UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

		For the quarterly period ended June 30, 2007

OR

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 0-18006

ORCHESTRA THERAPEUTICS, INC.

(Exact name of registrant as specified in its charter)

Delaware		33-0255679
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

5931 Darwin Court
Carlsbad, California		92008
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (760) 431-7080

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o Accelerated filer o Non-accelerated filer x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No x

As of September 26, 2007, there were 10,527,675 shares of our common stock outstanding.

ORCHESTRA THERAPEUTICS, INC.

INDEX

PART I – FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Condensed Balance Sheets
Condensed Statements of Operations
Condensed Statements of Cash Flows
Notes to Condensed Financial Statements
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Item 4. Controls and Procedures
PART II – OTHER INFORMATION
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits
SIGNATURES

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

Orchestra Therapeutics, Inc.

Condensed Balance Sheets

(in thousands, except for share amounts)

	June 30,			December 31,
	2007			2006
	(unaudited)
Assets

Current Assets:
Cash and cash equivalents	$	269		$	3,421
Accounts receivable	—			900
Prepaid expenses	157			389
	426			4,710
Property and equipment, net	2,401			2,785
Deposits and other assets ($370 and $521 restricted in escrow account as security for long-term lease at June 30, 2007 and December 31, 2006, respectively)	460			611
	$	3,287		$	8,106

Liabilities and Stockholders’ (Deficit) Equity

Current Liabilities:
Accounts payable and accrued expenses	$	3,730		$	3,084
Liability for warrants committed in excess of authorized stock	1,839			7,308
Convertible promissory notes, net of discount of $1,381 plus accrued interest of $535 at June 30, 2007	4,189			—
Convertible promissory notes, related party, net of discount of $149 plus accrued interest of $60 at June 30, 2007	461			—
Current portion of deferred liabilities and revenue	387			358
	10,606			10,750

Convertible promissory notes, related party, net of discount of $224 and $592 plus accrued interest of $545 and $458 at June 30, 2007 and December 31, 2006, respectively	3,477			3,571
Convertible promissory notes, net of discount of $2,845 plus accrued interest of $348 at December 31, 2006	—			2,733
Long-term deferred liabilities and revenue, net of current portion	1,739			1,936
Total long-term liabilities	5,216			8,240

Stockholders’ (Deficit) Equity :
Common stock, $.0025 par value, 35,000,000 shares authorized; 10,642,400 and 9,088,410 shares issued and outstanding at June 30, 2007 and December 31, 2006, respectively	27			23
Warrants	2,610			2,610
Additional paid-in capital	142,236			139,908
Accumulated deficit	(157,408		)	(153,425		)
Total stockholders’ deficit	(12,535		)	(10,884		)
	$	3,287		$	8,106

See accompanying notes to condensed financial statements.

Orchestra Therapeutics, Inc.

Condensed Statements of Operations

(in thousands, except for per share amounts)

(unaudited)

	Three Months Ended June 30,						Six months ended June 30,
	2007			2006			2007			2006
Revenues:
Licensed research revenue	$	4		$	4		$	8		$	8
Contract research revenue	—			7			—			14
	4			11			8			22

Expenses:
Research and development	1,834			2,475			4,103			4,938
General and administrative	1,077			1,469			2,551			2,798
	2,911			3,944			6,654			7,736

Other income and (expense):
Interest expense - including non-cash accretion of $814 and $2,760 for the three months and $1,684 and $3,488 for six months, respectively	(1,030		)	(3,632		)	(2,160		)	(4,862		)
Investment income	15			44			50			64
Gain on warrant liability marked to fair value	1,857			111,521			5,713			226,180
Beneficial inducement cost	—			—			(940		)	(14,095		)
	842			107,933			2,663			207,287

Net income (loss)	$	(2,065	)	$	104,000		$	(3,983	)	$	199,573

Basic income (loss) per share	$	(0.20	)	$	31.53		$	(0.40	)	$	87.60

Diluted (loss) per share	$	(0.20	)	$	0.39		$	(0.40	)	$	1.50

See accompanying notes to condensed financial statements.

Orchestra Therapeutics, Inc.

Condensed Statements of Cash Flows

(in thousands)

(unaudited)

	Six Months Ended June 30,
	2007			2006

Net cash used in operating activities	$	(4,111	)	$	(6,246	)

Cash Flows From Investing Activities:
Purchase of property and equipment	(2		)	(29		)
Net cash used in investing activities	(2		)	(29		)

Cash Flows From Financing Activities:
Net proceeds from common stock sold under the Standby Equity Distribution Agreement	—			1,139
Proceeds from secured convertible notes	—			7,700
Proceeds from secured convertible note, related party	—			550
Payments on short-term convertible debenture	—			(548		)
Proceeds from warrant exercise	1,067			6,123
Offering costs for debt and equity transactions	(106		)	(1,876		)
Net cash provided by financing activities	961			13,088

Net increase (decrease) in cash and cash equivalents	(3,152		)	6,813
Cash and cash equivalents - beginning of year	3,421			146
Cash and cash equivalents - end of period	$	269		$	6,959

See accompanying notes to condensed financial statements.

ORCHESTRA THERAPEUTICS, INC.

Notes to Condensed Financial Statements (unaudited)

Note 1 – The Company:

Orchestra Therapeutics, Inc., a Delaware Corporation, is an immuno-pharmaceutical company focused on developing products to treat autoimmune diseases. Our lead immune-based therapeutic product candidate is NeuroVaxTM for the treatment of multiple sclerosis (MS). NeuroVaxTM is designed to stimulate pathogen-specific immune responses aimed at slowing or halting the rate of disease progression.

In addition to MS, we have proprietary technology and prior clinical experience for evaluation of peptide-based immune therapies for rheumatoid arthritis (“RA”) and psoriasis. We are conducting pre-clinical work with human samples with various prestigious academic institutions toward the development of several therapeutic vaccines to treat other autoimmune diseases including RA and psoriasis.

We have completed our transition to an autoimmune diseases development company from our origins as an HIV vaccine development company. Over the past five years we have increased our focus on our autoimmune disease program, and in particular NeuroVaxTM and MS; at the beginning of the period our focus was almost exclusively on HIV.

