    relationships with unconsolidated entities or financial
    partnerships, such as entities often referred to as structured
    finance or special purpose entities, established for the purpose
    of facilitating off-balance sheet arrangements or other
    contractually narrow or limited purposes. In addition, we do not
    engage in trading activities involving non-exchange traded
    contracts.
Quantitative and
    Qualitative Disclosure About Market Risk
Our primary exposure to market risk is interest income
    sensitivity, which is affected by changes in the general level
    of U.S. interest rates. However, since a majority of our
    investments are in short-term certificates of deposit and money
    market funds, we do not believe we are subject to any material
    market risk exposure. We do not have any foreign currency or
    other derivative financial instruments.
Recent Accounting
    Pronouncements
In June 2009, the FASB issued Statement No. 168,
The
    FASB Accounting Standards Codification and the Hierarchy of
    Generally Accepted Accounting Principles-a replacement of FASB
    Statement No. 162
, or SFAS 168. SFAS 168
    establishes the FASB Accounting Standards Codification as the
    sole source of GAAP. Pursuant to the provisions of
    SFAS 168, we will update references to GAAP in our
    financial statements issued for the period ending
    September 30, 2009 and thereafter. The adoption of
    SFAS 168 will have no impact on our financial position or
    results of operations.
In June 2008, the EITF reached a consensus on EITF Issue
No. 07-5,
Determining Whether an Instrument (or Embedded Feature) is
    Indexed to an Entity's Own Stock
, or
EITF 07-5.
EITF 07-5
provides guidance on how to determine if certain instruments (or
    embedded features) are considered indexed to a company's
    own stock, including instruments similar to warrants to purchase
    the company's stock.
EITF 07-5
requires companies to use a two-step approach to evaluate an
    instrument's contingent exercise provisions and settlement
    provisions in determining whether the instrument is considered
    to be indexed to its own stock and therefore exempt from the
    application of SFAS No. 133,
Accounting for
    Derivative Instruments and Hedging Activities
. Although
EITF 07-5
is effective for fiscal years beginning after December 15,
    2008, any outstanding instrument at the date of adoption will
    require a retrospective application of the accounting through a
    cumulative effect adjustment to retained earnings upon adoption.
    We do not expect the adoption of
EITF 07-5
to have a material impact on either our financial position or
    results of operations.
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BUSINESS
Overview
We are a biopharmaceutical company focused on developing and
    commercializing products to treat serious diseases associated
    with inflammation, including cardiovascular and autoimmune
    diseases. We currently have one Phase 3 ready clinical program,
    A-002, and two Phase 2 clinical programs, A-001 and A-623. Two
    of our product candidates,
A-002
and
A-001,
are
    designed to inhibit a novel enzyme target known as secretory
    phospholipase
    A
2
,
    or
    sPLA
2
.
    Elevated levels of
    sPLA
2
have been implicated in a variety of acute inflammatory
    conditions, including acute coronary syndrome and acute chest
    syndrome associated with sickle cell disease, as well as in
    chronic diseases, including stable coronary artery disease, or
    CAD. In addition, our Phase 2 ready product candidate,
A-623,
targets elevated levels of B-lymphocyte stimulator, or BLyS,
    which has been associated with a variety of B-cell mediated
    autoimmune diseases, including systemic lupus erythematosus, or
    lupus, lupus nephritis, or LN, rheumatoid arthritis, multiple
    sclerosis, Sjögren's Syndrome, Graves' Disease
    and others.
We have worldwide rights to develop and commercialize our
    products in all indications and markets, with the exception of
    Japan where Shionogi & Co., Ltd. retains commercial
    rights to our
    sPLA
2
product candidates. Our current development plans are focused on
    acute treatment and orphan indications that may provide an
    accelerated and cost-efficient path to regulatory approval and
    commercialization. We believe that certain of these markets can
    be commercialized through a limited specialty sales force. In
    addition, we believe that our product candidates can also
    address market opportunities in chronic indications and we may
    seek development and commercialization partners to address
    chronic, non-specialty and international markets.
Inflammation and
    Diseases
The inflammatory process is a powerful and essential early line
    of defense for protection against injury and to repair body
    tissue. As a result, it is tightly regulated by the body to
    ensure appropriate activation and prompt resolution. However,
    under certain circumstances, the normal process can malfunction,
    leading to acute or chronic inflammation or inappropriate
    activation directed against the body's own tissues. All of
    these circumstances can cause significant damage to cells and
    tissues, leading to a range of inflammatory disorders, such as
    cardiovascular and autoimmune diseases.
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Our
    sPLA
2
Inhibition Portfolio
Building upon our knowledge of the regulation of inflammatory
    pathways and the growing body of evidence that links
    inflammation to multiple disease states, we believe that we have
    developed a leadership position in the field of
    sPLA
2
inhibition. Our
    sPLA
2
inhibitors have been studied in a number of inflammatory
    disorders in multiple therapeutic areas, which validate the
    effect of our
    sPLA
2
inhibitors on
    sPLA
2
concentration and activity, both of which have been implicated
    in acute coronary syndrome and acute chest syndrome associated
    with sickle cell disease. We currently have the two most
    advanced
    sPLA
2
inhibitors in clinical development.
Our lead product candidate, varespladib methyl,
A-002
(a
    prodrug of
A-001),
is a
    Phase 3 ready oral broad-spectrum inhibitor of
    sPLA
2
enzymes and is being developed initially for short-term
    (16-week) treatment of patients experiencing an acute coronary
    syndrome. The American Heart Association defines acute coronary
    syndrome as any group of clinical symptoms related to acute
    myocardial ischemia, including unstable angina, or UA.
A-002,
when
    combined with lipid-lowering therapies, is one of only a few
    therapeutics in development with the potential to offer a unique
    and synergistic approach targeting inflammation, elevated lipid
    levels and atherosclerosis as part of physician-directed
    standard of care. Through its novel mechanism of action,
A-002
may
    have applications in a broad range of acute and chronic
    cardiovascular diseases. Based on the successful results of our
    recently completed Phase 2b clinical study and assuming timely
    agreement with the U.S. Food and Drug Administration, or
    FDA, on our Special Protocol Assessment, or SPA, we plan to
    initiate a Phase 3 study in patients with acute coronary
    syndrome by the end of 2009.
Our second product candidate, varespladib sodium,
A-001,
is an
    intravenously administered inhibitor of
    sPLA
2,
which
    is in a Phase 2 clinical study for the prevention of acute chest
    syndrome associated with sickle cell disease. Acute chest
    syndrome is a form of inflammation-induced lung failure and is
    the most common cause of death in patients with sickle cell
    disease. Given that there are currently no approved drugs for
    the prevention of acute chest syndrome associated with sickle
    cell disease, we have received orphan drug designation and fast
    track status from the FDA for
A-001.
Based
    on a pre-specified review of our Phase 2 clinical study interim
    results by a Data Safety Monitoring Board, or DSMB, and the
    positive effects observed with the administration of
A-001,
we
    have an end of Phase 2 meeting scheduled with the FDA to review
    the interim data from our Phase 2 clinical study and to
    discuss the Phase 3 clinical study design for the use of
A-001
to
    prevent acute chest syndrome associated with sickle cell disease.
We also have a broad series of additional
    sPLA
2
inhibitors designed with distinct chemical scaffolds in
    preclinical development. These product candidates are intended
    to provide new
    sPLA
2
inhibitors for our existing target indications as well as new
    candidates for other therapeutic areas. Our lead candidate
    within the series,
A-003,
is
    chemically distinct from
A-001
and
A-002
and
    has shown increased potency against the target enzymes and
    higher drug exposure after dosing in preclinical studies. As a
    result,
A-003
may
    confer beneficial pharmacodynamic effects in patients and can be
    formulated for oral or intravenously administered use. We plan
    to file an investigational new drug application, or IND, for
A-003
in the
    future and we may continue to assess additional new compounds.
We have explored the use of our
A-002
and
A-001
sPLA
2
inhibitors as both topical and inhalation therapies in animal
    models for the treatment of atopic dermatitis and asthma,
    respectively. Results from a standard mouse model of edema
    demonstrated that topically administered
A-002
was
    equivalent to the marketed immunosuppressant Elidel in resolving
    inflammation. In a sheep model of allergen-induced asthma,
    inhaled
A-002
and
A-001
demonstrated an improvement in lung function similar to inhaled
    steroids.
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sPLA
2
Biology
sPLA
2
is a family of enzymes directly involved in the acute and
    chronic steps of an inflammatory response.
    sPLA
2
activity is highly elevated during the early stages of
    inflammation, and its acute effects serve to substantially
    amplify the inflammatory process. The
    sPLA
2
enzyme catalyzes the first step in the arachidonic acid pathway
    of inflammation, one of the main metabolic processes for the
    production of inflammatory mediators, which, when amplified, are
    responsible for causing damage to cells and tissue.
    Specifically,
    sPLA
2
breaks down phospholipids that result in the formation of fatty
    acids such as arachidonic acid. Arachidonic acid is subsequently
    metabolized to form several pro-inflammatory and thrombogenic
    molecules.
In cardiovascular diseases such as acute coronary syndrome,
    excess
    sPLA
2
activity has acute and chronic implications on disease
    progression and patient outcomes. In published studies and our
    own clinical studies, significant elevations in
    sPLA
2
activity and mass have been seen from 24 hours to two weeks
    following an acute coronary syndrome and can persist for up to
    an additional 12 weeks thereafter. Shortly after a heart
    attack,
    sPLA
2
is dramatically elevated, amplifying inflammation that is
    associated with more frequent and secondary cardiovascular
    events. This resulting elevated level of inflammation is
    problematic for acute coronary syndrome patients who are already
    at higher risk of complications during the weeks following their
    initial event. For example, increased inflammation can
    destabilize vulnerable vascular lesions or atherosclerotic
    plaque, destroy damaged but viable cardiac cells and adversely
    modify lipids, any of which may lead to the recurrence of a
    major adverse cardiovascular event, or MACE.
Historical and recent clinical results have demonstrated
    circulating levels of
    sPLA
2
are significantly correlated with a well-established
    inflammatory marker, C-reactive protein, or CRP. These and other
    clinical studies have also demonstrated that
    sPLA
2
independently predicts coronary events in patients that have
    recently experienced an acute coronary syndrome and patients
    with stable CAD independent of other standard risk factors. In a
    stable cardiovascular patient,
    sPLA
2
not only sustains chronic vascular inflammation as discussed
    earlier, but it also adversely remodels lipoproteins such as
    low-density lipoprotein cholesterol, or LDL-C.
    sPLA
2
interacts with LDL-C in a series of reactions that result in
    smaller, more pro-atherogenic and pro-inflammatory LDL-C
    particles. Moreover, these modified lipoproteins have a reduced
    affinity for LDL-C receptors, which are responsible for removal
    of cholesterol from the body. As a result, LDL-C remains in
    circulation longer and has a greater tendency to deposit in the
    artery wall. This increased LDL-C deposition and sustained
    chronic vascular inflammation may contribute to the development
    of atherosclerosis.
The family of
    sPLA
2
enzymes includes at least three forms that play a role in
    inflammation and the development of cardiovascular disease or
    lung injury. While
    sPLA
2
enzymes are a member of the phospholipase family that includes a
    lipoprotein associated phospholipase
    A
2
,
    or
    Lp-PLA
2
,
    there are important distinctions. Although both are present in
    blood,
    Lp-PLA
2
is mostly bound to LDL-C and high-density lipoprotein, or HDL,
    while
    sPLA
2
enzymes are not. Based on our clinical studies, we believe that
    our
    sPLA
2
inhibitor,
A-002,
can
    be distinguished from other
    PLA
2
enzyme inhibitors such as those targeted at inhibiting
    Lp-PLA
2
because
A-002
treatment:
•
is synergistic with HMG-CoA reductase inhibitors, or statins, in
    reducing LDL-C, total cholesterol, and non-HDL cholesterol in
    patients with CAD;
•
lowers circulating small, dense and pro-atherogenic, or
    plaque-building LDL-C particles, while
    Lp-PLA
2
inhibition has not demonstrated similar effects;
•
has been shown to lower CRP, a well-established marker of
    inflammation in a statistically significant manner; and
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•
reduces plaque volume and aneurysms in standard rodent models of
    atherosclerosis and has demonstrated synergistic reductions of
    plaque volume in standard rodent models of atherosclerosis when
    used in combination with statins.
In diseases such as acute chest syndrome, a very serious form of
    lung injury associated with sickle cell disease,
    sPLA
2
acts acutely on a number of substrates that amplify the
    inflammatory disease process. Sickle cell disease is a genetic
    disorder which leads to the structural alteration, or
    "sickling," of otherwise healthy red blood cells.
    Patients with sickle cell disease experience periods of intense
    pain known as vaso-occlusive crisis, or VOC, as structurally
    altered red blood cells bind together and occlude small blood
    vessels that supply blood and nutrients to vital tissue and
    bone.
    sPLA
2
levels are dramatically elevated in sickle cell patients during
    an episode of VOC as well as within 24 to 48 hours of the
    onset of acute chest syndrome. During VOC, microscopic fat
    emboli, or droplets of fat from the bone marrow, are prevalent
    and can break free and become lodged in the lung. These emboli
    are substrates for
    sPLA
2
enzymes and provide fuel for an already established inflammatory
    response, increasing lung injury. In addition,
    sPLA
2
has been demonstrated to degrade human lung surfactant, a
    component necessary in maintaining appropriate lung function,
    which further complicates lung injury.
We believe that early intervention with a drug designed to
    inhibit
    sPLA
2
activity may offer a unique opportunity to reduce the
    complications associated with certain inflammatory diseases such
    as acute coronary syndrome in cardiovascular patients and acute
    chest syndrome in patients with sickle cell disease.
Our BLyS
    Antagonism Portfolio
BLyS has been associated with a wide range of B-cell mediated
    autoimmune diseases including lupus, LN, rheumatoid arthritis,
    multiple sclerosis, Sjögren's Syndrome, Graves'
    Disease and others. The role of BLyS in lupus has recently been
    clinically validated in multiple clinical studies with other
    BLyS antagonists. We intend to advance the development of our
    BLyS antagonist,
A-623,
a
    selective peptibody, to exploit its broad potential clinical
    utility in autoimmune diseases. A peptibody is a novel fusion
    protein that is distinct from an antibody. We have worldwide
    rights to
A-623
in all
    potential indications, and pending further data from competitor
    clinical studies, we plan to initiate a Phase 2 clinical study
    in lupus in the second half of 2010.
A-623
demonstrates anti-BLyS activity and has been shown to be safe
    and effective in selectively modulating and reducing B-cells in
    two Phase 1 clinical studies in lupus patients. We believe
A-623
may
    offer a number of potential differentiations over other BLyS
    antagonists, as well as other novel B-cell directed therapies
    including:
•
dosing flexibility with both subcutaneous and intravenous routes
    of delivery;
•
selective modulation and reduction of relevant B-cell
sub-types
in
    lupus patients;
•
the ability to bind to both membrane-bound and soluble BLyS;
•
a molecular structure, which may confer differentiating
    pharmacokinetic and pharmacodynamic characteristics potentially
    providing efficacy and dosing benefits;
•
differentiated intellectual property as a peptibody
    circumventing existing antibody, antibody-fragment and other
    related patents; and
•
potential safety and manufacturing advantages.
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Product
    Development Programs
We have focused our product development programs on
    anti-inflammatory therapeutics for cardiovascular diseases,
    lupus and other serious diseases for which we believe that
    current treatments are either inadequate or non-existent. Our
    current product development programs are listed in the table
    below.
Worldwide
Development
Product
Product Candidate
Phase
Rights
Description
Next Milestone
A-002-varespladib
methyl with atorvastatin, also known as Lipitor in the
    United States
Phase 3 ready
Anthera (1)
• Orally administered
    sPLA
2
inhibitor
• Initiate Phase 3 clinical study by the end of 2009
• Indicated for the prevention of secondary MACE
    following an acute coronary syndrome (16-week treatment)
A-002-varespladib
methyl with niacin
Phase 2 ready
Anthera (1)
• Orally administered
    sPLA
2
inhibitor to improve lipid profiles and reduce flushing in
    cardiovascular patients on niacin therapy
• Initiate initial prospective Phase 2 clinical study
    to explore safety and efficacy
A-002-varespladib
methyl
Phase 2 investigator
study
Anthera (1)
• Orally administered
    sPLA
2
inhibitor to reduce inflammatory markers in patients undergoing
    interventional cardiovascular procedures
• Enrollment complete. Data publication targeted in
    2010
A-001-varespladib
sodium
Phase 2
Anthera (1)
• Intravenous
    sPLA
2
inhibitor with orphan drug and fast track status
• Complete end of Phase 2 meeting with the FDA in late
    2009 to review the interim data from our Phase 2 clinical study
    and to discuss the Phase 3 clinical study design for the use of
    A-001 to prevent acute chest syndrome associated with sickle
    cell disease
• Indicated for prevention of acute chest syndrome in
    hospitalized patients with sickle cell disease
A-623
Phase 2 ready
Anthera
• Selective peptibody antagonist of BLyS cytokine
    being developed for the treatment of B-cell mediated autoimmune
    diseases
• Initiate Phase 2 clinical study in the second half
    of 2010
• Indicated for systemic lupus erythematosus
A-003
Preclinical
Anthera (1)
• Under development as a second generation
    sPLA
2
inhibitor
• Continue preclinical development
• Indicated for cardiovascular diseases
• Initiate IND enabling studies
(1)
Shionogi & Co., Ltd.
    retains product rights in Japan
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A-002
A-002
is an
    orally administered pro-drug of
A-001,
which
    is a broad-spectrum, once-daily inhibitor of the IIa, V and X
    forms of the
    sPLA
2
enzyme that has demonstrated potent anti-inflammatory,
    lipid-lowering and lipid-modulating treatment effects in
    multiple clinical studies. We plan to initiate a pivotal Phase 3
    clinical study to evaluate
A-002
in
    combination with statin therapy for the short-term (16-week)
    treatment of acute coronary syndrome by the end of 2009,
    assuming we reach timely agreement on an SPA with the FDA. An
    SPA provides an opportunity for the clinical study sponsor to
    receive feedback from the FDA regarding the adequacy of a
    clinical study to meet regulatory and scientific requirements if
    conducted in accordance with the SPA agreement. An SPA is not a
    guarantee of an approval of a product candidate or any
    permissible claims about the product candidate.
To date, a total of 1,107 patients and healthy volunteers
    in at least 15 clinical studies have been exposed to
A-002.
The
    administration of
A-002
was
    generally safe and well-tolerated in studies where patients were
    exposed to a maximum of 48 weeks of therapy.
A-002
has
    been studied in combination with atorvastatin in a Phase 2b
    clinical study in acute coronary syndrome patients and two
    earlier Phase 2 clinical studies in stable CAD patients, the
    majority of whom were on various statin therapies.
We currently have all worldwide product rights to
A-002,
except in Japan where Shionogi & Co., Ltd. retains
    rights. We originally licensed our
    sPLA
2
inhibitor portfolio, including
A-002
and
A-001,
from
    Eli Lilly & Company, or Eli Lilly, and
    Shionogi & Co., Ltd. in July 2006.
Market
    Opportunity—Acute Coronary Syndrome
According to the American Heart Association, over
    18 million people in the United States have experienced an
    acute coronary syndrome and an estimated 1.5 million
    Americans will have a new or recurrent heart attack. In
    addition, the American Heart Association estimates that
    worldwide, cardiovascular disease kills an estimated
    17.5 million people each year. According to British Heart
    Foundation statistics, CAD, which often leads to acute coronary
    syndrome or heart attacks, accounts for 1.9 million deaths
    in Europe annually. According to the World Health Organization,
    or the WHO, cardiovascular disease is the most common cause of
    death in the western world and a major cause of hospital
    admissions. In addition, the American Heart Association provides
    that for people over the age of 40, 20% of them will die within
    one year following an initial heart attack, and over one-third
    of them will die within the first five years of an initial heart
    attack. These numbers are expected to increase given an aging
    population, as well as the rising epidemics of diabetes and
    obesity, two conditions known to increase the risk of acute
    coronary syndrome.
The American Heart Association defines acute coronary syndrome
    as any group of clinical signs and symptoms related to acute
    myocardial ischemia. Acute myocardial ischemia can often present
    as chest pain due to insufficient blood supply to the heart
    muscle that results from CAD. Acute coronary syndrome covers a
    spectrum of clinical conditions that include ST-elevated
    myocardial infarction, or STEMI, non-ST-elevated myocardial
    infarction, or NSTEMI, and UA. Both STEMI and NSTEMI are forms
    of a heart attack, where damage to the heart muscle occurs due
    to ischemia, which is lack of blood flow to tissues due to a
    blockage of a vessel. Typically, UA results in chest pain from
    ischemia, but does not cause permanent damage to the heart
    muscle.
Furthermore, for any patient who experiences an acute coronary
    syndrome, the risk of a secondary MACE is significantly
    increased immediately following the initial event. Large
    clinical outcome studies such as MIRACL and PROVE-IT have
    previously reported, and data from our own FRANCIS Phase 2b
    clinical study supports, the 16-week rate of secondary MACE in
    acute coronary syndrome patients to be between 6.1% and 14.8%.
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Current treatments for CAD other than interventional procedures
    include a variety of medications such as aspirin, statins and
    anti-platelet and anti-coagulant therapeutics. These medications
    are used to offer both acute and chronic benefits to patients.
    For patients presenting with acute coronary syndrome,
    therapeutics are administered quickly to improve blood flow to
    the heart and limit the risk associated with continued ischemia
    and thrombosis, which is the formation of a blood clot inside a
    vessel, which obstructs blood flow. In addition, interventional
    procedures and other medications, such as statins that are
    initiated early primarily for lipid benefits, are continued in
    an attempt to provide chronic protection against secondary MACE
    through improvement in lipid profiles such as lowering
LDL-C.
Inflammation in
    Cardiovascular Disease
In patients experiencing an acute coronary syndrome, the
    relationship between higher levels of inflammation, as measured
    by CRP,
    sPLA
2
and interleukin-6, or IL-6, and increased risk for MACE has been
    demonstrated extensively. In numerous clinical studies with a
    variety of therapeutic interventions, reductions in CRP have
    been correlated with reductions in subsequent MACE. We believe,
    if our Phase 3 pivotal study is successful, that
A-002
would
    represent the first anti-inflammatory therapeutic approved for
    prevention of MACE.
CRP is the most commonly used marker of inflammation. It has
    been independently and strongly correlated with adverse
    cardiovascular outcomes in multiple clinical studies. Although a
    causative role for CRP has not been established, inflammation is
    known to promote acute coronary syndrome and CRP may play a
    direct role in both vascular inflammation as well as plaque
    rupture.
Statins reduce the level of CRP and other markers of
    inflammation in patients with stable CAD. In April 2001, the
    Journal of the American Medical Association published results
    from the MIRACL study describing the effect of statins in acute
    coronary syndrome, where inflammation is greatly elevated. 3,086
    were randomized within 96 hours of their index event to
    treatment with high-dose atorvastatin or placebo. Atorvastatin
    significantly reduced secondary MACE after 16 weeks. A
    second paper from the same study, published in Circulation in
    2003, described the rapid decline of inflammatory markers in
    patients on statin treatment that was associated with reduced
    MACE. After 16 weeks, atorvastatin reduced CRP levels by
    34%.
More recently, in 2005, the New England Journal of Medicine
    published data from the PROVE-IT study. A total of
    3,745 patients were randomized to either intensive statin
    therapy with 80 mg atorvastatin or moderate statin therapy
    with 40 mg pravastatin. Patients with low CRP or
LDL-C
had
    fewer MACE than those with higher levels of either CRP or LDL-C.
    Patients who had both LDL-C < 70 mg/dL and CRP <
    1 mg/L had the fewest number of secondary events over all.
LDL-C in
    Cardiovascular Disease
The direct relationship between lower
LDL-C
levels
    and reduced risk for major cardiovascular events has been
    consistently demonstrated for over a decade in 18 outcome
    studies involving over 119,000 patients. Results from large
    clinical outcome studies demonstrate achieving incrementally
    lower
LDL-C
levels reduces the risk of future cardiovascular events and
    provides continued patient benefit. As a result, the lipid
    treatment guidelines have been revised to establish more
    aggressive
LDL-C
treatment goals over time. The most recent guidelines from the
    National Cholesterol Education Program's Adult Treatment
    Panel III, or NCEP ATP III, updated in 2004 advocate
    treatment goals for
LDL-C
below
    100 mg/dL for high-risk patients and 70 mg/dL for very
    high-risk patients. Given the breadth of more recent clinical
    data available, we believe that future treatment guidelines from
    the NCEP will likely establish new
LDL-C
treatment goals that apply the 70 mg/dL standard or lower
    to a broader population of at risk patients. Patients enrolled
    in our FRANCIS Phase 2b clinical study
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and our planned Phase 3 acute coronary syndrome study represent
    high-risk patients as defined by the NCEP.
In order to achieve these more aggressive
LDL-C
targets, doctors prescribe other approved lipid-lowering
    therapies such as cholesterol absorption inhibitors, nicotinic
    acid and fish oils in combination with statins to further reduce
    LDL-C. Still, many acute coronary syndrome patients who
    represent the NCEP ATP III guideline categories of
    high-risk and very high-risk do not achieve these recommended
    lipid goals despite maximum lipid-lowering therapies. Moreover,
    substantial residual risk remains even among the group of
    patients that do achieve these aggressive
LDL-C
goals
    suggesting additional biological mechanisms, including
    inflammation, may be relevant.
This is exemplified in a November 2008 publication in the New
    England Journal of Medicine that detailed the results from a
    17,000 patient, multinational, primary prevention study
    named JUPITER. The study randomized patients with relatively
    normal levels of
LDL-C,
but
    elevated levels of inflammation based on CRP to statin or
    placebo therapy. The JUPITER study was stopped early because
    those patients randomized to statin therapy demonstrated a
    statistically significant reduction in CRP, which also
    translated to a statistically significant reduction in
    cardiovascular events versus those on placebo. The reduction in
    events was well in excess of that which would be predicted from
    historical data evaluating
LDL-C
reductions alone. While these results were generated in a
    primary prevention setting, we believe that the benefits of
    reducing inflammation may prove to be even more meaningful in
    settings where patients are in a hyper-inflammatory state, such
    as following an acute coronary syndrome. As a result of these
    studies, we believe that there is a substantial need for novel
    therapies that provide meaningful reductions in inflammation
    while also improving
LDL-C
levels
    in high-risk cardiovascular patients beyond the benefits of
    statin therapy. Therefore, it is our belief that targeting
    inflammation and elevated
LDL-C
with
    sPLA
2
inhibition during the early phase of an acute coronary syndrome
    will further improve patient outcomes.
We believe that
A-002
is one
    of only a few novel drugs in development with the potential to
    offer, through a unique mechanism, anti-inflammatory activity,
    as measured by reductions in
    sPLA
2
,
    CRP and IL-6, lipid-lowering, as measured by
LDL-C,
and
    lipid-modulating activity beyond that achievable with statin
    therapy alone. Furthermore, because of their complementary
    mechanisms, we believe that the combination of statins and
A-002
can
    provide synergistic anti-inflammatory and lipid-lowering
    benefits. Additionally, we have preliminary data to suggest that
A-002
may be
    synergistic with other cardiovascular therapeutic regimens, such
    as niacin.
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Pivotal Phase 3
    Clinical Study—Acute Coronary Syndrome
In February 2008, based on the results from Phase 2 stable CAD
    studies, as discussed below, we met with the FDA to discuss
    plans for our planned Phase 3 clinical study during our end of
    Phase 2 meeting. As a result of that meeting and the results
    from our recently completed Phase 2b acute coronary syndrome
    study, we are in discussions with the FDA to obtain an SPA
    agreement for a pivotal Phase 3 clinical study of
A-002
for
    the acute and short-term
(16-week)
treatment of patients who have recently experienced an acute
    coronary syndrome. Assuming an SPA agreement is obtained in a
    timely manner, the clinical study is expected to begin by the
    end of 2009 and is expected to be completed in the second half
    of 2011. A DSMB will evaluate the performance of the clinical
    study over time to ensure patient safety and to review certain
    blinded laboratory data from the clinical study. After a minimum
    of 1,000 patients have completed the 16-week treatment in
    the Phase 3 clinical study, the DSMB will conduct a
    biomarker futility analysis to ensure patient levels of
    inflammation, as measured by
    sPLA
2
,
    CRP and IL-6, and lipid profiles, as measured by
LDL-C,
have
    met pre-specified reductions from baseline at various
    time-points. These markers of inflammation and lipid profiles
    are well-established in the clinical community and
    pharmaceutical industry as independent predictors of future
    cardiovascular risk and, if positive, will provide additional
    validation of our previous findings from the FRANCIS
    Phase 2b clinical study. Other than being informed by the
    DSMB to continue or stop the clinical study, we will remain
    blinded to all clinical study data including the biomarker
    results.
Our planned multinational, randomized, double-blind,
    placebo-controlled Phase 3 acute coronary syndrome study will
    enroll up to 6,500 patients in up to 15 countries and up to
    500 centers. However, enrollment may be stopped anytime after a
    minimum of 395 adjudicated endpoint events as described in the
    protocol have occurred. We may increase the sample size if the
    adjudicated endpoint events occur at a lower rate than we
    expect. Patients will be randomized at entry to receive either
    500 mg once-daily
A-002
or
    placebo in addition to any dose of atorvastatin. The dose of
    atorvastatin may be adjusted after eight weeks based on the
    subjects'
LDL-C
measurement in accordance with local country treatment
    guidelines. Upon completion of a planned animal combination
    study, the Phase 3 protocol may be amended to allow the use
    of simvastatin, a broadly available generic statin, as an
    alternative to atorvastatin. Patients will be treated with A-002
    or placebo and any dose of atorvastatin for 16 weeks and
    survival status will be obtained for patients six months after
    the completion of dosing. The clinical study will recruit a
    similar population of high-risk cardiovascular patients with
    acute coronary syndrome to those enrolled in the FRANCIS study.
    As in FRANCIS,
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randomization must occur within 96 hours of hospitalization
    for the acute coronary syndrome event, or if already
    hospitalized, within 96 hours of event diagnosis. Patient
    blood chemistry will be evaluated at baseline, 24 hours,
    48 hours and weeks one, two, four, eight and 16.
    Randomization will be stratified by the presence or absence of
    lipid-lowering therapy prior to the index event as well as the
    type of acute coronary syndrome event, such as UA, NSTEMI or
    STEMI. The number of subjects who undergo percutaneous coronary
    intervention following the index event and prior to
    randomization will be limited to no more than 40% of the total
    patient population.
The primary endpoint of the clinical study will be to determine
    whether 16 weeks of once-daily treatment with
A-002
plus
    any dose of atorvastatin is superior to placebo plus
    atorvastatin in the time to the first occurrence of the combined
    endpoint of cardiovascular death, non-fatal myocardial
    infarction, non-fatal stroke, or documented UA with objective
    evidence of ischemia requiring hospitalization. A secondary
    endpoint for the clinical study is to determine whether
A-002
plus
    any dose of atorvastatin is superior to placebo plus
    atorvastatin in the time to the first occurrence of the combined
    endpoint of all cause mortality, non-fatal myocardial
    infarction, non-fatal stroke, or documented UA with objective
    evidence of ischemia requiring hospitalization. A comparison
    between treatment groups will also be made for each component of
    the primary efficacy endpoint. Additionally, the time to
    multiple occurrences of any non-fatal component of the composite
    primary endpoint will also be explored. The biomarkers CRP,
IL-6,
LDL-C
and
    sPLA
2
,
    will also be evaluated at each time point of the clinical study.
Historical
    Clinical Studies
Phase 2b Acute Coronary Syndrome Study—FRANCIS (Fewer
    Recurrent Acute coronary events with Near-term Cardiovascular
    Inflammation Suppression)
In July 2008, we initiated a randomized, double-blind,
    placebo-controlled Phase 2b clinical study that enrolled 625
    acute coronary syndrome patients across 35 centers in three
    countries. Given the drug's combined anti-inflammatory,
    lipid-lowering and lipid-modulating effects, we evaluated the
    effects of
A-002
in
    acute coronary syndrome patients with high levels of
    inflammation and dislipidemia. The clinical study was designed
    to evaluate the safety and efficacy of
A-002
when
    co-administered with the highest dose (80 mg) of
    atorvastatin. The clinical study randomized all patients to a
    minimum of 24 weeks of treatment with either 500 mg
    once-daily
A-002
or
    placebo in combination with 80 mg atorvastatin and
    physician-directed standard of care.
Patients were eligible for enrollment if they had a diagnosis of
    UA, NSTEMI or STEMI. In addition, they must have had one of the
    following risk factors: diabetes, body mass index (BMI)
³
25
    kg/m2, CRP
³
2 mg/L
    (NSTEMI/STEMI) or CRP
³
3 mg/L
    (UA) and presence of three (pre-defined) characteristics of
    metabolic syndrome. Subjects must have been randomized
    within 96 hours of hospital admission for the index
    event, or, if already hospitalized, within 96 hours of
    index event diagnosis. Any percutaneous revascularization was
    required to occur prior to randomization. In addition, because
    we wanted to assess the effects of
A-002
with
    the highest available dose of atorvastatin, patients were not
    allowed to use any other lipid-lowering therapies during the
    clinical study.
Follow-up
visits for evaluation occurred post-randomization at weeks two,
    four, eight, 12, 16, 20, 24 and then monthly thereafter until
    clinical study completion. All enrolled subjects remained on
    treatment until all subjects had been treated for a minimum of
    24 weeks or until the occurrence of MACE. Patients
    randomized into the FRANCIS study had baseline characteristics
    such as
LDL-C
indexed-event risk factors and demographics similar to other
    studies of this type. All patients who completed the clinical
    study received a final evaluation.
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The primary efficacy endpoint evaluated the change in
LDL-C
after
    500 patients completed eight weeks of treatment.
LDL-C
is the
    most widely recognized surrogate for predicting cardiovascular
    risk where percentage reductions in
LDL-C
have
    been highly correlated with reductions in future cardiovascular
    risk. Secondary endpoints included:
•
changes in established markers of inflammation such as
    sPLA
2
,
    CRP and IL-6; and
•
the occurrence of secondary MACE (for purposes of this clinical
    study, all-cause mortality, non-fatal myocardial infarction,
    documented UA requiring urgent hospitalization,
    revascularization occurring
³
60 days
    post the index event or non-fatal stroke).
Results of the primary endpoint demonstrated a statistically
    significant incremental
LDL-C
reduction of 5.7% (p = 0.0023) in
A-002
treated patients versus those treated with 80 mg
    atorvastatin alone after eight weeks of therapy. In addition a
    statistically significant difference was observed in
LDL-C
reduction from baseline as early as two weeks after treatment.
    The treatment effect was maintained throughout the observation
    period.
Figure 1: Mean Percentage Change in
LDL-C
from
    Baseline
Treatment with
A-002
resulted in more subjects with
LDL-C
levels
    less than 70 mg/dL than those on placebo (80 mg
    atorvastatin and physician-directed standard of care) alone at
    eight, 16 and 24 weeks of treatment. As discussed above,
    the NCEP ATP III guidelines have established an
LDL-C
of 70
    mg/dL as an optional target for very high-risk patients. As
    indicated in the table below, the data suggests
A-002
treatment helps patients achieve their
LDL-C
target
    levels more quickly and maintain them longer than with high-dose
    statin (80 mg atorvastatin) therapy alone.
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Table 2: Percentage of Patients Achieving
LDL-C
<
    70 mg/dL
Secondary endpoints measured effects of
A-002
on
    sPLA
2,
CRP
    and IL-6 levels, which are well-established markers of
    inflammation. While the FRANCIS study was not designed to
    demonstrate statistically significant changes in CRP and IL-6,
    the results were consistent with previous studies, which
    demonstrated improvement across these biomarkers and achieved
    statistical significance at some time points.
sPLA
2
concentration was statistically significantly reduced from the
    earliest time point of two weeks through the 16-week time point
    (p < 0.0001) as compared to high-dose statin
    (80 mg atorvastatin) therapy alone. While our first
    sPLA
2
measurement in this clinical study occurred at two weeks, data
    from previous clinical studies utilizing
A-002
or
A-001
demonstrated reductions in
    sPLA
2
as early as two days following treatment.
Figure 3: Median Percentage Change in
    sPLA
2
Concentration from Baseline
In addition, treatment-related reductions in CRP and IL-6 levels
    were also greater in
A-002
treated patients compared to those treated with placebo at all
    time points in the clinical study. The percent decrease in CRP
    at week two was nearly two-fold greater among
A-002
and
    80 mg
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atorvastatin treated patients than those treated with placebo
    and 80 mg atorvastatin alone (-39% versus -20%, p = 0.183),
    and at week 16, the difference between treatment groups was
    statistically significant (-82% versus -73%, p = 0.0067). At
    weeks two, four, eight and 16,
A-002
treated patients had numerically reduced levels of CRP versus
    patients treated with placebo.
Figure 4: Median Percentage Change in CRP Concentration from
    Baseline
The percent decrease in IL-6 in patients on
A-002
and
    atorvastatin at week two was more than three times the reduction
    in IL-6 in patients on placebo and atorvastatin (-18% versus
    -5.1%, p = 0.18).
Figure 5: Median Percentage Change in IL-6 Concentration from
    Baseline
Finally, given the importance of reducing inflammation as well
    as
LDL-C
following an acute coronary syndrome event, we examined the
    proportion of patients in the clinical study that were able to
    achieve both
LDL-C
levels
    less than 70 mg/dL and CRP levels below 3 mg/L. As
    indicated in the figure below, results demonstrated that more
    patients treated with
A-002
and
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80 mg atorvastatin achieved these dual goals than those
    treated with placebo and 80 mg atorvastatin alone at all
    time points in the clinical study with statistically
    significantly greater percentages of patients achieving these
    levels at week four and week 16 (p = 0.0025 and p = 0.005).
Figure 6: Percentage of Patients Achieving Combined Targets of
    CRP < 3.0 mg/L and
LDL-C
< 70 mg/dL
We also conducted an exploratory analysis of MACE in the
    clinical study. At 16 weeks, there were 13 (4.2%) MACE
    events in the
A-002
treated group as compared to 19 (6.1%) in the placebo group. At
    the completion of the clinical study, all patients had received
    at least six months of therapy and there were 23 (7.4%) MACE in
    the
A-002
treated group as compared to 24 (7.7%) MACE in the placebo
    group. While the MACE analysis was not designed to demonstrate
    any statistical differences between the two treatment groups, we
    believe that the results are encouraging and will help us to
    design our Phase 3 clinical study.
Overall,
A-002
was
    generally safe and well tolerated in this clinical study and no
    imbalance was seen in dropouts due to drug effects. After
    completing patient treatment, overall exposure to
A-002
was a
    mean of 30 weeks and median of 34 weeks. In total, 485
    total patients completed six months of treatment, with 167
    subjects completing 40 weeks and 70 completing
    44 weeks. There was no imbalance of overall adverse events
    between the treatment arms. During the clinical study, at week
    four and week eight, occasional mild and transient elevations in
    liver enzymes, defined as elevations three times the upper limit
    of normal, were seen among more patients taking
A-002,
but
    the frequency and magnitude of the elevations were not
    meaningfully different between the active and control groups at
    the end of the clinical study. The frequency of the elevations
    was also similar to that reported for atorvastatin and other
    currently approved lipid-lowering agents. Furthermore, there
    were no effects on blood pressure or the QT interval, an
    electro-cardiographic safety endpoint.
We anticipate publishing detailed results from the FRANCIS study
    in 2010 at a scientific conference and in a scientific journal.
Phase 2 Stable Coronary Artery Disease Study—PLASMA
    (Phospholipase Levels and Serological Markers of
    Atherosclerosis):
A-002
Twice-Daily Versus Placebo
Our Phase 2 PLASMA study was designed to confirm the safety and
    effect of
A-002
on
    sPLA
2
concentration, other inflammatory biomarkers and lipids in
    patients with stable CAD. In
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October 2007, we completed a randomized, double-blind,
    placebo-controlled study evaluating four doses of
A-002
administered twice-daily versus placebo among 396 patients
    with stable CAD from 38 centers in two countries. The clinical
    study enrolled patients more than 12 weeks after a
    myocardial infarction or six weeks after an episode of UA. The
A-002
doses
    tested were 50 mg, 100 mg, 250 mg and 500 mg
    administered twice per day. Following randomization, patients
    were treated for eight weeks and safety and efficacy evaluations
    were conducted at weeks two, four and eight. Physician-directed
    standard of care therapies were permitted during the clinical
    study, including 259 patients who were on background statin
    therapy.
The primary endpoint of the clinical study was the change in
    sPLA
2
concentration from baseline to week eight in
A-002,
across all doses, versus placebo patients. Secondary endpoints
    in the clinical study included the change in lipids, including
    LDL-C, lipoprotein subclasses and certain inflammatory
    biomarkers, from baseline to each of weeks two, four and eight.
Our Phase 2 PLASMA results were selected for a late-breaking
    presentation at the American Cardiology Conference and published
    in the Lancet journal in February 2009. Results from the
    clinical study demonstrated that treatment with
A-002
led to
    statistically significant reductions in
    sPLA
2
,
    LDL-C and various plaque-building and pro-inflammatory forms of
    LDL-C. In patients receiving
A-002,
there
    were incremental reductions in CRP versus placebo (-55.6% versus
    -24.8%, p = 0.47) from baseline to eight weeks.
Among all patients treated with
A-002,
median
    sPLA
2
concentration decreased by 86.7% from baseline to week eight, as
    compared to 4.8% in the placebo group
    (p < 0.0001). Median
    sPLA
2
concentration decreased among the A-002 groups in a
    dose-dependent manner.
At week eight, across all dosage groups, LDL-C was reduced by
    9.7% versus placebo (p = 0.0035). In a subgroup of
    patients taking statins with LDL-C > 70 mg/dL, LDL-C
    was reduced by 12.0% (p = 0.0065) versus placebo at the eight
    week time point. Notably, the reductions in
LDL-C
appear
    to be driven primarily by a shift in the distribution of LDL-C
    particles with fewer pro-atherogenic, pro-inflammatory small
    LDL-C particles present in the circulation. In addition,
    statistically significant reductions from baseline to week eight
    were seen in total cholesterol and non-HDL cholesterol in the
    overall clinical study population treated with
A-002.
A-002
was
    generally safe and well-tolerated among all patients treated. In
    general, adverse effects were mild or moderate with no imbalance
    of adverse events in the
A-002
groups
    as compared to placebo. The most common adverse effects seen in
    the A-002 groups were headache (6.4%) and nausea (5.4%). There
    were mild and transient elevations of liver function tests,
    defined as elevations three times the upper limit of normal, in
    patients taking
A-002.
Phase 2 Stable Coronary Artery Disease Study—PLASMA-2
    (Phospholipase Levels and Serological Markers of Atherosclerosis
    -2): Once-Daily
A-002
versus
    Placebo
Based on data from our first PLASMA study, we initiated a second
    Phase 2 clinical study (PLASMA-2) to evaluate the effect of
    once-daily
A-002
treatment on inflammatory and lipid biomarkers. In December
    2007, we completed a randomized, double-blind,
    placebo-controlled Phase 2 clinical study evaluating two doses
    of
A-002
versus placebo amongst 138 patients with stable CAD. The
    clinical study, conducted in the United States, involved 13
    clinical sites. Following randomization to one of two doses of
    A-002 or placebo, patients were treated for eight weeks with
    safety and efficacy evaluations at weeks two, four and eight.
    Physician-directed standard of care therapies were permitted
    during the clinical study, including 123 patients (89.1%)
    who were on background statin therapy.
The primary endpoint of the clinical study was a comparison
    between once-daily doses of
A-002
and
    placebo in changes in
    sPLA
2
concentration at week eight. Secondary endpoints in
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the clinical study included measurements of lipids including
    LDL-C and certain other inflammatory biomarkers from baseline to
    each of weeks two, four and eight.
Results of the primary endpoint,
    sPLA
2
,
    were statistically significant and consistent with those
    generated from the first PLASMA study described above. Patients
    on
A-002
demonstrated a 77.8% reduction in
    sPLA
2
concentration as compared to an increase of 8.3% in placebo
    treated patients (p < 0.0001). Pharmacokinetic data
    indicated that once-daily dosing with
A-002
would
    be sufficient to achieve over 90% inhibition of
    sPLA
2
mass and activity over a
24-hour
period.
The anti-inflammatory, lipid-lowering and lipid-modulating
    effects of
A-002
treatment were consistent with those seen in the first PLASMA
    study: LDL-C was decreased by 8.3% compared to 0.7% in placebo
    (p = 0.014). Due to the small size of this clinical study, and
    the low baseline inflammation present in these patients, no
    meaningful changes with CRP could be detected between the active
    and control groups. As was observed in the first clinical study,
    there were statistically significant reductions from baseline to
    week eight in total cholesterol and non-HDL cholesterol in the
    overall clinical study population treated with
A-002.
The adverse effect profile for
A-002
was
    consistent with earlier studies and there was no imbalance of
    adverse events among the
A-002
groups
    and placebo.
A-002
was
    generally safe and well-tolerated. The most common effects seen
    in the
A-002
groups were diarrhea (6.7%), nausea (5.6%), any increase in
    alanine aminotransferase (5.6%), which is an enzyme that
    indicates liver cell injury, and any increase in aspartate
    aminotransferase (5.6%), which is another enzyme that indicates
    liver cell injury. However, mild and transient elevations of
    these liver enzymes, defined as elevations three times the upper
    limit of normal, were infrequent in patients taking
A-002.
