UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

~~[X] Annual Report~~x ~~Pursuant~~ANNUAL ToREPORT ~~Section~~PURSUANT TO SECTION 13 OrOR 15(Dd) OfOF ~~The~~THE ~~Securities~~SECURITIES ~~Exchange~~EXCHANGE ~~Act~~ACT Of OF 1934

For the fiscal year ended December 31, ~~2008~~ 2009

~~[ ] Transition Report~~o ~~Pursuant~~TRANSITION ToREPORT ~~Section~~PURSUANT TO SECTION 13 OrOR 15(Dd) OfOF ~~The~~THE ~~Securities~~SECURITIES ~~Exchange~~EXCHANGE ~~Act~~ACT Of OF 1934

For the transition period from _______________ to _______________

Commission File Number: 0-23317

ORE ~~PHARMACEUTICALS~~ PHARMACEUTICAL HOLDINGS INC.

(Exact ~~name~~ Name of ~~registrant~~Registrant as ~~specified~~Specified in its ~~charter~~Charter)

Delaware	0627-~~1411336~~1088078
(State of Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

~~610 Professional~~One ~~Drive~~Main Street, Suite ~~101~~300

~~Gaithersburg~~Cambridge, ~~Maryland~~ ~~20879~~MA 02142

(Address of Principal Executive Offices)

Registrant’s ~~phone~~ telephone number, including area code: (~~240~~617) ~~361~~649-~~4400~~2001

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:

COMMON STOCK, $.01 PAR VALUE

(Title of Class)

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act:. YES ¨ NO x

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act:. YES ¨ NO x

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 ¨

Indicate by check mark ifwhether ~~disclosure~~the ofregistrant ~~delinquent~~has ~~filers~~submitted ~~pursuant~~electronically toand ~~Item~~posted ~~405~~on ~~of Regulation~~its ~~S-K~~corporate ~~(Section~~Web ~~229.405~~site, ofif ~~this~~any, ~~chapter)~~every isInteractive ~~not~~Data ~~contained~~File ~~herein,~~required ~~and will~~to ~~not~~ be ~~contained,~~submitted and posted pursuant to ~~the~~Rule ~~best~~405 of ~~the~~Regulation ~~Registrant’s~~S-T ~~knowledge,~~during inthe ~~definitive proxy~~preceding or12 ~~information~~months ~~statements~~(or ~~incorporated~~for bysuch ~~reference~~shorter inperiod ~~Part~~that ~~III~~the ofRegistrant ~~this Form~~was ~~10-K~~required orto ~~any~~submit ~~amendment~~and topost ~~this~~such ~~Form~~files). Yes ~~10-K:~~ ¨ No ¨

Indicate by check mark ~~whether~~if ~~the~~disclosure ~~Registrant~~of isdelinquent afilers ~~large~~pursuant ~~accelerated~~to ~~filer,~~Item ~~an accelerated~~405 ~~filer~~of orRegulation ~~a non~~S-~~accelerated~~K ~~filer~~is not contained herein, orand awill ~~smaller~~not ~~reporting~~be ~~company. See~~contained, to the ~~definitions~~best of ~~“large~~the ~~accelerated~~Registrant’s ~~filer~~knowledge,” ~~“accelerated~~in ~~filer”~~definitive ~~and “smaller~~proxy ~~reporting~~or ~~company”~~information statements incorporated by reference in ~~Rule~~Part ~~12b-2~~III of ~~the~~this ~~Exchange~~Form ~~Act.~~10-K or any amendment to this Form 10-K: ¨

~~Large~~Indicate by check mark whether the Registrant is a large accelerated filer, ¨an ~~Accelerated~~accelerated filer, ¨a ~~Non~~non-accelerated filer, ¨or ~~(Do~~a ~~not~~smaller ~~check~~reporting ifcompany. aSee the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company)” ~~Smaller~~in ~~reporting~~Rule ~~company~~12b-2 xof the Exchange Act.

~~Indicate by~~Large ~~check~~accelerated ~~mark~~filer ~~whether~~¨ ~~the~~Accelerated ~~Registrant~~filer is¨ aNon-accelerated ~~shell~~filer ~~company~~¨ ~~(as~~Smaller ~~defined~~reporting incompany ~~Rule 12b-2~~x of(Do ~~the~~not ~~Exchange~~check ~~Act): YES~~if ¨a NOsmaller xreporting company)

~~The aggregate~~Indicate ~~market~~by ~~value~~check ofmark whether the ~~voting~~Registrant ~~stock~~is ~~(which~~a ~~consists~~shell ~~solely~~company of(as ~~shares~~defined ~~of Common~~in ~~Stock)~~Rule ~~held by non~~12b-~~affiliates~~2 of the ~~Registrant~~Exchange asAct). YES of¨ ~~June~~NO 30, 2008 was approximately $6,983,000, based on the closing price on that date of Common Stock on The NASDAQ Stock Market.*x

The ~~number~~ aggregate market value of ~~shares~~the ~~outstanding~~voting and non-voting Common Stock held by non-affiliates of the Registrant’s (without admitting that any person whose shares are not included in such calculation is an affiliate) computed by reference to the price at which the Common Stock, ~~$.01~~was ~~par~~last ~~value~~sold as of June 30, ~~was 5~~2009,~~483,519~~ asthe last business day of ~~March~~the 4Registrant’s most recently completed second fiscal quarter, ~~2009~~was approximately $3,072,000.

*The ~~Excludes~~number ~~211,216~~of shares ofoutstanding ~~Common Stock held by directors and executive officers and stockholders whose beneficial ownership exceeds 10%~~ of the ~~shares~~Registrant’s ~~outstanding~~Common ~~on June 30~~Stock, ~~2008~~$.01 ~~Exclusion~~par ofvalue ~~shares~~per ~~held by any person should not be construed to indicate that such person possesses the power~~share, ~~direct~~was ~~or indirect~~5,473,519 toas ~~direct or cause the direction~~ of ~~the~~March ~~management or policies of the Registrant~~15, ~~or that such person is controlled by or under common control with the Registrant~~2010.

Documents Incorporated by Reference

The following documents (or parts thereof) are incorporated by reference into the following parts of this Form 10-K: Certain information required byin Part III of this Annual Report on Form 10-K is incorporated ~~by reference~~ from the Registrant’s ~~definitive~~Proxy ~~proxy~~Statement ~~statement~~ for the ~~annual~~2010 ~~meeting~~Annual Meeting of ~~stockholders~~Stockholders which will be filed with the Securities and Exchange Commission within 120 days after the close of the Registrant’s fiscal year ended December 31, ~~2008~~2009.

TABLE OF CONTENTS

PART I
ITEM 1.	Business
ITEM 1A.	Risk Factors
ITEM 1B.	Unresolved Staff Comments
ITEM 2.	Properties
ITEM 3.	Legal Proceedings
ITEM 4.	~~Submission of Matters to a Vote of Security Holders~~Reserved
PART II
ITEM 5.	Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
ITEM 6.	Selected Financial Data
ITEM 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations
ITEM 7A.	Quantitative and Qualitative ~~Disclosure~~Disclosures About Market Risk
ITEM 8.	Financial Statements and Supplementary Data
ITEM 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
ITEM 9A(T).	Controls and Procedures
ITEM 9B.	Other Information
PART III
ITEM 10.	Directors, Executive Officers and Corporate Governance
ITEM 11.	Executive Compensation
ITEM 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
ITEM 13.	Certain Relationships and Related Transactions, and Director Independence
ITEM 14.	Principal Accounting Fees and Services
PART IV
ITEM 15.	Exhibits, Financial Statement Schedules
SIGNATURES

SIGNATURES

Report of Independent Registered Accounting Firm—Consolidated Financial Statements

Consolidated Balance Sheets as of December 31, ~~2008~~2009 and ~~2007~~2008

Consolidated Statements of Operations for the two years ended December 31, ~~2008~~2009

Consolidated Statements of Stockholders’ Equity for the two years ended December 31, ~~2008~~ 2009

Consolidated Statements of Cash Flows for the two years ended December 31, ~~2008~~2009

Notes to Consolidated Financial Statements

Reorganization of Ore Pharmaceuticals Inc. into a Holding Company Structure

On October 20, 2009, the stockholders of Ore Pharmaceuticals Inc. (“Ore”) adopted the Agreement and Plan of Reorganization, dated August 14, 2009, by and among Ore, Ore Pharmaceutical Holdings Inc. (the “Registrant”) and Ore Pharmaceuticals Merger Sub Inc. (the “Agreement”). The reorganization contemplated by the Agreement (the “Reorganization”) was consummated on October 20, 2009. In accordance with the Agreement, as described in the Registrant’s Registration Statement on Form S-4, originally filed with the Securities and Exchange Commission on August 14, 2009, and as amended thereafter, Ore became a wholly owned subsidiary of the Registrant and each share of Common Stock of Ore was exchanged for one share of Common Stock of the Registrant. As a result of the Reorganization, the Registrant is the successor issuer to Ore pursuant to Rule 12g-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Pursuant to paragraph (a) of Rule 12g-3, the Registrant’s Common Stock is deemed registered under Section 12(g) of the Exchange Act and the Registrant has succeeded to Ore’s reporting obligations under Sections 13(a) and 15(d) of the Exchange Act. References to Ore, the Registrant or the Company for the period prior to October 20, 2009 refer to Ore Pharmaceuticals Inc. and for the period following October 20, 2009 refer to Ore Pharmaceutical Holdings Inc.

PART I

This Annual Report on Form 10-K (“Form 10-K”) contains forward-looking statements regarding future events and the future results of Ore ~~Pharmaceuticals~~Pharmaceutical Holdings Inc. (“Ore ~~Pharmaceuticals~~ Holdings”) that are based on current expectations, estimates, forecasts and projections about the industries in which Ore ~~Pharmaceuticals~~Holdings operates and its business and the beliefs and assumptions of the management of Ore ~~Pharmaceuticals~~ Holdings. Words such as "“expects,"” "“anticipates,"” "“targets,"” "“goals,~~" "~~” “projects,"” "“intends,"” "“plans,"” "“believes,"” "“seeks,"” "“estimates,"” variations of such words, and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are only predictions and are subject to risks, uncertainties and assumptions that are difficult to predict. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. Factors that might cause or contribute to such differences include those discussed in this Form 10-K under the section entitled “Risk Factors”.” Ore ~~Pharmaceuticals~~ Holdings undertakes no obligation to revise or update publicly any forward-looking statements to reflect any change in management’s expectations with regard thereto or any change in events, conditions, or circumstances on which any such statements are based.

Unless the context otherwise requires, references in this Form 10-K to “Ore ~~Pharmaceuticals~~ Holdings,” “Ore,” ~~Pharmaceuticals~~“Ore Pharmaceutical Holdings Inc.,” the “Company,” “we,” “us,” and “our” refer to Ore ~~Pharmaceuticals~~Pharmaceutical Holdings Inc. Gene Logic® is a registered trademark of Ocimum Biosolutions, Inc.

ITEM 1.

BUSINESS

Corporate History

~~Ore Pharmaceuticals~~We ~~Inc.,~~were ~~headquartered~~incorporated in ~~Gaithersburg,~~September ~~Maryland,~~1994 isas a ~~drug development~~Delaware ~~company~~corporation ~~focused~~and oncompleted ~~developing~~our ~~certain~~initial ~~compounds~~public ~~for~~offering ~~uses~~in 1997. Formerly named Gene Logic Inc., we ~~identified~~ ~~through~~changed our ~~drug~~name ~~repositioning~~to ~~efforts~~Ore Pharmaceuticals Inc. ~~The~~in ~~Company~~December 2007. Until 2006, our core business was ~~incorporated in~~licensing ~~September~~our ~~1994~~proprietary asgenomics adatabases ~~Delaware~~and ~~corporation~~software and ~~completed~~providing ~~its~~related ~~initial~~services. ~~public offering~~In in2006, ~~1997.~~following ~~Formerly~~a ~~named~~strategic ~~Gene~~reevaluation ~~Logic~~of ~~Inc~~our business we embarked on a series of actions. In December 2006, we ~~changed~~sold our ~~name~~preclinical testing services subsidiary (sometimes referred to ~~Ore~~ as our Preclinical Division) to Bridge Pharmaceuticals, Inc. inIn December 2007, we sold the assets of our Genomics Division (the “Genomics Assets”) and the related name “Gene Logic” to Ocimum Biosolutions, Inc. (“Ocimum”). We retained certain technology and the right to use our genomics databases for the purposes of drug development and molecular diagnostics. In 2008, we focused our efforts on ~~developing~~our ~~certain compounds~~drug ~~for~~repositioning and development business, which was based on certain drug indication-seeking technologies that we had ~~found~~previously ~~new~~acquired ~~uses~~from ~~through~~Millennium Pharmaceuticals, Inc. (“Millennium”) and on the proprietary genomics databases and software we had developed. As part of this decision, in September 2008, we sold our molecular diagnostics subsidiary, DioGenix Inc., to Nerveda, Inc. (“Nerveda”). Through our drug repositioning ~~technology~~ efforts, we identified potential new therapeutic uses for specific compounds. ~~Our~~In ~~stock~~late is2008, ~~traded~~we discontinued further drug repositioning efforts to focus on ~~The~~developing ~~NASDAQ~~certain ~~Global~~of ~~Market~~these ~~under~~compounds for the ~~symbol “ORXE~~new uses.”

~~Until 2006,~~On ~~our~~October ~~core~~20, ~~business~~2009, ~~was~~we ~~licensing~~completed ~~our~~a ~~proprietary~~reorganization ~~genomics~~that ~~databases~~was ~~and software~~undertaken ~~and~~primarily ~~providing~~in ~~related~~order ~~services.~~to Inbetter ~~2006,~~protect ~~following~~the avalue ~~strategic reevaluation~~ of our ~~business~~approximately we$329 ~~embarked~~million onin agross ~~series~~net ofoperating ~~actions.~~and Incapital ~~December 2006,~~loss wecarryforwards ~~sold~~that ~~our~~can ~~preclinical~~be ~~testing~~used ~~services~~to ~~subsidiary~~reduce ~~(sometimes~~the ~~referred~~amount ~~to as~~of ~~our~~income ~~Preclinical~~tax ~~Division)~~we could be required to ~~Bridge~~pay ~~Pharmaceuticals,~~on ~~Inc.~~future Inearnings ~~December~~from ~~2007, we~~our ~~sold~~business. ~~the~~As ~~assets~~a result of ~~our~~this ~~Genomics~~reorganization, ~~Division~~Ore ~~(the~~Pharmaceuticals ~~“Genomics~~Inc. ~~Assets”)~~became ~~and~~a ~~the related~~wholly ~~name~~owned ~~“Gene~~subsidiary ~~Logic”~~of toa ~~Ocimum~~new ~~Biosolutions~~company, ~~Inc.~~Ore ~~(“Ocimum”).~~Pharmaceutical WeHoldings ~~retained certain~~Inc. ~~technology~~All ~~and~~ the ~~right~~outstanding toshares ~~use~~of ~~our~~Ore ~~genomics~~Pharmaceuticals ~~databases~~Inc. ~~for~~were ~~the~~converted ~~purposes~~ into shares of ~~drug~~Ore ~~development~~Holdings and ~~molecular~~Ore ~~diagnostics.~~Holdings Inthen ~~September~~became ~~2008,~~the wepublicly ~~sold~~traded ~~our molecular~~company ~~diagnostics~~that ~~subsidiary,~~we ~~DioGenix~~now ~~Inc.,~~refer to ~~Nerveda,~~as ~~Inc~~“Ore.”

WeIn ~~then focused~~September ~~our~~2009, ~~efforts~~we onreceived ~~our~~notice ~~drug~~from ~~repositioning~~The ~~and~~NASDAQ ~~development~~Stock ~~business,~~Market ~~which was~~(“Nasdaq”) ~~based~~that onour ~~certain~~stock ~~drug~~would ~~indication-seeking~~be ~~technologies~~subject ~~that~~to delisting if we ~~had~~did ~~previously acquired~~not ~~from~~regain ~~Millennium~~compliance ~~Pharmaceuticals~~by having a closing bid price equal or above $1.00 per share for a minimum of 10 consecutive trading days prior to March 15, ~~Inc~~2010. On ~~(“Millennium”)~~March ~~and~~16, on2010, we ~~the proprietary~~were ~~genomics~~further ~~databases~~notified ~~and~~by ~~software~~Nasdaq that we had ~~developed.~~not ~~Through~~regained compliance and that trading in our ~~drug repositioning~~stock ~~efforts~~would be suspended on March 25, 2010 in the event we ~~identified~~did ~~potential~~not ~~new~~submit ~~therapeutic~~an ~~uses~~appeal ~~for~~to ~~specific compounds~~Nasdaq. We Indetermined ~~2008~~not to submit an appeal and, weas ~~discontinued~~a ~~further~~result, ~~drug~~trading ~~repositioning~~in our stock on The Nasdaq Capital Market was suspended on March 25, 2010, and will be delisted thereafter. We are currently undertaking efforts to ~~focus on~~have ~~developing~~our ~~certain~~stock ofpublicly ~~these~~traded ~~specific~~on ~~compounds~~the ~~for~~OTC Bulletin Board or in the ~~new~~“Pink ~~uses~~Sheets”, although there is no assurance we will be able to accomplish that goal.

Our Business

Ore Pharmaceuticals is a drug development company. We are now developing a small number of drug candidates for new therapeutic uses discovered through our drug repositioning efforts.

Before discontinuing our drug repositioning efforts, we applied well-known technologies along with our proprietary know-how in integrative pharmacology to identify potential new uses for certain drug candidates owned by other pharmaceutical companies. These drug candidates were discontinued in such other pharmaceutical companies’ clinical development for reasons other than safety. In 2008, we decided to focus our efforts and resources on developing certain of these drug candidates for which we had discovered potential new therapeutic use and discontinued further drug repositioning work.

Our drug candidates have already been tested in preclinical testing and in humans by the original developer and have demonstrated an acceptable safety profile. Therefore, we believe that our drug candidates have a higher likelihood of clinical success than the drug candidates typically under development at small drug development companies.Business

~~Under~~Following ~~the supervision~~our ofreorganization described above, we are focused on developing and monetizing our ~~Senior~~current ~~Vice~~portfolio of pharmaceutical assets, which includes four compounds in-~~President~~licensed ~~for~~from ~~Clinical~~major ~~Development~~pharmaceutical companies. Our intention at the time of the reorganization was to explore and, if feasible, implement a strategy by which we would finance development of our ~~drug~~ portfolio through establishing alternative investment and program development ~~efforts~~vehicles, with Ore receiving program management fees from, and equity interests in, these vehicles. To date we have not formed any of these vehicles and we are ~~generally~~uncertain ~~performed~~that bywe ~~outsourced~~will ~~contractors~~be successful in implementing this strategy and ~~consultants~~ business model in the future, in which case we may determine to take other actions designed to preserve, increase and realize the value of these assets.