During the quarter the Company scaled back operations at its King of Prussia, Pennsylvania (KOP) facility which resulted in a reduction in its workforce and a one time severance charge of $75,000. The remaining employees were given a six month employment agreement and a promise of a stay bonus. The stay bonus of $226,000 is being expensed ratably over the six month service period.

On August 24, 2007 the Company laid off almost all of its employees and discontinued its NeuroVaxTM multiple sclerosis PII trial which was being enrolled in Eastern Europe. The Company has hired a broker and is attempting to sell its HIV manufacturing assets and intellectual property. The proceeds from the sale of these assets will be used to pay its creditors. The Company is currently evaluating strategic options related to its autoimmune technology. Additionally, on August 24, 2007 Dr. Joseph O’Neill’s employment was terminated, without cause, in conjunction with the reorganization of the Company. Dr. O’Neill’s severance per his 2005 employment agreement is being accrued by the Company and will be paid when the Company’s KOP facility is sold.

The Company believes, based on consultations with its broker, that the net realizable value for the potential sale of its KOP facility equals or exceeds the net book value of the KOP facility assets of $2,299,000 at June 30, 2007.

On July 23, 2007, Cheshire Associates (“Cheshire”) invested $250,000 in a bridge transaction with the Company.. The Company issued a 15% Secured Promissory Note to Cheshire in the principal amount of $250,000 (the “Note”). and issued 500,000 shares of the Company’s common stock to Cheshire. The Note accrues interest at the rate of 15% per annum and matures on the earlier of December 1, 2007 or immediately before the closing of a financing which raises over $10,000,000 for the Company. In connection with this transaction, on July 23, 2007, the Company also entered into a Security Agreement with Cheshire.

On August 28, 2007, Spencer Trask Investment Partners LLC (“STIP”) made a $150,000 investment in the Company. In exchange STIP received a Senior Subordinated Secured Promissory Note, due on January 1, 2008 (the “STIP Note”) in the principal amount of $450,000 as well as 600,000 shares of common stock of the Company. The STIP Note and shares of common stock were issued pursuant to a Securities Purchase Agreement between the Company and Spencer Trask, dated August 28, 2007, and is secured by the grant of a security interest in all of the assets of the Company pursuant to the terms of a Security Agreement, dated the same date, by the Company in favor of Spencer Trask. On August 28, 2007, the Company also entered into a Registration Rights Agreement with Spencer Trask. Pursuant to the Registration Rights Agreement, the Company agreed to register Spencer Trask’s shares of common stock issued under the Securities Purchase Agreement.

All numbers herein have been adjusted to reflect our 1-for-100 reverse stock split of December 2006.

Note 2 – Interim Financial Statements:

The accompanying condensed balance sheet as of June 30, 2007 and the condensed statements of operations and of cash flows for the three and six months ended June 30, 2007 and 2006 have been prepared by Orchestra Therapeutics, Inc. (the “Company”) and have

not been audited. These financial statements, in the opinion of management, include all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of the financial position, results of operations and cash flows for all periods presented. The financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K filed for the year ended December 31, 2006. Interim operating results are not necessarily indicative of operating results for the full year.

The preparation of financial statements in conformity with generally accepted accounting principles 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 revenues and expenses during the reporting period. Actual results could differ from those estimates.

Certain prior year amounts have been reclassified to conform to the current year presentation.

Note 3 – Going Concern:

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred net losses since inception (but for the $238,640,000 cumulative gain on warrant liability marked to fair value) and has an accumulated deficit of $157,408,000 and cash and cash equivalents of $269,000 as of June 30, 2007. The Company will not generate meaningful revenues in the foreseeable future. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s independent registered public accounting firm, LevitZacks, indicated in its audit report on the 2006 financial statements that there is 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 recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

In July and August 2007, the Company received loan proceeds of $400,000 from certain investors (see Note 7). The Company is currently being funded on a month-to-month basis by STIP while it attempts to sell its KOP facility; however, no assurance can be given that the Company will be able to obtain additional financing when and as needed in the future.

Note 4 – Net Income (Loss) per Share:

Basic and diluted net loss per share was computed using the weighted average number of common shares outstanding, 10,519,000 and 9,853,000 for the three and six months ended June 30, 2007, respectively. Potentially dilutive securities are excluded from the diluted net loss per share calculation for the three months and six months ended June 30, 2007 as the effect would be antidilutive. As of June 30, 2007 potentially dilutive shares not included are 137,000 shares for outstanding employee stock options, 4,940,000 shares issuable under convertible notes payable, 3,499,000 shares issuable under warrants outstanding, and 94,000 shares issuable under Class B Warrants outstanding.

The following is a reconciliation of net income and share amounts used in the computations of income (loss) per share for the three and six months ended June 30, 2006 (in thousands):

	Three Months Ended June 30, 2006			Six Months Ended June 30, 2006
Net income used in computing basic net income per share	$	104,000		$	199,573
Impact of assumed conversions:
8% interest on convertible debentures	225			379
Impact of equity classified as liability
Gain on warrant liability marked to fair value	(111,521		)	(226,180		)
Net loss used in computing diluted net loss per share	$	(7,296	)	$	(26,228	)

The weighted average shares outstanding used in the basic net income per share computations for the three and six months ended June 30, 2006 were 3,298,590 and 2,278,320, respectively. In determining the number of shares used in computing diluted loss per share, the Company added approximately 16,000,000 potentially dilutive securities, mostly attributed to the 2006 Private Placement. As a result, the diluted loss per share was $0.39 and $1.50 for the three and six months ended June 30, 2006.

Note 5 – Stockholders’ Equity:

2006 Private Placement Convertible Notes Activity: During the six months ended June 30, 2007, $195,000 of outstanding principal plus accrued interest of $15,000 was converted into approximately 105,000 shares of the Company’s common stock.