Table 7: Placebo-corrected Percent Decrease from Baseline to
    Week Eight in Biomarkers
LDL
Total
Non-HDL
Oxidized
sPLA
2
Cholesterol
Cholesterol
Cholesterol
LDL-C
PLASMA
(All doses
A-002)
81.9%
(p < 0.0001)
9.7%
(p = 0.0035)
4.9%
(p = 0.0069)
7.2%
(p = 0.0009)
5.4%
(p = 0.0065)
PLASMA-2
(500 mg
A-002)*
86.1%
(p < 0.0001)
13.9%
(p = 0.0007)
9.2%
(p = 0.0006)
14.2%
(p = 0.0001)
7.3%
(pNS)
*
Dose selected for Phase 3
Ongoing Investigator-Sponsored Phase 2 Percutaneous
    Intervention Study–SPIDER-PCI
    (sPLA
2
Inhibition to Decrease Enzyme Release after PCI):
A-002
Once-Daily Versus Placebo for up to 10 days.
In May 2007, Dr. Vladimir Dzavik at University Health
    Network Hospital in Toronto, Ontario, Canada initiated an
    investigator sponsored study with
A-002
in
    patients undergoing a percutaneous intervention, or PCI. The
    primary endpoint of this study is to determine if inhibition of
    sPLA
2
with
A-002
will result in a decrease in peri-PCI myocardial necrosis, or
    heart muscle damage, as measured by elevations of myocardial
    enzyme markers creatine kinase-MB, or
CK-MB,
or
    troponin I. The study was to enroll a maximum of
    164 patients who are scheduled to undergo PCI. Elevated
    levels of troponin I following PCI are associated with an
    increase in in-hospital complications and, in one study, was an
    independent predictor of major cardiac events. After PCI,
    circulating levels of
    sPLA
2
increase and patients with higher levels have an increased risk
    of events after a two-year follow-up. This study supports the
    notion that
    sPLA
2
inhibition may reduce myocardial damage after PCI and improve
    patient outcomes.
As of August 2009, enrollment and dosing in the SPIDER-PCI study
    was completed with 144 patients evaluated for purposes of
    assessing the primary endpoint. As an investigator-sponsored
    study, we have no access to the data from this study until it is
    announced at an upcoming scientific conference.
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Previous
    Experience at Eli Lilly and Shionogi & Co.,
    Ltd.
Eli Lilly and Shionogi & Co., Ltd. previously
    conducted a series of clinical studies evaluating
A-002
and
A-001
in
    various inflammatory conditions. In total, at least 17 Phase 1
    and Phase 2 clinical studies evaluated
A-002
and
A-001
as a
    treatment in sepsis, rheumatoid arthritis, asthma and ulcerative
    colitis, an inflammatory bowel disease. Results from these
    studies provide a large body of safety data for
A-002
and
A-001
with
    more than 1,000 healthy volunteers and subjects receiving
    treatment.
Throughout these studies,
A-002
was
    generally safe and well-tolerated.
Non-Clinical
    Studies with
A-002
and
A-001
Approximately 150 preclinical pharmacology and toxicology
    studies have been completed with
A-002
and
A-001,
including two-year rat and mouse carcinogenicity studies,
    one-year primate study and three-month rat study in combination
    with atorvastatin.
A-001
A-001
is an
    intravenously administered, potent, broad-spectrum inhibitor of
    sPLA
2
,
    including forms IIa, V and X.
A-001
is
    currently being evaluated in a Phase 2 clinical study for the
    prevention of acute chest syndrome associated with sickle cell
    disease in at-risk patients. Substantial scientific evidence
    implicates
    sPLA
2
activity in the development of acute chest syndrome associated
    with sickle cell disease, as well as other forms of acute lung
    injury. The FDA granted orphan drug and fast-track designation
    for
A-001
for the prevention of acute chest syndrome associated with
    sickle cell disease in at-risk patients. We currently retain all
    worldwide product rights, except in Japan where
    Shionogi & Co., Ltd. retains rights. We also licensed
A-001
from
    Eli Lilly and Shionogi & Co., Ltd. in July 2006.
sPLA
2
levels increase in advance of acute chest syndrome episodes and
    can be used alongside the presence of fever to strongly predict
    an impending episode. There is a strong correlation between
    levels of CRP and
    sPLA
2
in
    this patient population. Patients with acute chest syndrome
    associated with sickle cell disease can exhibit levels of
    sPLA
2
that can be 100 times greater than normal. We believe that
    early intervention with
A-001
to
    inhibit
    sPLA
2
activity may offer a novel preventative therapy to improve
    outcome among sickle cell disease patients presenting with a
    high risk of acute chest syndrome.
Market
    Opportunity
Sickle cell disease is a lifelong genetic, blood disorder
    typically diagnosed during early childhood. According to the
    Sickle Cell Information Center, in the United States, over
    70,000 people currently suffer from the disease and
    approximately 1,000 children are born with the disease annually.
    According to Medtech Insight, in Europe, there are over
    200,000 people suffering from the disease, and the numbers
    increase dramatically in Africa, where, according to the WHO,
    200,000 children alone are born with sickle cell disease each
    year. Life expectancy for these patients is significantly
    shortened, with most expected to live only until their mid-40s.
The disease is characterized by structurally altered red blood
    cells that assume an abnormal shape, similar to a sickle, and
    produce an altered form of hemoglobin. These altered red blood
    cells have a shortened life-cycle, become stiff and have
    difficulty passing through the body's small blood vessels.
    At times, these abnormal cells may obstruct or block blood flow
    through small blood vessels, leading to significant damage in
    tissue and bone. This damage is more commonly labeled as VOC.
    During VOC, blockage occurs within the circulation of the long
    bones, causing microscopic bone damage. Fragments of bone or
    bone fat may break free and embolize to the lungs, causing lung
    injury.
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VOC is a common trigger for the more serious complication of
    acute chest syndrome associated with sickle cell disease. Acute
    chest syndrome exhibits symptoms and characteristics similar to
    acute lung injury. There are an estimated 10,000 episodes of
    acute chest syndrome associated with sickle cell disease per
    year in the United States. It represents the most common cause
    of death in sickle cell patients and the second most common
    cause of hospitalization among such patients. A majority of
    sickle cell patients will experience at least one episode of
    acute chest syndrome and repeated episodes can result in
    progressive lung disease. The disorder is most common in the
    two- to four- year age group and gradually declines in incidence
    with age.
There are no marketed therapies targeting acute chest syndrome
    associated with sickle cell disease. The most common treatment
    regimen includes heavy doses of corticosteroids, opiates,
    transfusion and antibiotics while the patient suffers through
    the attack. In addition, hydroxyurea, a chemotherapy, was found
    to reduce the frequency of VOC and the need for blood
    transfusions in adult patients with sickle cell disease.
    However, all of these therapeutics are associated with
    significant adverse effects while only offering limited patient
    benefit.
Clinical
    Studies
Phase 2 Acute Chest Syndrome in Patients with Sickle Cell
    Disease Study—Investigation of the Modulation of
    Phospholipase in Acute Chest Syndrome, or IMPACTS.
In January 2007, we initiated a randomized, double-blind,
    placebo-controlled Phase 2 clinical study to assess the safety
    and tolerability of escalating doses of
A-001
therapy when administered as a
48-hour
continuous infusion. The clinical study was designed to enroll
    up to 75 patients across approximately 30 sites in the
    United States. This clinical study enrolls hospitalized sickle
    cell disease patients, at risk for acute chest syndrome on the
    basis of VOC, fever and serum
    sPLA
2
concentration level greater than 50 mg/mL. The primary
    endpoint for the clinical study was designed to assess safety
    and tolerability. Secondary endpoints included the absence of
    acute chest syndrome, suppression of
    sPLA
2
,
    reduced need for blood transfusions and assessment of
    pharmacokinetics.
The first group of patients was randomized 2:1 to receive low
    dose
A-001
or placebo as a
48-hour
continuous infusion. A pre-specified interim analysis was
    conducted in February 2009 after the
    30
th
patient completed treatment to examine safety and adjust dosing
    schedules. The interim data was balanced between two dosing arms
    of 30 mug/kg/hr (n = 11) and 55 mug/kg/hr (n = 6).
    Interim results indicated serum levels of
A-001
when
    dosed at 55 mug/kg/hr reduced
    sPLA
2
activity levels by more than 80% from baseline within
    48 hours. Furthermore, the prevention of acute chest
    syndrome associated with sickle cell disease appeared to be
    related to the level of
    sPLA
2
activity. The DSMB recommended the clinical study continue based
    on safety and tolerability. In addition, given the safety
    profile, the DSMB approved the addition of a higher dose group
    of 110 mug/kg/hr via continuous infusion during the second half
    of the clinical study. We believe that the data suggest
A-001
can
    suppress
    sPLA
2
at levels that may prevent the complication of acute chest
    syndrome associated with sickle cell disease.
Table 8: Reductions of
    sPLA
2
activity from baseline and incidence of acute chest syndrome
    (including placebo patients and patients receiving
A-001).
Exploratory analysis to determine correlation between degree of
    sPLA
2
suppression and incidence of acute chest syndrome.
48-Hour
    sPLA
2
Activity as
a Percentage of Baseline
0.0% < 25.0%
³
25% < 50%
³
50% < 75%
³
75%
Number of Subjects
7
7
3
12
Number of Subjects Developing Acute Chest Syndrome (%)
0(0
)
2(28
)
1(33
)
4(25
)
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Based upon the DSMB review of our Phase 2 interim results and
    given the significant unmet medical need for these patients, we
    scheduled an end of Phase 2 meeting with the FDA in late 2009 to
    review the interim data from our Phase 2 clinical study and
    to discuss Phase 3 clinical study design for the use of
A-001
to
    prevent acute chest syndrome associated with sickle cell
    disease. The meeting is scheduled to take place in late 2009 and
    we plan to finalize our future clinical strategy thereafter.
A-623
A-623
is a
    selective peptibody antagonist of the BLyS cytokine that is
    initially being developed as a treatment for lupus. BLyS, also
    known as B-cell activating factor, or BAFF, is a tumor necrosis
    family member and is critical to the development, maintenance
    and survival of B-cells. It is primarily expressed by
    macrophages, monocytes and dendritic cells and acts through
    interactions with three different receptors on B-cells including
    BAFF receptor, or
BAFF-R,
B-cell maturation, or BCMA, and transmembrane activator and
    cyclophilin ligand interactor, or TACI. The BAFF-R receptor is
    expressed primarily on peripheral B-cells.
Two Phase 1 clinical studies of
A-623
in 115
    lupus patients have been completed and we expect to initiate a
    Phase 2 clinical study for lupus during the second half of 2010.
    We may also study
A-623
in
    other B-cell mediated autoimmune diseases such as
    Sjögren's Syndrome or orphan indications such as
    myasthenia gravis and pemphigus. We licensed
A-623
from
    Amgen in December 2007.
Elevated levels of BLyS have been associated with a variety of
    B-cell mediated autoimmune diseases, including lupus. We believe
    that
A-623
may antagonize and reduce BLyS levels offering a novel treatment
    approach for patients with lupus and a wide range of other
    B-cell mediated autoimmune diseases.
A-623,
as a
    peptibody directed against BlyS, was developed as an alternative
    to antibodies and is produced in
escherichia coli
versus
    antibodies that are produced in mammalian cells. In addition,
A-623
offers
    a number of potential differentiations over other anti-BLyS
    compounds, as well as other novel B-cell directed therapies,
    including:
•
both subcutaneous and intravenous dosing, which may offer dosing
    convenience and flexibility;
•
selective modulation and reduction of B-cell subsets that are
    relevant in lupus patients, which may offer safety and efficacy
    benefits;
•
ability to bind to both membrane-bound and soluble BLyS, which
    may confer differentiating pharmacodynamic
    characteristics; and
•
non-glycosylated protein that is produced in
escherichia
    coli
, which may reduce the potential to be immunogenic, and
    may provide manufacturing benefits.
Market
    Opportunity
Lupus is an autoimmune disorder that involves inflammation that
    causes swelling, pain and tissue damage throughout the body.
    Lupus can affect any part of the body, but especially the skin,
    heart, brain, lungs, joints and the kidneys. The course of the
    disease is unpredictable, with periods of illness, called flares
    alternating with remission. The Lupus Foundation estimates that
    approximately 1.5 million people in the United States and
    five million worldwide suffer from lupus. Although lupus may
    affect people of either sex, women are 10 times more likely
    to suffer from the disease than men, according to the Lupus
    Foundation.
Patients with active lupus may have a broad range of symptoms
    related to the inflammation. Inflammation of the brain may cause
    seizures and other neurologic abnormalities. Inflammation of the
    heart may cause heart failure or sudden death. Lung
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inflammation causes shortness of breath. Lupus may also cause
    swollen joints and severe rash. In addition, LN may lead to
    kidney dialysis or transplantation.
Although the cause of lupus is still not completely understood,
    B-cell activation and autoantibody production are known to be
    central to the process. Evidence has emerged that
    over-expression of BLyS plays an important role in this disease
    process. In preclinical studies, transgenic mice created to
    over-express BLyS begin to exhibit symptoms similar to lupus. In
    addition, treatment of these same mice with BLyS antagonists
    appears to ameliorate the disease.
Historical
    Clinical Studies
Prior to our in-licensing of
A-623,
Amgen
    completed two Phase 1 clinical studies of
A-623
in
    lupus patients to evaluate the safety and pharmacokinetics of
    single and multiple doses of drug using intravenous and
    subcutaneous formulations. Prior to conducting Phase 1 clinical
    studies in lupus patients, Amgen conducted a pre-Phase 1
    clinical study. In Amgen's pre-Phase 1 clinical study,
    individual B-cell subsets, such as immature B-cells and mature
    naïve B-cells, both therapeutic targets for
A-623,
were
    quantified in order to characterize the specific B-cell subset
    abnormalities associated with lupus.
The randomized, placebo-controlled, dose-escalation Phase 1a
    clinical study evaluated
A-623
as a
    single intravenous or subcutaneous therapy among 54 lupus
    patients. Intravenous doses included 1 and 6 mg/kg, and
    subcutaneous doses included 0.1, 0.3, 1 and 3 mg/kg. The
    primary endpoint was to assess the safety and tolerability of
    single dose administrations of
A-623.
Secondary endpoints were designed to assess the plasma
    pharmacokinetic profile and immunogenicity of
A-623.
Results from this clinical study indicated the safety and
    tolerability of
A-623
administered as single dose of intravenous or subcutaneous was
    comparable to placebo. Single doses of
A-623
exhibited linear pharmacokinetics after both intravenous and
    subcutaneous administration. There were comparable adverse
    events between the
A-623
and
    placebo groups with no deaths reported. In addition, no
    neutralization antibodies were seen across all doses. The most
    common adverse events were nausea (15%), headache (10%), upper
    respiratory tract infection (10%) and diarrhea (8%).
A-623
was
    evaluated as an intravenous or subcutaneous therapy among 61
    lupus patients. Intravenous doses included 6 mg/kg, and
    subcutaneous doses included 0.3, 1 and 3 mg/kg. Patients
    received their doses of
A-623
or
    placebo once-weekly for four weeks. The primary endpoint was to
    assess the safety and tolerability of multiple dose
    administrations of
A-623.
Secondary endpoints were designed to assess the plasma
    pharmacokinetic profile and immunogenicity of
A-623
after
    multiple doses. Results showed that multiple doses of A-623
    exhibited dose-proportional pharmacokinetics after both
    intravenous and subcutaneous administration. Further, results
    demonstrated a dose-dependent decrease in total B-cells as early
    as 15 days of treatment, and total B-cell reduction (up to
    70% of baseline) reached its nadir after about 160 days of
    therapy. By six months after treatment, the B-cell populations
    had returned to baseline levels.
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Figure 9: Total B-cell Depletion
An experimental analysis was also conducted to assess B-cell
    subsets in patients following multiple doses. Results
    demonstrated that
A-623
selectively modulate certain B-cell subsets and induced trends
    toward normal that are consistent with findings in the pre-Phase
    1 clinical study.
Results indicated that the safety and tolerability of
A-623
administered as multiple doses of intravenous or subcutaneous
    administration was generally comparable to placebo. There were
    no deaths reported between the
A-623
and
    placebo. Few neutralization antibodies were seen, and all
    resolved in subsequent visits. Based on these results and
    pending further data from competitor studies, we expect to
    initiate a Phase 2 clinical study evaluating
A-623
in
    lupus patients during the second half of 2010.
Our
    Strategy
Our objective is to develop and commercialize our product
    candidates to treat serious diseases associated with
    inflammation, including cardiovascular and autoimmune diseases.
    To achieve these objectives, we intend to initially focus on:
Advancing
A-002
through Phase 3.
Inflammatory processes and lipid abnormalities are central to
    the onset of acute coronary syndrome and the development of CAD.
A-002
operates through a novel mechanism of action
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to offer both targeted anti-inflammatory activity and
    incremental lipid reductions, including LDL-C, when used in
    combination with statins. Despite the benefits of statin
    therapy, many acute coronary syndrome patients still remain at
    substantial risk of a coronary event, suggesting additional
    biological mechanisms may be relevant, including inflammation.
    We believe that combination therapy with
A-002
and
    statins will provide acute coronary syndrome patients with a
    unique, short-term therapeutic option unavailable with existing
    agents today. In addition, we believe that an opportunity exists
    in the future to evaluate
A-002
in
    chronic indications such as CAD.
Advancing
    clinical development of
A-001
and
A-623.
We are developing
A-001,
an
    intravenous
    sPLA
2
inhibitor for prevention of acute chest syndrome associated with
    sickle cell disease, because we identified that elevations in
    sPLA
2
activity are known to precede and predict disease progression.
    Based upon the DSMB review of our Phase 2 interim results and
    given the significant unmet medical need for these patients, we
    scheduled an end of Phase 2 meeting in late 2009 with the FDA to
    review the interim data from our Phase 2 clinical study and
    to discuss the Phase 3 clinical study design for the use of
    A-001 to prevent acute chest syndrome associated with sickle
    cell disease.
We intend to advance the development of
A-623
to
    exploit the broad potential clinical utility of BLyS antagonism.
    We plan to internally develop this compound beginning with a
    Phase 2 clinical study in lupus as resources permit. We may
    opportunistically enter into collaborations with third parties
    for development of this compound in lupus or in other B-cell
    mediated diseases, such as multiple sclerosis, rheumatoid
    arthritis or Sjögren's Syndrome, that may benefit from
    BLyS antagonism.
Leveraging our
    sPLA
2
expertise to develop products for additional disease
    indications.
We believe that we have developed a leadership position in the
    field of
    sPLA
2
inhibition. Beyond our acute coronary syndrome and acute chest
    syndrome program, we believe that
    sPLA
2
inhibition may have applications in other acute disease settings
    where early intervention may have an impact and reduce
    anti-inflammatory activity, such as acute lung injury.
    Additionally, we believe that we can apply our
    sPLA
2
expertise to develop novel therapeutics for a number of chronic
    diseases. For example,
    sPLA
2
has been shown to be involved in the development of such chronic
    inflammatory diseases as atherosclerosis and dermatitis. We plan
    to pursue these indications opportunistically and potentially in
    collaboration with third parties.
We are also developing new and unique
    sPLA
2
inhibitor compounds for additional therapeutic areas.
A-003
is our
    second generation lead candidate. We plan to continue
    preclinical development of
A-003
for an
    IND filing and we will continue to assess additional new
    compounds.
Developing
    commercial strategies designed to maximize our product
    candidates' market potential.
Our primary product candidates are focused on either the acute
    care setting in the hospital or highly-specialized physician
    segments, such as rheumatologists. We believe that we can build
    a small, focused sales force capable of marketing our products
    effectively in acute care and orphan indications such as acute
    coronary syndrome and acute chest syndrome associated with
    sickle cell disease. In other chronic indications such as CAD,
    we intend to seek commercial collaborations with companies that
    have a large, dedicated sales force focused on general
    practitioners and cardiologists and we plan to seek
    commercialization partners for products in non-specialty and
    international markets.
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Competition
Our industry is highly competitive and subject to rapid and
    significant technological change. Our potential competitors
    include large pharmaceutical and biotechnology companies,
    specialty pharmaceutical and generic drug companies, academic
    institutions, government agencies and research institutions. We
    believe that key competitive factors that will affect the
    development and commercial success of our product candidates are
    efficacy, safety and tolerability profile, reliability,
    convenience of dosing, price and reimbursement.
Many of our potential competitors, including many of the
    organizations named below, have substantially greater financial,
    technical and human resources than we do and significantly
    greater experience in the discovery and development of product
    candidates, obtaining FDA and other regulatory approvals of
    products and the commercialization of those products.
    Accordingly, our competitors may be more successful than we may
    be in obtaining FDA approval for drugs and achieving widespread
    market acceptance. Our competitors' drugs may be more
    effective, or more effectively marketed and sold, than any drug
    we may commercialize and may render our product candidates
    obsolete or non-competitive before we can recover the expenses
    of developing and commercializing any of our product candidates.
    We anticipate that we will face intense and increasing
    competition as new drugs enter the market and advanced
    technologies become available. Finally, the development of new
    treatment methods for the diseases we are targeting could render
    our drugs non-competitive or obsolete.
The
    sPLA
2
product candidates we are currently developing, if approved,
    will face intense competition, either as monotherapies or in
    combination therapies. Although there are no
    sPLA
2
inhibitors currently approved by the FDA, we are aware of other
    pharmaceutical companies, as described below, that are
    developing product candidates in this area for separate
    indications.
sPLA
2
in Acute Coronary Syndrome
Our lead product candidate,
A-002,
for
    the short-term (16-week) treatment of acute coronary syndrome
    has a dual mechanism of action that we believe confers
    anti-inflammatory and lipid-lowering and lipid-modulating
    benefits. The market for cardiovascular therapeutics and acute
    coronary syndrome, specifically, is especially large and
    competitive. A wide range of medications are typically
    administered to patients suffering an acute coronary syndrome
    event in order to reduce ischemia and thrombosis and improve
    blood flow. We expect that
A-002
for
    the treatment of acute coronary syndrome patients, if approved,
    may compete with the following anti-inflammatory therapeutics in
    development.
Compound
Stage
Company
Indications
Notes
Darapladib
Phase 3
GlaxoSmithKline plc
Acute coronary syndrome
•   Lp-PLA
2
inhibitor
•   Collaboration with Human
Genome Sciences, Inc.
•   Various back-up compounds
VIA-2291
Phase 2
Via Pharmaceuticals, Inc.
Acute coronary syndrome or atherosclerosis
•   5-lipoxygenase inhibitor
•   Discussions on-going with FDA
E-5555
Phase 2
Eisai Inc.
Acute coronary syndrome or atherosclerosis
•   600 patient study to be completed
October 2009
•   Evaluating biomarkers and events
Other Agents
    Under Development
Additionally, we are aware of other products in development that
    are being tested for anti-inflammatory benefits in patients with
    acute coronary syndrome such as Via Pharmaceuticals,
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Inc. and its 5-lipoxygenase, or 5-LO, inhibitor, which has been
    evaluated in Phase 2 clinical studies, GlaxoSmithKline plc and
    its product candidate, darapladib, which is an
    Lp-PLA
2
inhibitor
    currently being evaluated in Phase 3 clinical studies. If
    approved, these products or others in development may compete
    directly with
A-002.
Approved
    Categories of Drugs
Statins
– Treatment with
A-002
is
    designed to offer anti-inflammatory benefits for acute coronary
    syndrome patients that are additive to treatment with statins.
    However, statin therapy is thought to confer some element of
    anti-inflammatory benefit as monotherapy. In certain
    circumstances, it is possible the anti-inflammatory benefits of
    statin monotherapy with products such as Lipitor (atorvastatin),
    which is marketed by Pfizer Inc., Crestor (rosuvastatin), which
    is marketed by AstraZeneca UK Limited and Zocor (simvastatin),
    which is marketed by Merck & Co., Inc. may be viewed
    as competitive to that offered by A-002.
Other lipid-lowering therapies
– Increasingly,
    additional lipid-lowering agents are being administered either
    in combination with statins or as monotherapy to help acute
    coronary syndrome patients reduce levels of LDL-C.
A-002
has
    demonstrated LDL-C lowering benefits when tested as monotherapy
    and in combination with statin therapy. To the extent acute
    coronary syndrome patients need additional LDL-C lowering,
A-002
may
    compete for use with other approved agents such as Vytorin,
    which is a fixed dose combination therapy combining ezetimibe
    and Zocor, Tricor (fenofibrate tablets) and Niaspan (niacin),
    both of which are marketed by Abbott Laboratories, Zetia
    (ezetimibe) and fish oils (omega-3).
sPLA
2
for Acute Chest Syndrome Associated with Sickle Cell
    Disease
There are no currently approved agents for treatment or
    prophylaxis of acute chest syndrome associated with sickle cell
    disease. Droxia (hydroxyurea) is approved for prevention of VOC
    in sickle cell disease and thus could reduce the pool of
    patients with VOC at risk for acute chest syndrome. In addition,
    there is evidence in the literature that blood transfusions may
    prevent the occurrence of acute chest syndrome associated with
    sickle cell disease, and a randomized clinical study is underway
    by the National Heart, Lung and Blood Institute to explore this
    possibility.
Lupus
No new therapies have been approved for lupus in the last
    50 years. Current therapies such as non-steroidal
    anti-inflammatory drugs, or NSAIDs, corticosteroids and
    immunosuppressants generally act to hold back broadly the
    proliferation of many types of cells, including white blood
    cells. However, use of these agents is associated with
    significant adverse events and broad immune suppression.
Recently, several new biological agents under development have
    targeted BLyS for the treatment of lupus. These product
    candidates include Benlysta (bellimumab) from Human Genome
    Sciences, Inc., atacicept, or TACI-Ig, from ZymoGenetics Inc.
    and what we believe to be more non-specific B-cell depleting
    agents such as Rituxan from Genentech, Inc. and epratuzumab from
    Immunomedics, Inc. We believe that
A-623
may
    offer potential differentiation from these agents, including:
    demonstrated dosing flexibility with both subcutaneous and
    intravenous delivery; selective modulation and reduction of
    relevant B-cell types in lupus patients; the ability to bind to
    both membrane-bound and soluble BLyS; its smaller size as
    compared to a full antibody, which may confer differentiating
    pharmacokinetic and pharmacodynamic characteristics; and
    distinct patent protection based on a novel and proprietary
    technology developed and commercialized by Amgen, which may also
    confer safety and manufacturing advantages.
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Compound
Stage
Company
Indications
Notes
Benlysta
Phase 3
Human Genome Sciences, Inc.
Lupus
Monoclonal antibody against BLyS, an agent that demonstrated
    partial reduction in B-cells; positive results reported in first
    of two Phase 3 clinical studies.
Atacicept
Phase 3
ZymoGenetics Inc.
Lupus, LN
Fusion protein against BLyS and APRIL; Phase 3 clinical study in
    LN stopped due to safety issues; Phase 3 clinical study in lupus
on-going.
Epratuzumab
Phase 2b
Immunomedics, Inc.
Lupus,
Non-Hodgkin's
Lymphoma
Humanized antibody against
CD-22,
an
    agent that specifically targets
B-cells
and
    leads to partial depletion of peripheral
B-cells;
positive Phase 2b clinical study results reported.
Rituxan
Phase 3
Roche/Genentech, Inc.
Lupus, LN,
Non-Hodgkin's
Lymphoma
Humanized antibody against
CD-20,
an
    agent that leads to rapid and profound depletion of circulating
B-cells;
both Phase 3 clinical studies in lupus and LN failed.
Intellectual
    Property
Our policy is to pursue, maintain and defend patent rights,
    developed internally and licensed from third parties, to protect
    the technology, inventions and improvements that are
    commercially important to the development of our business. We
    also rely on trade secrets that may be important to the
    development of our business.
Our success will depend significantly on our ability to:
•
obtain and maintain patent and other proprietary protection for
    the technology, inventions and improvements we consider
    important to our business;
•
defend our patents;
•
preserve the confidentiality of our trade secrets; and
•
operate our business without infringing the patents and
    proprietary rights of third parties.
A-002
and
A-001
As of the date of this prospectus, our licensed
A-002
and
A-001
patent
    portfolio includes:
•
13 U.S. patents;
•
One pending U.S. non-provisional patent application;
•
Four European Patent, or EP, patents, each validated in one or
    more of Austria, Belgium, Denmark, France, Germany, Greece,
    Ireland, Italy, Liechtenstein, Luxembourg, the Netherlands,
    Portugal, Spain, Sweden, Switzerland and the United Kingdom;
•
Three pending EP patent applications;
•
14 non-EP foreign patents in Argentina, Australia, Brazil,
    Canada, China, Finland, Malaysia, Mexico, the Philippines, South
    Korea, Taiwan and Turkey; and
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•
Eight pending non-EP foreign patent applications in Brazil,
    Canada, China, India, Mexico, South Korea, Taiwan and Thailand.
We hold exclusive worldwide licenses from Eli Lilly and
    Shionogi & Co., Ltd. to all of these patents and
    patent applications with the exception of licensing rights in
    Japan, which Shionogi & Co., Ltd. retains. These
    licenses are described below under "—Licenses."
    The patents and applications described above contain claims
    directed to
A-002
and
A-001
compositions of matter and to various methods of making and
    using
A-002
and
A-001,
including methods of treating various inflammatory conditions.
    The issued U.S. patents are currently scheduled to expire
    between 2014 and 2021.
As of the date of this prospectus, our internally developed
A-002
and
A-001
patent
    portfolio includes:
•
Two pending U.S. non-provisional patent applications;
•
Four pending U.S. provisional patent applications; and
•
One pending Patent Cooperation Treaty, or PCT, patent
    application.
We own, and therefore hold all worldwide rights in and to, these
    patent applications, which contain claims directed to
A-002
and
A-001
compositions of matter and methods of treating various
    cardiovascular indications.
A-003
As of the date of this prospectus, our licensed
A-003
patent
    portfolio includes:
•
Two licensed U.S. patents;
•
One licensed pending U.S. non-provisional patent
    application (also listed above as covering
A-002
and
A-001);
•
Four licensed EP patents (one also listed above as covering
A-002
and
A-001),
each
    validated in one or more of Albania, Austria, Belgium, Denmark,
    Finland, France, Germany, Greece, Ireland, Italy, Latvia,
    Liechtenstein, Lithuania, Luxembourg, the Netherlands, Portugal,
    Romania, Slovenia, Spain, Sweden, Switzerland and the United
    Kingdom;
•
Two licensed pending EP patent applications (both also listed
    above as covering
A-002
and
A-001);
•
Eight licensed non-EP foreign patents (one also listed above as
    covering
A-002
and
A-001)
in
    Argentina, Australia, Canada, China, Mexico, South Korea and
    Taiwan; and
•
Eight licensed pending non-EP foreign patent applications (six
    also listed above as covering
A-002
and
A-001)
in
    Argentina, Brazil, Canada, China, India, Mexico, South Korea and
    Taiwan.
We hold exclusive worldwide licenses from Eli Lilly and
    Shionogi & Co., Ltd. to these patents and patent
    applications with the exception of licensing rights in Japan,
    which Shionogi & Co., Ltd. retains. These licenses are
    described below under "— Licenses." The
    patents and applications listed above contain claims directed to
A-003
compositions of matter and to various methods of making and
    using
A-003,
including methods of treating various inflammatory indications.
    The issued U.S. patents are currently scheduled to expire
    between 2017 and 2018.
As of the date of this prospectus, our internally developed
A-003
patent
    portfolio includes:
•
Two U.S. non-provisional patent applications (both also
    listed above as covering
A-002
and
A-001);
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•
Four pending U.S. provisional patent applications (all also
    listed above as covering
A-002
and
A-001); and
•
One pending PCT patent application (also listed above as
    covering
A-002
and
A-001).
We own, and therefore hold all worldwide rights in and to, these
    patent applications, which contain claims directed to
A-002
and
A-001
compositions of matter and methods of treating various
    cardiovascular indications.
New
    sPLA
2
Compounds
As of the date of this prospectus, our new
    sPLA
2
compound patent portfolio includes over 30 licensed
    U.S. patents and one EP patent not listed above as covering
A-001,
A-002
or
A-003.
We
    hold exclusive worldwide licenses from Eli Lilly and
    Shionogi & Co., Ltd. to these patents and patent
    applications with the exception of licensing rights in Japan,
    which Shionogi & Co., Ltd. retains. These licenses are
    described below under "— Licenses." The
    patents and applications listed above contain claims directed to
    various
    sPLA
2
second generation compounds, as well as methods of making and
    using these new
    sPLA
2
compounds. The issued U.S. patents are currently scheduled
    to expire between 2013 and 2024.
A-623
As of the date of this prospectus, our
A-623
patent
    portfolio includes:
•
One U.S. patent;
•
One pending U.S. non-provisional patent application;
•
One EP patent validated in Albania, Austria, Belgium, Cyprus,
    Denmark, Finland, France, Germany, Greece, Ireland, Italy,
    Latvia, Liechtenstein, Lithuania, Luxembourg, Monaco, the
    Netherlands, Portugal, Romania, Slovenia, Spain, Sweden,
    Switzerland, Turkey and the United Kingdom;
•
One pending EP patent application;
•
Eight non-EP foreign patents in Australia, China, Eurasia
    (validated in all nine Eurasian countries), New Zealand,
    Singapore, South Korea and South Africa; and
•
17 pending non-EP foreign patent applications in Brazil,
    Bulgaria, Canada, China, the Czech Republic, Estonia, Hong Kong,
    Hungary, Israel, Japan, Mexico, Norway, the Philippines, Poland,
    Serbia/Yugoslavia and Slovakia.
We hold exclusive worldwide licenses from Amgen to all of these
    patents and patent applications.
The U.S. patent system permits the filing of provisional
    and non-provisional patent applications. A non-provisional
    patent application is examined by the U.S. Patent Office,
    or USPTO, and can mature into a patent once the USPTO determines
    that the claimed invention meets the standards for
    patentability. A provisional patent application is not examined,
    and automatically expires 12 months after its filing date.
    As a result, a provisional patent application cannot mature into
    a patent. The requirements for filing a provisional patent
    application are not as strict as those for filing a
    non-provisional patent application. Provisional applications are
    often used, among other things, to establish an early filing
    date for a subsequent non-provisional patent application.
The filing date of a non-provisional patent application is used
    by the USPTO to determine what information is prior art when it
    considers the patentability of a claimed invention. If certain
    requirements are satisfied, a non-provisional patent application
    can claim the benefit of the filing date of an earlier filed
    provisional patent application. As a result, the filing date
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accorded by the provisional patent application may remove
    information that otherwise could preclude the patentability of
    an invention.
Depending upon the timing, duration and specifics of FDA
    approval of
A-002,
A-001,
A-623,
A-003
or one
    or more new
    sPLA
2
compounds, one or more of the U.S. patents listed above may
    be eligible for limited patent term restoration under the Drug
    Price Competition and Patent Term Restoration Act of 1984,
    commonly referred to as the Hatch-Waxman Act. See
    "—Regulatory Matters—Patent Term Restoration and
    Marketing Exclusivity."
Licenses
Eli Lilly and
    Shionogi & Co., Ltd.
In July 2006, we entered into a license agreement with Eli Lilly
    and Shionogi & Co., Ltd., pursuant to which we
    obtained an exclusive license in all countries except for Japan
    to certain technology and compounds relating to
    sPLA
2
inhibitors. The licensed technology was largely developed under
    a research and development agreement between Eli Lilly and
    Shionogi & Co., Ltd., which was entered into between
    the two parties in August 1992 and terminated in December 2004.
Under the agreement, we obtained exclusive rights to
    (i) use licensed patent rights and know-how to identify and
    develop
    sPLA
2
inhibitors,
    (ii) develop, make, have made, use, import, offer for sale,
    and sell licensed compounds and pharmaceutical formulations
    thereof, including
A-002,
A-001,
A-003
and
    other
    sPLA
2
inhibitors and (iii) grant sublicenses. The licensed patent
    rights include a specific set of previously filed U.S. and
    foreign patents and applications, as well as any applications
    filed after the execution date by Eli Lilly or
    Shionogi & Co., Ltd. that relate to licensed know-how.
    Certain patents and applications within the licensed patent
    rights are defined as "core patents." Although the
    agreement does not allow us to sell or offer for sale licensed
    products in Japan, it does allow us to conduct preclinical and
    clinical studies in Japan in support of applications for
    marketing authorization outside of Japan, and to make and have
    made licensed products in Japan for use or sale outside of
    Japan. Eli Lilly and Shionogi & Co., Ltd. retain the
    right to use licensed products for research purposes only. Eli
    Lilly also retains the right to conduct studies of specific
    compounds in animals for research purposes, but only with our
    prior written approval. In addition, Shionogi & Co.,
    Ltd. retains the non-exclusive right to make and have made
    licensed products for supply to us, as well as its rights to
    continue research, development and marketing of licensed
    technology in Japan.
Upon entering into the license agreement, we took over all
    prosecution and maintenance of core patents prosecuted and
    maintained by Eli Lilly prior to the agreement. All core patents
    prosecuted and maintained by Shionogi & Co., Ltd.
    prior to the agreement remained under the control of
    Shionogi & Co., Ltd. Licensed patent rights that were
    not classified as core remained under the control of Eli Lilly
    and Shionogi & Co., Ltd. However, control of certain
    of these patents and applications has since been transferred to
    us following the decision by Eli Lilly or Shionogi &
    Co., Ltd. to discontinue prosecution and maintenance.
Upon entering into the license agreement, we made one-time
    payments of cash in the amount of $250,000 and issued shares of
    convertible preferred stock with a total aggregate value of
    $2.25 million to Eli Lilly and Shionogi & Co.,
    Ltd. In addition, we are required to make various milestone
    payments, including payment upon initiation of the first Phase 3
    clinical study for a particular product. We amended the
    milestone payment terms with each of Eli Lilly and
    Shionogi & Co., Ltd. to no later than 12 months
    from the enrollment of the first patient in a Phase 3 clinical
    study for
A-002.
In
    consideration for the extension, the milestone payments
    increased to $1.75 million to each party. We are also
    required to pay tiered royalty payments on net sales. Both the
    milestone and royalty payment schedules vary depending on the
    specific formulation (e.g., oral versus intravenously
    administered). Our royalty payment obligations for a particular
    licensed product in a particular country begin on the date of
    the
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first commercial sale of the licensed product in that country,
    and end upon the later of 10 years from the date of first
    commercial sale in that country or the first date on which a
    generic version of the licensed product reaches a 25% total
    market share in that country.
The license agreement will remain in effect for the length of
    our royalty obligation on a
product-by-product
and
country-by-country
basis, unless we elect to terminate earlier or until termination
    by mutual agreement. Upon expiration of the agreement, our
    license will remain in effect and will convert to an
    irrevocable, perpetual royalty-free license. If we fail to meet
    our obligations under the agreement, Eli Lilly or
    Shionogi & Co., Ltd. can terminate the agreement,
    resulting in a loss of our exclusive rights to the licensed
    technology.
Amgen
In December 2007, we entered into a license agreement with
    Amgen, pursuant to which we obtained an exclusive worldwide
    license to certain technology and compounds relating to
A-623.
Under the agreement, we obtained exclusive rights under the
    licensed patents and know-how to research, develop, make, have
    made, use, sell, offer for sale and import pharmaceutical
    products containing
A-623,
as
    well as the right to grant sublicenses. The licensed patents
    included a specific set of previously filed U.S. and
    foreign patents and applications, as well as any applications
    filed after the execution date by Amgen and covering licensed
    know-how. During the period of the agreement, we are responsible
    for the filing, prosecution, defense and maintenance of all
    licensed
A-623
patents and applications. Amgen retains the right to review all
    documents relating to said filing, prosecution, defense and
    maintenance, and we are required to incorporate all reasonable
    comments or suggestions that Amgen makes with regard to these.
During the seven-year period after execution of the agreement,
    Amgen is prohibited from clinically developing or
    commercializing any BAFF peptibody. Similarly, we are prohibited
    during the term of the agreement from clinically developing or
    commercializing any molecule other than
A-623
that
    modulates BAFF as the primary intended therapeutic mechanism of
    action.
The license agreement provided for a first installment fee in
    cash of $3.0 million, of which we have paid
    $1.5 million. In addition, the license agreement provides
    for a second cash installment fee of $3.0 million upon the
    earlier of our termination of the agreement or February 1,
    2009. We have made no payments in respect of the second
    installment fee. If we are unable to make this $4.5 million
    payment or agree to alternative payment terms, Amgen may notify
    us of its intent to terminate the license agreement. We will
    have 30 days from the time of notification to make payment
    and cure the breach. As of the date of this prospectus, we have
    not been notified by Amgen of any intention to claim breach or
    terminate the license agreement. In addition, we are required to
    make various milestone payments upon the achievement of certain
    development, regulatory and commercial objectives, including
    payment upon initiation of the first Phase 3 clinical study for
    any
A-623
formulation. We are also required to make tiered quarterly
    royalty payments on net sales. Our royalty payment obligations
    for a particular product in a particular country begin on the
    date of the first commercial sale of the licensed product in
    that country, and end upon the later of 10 years from the
    date of first commercial sale in that country or the expiration
    date of the last valid claim of a licensed patent that covers
    the manufacture, use or sale, offer to sell or import of the
    product.
The license agreement will remain in effect until we elect to
    terminate, or until termination for material breach by either
    party or insolvency on our part. Under these terms, Amgen can
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terminate the agreement if we fail to meet our obligations,
    resulting in a loss of our exclusive rights to the licensed
    technology.
Manufacturing and
    Supply
We currently rely on contract manufacturers to produce drug
    substances and drug products required for our clinical studies
    under current good manufacturing practices, or cGMP, with
    oversight by our internal managers. We plan to continue to rely
    upon contract manufacturers and, potentially, collaboration
    partners to manufacture commercial quantities of our product
    candidates if and when approved for marketing by the FDA. We
    currently rely on a single manufacturer for the preclinical and
    clinical supplies of each of our product candidates and do not
    currently have agreements in place for redundant supply or a
    second source for any of our product candidates. We believe that
    there are alternate sources of supply that can satisfy our
    clinical study requirements without significant delay or
    material additional costs.
Sales and
    Marketing
Given our stage of development, we have not developed a
    commercial organization or distribution capabilities. We expect
    that we would develop these capabilities once we receive Phase 3
    data in contemplation of FDA approval and the commercial launch
    of our product candidates. In order to commercialize any of our
    product candidates, we must develop these capabilities
    internally or through collaboration with third parties. In
    selected therapeutic areas where we feel that any approved
    products can be commercialized by a specialty sales force that
    calls on a limited and focused group of physicians, acute care
    and orphan indications such as acute coronary syndrome and acute
    chest syndrome associated with sickle cell disease, we may seek
    to commercialize these product candidates alone. In therapeutic
    areas that require a large sales force selling to a large and
    diverse prescribing population, such as chronic indications such
    as CAD, we currently plan to partner with third parties to
    commercialize our product candidates while retaining rights to
    co-promote our products to a select audience of high prescribing
    physicians in the United States only, thereby supplementing or
    enhancing the efforts of a commercial partner. We also plan to
    seek commercialization partners for products in non-specialty
    and international markets.
In North America and Western Europe, patients in the target
    markets for our product candidates are largely managed by
    medical specialists in the areas of cardiology and internal
    medicine. Historically, companies have experienced substantial
    commercial success through the deployment of specialized sales
    forces that can address a majority of key prescribers,
    particularly within the cardiovascular disease marketplace.
    Therefore, we expect to utilize a specialized sales force in
    North America for the sales and marketing of product candidates
    that we may successfully develop. Based upon sales models, we
    estimate that we could effectively promote (supplementing a
    commercial partner's sales efforts) the treatment of acute
    coronary syndrome to 3,000 cardiologists with approximately 300
    sales representatives in North America and Western Europe. If we
    obtain additional label indications for
A-002
or
A-001,
we
    may choose to increase our sales force size to promote these new
    uses. Due to their concentrated and focused nature, specialty
    target audiences may be reached with more focused and
    cost-effective marketing campaigns. Outside of North America,
    and in situations or markets where a more favorable return may
    be realized through licensing commercial rights to a third
    party, we may license a portion or all of our commercial rights
    in a territory to a third party in exchange for one or more of
    the following: up-front payments, research funding, development
    funding, milestone payments and royalties on drug sales.
We intend to build the commercial infrastructure necessary to
    bring
A-002,
A-001
and
A-623
to
    market alone or in collaboration with a co-development or
    co-promotion partner. In addition to a specialty sales force,
    sales management, internal sales support and an internal
    marketing group, we will need to establish capabilities to
    manage key accounts, such as
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managed care organizations, group-purchasing organizations,
    specialty pharmacies and government accounts. We may also choose
    to employ medical sales liaisons personnel to support the
    product.
Regulatory
    Matters
Government
    Regulation and Product Approval
Government authorities in the United States at the federal,
    state and local level, and other countries, extensively
    regulate, among other things, the research, development,
    testing, manufacture, quality control, approval, labeling,
    packaging, storage, record-keeping, promotion, advertising,
    distribution, marketing, export and import of products such as
    those we are developing. Our product candidates must be approved
    by the FDA through the new drug application, or NDA, process,
    and our biological product candidate,
A-623,
must
    be approved by the FDA through the biologics license
    application, or BLA, process before they may legally be marketed
    in the United States.