~~Although~~ Each of our ~~current~~compounds ~~financial~~has ~~resources~~been ~~are~~observed ~~presently~~to ~~limited,~~be wewell-tolerated ~~have~~in ~~made~~human ~~and~~clinical ~~continue~~ trials to ~~make~~date. We ~~significant~~are ~~changes~~evaluating toour ~~reduce~~lead ~~our~~compound, ~~rate~~ORE1001, ofas ~~cash~~a ~~usage,~~potential ~~while~~treatment ~~maintaining our~~for ~~business~~Inflammatory ~~objectives~~Bowel Disease (“IBD”). IBD Inis ~~2009,~~a wesevere ~~expect~~gastrointestinal condition that is estimated to ~~outsource~~affect ~~additional administrative~~as ~~functions~~many as weone ~~continue~~million ~~efforts~~people toin ~~reduce~~the ~~our~~United ~~employee~~States ~~headcount and~~alone. We ~~related~~initiated ~~rate~~a Phase Ib/IIa clinical trial in patients with ulcerative colitis – one of ~~cash~~the ~~usage~~two main disorders comprising IBD – in the fourth quarter of 2009. Completion of this trial along with subsequent licensing will be subject to our ability to obtain sufficient financing.

WeOur ~~also continue~~Portfolio ~~to consider other strategic opportunities and paths to enhance shareholder value, including, but not limited to, targeting additional sources~~ of ~~funding~~Drug ~~and developing new strategic relationships with pharmaceutical companies and other interested third parties.~~Candidates

~~Our Pipeline~~We currently have four drug candidates for which we have obtained rights, including development rights, for new uses we discovered. All of ~~Drug~~these ~~Candidates~~drug candidates have undergone extensive preclinical safety testing and have completed early-stage human clinical trials. Using our drug repositioning technology, we found potential alternate uses for these drug candidates that our drug repositioning partners had not previously investigated. Since these drug candidates have already been in early stage clinical testing, we believe we can quickly move these drug candidates back into clinical development, enabling us to efficiently determine their potential for their newly discovered indications.

~~We currently~~Our ~~have~~right ~~three~~to ~~drug~~develop ~~candidates~~each ~~for which we have development rights for new uses we discovered. All~~ of ~~these~~our current drug candidates ~~have~~resulted ~~undergone~~from ~~extensive preclinical~~commercial ~~safety~~arrangements ~~testing~~with ~~and~~third ~~have,~~parties at(see ~~the~~“Contractual ~~very~~Arrangements” ~~least, been through early-stage human clinical trials~~below). Under ~~Using~~these ~~our drug repositioning technology~~arrangements, we ~~found potential~~are ~~alternate~~obligated ~~uses~~to ~~for~~pay ~~these~~to ~~drug~~such ~~candidates~~third ~~that~~parties ~~our~~certain ~~drug repositioning partners had not previously investigated. Since these drug candidates have already been in early~~success-~~stage~~based ~~clinical~~milestones ~~testing,~~during ~~we believe we can quickly move these drug candidates back into~~ clinical development, ~~enabling~~as uswell toas ~~efficiently determine~~royalties ~~their~~on ~~potential~~future ~~for~~commercial ~~their newly discovered indications~~sales.

Our right to develop each of our drug candidates resulted from a commercial arrangement with our drug repositioning partners (see “Contractual Arrangements” below). Under these arrangements, we are obligated to pay to such partners certain success-based milestones during clinical development, as well as royalties on future commercial sales. We are seeking to obtain development rights to several other compounds for which we identified new uses from our drug repositioning and development partnership agreements.ORE1001

~~GL1001~~Our lead drug candidate and the primary focus of our scientific efforts is ORE1001, which we are developing for the treatment of IBD. In December 2008 we completed a multiple ascending dose Phase I clinical trial in the United States that demonstrated an acceptable safety profile for continued development. We initiated a Phase Ib/IIa clinical trial of ORE1001 for ulcerative colitis in the fourth quarter of 2009, though completion of this trial will be dependent upon our ability to obtain financing.

~~Our~~Background ~~lead drug~~on candidate and the primary focus of our scientific efforts is GL1001, which we are developing for the treatment of inflammatory bowel disease (“IBD”). We recently completed a multiple ascending dose Phase I clinical trial in the United States. We are planning to initiate a Phase Ib/IIa clinical trial for ulcerative colitis in mid 2009 that we expect to have completed in mid to late 2010.ORE1001

~~Background on~~In ~~GL1001~~2006, we acquired the rights to develop ORE1001 from Millennium. Through extensive analysis, we have identified potential new therapeutic uses for this drug candidate to treat IBD and other gastrointestinal diseases and conditions.

InORE1001 ~~2006, we~~is ~~acquired~~a potent inhibitor of the ~~rights~~ACE2 toenzyme, ~~develop~~whose ~~GL1001~~substrates ~~from~~include ~~Millennium~~several bioactive peptides. We ~~Through~~have ~~extensive analysis~~broadly analyzed ORE1001’s action, weas ~~have~~well ~~identified~~as ~~potential~~its ~~new~~disease-specific ~~therapeutic~~expression ~~uses~~in ~~for~~human ~~this~~tissue samples. Our animal models indicate that ORE1001 reduces signs of injury and inflammation in experimental colitis, gastritis and gastric ulcer. In a particular model, our drug candidate toreduced ~~treat~~the ~~IBD~~severity of histological lesions and ~~other~~was ~~gastrointestinal~~observed ~~diseases~~to ~~and conditions~~target colon tissue. In another model, ORE1001 reduced gastric damage scores induced by non-steroidal anti-inflammatory drugs.

GL1001 is a potent inhibitor of the ACE2 enzyme, whose substrates include several bioactive peptides. We have broadly analyzed GL1001’s action, as well as its disease-specific expression in human tissue samples. Our animal models indicate that GL1001 reduces signs of injury and inflammation in experimental colitis, gastritis and gastric ulcer. In a particular model, our drug candidate reduced the severity of histological lesions and was observed to target colon tissue. In another model, GL1001 reduced gastric damage scores induced by non-steroidal anti-inflammatory drugs.

In 2002, GL1001 was tested by Millennium in a single ascending dose Phase I clinical study in the United Kingdom. Results of that clinical trial indicated that the drug candidate was well-tolerated up to the highest dose tested. In June 2008, we filed an investigational new drug (“IND”) application with the U.S. Food and Drug Administration (“FDA”) for GL1001 (see “Drug Development” below). Following clearance of the IND and to confirm GL1001’s safety profile in humans, we commenced clinical testing of GL1001 in September 2008 in a multiple ascending dose Phase I clinical trial. This study was a blinded, placebo-controlled study in 32 healthy volunteers that studied the effects on subjects of multiple ascending doses. The drug candidate was orally administered for 14 days. Results of that trial showed that the drug candidate was well tolerated by humans, with no serious adverse events observed.

WeIn ~~are currently~~2002, ~~preparing~~ORE1001 ~~protocols~~was ~~and~~tested ~~manufacturing~~by ~~sufficient~~Millennium ~~quantities of GL1001~~ in ~~anticipation~~a ofsingle ~~initiating~~ascending adose Phase ~~Ib/IIa~~I clinical ~~trial~~study in ~~mid~~the ~~2009~~United Kingdom. Results ~~This~~ of that clinical trial ~~will~~indicated bethat ~~designed~~the drug candidate was well-tolerated up to ~~study~~the ~~additional~~highest ~~safety~~dose ~~aspects~~tested. In June 2008, aswe ~~well~~filed asan investigational new drug (“IND”) application with the ~~effectiveness~~ U.S. Food and Drug Administration (“FDA”) for ORE1001 (see “Drug Development” below). Following clearance of ~~GL1001~~the IND and to confirm ORE1001’s safety profile in humans, we commenced clinical testing of ORE1001 in September 2008 in a multiple ascending dose Phase I clinical trial. This study was a blinded, placebo-controlled study in 32 healthy volunteers that studied the ~~treatment~~effects on subjects of ~~ulcerative~~multiple ~~colitis~~ascending doses. The Wedrug ~~expect results~~candidate was orally administered for 14 days. Results of ~~this~~that ~~study~~trial showed that the drug candidate appeared to be ~~available~~well intolerated ~~mid~~by tohumans, ~~late~~with ~~2010~~no serious adverse events observed.

Therapeutic Opportunity – Inflammatory Bowel Disease

IBD consists of two categories of disease: ulcerative colitis (“UC”) and Crohn’s disease (“CD”). These are conditions that are characterized by intermittent, relapsing intestinal inflammation. UC tends to occur in the terminal portions of the digestive tract, and CD can occur anywhere in the digestive tract. Most ~~Roughly fifty percent (50%) of~~ patients diagnosed with IBD are believed to have UC~~, while~~ ~~thirty~~or ~~percent (30%) have~~ CD and the remaining ~~twenty percent (20~~15%) have “indeterminate colitis” with symptoms that fall between CD and UC. The clinical trial for ~~GL1001~~ORE1001 that we ~~are~~initiated ~~planning~~in ~~will~~the ~~focus~~fourth quarter of 2009 is focused on treatment of UC; however, ~~we have~~animal ~~preliminary~~model ~~evidence~~results suggest that ~~GL1001~~ORE1001 may also be useful in the treatment of CD.

~~Worldwide, there~~UC ~~are~~is ~~estimated~~characterized toby bediffuse ~~four~~inflammation ~~million~~affecting ~~patients~~the ~~diagnosed~~mucosal ~~with~~and ~~IBD; approximately~~submucosal ~~one~~layers ~~million~~of the colon that typically is most intense in the rectum and can extend into the colon. In about one-third of ~~these~~UC patients, ~~are~~the entire large bowel is affected. The inflammation can result in ~~the~~ulcerations ~~United~~that ~~States~~can lead to complications such as bloody diarrhea. Current ~~Recent statistics~~therapies do not appear to ~~indicate~~cure athe ~~rise~~disease inor prevent future recurrences. Chronic inflammation increases the ~~number~~risk of ~~new~~colon ~~cases~~cancer, making surveillance for dysplasia (a form of pre-cancer) necessary even if the actual inflammatory disease remains in remission.

UCCD is ~~characterized~~ bymore ~~diffuse~~varied ~~inflammation~~in ~~affecting~~its ~~the~~inflammatory ~~mucosal~~process and ~~submucosal~~ clinical manifestations. Typically, inflammation affects all layers of(referred to as transmural inflammation), in contrast to the ~~colon~~superficial ~~that~~inflammation ~~typically~~found in UC. Unlike UC, where the inflammatory process is ~~most~~typically ~~intense~~diffuse and continuous in ~~the~~extent, ~~rectum~~CD inflammation may be patchy and segmental. Symptoms can ~~extend into~~reflect the ~~colon~~inflammation itself or the scarring that can result (fibrostenotic disease). Often the gastrointestinal tract becomes obstructed at the affected site. In ~~about~~many patients, the transmural inflammation can result in pathologic connections between the intestine and a ~~third~~variety of UCstructures, ~~patients~~including other parts of the gastrointestinal tract, the ~~entire~~bladder ~~large~~and ~~bowel~~the ~~is affected.~~skin ~~The~~(most ~~inflammation~~commonly in the perineal or perianal region). While CD can result in ~~ulcerations~~a ~~that~~wide range of symptoms, patients can ~~lead~~experience toa ~~bloody~~ combination of abdominal pain, diarrhea and weight loss. In ~~Current~~pediatric ~~therapies~~patients, dolack ~~not~~of ~~appear~~growth is a particularly common manifestation. In addition to ~~cure~~symptoms ~~the~~related ~~disease~~directly to gastrointestinal tract function, a significant minority of patients with either UC or ~~prevent~~CD ~~future recurrences.~~also ~~Chronic~~experience ~~inflammation~~manifestations ~~increases~~outside the ~~risk~~intestinal oftract ~~colon~~due ~~cancer~~to associated inflammation affecting the skin, ~~making surveillance~~eyes, ~~for~~joints, ~~dysplasia~~liver (aand ~~form~~bile ducts. Although specific episodes or complications of ~~pre-cancer)~~CD ~~necessary~~can ~~even~~respond ifto ~~the~~available ~~actual inflammatory~~drugs ~~disease~~or ~~remains~~surgical inintervention, ~~remission~~none are curative, and the disease is life-long.

CDIt is ~~more varied~~estimated inthat ~~its~~up ~~inflammatory process and clinical manifestations. Typically, inflammation affects all layers (referred~~ to asone ~~transmural~~million ~~inflammation),~~people in ~~contrast~~ to the ~~superficial~~United ~~inflammation~~States ~~found~~are inaffected ~~UC.~~by ~~Unlike~~IBD ~~UC, where the inflammatory process is typically diffuse~~ and ~~continuous~~there inare ~~extent,~~as ~~CD inflammation~~many ~~may~~as befour ~~patchy~~million ~~and~~sufferers ~~segmental~~worldwide. With ~~Symptoms~~typical ~~can~~onset ~~reflect~~in ~~the~~childhood ~~inflammation itself~~ or ~~the~~early ~~scarring~~adulthood, ~~that~~these ~~can~~disorders ~~result~~cause ~~(fibrostenotic disease). Often the gastrointestinal tract becomes obstructed at the affected site. In~~ many ~~patients,~~ ~~the~~decades ~~transmural~~of ~~inflammation~~pain ~~can result in pathologic connections between the intestine~~ and asuffering ~~variety of structures, including other parts of the GI tract, the bladder~~ and ~~the skin (most commonly in the perineal or perianal region). While CD can~~ result in asignificant ~~wide~~lost ~~range of symptoms~~productivity, ~~patients~~in ~~can experience a combination of abdominal pain, diarrhea and weight loss. In pediatric patients, lack of growth is a particularly common manifestation. In~~ addition to ~~symptoms~~the ~~related~~direct ~~directly~~costs ~~to gastrointestinal tract function, a significant minority~~ of ~~patients~~medical ~~with either UC or CD also experience manifestations outside the intestinal tract due to associated inflammation affecting the skin, eyes, joints, liver~~ and ~~bile ducts. Although specific episodes or complications of CD can respond to available drugs or~~ surgical ~~intervention,~~ ~~none are curative, and the disease is life-long~~care.

It is estimated that between one and two million Americans are affected by IBD. With typical onset in childhood or early adulthood, these disorders cause many decades of pain and suffering and result in significant lost productivity, in addition to the direct costs of medical and surgical care.

The burden on the U.S. healthcare system alone is significant; IBD is one of the five most prevalent gastrointestinal diseases in the United States, with an overall health care cost estimated at more than $1.7 billion. This chronic condition commonly requires a lifetime of care after diagnosis. Each year in the United States, IBD accounts for over 700,000 physician visits, 100,000 hospitalizations and disability in 119,000 patients. Over the long term, approximately 75% of patients with CD and 25% of those with UC will require surgery.

Limitations of Current IBD Treatments

Existing therapies present significant concerns in efficacy, safety and dosing. Although a variety of medications are available that can control inflammation and relieve the resulting symptoms, none provide fully effective treatment, and almost all are associated with the risk of serious side effects. Surgical intervention plays a key role in the management of some patients. However, even with surgery, recurrence of IBD over time is likely. There Ifis ~~approved~~a ~~for~~significant ~~use,~~unmet ~~GL1001~~medical ~~has~~need ~~the potential~~for therapies to offer long-term therapeutic relief of the serious symptoms exhibited by patients with IBD with less adverse side effects than current medications.

Potential Therapeutic Opportunity – Radiation Enteritis

In addition to IBD, we are also investigating use of ~~GL1001~~ORE1001 for the treatment of radiation enteritis (also known as radiation enteropathy), aan ~~common~~ adverse side-effect of radiation therapy for cancer where the mucosal lining of the intestine is damaged by cytotoxic radiation. An early ~~pilot~~preclinical study testing ~~GL1001~~ ORE1001 in a radiation enteritis animal model showed positive results;. In ~~however~~October 2009, itwe ~~is still~~entered ~~too~~into ~~early~~a toresearch ~~determine~~material ~~whether~~transfer ~~GL1001~~agreement ~~could~~with the Armed Forces Radiobiology Research Institute (AFRRI) where ORE1001 will, without cost to us, be ~~developed~~evaluated for potential utility in ~~this indication~~countering the adverse effects of radiation.

Commercialization Opportunities

As we proceed with our early-stage clinical testing, we are actively seeking to enter into an arrangement with one or more third parties that would conduct or finance later-stage clinical development and commercialization of ~~GL1001~~ORE1001.

ORE10002

In 2009, we acquired development and commercialization rights for ORE10002 from H. Lundbeck A/S (“Lundbeck”). Lundbeck had previously conducted phase II clinical trials of ORE10002 and was developing the compound in the area of depression. Lundbeck ceased development of ORE10002 for reasons other than safety.

We have discovered that ORE10002 has potent anti-inflammatory activities that we believe may make the compound attractive in several inflammation-based conditions. Lundbeck has an extensive package of preclinical and clinical development data related to ORE10002. We are currently evaluating ORE10002 in animal models of inflammatory disease.

Tiapamil

In 2008, we acquired development and commercialization rights for tiapamil from F. Hoffman La Roche Ltd. (“Roche”). We Ashave ~~part of our drug repositioning program, we~~ discovered that tiapamil activates a major regulatory protein in the brain, an activity for which this drug candidate and its class of L-type calcium channel antagonists had not been previously developed. We have thus identified potentially novel therapeutic uses for tiapamil in certain central nervous system diseases, particularly focused on cognition and memory.

Development of tiapamil was discontinued by Roche in 1986 for reasons other than safety after completing Phase II trials in hypertension, dysrhythmia and angina pectoris. Based on the results of our early preclinical studies, we intend to develop tiapamil for the most appropriate of several potential indications. Additional preclinical work will likely be necessary to assist in this determination prior to filing an IND with the FDA. We have not yet determined when or whether we will make such a filing.

The composition of matter patents (see “Intellectual Property Rights” below) for tiapamil that were filed by Roche have expired; however, we have ~~recently~~ filed provisional method-of-use patent applications for tiapamil based on our preclinical discoveries. Because tiapamil has never been made available commercially, we expect that any issued patents resulting from our patent applications would adequately protect a developer in the marketplace from generic competition for the remainder of such patents’ ~~life~~lives.