2006 Private Placement Investor Warrant Activity: In March 2007, the Company entered into a Warrant Exercise and Price Protection arrangement with certain warrant holders of the 2006 Private Placement. This arrangement included a special warrant exercise inducement whereby (i) the warrant holder would receive 2.5 shares of Company common stock for each $2.00 of second tranche warrant exercise price paid to the Company (this equates to an effective price of $0.80 per share) and (ii) the warrant holder would receive short-term ratchet-style price protection (through September 30, 2007) on March 2007 warrant exercises. Under the special Warrant Exercise and Price Protection arrangement, 533,625 second tranche warrants were exercised during the first quarter of 2007. The Company received gross proceeds totaling $1,067,000 (net proceeds to the Company were $961,000 after $106,000 of cash commissions paid to the placement agent), and issued approximately 1,334,000 shares of common stock (of which approximately 206,000 shares were subscribed at March 31, 2007 and subsequently issued during April 2007). The remaining 5,447,625 unexercised warrants from the second tranche expired on March 30, 2007.

The Warrant Exercise and Price Protection arrangement resulted in a non-cash charge to operations of $940,000 during the first quarter of 2007 representing beneficial inducement cost.

Warrants Issued for Limited Recourse Support: In connection with the limited recourse interest support on the 2006 Private Placement convertible notes, Spencer Trask Intellectual Capital Company LLC (“STIC”) earned approximately 63,000 and 127,000 seven-year warrants to purchase the Company’s common stock at $2.00 per share for the three and six months ended June 30, 2007, respectively. These warrants were valued utilizing the Black-Scholes option-pricing model (“BSOPM”) and the Company recognized the value of these warrants, $39,000 and $121,000 for the three and six months ended June 30, 2007, respectively, as interest expense at the time of issuance.

Commissions Paid and Warrants Issued to Placement Agent: Upon exercise of the 2006 Private Placement investor warrants, Spencer Trask Ventures, Inc. (“STVI”) was entitled to a commission equal to 10% of the warrant exercise proceeds in cash plus seven-year placement agent warrants to purchase a number of shares of the Company’s common stock (at $2.00 per share) equal to 20% of the number of exercised warrants. As a result of the exercise of 533,625 second tranche warrants during the first quarter of 2007, STVI became entitled to approximately $106,000 in cash and 106,000 additional placement agent warrants. The exercise price per share of the 106,000 additional placement agent warrants is at $0.80 instead of $2.00, as a result of an amendment related to the Warrant Exercise and Price Protection arrangement. STVI has chosen to share some of this compensation with its employees and/or its selected dealers. STVI will retain approximately 23,000 warrants of the 106,000 warrants earned during the first quarter of 2007.

Antidilution Adjustments: The 2006 Private Placement (including the placement agent warrants) resulted in weighted-average antidilution adjustments under various warrants held by Cheshire Associates LLC (“Cheshire”) resulting in them becoming exercisable for an aggregate of 1,070,731 shares of common stock, instead of the 338,091 shares of common stock for which they had been exercisable before the 2006 Private Placement, and at a blended exercise price of $9.72 instead of at a blended exercise price of $31.00. Following the Warrant Exercise and Price Protection exercises during the six month period ended June 30, 2007 and the expiration of the remaining 5,447,625 unexercised second tranche warrants, the warrants held by Cheshire are now exercisable for an aggregate of 934,120 shares of common stock at a blended exercise price of $11.14 per share.

Note 6 – Commitments and Contingencies:

On October 3, 2006 the Company reached agreement with class counsel to settle the Company’s securities-law class action lawsuit for approximately $9.6 million. In May 2007, the federal court gave final approval to the settlement. The Company also reached an agreement to settle the related California state-court derivative lawsuit for approximately $0.25 million, which settlement would also be funded entirely by the Company’s insurers, plus agreement to adopt certain corporate governance requirements. The settlements, which include no admission of wrongdoing by the Company, or any defendants, had no effect on the Company’s operations, cash flow, or financial position as they are within insurance limits. The settlements also include company officers who were named in the lawsuits.

7 – Subsequent Events:

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion contains forward-looking statements concerning our liquidity, capital resources, financial condition, results of operation and timing of anticipated revenues and expenditures. Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected. Factors that could cause or contribute to such differences include those discussed under “Risk Factors,” as well as those discussed elsewhere in this Form 10-Q. The following discussion should be read in conjunction with our financial statements and notes thereto included elsewhere in this Form 10-Q. Except for our ongoing obligation to disclose material information as required by federal securities laws, we undertake no obligation to publicly release the result of any revisions to these forward-looking statements that may be indicated in order to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Overview

We caution investors not to be misled by the “gain on warrant liability marked to fair value” reported for the three and six months ended June 30, 2007 and June 30, 2006, and the resulting net income we reported for the three and six months June 30, 2006. Our operations are not profitable. Indeed, our operations used approximately $6,246,000 of cash for the six months ended June 30, 2006, and 5,011,000 for the six months ended June 30, 2007, excluding the $900,000 received from NovaRx, Inc. in January 2007.

In December 2006, we effected a 1-for-100 reverse stock split. All numbers in this Quarterly Report have been adjusted to reflect the reverse stock split.

Liquidity and Capital Resources

As of June 30, 2007, we had an accumulated deficit of $157,408,000. We have not generated revenues from the commercialization of any product. We expect to continue to incur substantial net operating losses over the next several years, which would imperil our ability to continue operations even if we can resolve our more immediate cash needs. We may not be able to generate sufficient product revenue to become profitable on a sustained basis, or at all, and do not expect to generate significant product revenue before 2012, if at all, unless they are earned through corporate collaborations or new research and development agreements. We have operating and liquidity concerns due to our significant net losses and negative cash flows from operations. We have $5,335,000 of secured indebtedness which matures on January 1, 2008. As a result of these and other factors, our independent registered public accounting firm, LevitZacks, indicates, in its report on the 2006 financial statements, that there is substantial doubt about our ability to continue as a going concern.

In March 2007, we entered into a Warrant Exercise and Price Protection arrangement with certain warrant holders of the 2006 Private Placement. This agreement included a special warrant exercise inducement whereby (i) the warrant holder would receive 2.5 shares of our common stock for each $2.00 of warrant exercise price paid to us (this equates to an effective price of $0.80 per share) and, (ii) the warrant holder would receive short-term ratchet-style price protection (through September 30, 2007) on March 2007 warrant exercises. Under the special Warrant Exercise and Price Protection arrangement, 533,625 second tranche warrants were exercised during the first quarter of 2007. We received gross proceeds totaling $1,067,000 (net proceeds to us were $961,000 after $106,000 of cash commissions paid to the placement agent), and issued approximately 1,334,000 shares of common stock (of which approximately 206,000 shares were subscribed at March 31, 2007 and subsequently issued during April 2007). The remaining 5,447,625 unexercised warrants from the second tranche expired on March 30, 2007.