United States
    Drug Development Process
In the United States, the FDA regulates drugs under the Federal
    Food, Drug, and Cosmetic Act, or FDCA, and implementing
    regulations and biological products under both the FDCA and the
    Public Health Service Act, or the PHSA, and implementing
    regulations. The process of obtaining regulatory approvals and
    compliance with appropriate federal, state, local and foreign
    statutes and regulations require the expenditure of substantial
    time and financial resources. Failure to comply with the
    applicable U.S. requirements at any time during the product
    development process, approval process, or after approval, may
    subject an applicant to administrative or judicial sanctions.
    These sanctions could include the FDA's refusal to approve
    pending applications, withdrawal of an approval, a clinical
    hold, warning letters, product recalls, product seizures, total
    or partial suspension of production or distribution,
    injunctions, fines, refusals of government contracts,
    restitution, disgorgement or civil or criminal penalties. The
    process required by the FDA before a drug or biological product
    may be marketed in the United States generally involves the
    following:
•
completion of preclinical laboratory tests, animal studies and
    formulation studies according to Good Laboratory Practices
    regulations;
•
submission to the FDA of an IND, which must become effective
    before human clinical studies may begin;
•
performance of adequate and well-controlled human clinical
    studies according to Good Clinical Practices, or GCP, to
    establish the safety and efficacy of the proposed drug or
    biological product for its intended use;
•
submission to the FDA of an NDA for a new drug or BLA for a
    biological product;
•
satisfactory completion of an FDA inspection of the
    manufacturing facility or facilities at which the drug or
    biological product is produced to assess compliance with
    cGMP; and
•
FDA review and approval of the NDA or BLA.
The testing and approval process requires substantial time,
    effort and financial resources and we cannot be certain that any
    approvals for our product candidates will be granted on a timely
    basis, if at all.
Once a pharmaceutical or biological product candidate is
    identified for development, it enters the preclinical testing
    stage. Preclinical tests include laboratory evaluations of
    product chemistry, toxicity, formulation and stability, as well
    as animal studies to assess its potential safety and efficacy.
    An IND sponsor must submit the results of the preclinical tests,
    together
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with manufacturing information, analytical data and any
    available clinical data or literature, to the FDA as part of the
    IND. The sponsor will also include a protocol detailing, among
    other things, the objectives of the initial clinical study, the
    parameters to be used in monitoring safety and the effectiveness
    criteria to be evaluated if the initial clinical study lends
    itself to an efficacy evaluation. Some preclinical testing may
    continue even after the IND is submitted. The IND automatically
    becomes effective 30 days after receipt by the FDA, unless
    the FDA places the clinical study on a clinical hold within that
30-day
time
    period. In such a case, the IND sponsor and the FDA must resolve
    any outstanding concerns before the clinical study can begin.
    Clinical holds also may be imposed by the FDA at any time before
    or during studies due to safety concerns or non-compliance.
All clinical studies must be conducted under the supervision of
    one or more qualified investigators in accordance with GCP
    regulations. These regulations include the requirement that all
    research subjects provide informed consent. Further, an
    institutional review board, or IRB, must review and approve the
    plan for any clinical study before it commences at any
    institution. An IRB considers, among other things, whether the
    risks to individuals participating in the studies are minimized
    and are reasonable in relation to anticipated benefits. The IRB
    also approves the information regarding the clinical study and
    the consent form that must be provided to each clinical study
    subject or his or her legal representative and must monitor the
    clinical study until completed.
Each new clinical protocol and any amendments to the protocol
    must be submitted to the IND for FDA review, and to the IRBs for
    approval. Protocols detail, among other things, the objectives
    of the clinical study, dosing procedures, subject selection and
    exclusion criteria, and the parameters to be used to monitor
    subject safety.
Human clinical studies are typically conducted in three
    sequential phases that may overlap or be combined:
•
Phase 1.
The product is initially introduced
    into healthy human subjects and tested for safety, dosage
    tolerance, absorption, metabolism, distribution and excretion.
    In the case of some products for severe or life-threatening
    diseases, especially when the product may be too inherently
    toxic to ethically administer to healthy volunteers, the initial
    human testing is often conducted in patients.
•
Phase 2.
Involves studies in a limited patient
    population to identify possible adverse effects and safety
    risks, to preliminarily evaluate the efficacy of the product for
    specific targeted diseases and to determine dosage tolerance and
    optimal dosage and schedule.
•
Phase 3.
Clinical studies are undertaken to
    further evaluate dosage, clinical efficacy and safety in an
    expanded patient population at geographically dispersed clinical
    study sites. These studies are intended to establish the overall
    risk/benefit ratio of the product and provide an adequate basis
    for product labeling.
Progress reports detailing the results of the clinical studies
    must be submitted at least annually to the FDA and safety
    reports must be submitted to the FDA and the investigators for
    serious and unexpected adverse events. Phase 1, Phase 2 and
    Phase 3 testing may not be completed successfully within any
    specified period, if at all. The FDA or the sponsor may suspend
    or terminate a clinical study at any time on various grounds,
    including a finding that the research subjects or patients are
    being exposed to an unacceptable health risk. Similarly, an IRB
    can suspend or terminate approval of a clinical study at its
    institution if the clinical study is not being conducted in
    accordance with the IRB's requirements or if the drug or
    biological product has been associated with unexpected serious
    harm to patients.
Concurrent with clinical studies, companies usually complete
    additional animal studies and must also develop additional
    information about the chemistry and physical characteristics of
    the product and finalize a process for manufacturing the product
    in commercial quantities in
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accordance with cGMP requirements. The manufacturing process
    must be capable of consistently producing quality batches of the
    product candidate and, among other things, the manufacturer must
    develop methods for testing the identity, strength, quality and
    purity of the final product. Additionally, appropriate packaging
    must be selected and tested and stability studies must be
    conducted to demonstrate that the product candidate does not
    undergo unacceptable deterioration over its shelf life.
U.S. Review and
    Approval Processes
The results of product development, preclinical studies and
    clinical studies, along with descriptions of the manufacturing
    process, analytical tests conducted on the drug or biological
    product, proposed labeling and other relevant information, are
    submitted to the FDA as part of an NDA for a new drug or BLA for
    a biological product, requesting approval to market the product.
    The submission of an NDA or BLA is subject to the payment of a
    substantial user fee; a waiver of such fee may be obtained under
    certain limited circumstances.
In addition, under the Pediatric Research Equity Act of 2003, or
    PREA, which was reauthorized under the Food and Drug
    Administration Amendments Act of 2007, an NDA or BLA or
    supplement to an NDA or BLA must contain data to assess the
    safety and effectiveness of the drug or biological product for
    the claimed indications in all relevant pediatric subpopulations
    and to support dosing and administration for each pediatric
    subpopulation for which the product is safe and effective. The
    FDA may grant deferrals for submission of data or full or
    partial waivers. Unless otherwise required by regulation, PREA
    does not apply to any drug or biological product for an
    indication for which orphan designation has been granted.
The FDA reviews all NDAs and BLAs submitted to ensure that they
    are sufficiently complete for substantive review before it
    accepts them for filing. The FDA may request additional
    information rather than accept a NDA or BLA for filing. In this
    event, the NDA or BLA must be re-submitted with the additional
    information. The re-submitted application also is subject to
    review before the FDA accepts it for filing. Once the submission
    is accepted for filing, the FDA begins an in-depth substantive
    review. The FDA reviews an NDA to determine, among other things,
    whether a product is safe and effective for its intended use and
    whether its manufacturing is cGMP-compliant to assure and
    preserve the product's identity, strength, quality and
    purity. The FDA reviews a BLA to determine, among other things,
    whether the product is safe, has an acceptable purity profile
    and is adequately potent, and whether its manufacturing meets
    standards designed to assure the product's continued
    identity, sterility, safety, purity and potency. Before
    approving an NDA or BLA, the FDA will inspect the facility or
    facilities where the product is manufactured. The FDA will not
    approve an application unless it determines that the
    manufacturing processes and facilities are in compliance with
    cGMP requirements and adequate to assure consistent production
    of the product within required specifications. The FDA may refer
    the NDA or BLA to an advisory committee for review, evaluation
    and recommendation as to whether the application should be
    approved and under what conditions. An advisory committee is a
    panel of experts who provide advice and recommendations when
    requested by the FDA on matters of importance that come before
    the agency. The FDA is not bound by the recommendation of an
    advisory committee but it generally follows such recommendations.
The approval process is lengthy and difficult and the FDA may
    refuse to approve an NDA or BLA if the applicable regulatory
    criteria are not satisfied or may require additional clinical
    data or other data and information. Even if such data and
    information is submitted, the FDA may ultimately decide that the
    NDA or BLA does not satisfy the criteria for approval. Data
    obtained from clinical studies are not always conclusive and the
    FDA may interpret data differently than we interpret the same
    data. The FDA will issue a complete response letter if the
    agency decides not to approve the NDA or BLA in its present
    form. The complete response letter usually describes all of the
    specific deficiencies in the NDA or BLA identified by the FDA.
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The deficiencies identified may be minor, for example, requiring
    labeling changes, or major, for example, requiring additional
    clinical studies. Additionally, the complete response letter may
    include recommended actions that the applicant might take to
    place the application in a condition for approval. If a complete
    response letter is issued, the applicant may either resubmit the
    NDA or BLA, addressing all of the deficiencies identified in the
    letter, or withdraw the application
If a product receives regulatory approval, the approval may be
    significantly limited to specific diseases and dosages or the
    indications for use may otherwise be limited, which could
    restrict the commercial value of the product. Further, the FDA
    may require that certain contraindications, warnings or
    precautions be included in the product labeling. In addition,
    the FDA may require Phase 4 testing which involves clinical
    studies designed to further assess a drug or biological
    product's safety and effectiveness after NDA or BLA
    approval and may require testing and surveillance programs to
    monitor the safety of approved products that have been
    commercialized.
Patent Term
    Restoration and Marketing Exclusivity
Depending upon the timing, duration, and specifics of FDA
    approval of the use of our product candidates, some of our
    U.S. patents may be eligible for limited patent term
    extension under the Drug Price Competition and Patent Term
    Restoration Act of 1984, commonly referred to as the
    Hatch-Waxman Amendments. The Hatch-Waxman Amendments permit a
    patent restoration term of up to five years as compensation for
    patent term lost during product development and the FDA
    regulatory review process. However, patent term restoration
    cannot extend the remaining term of a patent beyond a total of
    14 years from the product's approval date. The patent
    term restoration period is generally one-half the time between
    the effective date of an IND and the submission date of an NDA
    plus the time between the submission date of an NDA and the
    approval of that application. Only one patent applicable to an
    approved drug is eligible for the extension and the application
    for the extension must be submitted prior to the expiration of
    the patent. The USPTO, in consultation with the FDA, reviews and
    approves the application for any patent term extension or
    restoration. In the future, we intend to apply for restorations
    of patent term for some of our currently owned or licensed
    patents to add patent life beyond their current expiration
    dates, depending on the expected length of the clinical studies
    and other factors involved in the filing of the relevant NDA.
Market exclusivity provisions under the FDCA can also delay the
    submission or the approval of certain applications. The FDCA
    provides a five-year period of non-patent marketing exclusivity
    within the United States to the first applicant to gain approval
    of an NDA for a new chemical entity. A drug is a new chemical
    entity if the FDA has not previously approved any other new drug
    containing the same active moiety, which is the molecule or ion
    responsible for the action of the drug substance. During the
    exclusivity period, the FDA may not accept for review an
    abbreviated new drug application, or ANDA, or a 505(b)(2) NDA
    submitted by another company for another version of such drug
    where the applicant does not own or have a legal right of
    reference to all the data required for approval. However, an
    application may be submitted after four years if it contains a
    certification of patent invalidity or non-infringement. The FDCA
    also provides three years of marketing exclusivity for an NDA,
    505(b)(2) NDA or supplement to an existing NDA if new clinical
    investigations, other than bioavailability studies, that were
    conducted or sponsored by the applicant are deemed by the FDA to
    be essential to the approval of the application, for example new
    indications, dosages or strengths of an existing drug. This
three-year
exclusivity covers only the conditions associated with the new
    clinical investigations and does not prohibit the FDA from
    approving ANDAs for drugs containing the original active agent.
    Five-year and three-year exclusivity will not delay the
    submission or approval of a full NDA. However, an applicant
    submitting a full NDA would be
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required to conduct or obtain a right of reference to all of the
    preclinical studies and adequate and well-controlled clinical
    studies necessary to demonstrate safety and effectiveness.
Pediatric exclusivity is another type of exclusivity in the
    United States. Pediatric exclusivity, if granted, provides an
    additional six months to an existing exclusivity or statutory
    delay in approval resulting from a patent certification. This
    six-month exclusivity, which runs from the end of other
    exclusivity protection or patent delay, may be granted based on
    the voluntary completion of a pediatric study in accordance with
    an FDA-issued "Written Request" for such a study. The
    current pediatric exclusivity provision was reauthorized in
    September 2007.
Orphan Drug
    Designation
Under the Orphan Drug Act, the FDA may grant orphan designation
    to a drug or biological product intended to treat a rare disease
    or condition, which is generally a disease or condition that
    affects fewer than 200,000 individuals in the United States, or
    more than 200,000 individuals in the United States and for which
    there is no reasonable expectation that the cost of developing
    and making a drug or biological product available in the United
    States for this type of disease or condition will be recovered
    from sales of the product. Orphan product designation must be
    requested before submitting an NDA or BLA. After the FDA grants
    orphan product designation, the identity of the therapeutic
    agent and its potential orphan use are disclosed publicly by the
    FDA. Orphan product designation does not convey any advantage in
    or shorten the duration of the regulatory review and approval
    process.
If a product that has orphan designation subsequently receives
    the first FDA approval for the disease or condition for which it
    has such designation, the product is entitled to orphan product
    exclusivity, which means that the FDA may not approve any other
    applications to market the same drug or biological product for
    the same indication, except in very limited circumstances, for
    seven years. Competitors, however, may receive approval of
    different products for the indication for which the orphan
    product has exclusivity or obtain approval for the same product
    but for a different indication for which the orphan product has
    exclusivity. Orphan product exclusivity also could block the
    approval of one of our products for seven years if a competitor
    obtains approval of the same drug or biological product as
    defined by the FDA or if our product candidate is determined to
    be contained within the competitor's product for the same
    indication or disease. If a drug or biological product
    designated as an orphan product receives marketing approval for
    an indication broader than what is designated, it may not be
    entitled to orphan product exclusivity.
The FDA also administers a clinical research grants program,
    whereby researchers may compete for funding to conduct clinical
    studies to support the approval of drugs, biologics, medical
    devices and medical foods for rare diseases and conditions. A
    product does not have to be designated as an orphan product to
    be eligible for the grant program. An application for an orphan
    grant should propose one discrete clinical study to facilitate
    FDA approval of the product for a rare disease or condition. The
    clinical study may address an unapproved new product or an
    unapproved new use for a product already on the market.
Expedited
    Development and Review Programs
The FDA has a fast track program that is intended to expedite or
    facilitate the process for reviewing new drugs and biological
    products that meet certain criteria. Specifically, new drugs and
    biological products are eligible for fast track designation if
    they are intended to treat a serious or life-threatening
    condition and demonstrate the potential to address unmet medical
    needs for the condition. Fast track designation applies to the
    combination of the product and the specific indication for which
    it is being studied. For a fast track product, the FDA may
    consider for review on a rolling basis sections of the NDA or
    BLA before the complete application is submitted, if the sponsor
    provides a schedule for the submission of the sections
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of the NDA or BLA, the FDA agrees to accept sections of the NDA
    or BLA and determines that the schedule is acceptable, and the
    sponsor pays any required user fees upon submission of the first
    section of the NDA or BLA.
A fast track product may also be eligible for other types of FDA
    programs intended to expedite development and review, such as
    priority review and accelerated approval. A fast track product
    is eligible for priority review if it has the potential to
    provide safe and effective therapy where no satisfactory
    alternative therapy exists or a significant improvement in the
    treatment, diagnosis or prevention of a disease compared to
    marketed products. The FDA will attempt to direct additional
    resources to the evaluation of an application for a new drug or
    biological product designated for priority review in an effort
    to facilitate the review. Additionally, a fast track product may
    be eligible for accelerated approval. Drug or biological
    products studied for their safety and effectiveness in treating
    serious or life-threatening illnesses and that provide
    meaningful therapeutic benefit over existing treatments may
    receive accelerated approval, which means that they may be
    approved on the basis of adequate and well-controlled clinical
    studies establishing that the product has an effect on a
    surrogate endpoint that is reasonably likely to predict a
    clinical benefit, or on the basis of an effect on a clinical
    endpoint other than survival or irreversible morbidity. As a
    condition of approval, the FDA may require that a sponsor of a
    drug or biological product receiving accelerated approval
    perform adequate and well-controlled post-marketing clinical
    studies. Fast track designation, priority review and accelerated
    approval do not change the standards for approval but may
    expedite the development or approval process.
We have been granted fast track designation for our product
    candidate,
A-001,
for
    the prevention of acute chest syndrome associated with sickle
    cell disease in at-risk patients. Even though we have received
    fast track designation for
A-001,
the
    FDA may later decide that
A-001
no
    longer meets the conditions for qualification. In addition,
    obtaining fast track designation may not provide us with a
    material commercial advantage.
Post-Approval
    Requirements
Any drug or biological products for which we receive FDA
    approvals are subject to continuing regulation by the FDA,
    including, among other things, record-keeping requirements,
    reporting of adverse experiences with the product, providing the
    FDA with updated safety and efficacy information, product
    sampling and distribution requirements, complying with certain
    electronic records and signature requirements and complying with
    FDA promotion and advertising requirements. The FDA strictly
    regulates labeling, advertising, promotion and other types of
    information on products that are placed on the market. Drugs and
    biological products may be promoted only for the approved
    indications and in accordance with the provisions of the
    approved label. Further, manufacturers of drugs and biological
    products must continue to comply with cGMP requirements, which
    are extensive and require considerable time, resources and
    ongoing investment to ensure compliance. In addition, changes to
    the manufacturing process generally require prior FDA approval
    before being implemented and other types of changes to the
    approved product, such as adding new indications and additional
    labeling claims, are also subject to further FDA review and
    approval.
Drug and biological product manufacturers and other entities
    involved in the manufacturing and distribution of approved drugs
    or biological products are required to register their
    establishments with the FDA and certain state agencies, and are
    subject to periodic unannounced inspections by the FDA and
    certain state agencies for compliance with cGMP and other laws.
    The cGMP requirements apply to all stages of the manufacturing
    process, including the production, processing, sterilization,
    packaging, labeling, storage and shipment of the drug or
    biological product. Manufacturers must establish validated
    systems to ensure that products meet specifications and
    regulatory standards, and test each product batch or lot prior
    to its release.
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Manufacturers of biological products must also report to the FDA
    any deviations from cGMP that may affect the safety, purity or
    potency of a distributed product; or any unexpected or
    unforeseeable event that may affect the safety, purity or
    potency of a distributed product. The regulations also require
    investigation and correction of any deviations from cGMP and
    impose documentation requirements.
We rely, and expect to continue to rely, on third parties for
    the production of clinical and commercial quantities of our
    products. Future FDA and state inspections may identify
    compliance issues at the facilities of our contract
    manufacturers that may disrupt production or distribution or may
    require substantial resources to correct.
The FDA may withdraw a product approval if compliance with
    regulatory standards is not maintained or if problems occur
    after the product reaches the market. Later discovery of
    previously unknown problems with a product may result in
    restrictions on the product or even complete withdrawal of the
    product from the market. Further, the failure to maintain
    compliance with regulatory requirements may result in
    administrative or judicial actions, such as fines, warning
    letters, holds on clinical studies, product recalls or seizures,
    product detention or refusal to permit the import or export of
    products, refusal to approve pending applications or
    supplements, restrictions on marketing or manufacturing,
    injunctions or civil or criminal penalties.
In addition, from time to time, legislation is drafted,
    introduced, and passed in Congress that could significantly
    change the statutory provisions governing the approval,
    manufacturing, and marketing of products regulated by the FDA.
    For example, in September 2007, the Food and Drug Administration
    Amendments Act of 2007 was enacted, giving the FDA enhanced
    post-market authority, including the authority to require
    post-market studies and clinical studies, labeling changes based
    on new safety information and compliance with a risk evaluation
    and mitigation strategy, or REMS, approved by the FDA. In
    determining whether a REMS is necessary, the FDA must consider
    the size of the population likely to use the drug or biological
    product, the seriousness of the disease or condition to be
    treated, the expected benefit of the product, the duration of
    treatment, the seriousness of known or potential adverse events
    for
A-002
and whether the product is a new molecular entity. We have
    submitted a REMS as an appendix to the SPA. If the FDA
    determines our REMS is necessary, we must submit a REMS plan as
    part of an NDA or BLA. The FDA may require that a REMS include
    various elements, such as a medication guide, patient package
    insert, a communication plan to educate health care providers,
    limitations on who may prescribe or dispense the product, or
    other measures. Failure to comply with any requirements under
    the new law may result in significant penalties. The new law
    also authorizes significant civil money penalties for the
    dissemination of false or misleading
direct-to-consumer
advertisements and allows the FDA to require companies to submit
direct-to-consumer
television drug advertisements for FDA review prior to public
    dissemination. Additionally, the new law expands the clinical
    study registry so that sponsors of all clinical studies, except
    for Phase 1 clinical studies, are required to submit certain
    clinical study information for inclusion in the clinical study
    registry data bank. In addition to new legislation, the FDA
    regulations and policies are often revised or reinterpreted by
    the agency in ways that may significantly affect our business
    and our products. It is impossible to predict whether further
    legislative or FDA regulation or policy changes will be enacted
    or implemented and what the impact of such changes, if any, may
    be.
Foreign
    Regulation
In addition to regulations in the United States, we will be
    subject to a variety of foreign regulations governing clinical
    studies and commercial sales and distribution of our products to
    the extent we choose to sell any products outside of the United
    States. Whether or not we obtain FDA approval for a product, we
    must obtain approval of a product by the comparable regulatory
    authorities of foreign countries before we can commence clinical
    studies or marketing of the product in those countries. The
    approval process varies from country to
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country and the time may be longer or shorter than that required
    for FDA approval. The requirements governing the conduct of
    clinical studies, product licensing, pricing and reimbursement
    vary greatly from country to country.
In the European Union, our products are subject to extensive
    regulatory requirements, which provide, among other things, that
    no medicinal product may be placed on the market of a European
    Union member state unless a marketing authorization has been
    issued by the European Medicines Agency or a national competent
    authority. European Union member states require both regulatory
    clearance by the national competent authority and a favorable
    ethics committee opinion prior to the commencement of a clinical
    study.
Under the European Union regulatory systems, we may submit
    marketing authorization applications either under a centralized
    or decentralized procedure. The centralized procedure provides
    for the grant of a single marketing authorization that is valid
    for all European Union member states. The centralized procedure
    is compulsory for medicines produced by certain biotechnological
    processes, products with a new active substance indicated for
    the treatment of certain diseases such as neurodegenerative
    disorder or diabetes and products designated as orphan medicinal
    products, and optional for those products which are highly
    innovative or for which a centralized process is in the interest
    of patients. The decentralized procedure of approval provides
    for approval by one or more other, or concerned, member states
    of an assessment of an application performed by one member
    state, known as the reference member state. Under the
    decentralized approval procedure, an applicant submits an
    application, or dossier, and related materials (draft summary of
    product characteristics, draft labeling and package leaflet) to
    the reference member state and concerned member states. The
    reference member state prepares a draft assessment and drafts of
    the related materials within 120 days after receipt of a
    valid application. Within 90 days of receiving the
    reference member state's assessment report, each concerned
    member state must decide whether to approve the assessment
    report and related materials. If a member state cannot approve
    the assessment report and related materials on the grounds of
    potential serious risk to public health, the disputed points may
    eventually be referred to the European Commission, whose
    decision is binding on all member states.
Reimbursement
Sales of pharmaceutical products depend significantly on the
    availability of third-party reimbursement. Third-party payors
    include government health administrative authorities, managed
    care providers, private health insurers and other organizations.
    We anticipate third-party payors will provide reimbursement for
    our products. However, these third-party payors are increasingly
    challenging the price and examining the cost-effectiveness of
    medical products and services. In addition, significant
    uncertainty exists as to the reimbursement status of newly
    approved health care products. We may need to conduct expensive
    pharmacoeconomic studies in order to demonstrate the
    cost-effectiveness of our products. Our product candidates may
    not be considered cost-effective. It is time consuming and
    expensive for us to seek reimbursement from third-party payors.
    Reimbursement may not be available or sufficient to allow us to
    sell our products on a competitive and profitable basis.
The passage of the Medicare Prescription Drug, Improvement, and
    Modernization Act of 2003, or the MMA, imposes new requirements
    for the distribution and pricing of prescription drugs for
    Medicare beneficiaries, and includes a major expansion of the
    prescription drug benefit under a new Medicare Part D.
    Medicare Part D went into effect on January 1, 2006.
    Under Part D, Medicare beneficiaries may enroll in
    prescription drug plans offered by private entities which will
    provide coverage of outpatient prescription drugs. Part D
    plans include both stand-alone prescription drug benefit plans
    and prescription drug coverage as a supplement to Medicare
    Advantage plans. Unlike Medicare Part A and B, Part D
    coverage is not standardized. Part D prescription drug plan
    sponsors are not required to pay for all covered Part D
    drugs, and each drug plan can develop its own drug formulary
    that identifies which drugs it will cover
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and at what tier or level. However, Part D prescription
    drug formularies must include drugs within each therapeutic
    category and class of covered Part D drugs, though not
    necessarily all the drugs in each category or class. Any
    formulary used by a Part D prescription drug plan must be
    developed and reviewed by a pharmacy and therapeutic committee.
It is not clear what effect the MMA will have on the prices paid
    for currently approved drugs and the pricing options for new
    drugs approved after January 1, 2006. Government payment
    for some of the costs of prescription drugs may increase demand
    for products for which we receive marketing approval. However,
    any negotiated prices for our products covered by a Part D
    prescription drug plan will likely be lower than the prices we
    might otherwise obtain. Moreover, while the MMA applies only to
    drug benefits for Medicare beneficiaries, private payors often
    follow Medicare coverage policy and payment limitations in
    setting their own payment rates. Any reduction in payment that
    results from the MMA may result in a similar reduction in
    payments from non-governmental payors.
There are also laws that govern a company's eligibility to
    participate in Medicare and Medicaid reimbursements. For
    example, a company may be debarred from participation if it is
    found to have violated federal anti-kickback laws, which could
    have a significant effect on a company's ability to operate
    its business.
In addition, Congress is considering a number of legislative and
    regulatory proposals which are intended to reduce or limit the
    growth of health care costs and which could significantly
    transform the market for pharmaceuticals and biological
    products. Legislative and regulatory proposals under
    consideration include health care reform initiatives, such as
    private health insurance expansion or the creation of competing
    public health insurance plans. Further, Congress is considering
    passing legislation that would allow Medicare to negotiate
    directly with pharmaceutical companies. While we cannot predict
    whether such legislative or regulatory proposals will be
    adopted, the adoption of such proposals could harm our business,
    financial condition and results of operations. In addition, in
    some foreign countries, the proposed pricing for a drug must be
    approved before it may be lawfully marketed. The requirements
    governing drug pricing vary widely from country to country. For
    example, the European Union provides options for its member
    states to restrict the range of medicinal products for which
    their national health insurance systems provide reimbursement
    and to control the prices of medicinal products for human use. A
    member state may approve a specific price for the medicinal
    product or it may instead adopt a system of direct or indirect
    controls on the profitability of the company placing the
    medicinal product on the market. There can be no assurance that
    any country that has price controls or reimbursement limitations
    for pharmaceutical products will allow favorable reimbursement
    and pricing arrangements for any of our products.
Employees
As of September 1, 2009, we had 16 employees, seven of
    which hold an M.D., Ph.D. or Pharm. D. All of our employees
    are engaged in administration, finance, clinical, regulatory and
    business development functions. None of our employees are
    represented by a labor union, and we believe that our relations
    with our employees are good.
Property and
    Facilities
We are currently subleasing approximately 7,800 square feet
    of office space in Hayward, California, which we occupy under a
    sublease that commenced on October 1, 2008 and will expire
    on September 30, 2010. We believe our existing facilities
    are adequate for our current needs and that any additional space
    we need will be available in the future on commercially
    reasonable terms.
Legal
    Proceedings
We are not currently subject to any material legal proceedings.
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MANAGEMENT
Executive
    Officers and Directors
The following table sets forth information regarding our
    executive officers and directors, including their ages as of
    September 4, 2009.
Name
Age
Position
Paul F. Truex
40
President, Chief Executive Officer and Director
Christopher P. Lowe
41
Chief Financial Officer and Vice President of Administration
James E. Pennington, M.D.
66
Executive Vice President and Chief Medical Officer
Colin Hislop, M.D.
52
Senior Vice President, Cardiovascular Products
Debra Odink, Ph.D.
45
Vice President, Pharmaceutical Research and Development
Joaquim Trias, Ph.D.
49
Senior Vice President, Preclinical Development
Stephen Lau
37
Vice President, Corporate and Business Development
Ursula Fritsch, Pharm. D
49
Vice President, Global Regulatory and Compliance
Christopher S. Henney, Ph.D. (1) (2)
68
Director and Chairman of the Board of Directors
Annette Bianchi (1) (3)
50
Director
James I. Healy, M.D., Ph.D. (1) (2) (3)
44
Director
A. Rachel Leheny, Ph.D.
46
Director
Donald J. Santel (2) (3)
49
Director
David E. Thompson
62
Director
(1)
Member of nominating and corporate
    governance committee.
(2)
Member of audit committee.
(3)
Member of compensation committee.
Paul F. Truex.
Mr. Truex has served as our President
    and Chief Executive Officer since our inception in September
    2004 and as a member of our board of directors since November
    2004. Prior to founding Anthera, Mr. Truex served as a
    Director, President and Chief Executive Officer of Peninsula
    Pharmaceuticals, Inc., a biopharmaceutical company, from the
    commencement of its operations in October 2001. Prior to
    Peninsula, Mr. Truex was Vice President of Commercial
    Development for Vicuron, Inc. from April 2000 to September 2001.
    From July 1997 to April 2000, Mr. Truex held various
    positions at Eli Lilly and Company. Mr. Truex holds an
    M.B.A. in marketing and finance from Indiana University and a
    B.A. in economics from the University of Waterloo.
    Mr. Truex is a director of Trius Therapeutics, Inc. and
    Eiger Biopharmaceuticals, Inc.
Christopher P. Lowe.
Mr. Lowe has served
    as our Chief Financial Officer and Vice President of
    Administration since November 2007. Beginning in September 2005
    and up until he joined the Company, Mr. Lowe served as
    Vice-President of Finance & Administration and,
    beginning in January 2006, as Chief Financial Officer of
    Asthmatx, Inc., a medical technology company. Previously,
    Mr. Lowe was with Peninsula Pharmaceuticals, Inc., as
    Corporate Controller from June 2004 to October 2004 and Chief
    Accounting Officer from October 2004 until June 2005.
    Mr. Lowe holds a B.S. in business administration from
    California Polytechnic
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State University, San Luis Obispo and an M.B.A. from Saint
    Mary's University, Texas. Mr. Lowe is a director of
    Hansen Medical Corporation, a medical device company.
James E. Pennington, M.D.
Dr. Pennington has
    served as our Executive Vice President and Chief Medical Officer
    since March 2007. Dr. Pennington came to Anthera from
    CoTherix, Inc. where, since February 2004, he served as
    Executive Vice President and Chief Medical Officer, focusing on
    licensing and developing and commercializing therapeutic
    products for the treatment of cardiovascular diseases. He holds
    a B.A. in General Science from the University of Oregon and an
    M.D. from the University of Oregon School of Medicine and is
    board certified in internal medicine and infectious disease.
Colin Hislop, M.D.
Dr. Hislop has served as our
    Senior Vice President of Cardiovascular Products since November
    2005 and also served as a consultant to the Company from July
    2005 through November 2005. From October 2004 until June 2005,
    Dr. Hislop was Vice President, Clinical Development for
    Peninsula Pharmaceuticals, Inc. where he oversaw three global
    development programs for Peninsula's anti-infective product
    portfolio. From September 2001 until September 2004,
    Dr. Hislop served as Vice President of Clinical Development
    at CV Therapeutics, Inc., a biopharmaceutical company.
    Dr. Hislop holds a B.Sc. in medical biochemistry from the
    University of Surrey, and a degree in medicine from the
    University of London.
Debra Odink, Ph.D.
Dr. Odink has served as our
    Vice President of Pharmaceutical Research and Development since
    December 2005. From September 2002 until July 2005,
    Dr. Odink served as Vice President of Pharmaceutical
    Chemistry and Product Development at Peninsula Pharmaceuticals,
    Inc., a biopharmaceutical company, where she was responsible for
    manufacturing and product development strategies for assets
    licensed to Peninsula. Dr. Odink holds a B.S. in chemistry
    from California State University, Stanislaus and a Ph.D. in
    inorganic chemistry from the University of California at Davis.
Joaquim Trias, Ph.D.
Dr. Trias has served as
    our Senior Vice President of Preclinical Development since
    December 2004. From July 1996 until July 2004, Dr. Trias
    was Vice President of Drug Discovery Research at Vicuron
    Pharmaceuticals Inc. where he directed internal discovery
    projects, from concept to clinical candidate, and participated
    in its clinical development programs. Dr. Trias holds a
    B.S. in Biology and a Ph.D. in microbiology from the University
    of Barcelona and completed his training at the University of
    California at Berkeley.
Stephen Lau.
Mr. Lau has served as our Vice
    President of Corporate and Business Development since February
    2008. From October 2003 until February 2008, Mr. Lau
    managed and negotiated in- and out-licensing opportunities at
    Amgen Inc., a biopharmaceutical company. From March 2001 until
    September 2003, Mr. Lau was an investment banker at Adams,
    Harkness & Hill. Prior to that, Mr. Lau was a
    management consultant at Strategic Decisions Group and Deloitte
    Consulting. Mr. Lau holds a B.A. in microbiology and an
    M.S. in immunology from the University of California at Davis,
    and a Master's degree in health care management from
    Harvard University.
Ursula Fritsch, Pharm.D.
Dr. Fritsch has served as
    our Vice President, Global Regulatory and Compliance since April
    2005. Prior to joining the Company, from 2003 to 2005,
    Dr. Fritsch was Senior Director of Regulatory Affairs at
    Peninsula Pharmaceuticals, Inc., where she oversaw both early
    and late stage regulatory strategy and operations for their
    antibiotic portfolio. Prior to Peninsula, Dr. Fritsch held
    various management positions and oversaw several new drug
    application approvals at Genentech, Inc. and Oclassen
    Pharmaceuticals, Inc. and was head of regulatory at Onyx
    Pharmaceuticals, Inc. Dr. Fritsch holds a B.A. from the
    University of Nebraska and a Pharm. D. from Creighton University.
Christopher S. Henney, Ph.D.
Dr. Henney has
    served as the Chairman of our board of directors since August
    2008 and has been a member of our board of directors since April
    2005.
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Dr. Henney served as Chairman and Chief Executive Officer
    of Dendreon Corporation, a biotechnology company he co-founded,
    from 1997 until his retirement in July 2004. Dr. Henney was
    previously a founder of Immunex Corp. and Icos Corp.
    Dr. Henney holds a B.Sc with honors in medical
    biochemistry, a Ph.D. in experimental pathology and a D.Sc. for
    contributions to the field of immunology, all from the
    University of Birmingham, England. Dr. Henney is currently
    the Chairman and a director of Oncothyreon, Inc., is
    vice-chairman and a director of Cyclacel Pharmaceuticals, Inc.,
    and is a director of AVI BioPharma Inc.
Annette Bianchi.
Ms. Bianchi has served as a member
    of our board of directors since August 2006. Ms. Bianchi
    has served as a Managing Director at VantagePoint Venture
    Partners, a venture capital firm, since 2004. From 1999 to 2004,
    Ms. Bianchi served as a Managing Director at Pacific
    Venture Group, a dedicated health care fund. From 1992 to 1999,
    Ms. Bianchi served as a General Partner at Weiss,
    Peck & Greer Venture Partners, a venture capital firm.
    From 1985 to 1999, Ms. Bianchi served as an associate and a
    General Partner of Burr, Egan, Deleage & Co., a
    venture capital firm. Ms. Bianchi holds a B.S.E. and an
    M.S.E. in Biomedical Engineering from the University of
    Pennsylvania and an M.B.A. from The Wharton School of the
    University of Pennsylvania.
James I. Healy, M.D., Ph.D.
Dr. Healy has
    served as a member of our board of directors since August 2006.
    Dr. Healy is a Managing Partner of Sofinnova Management VI,
    LLC, the general partner of Sofinnova Venture Partners VI, L.P.,
    a venture capital firm, a position he has held since June 2000.
    Dr. Healy holds a B.A. in molecular biology and a B.A. in
    Scandinavian studies from the University of California at
    Berkeley, an M.D. from Stanford University School of Medicine
    and a Ph.D. in immunology from Stanford University.
    Dr. Healy is a director of InterMune, Inc. and Amarin
    Corporation plc, both biopharmaceutical companies.
A. Rachel Leheny, Ph.D.
Dr. Leheny has served
    as a member of our board of directors since August 2008.
    Dr. Leheny is (i) a Managing Director of Caxton
    Advantage Venture Partners, L.P., which is the General Partner
    of Caxton Advantage Life Sciences Fund, L.P., a life-sciences
    venture capital fund that she co-founded in 2006 and (ii) a
    member of Advantage Life Sciences Partners LLC, the Managing
    General Partner of Caxton Advantage Venture Partners, L.P. Prior
    to that, from April 2000 to June 2002, she was head of the
    biotechnology research team at Lehman Brothers. Before Lehman,
    from April 1998 to April 2000, Dr. Leheny headed the
    biotechnology research team at UBS Warburg and before that, from
    April 1993 to April 1998, worked at Hambrecht & Quist,
    most recently as Managing Director and Senior Analyst.
    Dr. Leheny holds an A.B. in chemistry from Harvard and a
    Ph.D. from Columbia University. She did post-doctoral work at
    the University of California at Berkeley, where she was a
    National Institutes of Health fellow and lecturer.
Donald J. Santel.
Mr. Santel has served as a member
    of our board of directors since October 2007. From February 2000
    until January 2007, Mr. Santel held various positions in
    and was a member of the board of directors of CoTherix, Inc., a
    pharmaceutical company he
co-founded.
From October 2003 to August 2004, Mr. Santel served as
    President and Chief Operating Officer of CoTherix and from
    August 2004 until January 2007, Mr. Santel served as Chief
    Executive Officer. From November 2006 until the present,
    Mr. Santel has served as the Chief Executive Officer of
    Hyperion Therapeutics, Inc., a pharmaceutical company.
    Mr. Santel holds a B.S.E. in biomedical engineering from
    Purdue University and an M.S. in electrical engineering from the
    University of Minnesota.
David E. Thompson.
Mr. Thompson has served as a
    member of our board of directors since November 2005.
    Mr. Thompson served as Vice President of Corporate Strategy
    Business Development for Eli Lilly and Company from January 2001
    until his retirement in July 2005. Thereafter, he was a partner
    at VantagePoint Venture Partners from 2006 through 2008.
    Mr. Thompson holds a B.S. and an M.B.A. from Michigan State
    University.
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Board
    Composition
Upon completion of this offering, our board of directors will
    consist of seven directors, six of whom will qualify as
    "independent" directors according to the rules and
    regulations of The NASDAQ Global Market. Our amended and
    restated certificate of incorporation, which will be effective
    upon the completion of this offering, will provide for a
    classified board of directors divided into three classes with
    members of each class of directors serving staggered three-year
    terms. As a result, a portion of our board of directors will be
    elected each
    year.          
    and          
    have been designated Class I directors whose terms will
    expire at the 2010 annual meeting of
    stockholders.          
    and          
    have been designated Class II directors whose terms will
    expire at the 2011 annual meeting of
    stockholders.          ,          
    and          
    have been designated Class III directors whose terms will
    expire at the 2012 annual meeting of stockholders.
Our amended and restated certificate of incorporation will also
    provide that the number of authorized directors will be
    determined from time to time by resolution of the board of
    directors and any vacancies in our board and newly created
    directorships may be filled only by our board of directors. Any
    additional directorships resulting from an increase in the
    number of directors will be distributed among the three classes,
    so that, as nearly as possible, each class will consist of
    one-third of the total number of directors. Our amended and
    restated certificate of incorporation will further provide for
    the removal of a director only for cause or by the affirmative
    vote of the holders of 75% or more of the shares then entitled
    to vote at an election of our directors. These provisions and
    the classification of our board of directors may have the effect
    of delaying or preventing changes in the control or management
    of the Company.
There are no family relationships among any of our directors or
    executive officers.
Our board of directors has considered the relationships of all
    directors and, where applicable, the transactions involving them
    described below under "Certain Relationships and Related
    Person Transactions," and determined that each of them does
    not have any relationship which would interfere with the
    exercise of independent judgment in carrying out his or her
    responsibility as a director and that each non-employee director
    qualifies as an independent director under the applicable rules
    of The NASDAQ Global Market.
Committees of the
    Board of Directors
Our board of directors has established an audit committee, a
    compensation committee and a nominating and corporate governance
    committee, each of which operates pursuant to a separate charter
    adopted by our board of directors. The composition and
    responsibilities of each committee are described below. Members
    serve on these committees until their resignation or until
    otherwise determined by our board of directors.
The composition and function of our board of directors and all
    of our committees will comply with all applicable requirements
    of the Sarbanes-Oxley Act of 2002, The NASDAQ Global Market and
    SEC rules and regulations.
Audit
    Committee
Mr. Santel, Dr. Healy and Dr. Henney currently
    serve on our audit committee. Mr. Santel chairs the audit
    committee. All members of our audit committee meet the
    requirements for financial literacy under the applicable rules
    and regulations of the SEC and The NASDAQ Global Market. Our
    board has determined that Mr. Santel is an "audit
    committee financial expert" as defined under the applicable
    rules of the SEC and has the requisite financial sophistication
    as defined under the applicable rules and regulations of The
    NASDAQ Global Market. Mr. Santel, Dr. Healy and
    Dr. Henney are independent directors as defined under the
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applicable rules and regulations of the SEC and The NASDAQ
    Global Market. The audit committee will operate under a written
    charter that will satisfy the applicable standards of the SEC
    and The NASDAQ Global Market.
The audit committee's responsibilities include:
•
appointing, approving the compensation of, and assessing the
    independence of our independent registered public accounting
    firm;
•
pre-approving auditing and permissible non-audit services, and
    the terms of such services, to be provided by our independent
    registered public accounting firm;
•
reviewing and discussing with management and the independent
    registered public accounting firm our annual and quarterly
    financial statements and related disclosures;
•
coordinating the oversight and reviewing the adequacy of our
    internal controls over financial reporting;
•
establishing policies and procedures for the receipt and
    retention of accounting-related complaints and concerns; and
•
preparing the audit committee report required by SEC rules to be
    included in our annual proxy statement.
Compensation
    Committee
Ms. Bianchi, Dr. Healy and Mr. Santel currently
    serve on our compensation committee. Mr. Santel chairs the
    compensation committee. All of the members of our compensation
    committee are independent under the applicable rules and
    regulations of the SEC, The NASDAQ Global Market and the
    Internal Revenue Code.
The compensation committee's responsibilities include:
•
annually reviewing and approving corporate goals and objectives
    relevant to compensation of our chief executive officer;
•
evaluating the performance of our chief executive officer in
    light of such corporate goals and objectives and determining the
    compensation of our chief executive officer;
•
reviewing and approving the compensation of all our other
    officers;
•
overseeing and administering our incentive-based compensation
    and equity plans; and
•
reviewing and making recommendations to the board with respect
    to director compensation.
Nominating and
    Corporate Governance Committee
Dr. Henney, Dr. Healy and Ms. Bianchi currently
    serve on our nominating and corporate governance committee.
    Dr. Henney chairs the nominating and corporate governance
    committee. All of the members of our nominating and corporate
    governance committee are independent under the applicable rules
    and regulations of the SEC and The NASDAQ Global Market.
The nominating and corporate governance committee's
    responsibilities include:
•
developing and recommending to the board criteria for selecting
    board and committee membership;
•
establishing procedures for identifying and evaluating director
    candidates, including nominees recommended by stockholders;
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•
identifying individuals qualified to become board members;
•
recommending to the board the persons to be nominated for
    election as directors and each of the board's committees;
•
developing and recommending to the board a set of corporate
    governance guidelines; and
•
overseeing the evaluation of the board, its committees and
    management.
Compensation
    Committee Interlocks and Insider Participation
None of the members of the compensation committee is or has at
    any time during the past fiscal year been an officer or employee
    of the Company. None of the members of the compensation
    committee has formerly been an officer of the Company. None of
    our executive officers serve or in the past fiscal year has
    served as a member of the board of directors or compensation
    committee of any other entity that has one or more executive
    officers serving as a member of our board of directors or
    compensation committee.
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COMPENSATION
Compensation
    Discussion and Analysis
This section discusses our executive compensation policies and
    arrangements as they relate to our named executive officers who
    are listed in the compensation tables set forth below. The
    following discussion should be read together with the
    compensation tables and related disclosures set forth below.
Background and
    Objectives
We are a biopharmaceutical company focused on developing and
    commercializing products to treat serious diseases associated
    with inflammation, including cardiovascular and autoimmune
    diseases. The success of development companies is significantly
    influenced by the quality and motivation of their work forces.
    As a result, we face significant competition for executives and
    other talented employees from numerous pharmaceutical research
    and development companies in the San Francisco Bay Area.