Romazarit

In 2008, we also acquired development and commercialization rights from Roche for the clinical-stage drug candidate romazarit. ~~Through~~We ~~our~~have ~~repositioning analysis, we~~ identified potentially novel therapeutic uses for romazarit in metabolic diseases and subsequently observed lowered lipid levels, weight and glucose levels in preclinical testing, which could allow this drug candidate to be developed for the treatment of metabolic indications such as obesity.

Development of romazarit was discontinued by Roche in 1990 for reasons other than safety during Phase II trials for rheumatoid arthritis. Based on our preclinical efforts, we intend to develop romazarit for a metabolic indication, although we expect that some limited preclinical work will be necessary to assist in delineating the appropriate development path and prior to filing any IND with the FDA.

The composition of matter patents for romazarit have also expired; however, we have filed provisional method-of-use patent applications for romazarit based on the results of our preclinical analysis. Because romazarit has never been made available commercially, we expect that any issued patents resulting from our patent applications would adequately protect a developer in the marketplace from generic competition for the remainder of such patents’ ~~life~~lives.

Drug Development

Today, drug development in the United States generally consists of the following steps:

Discovery. Discovery is the process of identifying new biological targets and the compounds that can affect them. Targets must be identified, prioritized and validated.

Preclinical Testing. Compounds that are being considered as drugs are studied in the laboratory and in animal studies to determine if the compound will have an acceptable safety profile and if it will be effective in treating the targeted disease or condition (i.e. show efficacy in treatment). For certain diseases, animal models may exist which may predict human efficacy.

· Investigational New Drug (“"IND”") Application. After completing preclinical testing, an IND application is filed with the FDA for permission to test the compound in humans. The IND application includes the results of any animal studies and any other relevant safety and efficacy data.

Clinical Trials. These trials consist of a series of increasingly complex and costly studies (Phase I, II and III) designed to show the effect of drug candidates administered to human subjects that ultimately can involve up to several thousand patients over a multi-year period.

o° Phase I Trials. Represents the initial introduction of an investigational new drug into a small number of healthy human subjects to test for safety concerns and possible adverse effects, dosage tolerance, absorption, biodistribution, metabolism, excretion and clinical pharmacology. These trials may also potentially provide early indications of efficacy. In some instances, a slightly more advanced Phase Ib study can be used as a “proof of concept,” or confirmation of the drug developer’s hypothesis.

o° Phase II Trials. Includes early, controlled, small-scale clinical studies conducted to obtain initial data on the efficacy of the drug, to determine dose tolerance and optimal dose range and to gather additional information relating to safety and potential adverse effects. Phase II studies are sometimes divided into Phase IIa and Phase IIb. Phase IIa is designed to assess “proof of concept” (i.e. does the drug demonstrate the intended therapeutic effect), as well as dosing requirements (how much drug should be given), and Phase IIb is specifically designed to study efficacy (how well the drug works at the prescribed doses).

o° Phase III Trials. Consists of clinical trials involving substantially larger groups of subjects and longer testing after initial evidence of effectiveness of the drug has been obtained in Phase II trials. These trials also gather additional information about effectiveness and safety needed to evaluate the overall benefit-risk relationship of the drug. Phase III studies usually include several hundred to several thousand people and may be conducted over multiple years. As Phase III trials are the most expensive of the clinical trials, with costs frequently in excess of $50 million and in some cases more than $100 million, smaller companies often attempt to ~~outlicense~~out-license their drug candidates prior to Phase III trials.

· New Drug Application (“"NDA”") and Approval. Following successful completion of clinical trials, the developers are required to file NDA applications with the FDA for its approval to allow commercial manufacture, marketing and sale of the drug (referred to as commercializing the drug). This process can also be both extensive and burdensome and the FDA can request additional testing.

~~Sales and~~Business ~~Marketing~~Development

Our ~~sales and marketing activities consist of~~ business development ~~efforts~~activities toprimarily ~~identify third~~have ~~parties~~consisted ~~potentially~~of ~~interested~~identifying incompounds ~~our~~that ~~drug~~we ~~candidates.~~consider ~~These~~attractive ~~activities are~~for ~~ongoing~~in-licensing, ~~and~~as itwell ~~may~~as ~~take~~interacting awith ~~considerable~~third ~~period~~parties ofpotentially ~~time~~interested ~~for~~in uslicensing toor beacquiring ~~able~~our ~~to complete~~drug ~~a commercial arrangement~~candidates. WeAdditional ~~don’t~~efforts ~~expect~~are ~~that~~directed weat ~~will~~out-licensing benon-core ~~able~~assets ~~to complete any~~ such ~~arrangement~~as ~~for~~portions of our ~~lead~~intellectual ~~candidate,~~property ~~GL1001,~~portfolio ~~until~~or wepreclinical ~~complete the~~stage ~~anticipated Phase Ib/IIa clinical trial in mid to late 2010~~compounds.

In 2008, we approached what we believe to be the majority of companies who may have a therapeutic interest in the gastrointestinal disease market. We received indications of interest from a number of these companies, and have kept such interested companies aware of our progress. In 2009, we expect to continue to have additional communications and discussions with companies interested in GL1001.

Research & Development

Research and development expenses for the years ended ~~2008~~2009 and ~~2007~~2008 were $92.75 million and $109.37 million, respectively. In ~~2007,~~2009 ~~our research~~ and ~~development expenses primarily consisted of costs associated with our discontinued drug repositioning business. In~~ 2008, our research and development expenses primarily related to the development of ~~GL1001~~ORE1001.

Contractual Arrangements

We obtained rights to ~~GL1001~~ORE1001 from Millennium, to ORE10002 from Lundbeck and to romazarit and tiapamil from Roche.

Under the terms of a Compound Transfer and Development Agreement with Millennium dated July 26, 2006, we obtained broad rights to develop and/or ~~outlicense~~out-license ~~GL1001~~ORE1001 in any disease indication, except for oncology diseases. Under the agreement, we, or any successor that ultimately develops ~~GL1001~~ORE1001, would be obligated to make certain milestone payments to Millennium based on the achievement of the following milestones:

upon completion of Phase IIa clinical trials;

upon initiation of Phase III clinical trials; and

upon first obtaining regulatory approval to market the drug.

In addition, the developer of ~~GL1001~~ORE1001 will be obligated to make royalty payments to Millennium equal to a percentage of net commercial sales of approved products containing ~~GL1001~~ORE1001. The term of this agreement extends to the life of any of our valid patents for ~~GL1001~~ORE1001.

Under the terms of ~~the~~a ~~Drug~~Transfer ~~Indication Evaluation~~ and Development Agreement with ~~Roche~~ Lundbeck dated ~~December 5, 2005, and amended on~~ June 1326, ~~2008~~2009, we obtained rights to develop and/or ~~outlicense~~out-license ~~romazarit~~ORE10002 in any disease indication, other than central nervous system diseases and ~~tiapamil~~indications. Under the agreement, we, or any successor that ultimately develops ~~either tiapamil or romazarit~~ORE10002, would be obligated to make certain milestone payments to ~~Roche~~Lundbeck based on ~~the~~ achievement of the following milestones:

upon establishing efficacy in a Phase II clinical trial;

upon commencement of a Phase III clinical trial;

upon obtaining U.S. marketing approval; and

upon obtaining European marketing approval.

In addition, the developer of ORE10002 will be required to make royalty payments to Lundbeck equal to a percentage of worldwide net sales of an approved product containing ORE10002. The term of this agreement extends to the later of, (i) ten years from the effective date of the agreement; (ii) the last to expire claim in the patents that cover ORE10002; or (iii) the end of the royalty term.

Under the terms of the Drug Indication Evaluation and Development Agreement with Roche dated December 5, 2005, and amended on June 13, 2008, we obtained rights to develop and/or out-license romazarit and tiapamil. Under the agreement, we, or any successor that ultimately develops either tiapamil or romazarit, would be obligated to make certain milestone payments to Roche based on the achievement of the following milestones:

upon filing or reactivation of an IND;

· upon preliminary efficacy established in ~~first~~a Phase II clinical trial;

· upon initiation of Phase III clinical trials; and

upon obtaining regulatory approval to market the drug in the United States, Europe and/or Japan.

In addition, the developer of either tiapamil or romazarit will be obligated to make royalty payments to Roche equal to a percentage of net commercial sales of approved products containing such drug candidates. The term of this agreement extends to the life of any of our valid patents for tiapamil or romazarit, as the case may be.

Competition

Currently, there are many small pharmaceutical and biotechnology companies developing drugs. In many instances, these companies may not have the experience or resources necessary to bring a compound through the full clinical and regulatory process to obtain marketing approval and thus must seek assistance from larger companies. Recently, difficult economic conditions and the difficulties smaller companies have in obtaining capital appear to be causing more of these smaller companies to seek such assistance earlier in the development process. We compete with these companies to make commercial arrangements with larger, more well-established, companies.

In addition, we expect to see competition from both manufacturers of existing drugs and drugs currently in development to treat patients afflicted with diseases or conditions that can be treated with our drug candidates. Products in this market will be differentiated based on cost, effectiveness, dosage sizes, side effects and interaction with other therapies and drugs. Companies such as Proctor & Gamble Pharmaceuticals, Pfizer, Inc., Salix Pharmaceuticals Ltd. and Centocor Ortho Biotech Inc. currently market drugs that we anticipate would compete with GL1001 for the treatment of IBD. We believe that the following companies are currently developing drugs that, if approved, would also compete with GL1001 for IBD treatment: Bristol-Myers Squibb Company, Takeda Pharmaceutical Company Ltd., DanioLabs Ltd., BioLineRx, Ltd., Cosmo Pharmaceuticals S.p.A., AGI Therapeutics PLC and SLA Pharma AG. There may be other drugs in development for IBD treatment of which we are not aware.

Competition

Currently, there are many small pharmaceutical and biotechnology companies developing drugs. In many instances, these companies may not have the experience or resources necessary to bring a compound through the full clinical and regulatory process to obtain marketing approval and thus must seek assistance from larger companies. Recently, difficult economic conditions and the difficulties smaller companies have in obtaining capital appear to be causing more of these smaller companies to seek such assistance earlier in the development process. We compete with these companies to enter into commercial arrangements with larger, more well-established, companies.

In addition, we expect to see competition from both manufacturers of existing drugs and drugs currently in development to treat patients afflicted with diseases or conditions that can be treated with our drug candidates. Products in this market will be differentiated based on cost, effectiveness, dosage sizes, side effects and interaction with other therapies and drugs. Companies such as Warner Chilcott plc, Pfizer, Inc., Salix Pharmaceuticals Ltd. and Centocor Ortho Biotech Inc. currently market drugs that we anticipate would compete with ORE1001 for the treatment of IBD. We believe that the following companies are currently developing drugs that, if approved, would also compete with ORE1001 for IBD treatment: Bristol-Myers Squibb Company, Takeda Pharmaceutical Company Ltd., DanioLabs Ltd., BioLineRx, Ltd., Cosmo Pharmaceuticals S.p.A., AGI Therapeutics PLC and SLA Pharma AG. Each of these companies has substantially greater financial resources than we have. There may be other drugs in development for IBD treatment of which we are not aware.

Suppliers

We outsource a number of technical activities to achieve our business goals. These activities include performing preclinical and clinical testing, compound manufacturing and designing clinical protocols that meet FDA and other regulatory standards. We have entered into contractual arrangements with experienced professional consultants to provide advice and ~~assist~~assistance in meeting various regulatory requirements while we seek to conduct clinical trials for ~~GL1001.~~ ORE1001. We also have a manufacturing agreement to provide sufficient quantities of ~~GL1001~~ORE1001 for our clinical testing needs. Finally, we have service arrangements with a number of clinical research organizations to design the protocols, identify clinical facilities to recruit participants and conduct trials and to manage and oversee the actual conduct of clinical trials for ~~GL1001~~ORE1001. Because there is an adequate supply of other providers who could perform the services provided by our suppliers, we do not believe that we are dependent on any of our suppliers.

Intellectual Property Rights

As of December 31, ~~2008~~2009, we own or have license rights to 3615 issued patents, 2113 of which are United States patents, and 4757 patent applications, 2324 of which are United States utility (non-provisional) or provisional patent applications. Of such patents and patent applications, 6 USU.S. patents and 9 patent applications relate to ~~GL1001~~ORE1001 and 6 USU.S. patents and 1114 patent applications relate to the other drug candidates in our pipeline. The remaining patents relate to programs or technologies that we expect to ~~outlicense~~out-license, assign or abandon in ~~2009~~2010. At this time, we believe that, in particular, only the patent applications related to new indications of usage for ~~GL1001~~ORE1001 (and the in-licensed rights to Millennium patents and patent applications for ~~GL1001~~ORE1001) are material to our business. The patents and patent applications associated with our drug candidates generally fall into two categories: composition of matter patents and method-of-use patents.

Composition of Matter Patents. Typically, patents on new compounds are filed before or during the discovery stages of development, when lead compounds are identified as prospective drugs. These are typically composition of matter patents that set forth the invention of a compound described by its chemical composition and other physical or behavioral properties. These patents often claim initially-conceived methods for using the compound. When granted, any commercial use of the compound would likely infringe such patents and thus they provide full protection against generic manufacturers or developers of alternate uses.

~~Method-of-Use Patents. By contrast~~Typically, ~~method-of-use~~ patents ~~describe~~on ~~discoveries of~~ new ~~potential uses of pre-existing~~ compounds, ~~but~~are dofiled ~~not~~before ~~claim~~or ~~the~~during ~~invention of~~ the ~~compound~~discovery ~~itself. These~~stages ~~patents provide protection against infringement by other parties that may seek to use a compound in a way that is claimed in the patent, even if that compound’s composition~~ of ~~matter patent has expired. In this situation~~development, ~~while~~when ~~it may~~lead ~~not~~compounds beare ~~infringement~~identified toas ~~manufacture~~prospective ~~and sell a particular approved drug that is off patent (i~~drugs.e. These noare ~~longer~~typically ~~protected by a~~ composition of matter ~~patent),~~patents ~~it is~~that ~~likely~~set toforth ~~be infringement to sell~~ the ~~drug~~invention ~~marketed~~of ~~for~~ a ~~use~~compound described inby ~~a valid~~its ~~method-of-use~~chemical ~~patent.~~composition ~~A perceived industry risk with method-of-use patents is that, without infringing such patents, generic manufacturers can market~~ and ~~sell~~ ~~approved pharmaceuticals for~~ other ~~uses~~physical ~~that~~or ~~are~~behavioral ~~not covered~~properties. These ~~by the method-of-use~~ patents; ~~however,~~often ~~doctors~~claim ~~may~~initially-conceived ~~prescribe~~methods ~~such generic products~~ for ~~the~~using ~~uses that are claimed by~~ the ~~method-of-use~~ ~~patents~~compound. When ~~In the cases of our drug candidates~~granted, ~~these drugs have not been approved for~~ any commercial use; ~~thus, generic companies seeking to sell and market our drug candidates simply because composition~~ of ~~matter~~the ~~patents~~compound ~~have expired~~ would ~~have~~likely toinfringe gosuch ~~through~~patents ~~lengthy clinical trials~~ and ~~approval~~thus ~~processes~~they inprovide ~~order to~~full ~~bring~~protection ~~these~~against ~~drug~~generic ~~candidates~~manufacturers toor ~~market~~developers ~~for any use that would not otherwise infringe our method-~~of~~-use~~ ~~patents~~alternate uses.

We also have licenses granting us exclusive rights in particular issued composition of matter patents and patent applications for GL1001 that are currently owned by Millennium. Pursuant to these licenses with Millennium, which expire only when the patent life ends, we have the right to participate in the prosecution and other strategic decisions for these patents and patent applications.

Patents and patent applications associated with our drug candidates are the primary method for protecting our intellectual property rights. For intellectual property rights that are not eligible for patent protection, we rely on confidentiality agreements and other trade secret protection measures to protect our interests. We take security measures to protect our proprietary know-how and technologies and confidential data and information, including requiring all employees and consultants to enter into confidentiality agreements. In arrangements with third parties (including suppliers) that require the sharing of know-how and other confidential information, our policy is to make available only such information as is relevant to our agreements with such parties, subject to appropriate contractual restrictions, including requirements for them to maintain confidentiality and use such information solely in accordance with our agreement. However, such measures may not adequately protect our information.

Method-of-Use Patents

By contrast, method-of-use patents describe discoveries of new potential uses of pre-existing compounds, but do not claim the invention of the compound itself. These patents provide protection against infringement by other parties that may seek to use a compound in a way that is claimed in the patent, even if that compound’s composition of matter patent has expired. In this situation, while it may not be infringement to manufacture and sell a particular approved drug that is off patent (i.e. no longer protected by a composition of matter patent), it is likely to be infringement to sell the drug marketed for a use described in a valid method-of-use patent. A perceived industry risk with method-of-use patents is that, without infringing such patents, generic manufacturers can market and sell approved pharmaceuticals for other uses that are not covered by the method-of-use patents; however, doctors may prescribe such generic products for the uses that are claimed by the method-of-use patents. In the cases of our drug candidates, these drugs have not been approved for any use; thus, generic companies seeking to sell and market our drug candidates simply because composition of matter patents have expired would have to go through lengthy clinical trials and approval processes in order to bring these drug candidates to market for any use that would not otherwise infringe our method-of-use patents.

We also have licenses granting us exclusive rights in particular issued composition of matter patents and patent applications for ORE1001 that are currently owned by Millennium. Pursuant to these licenses with Millennium, which expire only when the patent life ends, we have the right to participate in the prosecution and other strategic decisions for these patents and patent applications. We currently anticipate that the first patent covered by this agreement will expire in 2017, subject to any extensions that may be granted by the U.S. Patent and Trademark Office (“USPTO”). Due to the fact that several of the patent applications covered by this agreement have not yet been approved by the USPTO, we are currently unable to estimate when the last of the patents covered by this agreement might expire.

In connection with the sale of our Genomics Assets, we also obtained a perpetual, royalty-free license to the genomics databases we had developed by our former Genomics Division that allow us to use such databases, in the form they existed as of the date of sale, for drug development.

Additional Government Regulation

As described above, our preclinical and clinical activities are regulated by the FDA. In addition we use third-party manufacturers to produce ~~GL1001~~ORE1001. These third party manufacturers are subject to FDA regulations and inspections. Also, new government requirements may be established that could delay or prevent our drug candidates from further clinical development.