$450,000 as well as 600,000 shares of common stock of the Company. The STIP Note and shares of common stock were issued pursuant to a Securities Purchase Agreement between the Company and Spencer Trask, dated August 28, 2007, and is secured by the grant of a security interest in all of the assets of the Company pursuant to the terms of a Security Agreement, dated the same date, by the Company in favor of Spencer Trask. On August 28, 2007, the Company also entered into a Registration Rights Agreement with Spencer Trask. Pursuant to the Registration Rights Agreement, the Company agreed to register Spencer Trask’s shares of common stock issued under the Securities Purchase Agreement.

We need to raise additional capital immediately. The Company is currently being funded on a month-to-month basis by STIP while it attempts to sell its KOP facility; however, no assurance can be given that the Company will be able to obtain additional financing when and as needed in the future.

We will need to raise very substantial additional funds over several years inorder to continue research and development, preclinical studies and clinical trials necessary to bring potential products to market and to establish manufacturing and marketing capabilities.

We cannot provide assurance that such financing will be available on acceptable terms, if at all. If we raise funds through future equity arrangements, significant further dilution to stockholders might result.

Results of Operations

Three and Six Months Ended June 30, 2007 Compared to Three and Six Months Ended June 30, 2006.

Revenues. We recorded revenues for the three and six months ended June 30, 2007 of $4,000 and $8,000, respectively, the same as the $11,000 and $22,000 for the corresponding period in 2006. We have not received any revenues from the sale of products and do not expect to derive revenue from the sale of any products earlier than 2012, if at all.

Research and Development Expenses. Our research and development expenditures for the three and six months ended June 30, 2007 were $1,834,000 and $4,103,000, respectively, as compared to $2,475,000 and $4,938,000 for the corresponding period in 2006. The $641,000 decrease in research and development expenses for the three month period ended June 30, 2007 compared with the corresponding period in 2006 is attributable primarily to a decrease of $177,000 in licensed technology amortization due to our licensed technology being fully amortized at December 31, 2006 and an overall decrease of $266,000 in administration, manufacturing and facility expenditures related to the scale back of the HIV business. In addition, clinical trials expenses during the second quarter of 2007 decreased $198,000 compared with the corresponding period in 2006 representing a decrease of $170,000 associated with HIV clinical trials and a decrease of $28,000 in expenses associated with MS clinical trials.

Research and development expenses decreased $835,000 for the six month period ended June 30, 2007 compared with the six month period ended June 30, 2006. This overall decrease in research and development expenses for the six month period ended June 30, 2007 compared with the corresponding period in 2006 is attributable primarily to a decrease of $353,000 in licensed technology amortization due to our licensed technology being fully amortized at December 31, 2006 and an overall decrease of $354,000 in administration, manufacturing and facility expenditures related to the scale back of the HIV business. In addition, clinical trials expenses for the six month period ended June 30, 2007 decreased $128,000 compared with the corresponding period in 2006 representing a decrease of $449,000 associated with HIV clinical trials offset by a $321,000 increase in expenses associated with our current MS trials.

General and Administrative Expenses. General and administrative expenses for the three and six months ended June 30, 2007 were $1,077,000 and $2,551,000 respectively, as compared to $1,469,000 and $2,798,000 for the corresponding period in 2006. General and administrative expenses decreased $392,000 for the three month period ended June 30, 2007 compared to the three month period ended June 30, 2006 primarily due to a $189,000 decrease in non-cash employee stock-based compensation cost and a combined decrease in legal, public relations and executive severance costs of $203,000.

General and administrative expenses decreased $247,000 for the six month period ended June 30, 2007 compared to the six month period ended June 30, 2006 primarily due to a $354,000 decrease in non-cash employee stock-based compensation cost and combined $259,000 decrease in legal, administrative and executive severance costs. This overall decrease in expense for the period was offset by a $366,000 increase in expenses associated with investor and public relations activities.

Interest Expense. Interest expense for the three and six months ended June 30, 2007 was $1,030,000 and $2,160,000, respectively, as compared to $3,632,000 and $4,862,000 for the corresponding period in 2006. The decrease of $2,602,000 and $2,702,000 for the

three and six months ended June 30, 2007 is primarily due to the reduction in 2007 of debt discount accretion and interest expense associated with the notes issued in the 2006 Private Placement, issuing the Debenture for $1,000,000 to Cornell Capital in 2005 at a 12% interest rate, and for the accelerated accretion on debt discount for early partial conversions by Cornell Capital and early payoff of the note. In addition, the decrease reflects the partial conversion during the first six months of 2006 of the 8% Mortgage Note held by Cheshire Associates LLC, which is an affiliate of our director and major stockholder Kevin Kimberlin.

In addition, the interest expense associated with the issuance of warrants to STIC for its limited recourse interest support decreased approximately $610,000 and $854,000 for the three and six months ended June 30, 2007 as compared to the corresponding period in 2006. The decrease in the value of the warrants issued to STIC is primarily due to the decrease in our stock price, which is one of the assumptions utilized in the Black-Scholes option-pricing model (“BSOPM”) valuation of the warrants.

During the first quarter of 2007 we recognized a non-cash charge to operations of $940,000 representing beneficial inducement cost associated with the Warrant Exercise and Price Protection arrangement.

During the first quarter of 2006 we recognized a non-cash charge to operations of $14,095,000 representing beneficial inducement cost associated with the Note Exchange and Note Revision transactions with Cheshire.

Pursuant to EITF No. 00-19, we are currently required to classify certain outstanding derivative instruments (primarily warrants) as a liability. This warrant liability was initially established in March 2006 and the fair value of the warrant liability is remeasured utilizing the BSOPM at each reporting date. We reported a gain on warrant liability marked to fair value of $1,857,000 and $5,713,000 for the three and six months ended June 30, 2007, respectively, as compared to $111,521,000 and $226,180,000 for the corresponding period in 2006, using the assumptions in the table below. The decrease in the gain recorded each quarter is attributable to a continued decrease in the company common stock price since the respective prior period measurement dates, combined with the expiration of the 2006 Private Placement warrants in March 2007..