    With this in mind, we strive to provide what we believe is a
    competitive total compensation package to our executive officers
    through a combination of base salary, short-term cash incentives
    and long-term equity compensation, in addition to broad-based
    employee benefits programs, in order to closely align the
    interests of our executive officers with those of our
    stockholders, to attract talented individuals to manage and
    operate all aspects of our business, to reward these individuals
    fairly and to retain those individuals who meet our high
    expectations and support the achievement of our business
    objectives.
Role of
    Compensation Committee and Executive Officers
Our executive compensation program is administered by our
    compensation committee of our board of directors. Our
    compensation committee is responsible for overseeing our
    executive compensation policies, plans and programs, reviewing
    our achievements as a company and the achievements of our
    individual officers, recommending to our board of directors the
    type and level of compensation for our named executive officers
    and our directors. The primary goal of our compensation
    committee is to closely align the interests of our named
    executive officers with those of our stockholders. To achieve
    this goal, our compensation committee relies on compensation
    that is designed to attract and retain executives whose
    abilities are critical to our long-term success, that motivates
    individuals to perform at their highest level and that rewards
    achievement.
The annual responsibilities of our compensation committee
    include the following:
•
reviewing and approving corporate goals and objectives relevant
    to the compensation of our Chief Executive Officer;
•
evaluating the performance of our Chief Executive Officer in
    light of such corporate goals and objectives and determining the
    compensation of our Chief Executive Officer; and
•
reviewing and approving the level of equity awards, annual
    salary and bonuses for our named executive officers and other
    employees.
In reviewing and approving these matters, our compensation
    committee considers such matters as it deems appropriate,
    including our financial and operating performance, the alignment
    of interests of our executive officers and our stockholders and
    our ability to attract and retain qualified individuals. For
    executive compensation decisions, including decisions relating
    to the grant of stock options and other equity awards to our
    named executive officers, our compensation committee typically
    considers the recommendations of Mr. Truex, our Chief
    Executive Officer. Mr. Truex also generally participates in
    our compensation committee's
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deliberations about executive compensation matters. However,
    Mr. Truex does not participate in the deliberation or
    determination of his own compensation.
Our compensation committee has not established any formal
    policies or guidelines for allocating compensation between
    current and long-term equity compensation, or between cash and
    non-cash compensation. In determining the amount and mix of
    compensation elements and whether each element provides the
    correct incentives and rewards for performance consistent with
    our short-term and long-term goals and objectives, our
    compensation committee relies on its judgment about each
    individual's performance in a rapidly changing business
    environment rather than adopting a formulaic approach to
    compensatory decisions that are too narrowly responsive to
    short-term changes in business performance. In making
    determinations about performance, our compensation committee
    does not solely rely on formal goals or metrics, but rather
    takes into account input from appropriate members of management
    with respect to an individual's performance, as well as its
    own observations.
Role of
    Compensation Consultant
Our compensation committee has the authority under its charter
    to engage the services of any consulting firm or other outside
    advisor to assist it. While our compensation committee did not
    utilize the services of any outside advisors in 2008, in late
    2007, our compensation committee engaged J. Thelander
    Consulting, an independent consulting firm selected by our
    compensation committee, to review the compensation of our named
    executive officers and other key employees. J. Thelander
    Consulting compared the base salary, bonus and equity awards
    offered to these employees with aggregated data from 193 pre-IPO
    companies in the biotechnology, medical device, IT/software,
    cleantech and health care space. These 193 companies were
    selected because they were at a similar stage of development as
    us and the majority of such companies were also based on the
    west coast and had levels of funding ranging from
    $15 million to $70 million. Accordingly, our
    compensation committee determined that these companies
    represented the types of companies with which we compete for
    executive employees. Based on our goal of attracting and
    retaining talented individuals to serve as executive officers in
    a competitive market, J. Thelander Consulting recommended
    targeting the 75th percentile of base salary, bonus and equity
    compensation offered by this group of companies. J. Thelander
    Consulting recommended targeting the 75th percentile of
    compensation at comparable companies in order to attract
    above-average executives, since attracting and retaining top
    talent is important to a smaller company like ours. To that end,
    J. Thelander Consulting recommended that we increase our
    offered base salary and bonus compensation for executive
    officers, and maintain the current level of offered equity
    compensation. Our compensation committee considered the
    recommendations and determined that the current compensation
    packages for our executive officers were sufficient in light of
    current market conditions, input from management and the desire
    to allocate resources to our clinical development study instead.
J. Thelander Consulting also reviewed the change in control and
    severance benefits we had in place at the time for our
    executives, which included all of our named executive officers.
    J. Thelander Consulting recommended that we maintain our current
    benefit levels for cash severance and health benefits, which are
    12 months cash severance and benefits continuation for our
    Chief Executive Officer and six months cash severance and
    benefits continuation for our other executive officers, but
    provide for 100% acceleration of equity awards vesting in
    connection with the termination of employment of our executive
    officers in certain circumstances. At the time of J. Thelander
    Consulting's review, our change of control and severance
    benefits provided acceleration of 12 months of equity award
    vesting for our Chief Executive Officer and Chief Medical
    Officer and six months of equity award vesting for our other
    executive officers. Our compensation committee considered the
    recommendations and
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determined that the existing change of control and severance
    provisions for our executive officers were adequate to provide
    security to our executive officers whose leadership and
    experience would be crucial to maximize stockholder value during
    the course of ordinary business.
J. Thelander Consulting was retained by and reported directly to
    our compensation committee.
Compensation
    Elements
Base Salary.
The base salaries of our named
    executive officers are primarily established based on the scope
    of their responsibilities and performance, taking into account
    the J. Thelander Consulting comparable company data and
    based upon our compensation committee's understanding of
    compensation paid to similarly situated executives, and adjusted
    as necessary to recruit or retain specific individuals. In
    making determinations about the performance of our named
    executive officers, our compensation committee takes into
    account corporate goals, which are set annually by our
    compensation committee and generally include milestones related
    to our preclinical studies and clinical studies and fundraising,
    as well as informal individual goals, which are
    position-specific and are communicated to the named executive
    officer over the course of the year. In 2008, our corporate
    goals focused on clinical development of
A-002,
including achieving full enrollment in our Phase 2b
    clinical study and receiving advice from the FDA on a special
    protocol assessment for a Phase 3 clinical study protocol.
We typically review the base salaries of our named executive
    officers annually. We may also increase the base salary of an
    executive officer at other times if a change in the scope of the
    executive's responsibilities, such as promotion, justifies
    such consideration. Although we do not target a specific
    percentile range, we believe that a competitive base salary
    relative to the companies with which we compete for executives
    is a necessary element of any compensation program that is
    designed to attract and retain talented and experienced
    executives. We also believe that attractive base salaries can
    motivate and reward executives for their overall performance.
    Base salaries are established in part based on experience,
    skills and expected contributions of our executives and our
    executives' performance during the prior year.
As part of its annual evaluation of salaries in 2008 for our
    named executive officers, our board of directors elected to
    maintain salaries for Mr. Truex and our other named
    executive officers at then-current levels. This determination
    was based on the recommendation of our compensation committee
    that such base salary provided adequate fixed income as compared
    to comparable company data and our compensation committee's
    own understanding of compensation at other pre-IPO companies in
    comparable industries, based in part on their respective
    experience on the board of directors of such companies, as well
    as management's view that base salaries should generally
    stay at the same level.
In February 2009, upon our compensation committee's
    recommendation, the board of directors approved temporary
    reduction in cash compensation of approximately 14% on average
    for all of our employees, including our named executive
    officers, which compensation reduction was reinstated in August
    2009. This measure was taken in connection with the redeployment
    of resources to our research and development activities and the
    elimination of four positions in light of the financing and
    economic environment. In connection with this salary reduction,
    Mr. Truex was granted special authority by our board of
    directors to allocate in his sole discretion options to purchase
    an aggregate of 45,000 shares to individuals, including our
    named executive officers, who had demonstrated high achievement
    toward our goals.
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Cash Bonuses.
We do not currently have a
    formal cash incentive program. While we have paid cash bonuses
    based on the achievement of approved operational milestones in
    the past, we did not establish a formal cash incentive program,
    nor did we pay any bonuses based on corporate goals in 2008. Our
    compensation committee made the decision not to pay annual
    bonuses for 2008 based on the need to manage expenses and
    allocate resources to our clinical development programs, and did
    not formally evaluate whether our 2008 corporate goals had been
    achieved. Our compensation committee has the authority to award
    discretionary performance-based cash bonuses to our executive
    officers and certain non-executive employees. Our compensation
    committee considers awarding such discretionary bonuses in the
    event of extraordinary short-term efforts and achievements by
    our executives and employees, as recommended by management. No
    such discretionary bonuses were awarded in 2008. We expect that
    our compensation committee will put a formal cash incentive
    program into place in the future, and that our named executive
    officers will participate in that program.
Equity Incentive Compensation.
We generally
    grant stock options to our employees, including our named
    executive officers, in connection with their initial employment
    with us. We also typically grant stock options on an annual
    basis as part of annual performance reviews of our employees.
    Our compensation committee has established grant guidelines for
    our employees, other than our Chief Executive Officer, based on
    an employee's position. These guidelines specify a range of
    equity grant amounts, expressed as a percentage of our common
    stock outstanding on a fully-diluted basis, which range from
    0.02% to 2.75%, depending on position. Grant guidelines for our
    named executive officers range from 1.0% to 2.75%.
Each of our named executive officers has either purchased
    restricted shares of common stock or received stock options to
    purchase shares of common stock in connection with their initial
    employment with us. We grant equity incentive compensation to
    our executive officers because we believe doing so will motivate
    our executives by aligning their interests more closely with the
    interests of our stockholders. Certain employees, including
    Mr. Truex, were granted restricted stock in 2004 and 2005
    because we believed that it was appropriate for our initial key
    employees to have an immediate equity stake, and because we
    believed owning restricted stock would more closely align the
    interests of the recipient with those of our stockholders. Now
    that we are a more mature company with over 15 employees,
    we believe it is generally more appropriate to grant options to
    employees, as is the practice at other companies with which we
    compete for talent, although we may continue to grant restricted
    stock when we deem it appropriate and in our stockholders'
    best interests.
In connection with their initial employment, each of our named
    executive officers was granted stock options to purchase shares
    of our common stock, for an aggregate of 445,000 shares at
    an exercise price of the fair value of such shares at the dates
    of grant, which ranged from $0.08 to $0.78 per share. The
    options held by each named executive officer are subject to
    vesting in order to encourage each named executive officer to
    remain with us for several years, and subject to the other
    provisions of their respective option agreements, which are
    described below.
Equity incentive grants to our named executive officers and
    other employees are currently made at the discretion of our
    board of directors with the recommendation of our compensation
    committee out of our 2005 Equity Incentive Plan, or 2005 Equity
    Plan. In determining equity incentive grants, the compensation
    committee considers the grant guidelines it has established for
    each position, along with the equity incentives already provided
    to an employee. Our compensation committee also considers
    individual performance, based on informal goals and input
    received from management. Under the 2005 Equity Plan, we may
    grant equity incentive awards in the form of stock options,
    restricted stock awards or stock appreciation rights. In 2008,
    our board of directors granted options to purchase a total of
    561,500 shares of common stock to our employees and
    directors, including options to purchase a total of
    210,000 shares of common stock to our named executive
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officers, all at an exercise price of $0.78 per share, which
    represented the fair value of our common stock on the dates of
    grant, as determined by our board of directors. These grants
    were made to further motivate the recipients by aligning their
    interests more closely with our stockholders over the next
    several years by providing them with an equity interest in the
    Company.
The exercise price of each stock option granted under our 2005
    Equity Plan is based on the fair value of our common stock on
    the date of grant. Historically, the fair value of our common
    stock for purposes of determining the exercise price of stock
    options has been determined by our board of directors based on
    its analysis of a number of factors including, among others, the
    total company valuation implied by our rounds of financing, the
    market value of similarly situated public companies, our
    anticipated future risks and opportunities, the rights and
    preferences of our preferred stock and the discounts customarily
    applicable to common stock of privately-held companies. We
    engaged independent valuation firms to assess the fair value of
    our common stock during 2006, 2007 and 2008. Based on several
    factors considered by our board of directors, including the
    valuation reports prepared by such firms, we determined the fair
    value of our common stock or option grants made in 2009 to be
    $0.88 per share, and for options grants made in 2008 to be $0.78
    per share. Following this offering, we expect that all stock
    options will continue to be granted with an exercise price equal
    to the fair value of our common stock on the date of grant, but
    fair value will be defined as the closing market price of a
    share of our common stock on the date of grant. We do not
    currently have any program, plan or practice of setting the
    exercise price based on a date or price other than the fair
    value of our common stock on the grant date.
Stock option awards provide our named executive officers and
    other employees with the right to purchase shares of our common
    stock at a fixed exercise price, subject to their continued
    employment. Stock options are earned on the basis of continued
    service and generally vest over four years, beginning with
    vesting as to 25% of the award on the one-year anniversary of
    the date of grant, and pro-rata vesting monthly thereafter. Our
    stock options may also be exercised prior to the award vesting
    in full, subject to our right of repurchase pursuant to the 2005
    Equity Plan. In addition, we have also granted options to
    purchase smaller amounts of stock, typically fewer than
    10,000 shares, which are immediately vested to recognize
    employee contributions, including those of our named executive
    officers. Furthermore, we generally grant incentive stock
    options to employees up to the statutory limit, then
    non-statutory options thereafter and non-statutory options to
    non-employees. See the section entitled "—Potential
    Payments Upon Termination or Change in Control" for a
    discussion of the change in control provisions related to stock
    options.
While we have only granted restricted stock awards to certain of
    our initial key employees, we have the authority to do so under
    our 2005 Equity Plan and our 2009 Stock Option and Incentive
    Plan, or 2009 Equity Plan. Restricted stock awards provide our
    named executive officers and other employees with the ability to
    purchase shares of our common stock at a fixed purchase price at
    the time of grant by entering into a restricted stock purchase
    agreement. Similar to stock options, shares of restricted stock
    are earned on the basis of continued service and generally vest
    over four years, beginning with vesting as to 25% of the award
    on the one year anniversary of the date of grant and pro-rata
    vesting quarterly thereafter. See the section entitled
    "—Potential Payments Upon Termination or Change in
    Control" for a discussion of the change in control
    provisions related to restricted stock.
We plan to adopt an equity award grant policy that will
    formalize how we grant equity-based awards to officers and
    employees after this offering. We anticipate that under our
    equity award grant policy all grants must be approved by our
    board of directors or compensation committee. All stock options
    will be awarded with an exercise price equal to the fair value
    of our common stock and calculated based on our closing market
    price on the grant date.
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Under our equity award grant policy, equity awards will
    typically be made on a regularly scheduled basis, as follows:
•
grants made in conjunction with the hiring of a new employee or
    the promotion of an existing employee will be made on the first
    trading day of the month following the later of (i) the
    hire date or the promotion date or (ii) the date on which
    such grant is approved; and
•
grants made to existing employees other than in connection with
    a promotion will be made, if at all, on an annual basis.
Other Compensation.
We currently maintain
    broad-based benefits that are provided to all employees,
    including health insurance, life and disability insurance,
    dental insurance and a 401(k) plan.
As discussed below in "—Severance and Change in
    Control Agreements" and in "—Potential Payments
    Upon Termination or Change in Control," we have agreements
    with our named executive officers providing certain benefits to
    them upon termination of their employment and, for all named
    executive officers other than Dr. Pennington, our Chief
    Medical Officer, in relation to a change in control, including
    the acceleration of vesting of restricted stock and options. Our
    goal in providing severance and change in control benefits is to
    offer sufficient cash continuity protection such that our
    executives will focus their full time and attention on the
    requirements of the business rather than the potential
    implications for their respective positions. We prefer to have
    certainty regarding the potential severance amounts payable to
    the named executive officers under certain circumstances, rather
    than negotiating severance at the time that a named executive
    officer's employment terminates. We have also determined
    that accelerated vesting provisions in connection with a
    termination following a change of control are appropriate
    because they will encourage our restricted stock and option
    holders, including our named executive officers, to stay focused
    in such circumstances, rather than the potential implications
    for them.
All of our named executive officers, except for
    Dr. Pennington, are party to severance agreements that
    provide benefits upon termination of employment in connection
    with a change of control. Dr. Pennington's severance
    agreement provides benefits in the event of termination of his
    employment, whether or not based on a change of control. Our
    compensation committee recommended and our board of directors
    agreed that Dr. Pennington should be provided severance
    benefits regardless of whether a change of control occurred
    because of his critical role in our success. In addition, in
    December 2007, our compensation committee recommended and the
    board of directors agreed that Mr. Lowe, our chief
    financial officer, should be offered the same change of control
    severance benefit levels as our chief executive officer, in
    light of his role in the Company.
Tax and Accounting Treatment of
    Compensation.
Section 162(m) of the Internal
    Revenue Code places a limit of $1.0 million per person on
    the amount of compensation that we may deduct in any one year
    with respect to each of our named executive officers other than
    the chief financial officer. There is an exemption from the
    $1.0 million limitation for performance-based compensation
    that meets certain requirements. Grants of stock options and
    stock appreciation rights under our 2009 Equity Plan are
    intended to qualify for the exemption. Restricted stock awards
    and restricted stock unit awards under our 2009 Equity Plan, as
    well as performance cash awards, may qualify for the exemption
    if certain additional requirements are satisfied. To maintain
    flexibility in compensating officers in a manner designed to
    promote varying corporate goals, our compensation committee has
    not adopted a policy requiring all compensation to be
    deductible. Although tax deductions for some amounts that we pay
    to our named executive officers as compensation may be limited
    by section 162(m), that limitation does not result in the
    current payment of increased federal income taxes by us due to
    our significant net operating loss carry-forwards. Our
    compensation committee may approve
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compensation or changes to plans, programs or awards that may
    cause the compensation or awards to exceed the limitation under
    section 162(m) if it determines that such action is
    appropriate and in our best interests.
We account for equity compensation paid to our employees under
    the rules of SFAS 123(R), which requires us to estimate and
    record an expense for each award of equity compensation over the
    service period of the award. Accounting rules also require us to
    record cash compensation as an expense at the time the
    obligation is incurred.
Summary
    Compensation Table—2008
The following table summarizes the compensation that we paid to
    our Chief Executive Officer, Chief Financial Officer and each of
    our three other most highly compensated executive officers
    during the year ended December 31, 2008. We refer to these
    officers in this prospectus as our named executive officers.
Option
Name and Principal Position
Year
Salary ($)
Awards ($) (1)
Total ($)
Paul F. Truex
2008
$
300,000
$
25,956
$
325,956
President, Chief
Executive Officer, and Director
Christopher P. Lowe
2008
$
250,000
$
26,832
$
276,832
Chief Financial Officer and
Vice President of Administration
James E. Pennington, M.D.
2008
$
290,000
$
7,029
$
297,029
Executive Vice President and Chief Medical Officer
Colin Hislop, M.D.
2008
$
270,000
$
9,573
$
279,573
Senior Vice President,
Cardiovascular Products
Debra Odink, Ph.D.
2008
$
200,000
$
4,787
$
204,787
Vice President, Pharmaceutical Research and Development
(1)
This column reflects the
    compensation expense recognized in 2008 and calculated in
    accordance with SFAS 123(R). See Note 8 to our
    financial statements for a discussion of the assumptions made in
    determining the valuation of option awards.
Grants of
    Plan-Based Awards—2008
The following table sets forth certain information with respect
    to awards under our equity and non-equity incentive plans made
    by us to our named executive officers and stock options awarded
    to our named executive officers for the year ended
    December 31, 2008.
All Other
Option
Awards:
Grant Date
Number of
Exercise or
Fair Value of
Securities
Base Price of
Stock and
Underlying
Option
Option
Name
Grant Date
Options (1)
Awards ($/sh)
Awards ($) (2)
Paul F. Truex
—
—
—
—
Christopher P. Lowe
2/21/2008
(3)
128,205
$
0.78
$
71,679
2/21/2008
(4)
81,795
$
0.78
$
45,732
James E. Pennington, M.D.
—
—
—
—
Colin Hislop, M.D.
—
—
—
—
Debra Odink, Ph.D.
—
—
—
—
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(1)
These options vest over four years
    as follows: 25% of the shares vest one year following the
    vesting commencement date, with the remaining 75% vesting in
    equal monthly installments over the next three years.
(2)
The grant date fair value of each
    equity owned award is computed in accordance with
    SFAS 123(R). See Note 8 to our financial statements
    for a discussion of the assumptions made in determining the
    valuation of option awards.
(3)
The vesting commencement date of
    this incentive stock option is November 26, 2007.
(4)
The vesting commencement date of
    this non-statutory stock option is November 26, 2007.
Outstanding
    Equity Awards at Fiscal Year End
The following table sets forth certain information with respect
    to outstanding equity awards as of December 31, 2008 with
    respect to our named executive officers.
Option Awards
Stock Awards
Number of
Number of
Number
Market
Securities
Securities
of Shares
Value of
Underlying
Underlying
or Units
Shares or
Unexercised
Unexercised
Option
Option
of Stock
Units of Stock
Options
Options
Exercise
Expiration
That Have
That Have
Name
Exercisable (#)
Unexercisable (#)*
Price ($)
Date
Not Vested (#)(1)
Not Vested ($)(2)
Paul F. Truex
26,666
13,334
(3)
$
0.08
4/06/2016
—
—
491,751
129,408
(4)
$
0.15
1/23/2017
—
—
Christopher P. Lowe
5,000
—
$
0.08
3/6/2016
—
34,722
93,483
(5)
$
0.78
2/21/2018
22,153
59,642
(6)
$
0.78
2/21/2018
James E. Pennington, M.D.
28,437
36,563
(7)
$
0.15
10/24/2017
101,250
$
89,100
Colin Hislop, M.D.
186,348
62,116
(8)
$
0.15
1/23/2017
Debra Odink, Ph.D.
—
—
—
—
31,058
$
27,331
*
These options vest over four years
    as follows: 25% of the shares vest one year following the
    vesting commencement date, with the remaining 75% vesting in
    equal monthly installments over the next three years. All
    unvested options contain an early exercise feature subject to
    the Company's right of repurchase pursuant to the 2005
    Equity Plan.
(1)
The number in this column
    represents shares of unvested stock options that were acquired
    upon exercise of stock options prior to the stock option vesting
    in full and which remain subject to the Company's right of
    repurchase as of December 31, 2008.
(2)
The fair value of our common stock
    as of December 31, 2008 was $0.88.
(3)
The vesting commencement date of
    this incentive stock option is April 6, 2006.
(4)
The vesting commencement date of
    this incentive stock option is October 3, 2005.
(5)
The vesting commencement date of
    this incentive stock option is November 26, 2007.
(6)
The vesting commencement date of
    this non-statutory stock option is November 26, 2007.
(7)
The vesting commencement date of
    this incentive stock option is March 19, 2007.
(8)
The vesting commencement date of
    this incentive stock option is December 1, 2005.
Option Exercises
    and Stock Vested
Stock
    Vested – 2008
The following table sets forth certain information with respect
    to the stock vested during the year ended December 31, 2008
    with respect to our named executive officers. There were no
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exercised stock options during the year ended December 31,
    2008 with respect to our named executive officers.
Stock Awards
Number
of Shares
Value
Acquired on
Realized on
Name
Vesting (#)
Exercise ($)(3)
Paul F. Truex
—
—
Christopher P. Lowe
—
—
James E. Pennington, M.D.
78,750
(1)
$
57,488
Colin Hislop, M.D.
—
—
Debra Odink, Ph.D.
31,058
(2)
$
22,672
(1)
On April 23, 2007,
    Dr. Pennington exercised 180,000 shares underlying a
    stock option award prior to the award vesting in full. During
    the year ended December 31, 2008, the Company's right
    of repurchase lapsed with respect to the number of shares in
    this column.
(2)
On October 19, 2007,
    Dr. Odink exercised 124,232 shares underlying a stock
    option award prior to the award vesting in full. During the year
    ended December 31, 2008, the Company's right of
    repurchase lapsed with respect to the number of shares in this
    column.
(3)
This column reflects the intrinsic
    value realized for shares vested in 2008, which represents the
    difference between the fair value of our common stock as of
    December 31, 2008 and the exercise price of the stock
    option.
Stock and Benefit
    Plans
2005 Equity
    Incentive Plan
Our 2005 Equity Plan was adopted by our board of directors and
    approved by our stockholders in April 2005. We have reserved
    3,725,000 shares of our common stock for the issuance of
    awards under the 2005 Equity Plan.
Our 2005 Equity Plan is administered by our board of directors,
    which has the authority to delegate full power and authority to
    a committee of the board. Our board of directors or any
    committee delegated by our board of directors has the power to
    select the individuals to whom awards will be granted, to make
    any combination of awards to participants, to accelerate the
    exercisability or vesting of any award, to provide substitute
    awards and to determine the specific terms and conditions of
    each award, subject to the provisions of the 2005 Equity Plan.
The 2005 Equity Plan permits us to make grants of incentive
    stock options, non-qualified stock options, restricted stock
    awards and stock appreciation rights to employees, directors and
    consultants. Stock options granted under the 2005 Equity Plan
    have a maximum term of 10 years from the date of grant and
    incentive stock options have an exercise price of no less than
    the fair market value of our common stock on the date of grant.
    Upon a sale event in which all awards are not assumed or
    substituted by the successor entity, the vesting of awards under
    the 2005 Equity Plan shall be accelerated in full prior to the
    sale event and all stock options issued thereunder will
    terminate.
All stock option awards that are granted to our named executive
    officers are covered by a stock option agreement. Except as
    noted above, under the stock option agreements, 25% of the
    shares vest on the first anniversary of the grant date and the
    remaining shares vest monthly over the following three years.
    Our board of directors may accelerate the vesting schedule in
    its discretion. We did not engage in any option repricing or
    other modification to any of our outstanding equity awards
    during the fiscal year ended December 31, 2008.
Our board of directors has determined not to grant any further
    awards under the 2005 Equity Plan. We intend to adopt the 2009
    Equity Plan, under which we expect to make all future awards.
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2009 Stock Option
    and Incentive Plan
Prior to completion of this offering, our board of directors,
    upon the recommendation of our compensation committee, intends
    to adopt the 2009 Equity Plan, which will be approved by our
    stockholders. The 2009 Equity Plan will replace the 2005 Equity
    Plan, as our board of directors has determined not to make
    additional awards under that plan once the 2009 Equity Plan is
    adopted. The 2009 Equity Plan provides flexibility to our
    compensation committee to use various equity-based incentive
    awards as compensation tools to motivate our workforce.
We intend to initially
    reserve           shares
    of our common stock for the issuance of awards under the 2009
    Equity Plan plus an
    additional           shares
    of common stock available for grant under our 2005 Equity Plan,
    which shares will be added to the shares reserved under our 2009
    Equity Plan. The 2009 Equity Plan provides that the number of
    shares reserved and available for issuance under the plan will
    automatically increase each January 1, beginning in 2010,
    by     % of the outstanding number of
    shares of common stock on the immediately preceding
    December 31. This number is subject to adjustment in the
    event of a stock split, stock dividend or other change in our
    capitalization.
The shares we issue under the 2009 Equity Plan will be
    authorized but unissued shares or shares that we reacquire. The
    shares of common stock underlying any awards that are forfeited,
    canceled, held back upon exercise or settlement of an award to
    satisfy the exercise price or tax withholding, reacquired by us
    prior to vesting, satisfied without any issuance of stock,
    expire or are otherwise terminated (other than by exercise)
    under the 2009 Equity Plan will be added back to the shares of
    common stock available for issuance under the 2009 Equity Plan.
The 2009 Equity Plan will be administered by our compensation
    committee. Our compensation committee will have full power to
    select, from among the individuals eligible for awards, the
    individuals to whom awards will be granted, to make any
    combination of awards to participants and to determine the
    specific terms and conditions of each award, subject to the
    provisions of the 2009 Equity Plan. The compensation committee
    may delegate to our Chief Executive Officer the authority to
    grant options to certain individuals. Persons eligible to
    participate in the 2009 Equity Plan will be those full or
    part-time officers, employees, non-employee directors and other
    key persons (including consultants and prospective employees) of
    the Company and its subsidiary as selected from time to time by
    our compensation committee in its discretion.
The 2009 Equity Plan will permit the granting of
    (i) options to purchase common stock intended to qualify as
    incentive stock options under Section 422 of the Internal
    Revenue Code and (ii) options that do not so qualify. The
    option exercise price of each option will be determined by our
    compensation committee but may not be less than 100% of the fair
    market value of the common stock on the date of grant. The term
    of each option will be fixed by our compensation committee and
    may not exceed 10 years from the date of grant. Our compensation
    committee will determine at what time or times each option may
    be exercised.
Our compensation committee may award stock appreciation rights
    subject to such conditions and restrictions as our compensation
    committee may determine. Stock appreciation rights entitle the
    recipient to shares of common stock equal to the value of the
    appreciation in the stock price over the exercise price. The
    exercise price shall not be less than the fair market value of
    the common stock on the date of grant.
Our compensation committee may award restricted shares of common
    stock to participants subject to such conditions and
    restrictions as our compensation committee may determine. These
    conditions and restrictions may include the achievement of
    certain performance goals
and/or
continued employment with us through a specified restricted
    period. Our compensation committee may award restricted stock
    units to any participants. Restricted
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stock units are ultimately payable in the form of shares of
    common stock and may be subject to such conditions and
    restrictions as our compensation committee may determine. These
    conditions and restrictions may include the achievement of
    certain performance goals
and/or
continued employment through a specified vesting period. Our
    compensation committee may also grant shares of common stock
    which are free from any restrictions under the 2009 Equity Plan.
    Unrestricted stock may be granted to any participant in
    recognition of past services or other valid consideration and
    may be issued in lieu of cash compensation due to such
    participant.
Our compensation committee may grant performance share awards to
    any participant which entitles the recipient to receive shares
    of common stock upon the achievement of certain performance
    goals and such other conditions as our compensation committee
    shall determine.
Our compensation committee may grant dividend equivalent rights
    to participants which entitle the recipient to receive credits
    for dividends that would be paid if the recipient had held
    specified shares of common stock.
Our compensation committee may grant cash bonuses under the 2009
    Equity Plan to participants. The cash bonuses may be subject to
    the achievement of certain performance goals.
The 2009 Equity Plan will provide that upon the effectiveness of
    a "sale event" as defined in the 2009 Equity Plan,
    except as otherwise provided by our compensation committee in
    the award agreement, all stock options and stock appreciation
    rights will automatically become fully exercisable and the
    restrictions and conditions on all other awards with time-based
    conditions will automatically be deemed waived, unless the
    parties to the sale event agree that such awards will be assumed
    or continued by the successor entity. Awards with conditions and
    restrictions relating to the attainment of performance goals may
    become vested and non-forfeitable in connection with a sale
    event in the compensation committee's discretion. In
    addition, in the case of a sale event in which our stockholders
    will receive cash consideration, we may make or provide for a
    cash payment to participants holding options and stock
    appreciation rights equal to the difference between the per
    share cash consideration and the exercise price of the options
    or stock appreciation rights.
No other awards may be granted under the 2009 Equity Plan after
    the date that is 10 years from the date of stockholder
    approval. No awards under the 2009 Equity Plan have been made
    prior to the date hereof.
401(k) Savings
    Plan
We have established a 401(k) plan to allow our employees to save
    on a tax-favorable basis for their retirement. We do not match
    any contributions made by any employees, including our named
    executive officers, pursuant to the plan.
Pension
    Benefits
None of our named executive officers participate in or have
    account balances in pension benefit plans sponsored by us.
Nonqualified
    Defined Contribution and Other Nonqualified Defined Compensation
    Plans
None of our named executive officers participate in or have
    account balances in non-qualified defined contribution plans or
    other deferred compensation plans maintained by us.
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Proprietary
    Information and Inventions Agreements
Each of our named executive officers has also entered into a
    standard form agreement with respect to proprietary information
    and inventions. Among other things, this agreement obligates
    each named executive officer to refrain from disclosing any of
    our proprietary information received during the course of
    employment and, with some exceptions, to assign to us any
    inventions conceived or developed during the course of
    employment.
Severance and
    Change in Control Agreements
We consider it essential to the best interests of our
    stockholders to foster the continuous employment of our key
    management personnel. In this regard, we recognize that the
    possibility of a change in control may exist and that the
    uncertainty and questions that it may raise among management
    could result in the departure or distraction of management
    personnel to the detriment of the Company and our stockholders.
    In order to reinforce and encourage the continued attention and
    dedication of certain key members of management, we have entered
    into several change in control agreements and severance
    agreements with certain of our executive officers.
In these agreements, the definition of "change in
    control" generally means the occurrence, in a single
    transaction or in a series of related transactions of any one or
    more of the following events, subject to specified events:
    (a) any Exchange Act Person (defined in the change in
    control agreements generally as any natural person, entity, or
    group not including the Company or any subsidiaries) becomes the
    owner of securities representing more than 50% of the combined
    voting power of our then outstanding securities; (b) a
    merger, consolidation or similar transaction involving the
    Company is consummated and immediately after the consummation of
    such merger, consolidation, or similar transaction, our
    stockholders immediately prior thereto do not own either
    outstanding voting securities representing more than 50% of the
    combined outstanding voting power of the surviving entity or
    more than 50% of the combined outstanding voting power of the
    parent of the surviving entity in such merger, consolidation, or
    similar transaction; or (c) a sale, lease, license or other
    disposition of all or substantially all of our consolidated
    assets is consummated.
In these agreements, "cause" means: (a) gross
    negligence or willful misconduct in the performance of duties
    that is not cured within 30 days of written notice, where
    such gross negligence or willful misconduct has resulted or is
    likely to result in substantial and material damage to the
    Company; (b) repeated unexplained or unjustified absence;
    c) a material and willful violation of any federal or state
    law; (d) commission of any act of fraud with respect to the
    Company; or (e) commission of an act of moral turpitude or
    conviction of or entry of a plea of nolo contendere to a felony.
"Constructive termination" means an officer's
    resignation within 60 days of the occurrence of any of the
    following events without the officer's prior written
    consent, which event remains uncured 30 days after delivery
    of the written notice: (a) any change in position that
    materially reduces the officer's title, duties, level of
    responsibility, reporting relationship or the requirements of
    such officer's position; (b) any reduction of base
    compensation; (c) the elimination or reduction of
    eligibility to participate in our benefit programs that is
    inconsistent with the general eligibility of our officers; or
    (d) the relocation of our offices to a location more than
    25 miles away from the original office.
Paul F.
    Truex
On June 4, 2007, we entered into a change in control
    agreement with Mr. Truex, our President and Chief Executive
    Officer. Upon the occurrence of a change in control or within
    12 months thereafter, if we terminate Mr. Truex's
    employment for any reason other than for cause or if there is a
    constructive termination, in either case, Mr. Truex is
    entitled to receive as
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severance compensation 100% of his then-current base salary for
    a period of up to 12 months and payment of continuation
    coverage premiums for health, dental, and vision benefits for
    Mr. Truex and his covered dependants, if any, for a period of
    12 months pursuant to COBRA. In addition, Mr. Truex is
    entitled to receive (i) 12 months accelerated vesting
    of any unvested options to purchase our common stock and
    (ii) the immediate lapsing of any vesting restrictions on
    any restricted stock awards as of the date of termination.
Christopher P.
    Lowe
On December 20, 2007, we entered into a change in control
    agreement with Mr. Lowe, our Chief Financial Officer and
    Vice President of Administration. Upon the occurrence of a
    change in control or within 12 months thereafter, if we
    terminate Mr. Lowe's employment for any reason other
    than for cause or if there is a constructive termination, in
    either case, Mr. Lowe is entitled to receive as severance
    compensation 100% of his then-current base salary for a period
    of up to 12 months and payment of continuation coverage
    premiums for health, dental, and vision benefits for Mr. Lowe
    and his covered dependants, if any, for a period of
    12 months pursuant to COBRA. In addition, Mr. Lowe is
    entitled to receive (i) 12 months accelerated vesting
    of any unvested options to purchase our common stock and
    (ii) the immediate lapsing of any vesting restrictions on
    any restricted stock awards as of the date of termination.
James E.
    Pennington, M.D.
On July 30, 2007, we entered into a severance benefits
    agreement with Dr. Pennington, our Executive Vice President
    and Chief Medical Officer, which provides certain benefits upon
    the termination of employment. If we terminate
    Dr. Pennington's employment for any reason other than
    for cause or if there is a constructive termination, in either
    case, Dr. Pennington is entitled to receive as severance
    compensation 100% of his then-current base salary and payment of
    continuation coverage premiums for health, dental, and vision
    benefits for Dr. Pennington and his covered dependants, if any,
    for a period of 12 months pursuant to COBRA. In addition,
    Dr. Pennington is entitled to receive:
    (i) 12 months accelerated vesting of his unvested
    options to purchase our common stock and (ii) the immediate
    lapsing of any vesting restrictions on any restricted stock
    awards as of the date of termination.
Colin
    Hislop, M.D.
On July 12, 2007, we entered into a change in control
    agreement with Dr. Hislop, our Senior Vice President,
    Cardiovascular Products. Upon the occurrence of a change in
    control or within 12 months thereafter, if we terminate
    Dr. Hislop's for any reason other than for cause or if
    there is a constructive termination, in either case,
    Dr. Hislop is entitled to receive as severance compensation
    100% of his then-current base salary for a period of up to six
    months and payment of continuation coverage premiums for health,
    dental, and vision benefits for Dr. Hislop and his covered
    dependants, if any, for a period of six months pursuant to
    COBRA. In addition, Dr. Hislop is entitled to receive
    (i) six months accelerated vesting of any unvested options
    to purchase our common stock and (ii) the immediate lapsing
    of any vesting restrictions on any restricted stock awards as of
    the date of termination.
Debra
    Odink, Ph.D.
On July 12, 2007, we entered into a change in control
    agreement with Dr. Odink, our Vice President,
    Pharmaceutical Research and Development. Upon the occurrence of
    a change in control or within 12 months thereafter, if we
    terminate Dr. Odink's employment for any reason other
    than for cause or if there is a constructive termination, in
    either case, Dr. Odink is entitled to receive as severance
    compensation 100% of her then-current base salary for a period
    of up to six months and payment of continuation coverage
    premiums for health, dental, and vision benefits for Dr. Odink
    and her covered dependants, if any, for a period of six months
    pursuant
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to COBRA. In addition, Dr. Odink is entitled to receive
    (i) six months accelerated vesting of any unvested options
    to purchase our common stock and (ii) the immediate lapsing
    of any vesting restrictions on any restricted stock awards as of
    the date of termination.
All payments and benefits are conditioned on the
    executive's execution and non-revocation of a general
    release agreement at the time of termination. All payments due
    upon termination (as discussed in this entire section) may be
    delayed up to six months from the termination date if necessary
    to avoid adverse tax treatment under Section 409A of the
    Internal Revenue Code.
Potential
    Payments Upon Termination or Change in Control
The tables below reflect potential payments and benefits
    available for each of our named executive officers upon
    termination in connection with a change in control or
    termination, assuming the date of occurrence is
    December 31, 2008. See section entitled
    "—Severance and Change in Control Agreements"
    above.
Named Executive
    Officer Benefits and Payments Upon Termination (1)
Involuntary
Termination within
Involuntary
One Year of Change
Name
Termination (2)
in Control (3)
Paul F. Truex
—
$
314,413
Christopher P. Lowe
—
$
260,026
James E. Pennington, M.D.
$
303,584
$
303,584
Colin Hislop, M.D.
—
$
141,614
Debra Odink, Ph.D.
—
$
105,606
(1)
Assumes triggering event effective
    as of December 31, 2008. Upon a voluntary termination or
    termination for cause, each named executive officer would
    receive any earned but unpaid base salary and unpaid vacation
    accrued until December 31, 2008. These payments would be
    available to all employees upon termination.
(2)
Includes continuation of base
    salary and health, dental and vision benefits for 12 months for
    Dr. Pennington.
(3)
Includes continuation of base
    salary and health, dental and vision benefits for 12 months for
    Mr. Truex, Mr. Lowe and Dr. Pennington. All other
    named executive officers receive six months continuation of base
    salary and benefits.
Acceleration of
    Vesting of Options upon Termination (1)
Number of Shares of
Number of Shares of
Vested Stock and Value
Vested Stock and Value
upon Involuntary
upon Involuntary
Termination and in
Termination and not in
Connection with a
Connection with a
Name
Change in Control (2)
Change in Control (3)
Paul F. Truex
(4)
—
Christopher P. Lowe
(5)
—
James E. Pennington, M.D.
(6)
(6)
Colin Hislop, M.D.
(7)
—
Debra Odink, Ph.D.
(8)
—
(1)
Assumes triggering event effective
    as of December 31, 2008. There was no public market for our
    common stock in 2008. We have estimated the market value of the
    unvested option shares based on our assumed initial public
    offering price of $      per share,
    which is the midpoint of the range listed on the cover page of
    this prospectus.
(2)
Includes acceleration of options
    for 12 months for Mr. Truex, Mr. Lowe and
    Dr. Pennington. All other named executive officers have six
    months acceleration of options.
(3)
Includes acceleration of options
    for 12 months for Dr. Pennington.
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(4)
139,408 of Mr. Truex's
    options would accelerate upon involuntary termination and in
    connection with a change of control.
(5)
52,500 of Mr. Lowe's
    options would accelerate upon involuntary termination and in
    connection with a change of control.
(6)
61,250 of
    Dr. Pennington's options would accelerate upon
    involuntary termination, including 45,000 shares with
    respect to which the Company's right of repurchase would
    lapse, which shares were acquired by Dr. Pennington upon
    exercise of options containing an early exercise feature.
(7)
31,058 of Dr. Hislop's
    options would accelerate upon involuntary termination and in
    connection with a change of control.
(8)
Dr. Odink held
    15,529 shares for which the Company's right of
    repurchase would lapse upon involuntary termination and in
    connection with a change in control. Such shares were acquired
    by Dr. Odink upon exercise of options containing an early
    exercise feature.
Director
    Compensation
On June 26, 2008, our board of directors, upon the
    recommendation of our compensation committee, adopted a formal
    compensation program for the chairman of our board of directors
    and our independent directors. Pursuant to this program, the
    current chairman of our board of directors, Dr. Henney,
    receives a $20,000 annual retainer fee plus an additional
    $60,000 as consideration for his services as chairman. Prior to
    Dr. Henney's appointment as the chairman of our board,
    his predecessor, Lowell Sears, received a $30,000 annual
    retainer fee. Pursuant to this program, each of our independent
    board members, Mr. Santel and Mr. Thompson, receives a
    $20,000 annual retainer fee, as well as $2,000 for each board
    meeting attended in person ($1,000 for meetings attended by
    telephone conference). All members of our board are eligible to
    receive full reimbursement for travel expenses arising from
    their attendance of our board meetings.
Under the director compensation program, each non-employee
    member of our board of directors initially receives (i) a
    nonqualified stock option to purchase 25,000 shares of our
    common stock upon election and (ii) each year thereafter an
    additional nonqualified stock option to purchase
    10,000 shares of our common stock. One quarter of the
    shares issuable pursuant to each such option shall vest upon the
    completion of one year of continuous service by such director
    following the date of commencement of the vesting of such
    option; the remaining three quarters of the shares issuable
    pursuant to each such option shall vest in equal monthly
    installments over a period of three years until the date that is
    the fourth anniversary of the date of the option grant. All of
    these options have an exercise price equal to the fair market
    value of our common stock on the date of the grant.
Director
    Compensation Table—2008
The following table sets forth information with respect to the
    compensation earned by our non-employee directors during the
    fiscal year ended December 31, 2008.
Fees Earned
Option
or Paid
Awards
All Other
Name
in Cash ($)
($) (1)
Compensation ($)
Total ($)
Christopher S. Henney, Ph.D. (Chairman) (2)
$
70,667
$
4,373
(4)
—
$
75,040
Annette Bianchi
—
$
3,050
(5)
—
$
3,050
James I. Healy, M.D., Ph.D.
—
$
3,050
—
$
3,050
A. Rachel Leheny, Ph.D
—
—
—
—
Donald J. Santel
$
34,000
$
684
(6)
—
$
34,684
David E. Thompson
$
34,000
$
2,034
(7)
—
$
36,034
Lowell Sears (3)
$
7,500
$
482
(8)
$
44,360
(9)
$
52,342
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(1)
This column reflects the
    compensation expense recognized in 2008 and calculated in
    accordance with SFAS 123(R). See Note 8 to our
    financial statements for a discussion of the assumptions made in
    determining the valuation of option awards.
(2)
Dr. Henney was appointed as
    the chairman of our board of directors, effective June 26,
    2008.
(3)
Mr. Sears resigned from our
    board of directors and as chairman of the board of directors,
    effective April 23, 2008.
(4)
Dr. Henney held
    60,000 shares underlying stock options as of
    December 31, 2008.
(5)
Ms. Bianchi held
    25,000 shares underlying stock options as of
    December 31, 2008.
(6)
Mr. Santel held
    25,000 shares underlying stock options as of
    December 31, 2008.
(7)
Mr. Thompson held
    20,000 shares underlying stock options as of
    December 31, 2008.
(8)
The value shown reflects the
    compensation expense recognized in 2008 for Mr. Sears'
    options that were granted in 2007 in connection with his board
    membership, which were accelerated pursuant to his resignation
    from our board of directors in 2008.
(9)
The value shown reflects the
    compensation expense recognized in 2008 for Mr. Sears'
    options that were granted in 2007 in connection with his role as
    Chief Financial Officer, which were accelerated pursuant to his
    resignation from our board of directors in 2008.