~~Our laboratory~~We ispreviously ~~located~~maintained inlaboratory ~~our~~space ~~facility~~ in Cambridge, Massachusetts~~. Our sublease for this facility expires by June 30~~, ~~2009,~~which ~~and~~subjected weus ~~do not anticipate leasing additional laboratory space as we now use outside contractors~~ to ~~perform the majority of our laboratory work. Our laboratory is currently subject to~~ a variety of national, state and local laws and regulations. However, Wedue ~~maintain~~to ~~standard operating~~our ~~procedures~~changed ~~and~~business ~~the~~strategy ~~documentation~~we ~~necessary~~determined to ~~comply~~use ~~with~~outside ~~regulations relating~~contractors to ~~hazard~~perform ~~communication~~our ~~and~~laboratory ~~employee right-to-know regulations~~work, ~~the handling, storage~~ and ~~disposal~~we ofno ~~medical~~longer ~~specimens,~~operate ~~laboratory~~any ~~materials~~laboratories. The ~~and hazardous~~sublease ~~waste~~on ~~and~~our ~~radioactive materials and the safety and health of~~ laboratory ~~employees.~~space ~~The~~expired ~~cost~~on ofJune ~~complying~~30, ~~with such regulations is not material~~2009.

We no longer use controlled substances in our laboratory; however, in 2008 such use was regulated and subject to licensure by the United States Drug Enforcement Administration and relevant state and local agencies. We are in the process of closing this license and removing any remaining controlled substances from our laboratory.

The regulations of the United States Department of Transportation and the United States Postal Service apply to the transportation of laboratory specimens via surface and air.

The Occupational Safety and Health Administration has established extensive requirements relating to workplace safety, which require us to follow certain procedures, ~~including providing ongoing training and proper equipment~~ for employees working in our ~~facilities~~offices. ~~Our employees receive training focusing on compliance with applicable hazardous materials regulations and health and safety guidelines.~~

Seasonality

Our business is not subject to predictable seasonal variation.

Human Resources

As of December 31, ~~2008~~2009, we had 14a total of seven employees, all of whom are full-time ~~employees,~~and all of whom reside within the United States. Most of our employees are engaged directly in the management and administration of the Company. None of our employees are covered by collective bargaining agreements, and management considers relations with our employees to be good.

Available Information

We maintain an Internet site at www.orepharma.com. However, material contained on our Internet site is not incorporated by reference into this Annual Report on Form 10-K. We make available free of charge on or through our Internet site our SEC filings, including our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports we file or furnish pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable after such ~~reports~~ ~~are~~materials have been electronically filed with, or furnished to, the ~~Securities and Exchange Commission (~~SEC).

1011

ITEM 1A.

RISK FACTORS

~~The~~Risks ~~Company is subject to risk factors common to other small drug development companies~~ and toUncertainties ~~risks~~Related ~~particular~~ to ~~its own~~Our ~~situation.~~Current ~~While~~Business ~~it is not possible to predict or identify all such risk factors, set forth below are what we believe to be the most significant risks~~ and ~~uncertainties that could cause our actual results to differ materially from the results contemplated by the forward-looking statements contained in this Form 10-K~~Industry. This list is not meant to be all-inclusive. You should carefully consider these risks and all other information included in this Form 10-K, together with all other risks associated with small public drug development companies and all risks associated with investing under difficult economic uncertainties. Each of these risk factors could have material adverse effects on our business, results of operations, financial condition and cash flows, as well as adversely affect the value of our Common Stock.

~~Risks~~ We are subject to risk factors common to other small drug development companies and ~~Uncertainties~~to ~~Related~~risks particular to ~~Our~~our ~~Current~~own ~~Business~~situation. Set forth below are what we believe to be the most significant risks and ~~Industry~~uncertainties that could cause our actual results to differ materially from the results contemplated by the forward-looking statements contained in this Form 10-K. This list is not meant to be all-inclusive. You should carefully consider these risks and all other information included in this Form 10-K, together with all other risks associated with small drug development companies and all risks associated with investing under difficult economic uncertainties. Each of these risk factors could have material adverse effects on our business, results of operations, financial condition and cash flows, as well as adversely affect the value of our Common Stock.

We will be required to raise additional funds to finance our operations and remain a going concern; we may not be able to do so when necessary, and/or the terms of any financings may not be advantageous to us.

Our operations to date have consumed substantial amounts of cash and we have limited funding available. Negative cash flows from our operations are expected to continue over at least the next several years. Our cash utilization amount is highly dependent on the progress of our product development programs, particularly, the results of our preclinical and clinical studies, the cost timing and outcomes of regulatory approval for our product candidates, the terms and conditions of our contracts with service providers for these programs, and the rate of recruitment of participants in our clinical trials.

We have made and are continuing to make substantial efforts to reduce our rate of cash usage and we believe that existing cash and cash equivalents and marketable securities available-for-sale, the anticipated receipt of $0.4 million relating to the promissory note from Nerveda and our ongoing cash conservation efforts, including the subsequent settlement agreement with the State of Maryland to reduce the amount due on the outstanding loan, grant and interest, but not taking into account our potential obligations with regard to the guarantees on the two leases in Gaithersburg, MD, will enable us to support our operations into the first quarter of 2011, including the costs of the currently ongoing Phase Ib/IIa clinical trial for ORE1001. There can be no assurance, however, that we will be successful in our continuing cash conservation efforts, the full collection of our outstanding note receivable, attracting additional financing, or in resolving the lease guarantee obligations in a manner favorable to us. Furthermore, there is no assurance if we complete our clinical trial of ORE1001, that the results will be satisfactory or will enable us to successfully out-license ORE1001.

We may seek to raise funds through public or private financing, strategic partnerships or other arrangements. Any additional equity financing may be dilutive to our current stockholders and debt financing, if available, may involve restrictive covenants. If we raise funds through collaborative or licensing arrangements, we may be required to relinquish, on terms that are not favorable to us, rights to some of our technologies or product candidates that we would otherwise seek to develop or commercialize. There is no assurance that funding will be available or will be on terms acceptable to us or to our stockholders. If we are unable to obtain necessary financing, or financing on favorable terms, when needed, our business would materially suffer and we may not be able to continue to develop our drug candidates and acquire additional drug candidates or other assets, and it may be necessary for us to substantially reduce or discontinue our operations.

We are currently engaged in litigation related to our guarantees on two property leases.

We have been sued by the landlords of two properties in Gaithersburg, MD related to our guarantees of performance of two leases held by a former subsidiary that we sold in 2006. The landlords assert that the tenant has ceased paying rent and that we are liable for those continuing lease payments as the guarantor of the leases. We estimate that our total liability could exceed $4 million in the event we are required to make the lease payments through the end of both the lease terms. In addition, the lease on one of the facilities requires the lessee to refit the building to its original state as of the date of the lease, subject to certain conditions, at the option of the landlord. We are currently unable to estimate the potential cost of this refit, were we to be required to fulfill the obligation; however, we believe any such cost would likely be material. We intend to contest these claims vigorously and to pursue the parties that we believe should be held responsible for these obligations; however, there is no assurance that we will be successful in our legal defenses or in our attempts to force the appropriate parties to pay. In the event we are forced to pay a substantial portion of these claims, our business could be forced into insolvency.

Our business is dependent on the successful development of our drug candidates.

Similar to other small drug development companies, we have a limited number of drug candidates and our business is dependent on their success. We currently have ~~three~~ four drug candidates in our ~~pipeline~~portfolio; however, our primary effort is focused on our lead drug candidate, ~~GL1001~~ORE1001. If we are unable to successfully develop and commercialize ~~GL1001~~ORE1001, it is unlikely that we will have sufficient resources to develop the other drug candidates currently in our pipeline and be able to acquire or invest in additional drug candidates in the future.

Small drug development companies with drug candidates in the testing stages, like us, face numerous risks and uncertainties, including but not limited to:

· whether they can successfully conduct preclinical and clinical testing of their drug candidates and whether such testing produces results sufficiently positive to support entering into ~~outlicensing~~out-licensing or other commercial arrangements with third parties;

whether they can design protocols and recruit sufficient subjects with the right characteristics and conduct clinical testing to adequately prove the safety and therapeutic effectiveness of their drug candidates at a cost acceptable to the company;

whether testing of their drug candidates demonstrates acceptable therapeutic effect;

whether testing of their drug candidates reveals unanticipated safety issues or undesirable side effects;

whether regulatory review and approval by the FDA and other domestic and foreign regulatory authorities can be timely and successfully completed;

whether their drug candidates appear to have sufficient potential economic return to interest investors and/or commercial partners;

whether sufficient funding is available to operate the company and to conduct the necessary testing and clinical trials; and

whether commercial partners are successful in developing and commercializing any drug candidates and whether such drug candidates produce sufficient revenue to pay any third party license fees associated with those drug candidates, support the companies and provide a financial return to their stockholders.

In addition to the foregoing, our drug candidates are subject to additional risks and uncertainties which include, but are not limited to:

· whether we experience difficulties or delays in the initiation, progress or completion of clinical trials for our drug candidates, including ~~GL1001 trials~~ORE1001, whether caused by competition, adverse events, investigative site initiation rates, patient enrollment rates, regulatory issues or other factors;

· whether the clinical trials demonstrate that ~~GL1001~~ORE1001 is a safe and effective treatment for diseases of commercial interest;

· whether the safety and/or efficacy results of the ~~GL1001~~ORE1001 trials support ~~developing~~making the investment necessary to develop and file an NDA in the United States or any other country; and

whether an NDA is approved by the FDA or any other regulatory authority.

Adverse outcomes with regard to any of the foregoing risks and uncertainties could cause a drug candidate to fail, either technically, economically or commercially, and such failure could deplete or exhaust our resources.

1113

~~If we~~We ~~are~~may be unable to ~~develop~~generate ~~commercial~~sufficient ~~arrangements~~revenues ~~for~~to ~~our~~continue ~~drug candidates, we may be unable~~ to ~~generate revenues~~operate.

Prior to late-stage clinical testing, smaller drug development companies often must ~~outlicense~~ out-license or otherwise partner a drug candidate to or with a larger company with more financing and resources because smaller companies lack the resources necessary to ~~(a)~~ conduct late-stage clinical testing, which is very expensive and time consuming, and ~~(b)~~ manufacture and commercialize the product. Because other funding available to small drug development companies is difficult and expensive to obtain in the current economic climate, we will face significant competition from other small drug development companies in our attempt to interest larger companies in our drug candidates. This competitive environment could force us to ~~outlicense~~out-license or otherwise partner our drug candidates at earlier stages and to accept less compensation. There can be no assurance that we will be able to complete ~~successful~~ commercial arrangements for our drug candidates that will sustain our continuing operations.

There are numerous risks associated with the commercialization of drug candidates.

If ~~GL1001~~ ORE1001 or any of our other drug candidates is commercialized, there are additional risks and uncertainties, including, but not limited to:

whether the government, private health insurers and other third-party payors will provide sufficient coverage or reimbursement for products derived from our drug candidates;

whether such products will achieve sufficient acceptance by the medical community;

whether alternative or more effective drug candidates or treatment strategies are developed; and

whether insurance covering our drug candidates will sufficiently cover product liability claims.

Adverse outcomes with regard to any of the foregoing risks and uncertainties would hinder or prevent the successful commercialization of ~~GL1001~~ORE1001 or any of our other drug candidates and could have a materially adverse effect on our business.

Because our drug candidates and our development and collaboration efforts depend on our intellectual property rights, adverse events affecting such rights would harm our ability to commercialize our drug candidates.

Our success will depend to a large degree on our own, our licensors’ and potential partners’ ability to obtain and defend patents for our drug candidates. The ~~Our~~ patent ~~position~~positions onof drug ~~candidates~~development ~~involves~~companies, including our patent position, involve complex legal and factual questions. Specific risks and uncertainties that we face in the area of patent exclusivity include, but are not limited to:

whether the pending patent applications we have filed, or to which we have licensed rights, result in issued patents and the length of time it takes to obtain issued patents;

whether the claims of any patents which are issued on our pending applications provide commercially meaningful protection or value;

whether the patents licensed or issued to us provide adequate exclusivity for all aspects of our proprietary technology;

whether other companies challenge patents issued or licensed to us; and

whether the patent protection available is deemed adequate protection by our commercial partners to invest in the development and commercialization of our drug candidates.

Adverse outcomes with regard to any of the foregoing risks and uncertainties could have a detrimental impact on the development and commercialization of our drug candidates.

We may need to initiate patent enforcement litigation or be subject to future infringement claims.

Various organizations, including companies, academic institutions and non-profit institutions are developing drug candidates. Many of these drug candidates are subject to the same evolving legal standards and related uncertainties about patent protection. Therefore, it may be necessary for us to initiate litigation to protect and enforce our intellectual property rights. We may not have the resources to initiate such litigation, and if we do, we may not prevail in such litigation. In addition, we may be the subject of patent infringement claims raised by other parties; and we could incur substantial litigation costs to defend ourselves in such infringement suits even if we are ultimately successful in defending against such litigation.

12Risks and Uncertainties Related to our Sold or Discontinued Businesses.

Risks and Uncertainties Related to our Sold or Discontinued Businesses

We remain subject to outstanding obligations with respect to our sold or discontinued businesses.

We previously conducted a genomics business, a preclinical business, a drug repositioning business and, on a smaller scale, a molecular diagnostic business. In most cases, when we sold or discontinued these businesses, we assigned the leases for the space required to conduct these businesses, but remain liable to the landlord with regard to several properties if the assignees of such properties fail to timely make rental payments or otherwise breach the terms of such leases. Such leases expire through December 2013 and at December 31, ~~2008~~ 2009 represented a potential aggregate contingent liability of $128.23 million. (excluding the related genomics business lease under which the landlord agreed to release us from liability). We also accepted promissory notes in partial payment of the sales price for two of our sold or discontinued businesses, ~~($3~~of ~~million~~which ~~due in June 2009 and~~ $0.4 million ~~due~~ ~~each~~remains inoutstanding ~~December~~as ~~2009 and June 2010) that have not yet come due and agreed to remain liable and to indemnify the purchasers~~ of ~~our~~December ~~discontinued businesses to various degrees~~31, ~~and~~2009 ~~subject to various limitations~~ and ~~exclusions,~~is ~~with regard~~due toin ~~any~~June ~~claims resulting from the discontinued businesses~~2010.

Therefore, risks and uncertainties applicable to our sold or discontinued businesses include, but are not limited to:

· whether the remaining amount under the outstanding promissory ~~notes~~note will be paid in full and without dispute when due;

whether claims will be made against us for any indemnity provided to purchasers or by any customer or supplier of the sold or discontinued businesses; and

· whether the assignees of the various leases will make rental payments and otherwise comply with the terms of such leases for the balance of the lease terms, or if any of them default, whether we will be able to limit any of our resulting lease liability.

~~General Business~~As ~~Risks~~described ~~and~~elsewhere ~~Risks~~in ~~Related~~“Risk Factors”, we have recently been sued by the landlords of two properties in Gaithersburg, MD related to ~~Our~~our ~~Common~~guarantees ~~Stock~~of performance of two leases held by a former subsidiary that we sold in 2006. In the event we are forced to pay a substantial portion of the asserted claims, our business could be forced into insolvency.

General Business Risks and Risks Related to Our Common Stock.

We have a history of operating losses that could continue for some time.

We have incurred operating losses in each year since our inception, including losses of $228.54 million in ~~2008~~2009 and $3422.75 million in ~~2007~~2008. At December 31, ~~2008~~2009, we had an accumulated deficit of $~~372~~381.82 million. Our losses have resulted principally from costs incurred ~~from~~by ~~the~~both ~~businesses~~our weongoing ~~sold~~business, ~~and~~as ~~the~~well ~~development~~as ofbusinesses ~~our~~we ~~drug development~~have ~~business~~sold. These costs have exceeded our revenue and we expect to incur additional losses in the future.

~~We have~~Our ~~limited~~Common ~~funding~~Stock ~~available~~has ~~and~~been ~~may~~delisted ~~not~~from beThe ~~able~~NASDAQ toCapital ~~obtain~~Market ~~the~~and ~~additional funding~~ we ~~need~~may tobe ~~continue~~unable to ~~develop~~achieve ~~our~~another ~~drug~~public ~~candidates as planned~~listing.

WeOur ~~have limited~~Common ~~funding~~Stock was ~~available,~~suspended ~~but~~from ~~have~~trading ~~made~~on ~~and~~The ~~are~~NASDAQ ~~continuing~~Capital toMarket ~~make~~on ~~substantial efforts~~March to25, ~~reduce~~2010 ~~our~~for ~~rate~~failure ~~of cash usage so that we will have sufficient funds~~ to ~~complete~~meet the ~~Phase~~$1 ~~Ib/IIa~~minimum ~~clinical~~bid ~~trial~~price werequired ~~believe~~for iscontinued ~~needed~~listing toand ~~realize value~~will ~~with~~be ~~respect to GL1001~~delisted. We ~~As part of those efforts, we~~ are ~~reducing~~currently ~~our workforce~~pursuing ~~and~~a ~~attempting~~public tolisting ~~reduce~~on ~~other expenses; however, we may also need to seek additional funding in~~ the ~~near~~OTC ~~future.~~Bulletin ~~There~~Board ~~is no assurance that funding will be available~~ or, ~~will~~if ~~be on terms acceptable to us or to our shareholders. If~~ we are unable to ~~obtain~~achieve ~~necessary financing~~that, orthe ~~financing~~“Pink onSheets”. We ~~favorable~~can ~~terms, when~~offer ~~needed,~~no ~~our~~assurances ~~business~~that ~~would materially suffer and~~ we ~~may~~will ~~not~~ be ~~able~~successful ~~to continue~~in our ~~strategies,~~efforts ~~including continuing~~ to ~~develop~~achieve ~~our~~another ~~drug~~public ~~candidates.~~listing ~~If additional~~for ~~financing is obtained through the issuance of equity securities or debt convertible to equity,~~ our ~~existing~~Common ~~stockholders could experience significant dilution~~Stock.

~~Our Common Stock is subject to the possibility of delisting from The NASDAQ Global Market.~~15

Our Common Stock, which is currently listed on The NASDAQ Global Market, is currently trading below the minimum $1.00 per share price necessary for such listing. Such requirement has been temporarily suspended by NASDAQ until at least April 2009; however, if we are unable to meet this requirement when reinstated, our Common Stock could be delisted by NASDAQ.

We may not be able to hire or retain key officers or employees that we need to implement our business strategy and develop our drug candidates.

Due to our efforts to reduce cash usage, we have had to significantly reduce our workforce. These changes could have potential negative effects on our operations. Additionally, these workforce reductions combined with the uncertainty of our future could make it difficult to retain and recruit qualified personnel as we continue to develop our drug candidates. The competition for qualified personnel is intense, and the loss of services of certain personnel or our inability to attract additional personnel when needed could adversely affect our business. ~~In order to hire and retain personnel, we may be required to issue significant amounts of equity-based compensation, which could cause our existing stockholders to experience dilution.~~

Future financings and the issuance of significant equity-based compensation may cause existing stockholders to experience dilution.