	March 31, 2007			March 31, 2006			June 30, 2007			June 30, 2006
Dividend yield	0.0		%	0.0		%	0.0		%	0.0		%
Expected volatility - based on the Company’s three year historical rate	161.95		%	139.61		%	164.87		%	162.62		%
Risk-free interest rate	4.54		%	4.83		%	4.89		%	5.130		%
Company common stock price	$	1.17		$	11.00		$	0.61		$	2.25

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions in certain circumstances that affect amounts reported in the accompanying financial statements and related footnotes. In preparing these financial statements, management has made its best estimates and judgments of certain amounts included in the financial statements, giving due consideration to materiality. However, application of these accounting policies involves the exercise of judgment and use of assumptions as to future uncertainties and, as a result, actual results could differ from these estimates. Historically, there have been no significant differences between estimates recorded for impairment of intangibles and long-lived assets or exit and disposal related costs compared to actual expenses incurred. In preparing our financial statements the most difficult, subjective and complex estimates and the assumptions that deal with the greatest amount of uncertainty relate to our accounting for stock-based compensation, asset impairments and warrant liability associated with EITF No. 00-19, as described in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2006.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We invest our excess cash primarily in U.S. government securities and money market accounts. These instruments have maturities of three months or less when acquired. We do not utilize derivative financial instruments, derivative commodity instruments or other market risk sensitive instruments, positions or transactions. Furthermore, our debt is at fixed rates. Accordingly, we believe that, while the instruments we hold are subject to changes in the financial standing of the issuer of such securities, we are not subject to any material risks arising from changes in interest rates, foreign currency exchange rates, commodity prices, equity prices or other market changes that affect market risk sensitive instruments.

Item 4. Controls and Procedures

Mr. Michael K. Green, our principal executive officer and principal financial officer, after evaluating the effectiveness of our disclosure controls and procedures (as defined in Securities Exchange Act Rule 13a-15(e)) have concluded that, as of June 30, 2007, our disclosure controls and procedures are effective.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

Item 1A. Risk Factors

Our future operating results are subject to a number of factors, including:

We need more cash immediately, and also on an ongoing basis.

We have never generated any revenue from product sales. As of June 30, 2007, we had an accumulated deficit of approximately $157,408,000, cash and cash equivalents of only $269,000, a working capital deficiency of $10,180,000 and a deficiency in stockholders’ equity of $12,535,000. Even after our July/August 2007 bridge financing, we must raise additional capital immediately. In July and August 2007, the Company received loan proceeds of $400,000 from certain investors. The Company is currently being funded on a month-to-month basis by STIP while it attempts to sell its KOP facility; however, no assurance can be given that these monthly loans will continue or that the Company will be able to obtain additional financing when and as needed in the future.

Because we do not anticipate generating any revenue from our products until at least 2012, if at all, we will continue to have negative cash flow.

We need to raise substantial additional capital to fund our operations and repay our loan obligations. We will need to raise substantial funds to continue our operations and to conduct research and development, preclinical studies and clinical trials necessary to bring our potential products to market and to establish manufacturing and marketing capabilities. We will continue to have limited cash resources. There can be no assurance that we will be successful in consummating any financing transaction or, if consummated, that the terms and conditions will not be unfavorable to us.

The timing and amount of our future capital requirements will depend on many factors, including (but not limited to):

· the timing of approval to begin new clinical trials;

· our ability to raise additional funding and the amounts raised, if any;

· the time and cost involved in obtaining regulatory approvals;

· continued scientific progress in our research and development programs;

· the scope and results of preclinical studies and clinical trials;

· the cost of manufacturing scale-up and/or withdrawal;

· the costs involved in filing, prosecuting and enforcing patent claims;

· competing technological and market developments;

· effective commercialization activities and arrangements;

· the costs of defending against and settling lawsuits; and/or

· other factors not within our control or known to us.

Our perceived momentum, and therefore also our access to capital, could be limited if we do not progress in:

· obtaining regulatory approvals;

· our research and development programs;

· our preclinical and clinical trials.

Our access to capital also could be limited by:

· overall financial market conditions;

· the security interest in substantially all of our assets in respect of indebtedness in an aggregate principal amount of $8,740,000;

· Potential dilution which would occur upon the exercise or conversion of outstanding derivative securities which overlie approximately 8,700,000 shares of our common stock.

Our independent registered public accountants have expressed substantial doubt as to our ability to continue as a going concern.

As of June 30, 2007, we had an accumulated deficit of $157,408,000. We have not generated revenues from the commercialization of any product. We expect to continue to incur substantial net operating losses over the next several years, which would imperil our ability to continue operations. Our cash currently on hand does not provide us with adequate liquidity beyond the third quarter of 2007. We have $5,335,000 of secured indebtedness which matures on January 1, 2008. We may not be able to generate sufficient product revenue to become profitable on a sustained basis, or at all, and do not expect to generate significant product revenue before 2012, if at all. We have operating and liquidity concerns due to our significant net losses and negative cash flows from operations. As a result of these and other factors, our independent registered public accounting firm, LevitZacks, indicated, in its report on our 2006 financial statements, that there is substantial doubt about our ability to continue as a going concern.

We have exited from our historic HIV vaccine development business. Over the past five years we have increased our focus on our autoimmune disease program, and in particular NeuroVax™ and MS; at the beginning of the period our focus was almost exclusively on HIV

On August 24, 2007 the Company laid off almost all of its employees and discontinued its Neurovax multiple sclerosis PII trial which was being enrolled in Eastern Europe. The Company has hired a broker and is attempting to sell its HIV manufacturing assets and intellectual property. The proceeds from the sale of these assets will be used to pay its creditors. The Company is currently evaluating strategic options related to its autoimmune technology. Additionally, on August 24, 2007 Dr. Joseph O’Neill’s employment was terminated, without cause, in conjunction with the reorganization of the Company. Dr. O’Neill’s severance per his 2005 employment agreement is being accrued by the Company and will be paid when the Company’s KOP facility is sold.