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CERTAIN
    RELATIONSHIPS AND RELATED PERSON TRANSACTIONS
Since January 1, 2006, we have engaged in the following
    transactions with our directors, executive officers, holders of
    more than 5% of our voting securities, each of whom we refer to
    as a Beneficial Owner, or any member of the immediate family of
    any of the foregoing persons.
Private
    Placements of Securities
2006 Note
    Financing
On April 8, 2006 and June 30, 2006, we sold in a
    private placement convertible promissory notes, or the 2006
    notes, to certain of our existing and new investors for an
    aggregate purchase price of $960,000. The 2006 notes accrued
    interest at a rate of 7% per annum for these notes sold on
    April 18, 2006 and 8% per annum for these notes sold on
    June 30, 2006. In August 2006, in connection with our
Series A-2
preferred stock financing described below, the aggregate
    principal amount of the 2006 notes, along with accrued but
    unpaid interest thereon of $1,751, were automatically converted
    into an aggregate of 383,918 shares of our
Series A-2
convertible preferred stock. Except as noted in the table below,
    the 2006 notes were converted at a conversion price of $2.25, or
    75% of the issue price of our
Series A-2
convertible preferred stock sold in our
Series A-2
preferred stock financing.
The following table summarizes the participation in the sale of
    the 2006 notes by any of our current directors, executive
    officers, Beneficial Owners or any member of the immediate
    family of any of the foregoing persons:
Series A-2 Convertible
Aggregate
Preferred Shares Issued
Consideration
Upon Conversion of
Name
Paid
Principal of Notes
VantagePoint Venture Partners IV, L.P. and affiliated entities,
    or VantagePoint (1)
$
250,000
(1)
83,333
Sofinnova Venture Partners VI, L.P. and affiliated entities, or
    Sofinnova (2)
$
140,000
(2)
46,667
The Sears Trust dtd. 3/11/91
$
150,000
(3)
66,667
Christopher S. Henney, Ph.D.
$
50,000
(4)
22,222
Paul F. Truex
$
33,000
(5)
14,667
BioVest III
$
312,000
(6)
138,667
TOTAL:
$
935,000
372,223
(1)
Consists of a convertible
    promissory note with a principal amount of $250,000 purchased by
    VantagePoint Venture Partners IV (Q), L.P. on June 30,
    2006. This note was converted at a conversion price of $3.00, or
    100% of the issue price of our
Series A-2
convertible preferred stock sold in our
Series A-2
preferred financing. Annette Bianchi, a member of our board of
    directors, is a Managing Director at VantagePoint. Alan E.
    Salzman and James D. Marver are managing members of the general
    partner of the limited partnerships that directly hold such
    shares, and as such, they may be deemed to have voting and
    investment power with respect to such shares.
    Messrs. Salzman and Marver disclaim beneficial ownership
    with respect to such shares and other shares as described in
    this section, except to the extent of their pecuniary interest
    therein.
(2)
Consists of a convertible
    promissory note with a principal amount of $140,000 purchased by
    Sofinnova Venture Partners VI, L.P. on June 30, 2006.
    This note was converted at a conversion price of $3.00, or 100%
    of the issue price of our
Series A-2
convertible preferred stock sold in our
Series A-2
preferred stock financing. Dr. James Healy, a member of our
    board of directors, is the managing member of the general
    partner of the limited partnership that directly holds such
    shares, and as such, may be deemed to share voting and
    investment power with respect to such shares. Dr. Healy
    disclaims beneficial ownership with regard to such shares and
    other shares as described in this section, except to the extent
    of his proportionate pecuniary interest in Sofinnova.
(3)
Consists of a convertible
    promissory note with a principal amount of $150,000 purchased by
    The Sears Trust dtd. 3/11/91 on April 8, 2006.
    Mr. Sears was chairman of our board of directors until
    April 2008.
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(4)
Consists of a convertible
    promissory note with a principal amount of $50,000 purchased by
    Dr. Henney on April 8, 2006. Dr. Henney served as
    an independent director of our board of directors since 2006 and
    became chairman of our board of directors in June 2008.
(5)
Consists of a convertible
    promissory note with a principal amount of $33,000 purchased by
    Mr. Truex on April 8, 2006. Mr. Truex has been
    our Chief Executive Officer since 2006.
(6)
Consists of a convertible
    promissory note with a principal amount of $312,000 purchased by
    BioVest III on April 8, 2006. Christopher Lowe, our
    Chief Financial Officer and Vice President of Administration,
    has sole voting and sole investment power with respect to the
    shares owned of record by BioVest III. Mr. Lowe disclaims
    beneficial ownership with respect to such shares except to the
    extent of his pecuniary interest therein.
Series A-2
Preferred Stock Financing
On August 4, 2006, we sold in a private placement an
    aggregate of 2,774,594 shares of our
Series A-2
convertible preferred stock, $0.001 par value per share,
    for cash consideration, consideration received upon the
    conversion of the 2006 notes and in exchange for licensed
    technology, which transaction we refer to as our
Series A-2
preferred stock financing. Excluding the 383,918 shares of
    our
Series A-2
convertible preferred stock that were issued upon the conversion
    of $960,000 of principal and interest accrued on the 2006 notes,
    as described in the notes below and 441,260 shares issued
    in exchange for licensed technology, the remaining
    1,949,416 shares were sold at a per share price of $3.00.
The following table summarizes the participation in our
Series A-2
preferred stock financing by any of our current directors,
    executive officers, Beneficial Owners or any member of the
    immediate family of any of the foregoing persons:
Aggregate
Shares of Series A-2
Consideration
Convertible Preferred
Name
Paid
Stock
VantagePoint
$
3,526,957
(1)
1,175,652
Sofinnova
$
1,973,123
(2)
657,708
A.M. Pappas Life Science Ventures III, L.P. and affiliated
    entities, or Pappas
$
493,281
(3)
164,427
The Sears Trust dtd. 3/11/91
$
200,000
(4)
66,667
Christopher S. Henney, Ph.D.
$
66,667
(5)
22,222
Paul F. Truex
$
44,000
(6)
14,667
BioVest III
$
416,000
(7)
138,667
TOTAL:
$
6,720,028
2,240,010
(1)
This aggregate consideration was
    paid by (i) conversion of a convertible promissory note in
    a total principal amount of $250,000 issued to VantagePoint
    Venture Partners IV (Q), L.P. on June 30, 2006 and
    $1,751 in accrued and unpaid interest thereon at a conversion
    price of $3.00, or 100% of the issue price of our
Series A-2
convertible preferred stock sold in our
Series A-2
preferred stock financing and (ii) cash payments totaling
    $3,275,205. Includes 1,065,141 shares of Series
A-2
convertible preferred stock owned of record by VantagePoint
    Venture Partners IV (Q), L.P., 106,632 shares of
    Series
A-2
convertible preferred stock owned of record by VantagePoint
    Venture Partners IV, L.P. and 3,879 shares of
Series A-2
convertible preferred stock owned of record by VantagePoint
    Venture Partners IV Principals Fund, L.P.
(2)
This aggregate consideration was
    paid by (i) conversion of a convertible promissory note in
    a total principal amount of $140,000 issued to Sofinnova Venture
    Partners VI, L.P. on June 30, 2006 and no accrued and
    unpaid interest thereon at a conversion price of $3.00, or 100%
    of the issue price of our
Series A-2
convertible preferred stock sold in our
Series A-2
preferred stock financing and (ii) cash payments totaling
    $1,833,123.
(3)
This aggregate consideration was
    paid by cash payments totaling $493,281. Includes
    154,803 shares of Series
A-2
convertible preferred stock owned of record by
    A. M. Pappas Life Science Ventures III, L.P. and
    9,624 shares of
Series A-2
convertible preferred stock owned of record by PV III CEO
    Fund, L.P. Arthur M. Pappas, in his role as chairman of the
    investment committee of AMP&A Management III, LLC, the
    general partner of A. M. Pappas Life Science
    Ventures III, L.P. and PV III CEO Fund, L.P., has
    voting and investment authority over these shares.
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Mr. Pappas disclaims
    beneficial ownership of these shares except to the extent of his
    pecuniary interest arising therein.
(4)
This number reflects the value of
    the shares issued, taking into consideration the discount upon
    conversion of a convertible promissory note. This aggregate
    consideration was paid by conversion of such note in a principal
    amount of $150,000 issued to The Sears Trust dtd. 3/11/91 and no
    accrued and unpaid interest thereon at a conversion price of
    $2.25, or 75% of the issue price of our
Series A-2
convertible preferred stock sold in our
Series A-2
preferred stock financing.
(5)
This number reflects the value of
    the shares issued, taking into consideration the discount upon
    conversion of a convertible promissory note. This aggregate
    consideration was paid by conversion of such note in a principal
    amount of $50,000 issued to Dr. Henney and no accrued and
    unpaid interest thereon at a conversion price of $2.25, or 75%
    of the issue price of our
Series A-2
convertible preferred stock sold in our
Series A-2
preferred stock financing.
(6)
This number reflects the value of
    the shares issued, taking into consideration the discount upon
    conversion of a convertible promissory note. This aggregate
    consideration was paid by conversion of such note in a principal
    amount of $33,000 issued to Mr. Truex and no accrued and
    unpaid interest thereon at a conversion price of $2.25, or 75%
    of the issue price of our
Series A-2
convertible preferred stock sold in our
Series A-2
preferred stock financing.
(7)
This number reflects the value of
    the shares issued, taking into consideration the discount upon
    conversion of a convertible promissory note. This aggregate
    consideration was paid by conversion of such note in a principal
    amount of $312,000 issued to BioVest III and no accrued and
    unpaid interest thereon at a conversion price of $2.25, or 75%
    of the issue price of our
Series A-2
convertible preferred stock sold in our
Series A-2
preferred stock financing.
Series B
    Preferred Stock Financing
On December 15, 2006, we sold in a private placement an
    aggregate of 4,702,640 shares of our Series B
    convertible preferred stock, $0.001 par value per share,
    which transaction we refer to as our Series B preferred
    stock financing. 4,484,706 shares of our Series B
    convertible preferred stock were sold at a per share price of
    $4.25 and 217,934 shares were issued in exchange for licensed
    technology. All shares of our Series B convertible
    preferred stock were subsequently reclassified into our
Series B-1
convertible preferred stock at a ratio of 1:1 in connection with
    our
Series B-2
convertible preferred stock financing described below.
The following table summarizes the participation in our
    Series B preferred stock financing by any of our current
    directors, executive officers, Beneficial Owners or any member
    of the immediate family of any of the foregoing persons:
Aggregate
Shares of Series B
Consideration
Convertible Preferred
Name
Paid
Stock
VantagePoint (1)
$
10,773,043
2,534,834
Sofinnova (2)
$
6,026,877
1,418,089
Pappas (3)
$
1,506,719
354,522
TOTAL:
$
18,306,639
4,307,445
(1)
Includes 2,296,560 shares of Series
B-1
convertible preferred stock owned of record by VantagePoint
    Venture Partners IV (Q), L.P., 229,909 shares of
    Series
B-1
convertible preferred stock owned of record by VantagePoint
    Venture Partners IV, L.P. and 8,365 shares of
Series B-1
convertible preferred stock owned of record by VantagePoint
    Venture Partners IV Principals Fund, L.P.
(2)
Includes 1,418,089 shares of
Series B-1
convertible preferred stock owned of record by Sofinnova Venture
    Partners VI, L.P.
(3)
Includes 333,771 shares of
Series B-1
convertible preferred stock owned of record by
    A. M. Pappas Life Science Ventures III, L.P. and
    20,751 shares of Series
B-1
convertible preferred stock owned of record by PV III CEO
    Fund, L.P.
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Table of Contents
2008 Note
    Financing
On February 15, 2008 and May 14, 2008, we sold
    convertible promissory notes, or the 2008 notes, to certain of
    our existing investors for an aggregate purchase price of
    $12,200,000. The 2008 notes accrued interest at a rate of 4.2%
    per annum and had a maturity date of the earliest of
    (i) September 30, 2008, (ii) immediately prior to
    (A) our underwritten public offering pursuant to the
    Securities Act of 1933, as amended, or the Securities Act,
    (B) any consolidation or merger of the Company with or into
    another into any other corporation or entity or (C) a sale
    of all or substantially of the assets or intellectual property
    of the Company or (iii) an event of default pursuant to the
    terms of the 2008 notes. In August 2008, in connection with our
Series B-2
preferred stock financing described below, the full principal
    amount of the 2008 notes, along with accrued but unpaid interest
    thereon of $155,630, were automatically converted into an
    aggregate of 3,876,277 shares of our
Series B-2
convertible preferred stock at a conversion price of
    approximately $3.19, or 75% of the issue price of our
Series B-2
convertible preferred stock sold in our
Series B-2
preferred stock financing.
The following table summarizes the participation in the sale of
    the 2008 notes by any of our current directors, executive
    officers, Beneficial Owners or any member of the immediate
    family of any of the foregoing persons:
Aggregate
Series B-2 Convertible Preferred
Consideration
Shares Issued Upon Conversion
Name
Paid
of Principal of Notes
VantagePoint
$
5,652,174
(1)
1,773,231
Sofinnova
$
4,662,056
(2)
1,462,606
Pappas
$
1,290,512
(3)
404,867
TOTAL:
$
11,604,742
3,640,704
(1)
Consists of (i) a note with a
    principal amount of $1,536,261 purchased by VantagePoint Venture
    Partners IV (Q), L.P. on February 15, 2008,
    (ii) a note with a principal amount of $3,584,609 purchased
    by VantagePoint Venture Partners IV (Q), L.P. on
    May 14, 2008, (iii) a note with a principal amount of
    $153,795 purchased by VantagePoint Venture Partners IV, L.P. on
    February 15, 2008, (iv) a note with a principal amount
    of $358,857 purchased by VantagePoint Venture Partners IV, L.P.
    on May 14, 2008, (v) a note with a principal amount of
    $5,596 purchased by VantagePoint Venture Partners IV
    Principals Fund, L.P. on February 15, 2008 and (vi) a
    note with a principal amount of $13,057 purchased by
    VantagePoint Venture Partners IV Principals Fund, L.P. on
    May 14, 2008.
(2)
Consists of (i) a note with a
    principal amount of $948,617 purchased by Sofinnova Venture
    Partners VI, L.P. on February 15, 2008 and (ii) a note
    with a principal amount of $3,713,439 purchased by Sofinnova
    Venture Partners VI, L.P. on May 14, 2008.
(3)
Consists of (i) a note with a
    principal amount of $223,272 purchased by A.M. Pappas Life
    Science Ventures III, L.P. on February 15, 2008,
    (ii) a note with a principal amount of $13,881 purchased by
    PV III CEO Fund, L.P. on February 15, 2008, (iii) a
    note with a principal amount of $991,704 purchased by
    A.M. Pappas Life Science Ventures III, L.P. on May 14,
    2008 and (iv) a note with a principal amount of $61,655
    purchased by PV III CEO Fund, L.P. on May 14, 2008.
Series B-2
Preferred Stock Financing
On August 12, 2008, we sold in a private placement
    (i) an aggregate of 5,523,337 shares of our
Series B-2
convertible preferred stock, $0.001 par value per share,
    and (ii) warrants, which we refer to as the 2008 warrants,
    to purchase an aggregate of 411,764 shares of our common
    stock, par value $0.001 per share, at an exercise price of $0.78
    per share, which transaction we refer to as our
Series B-2
preferred stock financing. Excluding the 3,876,277 shares
    of our
Series B-2
convertible preferred stock that were issued upon the conversion
    of $12,200,000 of principal and $155,630 interest accrued on the
    2008 notes at a conversion price of approximately $3.19, or 75%
    of the issue price of our
Series B-2
convertible preferred stock, the remaining 1,647,060 shares
    were sold at a per share price of $4.25.
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Table of Contents
The following table summarizes the participation in our
Series B-2
preferred stock financing by any of our current directors,
    executive officers, Beneficial Owners or any member of the
    immediate family of any of the foregoing persons:
Shares of Common
Aggregate
Shares of Series
Stock Issuable Upon
Consideration
B-2 Convertible
the Exercise of 2008
Name
Paid
Preferred Stock
Warrants
VantagePoint
$
5,727,421
(1)
1,796,838
0
Sofinnova
$
4,719,515
(2)
1,480,632
0
Pappas
$
1,306,155
(3)
409,774
0
Caxton Advantage Life Sciences Fund, L.P. (4)
$
3,500,003
823,530
205,882
HBM BioCapital, L.P. and affiliated entities, or HBM
    BioCapital (5)
$
3,500,003
823,530
205,882
TOTAL:
$
18,753,097
5,334,304
411,764
(1)
This aggregate consideration was
    paid by conversion of (i) convertible promissory notes in a
    total principal amount of $5,120,870 issued to VantagePoint
    Venture Partners IV (Q), L.P. on February 15, 2008 and
    May 14, 2008 and $68,176 accrued but unpaid interest
    thereon, (ii) convertible promissory notes in a total
    principal amount of $512,652 issued to VantagePoint Venture
    Partners IV, L.P. on February 15, 2008 and May 14,
    2008 and $6,825 accrued but unpaid interest thereon and
    (iii) convertible promissory notes in a total principal
    amount of $18,652 issued to VantagePoint Venture
    Partners IV Principals Fund, L.P. on February 15, 2008
    and May 14, 2008 and $246 accrued but unpaid interest
    thereon. Includes 1,627,936 shares of
Series B-2
convertible preferred stock owned of record by VantagePoint
    Venture Partners IV (Q), L.P., 162,973 shares of
Series B-2
convertible preferred stock owned of record by VantagePoint
    Venture Partners IV, L.P. and 5,929 shares of
Series B-2
convertible preferred stock owned of record by VantagePoint
    Venture Partners IV Principals Fund, L.P.
(2)
This aggregate consideration was
    paid by conversion of convertible promissory notes in a total
    principal amount of $4,662,056 issued to Sofinnova Venture
    Partners VI, L.P. on February 15, 2008 and May 14,
    2008 and $57,459 accrued but unpaid interest thereon.
(3)
This aggregate consideration was
    paid by conversion of (i) convertible promissory notes in a
    total principal amount of $1,214,977 issued to A.M. Pappas
    Life Science Ventures III, L.P. on February 15, 2008 and
    May 14, 2008 and $14,729 accrued but unpaid interest
    thereon and (ii) convertible promissory notes in a total
    principal amount of $75,536 issued to PV III CEO Fund, L.P. on
    February 15, 2008 and May 14, 2008 and $913 accrued
    but unpaid interest thereon. Includes 385,790 shares of
Series B-2
convertible preferred stock owned of record by
    A. M. Pappas Life Science Ventures III, L.P. and
    23,984 shares of
Series B-2
convertible preferred stock owned of record by PV III CEO
    Fund, L.P.
(4)
Dr. A. Rachel Leheny, a
    member of our board of directors, is (i) a Managing
    Director of Caxton Advantage Venture Partners, L.P., which is
    the General Partner of Caxton Advantage Life Sciences Fund,
    L.P., a life-sciences venture capital fund that she co-founded
    in 2006 and (ii) a member of Advantage Life Sciences
    Partners LLC, the Managing General Partner of Caxton Advantage
    Venture Partners, L.P. Dr. Leheny disclaims beneficial
    ownership with regard to the shares and other shares as
    described in this section, except to the extent of her
    proportionate pecuniary interests, either directly or indirectly
    through Caxton Advantage Venture Partners, L.P., in Caxton
    Advantage Life Sciences Fund, L.P.
(5)
Includes 700,000 shares of
Series B-2
convertible preferred stock owned of record by HBM BioCapital
    (EUR) L.P. and 123,530 shares of
Series B-2
convertible preferred stock owned of record by HBM
    BioCapital (USD) L.P. The board of directors of HBM
    BioCapital Ltd., the general partner of both HBM BioCapital
    (EUR) L.P. and HBM BioCapital (USD) L.P., together the HBM
    BioCapital Funds, has sole voting and dispositive power with
    respect to such shares. The board of directors of HBM BioCapital
    Ltd. consists of John Arnold, Sophia Harris, Richard Coles,
    Dr. Andreas Wicki and John Urquhart, each of whom disclaims
    beneficial ownership with regard to the shares and other shares
    as described in this section, except to the extent of their
    proportionate pecuniary interests in HBM BioCapital Ltd.
2009 Bridge
    Financing
In July and September 2009, we sold convertible promissory
    notes, or the 2009 notes, that are secured by a first priority
    security interest in all of our assets, and warrants, or the
    2009 warrants, to purchase shares of our preferred stock to
    certain of our existing investors for an
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aggregate purchase price of $10,000,000. We refer to these
    transactions collectively as our 2009 bridge financing. The 2009
    notes accrue interest at a rate of 8% per annum and have a
    maturity date of the earliest of (i) July 17, 2010,
    (ii) the date of the sale of all or substantially of our
    equity interests or assets or (iii) an event of default
    pursuant to the terms of the 2009 notes. The 2009 notes are
    automatically convertible into the securities that are sold in
    our next equity financing at a 25% discount to the price to
    which such securities are sold to other investors, or they are
    alternatively convertible into shares of our
Series B-2
convertible preferred stock in connection with a change of
    control of the Company. Each 2009 warrant is exercisable for the
    security into which each 2009 note is converted, at the price at
    which that security is sold to other investors. Depending on
    when the 2009 notes are converted, each 2009 warrant may be
    exercisable for a number of shares equal to the quotient
    obtained by dividing (x) (i) 25% of the principal amount of
    the accompanying 2009 notes, in the event the conversion occurs
    prior to April 1, 2010, or (ii) 50% of the principal
    amount of the accompanying 2009 notes, in the event the
    conversion occurs on or after April 1, 2010, by
    (y) the purchase price of the securities into which the
    note is ultimately converted.
The following table summarizes the participation in the 2009
    bridge financing by any of our current directors, executive
    officers, Beneficial Owners or any member of the immediate
    family of any of the foregoing persons:
Aggregate
Warrant Coverage
Warrant Coverage
Consideration
Amount Prior to
Amount After
Name
Paid
April 1, 2010
April 1, 2010
VantagePoint
$
4,569,675
(1)
$
1,142,419
$
2,284,839
Sofinnova
$
2,951,720
(2)
$
737,930
$
1,475,860
Pappas
$
770,225
(3)
$
192,556
$
385,111
Caxton Advantage Life Sciences Fund, L.P.
$
854,190
(4)
$
213,548
$
427,095
HBM BioCapital
$
854,190
(5)
$
213,547
$
427,095
TOTAL:
$
10,000,000
$
2,500,000
$
5,000,000
(1)
Consists of (i) a note with a
    principal amount of $1,656,051 purchased by VantagePoint Venture
    Partners IV (Q), L.P. on July 17, 2009, (ii) a
    note with a principal amount of $2,484,076 purchased by
    VantagePoint Venture Partners IV (Q), L.P. on
    September 9, 2009, (iii) a note with a principal
    amount of $165,788 purchased by VantagePoint Venture Partners
    IV, L.P. on July 17, 2009, (iv) a note with a
    principal amount of $248,681 purchased by VantagePoint Venture
    Partners IV, L.P. on September 9, 2009, (v) a note
    with a principal amount of $6,031 purchased by VantagePoint
    Venture Partners IV Principals Fund, L.P. on July 17,
    2009 and (vi) a note with a principal amount of $9,047
    purchased by VantagePoint Venture Partners IV Principals
    Fund, L.P. on September 9, 2009.
(2)
Consists of (i) a note with a
    principal amount of $1,180,688 purchased by Sofinnova Venture
    Partners VI, L.P. on July 17, 2009 and (ii) a note
    with a principal amount of $1,771,032 purchased by Sofinnova
    Venture Partners VI, L.P. on September 9, 2009.
(3)
Consists of (i) a note with a
    principal amount of $290,058 purchased by A.M. Pappas Life
    Science Ventures III, L.P. on July 17, 2009, (ii) a
    note with a principal amount of $435,086 purchased by
    A.M. Pappas Life Science Ventures III, L.P. on
    September 9, 2009, (iii) a note with a principal
    amount of $18,032 purchased by PV III CEO Fund, L.P. on
    July 17, 2009 and (iv) a note with a principal amount
    of $27,049 purchased by PV III CEO Fund, L.P. on
    September 9, 2009.
(4)
Consists of (i) a note with a
    principal amount of $341,676 purchased by Caxton Advantage Life
    Sciences Fund, L.P. on July 17, 2009 and (ii) a note
    with a principal amount of $512,514 purchased by Caxton
    Advantage Life Sciences Fund, L.P. on September 9, 2009.
(5)
Consists of (i) a note with a
    principal amount of $290,424 purchased by HBM BioCapital (EUR)
    L.P. on July 17, 2009, (ii) a note with a principal
    amount of $435,637 purchased by HBM BioCapital (EUR) L.P. on
    September 9, 2009, (iii) a note with a principal
    amount of $51,252 purchased by HBM BioCapital (USD) L.P. on
    July 17, 2009 and (iv) a note with a principal amount
    of $76,877 purchased by HBM BioCapital (USD) L.P. on
    September 9, 2009.
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Transactions with
    Our Executive Officers, Directors and Beneficial
    Owners
Indemnification
    Agreements
We have entered into indemnification agreements with each of our
    directors and certain of our executive officers. These
    agreements require us to indemnify these individuals and, in
    certain cases, affiliates of such individuals, to the fullest
    extent permitted under Delaware law against liabilities that may
    arise by reason of their service to us, and to advance expenses
    incurred as a result of any proceeding against them as to which
    they could be indemnified.
Registration
    Rights
Certain of our directors, executive officers and Beneficial
    Owners are party to agreements providing for rights to register
    under the Securities Act certain shares of our capital stock.
    For more information regarding the registration rights granted
    pursuant to these agreements, see the section entitled
    "Description of Capital Stock—Registration
    Rights."
Change in Control
    and Severance Agreements
We have entered into change in control agreements and severance
    agreements with certain of our officers, which provide for
    severance benefits and acceleration of the vesting of awards.
    For more information regarding these agreements, see the
    sections entitled "Compensation—Severance and Change
    in Control Agreements" and
    "Compensation—Potential Payments Upon Termination or
    Change in Control."
Restricted Stock
    and Stock Option Awards
For more information regarding restricted stock and stock option
    awards granted to our named executive officers and directors,
    see the sections entitled "Compensation—Outstanding
    Equity Awards at Year End" and
    "Compensation—Director Compensation."
Review, Approval
    and Ratification of Transactions with Related Parties
Our board of directors reviews and approves transactions with
    directors, officers and Beneficial Owners, each, a related
    party. Prior to this offering, before our board of
    directors' consideration of a transaction with a related
    party, the material facts as to the related party's
    relationship or interest in the transaction have been disclosed
    to our board of directors, and the transaction has not been
    considered approved by our board of directors unless a majority
    of the directors who are not interested in the transaction
    approve the transaction. Following this offering, such
    transactions must be approved by our audit committee or another
    independent body of our board of directors.
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Table of Contents
PRINCIPAL
    STOCKHOLDERS
The following table sets forth information with respect to the
    beneficial ownership of our common stock, as of August 31,
    2009, the most recent practicable date, and as adjusted to
    reflect the sale of common stock offered by us in this offering,
    for:
•
each beneficial owner of more than 5% of our outstanding common
    stock;
•
each of our named executive officers and directors; and
•
all of our executive officers and directors as a group.
Beneficial ownership is determined in accordance with the rules
    of the SEC. These rules generally attribute beneficial ownership
    of securities to persons who possess sole or shared voting power
    or investment power with respect to those securities and include
    shares of common stock issuable upon the exercise of stock
    options that are immediately exercisable or exercisable within
    60 days after August 31, 2009, but excludes unvested
    stock options, which contain an early exercise feature. Except
    as otherwise indicated, all of the shares reflected in the table
    are shares of common stock and all persons listed below have
    sole voting and investment power with respect to the shares
    beneficially owned by them, subject to applicable community
    property laws. The information is not necessarily indicative of
    beneficial ownership for any other purpose.
Percentage ownership calculations for beneficial ownership prior
    to this offering are based on 16,746,731 shares outstanding
    as of August 31, 2009, assuming the conversion of all of
    the outstanding convertible preferred stock and the exercise of
    certain warrants to purchase shares of our common stock.
    Percentage ownership calculations for beneficial ownership after
    this offering also include the shares we are offering hereby and
    additional shares we expect to issue prior to the closing of
    this offering pursuant to stock option exercises. Except as
    otherwise indicated in the table below, addresses of named
    beneficial owners are in care of Anthera Pharmaceuticals, Inc.,
    25801 Industrial Blvd., Suite B, Hayward, California 94545.
In computing the number of shares of common stock beneficially
    owned by a person and the percentage ownership of that person,
    we deemed outstanding shares of common stock subject to options
    held by that person that are currently exercisable or
    exercisable within 60 days of August 31, 2009. We did
    not deem these shares outstanding, however, for the purpose of
    computing the percentage ownership of any other person.
Percentage of Common Stock
Shares
Beneficially Owned
Beneficially
Before
After
Name of Beneficial Owner
Owned
Offering
Offering
5% or Greater Stockholders:
VantagePoint Venture Partners IV, L.P. and affiliated entities,
    or VantagePoint (1)
5,521,177
32.97
%
Sofinnova Venture Partners VI, L.P. and affiliated entities, or
    Sofinnova (2)
3,556,429
21.24
%
Caxton Advantage Life Sciences Fund, L.P. (3)
1,033,058
6.09
%
HBM BioCapital, L.P. and affiliated entities (4)
1,029,412
6.07
%
A.M. Pappas Life Science Ventures III, L.P. and affiliated
    entities (5)
928,723
5.55
%
All 5% or greater stockholders as a group
12,068,799
70.32
%
Named Executive Officers and Directors:
Paul F. Truex (6)
1,938,175
11.08
%
Christopher P. Lowe (7)
315,429
1.87
%
James E. Pennington, M.D. (8)
254,272
1.51
%
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Table of Contents
Percentage of Common Stock
Shares
Beneficially Owned
Beneficially
Before
After
Name of Beneficial Owner
Owned
Offering
Offering
Colin Hislop, M.D. (9)
282,947
1.66
%
Debra Odink, Ph.D. (10)
196,525
1.17
%
Christopher S. Henney, Ph.D. (11)
137,028
*
Annette Bianchi (12)
13,853
*
James I. Healy, M.D., Ph.D. (2) (13)
3,591,429
21.45
%
A. Rachel Leheny, Ph.D. (3) (14)
1,036,703
6.11
%
Donald J. Santel (15)
15,416
*
David E. Thompson (16)
41,249
*
All named executive officers and directors as a
    group (11 persons)
7,823,026
42.73
%
*
Represents beneficial ownership of
    less than 1% of the shares of common stock.
(1)
Includes
    (i) 1,065,141 shares of common stock issuable upon
    conversion of
Series A-2
convertible preferred stock, 2,296,560 shares of common
    stock issuable upon conversion of
Series B-1
convertible preferred stock and 1,627,936 shares of common
    stock issuable upon conversion of
Series B-2
convertible preferred stock all owned of record by VantagePoint
    Venture Partners IV (Q), L.P.,
    (ii) 106,632 shares of common stock issuable upon
    conversion of
Series A-2
convertible preferred stock, 229,909 shares of common stock
    issuable upon conversion of
Series B-1
convertible preferred stock and 162,973 shares of common
    stock issuable upon conversion of
Series B-2
convertible preferred stock all owned of record by VantagePoint
    Venture Partners IV, L.P., (iii) 3,879 shares of
    common stock issuable upon conversion of
Series A-2
convertible preferred stock, 8,365 shares of common stock
    issuable upon conversion of
Series B-1
convertible preferred stock and 5,929 shares of common
    stock issuable upon conversion of
Series B-2
convertible preferred stock all owned of record by VantagePoint
    Venture Partners IV Principals Fund, L.P., and (iv) options
    to purchase an additional 13,853 shares of common stock that are
    exercisable within 60 days of August 31, 2009 that are
    owned of record by Annette Bianchi over which VantagePoint has
    sole voting and investment power. Ms. Bianchi, a director of
    Anthera, is a Managing Director at VantagePoint. Alan E. Salzman
    and James D. Marver are managing members of the general partner
    of the limited partnerships that directly hold such shares, and
    as such, they may be deemed to have voting and investment power
    with respect to such shares. Messrs. Salzman and Marver
    disclaim beneficial ownership with respect to such shares except
    to the extent of their pecuniary interest therein. The address
    for VantagePoint Venture Partners is 1001 Bayhill Drive,
    Suite 300, San Bruno, CA 94066.
(2)
Includes 657,708 shares of
    common stock issuable upon conversion of
Series A-2
convertible preferred stock, 1,418,089 shares of common
    stock issuable upon conversion of
Series B-1
convertible preferred stock and 1,480,632 shares of common
    stock issuable upon conversion of
Series B-2
convertible preferred stock all owned of record by Sofinnova
    Venture Partners VI, L.P. Dr. James Healy, a director of
    Anthera, is the managing member of the general partner of the
    limited partnership that directly holds such shares, and as
    such, may be deemed to share voting and investment power with
    respect to such shares. Dr. Healy disclaims beneficial
    ownership except to the extent of his proportionate pecuniary
    interest in Sofinnova. The address for Sofinnova Ventures is 850
    Oak Grove Ave., Menlo Park, CA 94025.
(3)
Includes
    (i) 823,530 shares of common stock issuable upon
    conversion of
Series B-2
convertible preferred stock and 205,882 shares of common
    stock issuable upon exercise of outstanding warrants all owned
    of record by Caxton Advantage Life Sciences Fund, L.P. and
    (ii) options to purchase an additional 3,646 shares of
    common stock that are exercisable within 60 days of
    August 31, 2009 that are owned of record by Dr. A.
    Rachel Leheny over which Caxton Advantage Life Sciences Fund,
    L.P. may be deemed to hold voting power. Dr. Leheny, a
    member of the board of directors, is (i) a Managing
    Director of Caxton Advantage Venture Partners, L.P., which is
    the General Partner of Caxton Advantage Life Sciences Fund,
    L.P., a life-sciences venture capital fund that she co-founded
    in 2006 and (ii) a member of Advantage Life Sciences
    Partners LLC, the Managing General Partner of Caxton Advantage
    Venture Partners, L.P. Dr. Leheny disclaims beneficial
    ownership except to the extent of her proportionate pecuniary
    interests, either directly or indirectly through Caxton
    Advantage Venture Partners, L.P., in Caxton Advantage Life
    Sciences Fund, L.P. The address for Caxton Advantage Life
    Sciences Fund, L.P. is 500 Park Avenue, New York, NY 10022.
(4)
Includes
    (i) 700,000 shares of common stock issuable upon
    conversion of
Series B-2
convertible preferred stock and 175,000 shares of common
    stock issuable upon exercise of outstanding warrants all owned
    of record by HBM BioCapital (EUR) L.P. and
    (ii) 123,530 shares of common stock issuable upon
    conversion of
Series B-2
convertible preferred stock and 30,882 shares of common
    stock issuable upon exercise of outstanding warrants
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all owned of record by HBM
    BioCapital (USD) L.P., collectively, the HBM BioCapital Funds.
    The board of directors of HBM BioCapital Ltd., the general
    partner of the HBM BioCapital Funds, has sole voting and
    dispositive power with respect to such shares. The board of
    directors of HBM BioCapital Ltd. consists of John Arnold, Sophia
    Harris, Richard Coles, Dr. Andreas Wicki and John Urquhart,
    none of whom has individual voting or investment power with
    respect to the shares. The address for the HBM BioCapital Funds
    is
c/o HBM
BioCapital Ltd., Centennial Towers, 3rd Floor, 2454 West
    Bay Road, Grand Cayman, Cayman Islands.
(5)
Includes
    (i) 154,803 shares of common stock issuable upon
    conversion of
Series A-2
convertible preferred stock, 333,771 shares of common stock
    issuable upon conversion of
Series B-1
preferred stock and 385,790 shares of common stock issuable
    upon conversion of
Series B-2
convertible preferred stock all owned of record by A. M. Pappas
    Life Science Ventures III, L.P. and (ii) 9,624 shares
    of common stock issuable upon conversion of
Series A-2
convertible preferred stock, 20,751 shares of common stock
    issuable upon conversion of
Series B-1
convertible preferred stock and 23,984 shares of common
    stock issuable upon conversion of
Series B-2
convertible preferred stock all owned of record by PV III CEO
    Fund, L.P. Arthur M. Pappas, in his role as chairman of the
    investment committee of AMP&A Management III, LLC, the
    general partner of A. M. Pappas Life Science Ventures III, L.P.
    and PV III CEO Fund, L.P., has voting and investment authority
    over these shares. Mr. Pappas disclaims beneficial
    ownership of these shares except to the extent of his pecuniary
    interest arising therein. The address for both A. M. Pappas Life
    Science Ventures III, L.P. and PV III CEO Fund, L.P. is 2520
    Meridian Parkway, Suite 400, Durham, NC 27713.
(6)
Includes 1,135,000 shares of
    common stock subject to vesting pursuant to the terms of
    Mr. Truex's restricted stock agreement, all of which
    has vested, options to purchase an additional
    753,037 shares of common stock that are exercisable within
    60 days of August 31, 2009, 35,471 shares of
    common stock issuable upon conversion of
Series A-1
convertible preferred stock and 14,667 shares of common
    stock issuable upon conversion of
Series A-2
convertible preferred stock all owned of record by Paul F. Truex.
(7)
Includes (i) options to
    purchase 131,012 shares of common stock that are
    exercisable within 60 days of August 31, 2009 and
    30,000 shares of common stock issuable upon conversion of
Series A-1
convertible preferred stock owned of record by Mr. Lowe,
    (ii) 138,667 shares of common stock issuable upon
    conversion of
Series A-2
convertible preferred stock owned of record by BioVest III
    and (iii) options to purchase 15,750 shares of common
    stock that are exercisable within 60 days of
    August 31, 2009 owned of record by Dina Gonzalez,
    Mr. Lowe's spouse. Mr. Lowe has sole voting and
    sole investment power with respect to the shares owned of record
    by BioVest III. Mr. Lowe disclaims beneficial ownership
    with respect to such shares except to the extent of his
    pecuniary interest therein. The address for BioVest III is
    25801 Industrial Blvd., Suite B, Hayward, CA 94545.
(8)
Includes 180,000 shares of
    common stock 63,750 shares of which are subject to the
    Company's right of repurchase, and options to purchase an
    additional 74,272 shares of common stock that are
    exercisable within 60 days of August 31, 2009 owned of
    record by Dr. Pennington.
(9)
Includes 10,000 shares of
    common stock and options to purchase an additional
    272,947 shares of common stock that are exercisable within
    60 days of August 31, 2009 owned of record by
    Dr. Hislop.
(10)
Includes 134,232 shares of
    common stock, 5,177 shares of which are subject to the
    Company's right of repurchase, options to purchase an
    additional 32,293 shares of common stock that are
    exercisable within 60 days of August 31, 2009 and
    30,000 shares of common stock issuable upon conversion of
Series A-1
convertible preferred stock all owned of record by the Debra
    Odink Living Trust, for which Dr. Odink serves as trustee.
(11)
Includes 25,000 shares of
    common stock, options to purchase an additional
    31,666 shares of common stock that are exercisable within
    60 days of August 31, 2009, 58,140 shares of
    common stock issuable upon conversion of
Series A-1
convertible preferred stock and 22,222 shares of common
    stock issuable upon conversion of
Series A-2
convertible preferred stock all owned of record by
    Dr. Henney.
(12)
Includes options to purchase
    13,853 shares of common stock that are exercisable within
    60 days of August 31, 2009 owned of record by
    Ms. Bianchi. VantagePoint has sole voting and investment
    power with respect to these shares, and Ms. Bianchi
    disclaims beneficial ownership thereof except to the extent of
    her pecuniary interest in the shares of common stock issuable
    upon exercise of the option.
(13)
Includes 35,000 shares of
    common stock owned of record by Dr. Healy, 21,147 shares of
    which are subject to the Company's right of repurchase.
(14)
Includes options to purchase
    7,291 shares of common stock that are exercisable within
    60 days of August 31, 2009 owned of record by
    Dr. Leheny. Caxton Advantage Life Sciences Fund, L.P. may
    be deemed to hold voting power with respect to 3,646 of these
    shares.
(15)
Includes options to purchase
    15,416 shares of common stock that are exercisable within
    60 days of August 31, 2009 owned of record by the
    Mr. Santel.
(16)
Includes 35,000 shares of
    common stock and options to purchase an additional
    6,249 shares of common stock that are exercisable within
    60 days of August 31, 2009 owned of record by
    Mr. Thompson.
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DESCRIPTION OF
    CAPITAL STOCK
General
The following description of our capital stock is intended as a
    summary only and is qualified in its entirety by reference to
    our amended and restated certificate of incorporation and
    amended and restated bylaws to be in effect at the closing of
    this offering, which are filed as exhibits to the registration
    statement of which this prospectus forms a part, and to the
    applicable provisions of the Delaware General Corporation Law.
    We refer in this section to our amended and restated certificate
    of incorporation as our certificate of incorporation, and we
    refer to our amended and restated bylaws as our bylaws.
Upon completion of this offering, our authorized capital stock
    will consist
    of          shares
    of common stock, par value $0.001 per share,
    and           shares
    of preferred stock, par value $0.001 per share, all of which
    shares of preferred stock will be undesignated.
As of August 31, 2009, 16,746,731 shares of our common
    stock were outstanding and held by 38 stockholders of
    record. This amount assumes the conversion of all outstanding
    shares of our preferred stock into common stock, which will
    occur immediately prior to the closing of this offering. In
    addition, as of August 31, 2009, we had outstanding options
    to purchase 2,248,623 shares of our common stock under our
    2005 Stock Option Plan at a weighted-average exercise price of
    $0.50 per share, all of which were exercisable, and outstanding
    warrants to purchase 411,764 shares of our common stock.
Common
    Stock
The holders of our common stock are entitled to one vote for
    each share held on all matters submitted to a vote of the
    stockholders. The holders of our common stock do not have any
    cumulative voting rights. Holders of our common stock are
    entitled to receive ratably any dividends declared by the board
    of directors out of funds legally available for that purpose,
    subject to any preferential dividend rights of any outstanding
    preferred stock. Our common stock has no preemptive rights,
    conversion rights or other subscription rights or redemption or
    sinking fund provisions.
In the event of our liquidation, dissolution or winding up,
    holders of our common stock will be entitled to share ratably in
    all assets remaining after payment of all debts and other
    liabilities and any liquidation preference of any outstanding
    preferred stock. The shares to be issued by us in this offering
    will be, when issued and paid for, validly issued, fully paid
    and non-assessable.
Preferred
    Stock
Our board of directors is authorized, subject to any limitations
    prescribed by law, without stockholder approval, to issue from
    time to time up to an aggregate
    of           shares
    of preferred stock, in one or more series, each series to have
    such rights and preferences, including voting rights, dividend
    rights, conversion rights, redemption privileges and liquidation
    preferences as our board of directors determines. The rights of
    the holders of common stock will be subject to, and may be
    adversely affected by, the rights of holders of any preferred
    stock that may be issued in the future. Issuance of preferred
    stock, while providing desirable flexibility in connection with
    possible acquisitions and other corporate purposes, could have
    the effect of making it more difficult for a third party to
    acquire, or of discouraging a third party from attempting to
    acquire, a majority of our outstanding voting stock. We
    currently have no shares of preferred stock outstanding and we
    have no present plans to issue any shares of preferred stock.
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Warrants
As of August 31, 2009, warrants exercisable for an
    aggregate of up to 411,764 shares of our common stock were
    outstanding. Of these, warrants exercisable for
    411,764 shares of our common stock were issued in
    connection with a preferred stock financing, are immediately
    exercisable at an exercise price of $0.78 per share and will
    expire upon the earlier of (i) August 12, 2015,
    (ii) an authorized warrant cancellation in accordance with
    the terms of the warrants, (iii) the closing of this
    offering or (iv) the sale of a majority of our equity
    interests or assets. Warrants were issued in connection with a
    bridge financing arrangement, are exercisable for shares issued
    in our next equity financing or, alternatively shares of our
Series B-2
convertible preferred stock in connection with a change in
    control of our company, at an exercise price of the price per
    share of such securities and will expire upon the earlier of
    July 2014 and September 2014 or upon the date of the sale of all
    or substantially of our equity interests or assets. Each of the
    warrants contains a customary net issuance feature, which allows
    the warrant holder to pay the exercise price of the warrant by
    forfeiting a portion of the exercised warrant shares with a
    value equal to the aggregate exercise price.
Registration
    Rights
Holders
    of           shares
    of our common stock, after giving effect to the conversion of
    our outstanding preferred stock into common stock upon
    completion of this offering, have rights, under the terms of an
    investor rights agreement between us and these holders, to
    require us to file registration statements under the Securities
    Act, subject to limitations and restrictions, or request that
    their shares be covered by a registration statement that we are
    otherwise filing, subject to specified exceptions. We refer to
    these shares as registrable securities. The investor rights
    agreement does not provide for any liquidated damages, penalties
    or other rights in the event we do not file a registration
    statement. These rights will continue in effect following this
    offering.
Demand Registration Rights.
At any time after
    the earlier of (i) 180 days following the effective
    date of this registration statement or (ii) July 17,
    2012, subject to certain exceptions, the holders of (a) a
    majority of the registrable securities issuable upon the
    conversion of our
Series A-1
convertible preferred stock or (b) two-thirds of the
    then-outstanding registrable securities issuable upon the
    conversion of our
Series A-2
convertible preferred stock,
Series B-1
convertible preferred stock and
Series B-2
convertible preferred stock have the right to demand that we
    file a registration statement covering the offering and sale of
    at least a majority of the registrable securities then
    outstanding (or a lesser percent if the anticipated aggregate
    offering price, net of underwriting discounts and commissions,
    would exceed $5,000,000).