We may need to seek additional financing. If this additional financing is obtained through the issuance of equity securities, debt convertible into equity or options or warrants to acquire equity securities, our existing stockholders could experience significant dilution upon the issuance, conversion or exercise of such securities. Likewise, in order to hire and retain personnel, we may be required to issue significant amounts of equity-based compensation, which could, among others, take the form of restricted stock and options to acquire equity securities. The issuance of the restricted stock or the exercise of such options could also cause our existing stockholders to experience dilution.

ITEM 1B.

UNRESOLVED STAFF COMMENTS

None.

ITEM 2.

PROPERTIES

The following table sets forth information regarding the principal facilities that we lease and sublease, the location and approximate size of each leased or subleased space and their designated use. We believe that these facilities are in good condition and are sufficient to meet our business needs for the foreseeable future.

Location	Approximate Square Footage		Operation	~~Type of Holding~~	~~Expiration~~Type of Holding	Expiration
Gaithersburg, MD.		5,108	Office	Sublease	2013
Gaithersburg, MD		5,108	Office		Sublease		2013
Cambridge, MA.*		4,211	Administrative, R&D	Sublease	2009
Cambridge, MA		4,077	Office		Lease		2012
		9,319
		9,185

*Our sublease of the Cambridge facility expires by June 30, 2009; we are currently looking to enter into a new lease arrangement in or around Cambridge, MA.

ITEM 3.

LEGAL PROCEEDINGS

WeOn ~~are~~January ~~not currently~~28 aand ~~party~~February to1, ~~any~~2010, ~~legal~~we ~~proceedings~~received demand letters from the landlords of the properties located at 620 and 610 Professional Drive in Gaithersburg, Maryland, respectively (the “620 Landlord” and the “610 Landlord,” respectively, and collectively the “Landlords”), stating that ~~would~~Bridge Global Pharmaceutical Services, Inc. (“Bridge”), which is the lessee under the leases for both properties, had appeared to have avacated ~~material~~the ~~adverse effect~~premises and had stopped paying rent on those properties and demanding that we pay the amounts due pursuant to our ~~financial~~guaranties ~~condition~~of Bridge’s obligations under the leases. On February 9, 2010, we received notice of service of process informing us that the 620 Landlord had filed a complaint with the Circuit Court for Montgomery County, Maryland. The complaint alleges that we breached our guaranty of Bridge’s obligations to pay rent due under the leases and alleges current damages of $116,497.69 plus interest and further costs and expenses. On March 1, 2010, we received notice of a service of process informing us that the 610 Landlord had filed a complaint with the Circuit Court for Montgomery County, Maryland, alleging breach of contract by us and asserting current damages in an amount to be determined. We estimate that the total potential rent payable to the Landlords through the end of the leases, including the past due rents, is approximately $4.1 million. We intend to contest these claims vigorously and to actively pursue all available avenues to hold Bridge or ~~results~~other affiliated entities responsible for obligations under the leases or to otherwise recoup amounts owed by Bridge or other affiliated entities for non-payment of ~~operations~~rent under the leases and other costs and expenses; however, there is no assurance that we will be successful in our legal defenses or in our attempts to force the appropriate parties to pay.

ITEM 4. ~~SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS~~RESERVED

~~None.~~16

PART II

ITEM 5.

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

~~Our Common Stock is traded on The NASDAQ Global Stock~~ Market under the symbol “ORXE”. Prior to January 3, 2008, it traded under the symbol “GLGC.” The following table sets forth information regarding the high and low closing prices* for our Common Stock, for the periods indicated:Information

Year Ended December 31, 2008	High		Low
First Quarter	$	4.50	$	2.40
Second Quarter	$	2.85	$	1.31
Third Quarter	$	1.40	$	0.73
Fourth Quarter	$	0.96	$	0.48
Year Ended December 31, 2007
First Quarter	$	12.60	$	7.65
Second Quarter	$	12.50	$	6.25
Third Quarter	$	7.00	$	5.90
Fourth Quarter	$	6.10	$	3.80

Our Common Stock traded on The NASDAQ Capital Market under the symbol “ORXE” from August 3, 2009 until its suspension on March 25, 2010. Prior to August 3, 2009, it traded on The NASDAQ Global Market and prior to January 3, 2008, it traded under the symbol “GLGC.” The following table sets forth the high and low sales prices for our Common Stock, as reported by Nasdaq, for the periods indicated:

* All closing prices shown in the table reflect the one-for-five reverse stock split approved by our stockholders on May 23, 2008.

	Common Stock
Year Ended December 31, 2009	High		Low
First Quarter	$	0.63	$	0.30
Second Quarter	$	0.75	$	0.35
Third Quarter	$	0.84	$	0.51
Fourth Quarter	$	0.81	$	0.40
Year Ended December 31, 2008
First Quarter	$	4.55	$	2.25
Second Quarter	$	3.10	$	1.30
Third Quarter	$	1.42	$	0.68
Fourth Quarter	$	1.25	$	0.46

All prices shown in the table reflect the one-for-five reverse stock split approved by our stockholders on May 23, 2008.

We are currently pursuing a public listing on the OTC Bulletin Board or, if we are unable to achieve that, the “Pink Sheets”. We can offer no assurances that we will be successful in our efforts to achieve another public listing for our Common Stock.

Stockholders

As of March 15, 2010, there were approximately 121 stockholders of record of the 5,473,519 outstanding shares of our Common Stock.

Dividends

We have never paid or declared any cash dividends on our Common Stock. We currently intend to retain all available funds and any future earnings to fund the development and expansion of our business, and we do not anticipate paying any cash dividends in the foreseeable future. Any future determination to pay dividends will be at the discretion of our board of directors and will depend on our financial condition, results of operations, capital requirements, and other factors that our board of directors deems relevant. In addition, the terms of any future debt or credit facility may preclude us from paying dividends.

Unregistered Sales of Securities

None.

Issuer Purchases of Equity Securities

None.

ITEM 6.

SELECTED FINANCIAL DATA

Not Applicable.

1518

ITEM 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

We are ~~a drug~~focusing ~~development company focused~~ on ~~advancing~~developing ~~our~~and ~~pipeline~~monetizing ~~of drug candidates for uses previously identified by~~ our ~~discontinued~~current ~~drug~~portfolio ~~repositioning program. We~~of ~~currently~~pharmaceutical ~~have~~assets, ~~three~~which ~~drug~~includes ~~candidates~~four inclinical-stage ~~our~~compounds ~~pipeline: GL1001 (~~in-licensed ~~development~~from ~~for~~major ~~inflammatory~~pharmaceutical ~~bowel~~companies. Each ~~disease),~~of ~~tiapamil~~these ~~(beginning development~~compounds ~~for~~has ~~treatment~~been ofobserved ~~diseases~~to ofbe ~~the~~well-tolerated ~~central~~in ~~nervous~~human ~~system)~~clinical ~~and romazarit~~trials ~~(beginning~~to ~~development for metabolic disorders)~~date. We are ~~also~~ ~~seeking~~evaluating ~~to obtain rights to several other compounds for which we identified new uses from~~ our ~~drug~~lead ~~repositioning~~compound, ~~and development partnership agreements; however~~ORE1001, ~~there~~as ~~can~~a bepotential notreatment ~~assurances~~for ~~that~~Inflammatory weBowel ~~will~~Disease ~~be able to do so~~(“IBD”). ~~Our~~IBD ~~pipeline~~ is ~~unique~~a insevere gastrointestinal condition that ~~all~~is ofestimated ~~our~~to ~~drug~~affect ~~candidates~~as ~~have been~~many ~~successfully~~as ~~tested~~one ~~for~~million ~~safety~~people in ~~humans~~the byUnited ~~the~~States ~~original developer~~alone. We ~~believe~~initiated ~~this~~a ~~gives~~Phase ~~our~~Ib/IIa ~~drug~~clinical ~~candidates~~trial ain ~~greater~~patients ~~chance of~~with ~~success~~ulcerative ~~since~~colitis ~~the~~– ~~majority~~one of ~~compounds~~the ~~fail~~two inmain ~~clinical~~disorders ~~trials~~comprising ~~due~~IBD to– ~~safety issues. We~~of ~~are~~ORE1001 ~~exploring~~in ~~commercial~~the ~~arrangements~~fourth ~~for~~quarter ~~these compounds~~of 2009.

In ~~June 2008~~September 2009, we ~~filed~~received annotice ~~IND~~from ~~with~~The ~~the~~NASDAQ ~~FDA~~Stock ~~for~~Market ~~GL1001,~~(“Nasdaq”) that our ~~lead~~stock ~~drug~~would ~~candidate,~~be subject to delisting if we did not regain compliance by having a closing bid price equal or above $1.00 per share for ~~the treatment~~a minimum of ~~inflammatory~~10 ~~bowel~~consecutive ~~disease~~trading days prior to March 15, 2010. InOn ~~December~~March ~~2008~~16, 2010, we ~~completed~~ awere ~~multiple~~further ~~ascending~~notified ~~dose~~by ~~Phase~~Nasdaq Ithat ~~clinical~~we ~~trial. The~~had ~~study was~~not aregained ~~blinded,~~compliance ~~placebo-controlled~~and ~~study~~that trading in 32our ~~healthy~~stock ~~volunteers~~would ~~that~~be ~~studied~~ suspended on March 25, 2010 in the ~~effects~~event onwe ~~subjects~~did ofnot ~~multiple~~submit ~~ascending~~an ~~doses~~appeal to Nasdaq. We determined not to submit an appeal and, as a result, trading in our stock on The ~~drug candidate~~Nasdaq Capital Market was ~~orally~~suspended ~~administered~~on ~~for~~March 1425, ~~days~~2010, and will be delisted thereafter. ~~Results~~We ofare ~~that~~currently ~~trial showed~~undertaking ~~that~~efforts to have our stock publicly traded on the ~~drug~~OTC ~~candidate~~Bulletin ~~was~~Board ~~well~~or ~~tolerated~~in bythe ~~humans~~“Pink Sheets”, ~~with~~although there is no ~~serious adverse~~assurance ~~effects~~we ~~observed~~will be able to accomplish that goal.

InOn ~~2008~~October 20, 2009, we ~~discontinued~~completed ~~our~~a ~~drug~~reorganization ~~repositioning~~that ~~efforts~~was ~~and~~undertaken ~~realigned~~primarily ~~our~~in ~~corporate resources~~order to ~~invest~~better inprotect the ~~clinical~~value ~~and~~of ~~business~~our ~~development~~approximately of$329 ~~drug~~million ~~candidates~~ in ~~our~~gross ~~pipeline. We~~net ~~reduced our~~ operating ~~expenses~~and bycapital ~~implementing~~loss ~~a significant~~carryforwards ~~reduction~~that incan ~~our~~be ~~workforce~~used ~~from~~to reduce the 71amount ~~employees~~of ~~reported~~income ~~on December~~tax ~~31,~~we ~~2007~~could be required to 14pay ason offuture ~~December~~earnings ~~31,~~from ~~2008~~our business. ~~Further~~As ~~expense reductions were achieved as~~ a result of ~~the~~this ~~assignment~~reorganization, ofOre ~~our~~Pharmaceuticals ~~Cambridge, Massachusetts~~Inc. ~~facility~~became ~~(we~~a ~~subleased~~wholly-owned ~~back~~subsidiary of a ~~smaller~~new ~~portion~~company, ~~for~~Ore aPharmaceutical ~~term~~Holdings ~~ending~~Inc. ~~in June~~(“Ore ~~2009~~Holdings”). All ~~resulting~~the inoutstanding ~~total~~shares ~~savings~~ of ~~approximately~~Ore $7Pharmaceuticals Inc.1 ~~million~~were ~~over~~converted ~~the remaining~~into ~~term~~shares of Ore Holdings and Ore Holdings then became the ~~lease~~publicly traded company that ~~expires~~we innow ~~2013~~refer to as “Ore.”

WeOur ~~believe that~~intention asat athe ~~result~~time of ~~our~~the ~~ongoing~~reorganization ~~realignment~~was ~~efforts~~to explore and, ~~cash~~if ~~conservation programs~~feasible, ~~including~~implement ~~further~~a ~~employee~~strategy ~~reductions~~by ~~expected~~which inwe ~~2009,~~would ~~nine~~finance development of ~~which are~~our ~~expected~~portfolio tothrough ~~occur~~establishing ~~prior~~alternative toinvestment ~~May~~and ~~2009,~~program wedevelopment ~~now~~vehicles, ~~have~~with ~~the~~Ore ~~resources~~receiving toprogram ~~initiate and~~management ~~complete~~fees ~~the~~from, ~~Phase~~and ~~Ib/IIa~~equity ~~clinical~~interests ~~trial~~in, ~~for~~these ~~GL1001~~vehicles. However, ~~which~~we ishave ~~expected~~not ~~to begin~~formed ~~mid~~any ~~2009~~of these vehicles and we are uncertain that we will be ~~completed~~successful in ~~mid~~implementing tothis ~~late~~strategy ~~2010. We~~and ~~also~~business ~~plan~~model in the future, in which case we may determine to ~~continue~~ take other actions designed to ~~exploit~~preserve, ~~our~~increase ~~portfolio~~and ofrealize ~~other~~the ~~drug~~value ~~candidates~~of these assets.

~~Previously, we~~We ~~had~~have ~~drug~~incurred ~~repositioning~~net ~~and~~losses ~~development~~in ~~partnership~~each ~~agreements~~year ~~with pharmaceutical~~since ~~companies~~our toinception, ~~find~~including ~~new~~losses ~~therapeutic~~of ~~uses~~$8.4 ~~for~~million ~~compounds~~in ~~they~~2009 ~~had assessed~~and as$22.5 ~~safe~~million in ~~human~~2008. At ~~clinical~~December ~~trials~~31, ~~but~~2009, ~~for~~we ~~which development~~ had ~~been discontinued. Our~~an ~~obligations~~accumulated todeficit ~~evaluate~~of ~~their~~$381.2 ~~compounds under these agreements have been completed~~million. WeOur ~~obtained~~losses ~~rights~~have toresulted ~~develop~~principally ~~three such~~from ~~compounds~~costs ~~and~~incurred ~~are~~by ~~seeking~~both toour ~~obtain~~ongoing ~~similar~~business, ~~rights~~as towell ~~several~~as ~~other compounds~~businesses we ~~identified~~have ~~from these agreements~~sold. ~~For~~We ~~each~~expect ~~compound~~ to ~~which~~ weincur ~~obtain~~additional ~~rights,~~losses ifin wethe ~~further develop it, alone or with others, we are obligated to pay success-based milestone payments and royalties on net commercial sales~~future.

InResults ~~March 2008, we purchased 920,426 shares~~ of Common Stock of the Company from a then member of our Board of Directors for $3.3 million (the “Share Purchase”) and paid the director $0.1 million for certain fees and expenses. In connection with the Share Purchase, the director resigned from the Company’s Board of Directors and surrendered stock options for 6,000 shares of our Common Stock.Operations

InYears ~~2008, we~~Ended ~~sold~~December ~~to Nerveda~~31, Inc. our wholly owned subsidiary, DioGenix Inc., which was our molecular diagnostics business, for a sales price of $1.3 million, of which $0.5 million was received at closing and the balance is payable pursuant to a $0.8 million promissory note bearing interest at 2.38%, with two principal payments of $0.4 million plus interest due December 2009 and June 2010, subject to acceleration in certain events. We agreed to indemnify each other for the breach by either of any representation, warranty, covenant or obligation made or undertaken pursuant to the agreement. During 2008~~, we recorded a gain on the sale of DioGenix Inc. of $0.1 million.~~

~~In 2007, we sold our Genomics Assets to Ocimum for a sales price of $10~~Revenue.0 Revenue ~~million,~~was ~~of which~~ $7.0.2 million ~~was~~in ~~received~~2009 atcompared ~~closing and the balance is payable pursuant~~ to a $32.0 million ~~non-interest~~in ~~bearing promissory note due June 2009~~2008. WeThe ~~agreed~~2009 toand ~~indemnify~~2008 ~~Ocimum~~revenue inprimarily ~~the~~resulted ~~event~~from oflicensing ~~a breach of our representations and warranties to, and~~ agreements ~~with, Ocimum. Ocimum~~for ~~assumed~~ certain ~~liabilities~~technology ~~relating~~unrelated to ~~the Genomics Assets and the lease obligations of~~ our ~~former~~pharmaceutical ~~Genomics~~asset ~~laboratory~~management ~~and~~business. During ~~office facility~~2009, ~~subject~~one tocustomer ~~our~~accounted ~~agreement to reimburse Ocimum~~ for 5086% of ~~the~~our ~~lease obligations~~revenue ~~for~~while ~~2008. In~~in ~~the event of Ocimum’s default under the lease, we could be liable for amounts due under the lease that at December 31,~~ 2008 ~~totaled~~two ~~$2.2~~customers ~~million. Our~~accounted ~~liability expires~~ for ~~obligations under~~97% ~~the lease in February 2011. At December 31, 2008, Ocimum had on deposit in escrow $0.7 million to partially secure both Ocimum’s performance under the lease and payment~~ of ~~the~~our $3revenue.~~0 million promissory note.~~

16Research and Development Expense. Research and development expenses, which in 2009 consisted almost entirely of costs associated with the clinical development of ORE1001, decreased to $2.5 million in 2009 from $9.7 million in 2008. The decrease was primarily the result of lower employee and facility-related costs due to our significant workforce reductions during the later portion of 2008 and the first half of 2009 and consolidation of facilities.

The sale of our Genomics Assets was part of our transformation into a drug development company. We continue to consider other strategic opportunities and paths to enhance shareholder value, including but not limited to, targeting additional sources of funding and developing new strategic relationships with pharmaceutical companies and other interested third parties.19

~~In December 2007~~Selling, ~~NASDAQ~~General ~~notified~~and usAdministrative ~~that~~Expense. Selling, ~~our~~general ~~stock~~and ~~would~~administrative beexpenses, ~~subject~~which toconsist ~~delisting if~~primarily weof ~~did~~administration, ~~not~~legal, ~~regain~~accounting, ~~compliance~~and ~~within~~other ~~six~~general ~~months~~corporate ~~with~~expenses, adecreased ~~listing~~to ~~requirement that~~$7.2 ~~the~~million ~~closing~~in ~~bid~~2009 ~~price~~from of$12.7 ~~our~~million ~~Common~~in ~~Stock equal or exceed $1~~2008.00 The ~~per~~primary ~~share~~ reasons for athe ~~minimum~~decrease ofin 10expenses ~~consecutive~~were ~~trading~~lower ~~days. On~~employee ~~May~~costs ~~23,~~due ~~2008,~~to our ~~stockholders~~ ~~approved~~significant aworkforce ~~one-for-five~~reductions, ~~reverse~~reduced ~~split~~professional offees ~~our~~relating ~~outstanding~~to ~~Common Stock~~strategic ~~shares~~planning, ~~that~~the ~~allowed~~absence usof to$0.4 ~~regain~~million ~~compliance~~of ~~with~~expense ~~NASDAQ’s~~related ~~listing requirements. Our~~to ~~Common~~the ~~Stock~~purchase isof ~~currently~~shares ~~again~~from ~~below~~a ~~the~~former ~~$1.00 price,~~director ~~but~~that ~~NASDAQ~~occurred ~~has~~in ~~temporarily~~2008 ~~suspended~~and ~~the~~lower ~~listing~~facility-related ~~requirement~~costs ~~through~~related ~~at least~~to ~~April~~the ~~19,~~consolidation ~~2009~~of facilities.