Except for any proceeds from selling the KOP facility, it is unlikely that stockholders will receive any return on the hundreds of millions of dollars we have invested in our HIV program since we were founded in 1987.

Due to our low stock price, our recent financings have been extraordinarily dilutive, and our stockholders can be expected to suffer significant additional dilution in connection with any future financings.

As part of our 2006 Private Placement, we offered and sold 80 units in a private securities offering, each unit comprising a $100,000 principal amount 8% Senior Secured Convertible Promissory Note, due January 1, 2008, and a warrant to purchase up to 150,000 shares of common stock at a price of $2.00 per share. The principal plus accrued interest on the notes may be converted into common

stock at a conversion price equal to $2.00 per share. We have issued approximately 7,561,000 shares of common stock in respect of note conversions and warrant exercises through June 30, 2007. If the remaining notes are converted in full, we would be required to issue approximately 2,667,500 more shares of common stock. Additionally, our placement agent for this offering, which is an affiliate of Kevin Kimberlin, a director and our largest stockholder, received warrants to purchase approximately 1,769,000 shares of common stock at a price of $2.00 per share and warrants to purchase approximately 106,000 shares of common stock at $0.80 per share.

As a result of the 2006 Private Placement and the 2007 Bridge Financing, our existing stockholders as of early 2006, after the conversion and exercise of the notes and warrants, hold only a fraction of the equity interest they previously held in the Company.

Although we urgently need to secure additional financing, there can be no assurance that we will be successful in consummating any financing transaction or, if consummated, that the terms and conditions of the financing will not be unfavorable to us. Any other future near-term financings will almost certainly involve substantial further dilution of outstanding equity. Any subsequent offerings may also require the creation or issuance of a class or series of stock that by its terms ranks senior to the common stock with respect to rights relating to dividends, voting and/or liquidation.

Our stock has been delisted from Nasdaq and is subject to penny stock rules, which may make it more difficult for us to raise capital and for you to sell your securities.

In November 2005, our stock and Class B warrants were delisted from the Nasdaq Stock Market (Nasdaq) due to our failure to satisfy the Nasdaq continued listing criteria. As a result, our stock is currently quoted on the Over-the-Counter Bulletin Board quotation service (OTCBB). Securities traded on the OTCBB generally suffer from lower liquidity and greater price volatility. Additionally, because our stock price is currently considered a “penny stock” under regulations of the Securities and Exchange Commission, broker-dealers who buy and sell our securities are subject to rules that impose additional sales practice requirements. These additional burdens imposed upon broker-dealers could discourage broker-dealers from effecting transactions in our common stock, which could severely limit the market liquidity of the common stock and warrants and your ability to sell our securities in the secondary market. Being delisted also hurts our ability to raise additional financing, in part because many investors are unwilling to take large positions in stocks which do not trade on Nasdaq or a major stock exchange.

Our failure to successfully develop our product candidates may cause us to cease operations.

We have not completed the development of any products. We are dependent upon our ability to successfully develop our product candidates and our failure to do so may cause us to cease operations.

For 20 years we were engaged in an effort to develop a vaccine against HIV. We exited this program in August 2007 We have chosen to focus our development efforts on NeuroVaxTM and other autoimmune disease. We cannot assure you that any of our drug candidates will succeed in clinical trials or that we, or our corporate collaborators, if any, will ever obtain any regulatory approvals for these drug candidates.

The results of our preclinical studies and clinical trials may not be indicative of future clinical trial results. A commitment of substantial financial and other resources to conduct time-consuming research, preclinical studies and clinical trials will be required if we are to develop any products. None of our potential products may prove to be safe or effective in clinical trials. Approval by the U.S. FDA, or other regulatory approvals, including export license permissions, may not be obtained and even if successfully developed and approved, our products may not achieve market acceptance. Any products resulting from our programs may not be successfully developed or commercially available until 2012 or later, if at all. Moreover, unacceptable toxicity or side effects could occur at any time in the course of human clinical trials or, if any products are successfully developed and approved for marketing, during commercial use of our products. Although preliminary research and clinical evidence have shown our product candidates to be safe, the appearance of any unacceptable toxicity or side effects could interrupt, limit, delay or abort the development of any of our products or, if previously approved, necessitate their withdrawal from the market.

The lengthy product approval process and uncertainty of government regulatory requirements may delay or prevent us from commercializing products.

Clinical testing, manufacture, promotion, export and sale of our products are subject to extensive regulation by numerous governmental authorities in the United States, principally the FDA, and corresponding state and numerous foreign regulatory agencies worldwide. This regulation may delay or prevent us from commercializing products. Noncompliance with applicable requirements can result in, among other things, fines, injunctions, seizure or recall of products, total or partial suspension of product manufacturing and marketing, failure of the government to grant pre-market approval, withdrawal of marketing approvals and criminal prosecution.

The regulatory process for new therapeutic drug products, including the required preclinical studies and clinical testing, is lengthy and expensive. We may not receive necessary international regulatory or FDA clearances for our drug candidates in a timely manner, or at all. The length of the clinical trial process and the number of patients regulatory agencies will require to be enrolled in the clinical trials in order to establish the safety and efficacy of our products is uncertain.

Even if late-stage clinical trials for our drug candidates are initiated and successfully completed, the FDA and numerous foreign regulatory agencies may not approve these candidates for commercial sale. We may encounter significant delays or excessive costs in our efforts to secure necessary approvals. Regulatory requirements are evolving and uncertain. Future United States or foreign legislative or administrative acts could also prevent or delay regulatory approval of our products. We may not be able to obtain the necessary approvals for clinical trials, manufacturing or marketing of any of our products under development. Even if commercial regulatory approvals are obtained, they may include significant limitations on the indicated uses for which a product may be marketed.

In addition, a marketed product is subject to continual regulatory review. Later discovery of previously unknown problems or failure to comply with the applicable regulatory requirements may result in restrictions on the marketing of a product or withdrawal of the product from the market, as well as possible civil or criminal sanctions.