We have the ability to delay the filing of such registration
    statement under specified conditions, such as during the period
    starting with the date of filing of and ending on the date
    180 days following the effective date of this offering or
    if our board of directors deems it advisable to delay such
    filing or if we are in possession of material nonpublic
    information that would be in our best interests not to disclose.
    Postponements at the discretion of our board of directors cannot
    exceed 120 days during any twelve-month period. We are not
    obligated to file a registration statement on more than one
    occasion upon the request of the holders of a majority of the
    registrable securities issuable upon the conversion of our
Series A-1
convertible preferred stock, and we are not obligated to file a
    registration statement on more than two occasions upon the
    request of the holders of two-thirds of the then-outstanding
    registrable securities issuable upon the conversion of our
Series A-2
convertible preferred stock,
Series B-1
convertible preferred stock and
Series B-2
convertible preferred stock.
Form S-3
Registration Rights.
If we are eligible to file a
    registration statement on
Form S-3,
the holders of the registrable securities described above have
    the right, on one or
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more occasions, to request registration on
Form S-3
of the sale of the registrable securities held by such holder
    provided such securities are anticipated to have an aggregate
    sale price (net of underwriting discounts and commissions, if
    any) in excess of $1,000,000.
We have the ability to delay the filing of such registration
    statement under specified conditions, such as for a period of
    time prior to our intention to make a public offering, if our
    board of directors deems it advisable to delay such filing or if
    we are in possession of material nonpublic information that
    would be in our best interests not to disclose. Such
    postponements cannot exceed 120 days during any 12-month
    period. We are not obligated to effect more than two
    registrations of registrable securities on
Form S-3
in any twelve-month period.
Piggyback Registration Rights.
The holders of
    the registrable securities described above have piggyback
    registration rights. Under these provisions, if we register any
    securities for public sale, including pursuant to any
    stockholder-initiated demand registration, these holders will
    have the right to include their shares in the registration
    statement, subject to customary exceptions. The underwriters of
    any underwritten offering will have the right to limit the
    number of shares having registration rights to be included in
    the registration statement, and piggyback registration rights
    are also subject to the priority rights of stockholders having
    demand registration rights in any demand registration.
Expenses of Registration.
We will pay all
    registration expenses, other than underwriting discounts and
    commissions, related to any demand,
Form S-3
or piggyback registration, including reasonable attorneys'
    fees and disbursements of one counsel for the holders of
    registrable securities in an amount not to exceed an aggregate
    of $25,000.
Indemnification.
The investor rights agreement
    contains customary cross-indemnification provisions, under which
    we are obligated to indemnify the selling stockholders in the
    event of material misstatements or omissions in the registration
    statement attributable to us, and each selling stockholder is
    obligated to indemnify us for material misstatements or
    omissions in the registration statement due to information
    provided by such stockholder provided that such information was
    not changed or altered by us.
Expiration of Registration Rights.
The
    registration rights granted under the investor rights agreement
    will terminate on the seventh anniversary of the completion of
    this offering.
Anti-Takeover
    Effects of Delaware Law and Provisions of Our Certificate of
    Incorporation and Bylaws
Upon completion of this offering, our certificate of
    incorporation and bylaws will include a number of provisions
    that may have the effect of delaying, deferring or preventing
    another party from acquiring control of us and encouraging
    persons considering unsolicited tender offers or other
    unilateral takeover proposals to negotiate with our board of
    directors rather than pursue non-negotiated takeover attempts.
    These provisions include the items described below.
Board Composition and Filling Vacancies.
In
    accordance with our certificate of incorporation, our board is
    divided into three classes serving staggered three-year terms,
    with one class being elected each year. Our certificate of
    incorporation also provides that directors may be removed only
    for cause and then only by the affirmative vote of the holders
    of 75% or more of the shares then entitled to vote at an
    election of directors. Furthermore, any vacancy on our board of
    directors, however occurring, including a vacancy resulting from
    an increase in the size of our board, may only be filled by the
    affirmative vote of a majority of our directors then in office
    even if less than a quorum. The classification of directors,
    together with the limitations on removal of directors and
    treatment of vacancies, has the effect of making it more
    difficult for stockholders to change the composition of our
    board of directors.
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No Written Consent of Stockholders.
Our
    certificate of incorporation provides that all stockholder
    actions are required to be taken by a vote of the stockholders
    at an annual or special meeting, and that stockholders may not
    take any action by written consent in lieu of a meeting. This
    limit may lengthen the amount of time required to take
    stockholder actions and would prevent the amendment of our
    bylaws or removal of directors by our stockholders without
    holding a meeting of stockholders.
Meetings of Stockholders.
Our certificate of
    incorporation and bylaws provide that only a majority of the
    members of our board of directors then in office may call
    special meetings of stockholders and only those matters set
    forth in the notice of the special meeting may be considered or
    acted upon at a special meeting of stockholders. Our bylaws
    limit the business that may be conducted at an annual meeting of
    stockholders to those matters properly brought before the
    meeting.
Advance Notice Requirements.
Our bylaws
    establish advance notice procedures with regard to stockholder
    proposals relating to the nomination of candidates for election
    as directors or new business to be brought before meetings of
    our stockholders. These procedures provide that notice of
    stockholder proposals must be timely given in writing to our
    corporate secretary prior to the meeting at which the action is
    to be taken. Generally, to be timely, notice must be received at
    our principal executive offices not less than 90 days nor
    more than 120 days prior to the first anniversary date of
    the annual meeting for the preceding year. Our bylaws specify
    the requirements as to form and content of all
    stockholders' notices. These requirements may preclude
    stockholders from bringing matters before the stockholders at an
    annual or special meeting.
Amendment to Certificate of Incorporation and
    Bylaws.
As required by the Delaware General
    Corporation Law, any amendment of our certificate of
    incorporation must first be approved by a majority of our board
    of directors, and if required by law or our certificate of
    incorporation, must thereafter be approved by a majority of the
    outstanding shares entitled to vote on the amendment and a
    majority of the outstanding shares of each class entitled to
    vote thereon as a class, except that the amendment of the
    provisions relating to stockholder action, board composition,
    limitation of liability and the amendment of our certificate of
    incorporation must be approved by not less than 75% of the
    outstanding shares entitled to vote on the amendment, and not
    less than 75% of the outstanding shares of each class entitled
    to vote thereon as a class. Our bylaws may be amended by the
    affirmative vote of a majority of the directors then in office,
    subject to any limitations set forth in the bylaws; and may also
    be amended by the affirmative vote of at least 75% of the
    outstanding shares entitled to vote on the amendment, or, if our
    board of directors recommends that the stockholders approve the
    amendment, by the affirmative vote of the majority of the
    outstanding shares entitled to vote on the amendment, in each
    case voting together as a single class.
Undesignated Preferred Stock.
Our certificate
    of incorporation provides
    for          authorized
    shares of preferred stock. The existence of authorized but
    unissued shares of preferred stock may enable our board of
    directors to render more difficult or to discourage an attempt
    to obtain control of us by means of a merger, tender offer,
    proxy contest or otherwise. For example, if in the due exercise
    of its fiduciary obligations, our board of directors were to
    determine that a takeover proposal is not in the best interests
    of our stockholders, our board of directors could cause shares
    of preferred stock to be issued without stockholder approval in
    one or more private offerings or other transactions that might
    dilute the voting or other rights of the proposed acquirer or
    insurgent stockholder or stockholder group. In this regard, our
    certificate of incorporation grants our board of directors broad
    power to establish the rights and preferences of authorized and
    unissued shares of preferred stock. The issuance of shares of
    preferred stock could decrease the amount of earnings and assets
    available for distribution to holders of shares of common stock.
    The issuance may also adversely affect the rights and powers,
    including voting rights, of these holders and may have the
    effect of delaying, deterring or preventing a change in control
    of us.
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Section 203
    of the Delaware General Corporation Law
Upon completion of this offering, we will be subject to the
    provisions of Section 203 of the Delaware General
    Corporation Law. In general, Section 203 prohibits a
    publicly held Delaware corporation from engaging in a
    "business combination" with an "interested
    stockholder" for a three-year period following the time
    that this stockholder becomes an interested stockholder, unless
    the business combination is approved in a prescribed manner. A
    "business combination" includes, among other things, a
    merger, asset or stock sale or other transaction resulting in a
    financial benefit to the interested stockholder. An
    "interested stockholder" is a person who, together
    with affiliates and associates, owns, or did own within three
    years prior to the determination of interested stockholder
    status, 15% or more of the corporation's voting stock.
    Under Section 203, a business combination between a
    corporation and an interested stockholder is prohibited unless
    it satisfies one of the following conditions:
•
before the stockholder became interested, our board of directors
    approved either the business combination or the transaction
    which resulted in the stockholder becoming an interested
    stockholder;
•
upon consummation of the transaction which resulted in the
    stockholder becoming an interested stockholder, the interested
    stockholder owned at least 85% of the voting stock of the
    corporation outstanding at the time the transaction commenced,
    excluding for purposes of determining the voting stock
    outstanding, shares owned by persons who are directors and also
    officers, and employee stock plans, in some instances, but not
    the outstanding voting stock owned by the interested
    stockholder; or
•
at or after the time the stockholder became interested, the
    business combination was approved by our board of directors of
    the corporation and authorized at an annual or special meeting
    of the stockholders by the affirmative vote of at least
    two-thirds of the outstanding voting stock which is not owned by
    the interested stockholder.
Section 203 defines a business combination to include:
•
any merger or consolidation involving the corporation and the
    interested stockholder;
•
any sale, transfer, pledge or other disposition involving the
    interested stockholder of 10% or more of the assets of the
    corporation;
•
subject to exceptions, any transaction that results in the
    issuance of transfer by the corporation of any stock of the
    corporation to the interested stockholder;
•
subject to exceptions, any transaction involving the corporation
    that has the effect of increasing the proportionate share of the
    stock of any class or series of the corporation beneficially
    owned by the interest stockholder; and
•
the receipt by the interested stockholder of the benefit of any
    loans, advances, guarantees, pledges or other financial benefits
    provided by or through the corporation.
In general, Section 203 defines an interested stockholder
    as any entity or person beneficially owing 15% or more of the
    outstanding voting stock of the corporation and any entity or
    person affiliated with or controlling or controlled by the
    entity or person.
The NASDAQ Global
    Market Listing
We have applied to have our common stock approved for listing on
    The NASDAQ Global Market under the trading symbol
    "ANTH."
Transfer Agent
    and Registrar
The transfer agent and registrar for our common stock will be
    American Stock Transfer & Trust Company, LLC.
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SHARES ELIGIBLE
    FOR FUTURE SALE
Immediately prior to this offering, there was no public market
    for our common stock. Future sales of substantial amounts of
    common stock in the public market, or the perception that such
    sales may occur, could adversely affect the market price of our
    common stock. Although we have applied to have our common stock
    approved for listing on The NASDAQ Global Market, we cannot
    assure you that there will be an active public market for our
    common stock.
Upon completion of this offering, we will have outstanding an
    aggregate
    of          shares
    of common stock, assuming no exercise of the underwriters'
    over-allotment option and no exercise of outstanding stock
    options. Of these shares, the shares sold in this offering will
    be freely tradable without restriction or further registration
    under the Securities Act, except for any shares purchased by our
    "affiliates," as that term is defined in Rule 144
    under the Securities Act, whose sales would be subject to
    certain limitations and restrictions described below. The
    remaining           shares
    of common stock held by existing stockholders will be restricted
    securities as that term is defined in Rule 144 under the
    Securities Act. Restricted securities may be sold in the public
    market only if registered or if they qualify for exemption under
    Rules 144 or 701 under the Securities Act, which rules are
    summarized below, or another exemption.
As a result of the lock-up agreements described below and the
    provisions of Rule 144 and Rule 701 under the
    Securities Act, the shares of our common stock (excluding the
    shares sold in this offering) that will be available for sale in
    the public market are as follows:
Approximate
Number of
Date of Availability of Sale
Shares
As of the date of this prospectus
90 days after the date of this prospectus
180 days after the date of this prospectus, or longer if
    the lock-up period is extended, although a portion of such
    shares will be subject to volume limitations pursuant to
    Rule 144
Stock
    Plans
We intend to file one or more registration statements on
Form S-8
under the Securities Act to register shares of our common stock
    issued or reserved for issuance under our stock option plans.
    The first such registration statement is expected to be filed
    soon after the date of this prospectus and will automatically
    become effective upon filing with the SEC. Accordingly, shares
    registered under such registration statement will be available
    for sale in the open market, unless such shares are subject to
    vesting restrictions with us or the
lock-up
restrictions described above.
Lock-Up
Agreements
Each of our officers and directors, and greater than 2%
    stockholders, have agreed not to offer, sell, contract to sell
    or otherwise dispose of, or enter into any transaction that is
    designed to, or could be expected to, result in the disposition
    of any shares of our common stock or other securities
    convertible into or exchangeable or exercisable for shares of
    our common stock or derivatives of our common stock owned by
    these persons prior to this offering or common stock issuable
    upon exercise of options or warrants held by these persons for a
    period of 180 days after the effective date of the
    registration statement of which this prospectus is a part
    without the prior written consent of Deutsche Bank Securities
    Inc. This
180-day
period may be extended if (i) during the last 17 days
    of the
180-day
period we issue an
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earnings release or material news or a material event relating
    to us occurs; or (ii) prior to the expiration of the
180-day
period, we announce that we will release earnings results during
    the
16-day
period following the last day of the
180-day
period. The period of such extension will be 18 days,
    beginning on the issuance of the earnings release or the
    occurrence of the material news or material event. Deutsche Bank
    Securities Inc. may, in its sole discretion as representative of
    the underwriters, and at any time without notice release some or
    all of the shares subject to
lock-up
agreements prior to the expiration of the
180-day
period. When determining whether or not to release shares from
    the
lock-up
agreements, Deutsche Bank Securities Inc. will consider, among
    other factors, the stockholder's reasons for requesting the
    release, the number of shares for which the release is being
    requested and market conditions at the time.
Transfers can be made during the
lock-up
period in the case of (a) shares of common stock acquired
    in open market transactions after the completion of this
    offering, (b) gifts or for estate planning purposes and
    distributions to partners, members or stockholders of the
    transferor where the transferee signs a
lock-up
agreement, and (c) shares of common stock (i) as
    forfeitures of common stock to satisfy tax withholding
    obligations of the stockholder in connection with the vesting or
    exercise of equity awards by the stockholder pursuant to our
    2005 Equity Incentive Plan, or 2005 Equity Plan, and 2009 Stock
    Option and Incentive Plan, or 2009 Equity Plan, or pursuant to a
    net exercise or cashless exercise by the stockholder of
    outstanding equity awards pursuant to our 2005 Equity Plan and
    2009 Equity Plan, or (ii) pursuant to the conversion or
    sale of, or an offer to purchase, all or substantially all of
    our outstanding common stock, whether pursuant to a merger,
    tender offer or otherwise; provided that in the case of a
    transfer in clause (c)(i) above, no filing under
    Section 16(a) of the Exchange Act shall be required or
    shall be voluntarily made in connection with such transactions.
Rule 144
In general, under Rule 144, beginning 90 days after
    the date of this prospectus, a person who is not our affiliate
    and has not been our affiliate at any time during the preceding
    three months will be entitled to sell any shares of our common
    stock that such person has beneficially owned for at least six
    months, including the holding period of any prior owner other
    than one of our affiliates, without regard to volume
    limitations. Sales of our common stock by any such person would
    be subject to the availability of current public information
    about us if the shares to be sold were beneficially owned by
    such person for less than one year.
In addition, under Rule 144, a person may sell shares of
    our common stock acquired from us immediately upon the closing
    of this offering, without regard to volume limitations or the
    availability of public information about us, if:
•
the person is not our affiliate and has not been our affiliate
    at any time during the preceding three months; and
•
the person has beneficially owned the shares to be sold for at
    least one year, including the holding period of any prior owner
    other than one of our affiliates.
Beginning 90 days after the date of this prospectus, our
    affiliates who have beneficially owned shares of our common
    stock for at least six months, including the holding period of
    any prior owner other than one of our affiliates, would be
    entitled to sell within any three-month period a number of
    shares that does not exceed the greater of:
•
1% of the number of shares of our common stock then outstanding,
    which will equal
    approximately          shares
    immediately after this offering; and
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•
the average weekly trading volume in our common stock on The
    NASDAQ Global Market during the four calendar weeks preceding
    the date of filing of a Notice of Proposed Sale of Securities
    Pursuant to Rule 144 with respect to the sale.
Sales under Rule 144 by our affiliates are also subject to
    manner of sale provisions and notice requirements and to the
    availability of current public information about us.
Rule 701
In general, under Rule 701, any of our employees,
    directors, officers, consultants or advisors who purchase shares
    from us in connection with a compensatory stock or option plan
    or other written agreement before the effective date of this
    offering is entitled to sell such shares 90 days after the
    effective date of this offering in reliance on Rule 144,
    without having to comply with the holding period and notice
    filing requirements of Rule 144 and, in the case of
    non-affiliates, without having to comply with the public
    information, volume limitation or notice filing provisions of
    Rule 144. The SEC has indicated that Rule 701 will
    apply to typical stock options granted by an issuer before it
    becomes subject to the reporting requirements of the Exchange
    Act, as amended, along with the shares acquired upon exercise of
    such options, including exercises after the date of this
    prospectus.
Registration
    Rights
Upon completion of this offering, the holders of at
    least           shares
    of our common stock have certain rights with respect to the
    registration of such shares under the Securities Act. See the
    section entitled "Description of Capital
    Stock—Registration Rights." Upon the effectiveness of
    a registration statement covering these shares, the shares would
    become freely tradable.
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MATERIAL U.S.
    FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of certain U.S. federal income
    tax considerations relating to the acquisition, ownership and
    disposition of common stock. Except where noted, this summary
    deals only with common stock held as a capital asset by a
    stockholder, and does not discuss the U.S. federal income
    tax considerations applicable to a stockholder that is subject
    to special treatment under U.S. federal income tax laws,
    including: a dealer in securities or currencies; a financial
    institution; a regulated investment company; a real estate
    investment trust; a tax-exempt organization; an insurance
    company; a person holding common stock as part of a hedging,
    integrated, conversion or straddle transaction or a person
    deemed to sell common stock under the constructive sale
    provisions of the Internal Revenue Code of 1986, as amended, the
    Tax Code; a trader in securities that has elected the
mark-to-market
method of accounting; a person liable for alternative minimum
    tax; an entity that is treated as a partnership for
    U.S. federal income tax purposes; a person that received
    such common stock in connection with services provided; a
    U.S. person whose "functional currency" is not
    the U.S. dollar; a "controlled foreign
    corporation"; a "passive foreign investment
    company"; or a U.S. expatriate.
This summary is based upon provisions of the Tax Code, and
    applicable regulations, rulings and judicial decisions in effect
    as of the date hereof. Those authorities may be changed, perhaps
    retroactively, or may be subject to differing interpretations,
    so as to result in U.S. federal income tax consequences
    different from those discussed below. This summary does not
    address all aspects of U.S. federal income tax, does not
    deal with all tax considerations that may be relevant to
    stockholders in light of their personal circumstances and does
    not address any state, local, foreign, gift, estate or
    alternative minimum tax considerations.
For purposes of this discussion, a "U.S. holder"
    is a beneficial holder of common stock that is: an individual
    citizen or resident of the United States; a corporation (or any
    other entity treated as a corporation for U.S. federal
    income tax purposes) created or organized in or under the laws
    of the United States, any state thereof or the District of
    Columbia; an estate the income of which is subject to
    U.S. federal income taxation regardless of its source; a
    trust if it (1) is subject to the primary supervision of a
    court within the United States and one or more U.S. persons
    have the authority to control all substantial decisions of the
    trust or (2) has a valid election in effect under
    applicable U.S. Treasury regulations to be treated as a
    U.S. person.
For purposes of this discussion, a
"non-U.S. holder"
is a beneficial holder of common stock (other than a partnership
    or any other entity that is treated as a partnership for
    U.S. federal income tax purposes) that is not a
    U.S. holder.
If a partnership (or an entity that is treated as a partnership
    for U.S. federal income tax purposes) holds common stock,
    the tax treatment of a partner will generally depend upon the
    status of the partner and the activities of the partnership. A
    partner of a partnership holding common stock is particularly
    urged to consult its own tax advisors.
Holders of common stock are urged to consult their own tax
    advisors concerning their particular U.S. federal income
    tax consequences in light of their specific situations, as well
    as the tax consequences arising under the laws of any other
    taxing jurisdiction.
U.S.
    Holders
Ownership and Disposition of Common Stock.
The
    following discussion is a summary of certain U.S. federal
    income tax considerations relevant to a U.S. holder of
    common stock.
Distributions with respect to common stock, if any, will be
    includible in the gross income of a U.S. holder as ordinary
    dividend income to the extent paid out of current or accumulated
    earnings and profits, as determined for U.S. federal income
    tax purposes. Any portion of a distribution in excess of current
    or accumulated earnings and profits would be treated as a return
    of the holder's tax basis in its common stock and then as
    gain from the sale or
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exchange of the common stock. Under current law, if certain
    requirements are met, a maximum 15% U.S. federal income tax
    rate will apply to any dividends paid to a holder of common
    stock who is a U.S. individual and that is included in the
    U.S. holder's income prior to January 1, 2011.
Distributions to U.S. holders that are corporate
    stockholders, constituting dividends for U.S. federal
    income tax purposes, may qualify for the 70% dividends received
    deduction, or DRD, which is generally available to corporate
    stockholders that own less than 20% of the voting power or value
    of the outstanding stock of the distributing corporation. A
    U.S. holder that is a corporate stockholder holding 20% or
    more of the distributing corporation may be eligible for an 80%
    DRD. No assurance can be given that we will have sufficient
    earnings and profits (as determined for U.S. federal income
    tax purposes) to cause any distributions to be eligible for a
    DRD. In addition, a DRD is available only if certain holding
    periods and other taxable income requirements are satisfied. The
    length of time that a stockholder has held stock is reduced by
    any period during which the stockholder's risk of loss with
    respect to the stock is diminished by reason of the existence of
    certain options, contracts to sell, short sales, or other
    similar transactions. Also, to the extent that a corporation
    incurs indebtedness that is directly attributable to an
    investment in the stock on which the dividend is paid, all or a
    portion of the DRD may be disallowed. In addition, any dividend
    received by a corporation may also be subject to the
    extraordinary distribution provisions of the Tax Code.
A U.S. holder of common stock will generally recognize gain
    or loss on the taxable sale, exchange, or other disposition of
    such stock in an amount equal to the difference between such
    U.S. holder's amount realized on the sale and its tax
    basis in the common stock sold. A U.S. holder's amount
    realized should equal the amount of cash and the fair market
    value of any property received in consideration of its stock.
    The gain or loss should be capital gain or loss if the
    U.S. holder holds the common stock as a capital asset, and
    should be long-term capital gain or loss if the common stock is
    held for more than one year at the time of disposition. Capital
    loss can generally only be used to offset capital gain
    (individuals may also offset excess capital losses against up to
    $3,000 of ordinary income per tax year). Under current law,
    long-term capital gain recognized by an individual
    U.S. holder prior to January 1, 2011 is subject to a
    maximum 15% U.S. federal income tax rate.
Non-U.S.
Holders
Ownership and Disposition of Common Stock.
The
    following is a summary of the U.S. federal tax
    considerations applicable to a
non-U.S. holder
of common stock.
Distributions treated as dividends that are paid to a
non-U.S. holder,
if any, with respect to the shares of common stock will be
    subject to withholding tax at a 30% rate (or lower applicable
    income tax treaty rate) unless the dividends are effectively
    connected with the
non-U.S. holder's
conduct of a trade or business in the United States. If a
non-U.S. holder
is engaged in a trade or business in the United States and
    dividends with respect to the common stock are effectively
    connected with the conduct of that trade or business and, if
    required by an applicable income tax treaty, are attributable to
    a U.S. permanent establishment, then the
non-U.S. holder
will be subject to U.S. federal income tax on those
    dividends on a net income basis (although the dividends will be
    exempt from the 30% U.S. federal withholding tax, provided
    certain certification requirements are satisfied) in the same
    manner as if received by a U.S. person as defined under the
    Tax Code. Any such effectively connected income received by a
    foreign corporation may, under certain circumstances, be subject
    to an additional branch profits tax at a 30% rate (or lower
    applicable income tax treaty rate). To claim the exemption from
    withholding, the
non-U.S. holder
must generally furnish to us or our paying agent a properly
    executed IRS
Form W-8ECI
(or applicable successor form).
A
non-U.S. holder
of shares of common stock who wishes to claim the benefit of an
    applicable treaty must furnish to us or our paying agent a valid
    IRS
Form W-8BEN
(or applicable successor form) certifying such holder's
    qualification for the reduced rate. If a
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non-U.S. holder
is eligible for a reduced rate of U.S. withholding tax
    pursuant to an income tax treaty, it may obtain a refund of any
    excess amounts withheld by filing an appropriate claim for
    refund with the Internal Revenue Service.
Non-U.S. holders
may recognize gain upon the sale, exchange, redemption or other
    taxable disposition of common stock. Such gain generally will
    not be subject to U.S. federal income tax unless:
    (i) that gain is effectively connected with the conduct of
    a trade or business in the United States (and, if required by an
    applicable income tax treaty, is attributable to a
    U.S. permanent establishment) by a
non-U.S. holder;
(ii) the
non-U.S. holder
is a non-resident alien individual who is present in the United
    States for 183 days or more in the taxable year of that
    disposition, and certain other conditions are met; or
    (iii) we are or have been a "U.S. real property
    holding corporation" for U.S. federal income tax
    purposes. We believe that we are not and do not anticipate
    becoming a "U.S. real property holding
    corporation" for U.S. federal income tax purposes.
If a
non-U.S. holder
is an individual described in clause (i) of the preceding
    paragraph, the
non-U.S. holder
will generally be subject to tax on the net gain at regular
    graduated U.S. federal income tax rates. If the
non-U.S. holder
is an individual described in clause (ii) of the preceding
    paragraph, the
non-U.S. holder
will generally be subject to a flat 30% tax on the gain, which
    may be offset by U.S. source capital losses even though the
non-U.S. holder
is not considered a resident of the United States. If a
non-U.S. holder
is a foreign corporation that falls under clause (i) of the
    preceding paragraph, it will be subject to tax on its net gain
    in the same manner as if it were a U.S. person as defined
    under the Tax Code and, in addition, the
non-U.S. holder
may be subject to the branch profits tax at a rate equal to 30%
    of its effectively connected earnings and profits or at such
    lower rate as may be specified by an applicable income tax
    treaty.
Information
    Reporting and Backup Withholding Tax
We report to our U.S. holders and the IRS the amount of
    dividends paid during each calendar year, and the amount of any
    tax withheld. All distributions to stockholders of common stock
    are subject to any applicable withholding. Under
    U.S. federal income tax law, interest, dividends, and other
    reportable payments may, under certain circumstances, be subject
    to "backup withholding" at the then applicable rate
    (currently 28%). Backup withholding generally applies to a
    U.S. holder if the holder (i) fails to furnish its
    social security number or other taxpayer identification number,
    or TIN, (ii) furnishes an incorrect TIN, (iii) fails
    to properly report interest or dividends, or (iv) under
    certain circumstances, fails to provide a certified statement,
    signed under penalty of perjury, that the TIN provided is its
    correct number and that it is a U.S. person that is not
    subject to backup withholding. Backup withholding is not an
    additional tax but merely an advance payment, which may be
    refunded to the extent it results in an overpayment of tax and
    the appropriate information is supplied to the IRS. Certain
    persons are exempt from backup withholding, including, in
    certain circumstances, corporations and financial institutions.
We also report to our
non-U.S.
holders and the IRS the amount of dividends paid during each
    calendar year, and the amount of any tax withheld. These
    information reporting requirements apply even if no withholding
    was required because the distributions were effectively
    connected with the
non-U.S.
holder's conduct of a United States trade or business, or
    withholding was reduced or eliminated by an applicable income
    tax treaty. This information also may be made available under a
    specific treaty or agreement with the tax authorities in the
    country in which the
non-U.S.
holder resides or is established. Backup withholding, however,
    generally will not apply to distributions to a
non-U.S.
holder of our common stock provided the
non-U.S.
holder furnishes to us or our paying agent the required
    certification as to its
non-U.S.
status, such as by providing a valid IRS Form
W-8BEN
or
    IRS
Form W-8ECI,
or certain other requirements are met. Notwithstanding the
    foregoing, backup withholding may apply if either we or our
    paying agent has actual knowledge, or reason to know, that the
    holder is a U.S. person that is not an exempt recipient.
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UNDERWRITING
Subject to the terms and conditions of the underwriting
    agreement, the underwriters named below, through their
    representative Deutsche Bank Securities Inc., have severally
    agreed to purchase from us the following respective numbers of
    shares of common stock at a public offering price less the
    underwriting discounts and commissions set forth on the cover
    page of this prospectus:
Number
Underwriters
of Shares
Deutsche Bank Securities Inc.
Piper Jaffray & Co.
Wedbush Securities Inc.
Merriman Curhan Ford & Co.
Total
The underwriting agreement provides that the obligations of the
    several underwriters to purchase the shares of common stock
    offered hereby are subject to certain conditions precedent and
    that the underwriters will purchase all of the shares of common
    stock offered by this prospectus, other than those covered by
    the over-allotment option described below, if any of these
    shares are purchased.
We have been advised by Deutsche Bank Securities Inc., as
    representative of the underwriters, that the underwriters
    propose to offer the shares of common stock to the public at the
    public offering price set forth on the cover of this prospectus
    and to dealers at a price that represents a concession not in
    excess of $      per share under the
    public offering price. The underwriters may allow, and these
    dealers may re-allow, a concession of not more than
    $      per share to other dealers.
    After the initial public offering, Deutsche Bank Securities
    Inc., as representative of the underwriters, may change the
    offering price and other selling terms.
We have granted to the underwriters an option, exercisable not
    later than 30 days after the date of this prospectus, to
    purchase up
    to          
    additional shares of common stock at the public offering price
    less the underwriting discounts and commissions set forth on the
    cover page of this prospectus. The underwriters may exercise
    this option only to cover over-allotments made in connection
    with the sale of the common stock offered by this prospectus. To
    the extent that the underwriters exercise this option, each of
    the underwriters will become obligated, subject to conditions,
    to purchase approximately the same percentage of these
    additional shares of common stock as the number of shares of
    common stock to be purchased by it in the above table bears to
    the total number of shares of common stock offered by this
    prospectus. We will be obligated, pursuant to the option, to
    sell these additional shares of common stock to the underwriters
    to the extent the option is exercised. If any additional shares
    of common stock are purchased, the underwriters will offer the
    additional shares on the same terms as those on which the shares
    are being offered.
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The underwriting discounts and commissions per share are equal
    to the public offering price per share of common stock less the
    amount paid by the underwriters to us per share of common stock.
    The underwriting discounts and commissions
    are     % of the initial public
    offering price. We have agreed to pay the underwriters the
    following discounts and commissions, assuming either no exercise
    or full exercise by the underwriters of the underwriters'
    over-allotment option:
Total Fees
Without Exercise of Over-
With Full Exercise of Over-
Fee per Share
Allotment Option
Allotment Option
Discounts and commissions paid by us
$
$
$
In addition, we estimate that our share of the total expenses of
    this offering, excluding underwriting discounts and commissions,
    will be approximately $     .
We have agreed to indemnify the underwriters against some
    specified types of liabilities, including liabilities under the
    Securities Act, and to contribute to payments the underwriters
    may be required to make in respect of any of these liabilities.
Each of our officers and directors, and greater than 2%
    stockholders, have agreed not to offer, sell, contract to sell
    or otherwise dispose of, or enter into any transaction that is
    designed to, or could be expected to, result in the disposition
    of any shares of our common stock or other securities
    convertible into or exchangeable or exercisable for shares of
    our common stock or derivatives of our common stock owned by
    these persons prior to this offering or common stock issuable
    upon exercise of options or warrants held by these persons for a
    period of 180 days after the effective date of the
    registration statement of which this prospectus is a part
    without the prior written consent of Deutsche Bank Securities
    Inc. This consent may be given at any time without public
    notice. Transfers can be made during the
lock-up
period in the case of (a) shares of common stock acquired
    in open market transactions after the completion of this
    offering, (b) gifts or for estate planning purposes and
    distributions to partners, members or stockholders of the
    transferor where the transferee signs a
lock-up
agreement, and (c) shares of common stock (i) as
    forfeitures of common stock to satisfy tax withholding
    obligations of the stockholder in connection with the vesting or
    exercise of equity awards by the stockholder pursuant to our
    2005 Equity Incentive Plan, or 2005 Equity Plan, and 2009 Stock
    Option and Incentive Plan, or 2009 Equity Plan, or pursuant to a
    net exercise or cashless exercise by the stockholder of
    outstanding equity awards pursuant to our 2005 Equity Plan and
    2009 Equity Plan, or (ii) pursuant to the conversion or
    sale of, or an offer to purchase, all or substantially all of
    our outstanding common stock, whether pursuant to a merger,
    tender offer or otherwise; provided that in the case of a
    transfer in clause (c)(i) above, no filing under
    Section 16(a) of the Exchange Act shall be required or
    shall be voluntarily made in connection with such transactions.
    We have entered into a similar agreement with Deutsche Bank
    Securities Inc., as representative of the underwriters, except
    that without such consent we may grant options and sell shares
    pursuant to our 2005 Equity Plan and 2009 Equity Plan. There are
    no agreements between Deutsche Bank Securities Inc. and any of
    our stockholders or affiliates releasing them from these
lock-up
agreements prior to the expiration of the
180-day
period.
Deutsche Bank Securities Inc. has advised us that the
    underwriters do not intend to confirm sales to any account over
    which they exercise discretionary authority.
In connection with the offering, the underwriters may purchase
    and sell shares of our common stock in the open market. These
    transactions may include short sales, purchases to cover
    positions created by short sales and stabilizing transactions.
Short sales involve the sale by the underwriters of a greater
    number of shares than they are required to purchase in the
    offering. Covered short sales are sales made in an amount not
    greater than the underwriters' option to purchase
    additional shares of common stock from us
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in the offering. The underwriters may close out any covered
    short position by either exercising their option to purchase
    additional shares or purchasing shares in the open market. In
    determining the source of shares to close out the covered short
    position, the underwriters will consider, among other things,
    the price of shares available for purchase in the open market as
    compared to the price at which they may purchase shares through
    the over-allotment option.
Naked short sales are any sales in excess of the over-allotment
    option. The underwriters must close out any naked short position
    by purchasing shares in the open market. A naked short position
    is more likely to be created if underwriters are concerned that
    there may be downward pressure on the price of the shares in the
    open market prior to the completion of the offering.
Stabilizing transactions consist of various bids for or
    purchases of our common stock made by the underwriters in the
    open market prior to the completion of the offering.
The underwriters may impose a penalty bid. This occurs when a
    particular underwriter repays to the other underwriters a
    portion of the underwriting discount received by it because
    Deutsche Bank Securities Inc., as representative of the
    underwriters, has repurchased shares sold by or for the account
    of that underwriter in stabilizing or short covering
    transactions.
Purchases to cover a short position and stabilizing transactions
    may have the effect of preventing or slowing a decline in the
    market price of our common stock. Additionally, these purchases,
    along with the imposition of the penalty bid, may stabilize,
    maintain or otherwise affect the market price of our common
    stock. As a result, the price of our common stock may be higher
    than the price that might otherwise exist in the open market.
    These transactions may be effected on The NASDAQ Global Market,
    in the
over-the-counter
market or otherwise.
A prospectus in electronic format is being made available on
    Internet web sites maintained by one or more of the lead
    underwriters of this offering and may be made available on web
    sites maintained by other underwriters. Other than the
    prospectus in electronic format, the information on any
    underwriter's web site and any information contained in any
    other web site maintained by an underwriter is not part of the
    prospectus or the registration statement of which the prospectus
    forms a part.
Pricing of this
    Offering
Prior to this offering, there has been no public market for our
    common stock. Consequently, the initial public offering price of
    our common stock will be determined by negotiation among us and
    Deutsche Bank Securities Inc., as representative of the
    underwriters. Among the primary factors that will be considered
    in determining the public offering price are:
•
prevailing market conditions;
•
our results of operations in recent periods;
•
the present stage of our development;
•
the market capitalizations and stages of development of other
    companies that we and Deutsche Bank Securities Inc., as
    representative of the underwriters, believe to be comparable to
    our business; and
•
estimates of our business potential.
European Economic
    Area
In relation to each member state of the European Economic Area
    which has implemented the Prospectus Directive (each, a Relevant
    Member State), with effect from and including the date on which
    the Prospectus Directive is implemented in that Relevant Member
    State (the Relevant Implementation Date) an offer of the shares
    to the public may not be made in that
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Relevant Member State prior to the publication of a prospectus
    in relation to the shares which has been approved by the
    competent authority in that Relevant Member State or, where
    appropriate, approved in another Relevant Member State and
    notified to the competent authority in that Relevant Member
    State, all in accordance with the Prospectus Directive, except
    that an offer to the public in that Relevant Member State of any
    shares may be made at any time under the following exemptions
    under the Prospectus Directive if they have been implemented in
    the Relevant Member State:
(a) to legal entities which are authorized or regulated to
    operate in the financial markets or, if not so authorized or
    regulated, whose corporate purpose is solely to invest in
    securities;
(b) to any legal entity which has two or more of
    (i) an average of at least 250 employees during the
    last financial year; (ii) a total balance sheet of more
    than €43,000,000 and (iii) an annual net turnover of
    more than €50,000,000, as shown in its last annual or
    consolidated accounts; or
(c) in any other circumstances falling within
    Article 3(2) of the Prospectus Directive;
provided that no such offer of shares shall result in a
    requirement for the publication by us or any underwriter of a
    prospectus pursuant to Article 3 of the Prospectus
    Directive.
For the purposes of this provision, the expression an
    "offer of shares to the public" in relation to any
    shares in any Relevant Member State means the communication in
    any form and by any means of sufficient information on the terms
    of the offer and the shares to be offered so as to enable an
    investor to decide to purchase or subscribe the shares, as the
    same may be varied in that Member State by any measure
    implementing the Prospectus Directive in that Member State and
    the expression Prospectus Directive means Directive 2003/71/EC
    and includes any relevant implementing measure in each Relevant
    Member State.
United
    Kingdom
Each underwriter has represented and agreed that (i) it has
    not offered or sold and, prior to the expiration of the period
    of six months from the closing date of this offering, will not
    offer or sell any shares of our common stock to persons in the
    United Kingdom except to persons whose ordinary activities
    involve them in acquiring, holding, managing or disposing of
    investments (as principal or agent) for the purposes of their
    businesses or otherwise in circumstances which have not resulted
    and will not result in an offer to the public in the
    United Kingdom within the meaning of the Public Offers of
    Securities Regulations 1995; (ii) it has complied with and
    will comply with all applicable provisions of the Financial
    Services Act 1986 with respect to anything done by it in
    relation to the shares of our common stock in, from or otherwise
    involving the United Kingdom; and (iii) it has only issued
    or passed on and will only issue or pass on in the United
    Kingdom, any document received by it in connection with the
    issue of the shares of our common stock to a person who is of a
    kind described in Article 11(3) of the Financial Services
    Act 1986 (Investment Advertisements) (Exemptions) Order 1996 or
    is a person to whom such document may otherwise lawfully be
    issued or passed on.
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LEGAL
    MATTERS
The validity of the shares of common stock offered by this
    prospectus will be passed upon for us by Goodwin Procter LLP,
    San Francisco, California. Certain legal matters relating
    to this offering will be passed upon for the underwriters by
    Latham & Watkins LLP, Menlo Park, California.
EXPERTS
The financial statements as of December 31, 2007 and 2008
    and for each of the three years in the period ended
    December 31, 2008 included in this prospectus have been
    audited by Deloitte & Touche LLP, an independent
    registered public accounting firm, as stated in their report
    appearing herein (which report expresses an unqualified opinion
    and includes an explanatory paragraph regarding our development
    stage status and our ability to continue as a going concern, and
    have been so included on reliance upon the report of such firm
    given upon their authority as experts in auditing and accounting.
WHERE YOU CAN
    FIND MORE INFORMATION
We have filed with the SEC a registration statement on
Form S-1
under the Securities Act, as amended, with respect to the shares
    of common stock we are offering by this prospectus. This
    prospectus does not contain all of the information included in
    the registration statement. For further information pertaining
    to us and our common stock, you should refer to the registration
    statement and the exhibits and schedules filed with the
    registration statement. Whenever we make reference in this
    prospectus to any of our contracts, agreements or other
    documents, the references are not necessarily complete, and you
    should refer to the exhibits attached to the registration
    statement for copies of the actual contract, agreement or other
    document.
Upon the closing of the offering, we will be subject to the
    informational requirements of the Securities Exchange Act and
    will file annual, quarterly and current reports, proxy
    statements and other information with the SEC. You can read our
    SEC filings, including the registration statement, over the
    Internet at the SEC's website at www.sec.gov. You may also
    read and copy any document we file with the SEC at its Public
    Reference Room at 100 F Street, N.E.,
    Washington, D.C., 20549.
You may also obtain copies of the documents at prescribed rates
    by writing to the Public Reference Room of the SEC at
    100 F Street, N.E., Washington, D.C., 20549.
    Please call the SEC at
1-800-SEC-0330
for further information on the operation of the public reference
    facility.
140
Anthera
    Pharmaceuticals, Inc.
(A Development Stage Company)
INDEX TO FINANCIAL STATEMENTS
CONTENTS
Report of Independent Registered Public
    Accounting Firm
F-2
Balance Sheets as of December 31, 2007 and
    2008 and June 30, 2009 (Unaudited) and June 30, 2009
    pro forma (Unaudited)
F-3
Statements of Operations for the years ended
    December 31, 2006, 2007 and 2008, the six months ended
    June 30, 2008 and 2009 (Unaudited) and for the period from
    September 9, 2004 (Date of Inception) to June 30, 2009
    (Unaudited)
F-4
Statements of Stockholders' Equity (Deficit)
    and Comprehensive Loss for the period from September 9,
    2004 (Date of Inception) to December 31, 2008 and
    January 1, 2009 to June 30, 2009 (Unaudited)
F-5
Statements of Cash Flows for the years ended
    December 31, 2006, 2007 and 2008, and the six months ended
    June 30, 2008 and 2009 (Unaudited) and the period from
    September 9, 2004 (Date of Inception) to June 30, 2009
    (Unaudited)
F-7
Notes to Financial Statements
F-8
F-1
Table of Contents
REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Anthera Pharmaceuticals, Inc.
Hayward, California
We have audited the accompanying balance sheets of Anthera
    Pharmaceuticals, Inc. (a development stage company)(the
    "Company") as of December 31, 2008 and 2007, and
    the related statements of operations, stockholders' equity
    (deficit) and comprehensive income (loss), and cash flows for
    each of the three years in the period ended December 31,
    2008. These financial statements are the responsibility of the
    Company's management. Our responsibility is to express an
    opinion on the financial statements based on our audits.
We conducted our audits in accordance with the standards of the
    Public Company Accounting Oversight Board (United States). Those
    standards require that we plan and perform the audit to obtain
    reasonable assurance about whether the financial statements are
    free of material misstatement. The Company was not required to
    have, nor were we engaged to perform, an audit of its internal
    control over financial reporting. Our audits included
    consideration of internal control over financial reporting as a
    basis for designing audit procedures that are appropriate in the
    circumstances, but not for the purpose of expressing an opinion
    on the effectiveness of the Company's internal control over
    financial reporting. Accordingly, we express no such opinion. An
    audit also includes examining, on a test basis, evidence
    supporting the amounts and disclosures in the financial
    statements, assessing the accounting principles used and
    significant estimates made by management, as well as evaluating
    the overall financial statement presentation. We believe that
    our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all
    material respects, the financial position of the Company as of
    December 31, 2008 and 2007, and the results of its
    operations and its cash flows for each of the three years in the
    period ended December 31, 2008, in conformity with
    accounting principles generally accepted in the
    United States of America.
The accompanying financial statements have been prepared
    assuming that the Company will continue as a going concern. The
    Company is a development stage enterprise engaged in developing
    therapeutics to treat diseases associated with inflammation. As
    discussed in Note 1 to the financial statements, the
    deficiency in working capital at December 31, 2008 and the
    Company's operating losses since inception raise
    substantial doubt about its ability to continue as a going
    concern. Management's plans concerning these matters are
    also described in Note 1 to the financial statements. The
    financial statements do not include any adjustments that might
    result from the outcome of these uncertainties.
/s/ Deloitte & Touche LLP
San Francisco, California
September 15, 2009
F-2
Table of Contents
Anthera
    Pharmaceuticals, Inc.