WeNet ~~have incurred~~Interest ~~net~~Income. Net ~~losses~~interest inincome ~~each~~decreased ~~year~~to ~~since~~$0.5 ~~our~~million ~~inception,~~in ~~including~~2009 ~~losses~~from of $220.5 8 million in 2008 ~~and~~due ~~$34.7~~to ~~million~~the decline in ~~2007. At~~the ~~December~~balance ~~31,~~of ~~2008,~~our ~~we had~~cash anand ~~accumulated~~cash ~~deficit~~equivalents and decreases in our rates of ~~$372.8~~return ~~million. Our~~on ~~losses~~investments, ~~have resulted~~partly ~~principally~~offset ~~from~~by ~~costs~~principal ~~incurred~~adjustments, ~~from~~which ~~the~~were ~~businesses~~recorded weas ~~sold~~interest income, and interest related to the ~~development~~ ofsuperseding ~~our~~secured ~~drug~~promissory ~~development~~note ~~business~~that was entered into with Ocimum during the second quarter of 2009. WeThe ~~expect~~original toand ~~incur additional~~superseding ~~losses~~notes infrom Ocimum related to the ~~future~~sale of our genomics business.

~~Results~~Income/(Loss) on Equity Investments. In 2009, we recorded other income of ~~Continuing~~$0.6 ~~Operations~~million related to the sale of our investment in Neuralstem, Inc. In 2008, we recorded a $3.0 million write-down of the remaining book value of our investment in Xceed Molecular Inc. (formerly MetriGenix Corporation) due to an other-than-temporary decline in the estimated fair value of that investment.

With the completion of the sale of our Genomics Assets in December 2007, the Genomics Division has been classified as a “Discontinued Operation” for historical financial statement purposes. Our remaining continuing operations consist of our drug development business. Expenses for our molecular diagnostic business, which we sold in 2008, are also included in our operating expenses from continuing operations; however, these expenses and associated assets are not considered material to us. There was no revenue from our molecular diagnostics business.

Years Ended December 31, 2008 and 2007

Revenue. Revenue from continuing operations was $2.0 million in 2008 compared to $1.6 million in 2007. During 2008, two customers accounted for 97% of our revenue from continuing operations. During 2007, one customer accounted for 94% of our revenue from continuing operations. The 2008 revenue primarily resulted from $1.5 million from a licensing agreement for certain technology unrelated to our core drug development business and $0.4 million from the achievement of milestones under a drug repositioning and development partnership agreement. The 2007 revenue primarily resulted from $1.5 million from the licensing agreement referred to above. We expect future revenue to be derived primarily from commercial arrangements for our drug candidates in our pipeline, including our lead drug candidate GL1001 (that would occur no sooner than 2010).

Research and Development Expense. Research and development expenses, which now consist primarily of costs associated with the further development of GL1001, decreased to $9.7 million in 2008 from $10.3 million in 2007. The decrease was primarily due to $1.9 million in lower employee and laboratory related costs, partially offset by $1.6 million in increased third-party costs for further development of GL1001. For 2009, we expect research and development expenses to decrease significantly as a result of our workforce reductions.

Selling, General and Administrative Expense. Selling, general and administrative expenses from continuing operations, which consist primarily of sales, marketing, accounting, legal, human resources and other general corporate expenses, increased to $12.7 million in 2008 from $11.1 million in 2007. The increase is largely due to increased professional services associated with strategic planning (including $0.9 million related to exploring a specific strategic alternative), the Share Purchase and our reverse split of the Company’s shares and $0.4 million of expense related to the Share Purchase. This increase was partially offset by lower employee-related expenses. For 2009, we expect selling, general and administrative expenses to decrease significantly as a result of our workforce reductions.

Net Interest Income. Net interest income decreased to $0.8 million in 2008 from $2.0 million in 2007, due to the decline in the balance of our cash and cash equivalents and marketable securities available-for-sale and decreases in our rates of return on investments.

Write-down of Equity Investment. In 2008, we recorded a $3.0 million write-down of the remaining book value of our investment in Xceed Molecular (“Xceed”, formerly MetriGenix Corporation), due to an other-than-temporary decline in its estimated fair value.

Gain on Sale of DioGenix Inc. In 2008, we sold our wholly owned subsidiary, DioGenix Inc., which was our molecular diagnostics business, and recorded a gain on the sale of $0.1 million.

Liquidity and Capital Resources

~~From inception through December 31~~Historically, ~~2008,~~ we have financed our operations ~~and acquisitions~~ through the issuance and sale of equity securities, ~~and~~ payments from customers and sales of parts of our business and assets from time to time. As of December 31, ~~2008~~2009, we had approximately $105.8 million in cash, ~~cash equivalents~~ and ~~marketable~~cash ~~securities available-for-sale~~equivalents, compared to $3210.8 million as of December 31, ~~2007~~2008. The reduction in cash and cash equivalents from 2008 to 2009 primarily related to our cash burn from operations, partly offset by collections from the outstanding notes with Ocimum and Nerveda.

Net cash used from operating activities ~~from continuing operations~~ decreased to ~~a negative~~ $208.38 million in ~~2008~~2009 from ~~a negative~~ $1720.73 million in ~~2007, primarily due to our increased net loss from continuing operations in~~ 2008~~. As a result of the significant reductions in our cash usage~~, ~~we presently anticipate that we have sufficient resources to initiate~~ and ~~complete~~was the Phase Ib/IIa clinical trial for GL1001, which is expected to begin mid 2009 and be completed in mid to late 2010. We currently expect our cash usage for the first quarter of 2009 to be slightly higher than that of the fourth quarter of 2008, primarily ~~due~~ toattributed ~~timing of payments~~ to ~~certain of our professional service providers and~~ the ~~fourth~~reduction ~~quarter~~in ~~of 2008 receipt of $0.7 million from Agios Pharmaceuticals, Inc. (“Agios”) for~~ the ~~sale~~net oflosses ~~laboratory~~during ~~equipment~~those ~~associated with drug repositioning~~periods.

~~Our~~ In 2009, our investing activities ~~during~~consisted ~~2008~~primarily ~~and~~of ~~2007,~~the ~~other~~collection ~~than~~of ~~proceeds~~the ~~and~~$3.0 ~~payments relating~~million tointerest ~~our~~bearing ~~discontinued~~promissory ~~operations~~note ~~and~~in connection with the 2007 sale of ~~DioGenix~~our ~~Inc.~~genomics business to Ocimum, ~~consisted primarily~~the collection of ~~purchases~~the ~~and~~first ~~sales~~principal payment of ~~marketable~~$0.4 ~~securities~~million ~~available-for-sale~~from ~~and~~ the ~~sale~~interest ofbearing ~~laboratory~~promissory ~~equipment~~note toin ~~Agios. For~~connection ~~2009,~~with ~~other~~the ~~than purchases~~2008 ~~and~~sale ~~sales~~ of ~~marketable~~DioGenix ~~securities~~Inc. ~~available-for-sale~~to Nerveda and ~~proceeds relating~~$0.6 tomillion ~~our~~in ~~discontinued~~proceeds ~~operations~~from ~~and~~ the sale of ~~DioGenix~~an ~~Inc~~equity investment. The final principal payment, weincluding dointerest, ~~not expect~~of ~~our~~$0.4 ~~investing~~million ~~activities~~is due from Nerveda in June 2010, subject to beacceleration ~~significant~~under certain events.

In ~~connection~~ ~~with~~2008, we assigned our lease in Cambridge, Massachusetts, to a third party, but we remain liable under the ~~2008~~lease ~~sale~~in the event of ~~DioGenix~~the ~~Inc~~assignee’s default., The ~~described~~lease ~~above~~expires in August 2013 and at December 31, 2009, the total remaining amount due under the lease for the balance of the ~~purchase~~term ~~price~~ is ~~payable~~$4.2 ~~pursuant~~million. In connection with the 2006 sale of our Preclinical Division to aBridge Pharmaceuticals, Inc. (“Bridge”), less than $0.81 million ~~interest~~of ~~bearing promissory~~the ~~note,~~sales ~~with~~price remains in escrow pending resolution between the parties. We continue to guarantee two ~~principal~~leases ~~payments~~now ofheld $0by Bridge.4 The ~~million~~leases ~~plus~~expire ~~interest~~in ~~due~~ February 2011 and December 2013 and at December 31, 2009, the total remaining amounts due under the leases for the balance of the terms is $0.7 million and ~~June~~$3.4 ~~2010~~million, ~~subject~~respectively. We tohave ~~acceleration~~been named as a defendant in ~~certain events~~two lawsuits brought by the landlords of the properties formerly occupied by Bridge. See Item 3, “Legal Proceedings.”

InOur ~~2008, we~~financing ~~assigned~~activities ~~our lease~~ in ~~Cambridge,~~2009 ~~Massachusetts~~were toinsignificant ~~Agios,~~and ~~but remain liable under the lease~~ in ~~the event of Agios’ default. The lease expires in August 2013 and at December 31,~~ 2008, ~~the~~primarily ~~total~~consisted ~~remaining~~of ~~amounts due under~~ the ~~lease~~ ~~for~~purchase ~~the balance~~ of ~~the~~shares ~~term~~from isa ~~$5.2~~former ~~million,~~director ~~not~~for ~~including~~ $13.90 million ~~of estimated building operating costs~~.

In ~~connection~~ ~~with~~ the ~~2007~~second ~~sale~~quarter of ~~our~~2009, ~~Genomics~~we ~~Assets,~~received ~~described~~a ~~above,~~notice ~~the balance~~requiring repayment of ~~the~~all ~~sales~~amounts ~~price~~potentially isdue ~~payable~~under ~~pursuant~~a toloan and a grant agreement with the State of Maryland that totaled $3.0.7 million. We ~~non-interest bearing~~have ~~promissory~~recorded ~~note~~the amounts due ~~June~~under ~~2009. Ocimum~~the ~~also~~loan ~~assumed~~and ~~the~~grant ~~lease obligations~~agreement ofwithin ~~our~~current ~~former~~portion ~~Genomics~~of ~~laboratory~~long-term debt and ~~office~~other ~~facility,~~accrued ~~but~~expenses. In January 2010, we ~~remain liable~~reached ~~under~~a ~~the~~settlement ~~lease~~agreement inwith the ~~event~~lender concerning repayment of ~~Ocimum’s~~the ~~default~~loan of $0. ~~Our liability~~4 ~~expires~~million ~~for~~that ~~obligations~~was ~~under~~currently ~~the~~due ~~lease~~upon indemand, ~~February~~as ~~2011~~well ~~and~~as ~~at December~~repayment ~~31,~~of ~~2008~~a ~~(not~~training ~~taking~~program ~~into~~grant ~~account~~of ~~Ocimum’s~~$0.1 ~~escrow~~million and accrued interest of $0.72 million) that has been recorded in Other Accrued Expenses. Under the settlement agreement, we ~~could~~ bewill ~~liable~~repay ~~for~~$0.4 ~~amounts~~million, of which $0.2 million was paid in February 2010 and the remaining $0.2 million is due ~~under~~in September 2010. We are required to pay the ~~lease~~settlement ~~that~~agreement in full by September 30, 2010 or else the total amount due will revert to the original $20.2 7 million.

In connection with the 2006 sale of our Preclinical Division to Bridge Pharmaceuticals, Inc. (“Bridge”), less than $0.1 million of the sales price remains in escrow pending resolution between the parties. We continue to guarantee two leases now held by Bridge. The leases expire in February 2011 and December 2013 and at December 31, 2008, the total remaining amounts due under the leases for the balance of the terms is $1.2 million and $3.6 million, respectively.20

~~Our financing~~We ~~activities~~believe ~~consisted~~that ~~primarily~~existing ofcash ~~the~~and ~~Share~~cash ~~Purchase~~equivalents ~~from~~and amarketable ~~former director~~securities available-for-sale, ~~$3.0~~the ~~million~~anticipated ~~(not~~receipt ~~including~~of $0.34 million relating to the promissory note from Nerveda and our ongoing cash conservation efforts, including the subsequent settlement agreement with the State of Maryland to reduce the amount due on the outstanding loan, grant and interest, will enable us to support our operations into the first quarter of 2011, including the costs to fund the ongoing Phase Ib/IIa clinical trial for ORE1001 but assuming that we are not required to pay more under our guarantees for two lease obligations discussed in Notes 10 and 13 than we have established as a reserve. There can be no assurance that we will be successful in achieving our objectives of continuing cash conservation efforts, the ~~price~~collection ~~paid~~of our remaining outstanding note receivable, attracting additional financing, or resolution of the potential lease obligations in ~~excess~~ a manner favorable to the Company. Furthermore, there is no assurance if we complete our clinical trial of ORE1001, that the ~~fair~~results ~~value~~will be satisfactory or will enable us to successfully out-license ORE1001. If we are not successful in achieving our objectives, it might be necessary to substantially reduce or discontinue our operations. We currently expect long-term support of our operations to come from possible future financings and payments from commercial arrangements from our portfolio of drug candidates. These estimates are forward-looking statements that involve risks and uncertainties. Our actual future capital requirements and the ~~shares)~~adequacy of our available funds will depend on those factors discussed under “Risk Factors” elsewhere in this Form 10-K.

We have had discussions with the lender concerning repayment and/or forgiveness of a $0.5 million loan that is currently due upon demand, as well as $0.1 million of accrued interest thereon.

We believe that existing cash and cash equivalents, the anticipated receipt of $3.0 million and $0.8 million relating to the promissory notes from Ocimum and Nerveda, respectively, and our ongoing realignment efforts and cash conservations programs will be sufficient to support our operations through mid to late 2010, including any milestone payment obligations related to developing our compounds. We expect long-term support of our operations to come from our possible future financings and payments from commercial arrangements from our pipeline of drug candidates. These estimates are forward-looking statements that involve risks and uncertainties. Our actual future capital requirements and the adequacy of our available funds will depend on many factors, including those discussed under “Risks Factors” elsewhere in this Form 10-K.

Critical Accounting Policies

Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States, which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates. The following discussion highlights what we believe to be the critical accounting policies and judgments made in the preparation of these consolidated financial statements.

Revenue Recognition

Revenue ~~is recognized~~associated ~~in accordance~~ with ~~the~~non-refundable ~~SEC’s~~license ~~Staff~~fees ~~Accounting~~for ~~Bulletin~~which ~~No.~~we ~~104, “Revenue~~are ~~Recognition”~~not ~~(“SAB~~obligated ~~104”). SAB~~to ~~104~~provide ~~requires~~continuing ~~that~~research ~~four~~and ~~basic criteria~~development beactivities ~~met~~is ~~before~~generally ~~revenue can be~~ recognized: 1)when ~~persuasive~~the ~~evidence~~license ofbecomes ~~an arrangement~~effective. ~~exists;~~Revenue 2)associated ~~delivery~~with ~~has~~non-refundable ~~occurred~~license orfees ~~services~~under ~~rendered;~~arrangements 3)where the ~~fee~~license ~~is fixed~~fees and ~~determinable;~~research and 4)development ~~collectability~~activities iscannot ~~reasonably assured. As to 1), our business practices require that our services~~ be ~~performed~~accounted ~~pursuant~~for toas ~~contracts~~separate ~~with~~units ~~our~~of ~~customers. As~~accounting ~~to 2), we recognize revenue when services~~ are ~~rendered~~deferred ~~to our customers. Determination of 3)~~ and 4)recognized ~~are~~as ~~based~~revenue onover ~~management’s judgments regarding~~ the ~~fixed~~expected ~~nature~~term of our ~~arrangements~~continued ~~taking~~performance ~~into account termination provisions and the collectability~~ of ~~fees~~such ~~under~~research our arrangements. Should changes in conditions cause management to determine these criteria are not met for certain future arrangements, revenue recognized for any reporting period would be adjusted and ~~could~~development ~~be adversely affected~~activities.

~~In accordance with Emerging Issues Task Force ("EITF") Issue No. 00-21, “~~Revenue ~~Arrangements~~ ~~with Multiple Deliverables,” revenue~~ recognized for any multiple-element contract is allocated to each element of the arrangement based on the relative fair value of the element. The determination of fair value of each element is based on our analysis of objective and reliable evidence from comparable internal or third-parties’ sales of the individual element. If we are unable to determine evidence of fair value for an undelivered element of the arrangement, revenue for the arrangement is deferred and recognized using the revenue recognition method appropriate to the predominant undelivered element.

WeDeferred ~~could enter~~revenue ~~into~~is ~~contractual~~recorded ~~arrangements~~for ~~with~~cash ~~multiple~~received ~~deliverables. If~~from ~~we are~~customers ~~unable~~for towhom ~~determine~~services ~~objectively~~have ~~and~~not ~~reliably~~yet ~~the~~been ~~fair~~performed ~~value~~or ~~of individual undelivered elements, we recognize all~~ revenue ~~using the revenue~~ recognition ~~method~~ ~~appropriate~~criteria tohas ~~the~~not ~~predominant~~been ~~undelivered~~met ~~element. We also defer the direct and incremental expenses associated with the revenue and recognize these expenses~~ as ~~we recognize the related revenue. The timing~~ of ~~revenue recognition associated with agreements we enter into in future periods may also be dependent on our ability to objectively and reliably determine~~ the ~~fair~~balance ~~value~~sheet ~~of deliverables included in those agreements~~date.

Goodwill and Intangible Assets Impairment

In connection with the sale of our Genomics Assets, we allocated $2.1 million of goodwill to the disposition of such assets with the remaining amount of $0.6 million being allocated to our molecular diagnostics business. The allocation of goodwill was based on the respective fair values of each of our Genomics Assets and molecular diagnostics business. In 2008, we sold our molecular diagnostic business (DioGenix Inc.) and recorded a write-down of all of our remaining goodwill of $0.6 million (included in the gain on sale of DioGenix Inc. in 2008).