Among the other requirements for regulatory approval is the requirement that prospective manufacturers conform to the FDA’s Good Manufacturing Practices, or GMP, requirements. In complying with the FDA’s GMP requirements, manufacturers must continue to expend time, money and effort in production, record keeping and quality control to assure that products meet applicable specifications and other requirements. Failure to comply and maintain compliance with the FDA’s GMP requirements subjects manufacturers to possible FDA regulatory action and as a result may have a material adverse effect on us. We, or our contract manufacturers, if any, may not be able to maintain compliance with the FDA’s GMP requirements on a continuing basis. Failure to maintain compliance could have a material adverse effect on us.

The FDA has not designated expanded access protocols for our drug candidates as “treatment” protocols. The FDA may not determine that any of our drug candidates meet all of the FDA’s criteria for use of an investigational drug for treatment use. Even if one of our candidates is allowed for treatment use, third party payers may not provide reimbursement for the costs of treatment. The FDA also may not consider our product candidates under development to be appropriate candidates for accelerated approval, expedited review or “fast track” designation.

Marketing any drug products outside of the United States will subject us to numerous and varying foreign regulatory requirements governing the design and conduct of human clinical trials and marketing approval. Additionally, our ability to export drug candidates outside the United States on a commercial basis is subject to the receipt from the FDA of export permission, which may not be available on a timely basis, if at all. Approval procedures vary among countries and can involve additional testing, and the time required to obtain approval may be even longer than that required to obtain FDA approval. Foreign regulatory approval processes include all of the risks associated with obtaining FDA approval set forth above, and approval by the FDA does not ensure approval by the health authorities of any other country.

Before we will be permitted to any either of our drug candidates to foreign countries for clinical use in those countries, we need to meet a number of regulatory requirements. One of those requirements is that we must ensure that we can manufacture the candidate at a United States manufacturing facility in a manner that is in “substantial compliance” with current United States GMP requirements. We must provide the FDA with “credible scientific evidence” that the candidate would be safe and effective under the conditions of proposed use in foreign countries. There can be no assurance, however, that we will successfully meet any or all of these requirements for the export of our drug candidates, and if we are unable to successfully meet all regulatory requirements, we will not be permitted by the FDA to export our candidates to foreign countries for clinical use, even if the foreign governments were to approve such use.

Our patents and proprietary technology may not be enforceable and the patents and proprietary technology of others may prevent us from commercializing products. Some of our patents expire fairly soon.

Although we believe our patents to be protected and enforceable, the failure to obtain meaningful patent protection for our potential products and processes would greatly diminish the value of our potential products and processes.

In addition, whether or not our patents are issued, or issued with limited coverage, others may receive patents, which contain claims applicable to our products. Patents we are not aware of may adversely affect our ability to develop and commercialize products. Also, our patents related to autoimmune diseases have expiration dates that range from 2010 to 2019. The limited duration of our patents could diminish the value of our potential products and processes, particularly since we do not expect to generate any revenue from our products sooner than 2012, if at all.

The patent positions of biotechnology and pharmaceutical companies are often highly uncertain and involve complex legal and factual questions. Therefore, the breadth of claims allowed in biotechnology and pharmaceutical patents cannot be predicted. We also rely upon non-patented trade secrets and know how, and others may independently develop substantially equivalent trade secrets or know how. We also rely on protecting our proprietary technology in part through confidentiality agreements with our current and former corporate collaborators, employees, consultants and some contractors. These agreements may be breached, and we may not have adequate remedies for any breaches. In addition, our trade secrets may otherwise become known or independently discovered by our competitors. Litigation may be necessary to defend against claims of infringement, to enforce our patents and/or to protect trade secrets. Litigation could result in substantial costs and diversion of management efforts regardless of the results of the litigation. An adverse result in litigation could subject us to significant liabilities to third parties, require disputed rights to be licensed or require us to cease using proprietary technologies.

Our products and processes may infringe, or be found to infringe, on patents not owned or controlled by us. If relevant claims of third-party patents are upheld as valid and enforceable, we could be prevented from practicing the subject matter claimed in the patents, or be required to obtain licenses or redesign our products or processes to avoid infringement.

Technological change and competition may render our potential products obsolete.

The pharmaceutical and biotechnology industries continue to undergo rapid change, and competition is intense and we expect it to increase. Competitors may succeed in developing technologies and products that are more effective or affordable than any that we are developing or that would render our technology and products obsolete or noncompetitive. Many of our competitors have substantially greater experience, financial and technical resources and production and development capabilities than we. Accordingly, some of our competitors may succeed in obtaining regulatory approval for products more rapidly or effectively than we, or develop or acquire technologies and products that are more effective and/or affordable than any that we are developing.

Our lack of commercial manufacturing and marketing experience and our dependence on third parties for manufacturing may prevent us from successfully commercializing products.

We have arrangements with third party contract manufacturing companies to manufacture our product candidates. We may encounter costs, delays and /or other difficulties in producing, packaging and distributing our clinical trials and finished product. Further, contract manufacturers must also operate in compliance with the GMP requirements; failure to do so could result in, among other things, the disruption of our product supplies. Our potential dependence upon third parties for the manufacture of our products may adversely affect our profit margins and our ability to develop and deliver products on a timely and competitive basis.

The manufacturing process of our products involves a number of steps and requires compliance with stringent quality control specifications imposed by us and by the FDA. Moreover, our products can be manufactured only in a facility that has undergone a satisfactory inspection and certification by the FDA. For these reasons, we would not be able to quickly replace our manufacturing capacity if we were unable to use our manufacturing facilities as a result of a fire, natural disaster (including an earthquake), equipment failure or other difficulty, or if our manufacturing facilities are deemed not in compliance with the GMP requirements, and the non-compliance could not be rapidly rectified. Our inability or reduced capacity to manufacture our products would prevent us from successfully commercializing our products.

We have no experience in the sales, marketing and distribution of pharmaceutical or biotechnology products. Thus, our products may not be successfully commercialized even if they are developed and approved for commercialization and even if we can manufacture them. In addition, our competitors will have significantly greater marketing resources and power than we will.

We may be unable to enter into collaborations.

Our current development strategy is to seek collaborative arrangements with larger pharmaceutical companies for the clinical development and commercialization of our product candidates. If we are able to enter into such arrangements, we expect that a large portion of the ongoing development costs for our drug candidates would be funded by our collaborative partners. However, we may be unable to negotiate collaborative arrangements on favorable terms, or at all, and any future collaborative arrangements may not be successful or continue. If we are unable to enter into favorable collaborative arrangements, we expect that our future capital requirements would increase and we may be required to delay or curtail development efforts for one or both of our drug candidates.