(A Development Stage Company)
BALANCE SHEETS
June 30, 2009
December 31,
December 31,
June 30,
Pro Forma
2007
2008
2009
(Note 2)
(unaudited)
(unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$
152,744
$
7,895,113
$
1,290,730
Short-term investments
5,825,000
—
—
Restricted cash
70,000
40,000
40,000
Prepaid expenses and other current assets
102,445
63,468
32,855
Total current assets
6,150,189
7,998,581
1,363,585
Property and equipment—net
43,024
27,779
18,234
Other assets
—
7,794
7,794
TOTAL
$
6,193,213
$
8,034,154
$
1,389,613
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable
$
3,774,281
$
1,597,300
$
3,085,066
Accrued clinical study
1,396,166
1,461,179
801,588
Accrued liabilities
192,782
319,893
284,786
Accrued payroll and related costs
694,955
116,045
145,701
License fee payable
3,000,000
5,000,000
4,500,000
Total current liabilities
9,058,184
8,494,417
8,817,141
License fee payable—noncurrent
3,000,000
—
—
Total liabilities
$
12,058,184
$
8,494,417
$
8,817,141
Commitments and Contingencies (Note 5)
Stockholders' equity (deficit)
Series A-1
convertible preferred stock, $0.001 par value,
    945,939 shares authorized, issued and outstanding at
    December 31, 2007 and 2008 and June 30, 2009;
    (aggregate liquidation value of $813,508 as of December 31,
    2007, 2008 and June 30, 2009); 0 shares outstanding
    pro forma at June 30, 2009 (unaudited)
946
946
946
$
—
Series A-2
convertible preferred stock, $0.001 par value,
    2,800,000 shares authorized; 2,774,594, shares issued and
    outstanding at December 31, 2007 and 2008 and June 30,
    2009; (aggregate liquidation value of $8,323,782 as of
    December 31, 2007, 2008 and June 30, 2009);
    0 shares outstanding pro forma at June 30, 2009
    (unaudited)
2,774
2,774
2,774
—
Series B-1
convertible preferred stock, $0.001 par value,
    4,710,000 shares authorized; 4,702,640 shares issued
    and outstanding at December 31, 2007 and 2008 and
    June 30, 2009; (aggregate liquidation value of $19,986,220
    as of December 31, 2007, 2008 and June 30, 2009);
    0 shares outstanding pro forma at June 30, 2009
    (unaudited)
4,703
4,703
4,703
—
Series B-2
convertible preferred stock, $0.001 par value,
    6,175,000 shares authorized; 5,523,337 shares issued
    and outstanding at December 31, 2008 and June 30,
    2009; (aggregate liquidation value of $23,474,182 as of
    December 31, 2008 and June 30, 2009); 0 shares
    outstanding pro forma at June 30, 2009 (unaudited)
—
5,523
5,523
—
Preferred stock, $0.001 par value
—
—
—
—
Common stock, $0.001 par value, 30,000,000 shares
    authorized; 1,995,877, 2,490,790, 2,578,133 shares issued
    and outstanding at December 31, 2007, 2008 and
    June 30, 2009, respectively; 16,524,643 shares
    outstanding pro forma at June 30, 2009 (unaudited)
1,996
2,491
2,578
16,524
Additional paid-in capital
29,053,672
52,550,920
52,703,824
52,703,824
Accumulated other comprehensive loss
(1,812
)
(1,160
)
Deficit accumulated the during the development stage
(34,927,250
)
(53,026,460
)
(60,147,876
)
(60,147,876
)
Total stockholders' deficit
(5,864,971
)
(460,263
)
(7,427,528
)
$
(7,427,528
)
TOTAL
$
6,193,213
$
8,034,154
$
1,389,613
See accompanying notes to financial statements
F-3
Table of Contents
Anthera
    Pharmaceuticals, Inc.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
Cumulative
Period
from
September 9,
2004
(Date of
Inception)
to
Years Ended December 31,
Six Months Ended June 30,
June 30,
2006
2007
2008
2008
2009
2009
(unaudited)
(unaudited)
OPERATING EXPENSES:
Research and development
$
7,759,106
$
23,921,932
$
10,882,322
$
5,363,436
$
5,201,181
$
48,109,749
General and administrative
822,732
2,468,607
2,980,170
1,592,243
1,845,574
8,337,450
Total operating expenses
8,581,838
26,390,539
13,862,492
6,955,679
7,046,755
56,447,199
LOSS FROM OPERATIONS
(8,581,838
)
(26,390,539
)
(13,862,492
)
(6,955,679
)
(7,046,755
)
(56,447,199
)
OTHER INCOME (EXPENSE):
Interest and other income
$
109,987
$
696,962
$
178,129
$
85,330
$
21,637
$
1,017,863
Interest expense
(17,395
)
—
(296,303
)
(96,704
)
(96,298
)
(409,996
)
Beneficial conversion features
(190,000
)
—
(4,118,544
)
(1,392,601
)
—
(4,308,544
)
Total other income (expense)
(97,408
)
696,962
(4,236,718
)
(1,403,975
)
(74,661
)
(3,700,677
)
NET LOSS
$
(8,679,246
)
$
(25,693,577
)
$
(18,099,210
)
$
(8,359,654
)
$
(7,121,416
)
$
(60,147,876
)
Net loss per share—basic and diluted
$
(7.71
)
$
(16.44
)
$
(7.87
)
$
(3.86
)
$
(2.80
)
Weighted-average number of shares used in per share
    calculation—basic and diluted
1,125,065
1,562,670
2,300,090
2,164,630
2,540,033
Pro forma net loss per share—basic and diluted (unaudited)
$
(1.39
)
$
(0.42
)
Pro forma weighted-average number of shares used in per share
    calculation—basic and diluted (unaudited)
13,048,521
16,898,307
See accompanying notes to financial statements.
F-4
Table of Contents
Anthera
    Pharmaceuticals, Inc.
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) AND
    COMPREHENSIVE LOSS
Deficit
Accumulated
Accumulated
Total
Convertible
Additional
Other
During
Stockholders'
Preferred Stock
Common Stock
Paid-In
Comprehensive
Development
Equity
Shares
Amount
Shares
Amount
Capital
Loss
Stage
(Deficit)
DATE OF INCEPTION—September 9, 2004
Issuance of common stock to founders for cash
—
$
—
240,000
$
240
$
—
$
—
$
—
$
240
Issuance of common stock to founders for service
—
—
1,260,000
1,260
—
—
—
1,260
Repurchase of common stock from founder
—
—
(125,000
)
(125
)
—
—
—
(125
)
Issuance of Series A convertible preferred stock for cash
    at $0.86 per share, net of issuance cost of $8,555
902,153
902
—
—
766,393
—
—
767,295
Issuance of Series A convertible preferred stock in
    exchange for service at $0.86 per share
43,786
44
—
—
37,612
—
—
37,656
Issuance of common stock upon exercise of stock options
—
—
57,000
57
4,503
—
—
4,560
Reclass of early exercise of stock options to liability
—
—
(50,000
)
(50
)
(3,950
)
—
—
(4,000
)
Stock-based compensation expense related to consultant options
—
—
—
—
842
—
—
842
Net loss
—
—
—
—
—
—
(554,427
)
(554,427
)
BALANCE—December 31, 2005
945,939
946
1,382,000
1,382
805,400
—
(554,427
)
253,301
Conversion of Series A convertible preferred stock to
Series A-1
convertible preferred stock at a ratio of 1:1
—
—
—
—
—
—
—
—
Issuance of
Series A-2
convertible preferred stock for cash at $3.00 per share—net
    of issuance cost of $202,019
1,949,416
1,949
—
—
5,644,283
—
—
5,646,232
Issuance of
Series A-2
convertible preferred stock upon conversion of convertible
    promissory notes at $2.25 and $3.00 per share
383,918
384
—
—
961,367
—
—
961,751
Issuance of
Series A-2
convertible preferred stock in exchange for licensed technology
    at $3.00 per share
441,260
441
—
—
1,323,341
—
—
1,323,782
Beneficial conversion feature related to conversion of
    convertible promissory notes into
Series A-1
convertible preferred stock
—
—
—
—
190,000
—
—
190,000
Issuance of Series B convertible preferred stock for cash
    at $4.25 per share—net of issuance cost of $20,930
4,484,706
4,485
—
—
19,034,585
—
—
19,039,070
Issuance of Series B convertible preferred stock in
    exchange for licensed technology at $4.25 per share
217,934
218
—
—
926,000
—
—
926,218
Issuance of common stock upon exercise of stock options
—
—
215,000
215
16,985
—
—
17,200
Reclass of early exercise of stock options to liability
—
—
(63,024
)
(63
)
(4,980
)
—
—
(5,043
)
Stock-based compensation expense related to consultant options
—
—
—
—
4,358
—
—
4,358
Stock-based compensation expense related to employee options
—
—
—
—
4,648
—
—
4,648
Net loss
—
—
—
—
—
—
(8,679,246
)
(8,679,246
)
BALANCE—December 31, 2006
8,423,173
$
8,423
1,533,976
$
1,534
$
28,905,987
$
—
$
(9,233,673
)
$
19,682,271
See accompanying notes to financial statements.
F-5
Table of Contents
Anthera
    Pharmaceuticals, Inc.
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) AND
    COMPREHENSIVE LOSS—(Continued)
Deficit
Accumulated
Accumulated
Total
Convertible
Additional
Other
During
Stockholders'
Preferred Stock
Common Stock
Paid-In
Comprehensive
Development
Equity
Shares
Amount
Shares
Amount
Capital
Loss
Stage
(Deficit)
BALANCE—December 31, 2006
8,423,173
$
8,423
1,533,976
$
1,534
$
28,905,987
$
—
$
(9,233,673
)
$
19,682,271
Issuance of common stock upon exercise of stock options
—
—
817,065
817
118,103
—
—
118,920
Reclass of early exercise of stock options liability
—
—
(383,164
)
(383
)
(60,190
)
—
—
(60,573
)
Issuance of common stock for service
—
—
28,000
28
2,422
—
—
2,450
Stock-based compensation expense related to consultant options
—
—
—
—
12,489
—
—
12,489
Stock-based compensation expense related to employee options
—
—
—
—
74,861
—
—
74,861
Change in other comprehensive loss—unrealized (loss) gain
    on investments
—
—
—
—
—
(1,812
)
—
(1,812
)
Net loss
—
—
—
—
—
—
(25,693,577
)
(25,693,577
)
Comprehensive loss
—
—
—
—
—
—
—
(25,695,389
)
BALANCE—December 31, 2007
8,423,173
8,423
1,995,877
1,996
29,053,672
(1,812
)
(34,927,250
)
(5,864,971
)
Conversion of Series B convertible preferred stock to
Series B-1
convertible preferred stock at a ratio of 1:1
—
—
—
—
—
—
—
—
Issuance of
Series B-2
convertible preferred stock for cash at $4.25 per share—net
    of issuance cost of $242,327 and warrants issuance (below)
1,647,060
1,647
—
—
6,511,556
—
—
6,513,203
Issuance of
Series B-2
convertible preferred stock upon conversion of convertible
    promissory notes at $3.19 per share
3,827,452
3,827
—
—
12,196,173
—
—
12,200,000
Issuance of
Series B-2
convertible preferred stock in lieu of interest payment at $3.19
    per share
48,825
49
—
—
155,581
—
—
155,630
Issuance of warrants in connection with issuance of
Series B-2
convertible preferred stock
—
—
—
—
244,478
—
—
244,478
Beneficial conversion feature related to conversion of
    convertible promissory notes into
Series B-2
convertible preferred stock
—
—
—
—
4,118,544
—
—
4,118,544
Issuance of common stock upon exercise of stock options
—
—
307,970
308
67,797
—
—
68,105
Release of early exercise of stock options liability
—
—
219,443
219
12,682
—
—
12,901
Repurchase of common stock upon employee termination
—
—
(32,500
)
(32
)
(4,843
)
—
—
(4,875
)
Stock-based compensation expense related to consultant options
—
—
—
—
51,874
—
—
51,874
Stock-based compensation expense related to employee options
—
—
—
—
143,406
—
—
143,406
Change in other comprehensive loss—unrealized (loss) gain
    on investments
—
—
—
—
—
652
—
652
Net loss
—
—
—
—
—
—
(18,099,210
)
(18,099,210
)
Comprehensive loss
—
—
—
—
—
—
—
(18,098,558
)
—
BALANCE—December 31, 2008
13,946,510
13,946
2,490,790
2,491
52,550,920
(1,160
)
(53,026,460
)
(460,263
)
Release of early exercise of stock options liability*
—
—
87,343
87
18,227
—
—
18,314
Stock-based compensation expense related to consultant options*
—
—
—
—
1,153
—
—
1,153
Stock-based compensation expense related to employee options*
—
—
—
—
133,524
—
—
133,524
Change in other comprehensive loss—unrealized (loss) gain
    on investments*
—
—
—
—
—
1,160
—
1,160
Net loss*
—
—
—
—
—
—
(7,121,416
)
(7,121,416
)
Comprehensive loss*
—
—
—
—
—
—
—
(7,120,256
)
Balance June 30, 2009 (unaudited)
13,946,510
$
13,946
2,578,133
$
2,578
$
52,703,824
$
—
$
(60,147,876
)
$
(7,427,528
)
*
unaudited
See accompanying notes to financial statements
F-6
Table of Contents
Anthera
    Pharmaceuticals, Inc.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
September 9,
2004
(Date of
Six Months
Inception) to
Years Ended December 31,
Ended June 30,
June 30,
2006
2007
2008
2008
2009
2009
(unaudited)
(unaudited)
CASH FLOW FROM OPERATING ACTIVITIES:
Net loss
$
(8,679,246
)
$
(25,693,577
)
$
(18,099,210
)
$
(8,359,654
)
$
(7,121,416
)
$
(60,147,876
)
Adjustments to reconcile net loss to net cash used in operating
    activities:
Depreciation
8,742
18,922
21,997
11,669
9,545
63,421
Amortization of discount on short-term investments
—
(130,248
)
—
—
—
(130,248
)
Realized loss on short-term investments
—
—
7,522
—
1,160
8,682
Stock-based compensation expense—employees
4,648
74,861
143,406
66,931
133,524
356,439
Stock-based compensation expense—consultants
4,358
12,489
51,874
51,874
1,153
70,716
Issuance of common stock for consulting service
—
2,450
—
—
—
41,366
Issuance of preferred stock for service and license fee
2,250,000
—
—
—
—
2,250,000
Issuance of preferred stock in lieu of interest payment
1,751
—
155,630
—
—
157,381
Beneficial conversion feature
190,000
—
4,118,544
1,392,601
—
4,308,544
Changes in assets and liabilities:
Prepaid expenses and other assets
(39,214
)
(62,269
)
31,182
7,207
30,614
(40,649
)
Accounts payable
686,168
3,002,254
(2,176,982
)
(2,156,338
)
1,487,765
3,085,066
Accrued clinical study
235,449
1,160,717
65,013
(679,942
)
(659,591
)
801,588
Accrued liabilities
53,746
8,489
135,137
261,015
(16,792
)
241,508
Accrued payroll and related costs
43,426
651,529
(578,910
)
(579,956
)
29,655
145,701
License fee payable
—
6,000,000
(1,000,000
)
—
(500,000
)
4,500,000
Net cash used in operating activities
(5,240,172
)
(14,954,383
)
(17,124,797
)
(9,984,593
)
(6,604,383
)
(44,288,361
)
INVESTING ACTIVITIES:
Property and equipment purchases
(22,378
)
(27,145
)
(6,752
)
(4,447
)
—
(81,655
)
Purchase of short-term investments
—
(14,800,564
)
—
—
—
(14,800,564
)
Proceeds from sale of short-term investments
—
9,104,000
5,818,132
4,325,636
—
14,922,132
Restricted cash
—
(70,000
)
30,000
—
—
(40,000
)
Net cash provided by (used in) investing activities
(22,378
)
(5,793,709
)
5,841,380
4,321,189
—
(87
)
FINANCING ACTIVITIES:
Net proceeds from issuance of convertible notes
960,000
—
12,200,000
12,200,000
—
13,160,000
Net proceeds from issuance of preferred stock
24,685,302
—
6,757,681
—
—
32,210,278
Proceeds from issuance of common stock—net of repurchase
—
—
—
—
—
115
Proceeds from exercise of stock options
17,200
118,920
68,105
53,145
—
208,785
Net cash provided by financing activities
25,662,502
118,920
19,025,786
12,253,145
—
45,579,178
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
20,399,952
(20,629,172
)
7,742,369
6,589,741
(6,604,383
)
1,290,730
CASH AND CASH EQUIVALENTS—Beginning of period
381,964
20,781,916
152,744
152,744
7,895,113
—
CASH AND CASH EQUIVALENTS—End of period
$
20,781,916
$
152,744
$
7,895,113
$
6,742,485
$
1,290,730
$
1,290,730
SUPPLEMENTAL CASH DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid
$
13,816
$
—
$
1,413
$
—
$
—
$
15,229
Taxes paid
$
11,098
$
8,235
$
4,379
$
1,681
$
—
$
24,687
NONCASH INVESTMENT AND FINANCING ACTIVITIES:
Conversion of convertible promissory notes and accrued interest
    into
Series A-2
convertible preferred stock and
Series B-2
convertible preferred stock
$
961,751
$
—
$
12,355,630
$
—
$
—
$
13,317,381
Beneficial conversion feature
$
190,000
$
—
$
4,118,544
$
1,392,601
$
—
$
4,308,544
See accompanying notes to financial statements.
F-7
Table of Contents
Anthera
    Pharmaceuticals, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008, AND
    FOR THE PERIOD FROM SEPTEMBER 9, 2004 (DATE OF INCEPTION) TO
    JUNE 30, 2009 (UNAUDITED)
1.
ORGANIZATION AND
    DESCRIPTION OF BUSINESS
Anthera Pharmaceuticals, Inc., the Company or Anthera, was
    incorporated on September 9, 2004 in the state of Delaware.
    During 2006, the Company opened its headquarters in
    San Mateo, California, and subsequently moved to Hayward,
    California. Anthera is a biopharmaceutical company focused on
    developing and commercializing therapeutics to treat serious
    diseases associated with inflammation, including cardiovascular
    and autoimmune diseases. Two of the Company's primary
    product candidates,
A-002
and
A-001,
are
    inhibitors of the family of human enzymes known as secretory
    phospholipase
    A
2
,
    or
    sPLA
2
.
    The Company's other primary product candidate,
A-623,
targets elevated levels of
B-lymphocyte
stimulator. The Company's activities since inception have
    consisted principally of acquiring product and technology
    rights, raising capital, and performing research and
    development. Accordingly, the Company is considered to be in the
    development stage as of June 30, 2009, as defined by FASB
    Statement No. 7,
Accounting and Reporting by Development
    Stage Enterprises
. Successful completion of the
    Company's development programs and, ultimately, the
    attainment of profitable operations are dependent on future
    events, including, among other things, its ability to access
    potential markets; secure financing, develop a customer base;
    attract, retain and motivate qualified personnel; and develop
    strategic alliances. To date, the Company has been funded by
    private equity and debt financings. Although management believes
    that the Company will be able to successfully fund its
    operations, there can be no assurance that the Company will be
    able to do so or that the Company will ever operate profitably.
    The Company has evaluated subsequent events through September
    15, 2008.
The Company expects to continue to incur substantial losses over
    the next several years during its development phase. To fully
    execute its business plan, the Company will need to complete
    certain research and development activities and clinical
    studies. Further, the Company's product candidates will
    require regulatory approval prior to commercialization. These
    activities may span many years and require substantial
    expenditures to complete and may ultimately be unsuccessful. Any
    delays in completing these activities could adversely impact the
    Company. The Company plans to meet its capital requirements
    primarily through issuances of equity securities and, in the
    longer term, revenue from product sales.
The accompanying financial statements have been prepared in
    conformity with accounting principles generally accepted in the
    United States, or GAAP, which contemplate continuation of the
    Company as a going concern. During the year ended
    December 31, 2008, the Company incurred a net loss of
    $18,099,210 and had negative cash flows from operations of
    $17,124,797. In addition, the Company had an accumulated deficit
    of $53,026,460 at December 31, 2008. The Company expects to
    incur additional operating losses and negative cash flows for
    the foreseeable future. Failure to generate revenue or raise
    additional capital would adversely affect the Company's
    ability to achieve its intended business objectives.
Going
    Concern
The Company has historically incurred losses, and through
    June 30, 2009 has incurred losses of $60,147,876
    (unaudited) since inception. Because of these historical losses,
    the Company will require additional working capital to develop
    business operations. The Company
F-8
Table of Contents
Anthera
    Pharmaceuticals, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS—(Continued)
intends to raise additional working capital through private
    placements, public offerings, bank financing or advances from
    related parties or shareholder loans.
The continuation of the Company's business is dependent
    upon obtaining further financing and ultimately achieving a
    profitable level of operations. The issuance of additional
    equity securities by the Company could result in a significant
    dilution in the equity interests of the Company's current
    or future stockholders. Obtaining commercial loans, assuming
    those loans would be available, will increase liabilities and
    future cash commitments.
There are no assurances that the Company will be able to either
    (i) achieve a level of revenues adequate to generate
    sufficient cash flow from operations; or (ii) obtain
    additional financing through either private placements, public
    offerings or bank financing necessary to support the
    Company's working capital requirements. To the extent that
    funds generated from operations and any private placements,
    public offerings or bank financing are insufficient, the Company
    will have to raise additional working capital. No assurance can
    be given that additional financing will be available, or if
    available, will be on terms acceptable to the Company. If
    adequate working capital is not available, the Company may cease
    operations.
These conditions raise substantial doubt about the
    Company's ability to continue as a going concern. The
    financial statements do not include any adjustments relating to
    the recoverability and classification of asset carrying amounts
    or the amount and classification of liabilities that might be
    necessary should the Company be unable to continue as a going
    concern.
2.
SUMMARY OF
    SIGNIFICANT ACCOUNTING POLICIES
Unaudited Interim
    Financial Information
The accompanying interim balance sheet as of June 30, 2009,
    the statements of operations and cash flows for the six months
    ended June 30, 2008 and 2009, and for the cumulative period
    from September 9, 2004 (date of inception) to June 30,
    2009 and the statements of stockholders' equity (deficit)
    and comprehensive loss for the six months ended June 30,
    2009, are unaudited. The unaudited interim financial statements
    have been prepared in accordance with GAAP. The unaudited
    interim financial statements have been prepared on the same
    basis as the audited financial statements. In the opinion of
    management, the unaudited interim financial statements include
    all adjustments, consisting of normal recurring adjustments,
    necessary for the fair presentation of the Company's
    financial position at June 30, 2006 and the Company's
    results of operations, cash flows and stockholders' equity
    (deficit) for the six months ended June 30, 2008 and 2009
    and for the cumulative period from September 9, 2004 (date
    of inception) to June 30, 2009. The results for the six
    months ended June 30, 2009 are not necessarily indicative
    of the results to be expected for the year ending
    December 31, 2009 or for any future period. The Company has
    evaluated subsequent events through September 15, 2009.
Unaudited Pro
    Forma Balance Sheet and Net Loss Per Share
The unaudited pro forma balance sheet data presented as of
    June 30, 2009, reflects the conversion of all outstanding
    shares of convertible stock as of that date into
    13,946 shares of common stock, which will occur immediately
    prior to closing of the proposed initial public offering, as if
    the conversion had occurred on June 30, 2009. The unaudited
    pro forma basic and diluted net loss per common share and the
    pro forma weighted-average number of shares
F-9
Table of Contents
Anthera
    Pharmaceuticals, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS—(Continued)
for the year ended December 31, 2008 and six months ended
    June 30, 2009, have been computed to give effect to the
    conversion of the Company's convertible preferred stock
    (using the as-if-converted method) into common stock as though
    the conversion had occurred on the original dates of issuance.
    The June 30, 2009 balance sheet data also reflects the
    Company's authorization
    of      million preferred shares
    upon completion of the initial public offering.
Use of
    Estimates
The preparation of financial statements in conformity with
    accounting principles generally accepted in the United States of
    America requires management to make estimates and assumptions
    that affect the reported amounts of assets and liabilities and
    disclosure of contingent assets and liabilities at the date of
    the financial statements and the reported amounts of expenses
    during the reporting period. Significant estimates include
    assumptions made in the accrual of clinical costs and
    stock-based compensation. Actual results could differ from those
    estimates.
Cash and Cash
    Equivalents
The Company considers all highly liquid instruments purchased
    with an original maturity or remaining maturities of three
    months or less at the date of purchase to be cash equivalents.
Short-Term
    Investments
The Company has designated its investments as available for sale
    and the investments are carried at fair value. The Company
    determines the appropriate classification of securities at the
    time of purchase and reevaluates such classification as of each
    balance sheet date. Realized gains and losses and declines in
    value judged to be other than temporary are determined based on
    the specific identification method and are reported in the
    statements of operations.
Restricted
    Cash
At December 31, 2008, and June 30, 2009, the Company
    had restricted cash of $40,000 to collateralize the
    Company's corporate credit card.
Concentration of
    Credit Risk
Financial instruments that potentially subject the Company to
    concentrations of credit risk consist primarily of cash and cash
    equivalents. The Company's cash equivalents consist of
    cash, certificates of deposits, and treasury money market funds.
    The Company has not experienced any losses in such accounts. The
    Company believes it is not exposed to significant credit risk
    related to cash and cash equivalents.
Property and
    Equipment—Net
Property and equipment are stated at cost, less accumulated
    depreciation. Depreciation is computed over the estimated useful
    lives of the respective assets, which range from three to five
    years, using the straight-line method. Repairs and maintenance
    costs are expensed as incurred.
F-10
Table of Contents
Anthera
    Pharmaceuticals, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS—(Continued)
Long-Lived
    Assets
The Company's long-lived assets and other assets are
    reviewed for impairment in accordance with FASB Statement
    No. 144,
Accounting for the Impairment or Disposal of
    Long-Lived Assets
, whenever events or changes in
    circumstances indicate that the carrying amount of the asset may
    not be recoverable. Recoverability of an asset to be held and
    used is measured by a comparison of the carrying amount of an
    asset to the future undiscounted cash flows expected to be
    generated by the asset. If such asset is considered to be
    impaired, the impairment to be recognized is measured by the
    amount by which the carrying amount of the asset exceeds its
    fair value. Through June 30, 2009, the Company had not
    experienced impairment losses on its long-lived assets.
Fair Value of
    Financial Instruments
The Company adopted the provisions of the FASB Statement
    No. 157,
Fair Value Measurements
, or SFAS 157,
    effective January 1, 2008. SFAS 157 defines fair
    value, establishes a framework for measuring fair value under
    generally accepted accounting principles and enhances
    disclosures about fair value measurements.
Fair value is defined under SFAS 157 as the exchange price
    that would be received for an asset or paid to transfer a
    liability (an exit price) in the principal or most advantageous
    market for the asset or liability in an orderly transaction
    between market participants on the measurement date. Valuation
    techniques used to measure fair value under SFAS 157 must
    maximize the use of observable inputs and minimize the use of
    unobservable inputs.
The standard describes a fair value hierarchy based on three
    levels of inputs, of which the first two are considered
    observable and the last unobservable, that may be used to
    measure fair value. The Company's assessment of the
    significance of a particular input to the fair value
    measurements requires judgment, and may affect the valuation of
    the assets and liabilities being measured and their placement
    within the fair value hierarchy. The three levels of input are:
Level 1
—Quoted prices in active markets for
    identical assets or liabilities.
Level 2
—Inputs other than Level 1 that are
    observable, either directly or indirectly, such as quoted prices
    for similar assets or liabilities; quoted prices in markets that
    are not active; or other inputs that are observable or can be
    corroborated by observable market data for substantially the
    full term of the assets or liabilities.
Level 3
—Unobservable inputs that are supported
    by little or no market activity and that are significant to the
    fair value of the assets or liabilities.
The adoption of this statement did not have a material impact on
    the Company's results of operations and financial condition.
Following is a description of the Company's valuation
    methodologies for assets and liabilities measured at fair value.
Where quoted prices are available in an active market, fair
    value is based upon quoted market prices, and are classified in
    level 1 of the valuation hierarchy. If quoted market prices
    are not available, fair value is based upon observable inputs
    such as quoted prices for similar assets or liabilities, quoted
    prices in markets that are not active, or other inputs that are
    observable or can be corroborated by observable market data, the
    assets or liabilities are
F-11
Table of Contents
Anthera
    Pharmaceuticals, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS—(Continued)
classified in level 2 of the valuation hierarchy. When
    quoted prices and observable inputs are unavailable, fair values
    are based on internally developed cash flow models and are
    classified in level 3 of the valuation hierarchy. The
    internally developed cash flow models primarily use, as inputs,
    estimates for interest rates and discount rates including yields
    of comparable traded instruments adjusted for illiquidity and
    other risk factors, amount of cash flows and expected holding
    periods of the assets. These inputs reflect the Company's
    own assumptions about the assumptions market participants would
    use in pricing the assets including assumptions about risk
    developed based on the best information available in the
    circumstances.
Other financial instruments, including accounts payable and
    accrued liabilities, are carried at cost, which the Company
    believes approximates fair value because of the short-term
    maturity of these instruments.
Research and
    Development Costs
Research and development expenses consist of personnel costs,
    including salaries, benefits and stock-based compensation,
    clinical studies performed by contract research organizations,
    or CROs, materials and supplies, licenses and fees, and overhead
    allocations consisting of various administrative and facilities
    related costs. Research and development activities are also
    separated into three main categories: research, clinical
    development, and pharmaceutical development. Research costs
    typically consist of preclinical and toxicology costs. Clinical
    development costs include costs for Phase 1 and 2 clinical
    studies. Pharmaceutical development costs consist of expenses
    incurred in connection with product formulation and chemical
    analysis.
The Company charges research and development costs, including
    clinical study costs, to expense when incurred, consistent with
    FASB Statement No. 2,
Accounting for Research and
    Development Costs
. Clinical study costs are a significant
    component of research and development expenses. All of the
    Company's clinical studies are performed by third-party
    CROs. The Company accrues costs for clinical studies performed
    by CROs on a straight-line basis over the service periods
    specified in the contracts and adjusts the estimates, if
    required, based upon the Company's ongoing review of the
    level of effort and costs actually incurred by the CROs. The
    Company monitors levels of performance under each significant
    contract, including the extent of patient enrollment and other
    activities through communications with the CROs, and adjusts the
    estimates, if required, on a quarterly basis so that clinical
    expenses reflect the actual effort expended by each CRO.
All material CRO contracts are terminable by the Company upon
    written notice and the Company is generally only liable for
    actual effort expended by the CROs and certain noncancelable
    expenses incurred at any point of termination.
Amounts paid in advance related to incomplete services will be
    refunded if a contract is terminated. Some contracts include
    additional termination payments that become due and payable if
    the Company terminates the contract. Such additional termination
    payments are only recorded if a contract is terminated.
Comprehensive
    Income (Loss)
Comprehensive income (loss) consists of other comprehensive
    income and net loss. Other comprehensive income includes certain
    changes in equity that are excluded from net income (loss).
    Specifically, the Company includes unrealized gains (losses) on
    available for sale
F-12
Table of Contents
Anthera
    Pharmaceuticals, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS—(Continued)
securities in other comprehensive income (loss). Comprehensive
    income (loss) for each period presented is set forth in the
    Statement of Stockholders' Equity (Deficit) and
    Comprehensive Loss.
Income
    Taxes
The Company accounts for income taxes in accordance with FASB
    Statement No. 109,
Accounting for Income Taxes
. FASB
    Statement No. 109 prescribes the use of the liability
    method whereby deferred tax asset and liability account balances
    are determined based on differences between the financial
    reporting and tax bases of assets and liabilities and are
    measured using the enacted tax rates and laws that will be in
    effect when the differences are expected to reverse. The Company
    provides a valuation allowance, if necessary, to reduce deferred
    tax assets to their estimated realizable value.
In June 2006, the FASB issued Interpretation No. 48,
Accounting for Uncertainty in Income Taxes—an
    Interpretation of FASB Statement No. 109
, or
    FIN 48, to create a single model to address accounting for
    uncertainty in tax positions. FIN 48 clarifies the
    accounting for income taxes, by prescribing a minimum
    recognition threshold a tax position is required to meet before
    being recognized in the financial statements. FIN 48 also
    provides guidance on derecognition, measurement and
    classification of amounts relating to uncertain tax positions,
    accounting for and disclosure of interest and penalties,
    accounting in interim periods, disclosures and transition
    relating to the adoption of the new accounting standard.
    FIN 48 is effective for fiscal years beginning after
    December 15, 2006. The Company adopted FIN 48 as of
    January 1, 2007, as required, and determined that the
    adoption of FIN 48 did not have a material impact on the
    Company's financial position and results of operations.
Net Loss Per
    Common Share
The Company computes net loss per share in accordance with
    Statement of Financial Accounting Standards No. 128,
Earnings per Share
, or SFAS 128. Under the
    provisions of SFAS 128, basic net loss attributable to
    common stockholders per share, or Basic EPS, is computed by
    dividing net loss by the weighted-average number of common
    shares outstanding (excluding unvested shares subject to
    repurchase). Diluted net loss attributable to common
    stockholders, or diluted EPS, is computed by dividing net loss
    by the weighted-average number of common shares and dilutive
    common shares equivalents then outstanding. Common equivalent
    shares consist of the incremental common shares issuable upon
    the conversion of preferred stock, shares issuable upon the
    exercise of stock options, and unvested shares subject to
    repurchase. Diluted EPS is identical to Basic EPS since common
    equivalent shares are excluded from the calculation, as their
    effect is anti-dilutive.
F-13
Table of Contents
Anthera
    Pharmaceuticals, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS—(Continued)
The following table summarizes the Company's calculation of
    net loss per common share:
Years Ended December 31,
Six Months Ended June 30,
2006
2007
2008
2008
2009
(unaudited)
Historical net loss per share
Numerator
Net loss
$
(8,679,246
)
$
(25,693,577
)
$
(18,099,210
)
$
(8,359,654
)
$
(7,121,416
)
Denominator
Weighted-average common shares outstanding
1,584,464
2,010,450
2,693,773
2,632,149
2,767,535
Less: Weighted-average shares subject to repurchase
(459,399
)
(447,780
)
(393,683
)
(467,519
)
(227,502
)
Denominator for basic and diluted net loss per share
1,125,065
1,562,670
2,300,090
2,164,630
2,540,033
Basic and diluted net loss per share
$
(7.71
)
$
(16.44
)
$
(7.87
)
$
(3.86
)
$
(2.80
)
Pro forma net loss per share (unaudited):
Net loss attributed to common stockholders
(18,099,210
)
(7,121,416
)
Pro forma adjustment
—
—
Net loss used to compute pro forma net loss per share
(18,099,210
)
(7,121,416
)
Denominator
Basic and diluted weighted-average common shares, as used above
2,300,090
2,540,033
Add: Pro forma adjustments to reflect assumed weighted-average
    effect of conversion of convertible preferred stock
10,748,431
14,358,274
Weighted-average shares used in computing pro forma basic and
    diluted net loss per common share
13,048,521
16,898,307
Pro forma basic and diluted net loss per share
$
(1.39
)
$
(0.42
)
F-14
Table of Contents
Anthera
    Pharmaceuticals, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS—(Continued)
The following table shows weighted-average historical dilutive
    common share equivalents outstanding, which are not included in
    the above historical calculation, as the effect of their
    inclusion is anti-dilutive during each period.
Years Ended December 31,
Six Month Ended June 30,
2006
2007
2008
2008
2009
(unaudited)
Options to purchase common stock
7,189
176,888
923,170
959,719
900,334
Common stock subject to repurchase
459,399
447,779
393,683
467,519
227,502
Warrants to purchase common stock
—
—
161,321
—
411,764
Convertible preferred stock (on an
as-if-converted
basis)
2,305,210
8,423,173
10,587,110
8,423,173
13,946,510
2,771,798
9,047,840
12,065,284
9,850,411
15,486,110
Stock-Based
    Compensation
Effective January 1, 2006, the Company adopted the
    provisions of SFAS 123(R) using the modified prospective
    method. SFAS 123(R) supersedes Accounting Principles Board
    (APB) Opinion No. 25,
Accounting for Stock Issued to
    Employees
, and its related interpretations, and revises
    guidance in FASB Statement No. 123,
Accounting for
    Stock-Based Compensation
. Compensation costs related to all
    equity instruments granted after January 1, 2006, are
    recognized at the grant-date fair value of the awards in
    accordance with the provisions of SFAS 123(R).
    Additionally, under the provisions of SFAS 123(R), the
    Company is required to include an estimate of the number of
    awards that will be forfeited in calculating compensation costs,
    which are recognized over the requisite service period of the
    awards on a straight-line basis. SFAS 123(R) requires
    companies to estimate the fair value of share-based payment
    awards on the date of grant using an option-pricing model.
Prior to the adoption of SFAS 123(R), the Company accounted
    for stock-based awards to employees and directors using the
    intrinsic value method in accordance with APB Opinion
    No. 25 as allowed under FASB Statement No. 123. In
    accordance with APB Opinion No. 25, stock-based
    compensation expense was recognized based on the intrinsic value
    method whereby any difference between exercise price and fair
    value of the common stock on the date of grant was recognized as
    stock-based compensation expense ratably over the vesting
    period. As all employee stock options granted through
    December 31, 2005 were granted with an exercise price equal
    to the fair value of the common stock at the date of grant, no
    expense was recognized through December 31, 2005.
The Company uses the Black-Scholes option-pricing model as the
    method for determining the estimated fair value of stock
    options. The Black-Scholes model requires the use of highly
    subjective and complex assumptions which determine the fair
    value of share-based awards, including the option's
    expected term and the price volatility of the underlying stock.
Expected Term
—The Company's expected term
    represents the period that the Company's stock-based awards
    are expected to be outstanding and is determined using the
    simplified method described in the Staff Accounting Bulletin
    (SAB) No. 107,
Share-Based Payment
, as amended by
    SAB No. 110.
Expected Volatility
—Expected volatility is estimated
    using comparable public company volatility for similar terms.
F-15
Table of Contents
Anthera
    Pharmaceuticals, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS—(Continued)
Expected Dividend
—The Black-Scholes valuation model
    calls for a single expected dividend yield as an input and the
    Company has never paid dividends and has no plans to pay
    dividends.
Risk-Free Interest Rate
—The risk-free interest rate
    used in the Black-Scholes valuation method is based on the
    U.S. Treasury zero-coupon issues in effect at the time of
    grant for periods corresponding with the expected term of option.
Estimated Forfeitures
—The estimated forfeiture rate
    is determined based on the Company's historical forfeiture
    rates to date. The Company will monitor actual expenses and
    periodically update the estimate.
Equity instruments issued to nonemployees are recorded at their
    fair value as determined in accordance with FASB Statement
    No. 123 and Emerging Issues Task Force Issue, or EITF,
No. 96-18,
Accounting for Equity Instruments That Are Issued to Other
    Than Employees for Acquiring, or in Conjunction with Selling
    Goods and Services
, and are periodically revalued as the
    equity instruments vest and are recognized as expense over the
    related service period.
Recently Issued
    Accounting Standards
In June 2009, the FASB issued Statement No. 168,
The
    FASB Accounting Standards Codification and the Hierarchy of
    Generally Accepted Accounting Principles-a replacement of FASB
    Statement No. 162
, or SFAS 168. SFAS 168
    establishes the FASB Accounting Standards Codification as the
    sole source of authoritative generally accepted accounting
    principles. Pursuant to the provisions of SFAS 168, the
    Company will update references to GAAP in their financial
    statements issued for the period ended September 30, 2009
    and thereafter. The adoption of SFAS 168 will have no
    impact on the Company's financial position or results of
    operations.
In June 2008, the EITF reached a consensus on EITF Issue
No. 07-5,
Determining Whether an Instrument (or Embedded Feature) is
    Indexed to an Entity's Own Stock
, or
EITF 07-5.
EITF 07-5
provides guidance on how to determine if certain instruments (or
    embedded features) are considered indexed to a company's
    own stock, including instruments similar to warrants to purchase
    the company's stock.
EITF 07-5
requires companies to use a two-step approach to evaluate an
    instrument's contingent exercise provisions and settlement
    provisions in determining whether the instrument is considered
    to be indexed to its own stock and therefore exempt from the
    application of SFAS No. 133,
Accounting for
    Derivative Instruments and Hedging Activities
. Although
EITF 07-5
is effective for fiscal years beginning after December 15,
    2008, any outstanding instrument at the date of adoption will
    require a retrospective application of the accounting through a
    cumulative effect adjustment to retained earnings upon adoption.
    The Company does not expect the adoption of
EITF 07-5
to have a material impact on the Company's financial
    position or results of operations.
3.
FAIR VALUE OF
    FINANCIAL INSTRUMENTS
As of December 31, 2008 and June 30, 2009, the Company
    held no short-term investments. As of December 31, 2007,
    the Company held $5.8 million short-term investments, which
    consisted of auction rate securities and municipal securities.
    These securities were classified as short-term based on their
    highly liquid nature due to the frequency with which the
    interest rate is reset and because such marketable securities
    represent the investment of cash that is available for current
    operations. The Company included any unrealized gains and losses
    on
F-16
Table of Contents
Anthera
    Pharmaceuticals, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS—(Continued)
short-term investments in stockholders' equity as a
    component of other comprehensive income (loss). Individual
    securities with a fair value below the cost basis at
    December 31, 2007 were evaluated to determine if they were
other-than-temporarily
impaired.
The aggregate market value, cost basis and gross unrealized
    gains and losses on the Company's short-term investments as
    of December 31, 2007, by major security type, are as
    follows:
Gross
Amortized
Unrealized
Fair
Cost
Gain/(Losses)
Value
Municipal bonds
$
1,824,991
$
9
$
1,825,000
Auction rate securities
4,001,821
(1,821
)
4,000,000
Total short-term investments
$
5,826,812
$
(1,812
)
$
5,825,000
All of the Company's municipal bonds and auction rate
    securities were sold during 2008.
The following table provides a summary of changes in fair value
    of the Company's level 3 financial assets for the year
    ended December 31, 2008:
Auction Rate
Securities
Balance at December 31, 2007 reflected as other short-term
    investments
$
4,000,000
Total realized gain included in net loss
1,484
Sales, net of purchases
(4,001,484
)
Balance at December 31, 2008
$
0
4.
PROPERTY AND
    EQUIPMENT
At December 31, 2007 and 2008 and June 30, 2009,
    property and equipment consist of the following:
December 31,
June 30,
2007
2008
2009
(unaudited)
Computers and software
$
58,173
$
64,925
$
64,925
Office equipment and furniture
16,730
16,730
16,730
Total property and equipment
74,903
81,655
81,655
Less accumulated depreciation
(31,879
)
(53,876
)
(63,421
)
Property and equipment, net
$
43,024
$
27,779
$
18,234
Depreciation expense for the years ended December 31, 2006,
    2007 and 2008, for the six months ended June 30, 2008 and
    2009, and for the period from September 9, 2004 (date of
    inception) to June 30, 2009, was $8,742, $18,922, $21,997,
    $11,669, $9,545 and $63,421, respectively.
F-17
Table of Contents
Anthera
    Pharmaceuticals, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS—(Continued)
5.
COMMITMENTS AND
    CONTINGENCIES
Leases
The Company leases its office facilities under an operating
    lease that expires in September 2010. Rent expense for the years
    ended December 31, 2006, 2007 and 2008, for the six months
    ended June 30, 2008 and 2009, and for the period from
    September 9, 2004 (date of inception) to June 30,
    2009, were $20,189, $97,314, $115,506, $50,960, $80,577 and
    $313,586, respectively. Future minimum payments under the
    operating lease for the years ending December 31, 2009 and
    2010 are $93,528 and $70,146, respectively.
In addition to the facility lease, the Company leases office
    equipment under an operating lease, which began in 2007 and ends
    in 2010. Rental expense for the years ended December 31,
    2007 and 2008, for the six months ended June 30, 2008 and
    2009, and the period from September 9, 2004 (date of
    inception) to June 30, 2009, was $2,910, $15,216, $7,550,
    $7,645 and $25,050, respectively. Future minimum payments under
    the operating lease for the years ending December 31, 2009
    and 2010 are $12,840 and $9,630, respectively.
Other
    Commitments
In July 2006, the Company entered into a license agreement with
    Shionogi & Co., Ltd. and Eli Lilly and Company, or Eli
    Lilly, to develop and commercialize certain
    sPLA
2
inhibitors for the treatment of inflammatory diseases. The
    agreement granted the Company commercialization rights to
    Shionogi & Co., Ltd.'s and Eli Lilly's
    sPLA
2
inhibitors, including
A-002
and
A-001.
Under
    the terms of the agreement, the Company's license is
    worldwide, with the exception of Japan where
    Shionogi & Co., Ltd. has retained rights. Pursuant to
    this license agreement, the Company paid Shionogi &
    Co., Ltd. and Eli Lilly a one-time license initiation fee of
    $250,000. Additionally, in consideration for the licensed
    technology, the Company issued 441,260 shares of
Series A-2
convertible preferred stock, or
Series A-2,
at $3 per share and 217,934 shares of
Series B-1
convertible preferred stock at $4.25 per share with a total
    aggregate value of $2.25 million to Shionogi &
    Co., Ltd. and Eli Lilly. As there is no future alternative use
    for the technology and in accordance with FASB Statement
    No. 2, the Company recorded the initiation and license fees
    in research and development expenses during the year ended
    December 31, 2006. There was no outstanding obligation
    pursuant to the license agreement in the years ended
    December 31, 2007 and 2008 and for the six months ended
    June 30, 2009. The Company is obligated to make additional
    milestone payments upon the achievement of certain development,
    regulatory, and commercial objectives, which includes a
    $3 million milestone payment due upon the start of a
    Phase 3 clinical study. See Note 12. The Company is
    also obligated to pay royalties on future net sales of products
    that are developed and approved as defined by this
    collaboration. The Company's obligation to pay royalties
    with respect to each licensed product in each country will
    expire upon the later of (a) 10 years following the
    date of the first commercial sale of such licensed product in
    such country, and (b) the first date on which generic
    version(s) of the applicable licensed product achieve a total
    market share, in the aggregate, of 25% or more of the total unit
    sales of wholesalers to pharmacies of licensed product and all
    generic versions combined in the applicable country.