Under Statement of Financial Accounting Standards ("SFAS") No. 142, “Goodwill and Other Intangible Assets,” we are required to perform an annual impairment test of our goodwill and periodic reviews of our other intangible assets. In addition, we are required to test for impairment at any point we have an indication that an impairment may exist. We have elected to perform our annual impairment test of goodwill as of October 1. As part of our annual testing of goodwill, we determined that no impairment existed in the carrying value of goodwill in 2007. In connection with the sale of DioGenix Inc., all remaining amounts of goodwill were disposed.

Equity Investments

In 2008, we recorded a $3.0 million write-down of the remaining book value of our investment in Xceed, due to an other-than-temporary decline in its estimated fair value. We record an investment impairment charge when indicators of impairment exist and it is believed that an investment has experienced a decline in value that is other-than-temporary.

Stock-Based Compensation

InEffective January 1, 2006, we adopted ASC 718, previously referred to as SFAS No. 123 (revised 2004), “Share-Based Payment,” ~~(“SFAS 123R”). SFAS~~which ~~123R~~ requires usall toshare-based ~~expense~~payments ~~the~~to ~~fair~~employees, ~~value~~including grants of employee stock~~-based~~ ~~compensation~~options and restricted stock awards, ofto ~~our~~be ~~various~~recognized ~~stock-~~in the financial statements based upon their respective grant-date fair values. We recognize compensation ~~programs~~ expense on a straight-line basis over the requisite service period of the award, which typically occurs ratably over periods ranging from one to four years. We estimate the fair value of our stock-based compensation using fair value pricing models that require the use of significant assumptions for expected volatility of our ~~common stock~~Common Stock, life of stock options and forfeiture rates. Future adverse changes in such assumptions could result in us recording increased stock-based compensation expenses for stock-based compensation awards granted/issued in the future.

Recently Issued Accounting Pronouncements

In ~~February~~ ~~2008~~June 2009, the Financial Accounting Standards Board (“FASB”) issued ~~a one-year~~an ~~deferral~~accounting ~~for~~pronouncement ~~non-financial~~found ~~assets~~under ~~and~~ASC ~~liabilities~~105, previously referred to ~~comply~~as ~~with~~ SFAS No. ~~157~~ 168, “~~Fair~~The ~~Value~~FASB ~~Measurements” (“SFAS~~ Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles, a replacement of FASB Statement No. ~~157~~ 162,”~~). We~~ ~~adopted~~which ~~SFAS No. 157~~establishes ~~for financial~~the ~~assets~~FASB ~~and~~Accounting ~~liabilities~~Standards ~~effective~~Codification ~~January 1,~~as ~~2008~~the ~~and~~source of authoritative accounting principles recognized by the ~~adoption had~~FASB noto ~~impact~~be onapplied ~~our~~in the preparation of financial ~~position~~statements orin ~~results~~conformity ofwith ~~operations~~accounting principles generally accepted in the United States (“GAAP”). ~~We do~~ASC ~~not~~105 ~~expect~~explicitly ~~the~~recognizes ~~adoption~~rules and interpretive releases of ~~SFAS No. 157~~the SEC under federal securities laws as itauthoritative ~~pertains~~GAAP ~~to non-~~for SEC registrants. ASC 105 was effective for financial ~~assets~~statements issued for interim and ~~liabilities~~annual toreporting ~~have~~periods aending ~~material~~after September 15, 2009 (the quarter ended September 30, 2009 for us) and did not have an impact on our financial position or results of operations.

In ~~December~~ ~~2007~~May 2009, the FASB issued an accounting pronouncement found under ASC 855-10, previously referred to as SFAS No. ~~141 Revised~~165, “~~Business~~Subsequent ~~Combinations~~Events,” ~~(“SFAS~~ ~~141R”). SFAS~~which ~~141R~~establishes ~~requires~~general anstandards ~~acquirer~~of toaccounting ~~determine~~for ~~the~~and ~~fair value~~disclosure of ~~the~~events ~~consideration~~that ~~exchanged~~occur asafter of the ~~acquisition~~balance sheet date, ~~(i.e.~~but ~~the~~before ~~date the~~financial ~~acquirer~~statements ~~obtains~~are ~~control). Previously,~~issued anor ~~acquisition~~are ~~was~~available ~~valued as~~to ofbe ~~the~~issued. ASC ~~date~~855-10 ~~the~~is ~~parties~~effective ~~agreed~~for ~~upon~~financial ~~the~~statements ~~terms~~issued offor ~~the transaction. SFAS~~interim ~~141R~~and ~~also~~annual ~~modifies,~~reporting ~~among~~periods ~~other~~ending ~~things,~~after ~~the accounting~~June ~~for~~15, ~~direct~~2009 ~~costs~~(the ~~associated~~quarter ~~with~~ended anJune ~~acquisition~~30, ~~contingencies acquired~~2009 ~~and~~for ~~contingent consideration~~us). WeThe ~~will~~adoption ~~adopt~~of ~~SFAS~~ASC ~~141R~~855-10 ~~for business~~did ~~combinations~~not ~~for~~have ~~which~~an ~~the~~impact ~~acquisition~~on ~~date~~our ~~occurs~~financial onposition or ~~after~~results ~~January 1,~~of ~~2009~~operations.

In ~~December 2007~~ April 2009, the FASB ~~ratified~~issued ~~EITF~~an accounting pronouncement under ASC 825-10-50 extending the disclosure requirements for financial instruments, previously referred to as FASB Staff Position (“FSP”) No. 07 107-1, “and Accounting ~~for Collaborative~~Principles ~~Agreements”~~Board ~~(“EITF~~Opinion 07No. 28-1”), “Interim Disclosures about Fair Value of Financial Instruments.” ~~EITF~~ASC 07825-110-50 ~~provides~~requires ~~guidance~~ disclosures in interim reporting periods and in financial statements for annual reporting periods regarding the fair value of all financial ~~statement~~instruments ~~presentation~~for which it is practicable to estimate that value, whether recognized or not on the company's balance sheet. ASC 825-10-50 requires entities to disclose the methods and ~~disclosure~~significant assumptions used to estimate the fair value of ~~collaborative arrangements~~financial instruments and describe changes in methods and significant assumptions, asin ~~defined~~both ~~therein~~interim and annual financial statements. ~~EITF~~ASC 07825-110-50 is effective for usinterim asreporting ~~of January 1~~periods ending after June 15, 2009~~. We~~ do(the ~~not~~quarter ~~expect~~ended June 30, 2009 for us). While the adoption of ~~this~~ASC ~~statement will~~825-10-50 ~~have~~impacts aour ~~material~~disclosures, ~~effect~~it did not have an impact on our financial position or results of operations.

~~ITEM~~In 7AApril 2009, the FASB issued an accounting pronouncement found under ASC 320-10-65, previously referred to as FSP SFAS 115-2 and SFAS 124-2, “Recognition and Presentation of Other-Than-Temporary Impairments,” which modifies the recognition requirements for other-than-temporary impairments of debt securities and enhances existing disclosures with respect to other-than-temporary impairments of debt and equity securities. ASC ~~QUANTITATIVE~~320-10-65 ~~AND~~is ~~QUALITATIVE~~effective ~~DISCLOSURE~~for ~~ABOUT~~interim ~~MARKET~~and ~~RISK~~annual reporting periods ending after June 15, 2009 (the quarter ended June 30, 2009 for us). The adoption of ASC 320-10-65 had no impact on our financial position or results of operations.

In February 2008, the FASB issued a one-year deferral for non-financial assets and liabilities to comply with ASC 820, previously referred to as SFAS No. 157. We adopted ASC 820 for financial assets and liabilities effective January 1, 2008 (see Note 1, Fair Value Measurements, to the accompanying consolidated financial statements). We adopted ASC 820 as it pertains to non-financial assets and liabilities effective January 1, 2009 and the adoption had no impact on our financial position or results of operations.

In December 2007, the FASB issued an accounting pronouncement found under ASC 805, previously referred to as SFAS No. 141 Revised, “Business Combinations.” ASC 805 requires an acquirer to determine the fair value of the consideration exchanged as of the acquisition date (i.e. the date the acquirer obtains control). Previously, an acquisition was valued as of the date the parties agreed upon the terms of the transaction. ASC 805 also modifies, among other things, the accounting for direct costs associated with an acquisition, contingencies acquired and contingent consideration. We adopted ASC 805 effective January 1, 2009 for business combinations occurring after the effective date and the adoption had no impact on our financial position or results of operations.

In December 2007, the FASB ratified an accounting pronouncement found under ASC 808-10-15, previously referred to as Emerging Issues Task Force No. 07-1, “Accounting for Collaborative Agreements.” ASC 808-10-15 provides guidance regarding financial statement presentation and disclosure of collaborative arrangements, as defined therein. We adopted ASC 808-10-15 effective January 1, 2009 and the adoption had no impact on our financial position or results of operations.

ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Our Consolidated Financial Statements and notes thereto, together with the Report of Independent Registered Public Accounting Firm, appear on pages F-1 through F-18 17 of this Form 10-K and are incorporated herein by reference.

ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

2023

ITEM 9A(T).

CONTROLS AND PROCEDURES

Attached as exhibits to this Form 10-K are certifications of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), which are required in accordance with Rule 13a-14 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). This “Controls and Procedures” section includes information concerning the controls and controls evaluation referred to in the certifications.

Evaluation of Disclosure Controls and Procedures

AsOur ~~of December~~principal ~~31,~~executive ~~2008,~~officer ~~under the supervision~~ and ~~with~~principal ~~the~~financial ~~participation of our management~~officer, ~~including~~after ~~the~~evaluating ~~CEO and CFO, an evaluation was performed of~~ the effectiveness of ~~the design and operation of~~ our “disclosure controls and procedures” (~~“Disclosure~~as ~~Controls”). These~~defined ~~are controls and procedures designed to reasonably assure that information required to be disclosed~~ in ~~our reports filed under the~~ Exchange Act, ~~such~~Rules ~~as this Form 10~~13a-~~K, is~~15(e) ~~recorded, processed, summarized~~ and ~~reported~~15d-15(e)) ~~within~~as ~~the~~of ~~time periods specified in~~ the ~~rules~~end ~~and forms~~ of the ~~SEC. Disclosure~~period ~~Controls~~covered ~~are also~~by ~~designed~~this toForm ~~reasonably assure that such information is accumulated and communicated to our management~~10-K, ~~including the CEO and CFO as appropriate, to allow timely decisions regarding required disclosure. Based on that evaluation, our CEO and CFO~~ have concluded that, asbased ofon ~~December~~such 31evaluation, ~~2008,~~ our disclosure controls and procedures were effective to ~~provide~~ensure ~~reasonable assurance~~ that information required to be disclosed by us in ~~our~~the reports that we file or submit under the Exchange Act ~~reports~~ is recorded, processed, summarized and reported, within the time periods specified byin the SEC,’s rules and ~~that~~forms, ~~material~~and ~~information~~is ~~relating~~accumulated toand uscommunicated ~~is made known~~ to our management, including ~~the~~our ~~CEO~~principal executive and ~~CFO~~principal financial officers, ~~particularly~~or ~~during~~persons ~~the~~performing ~~period~~similar ~~when our~~functions, ~~periodic~~as ~~reports~~appropriate ~~are~~to ~~being~~allow ~~prepared~~timely decisions regarding required disclosure.

Our management, including the ~~CEO~~principal executive and ~~CFO~~principal financial officers, does not expect that our ~~Disclosure Controls~~disclosure controls or our internal control over financial reporting will prevent or detect all errors and all instances of fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based, in part, on certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of the effectiveness of controls to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

Management’s Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate “internal control over financial reporting” as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended, to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.

Under the supervision and with the participation of our management, including our CEO and CFO, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, ~~2008~~2009 based on the ~~framework~~criteria inset forth by the Internal Control--Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on that evaluation, our management ~~concluded~~believes that our internal control over financial reporting was effective as of December 31, ~~2008~~ 2009 to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with generally accepted accounting principles.

2124

This Form 10-K does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the SEC that permit the Company to provide only management’s report in ~~the~~this Form 10-K.

Changes In Internal Control Over Financial Reporting

There were no changes in our internal ~~controls~~control over financial reporting, identified in connection with the evaluation of such internal control that occurred during the fourth quarter of ~~2008~~2009 that have materially affected, or are reasonably likely to materially affect, our internal ~~controls~~control over financial reporting.

ITEM 9B.

OTHER INFORMATION

~~None~~We held our Annual Meeting of Stockholders on October 20, 2009 (the “Annual Meeting”). At the Annual Meeting, our stockholders approved a plan for reorganization intended to protect the long-term value to our Company of our substantial net operating and capital loss carryforwards, elected one director to our Board of Directors; approved a new 2009 Omnibus Equity Incentive Plan and ratified the selection of our independent registered public accounting firm, as described below. At the Annual Meeting, 4,905,684 shares, out of a total of 5,421,643 shares of Common Stock outstanding at the record date of September 4, 2009, were represented in person or by proxy.

The proposals considered at the Annual Meeting were voted on as follows

		For	Withheld

1.	To approve a plan of reorganization intended to protect the long-term value to our Company of our substantial net operating and capital loss carryforwards.	2,770,138	93,047

2.	To elect G. Anthony Gorry, Ph.D. as a Class III director to hold office until the 2012 Annual Meeting of Stockholders and until his successor is duly elected and qualified.	4,637,096	268,588

		For	Against	Abstain
3.	To approve a new 2009 Omnibus Equity Incentive Plan	1,901,930	952,650	31,393


4.	To ratify the selection of Ernst & Young LLP as the Company's independent registered public accounting firm for the year ending December 31, 2009.	4,714,466	158,542	32,676

After the Annual Meeting, Mark J. Gabrielson and David L. Urdal, Ph.D. continued to serve as directors with terms that expire at our annual meeting to be held in 2010 and until their successors are duly elected and qualified. J. Stark Thompson, Ph.D. and James W. Fordyce continued to serve as directors with terms that expire at our annual meeting to be held in 2011 and until their successors are duly elected and qualified. Mr. Fordyce resigned from our Board of Directors effective February 12, 2010.

PART III

ITEM 10.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Identification Of Directors

The information required by this item is incorporated by reference tofrom the ~~information~~ discussion responsive thereto set forth in the section entitled “Election of Directors,” contained in the Company’s ~~definitive~~ Proxy Statement for the ~~2009~~2010 Annual Meeting of Stockholders to be filed with the SEC within 120 days following the Company’s fiscal year ended December 31, ~~2008~~2009 (the “Proxy Statement”).

Identification Of Executive Officers

The information required by this item is incorporated by reference tofrom the ~~information~~ discussion responsive thereto set forth in the section entitled “Executive Officers,” contained in the Proxy Statement.

Compliance With Section 16(Aa) Of The Securities Exchange Act Of 1934

The information required by this item is incorporated by reference tofrom the ~~information~~ discussion responsive thereto set forth in the section entitled “Section 16(a) Beneficial Ownership Reporting Compliance,” contained in the Proxy Statement.

Code Of Ethics/Corporate Governance

The information required by this item is incorporated by reference tofrom the ~~information~~ discussion responsive thereto set forth in the section entitled “Corporate Governance,” contained in the Proxy Statement.

ITEM 11.

EXECUTIVE COMPENSATION

The information required by this item is incorporated by reference tofrom the ~~information~~ discussion responsive thereto set forth in the section entitled “Executive Compensation,” contained in the Proxy Statement.

ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by this item is incorporated by reference tofrom the ~~information~~ discussion responsive thereto set forth in the ~~section~~sections entitled “Security Ownership of Certain Beneficial Owners and Management” and “Equity Compensation Plan Information,” contained in the Proxy Statement.

ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by this item is incorporated by reference tofrom the ~~information~~ discussion responsive thereto set forth in the ~~section~~sections entitled “~~Certain~~ Transactions with Related Persons” and “Corporate Governance,” contained in the Proxy Statement.

ITEM 14.

PRINCIPAL ACCOUNTING FEES AND SERVICES

The information required by this item is incorporated by reference tofrom the ~~information~~ discussion responsive thereto set forth in the section entitled “Principal ~~Accountant~~Accounting Fees and Services,” contained in the Proxy Statement.

PART IV

ITEM 15.

EXHIBITS, FINANCIAL STATEMENT SCHEDULES

Item 15(a)~~1. Financial~~ ~~Statements~~The following documents are filed as part of this Annual Report on Form 10-K:

Consolidated Financial Statements of Ore Pharmaceuticals Inc.	Page
Report of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets as of December 31, 2008 and 2007	F-3
Consolidated Statements of Operations for the two years ended December 31, 2008	F-4
Consolidated Statements of Stockholders' Equity for the two years ended December 31, 2008	F-5
Consolidated Statements of Cash Flows for the two years ended December 31, 2008	F-6
Notes to Consolidated Financial Statements	F-7

Item 15(a)(1) and (2). Financial Statements and Financial Statement Schedules

(a)2. Financial Statement Schedules

Consolidated Financial Statements of Ore Pharmaceutical Holdings Inc. (formerly Ore Pharmaceuticals, Inc.)	Page
Report of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets as of December 31, 2009 and 2008	F-3
Consolidated Statements of Operations for the two years ended December 31, 2009	F-4
Consolidated Statements of Stockholders' Equity for the two years ended December 31, 2009	F-5
Consolidated Statements of Cash Flows for the two years ended December 31, 2009	F-6
Notes to Consolidated Financial Statements	F-7

~~All~~Other financial statement schedules ~~for~~have ~~which~~not ~~provision~~been isincluded ~~made~~because inthey ~~the~~are not applicable ~~accounting regulations~~or of the ~~SEC~~information ~~are~~is ~~not~~included ~~required~~in ~~under~~ the ~~related~~Financial ~~instruction~~Statements or ~~applicable~~ ~~and~~notes ~~therefore have been omitted~~thereto.