Adverse determinations and pressures concerning product pricing, reimbursement and related matters could prevent us from successfully commercializing any of our product candidates.

Our ability to earn revenue on any of our products will depend in part on the extent to which patient reimbursement for the costs of the products and related treatments will be available from government health administration authorities, private health coverage insurers, managed care organizations and other organizations. Failure of patients to obtain appropriate cost reimbursement may prevent us from successfully commercializing any of our other products. Third-party payers are increasingly challenging the prices of medical products and services. If purchasers or users of any of our other products are not able to obtain adequate reimbursement for the cost of using the products, they may forego or reduce their use. Significant uncertainty exists as to the reimbursement status of newly approved health care products and whether adequate third party coverage will be available.

Kevin Kimberlin, a member of our Board of Directors, beneficially owns approximately 24% of our outstanding common stock and has the rights to acquire approximately 3,522,000 additional shares of our common stock, which could theoretically result in ownership of up to approximately 41% of our outstanding shares and could allow him to control or influence stockholder votes.

Kevin B. Kimberlin, a member of our Board of Directors, together with his affiliates and/or related parties, currently owns of record approximately 24 % of our outstanding shares of common stock. He and they also have the right to acquire, through the conversion of indebtedness and the exercise of options and warrants beneficially owned by them, approximately 3,522,000 additional shares. If his/their indebtedness, options and warrants (but not those of anyone else) were to be converted and exercised in full, Mr. Kimberlin and his affiliates and/or related persons would own approximately 41% of our outstanding shares of common stock on a post-conversion/exercise basis.

As a result of ownership of our common stock and the ability to acquire additional shares, Mr. Kimberlin and his affiliates and/or related persons have the ability to influence, and possibly control, substantially all matters requiring approval by our stockholders, including the election of directors and the approval of mergers or other business combination transactions. If your interests as a stockholder are different from his interests, you may not agree with his decisions and you might be adversely affected thereby.

Mr. Kimberlin is also a secured creditor.

As collateral for the Mortgage Note held by Cheshire and the Qubit Note, which have principal amounts of $3,155,000 and $250,000 and mature on January 1, 2009 and January 1, 2008, respectively, parties affiliated with and/or associated with Kevin Kimberlin have a perfected security interest (shared with the 2006 Private Placement note holders) in our intellectual property and other assets. Pursuant to the security agreement, we must comply with covenants with respect to these assets. The security interests and covenants could impair our ability to enter into collaborative and licensing arrangements.

We have significant indebtedness that will mature soon, before our operations can repay it.

We have $5,335,000 of secured debt due on January 1, 2008 and $3,155,000 of secured debt due on January 1, 2009. We will not have any product revenues before those dates. There can be no assurance that we can pay, refinance or extend this debt.

Our reporting of profits may confuse investors and result in lawsuits against us.

Due to EITF No. 00-19, we reported a large net income for the year ended December 31, 2006, and a reduced net loss for the three and six months ended June 30, 2007. If investors fail to understand that this net income is an artifice which does not reflect our unprofitable operations, our stock price might rise temporarily and then fall again. This scenario might then lead disappointed investors to sue us on a variety of possible legal theories.

Our certificate of incorporation and bylaws include provisions that could make attempts by stockholders to change management more difficult.

The approval of 66 2/3% of our voting stock is required to approve specified transactions and to take specified stockholder actions, including the calling of special meetings of stockholders and the amendment of any of the anti-takeover provisions, including those providing for a classified board of directors, contained in our certificate of incorporation. Further, we have a “poison pill” stockholder rights plan, which would cause substantial dilution to the ownership of a person or group that attempts to acquire us on terms not approved by our Board of Directors and may have the effect of deterring hostile takeover attempts. The substantial aggregate equity positions of Mr. Kimberlin and his affiliates would make a hostile takeover attempt very unlikely. The practical effect of these provisions is to require a party seeking control of us to negotiate with our Board of Directors, which could delay or prevent a change in control. These provisions could limit the price that investors might be willing to pay in the future for our securities and make attempts by stockholders to change management more difficult.

We are subject to the anti-takeover provisions of Section 203 of the Delaware General Corporation Law, which prohibits us from engaging in a “business combination” with an “interested stockholder” for a period of three years after the date of the transaction in which the person first becomes an “interested stockholder,” unless the business combination is approved in a prescribed manner. The application of Section 203 also could have the effect of delaying or preventing a change of control.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

No further disclosure required.

Item 3. Defaults Upon Senior Securities

None

Item 4. Submission of Matters to a Vote of Security Holders

None.

Item 5. Other Information

None

Item 6. Exhibits

Exhibit Number		Description of Document

10.208.1 (1)		Supplement to Prospectus Dated June 15, 2007, Press release announcing discontinuation of our HIV vaccine development program

31.1		Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002/SEC Rule 13a-14(a).

31.2		Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002/SEC Rule 13a-14(a).

32.1		Certification pursuant to Section 1350 of Chapter 63 of 18 U.S.C. as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002/SEC Rule 13a-14(b).

32.2		Certification pursuant to Section 1350 of Chapter 63 of 18 U.S.C. as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002/SEC Rule 13a-14(b).

(1) Incorporated by reference to the Exhibit of the same number filed with our December 31, 2006 Form 10-K.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	ORCHESTRA THERAPEUTICS, INC.

Date: October 2, 2007	By:	/s/ Michael K. Green
		Michael K. Green,
		Chief Operating Officer & Chief Financial Officer

Exhibit Index

Exhibit Number		Description of Document

31.1		Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002/SEC Rule 13a-14(a).

31.2		Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002/SEC Rule 13a-14(a).

32.1		Certification pursuant to Section 1350 of Chapter 63 of 18 U.S.C. as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002/SEC Rule 13a-14(b).

32.2		Certification pursuant to Section 1350 of Chapter 63 of 18 U.S.C. as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002/SEC Rule 13a-14(b).

ORCHESTRA THERAPEUTICS, INC. 10-Q