In December 2007, the Company entered into with Amgen Inc., or
    Amgen, a worldwide, exclusive license agreement, or the Amgen
    Agreement, to develop and commercialize
A-623
for
    the treatment of systemic lupus erythematosus, or lupus. Under
    the terms of the Amgen Agreement, the Company was required to
    pay a nonrefundable, upfront license fee of $6 million,
    payable in two installments with the first installment due
    within 90 days from the
F-18
Table of Contents
Anthera
    Pharmaceuticals, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS—(Continued)
effective date of the agreement and the second installment due
    on the earlier of (i) termination of the agreement by the
    Company or (ii) February 1, 2009. As there is no
    future alternative use for the technology and in accordance with
    FASB Statement No. 2, the Company expensed the license fee
    in research and development expenses during the year ended
    December 31, 2007. The outstanding obligation pursuant to
    the license agreement was $6 million, $5 million and
    $4.5 million as of December 31, 2007 and 2008 and
    June 30, 2009, respectively. Pursuant the terms of the
    Amgen Agreement, if the Company fails to make any payment to
    Amgen under the agreement, interest will accrue on a daily basis
    equal to 2% above the then applicable prime rate. As of
    December 31, 2008 and June 30, 2009, the Company had
    accrued $140,243 and $236,541 in interest, respectively, in
    respect of unpaid license fees under the Amgen Agreement.
Under the terms of the Amgen Agreement, the Company is obligated
    to make additional milestone payments to Amgen upon the
    achievement of certain development, regulatory and commercial
    objectives. The Company is also obligated to pay royalties on
    future net sales of products that are developed and approved as
    defined by this collaboration. The Company's royalty
    obligations as to a particular licensed product will be payable,
    on a
country-by-country
and licensed
product-by-licensed
product basis, for the longer of (a) the date of expiration
    of the last to expire valid claim within the licensed patents
    that covers the manufacture, use or sale, offer to sell, or
    import of such licensed product by the Company or a sublicense
    in such country, or (b) 10 years after the first
    commercial sale of the applicable licensed product in the
    applicable country.
6.
CONVERTIBLE
    PROMISSORY NOTES
In April 2006, the Company issued convertible promissory notes
    to a group of individuals, or Holders, in exchange for an
    aggregate principal amount of $570,000, or Bridge Loan. The
    Bridge Loan was converted into
Series A-2
convertible preferred stock at a discount of 25% resulting in a
    $2.25 per share price in August 2006. The interest on these
    loans was 7% per annum and accrued interest of $13,816 was paid
    out to the Holders upon closing of our
Series A-2
convertible preferred stock. In connection with the conversion
    of the Bridge Loan, a beneficial conversion feature of $190,000
    representing the difference between the conversion price and the
    fair value of the preferred shares multiplied by the number of
    shares converted was recorded as noncash interest expense and an
    increase in additional paid-in capital.
In June 2006, the Company issued two additional convertible
    promissory notes to two new investors for an aggregate principal
    amount of $390,000. The notes were converted into
Series A-2
convertible preferred stock at the issuance price of our
Series A-2
convertible preferred stock, or $3.00 per share, in August 2006.
    The interest on these loans was 8% per annum. A portion of
    accrued interest in the amount of $1,751 was converted into
Series A-2
convertible preferred stock and the remainder of accrued
    interest was paid out to the investors.
During February and May 2008, the Company issued convertible
    promissory notes to its existing investors in exchange for an
    aggregate principal amount of $12.2 million. The interest
    on these loans was 4.2% per annum. The notes and accrued
    interest of $155,630 were converted into
Series B-2
convertible preferred stock at the issuance price of our
Series B-2
convertible preferred stock, or $3.19 per share, in August 2008.
    In connection with the terms of the convertible promissory
    notes, a charge for the beneficial conversion feature of
    $4.1 million representing the difference between the
    conversion price and the fair value of the preferred
F-19
Table of Contents
Anthera
    Pharmaceuticals, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS—(Continued)
shares multiplied by the number of shares converted was recorded
    as noncash interest expense and an increase to additional
    paid-in capital.
On August 12, 2008, the Company issued
    3,876,277 shares of its
Series B-2
convertible preferred stock to certain of its existing investors
    in exchange for conversion of $12,200,000 of aggregate principal
    amount of and $155,630 of aggregate interest accrued upon
    convertible promissory notes and 1,647,060 shares of its
Series B-2
convertible preferred stock to two new investors in exchange for
    $7,000,005 of cash. In connection with the issuance of our
Series B-2
convertible preferred stock, the Company issued warrants to
    purchase 411,764 shares of the Company's common stock
    to those investors purchasing shares for cash.
7.
CAPITAL
    STRUCTURE
Common
    Stock
At December 31, 2007 and 2008 and June 30, 2009, the
    Company was authorized to issue 30,000,000 shares of common
    stock and had reserved the following shares for future issuance:
December 31,
December 31,
June 30,
2007
2008
2009
(unaudited)
Conversion of
Series A-1
convertible preferred stock
945,939
945,939
945,939
Conversion of
Series A-2
convertible preferred stock
2,774,594
2,774,594
2,774,594
Conversion of
Series B-1
convertible preferred stock
4,702,640
4,702,640
4,702,640
Conversion of
Series B-2
convertible preferred stock
0
5,523,337
5,523,337
Warrants for purchase of common stock
0
411,764
411,764
Common stock options outstanding
1,451,343
1,638,623
2,281,309
Common stock options available for future grant under stock
    option plan
556,592
693,842
51,156
Total
10,431,108
16,690,739
16,690,739
In November 2004, the Company issued 1,500,000 shares of
    restricted common stock to founders of the Company for $0.001
    per share. The restricted common stock vested over a three-year
    period ending December 31, 2007.
F-20
Table of Contents
Anthera
    Pharmaceuticals, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS—(Continued)
Convertible
    Preferred Stock
At December 31, 2007, December 31, 2008 and
    June 30, 2009, the Company was authorized to issue the
    following shares of preferred stock:
December 31,
December 31,
June 30,
2007
2008
2009
(unaudited)
Shares designated Series A convertible preferred stock
945,939
—
—
Shares designated
Series A-1
convertible preferred stock
945,939
945,939
945,939
Shares designated
Series A-2
convertible preferred stock
2,800,000
2,800,000
2,800,000
Shares designated Series B convertible preferred stock
7,200,000
8,700,000
8,700,000
Shares designated
Series B-1
convertible preferred stock
—
4,710,000
4,710,000
Shares designated
Series B-2
convertible preferred stock
—
6,175,000
6,175,000
Total authorized shares of preferred stock
11,891,878
23,330,939
23,330,939
The
Series A-1
convertible preferred stock,
Series A-2
convertible preferred stock, Series B convertible preferred
    stock,
Series B-1
convertible preferred stock and
Series B-2
convertible preferred stock are collectively referred to as
    series preferred. The holders of the series preferred have
    various rights and privileges. In fiscal year 2005, the Company
    issued 945,939 shares of Series A convertible
    preferred stock that was subsequently reclassified into
Series A-1
convertible preferred stock, or
Series A-1
preferred, at a ratio of 1:1 in fiscal year 2006. In fiscal year
    2006, the Company issued 4,702,640 shares of Series B
    convertible preferred stock that was subsequently reclassified
    into
Series B-1
convertible preferred stock, or
Series B-1
preferred, at a ratio of 1:1 in fiscal year 2008. In fiscal
    2008, the Company issued 5,523,337 shares of
Series B-2
convertible preferred stock.
Voting
Each holder of shares of the series preferred is entitled to the
    number of votes equal to the number of shares of common stock
    into which such shares of series preferred could be converted
    and have equal voting rights and powers of the common stock.
Dividend
    Rights
Holders of series preferred, in preference to the holders of
    common stock, are entitled to receive, when and as declared by
    the board of directors, but only out of funds that are legally
    available therefor, cash dividends at the rate of 7% of the
    original issuance price per annum on each outstanding share of
    series preferred. The original issuance prices for
Series A-1
preferred,
Series A-2
convertible preferred stock, or
Series A-2
preferred,
Series B-1
preferred and
Series B-2
convertible preferred stock, or
Series B-2
preferred, were $0.86, $3.00, $4.25 and $4.25 per share,
    respectively. Such dividends are payable only when, as and if
    declared by the board and are noncumulative.
F-21
Table of Contents
Anthera
    Pharmaceuticals, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS—(Continued)
Conversion
Holders of series preferred are entitled, at any time, to cause
    their shares to be converted into fully paid and nonassessable
    shares of common stock. The conversion rate in effect at any
    time for conversion of each series of series preferred is
    determined by dividing (i) the original issuance price of
    the series preferred with respect to such series by
    (ii) the applicable series preferred conversion price. The
    conversion price of the series preferred is the original issue
    price for such series (subject to adjustment). Additionally, the
    preferred stock will automatically convert into shares of common
    stock based on the then-effective series preferred conversion
    price (i) at any time upon the affirmative election of the
    holders of at least two-thirds of the outstanding shares of
    preferred stock, or (ii) immediately upon the closing of a
    public offering pursuant to an effective registration statement
    under the Securities Act of 1933, as amended, covering the offer
    and sale of common stock for the account of the Company in which
    the valuation of the Company, before giving effect to such
    offering, is at least $200 million and the aggregate
    proceeds to the Company (after underwriting discounts,
    commission and fees) are at least $50 million. Upon such
    automatic conversion, any declared and unpaid dividends are
    payable in cash to the preferred shareholders.
Liquidation
Upon any liquidation, dissolution, or winding up of the Company,
    whether voluntary or involuntary, a Liquidation Event, before
    any distribution or payment is made to holders of common stock,
    the holders of series preferred are entitled to be paid, with
    equal priority and pro rata, out of the assets of the Company
    legally available for distribution, or the consideration
    received in such transaction, for each share of series preferred
    held by them, an amount equal to the original issuance price per
    share, plus all accrued or declared but unpaid dividends
    (appropriately adjusted for any stock dividend, stock split,
    recapitalization and the like). After payment of the full
    liquidation preference of the series preferred, the remaining
    assets of the Company, if any, shall be distributed ratably to
    the holders of the common stock, our
Series A-2
preferred,
Series B-1
preferred and
Series B-2
preferred stockholders, on an as-converted-to-common-stock
    basis, until such time as such holders of
Series A-2
preferred,
Series B-1
preferred and
Series B-2
preferred have received a distribution equal to
three-and-a-half
times the original issue price of such series. If there are
    still assets left to be distributed by the Company, then the
    remaining assets shall be distributed ratably to the holders of
    the common stock.
Redemption
Shares of series preferred are not redeemable by the Company.
Warrants
In August 2008, in connection with the issuance of
Series B-2
preferred, the Company issued 411,764 warrants to two new
    investors for the purchase of common stock at $0.78 per share.
    The warrants have a term of seven years. The Company valued the
    warrants using the Black-Scholes valuation model with the
    following assumptions: expected volatility of 72%, risk-free
    interest rate of 3.46% and expected term of seven years. The
    fair value of the warrants was calculated to be $224,478 and
    recorded as issuance cost and an increase to additional paid-in
    capital. As of June 30, 2009, the warrants remain
    outstanding.
F-22
Table of Contents
Anthera
    Pharmaceuticals, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS—(Continued)
8.
STOCK
    OPTIONS
Option
    Plan
The Company's 2005 Equity Incentive Plan, or the 2005
    Equity Plan, was adopted by the board of directors in January
    2005. The 2005 Equity Plan permits the granting of incentive and
    non-statutory stock options, restricted stock, stock
    appreciation rights, performance units, performance shares and
    other stock awards to eligible employees, directors and
    consultants. The Company grants options to purchase shares of
    common stock under the 2005 Equity Plan at no less than the fair
    market value of the underlying common stock as of the date of
    grant. Options granted under the 2005 Equity Plan have a maximum
    term of 10 years and generally vest over four years at the
    rate of 25% of total shares underlying the option. Selected
    grants vest immediately or over a shorter vesting period.
The 2005 Equity Plan allows the option holders to exercise their
    options prior to vesting. Unvested shares are subject to
    repurchase by the Company at the option of the Company. Unvested
    shares subject to repurchase have been excluded from the number
    of shares outstanding. Option activity in the table below
    includes options exercised prior to vesting. At
    December 31, 2007, 2008 and June 30, 2009, 496,118,
    276,745 and 189,402 shares were subject to repurchase with
    a corresponding liability of $69,615, $56,715 and $38,399,
    respectively.
F-23
Table of Contents
Anthera
    Pharmaceuticals, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS—(Continued)
The following table summarizes stock option activity for the
    Company:
Weighted-
Weighted-
Average
Shares
Average
Remaining
Aggregate
Available for
Number of
Exercise
Contractual
Intrinsic
Grant
Options
Price
Life in Years
Value
Balance at September 9, 2004 (date of inception)
Shares authorized
425,000
—
Options granted
(320,500
)
320,500
$
0.08
Options exercised
—
(57,000
)
$
0.08
Balance at December 31, 2005
104,500
263,500
$
0.08
8.42
$
0
Shares authorized
2,200,000
—
Options granted
(113,000
)
113,000
$
0.08
Options exercised
—
(215,000
)
$
0.08
Balance at December 31, 2006
2,191,500
161,500
$
0.08
6.89
$
11,305
Shares authorized
500,000
—
Options granted
(2,293,515
)
2,293,515
$
0.15
Options exercised
—
(845,065
)
$
0.14
Options cancelled
158,607
(158,607
)
$
0.14
Balance at December 31, 2007
556,592
1,451,343
$
0.15
8.86
$
918,511
Shares authorized
600,000
—
Options granted
(561,500
)
561,500
$
0.78
Options exercised
—
(307,970
)
$
0.22
Options cancelled
66,250
(66,250
)
$
0.25
Repurchase
32,500
—
$
0.15
Balance at December 31, 2008
693,842
1,638,623
$
0.35
8.29
$
874,825
Options granted*
(674,000
)
674,000
$
0.88
Options cancelled*
31,314
(31,314
)
$
0.57
Balance as of June 30, 2009*
51,156
2,281,309
$
0.50
8.36
$
865,015
Ending Outstanding, Exercisable and Expected to Vest as of
    December 31, 2008
1,638,623
$
0.35
8.29
$
874,825
Ending Vested as of December 31, 2008
905,470
$
0.20
8.04
$
611,599
Ending Outstanding, Exercisable and Expected to Vest as of
    June 30, 2009*
2,281,309
$
0.50
8.36
$
865,015
Ending Vested as of June 30, 2009*
1,457,009
$
0.39
8.05
$
720,152
*
unaudited
The grant date total fair value of employee options vested
    during the years ended December 31, 2007 and 2008 and for
    the six months ended June 30, 2009 was $95,439, $113,166
    and $268,624, respectively. The total intrinsic value of options
    exercised during the years ended December 31, 2007 and 2008
    was $5,390 and $109,741, respectively. Total proceeds received
    for options exercised during years ended December 31, 2007
    and 2008 was $118,920 and $68,105. No options were exercised
    during the six months ended June 30, 2009.
F-24
Table of Contents
Anthera
    Pharmaceuticals, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS—(Continued)
Information about stock options outstanding, exercisable and
    vested as of June 30, 2009 (unaudited), is as follows:
Outstanding & Exercisable
Weighted-
Options Vested
Average
Weighted-
Weighted-
Remaining
Average
Average
Number of
Contractual Life
Exercise
Number of
Exercise
Range of Exercise Price
Shares
(in Years)
Price
Shares
Price
$0.08
$
0.08
57,500
6.73
$
0.08
49,166
$
0.08
$0.15
$
0.15
1,051,185
7.52
$
0.15
906,862
$
0.15
$0.78
$
0.78
516,500
8.70
$
0.78
188,102
$
0.78
$0.88
$
0.88
656,124
9.59
$
0.88
312,879
$
0.88
$0.08
$
0.88
2,281,309
8.36
$
0.50
1,457,009
$
0.39
Early Exercise of
    Employee Options
Stock options granted under the Company's stock option plan
    provide employee option holders the right to elect to exercise
    unvested options in exchange for restricted common stock.
    Unvested shares, which amounted to 496,118 and 276,745 at
    December 31, 2007 and 2008, respectively, and 189,402 at
    June 30, 2009 were subject to a repurchase right held by
    the Company at the original issuance price in the event the
    optionees' employment is terminated either voluntarily or
    involuntarily. For exercises of employee options, this right
    lapses 25% on the first anniversary of the vesting start date
    and in 36 equal monthly amounts thereafter. These repurchase
    terms are considered to be a forfeiture provision and do not
    result in variable accounting. In accordance with EITF
No. 00-23,
Issues Related to the Accounting for Stock Compensation under
    APB No. 25,
the shares purchased by the employees
    pursuant to the early exercise of stock options are not deemed
    to be outstanding until those shares vest. In addition, cash
    received from employees for exercise of unvested options is
    treated as a refundable deposit shown as a liability in the
    Company's financial statements. For the periods ended
    December 31, 2007 and 2008 and June 30, 2009 cash
    received for early exercise of options totaled to $72,352,
    $30,953 and $0, respectively. As the shares vest, the shares and
    liability are released into common stock and additional paid-in
    capital.
The activity of unvested shares for the six months ended
    June 30, 2009 (unaudited) as a result of early exercise of
    options granted to employees is as follows:
Weighted-
Average
Unvested Shares
Shares
Grant Price
Balance as of December 31, 2007
496,188
$
0.14
Early exercise of options
101,356
$
0.36
Vested
(288,299
)
$
0.13
Repurchases
(32,500
)
$
0.15
Balance as of December 31, 2008
276,745
$
0.20
Early exercise of options*
—
—
Vested*
(87,343
)
$
0.21
Balance as of June 30, 2009*
189,402
$
0.20
*
unaudited
F-25
Table of Contents
Anthera
    Pharmaceuticals, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS—(Continued)
Stock-Based
    Compensation Expense
Total employee stock-based compensation expense recognized under
    SFAS 123(R) was as follows:
Period from
September 9,
2004
(Date of
Inception)
Years Ended December 31,
Six Months Ended June 30,
to June 30,
2006
2007
2008
2008
2009
2009
(unaudited)
(unaudited)
Research and development
$
2,996
$
44,066
$
45,544
$
23,036
$
57,616
$
150,222
General and administrative
1,652
30,795
97,862
43,895
75,908
206,217
Total stock-based compensation
$
4,648
$
74,861
$
143,406
$
66,931
$
133,524
$
356,439
As of December 31, 2006, 2007 and 2008 and June 30,
    2009, total compensation cost related to unvested stock options
    not yet recognized was $9,516, $161,996, $330,381 and $577,051,
    which is expected to be allocated to expenses over a
    weighted-average period of 2.94, 2.25, 2.33 and 2.49 years,
    respectively.
The assumptions used in the Block-Scholes option-pricing model
    for the years ended December 31, 2006, 2007 and 2008, the
    six months ended June 30, 2008 and 2009 and for the period
    from September 9, 2004 (date of inception) to June 30,
    2009, are as follows:
Period from
September 9,
2004 (Date of
Years Ended December 31,
Six Months Ended, June 30,
Inception) to
2006
2007
2008
2008
2009
June 30, 2009
(unaudited)
(unaudited)
Expected Volatility
81
%
81
%
81
%
81
%
74
%
80
%
Dividend Yield
0
0
0
0
0
0
Risk-Free Interest Rate
4.89
%
4.54
%
3.08
%
3.08
%
2.10
%
3.96
%
Expected Term (years)
6.25
6.25
6.25
6.25
6.25
6.25
The weighted-average grant date fair values of stock options
    granted during the years ended December 31, 2006, 2007 and
    2008, the six months ended June 30, 2008 and 2009, and for
    the period from September 9, 2004 (date of inception) to
    June 30, 2009 were $0.04, $0.10, $0.56, $0.56, $0.59 and
    $0.26 per share, respectively.
Nonemployee
    Stock-Based Compensation
In connection with stock options granted to consultants, the
    Company recorded $4,358, $12,489, $51,874, $51,874, $1,153 and
    $70,716 for nonemployee stock-based compensation during the
    years ended December 31, 2006, 2007 and 2008, for the six
    months ended June 30, 2008 and 2009, and for the period
    from September 9, 2004 (date of inception) to June 30,
    2009, respectively. These amounts were based upon the fair value
    of the vested portion of the grants.
F-26
Table of Contents
Anthera
    Pharmaceuticals, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS—(Continued)
The assumptions used in the Black-Scholes option-pricing model
    for the years ended December 31, 2006, 2007 and 2008, the
    six months ended June 30, 2008 and 2009, and for the period
    from September 9, 2004 (date of inception) to June 30,
    2009, are as follows:
Period from
September 9,
Six Months Ended
2004 (Date of
Years Ended December 31,
June 30,
Inception) to
2006
2007
2008
2008
2009
June 30, 2009
(unaudited)
(unaudited)
Expected Volatility
98
%
98
%
98
%
98
%
98
%
98
%
Dividend Yield
0
0
0
0
0
0
Risk-Free Interest Rate
4.77
%
4.40
%
3.67
%
3.67
%
2.85
%
3.86
%
Expected Term (years)
10.00
10.00
9.26
9.26
9.52
9.45
Amounts expensed during the remaining vesting period will be
    determined based on the fair value at the time of vesting.
9.
EMPLOYEE BENEFIT
    PLAN
The Company maintains a defined contribution 401(k) plan, or the
    401(k) Plan. Employee contributions are voluntary and are
    determined on an individual basis, limited by the maximum
    amounts allowable under federal tax regulations. The Company has
    made no contributions to the 401(k) Plan since its inception.
10.
INCOME
    TAXES
The Company has incurred net operating losses since inception.
    The Company has not reflected any benefit of such net operating
    loss carryforwards in the accompanying financial statements and
    has established a full valuation allowance against its deferred
    tax assets.
Deferred income taxes reflect the net tax effects of
    (a) temporary differences between the carrying amounts of
    assets and liabilities for financial reporting purposes and the
    amounts used for income tax purposes, and (b) operating
    losses and tax credit carryforwards.
F-27
Table of Contents
Anthera
    Pharmaceuticals, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS—(Continued)
The significant components of the Company's deferred tax
    assets for the years ended December 31, 2007 and 2008 are
    as follows:
December 31,
2007
2008
Deferred tax assets:
Net operating loss carryforwards
$
9,864,070
$
15,550,186
Tax credits
1,713,935
2,158,679
Intangible assets
3,810,824
3,545,262
Accrued bonus
85,048
46,226
Accrued liabilities
31,510
133,486
Stock-based compensation
7,047
12,913
Other
398
1,366
Total deferred tax assets
15,512,832
21,448,118
Deferred tax liabilities—fixed assets
(669
)
—
Subtotal
15,512,163
21,448,118
Valuation allowance
(15,512,163
)
(21,448,118
)
Net deferred tax asset
$
—
$
—
A reconciliation of the statutory tax rates and the effective
    tax rates for the years ended December 31, 2006, 2007 and
    2008 is as follows:
2006
2007
2008
Statutory rate
34%
34%
34%
State tax
7%
7%
5%
Tax credit
1%
5%
2%
Beneficial conversion feature
(1)%
0%
(8)%
Valuation allowance
(41)%
(46)%
(33)%
Effective tax rates
0%
0%
0%
Realization of the future tax benefits is dependent on the
    Company's ability to generate sufficient taxable income
    within the carryforward period. Because of the Company's
    recent history of operating losses, management believes that the
    deferred tax assets arising from the above-mentioned future tax
    benefits are currently not likely to be realized and,
    accordingly, has provided a full valuation allowance. The net
    valuation allowance increased by $11,720,154 and $5,935,955 for
    the years ended December 31, 2007 and 2008, and $21,448,118
    for the period from September 9, 2004 (date of inception)
    to December 31, 2008.
Net operating losses and tax credit carryforwards as of
    December 31, 2008, are as follows:
Amount
Expiration Years
Net operating losses—federal
$
39,037,547
Beginning 2024
Net operating losses—state
$
39,034,347
Beginning 2016
Tax credits—federal
$
1,640,372
Beginning 2024
Tax credits—state
$
785,343
Not applicable
Utilization of the net operating loss carryforwards and credits
    may be subject to a substantial annual limitation due to the
    ownership change limitations provided by the Internal
F-28
Table of Contents
Anthera
    Pharmaceuticals, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS—(Continued)
Revenue Code of 1986, as amended, or the IRC, and similar state
    provisions. The Company has not performed a detailed analysis to
    determine whether an ownership change under Section 382 of
    the IRC has occurred. The effect of an ownership change would be
    the imposition of an annual limitation on the use of net
    operating loss carryforwards attributable to periods before the
    change.
The Company adopted the provisions of FASB Interpretation
    No. 48, "Accounting for Uncertainty in Income
    Taxes," or FIN 48, on January 1, 2007. As a
    result of the implementation of FIN 48, the Company did not
    record any changes to the liability for unrecognized tax
    benefits related to tax positions taken in prior periods, and no
    corresponding change in accumulated deficit was recorded. At the
    adoption date of January 2, 2007, the Company had $80,000
    unrecognized tax benefits, none of which would affect its income
    tax expense if recognized to the extent the Company continues to
    maintain a full valuation allowance against its deferred tax
    assets.
As of December 31, 2008, the Company had unrecognized tax
    benefits of $808,562, all of which would not currently affect
    the Company's effective tax rate if recognized due to the
    Company's deferred tax assets being fully offset by a
    valuation allowance. The Company did not anticipate any
    significant change to the unrecognized tax benefit balance as of
    June 30, 2009. A reconciliation of the beginning and ending
    amount of unrecognized tax benefits is as follows:
Amount
Balance as January 1, 2007
$
79,855
Additions based on tax positions related to current year
566,326
Balance as December 31, 2007
646,181
Additions based on tax positions related to current year
162,381
Balance as of December 31, 2008
808,562
Additions based on tax positions related to current year
    (unaudited)
—
Balance as of June 30, 2009 (unaudited)
$
808,562
The Company would classify interest and penalties related to
    uncertain tax positions in income tax expense, if applicable.
    There was no interest expense or penalties related to
    unrecognized tax benefits recorded through June 30, 2009.
    The tax years 2004 through 2008 remain open to examination by
    one or more major taxing jurisdictions to which the Company is
    subject.
The Company does not anticipate that total unrecognized net tax
    benefits will significantly change prior to the end of 2009.
11.
RELATED PARTY
    TRANSACTIONS
For the years ended December 31, 2006, 2007 and 2008, the
    six months ended June 30, 2008 and 2009, and for the period
    from September 9, 2004 (date of inception) to June 30,
    2009, the Company paid $0, $71,100, $22,200, $20,800, $38,274
    and $131,574, respectively, for clinical management services
    rendered by an outside organization where one of the founders is
    employed.
F-29
Table of Contents
Anthera
    Pharmaceuticals, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS—(Continued)
12.
SUBSEQUENT
    EVENTS
On July 17, 2009 and September 9, 2009, the Company
    sold (i) convertible promissory notes, or the 2009 notes,
    that are secured by a first priority security interest in all of
    the Company's assets, and (ii) warrants, or the 2009
    warrants, to purchase shares of the Company's preferred
    stock to certain of its existing investors for an aggregate
    purchase price of $10,000,000. These transactions are
    collectively referred to as the 2009 bridge financing. The 2009
    notes accrue interest at a rate of 8% per annum and have a
    maturity date of the earliest of (i) July 17, 2010,
    (ii) the date of the sale of all or substantially all of
    the Company's equity interests or assets or (iii) an
    event of default pursuant to the terms of the 2009 notes. The
    2009 notes are automatically convertible into the securities
    that are sold in the next equity financing at a 25% discount to
    the price to which such securities are sold to other investors,
    or they are alternatively convertible into shares of the
    Company's
Series B-2
convertible preferred stock in connection with a change of
    control of the Company. Each 2009 warrant is exercisable for the
    security into which each 2009 note is converted, at the price at
    which that security is sold to other investors. Depending on
    when the 2009 notes are converted, each 2009 warrant may be
    exercisable for a number of shares equal to the quotient
    obtained by dividing (x) (i) 25% of the principal amount of
    the accompanying 2009 notes, in the event the conversion occurs
    prior to April 1, 2010, or (ii) 50% of the principal
    amount of the accompanying 2009 notes, in the event the
    conversion occurs on or after April 1, 2010, by
    (y) the purchase price of the securities into which the
    note is ultimately converted.
Under the terms of a license agreement with Eli Lilly and
    Shionogi & Co., Ltd. executed in July 2006, the
    Company is obligated to make a $1.5 million milestone
    payment to each party upon the start of a Phase 3 clinical
    study with A-001 or A-002. The Company amended the milestone
    payment terms with each of Eli Lilly and Shionogi &
    Co., Ltd. to no later than 12 months from the enrollment of
    the first patient in a Phase 3 clinical study for A-002. In
    consideration for the extension, the milestone payments
    increased to $1.75 million to each party.
F-30
Table of Contents
[Back Cover Page
    of Prospectus]
Table of Contents
PART II
INFORMATION NOT
    REQUIRED IN PROSPECTUS
Item 13.
Other Expenses
    of Issuance and Distribution.
The expenses (other than underwriting discounts and commissions)
    payable by us in connection with this offering are as follows:
Amount
Securities and Exchange Commission Registration fee
$
Financial Industry Regulatory Authority, Inc. fee
$
NASDAQ Global Market listing fee
$
Accountants' fees and expenses
$
Legal fees and expenses
$
Blue Sky fees and expenses
$
Transfer Agent's fees and expenses
$
Printing and engraving expenses
$
Miscellaneous
$
Total Expenses
$
All expenses are estimated except for the Securities and
    Exchange Commission fee and the Financial Industry Regulatory
    Authority, Inc. fee.
Item 14.
Indemnification
    of Directors and Officers.
Section 145 of the Delaware General Corporation Law, or the
    DGCL, authorizes a corporation to indemnify its directors and
    officers against liabilities arising out of actions, suits and
    proceedings to which they are made or threatened to be made a
    party by reason of the fact that they have served or are
    currently serving as a director or officer to a corporation. The
    indemnity may cover expenses (including attorneys' fees)
    judgments, fines and amounts paid in settlement actually and
    reasonably incurred by the director or officer in connection
    with any such action, suit or proceeding. Section 145
    permits corporations to pay expenses (including attorneys'
    fees) incurred by directors and officers in advance of the final
    disposition of such action, suit or proceeding. In addition,
    Section 145 provides that a corporation has the power to
    purchase and maintain insurance on behalf of its directors and
    officers against any liability asserted against them and
    incurred by them in their capacity as a director or officer, or
    arising out of their status as such, whether or not the
    corporation would have the power to indemnify the director or
    officer against such liability under Section 145.
We have adopted provisions in our certificate of incorporation
    and bylaws to be in effect at the completion of this offering
    that limit or eliminate the personal liability of our directors
    to the fullest extent permitted by the DGCL, as it now exists or
    may in the future be amended. Consequently, a director will not
    be personally liable to us or our stockholders for monetary
    damages or breach of fiduciary duty as a director, except for
    liability for:
•
any breach of the director's duty of loyalty to us or our
    stockholders;
•
any act or omission not in good faith or that involves
    intentional misconduct or a knowing violation of law;
•
any unlawful payments related to dividends or unlawful stock
    purchases, redemptions or other distributions; or
•
any transaction from which the director derived an improper
    personal benefit.
II-1
Table of Contents
These limitations of liability do not alter director liability
    under the federal securities laws and do not affect the
    availability of equitable remedies such as an injunction or
    rescission.
In addition, our bylaws provide that:
•
we will indemnify our directors, officers and, in the discretion
    of our board of directors, certain employees to the fullest
    extent permitted by the DGCL, as it now exists or may in the
    future be amended; and
•
we will advance reasonable expenses, including attorneys'
    fees, to our directors and, in the discretion of our board of
    directors, to our officers and certain employees, in connection
    with legal proceedings relating to their service for or on
    behalf of us, subject to limited exceptions.
We have entered into indemnification agreements with each of our
    directors and our executive officers and, in several cases,
    amended and restated indemnification agreements with certain of
    their affiliates. These agreements provide that we will
    indemnify each of our directors, executive officers and, at
    times, their affiliates to the fullest extent permitted by
    Delaware law. We will advance expenses, including
    attorneys' fees, judgments, fines and settlement amounts,
    to each indemnified director, executive officer or affiliate in
    connection with any proceeding in which indemnification is
    available and we will indemnify our directors and officers for
    any action or proceeding arising out of that person's
    services as an officer or director brought on behalf of the
    Company or in furtherance of our rights. Additionally, each of
    our directors may have certain rights to indemnification,
    advancement of expenses or insurance provided by their
    affiliates, which indemnification relates to and might apply to
    the same proceedings arising out of such director's
    services as a director referenced herein. Nonetheless, we have
    agreed in the indemnification agreements that the Company's
    obligations to those same directors are primary and any
    obligation of the affiliates of those directors to advance
    expenses or to provide indemnification for the expenses or
    liabilities incurred by those directors are secondary.
We also maintain general liability insurance which covers
    certain liabilities of our directors and officers arising out of
    claims based on acts or omissions in their capacities as
    directors or officers, including liabilities under the
    Securities Act.
The underwriting agreement filed as Exhibit 1.1 to this
    registration statement provides for indemnification of us and
    our directors and officers by the underwriters against certain
    liabilities under the Securities Act and the Exchange Act.
Item 15.
Recent Sales
    of Unregistered Securities.
In the three years preceding the filing of this registration
    statement, we have sold and issued the following unregistered
    securities:
(a)
Issuances of
    Capital Stock
On December 15, 2006, we issued 4,702,640 shares of
    our Series B convertible preferred stock to eight investors
    for an aggregate purchase price of $19,986,217. This aggregate
    purchase price was comprised of (i) consideration in
    satisfaction of our obligations under a technology transfer
    agreement filed as Exhibit 10.8 to this registration statement,
    by and between the Company and Eli Lilly and Company, dated as
    of July 31, 2006, the value of which consideration was
    $926,218 and (ii) cash payments to the Company, which
    totaled $19,059,999.
On February 15, 2008, we issued convertible promissory
    notes and warrants to purchase shares of the Company's
    common stock to seven investors for an aggregate principal
    amount of $3,000,000.
II-2
Table of Contents
On May 14, 2008, we issued convertible promissory notes to
    seven investors for an aggregate principal amount of $9,000,000
    and we cancelled all warrants to purchase shares of the
    Company's stock that were issued on February 15, 2008.
On August 12, 2008, we issued 5,523,337 shares of our
Series B-2
convertible preferred stock to 10 investors for an
    aggregate purchase price of $19,355,638. This aggregate purchase
    price was comprised of (i) conversion of indebtedness of
    the Company and interest accrued thereupon, the value of which
    conversion was $12,355,630 and (ii) cash payments to the
    Company, which totaled $7,000,005. In addition, we issued
    warrants to three investors to purchase 411,764 shares of
    our common stock at an exercise price of $0.78 per share. We
    have filed a Form D to ensure that all securities issued in
    this transaction fall within the safe harbor provided pursuant
    to Rule 506 of Regulation D, which is promulgated
    under the Securities Act.
On July 17, 2009, we issued convertible promissory notes to
    nine investors for an aggregate principal amount of $4,000,000.
    In addition, we issued warrants to purchase either shares of
    convertible preferred stock of the Company to be issued in the
    next equity financing or shares of our
Series B-2
convertible preferred stock. Depending on when these convertible
    promissory notes are converted, the warrants may be exercisable
    for a number of shares of convertible preferred stock to be
    issued in the next equity financing or shares of our
Series B-2
convertible preferred stock, at the price which each such
    security is sold, for a number of shares equaling 25% of the
    principal amount of the notes or 50% of the principal amount of
    the notes.
On September 9, 2009, we issued convertible promissory
    notes to nine investors for an aggregate principal amount of
    $6,000,000. In addition, we issued warrants to purchase either
    shares of convertible preferred stock of the company to be
    issued in the next equity financing or shares of our
Series B-2
convertible preferred stock. Depending on when these convertible
    promissory notes are converted, the warrants may be exercisable
    for a number of shares of convertible preferred stock to be
    issued in the next equity financing or shares of our
Series B-2
convertible preferred stock, at the price which each such
    security is sold, for a number of shares equaling 25% of the
    principal amount of the notes or 50% of the principal amount of
    the notes.
No underwriters were used in the foregoing transactions. Unless
    otherwise stated, the sales of securities described above were
    deemed to be exempt from registration pursuant to
    Section 4(2) of the Securities Act as transactions by an
    issuer not involving a public offering. All of the purchasers in
    these transactions represented to us in connection with their
    purchase that they were acquiring the securities for investment
    and not distribution, that they could bear the risks of the
    investment and could hold the securities for an indefinite
    period of time. Such purchasers received written disclosures
    that the securities had not been registered under the Securities
    Act and that any resale must be made pursuant to a registration
    or an available exemption from such registration. All of the
    foregoing securities are deemed restricted securities for the
    purposes of the Securities Act.
(b)
Grants and
    Exercises of Stock Options and Grants of Restricted
    Stock
In the three years preceding the filing of this registration
    statement, we have issued under our 2005 Equity Plan, options to
    purchase an aggregate of 3,529,015 shares of our common
    stock to certain of our directors, employees and service
    providers at exercise prices ranging from $0.15 to $0.88 per
    share. Of these options, 1,106,721 have been exercised.
In the three years preceding the filing of this registration
    statement, we have not issued any restricted stock under our
    2005 Equity Plan to our directors, employees or service
    providers.
II-3
Table of Contents
The issuances of the securities described above were deemed to
    be exempt from registration pursuant to Rule 701
    promulgated under the Securities Act as transactions pursuant to
    compensatory benefit plans. The shares of common stock issued
    upon the exercise of options are deemed to be restricted
    securities for purposes of the Securities Act.
Item 16.
Exhibits and
    Financial Statement Schedules.
(a) Exhibits.
See the Exhibit Index on the page immediately following the
    signature page for a list of exhibits filed as part of this
    registration statement on
Form S-1,
which Exhibit Index is incorporated herein by reference.
Item 17.
Undertakings.
The undersigned registrant hereby undertakes to provide to the
    underwriter at the closing specified in the underwriting
    agreements, certificates in such denominations and registered in
    such names as required by the underwriter to permit prompt
    delivery to each purchaser.
Insofar as indemnification for liabilities arising under the
    Securities Act may be permitted to directors, officers and
    controlling persons of the registrant pursuant to the foregoing
    provisions, or otherwise, the registrant has been advised that
    in the opinion of the Securities and Exchange Commission such
    indemnification is against public policy as expressed in the
    Securities Act, and is, therefore, unenforceable. In the event
    that a claim for indemnification by the registrant against such
    liabilities (other than the payment by the registrant of
    expenses incurred or paid by a director, officer or controlling
    person of the registrant in the successful defense of any
    action, suit or proceeding) is asserted by such director,
    officer or controlling person in connection with the securities
    being registered, the registrant will, unless in the opinion of
    its counsel the matter has been settled by the controlling
    precedent, submit to a court of appropriate jurisdiction the
    question whether such indemnification by it is against public
    policy as expressed in the Securities Act and will be governed
    by the final adjudication of such issue.
The undersigned registrant hereby undertakes that:
•
For purposes of determining any liability under the Securities
    Act, the information omitted from the form of Prospectus filed
    as part of this Registration Statement in reliance upon
    Rule 430A and contained in a form of prospectus filed by
    the registrant pursuant to Rule 424(b)(1) or (4), or 497(h)
    under the Securities Act shall be deemed to be part of this
    registration statement as of the time it was declared effective.
•
For the purpose of determining any liability under the
    Securities Act, each post-effective amendment that contains a
    form of prospectus shall be deemed to be a new registration
    statement relating to the securities offered therein and the
    offering of such securities at that time shall be deemed to be
    the initial
bona fide
offering thereof.
II-4
Table of Contents
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
    amended, the registrant has duly caused this registration
    statement to be signed on its behalf by the undersigned,
    thereunto duly authorized, in the city of Hayward, state of
    California, on this 15th day of September, 2009.
Anthera Pharmaceuticals, Inc.
By:
/s/
Paul
    F. Truex
Paul F. Truex, President and Chief Executive
Officer
SIGNATURES AND
    POWER OF ATTORNEY
We, the undersigned officers and directors of Anthera
    Pharmaceuticals, Inc., hereby severally constitute and appoint
    Paul F. Truex and Christopher P. Lowe, and each of them singly
    (with full power to each of them to act alone), our true and
    lawful attorneys-in-fact and agents, with full power of
    substitution and resubstitution in each of them for him and in
    his name, place and stead, and in any and all capacities, to
    sign for us and in our names in the capacities indicated below
    any and all amendments (including post-effective amendments) to
    this registration statement (or any other registration statement
    for the same offering that is to be effective upon filing
    pursuant to Rule 462(b) under the Securities Act of 1933,
    as amended), and to file the same, with all exhibits thereto and
    other documents in connection therewith, with the Securities and
    Exchange Commission, granting unto said attorneys-in-fact and
    agents, and each of them, full power and authority to do and
    perform each and every act and thing requisite or necessary to
    be done in and about the premises, as full to all intents and
    purposes as he might or could do in person, hereby ratifying and
    confirming all that said attorneys-in-fact and agents or any of
    them, or their or his substitute or substitutes, may lawfully do
    or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as
    amended, this Registration Statement has been signed by the
    following persons in the capacities and on the dates indicated.
Signature
Title
Date
/s/
Paul
    F. Truex
Paul
    F. Truex
President and Chief Executive Officer and Director (Principal
    Executive Officer)
September 15, 2009
/s/
Christopher
    P. Lowe
Christopher
    P. Lowe
Chief Financial Officer and Vice President of Administration
    (Principal Financial and Accounting Officer)
September 15, 2009
/s/
Christopher
    S. Henney
Christopher
    S. Henney
Director, Chairman of the Board of Directors
September 15, 2009
/s/
Annette
    Bianchi
Annette
    Bianchi
Director
September 15, 2009
II-5
Table of Contents
Signature
Title
Date
/s/
James
    I. Healy
James
    I. Healy
Director
September 15, 2009
/s/
A.
    Rachel Leheny
A.
    Rachel Leheny
Director
September 15, 2009
/s/
Donald
    J. Santel
Donald
    J. Santel
Director
September 15, 2009
/s/
David
    E. Thompson
David
    E. Thompson
Director
September 15, 2009
II-6
Table of Contents
EXHIBIT LIST
Number
Description
1
.1*
Form of Underwriting Agreement
3
.1
Fourth Amended and Restated Certificate of Incorporation, as
    currently in effect
3
.2*
Form of Fifth Amended and Restated Certificate of Incorporation
    (to be effective upon completion of this offering)
3
.3
Bylaws, as currently in effect
3
.4
Certificate of Amendment of Bylaws, as currently in effect
3
.5*
Form of Amended and Restated Bylaws (to be effective immediately
    prior to the closing of this offering)
4
.1*
Specimen certificate evidencing shares of common stock
5
.1*
Opinion of Goodwin Procter LLP
# 10
.1
2005 Equity Incentive Plan and form agreements thereunder
# 10
.2*
2009 Stock Option and Incentive Plan and form agreements
    thereunder
10
.3
Form of Amended and Restated Indemnification Agreement
# 10
.4*
Form of Amended and Restated Change in Control Agreement
# 10
.5*
Form of Amended and Restated Severance Benefits Agreement
+ 10
.6
License Agreement among Eli Lilly and Company,
    Shionogi & Co., Ltd. and the Company, dated as of
    July 31, 2006.
+ 10
.7
Agreement between Shionogi & Co., Ltd. and the Company,
    dated September 7, 2009 (amending License Agreement among
    Eli Lilly and Company, Shionogi & Co., Ltd. and the
    Company, dated as of July 31, 2006)
+ 10
.8
Agreement between Eli Lilly and Company and the Company, dated
    September 15, 2009 (amending License Agreement among Eli
    Lilly Company, Shionogi & Co., Ltd. and the Company, dated
    as of July 31, 2006)
+ 10
.9
Amended and Restated Technology Transfer Letter Agreement
    between Eli Lilly and Company and the Company, dated as of
    July 12, 2006.
+ 10
.10
License Agreement between Amgen Inc. and the Company, dated as
    of December 18, 2007
10
.11
Consent to Sublease, by and among the Company, NewTower
    Trust Company Multi-Employer Property Trust and Guava
    Technologies, dated as of September 12, 2008
10
.12
Sublease by and between the Company and Guava Technologies,
    dated as of August 1, 2008
10
.13
Note and Warrant Purchase Agreement by and among the Company and
    the persons and entities party thereto, dated July 17, 2009
10
.14
Form of Senior Secured Promissory note sold pursuant to that
    Note and Warrant Purchase Agreement, dated July 17, 2009
10
.15
Form of Stock Purchase Warrant sold pursuant to that Note and
    Warrant Purchase Agreement, dated July 17, 2009
21
.1
Subsidiary of Anthera Pharmaceuticals, Inc.
23
.1
Consent of Deloitte & Touche LLP, independent
    registered public accounting firm
23
.2*
Consent of Goodwin Procter LLP (included in Exhibit 5.1)
24
.1
Power of Attorney (included in page II-5)
*
To be filed by amendment
+
Certain provisions of this Exhibit
    have been omitted pursuant to a request for confidential
    treatment
#
Indicates management contract or
    compensatory plan, contract or agreement
II-7