Item 15(a)(3). ~~Index to~~ Exhibits

Exhibit

Exhibit Number	Exhibit Description	Filed with this Report	Incorporated by Reference herein from Form or Schedule	Filing Date	SEC File / Registration Number
2.1	Agreement and Plan of Reorganization, dated as of August 14, 2009, by and among the Registrant, Ore Pharmaceuticals Merger Sub Inc. and Ore Pharmaceuticals Inc.		S-4/A (Appendix A)	September 2, 2009	333-161363
2.2	Stock Purchase Agreement, dated December 15, 2006, between Registrant and Bridge Pharmaceuticals Inc.		8-K (Exhibit 2.2)	December 21, 2006	000-23317
2.3	Asset Purchase Agreement by and between Registrant and Ocimum Biosolutions Limited and Ocimum Biosolutions Inc. dated as of October 14, 2007.		8-K/A (Exhibit 10.99)	October 18, 2007	000-23317
2.4	Letter Agreement dated as of December 12, 2007 by and between Registrant, Ocimum Biosolutions Inc. and Ocimum Biosolutions (India) Limited.		8-K (Exhibit 10.99a)	December 18, 2007	000-23317
2.5	Letter Agreement dated as of December 14, 2007 by and between Registrant, Ocimum Biosolutions Inc. and Ocimum Biosolutions (India) Limited.		8-K (Exhibit 10.99b)	December 18, 2007	000-23317

Number Description of Document

2.2 Stock Purchase Agreement, dated December 15, 2006, between Registrant and Bridge Pharmaceuticals, Inc. (23)

2.3 Asset Purchase Agreement by and between Registrant and Ocimum Biosolutions (India) Limited and Ocimum Biosolutions Inc. dated as of October 14, 2007. (30)

2.3a Letter Agreement dated as of December 12, 2007 by and between Registrant, Ocimum Biosolutions, Inc. and Ocimum Biosolutions (India) Limited. (31)

2.3b Letter Agreement dated as of December 14, 2007 by and between Registrant, Ocimum Biosolutions, Inc. and Ocimum Biosolutions (India) Limited. (31)

3.1 Amended and Restated Certificate of Incorporation dated November 26, 1997, as amended by the Certificate of Amendment dated December 18, 2007, and as further amended by the Certificate of Amendment dated May 23, 2008.

3.2 By-Laws, as amended and restated as of July 31, 2008. (32)

4.1 Reference is made to Exhibits 3.1 and 3.2.

4.2 Specimen stock certificate. (1)

*10.1 Form of Indemnity Agreement entered into between Registrant and its directors and officers. (1)

*10.2 Registrant's 1997 Equity Incentive Plan, as amended (the "Stock Plan").

*10.3 Form of Stock Option Agreement under the Stock Plan. (1)

*10.4 Form of Stock Option Grant Notice. (1)

*10.5 Registrant's Employee Stock Purchase Plan, as amended, and related offering document. (13)

*10.6 Registrant's 1997 Non-Employee Directors' Stock Option Plan, as amended. (2)

*10.7 Form of Nonstatutory Stock Option under the 1997 Non-Employee Directors' Stock Option Plan. (1)

*10.12 Employment Agreement, dated June 7, 2001, between the Registrant and Michael J. Brennan. (12)

*10.14 Employment Agreement, dated May 16, 1996, between the Registrant and Mark D. Gessler. (1)

*10.15 Amendment to the Employment Agreement, dated July 9, 1997, between the Registrant and Mark D. Gessler. (1)

10.22 Lease Agreement, dated August 22, 1997, between Registrant and ARE-708 Quince Orchard, LLC. (1)

10.22a First Amendment to Lease, dated July 21, 2000, between Registrant and ARE-708 Quince Orchard, LLC. (7)

*10.45 Amended and Restated Employment Agreement, dated April 1, 1999, between Registrant and Y. Douglas Dolginow. (3)

10.50 Agreement, effective January 1, 2002, between Registrant and Affymetrix, Inc. (superceded)(10)

10.50a Letter Agreement, amending Agreement effective January 1, 2002, between Registrant and Affymetrix, Inc. (superceded)(5)(B)

10.50b Service Provider Agreement, effective January 1, 2006, between Registrant and Affymetrix, Inc. (21)

10.50c Biotech Access Agreement, effective January 1, 2007, between Registrant and Affymetrix, Inc. (28)

10.50d Service Provider Agreement, effective January 1, 2007, between Registrant and Affymetrix, Inc. (28)

*10.55 Executive Severance Plan, as amended February 2001. (8)

*10.55a Executive Severance Plan, as amended September 2008. (35)

*10.58 Employment Agreement, dated October 11, 1999, between Registrant and Philip L. Rohrer, Jr. (4)

*10.58a Second Amendment to Executive Employment Agreement, dated as of February 23, 2007, between Registrant and Philip L. Rohrer, Jr. (28)

*10.58b Third Amendment to Executive Employment Agreement, dated as of January 1, 2008, between Registrant and Philip L. Rohrer, Jr.

*10.58c Executive Employment Agreement, dated as of December 31, 2008, between Registrant and Philip L. Rohrer, Jr. (9)

10.67 Lease Agreement, dated July 21, 2000 between Registrant and ARE-50 West Watkins Mill, LLC. (6)

*10.75 Employment Agreement, dated May 30, 2002, between Registrant and F. Dudley Staples, Jr. (11)

10.78 Settlement and Nonexclusive License Agreement, dated January 10, 2001, between Registrant and Incyte Corporation. (19)(A)

10.80 Lease Agreement for 620 Professional Drive, dated October 26, 2000, between TherImmune Research Corporation and Oxbridge Development at Crown Pointe, L.C. (15)

10.80a Guarantee of Lease Agreement dated April 1, 2003, between Registrant and Oxbridge Development at Crown Pointe, L.C. (28)

10.81 Lease Agreement for 610 Professional Drive, dated June 22, 2001, between TherImmune Research Corporation and Oxbridge Development at Crown Pointe, L.C., including amendments dated September 25, 2001 and December 20, 2002. (15)

10.81a Third Amendment to Lease dated June 22, 2001, between TherImmune Research Corporation and Oxbridge Development at Crown Pointe, L.C. (19)

10.81b Guarantee of Lease Agreement dated April 1, 2003, between Registrant and Oxbridge Development at Crown Pointe, L.C. (28)

*10.83 Employment Agreement, dated November 4, 2004, between Registrant and Dennis A. Rossi. (17)

*10.84 Employment Agreement, dated November 4, 2004, between Registrant and Joanne M. Smith-Farrell. (17)

10.85 Asset Purchase Agreement, dated July 22, 2004, between Registrant and Millennium Pharmaceuticals, Inc. (17)(B)

10.85a Compound Transfer and Development Agreement, dated July 26, 2006, between Registrant and Millennium Pharmaceuticals, Inc. (34)(C)

10.86 Lease Agreement, dated July 31, 2004, between Registrant and Thirty-Eight Sidney Street Limited Partnership. (17)

10.86a First Amendment to Lease dated February 28, 2008, between Registrant and Thirty-Eight Sidney Street Limited Partnership. (36)

*10.88 Employment Agreement, dated March 10, 2005, between Registrant and V.W. Brinkerhoff, III. (20)

*10.88a Second Amendment to Employment Agreement, dated February 23, 2007, between Registrant and V. W. Brinkerhoff, III. (28)

10.90 License and Sublicense Agreement, dated September 12, 2005, between Registrant and Promega Corporation. (14)(C)

10.91 License Agreement for Real-Time In Vivo Imaging Technology, effective November 17, 2004, between Registrant and Xenogen Corporation. (14)(C)

10.91a Amendment to License Agreement for Real-Time In Vivo Imaging Technology, effective November 22, 2005, between Registrant and Xenogen Corporation. (14)(C)

*10.92a 2007 Performance Year Incentive Compensation Plan. (28)

*10.92b 2008 Performance Year Incentive Compensation Plan. (37)

*10.93 Employment Agreement, dated June 21, 2006, between Registrant and Larry Tiffany. (24)

*10.93b Amendment to Employment Agreement, dated December 6, 2006 between Registrant and Larry Tiffany. (28)

*10.93c Executive Employment Agreement, dated February 1, 2007, between Registrant and Larry Tiffany. (28)

*10.93d First Amendment to Employment Agreement, dated January 1, 2008, between Registrant and Larry Tiffany. (38)

*10.94 Amendment to Employment Agreement, dated August 31, 2006, between Registrant and Larry Tiffany. (25)

*10.95 Amendment to Employment Agreement, dated October 24, 2006, between Registrant and each of Mark D. Gessler, Philip L. Rohrer, Jr., F. Dudley Staples, Joanne Smith-Farrell and Louis A. Tartaglia. (26)

*10.95a Form of Amendment to Employment Agreement for Employment Agreements between Registrant and Charles L. Dimmler, III, Philip L. Rohrer, Jr. and F. Dudley Staples. (35)

*10.96 Form of Restricted Stock Agreement under the Stock Plan. (28)

*10.97	Employment Agreement, signed July 9, 2007, between Registrant and Charles L. Dimmler, III. (29)
*10.98	Advisory Services Agreement between Registrant and Louis Tartaglia, dated as of October 26, 2007. (33)

10.100 License Agreement dated as of December 14, 2007 by and between Registrant and Ocimum Biosolutions, Inc. (31)

10.101 License Agreement dated as of December 14, 2007 by and between Registrant and Ocimum Biosolutions, Inc. (31)

10.103 Secured Note dated as of December 14, 2007 from Ocimum Biosolutions (India) Limited and Ocimum Biosolutions, Inc. to Registrant. (31)

10.103 Sublease dated as of December 14, 2007 by and between Registrant and Ocimum Biosolutions, Inc. (31)

10.104 Stock Purchase Agreement dated as of September 19, 2008 by and among Registrant and Nerveda, Inc. (39)

*10.105 Letter Agreement, dated February 26, 2009, between Registrant and Mark J. Gabrielson. (18)

10.106 Stock Purchase Agreement, dated as of March 14, 2008, by and among Lloyd I. Miller, III, Millfam II L.P., and Registrant. (40)

10.107 Letter of Resignation from Lloyd I. Miller, III dated March 14, 2008. (40)

23.1 Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm.

31 Certifications pursuant to Rule 13a-14(a) and 15d-14(a).

32 Certification pursuant to 18 U.S.C. Section 1350, as adopted, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

_____________________

* Indicates management compensatory plan, contract or arrangement.

(1) Filed as an exhibit to Registrant’s Registration Statement on Form S-1, filed October 7, 1997, as amended, (No. 333-37317) and incorporated herein by reference.

(2) Filed as an exhibit to Registrant’s Current Report on Form 8-K, filed on June 6, 2005, and incorporated herein by reference.

(3) Filed as an exhibit to Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1999, filed on August 13, 1999, and incorporated herein by reference.

(4) Filed as an exhibit to Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 1999, filed on March 30, 2000, and incorporated herein by reference.

(5) Filed as an exhibit to Registrant’s Annual Report on From 10-K for the fiscal year ended December 31, 2004, filed on March 16, 2005, and incorporated herein by reference.

(6) Filed as an exhibit to Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2000, filed on November 14, 2000, and incorporated herein by reference.

(7) Filed as an exhibit to Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2000, filed on March 29, 2001, and incorporated herein by reference.

(8) Filed as an exhibit to Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2001, filed on May 11, 2001, and incorporated herein by reference.

(9) Filed as an exhibit to Registrant’s Current Report on Form 8-K with respect to the Company’s employment of Phillip L. Rohrer, Jr. filed on January 15, 2009, and incorporated herein by reference.

(10) Filed as an exhibit to Registrant’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2001, filed on July 31, 2003, and incorporated herein by reference.

(11) Filed as an exhibit to Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2002, filed on August 9, 2002, and incorporated herein by reference.

(12) Filed as an exhibit to Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2001, filed on March 28, 2002, and incorporated herein by reference.

(13) Filed as an exhibit to Registrant’s Proxy Statement with respect to the Annual Meeting of Stockholders held on June 5, 2003, filed on April 25, 2003, and incorporated herein by reference.

(14) Filed as an exhibit to Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005, filed on March 16, 2006, and incorporated herein by reference.

(15) Filed as an exhibit to Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2003, filed on August 14, 2003, and incorporated herein by reference.

(16) Not used.

(17) Filed as an exhibit to Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2004, filed on November 9, 2004, and incorporated herein by reference.

(18) Filed as an exhibit to Registrant’s Current Report on Form 8-K with respect to the Company’s employment of Mark J. Gabrielson, filed on March 3, 2009, and incorporated herein by reference.

(19) Filed as an exhibit to Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2003, filed on March 15, 2004, and incorporated herein by reference.

(20) Filed as an exhibit to Registrant’s Current Report on Form 8-K with respect to the Company’s hiring of V. W. Brinkerhoff, III as Senior Vice President and General Manager, Gene Logic Laboratories, filed on March 10, 2005, and incorporated herein by reference.

(21) Filed as Exhibit 10.50 to Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2006, filed on May 10, 2006, and incorporated herein by reference.

(22) Not used.

(23) Filed as an exhibit to Registrant’s Current Report on Form 8-K with respect to the Company’s sale of its Preclinical Division, filed on December 21, 2006, and incorporated herein by reference.

(24) Filed as an exhibit to Registrant’s Current Report on Form 8-K with respect to the Company’s employment of Larry Tiffany, filed on June 30, 2006, and incorporated herein by reference.

(25) Filed as an exhibit to Registrant’s Current Report on Form 8-K with respect to the Company’s employment of Larry Tiffany, filed on September 7, 2006, and incorporated herein by reference.

(26) Filed as Exhibit 99.1 to Registrant’s Current Report on Form 8-K with respect to the Company’s employment of the named executives, filed on October 24, 2006, and incorporated herein by reference.

(27) Not used.

(28) Filed as an exhibit to Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2007, filed on May 10, 2007, and incorporated herein by reference.

(29) Filed as an exhibit to Registrant’s Current Report on Form 8-K/A with respect to the Company’s employment of Charles L. Dimmler, III, filed on July 12, 2007, and incorporated herein by reference.

(30) Filed as Exhibit 10.99 to Registrant’s Report on Form DEFA14A with respect to the Special Meeting of Stockholders held on December 14, 2007, filed on October 18, 2007, and incorporated herein by reference.

(31) Filed as Exhibit 10.99a or 10.99b, as applicable, to Registrant’s Current Report on Form 8-K with respect to the Company’s entry into certain material agreements, filed on December 18, 2007, and incorporated herein by reference.

(32) Filed as an exhibit to Registrant’s Current Report on Form 8-K with respect to an amendment to the By-laws, filed on August 6, 2008, and incorporated herein by reference.

(33) Filed as an exhibit to Registrant’s Current Report on Form 8-K/A with respect to an advisory services agreement, filed on October 18, 2007, and incorporated herein by reference.

(34) Filed as an exhibit to Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007, filed on March 17, 2008, and incorporated herein by reference.

(35) Filed as an exhibit to Registrant’s Current Report on Form 8-K with respect to amendments to certain agreements to comply with Section 409A of the Internal Revenue Code of 1986, as amended, filed on October 2, 2008, and incorporated herein by reference.

(36) Filed as an exhibit to Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2008, filed on May 8, 2008, and incorporated herein by reference.

(37) Filed as an exhibit to Registrant’s Current Report on Form 8-K with respect to the Company’s 2008 incentive compensation plan, filed on March 27, 2008, and incorporated herein by reference.

(38) Filed as an exhibit to Registrant’s Current Report on Form 8-K with respect to the Company’s employment of Larry Tiffany, filed on April 30, 2008, and incorporated herein by reference.

(39) Filed as an exhibit to Registrant’s Current Report on Form 8-K with respect to the Company’s sale of its wholly owned subsidiary, DioGenix Inc., its molecular diagnostics business, to Nerveda, Inc., filed on September 23, 2008, and incorporated herein by reference.

(40) Filed as Exhibit 10.1 or Exhibit 10.2, as applicable, to Registrant’s Current Report on Form 8-K with respect to the Company’s purchase of shares of Common Stock from a former director of the Company, filed on March 14, 2008, and incorporated herein by reference.

~~(A)~~Exhibit ~~Confidential~~Number ~~treatment~~Exhibit ~~has~~Description ~~been~~Filed ~~granted~~ with ~~respect to certain portions of~~ this ~~exhibit~~Report ~~pursuant~~Incorporated toby anReference ~~Order~~herein ~~Granting~~from ~~Application~~Form ~~Under~~or ~~the~~Schedule ~~Securities~~Filing ~~Exchange~~Date ~~Act~~SEC ofFile ~~1934~~/ ~~and~~Registration ~~Rule 24b-2 Thereunder Respecting Confidential Treatment dated December 12, 2003.~~Number

(B) Confidential treatment has been granted with respect to certain portions of this exhibit pursuant to an Order Granting Application Under the Securities Exchange Act of 1934 and Rule 24b-2 Thereunder Respecting Confidential Treatment dated May 5, 2005.

3.1	Certificate of Incorporation of Ore Pharmaceutical Holdings Inc.	10-Q (Exhibit 3.1)	November 13, 2009	000-23317
3.2	Bylaws of Ore Pharmaceutical Holdings Inc.	S-4/A (Appendix C)	September 2, 2009	333-161363
4.1	Specimen stock certificate.	S-1/A (Exhibit 4.2)	November 12, 1997	333-37317
Agreements with Respect to Collaborations, Licenses, Research and Development
†10.1	Asset Purchase and Technology Rights Agreement, dated July 22, 2004, between Registrant and Millennium Pharmaceuticals, Inc.	10-Q (Exhibit 10.85)	November 9, 2004	000-23317
†10.2	Compound Transfer and Development Agreement, dated July 26, 2006, between Registrant and Millennium Pharmaceuticals, Inc.	10-K (Exhibit 10.85a)	March 17, 2008	000-23317
10.3	License Agreement, dated as of December 14, 2007, by and between Registrant and Ocimum Biosolutions, Inc.	8-K (Exhibit 10.100)	December 18, 2007	000-23317
10.4	License Agreement, dated as of December 14, 2007, by and between Registrant and Ocimum Biosolutions, Inc.	8-K (Exhibit 10.101)	December 18, 2007	000-23317
Financial Transactions
10.5	Secured Note, dated December 14, 2007, from Ocimum Biosolutions (India) Limited and Ocimum Biosolutions, Inc. to Registrant.	8-K (Exhibit 10.103)	December 18, 2007	000-23317
10.6	Secured Note, dated June 15, 2009, from Ocimum Biosolutions, Inc. and Ocimum Biosolutions India Limited to Registrant.	8-K (Exhibit 10.111)	June 29, 2009	000-23317
10.7	Security Agreement, dated as of June 15, 2009, between Ocimum Biosolutions, Inc. and Registrant.	8-K (Exhibit 10.112)	June 29, 2009	000-23317
10.8	Unconditional Guaranty Agreement, dated as of June 15, 2009, from Coramandel Infrastructure Private Limited in favor of Registrant.	8-K (Exhibit 10.113)	June 29, 2009	000-23317
10.9	Stock Purchase Agreement, dated as of September 19, 2008, by and between Registrant and Nerveda, Inc.	8-K (Exhibit 10.104)	September 23, 2008	000-23317

(C) Confidential treatment has been requested with respect to certain portions of this exhibit. Omitted portions have been filed separately with the SEC.

~~SIGNATURE~~Exhibit Number Exhibit Description Filed with this Report Incorporated by Reference herein from Form or Schedule Filing Date SEC File / Registration Number

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, on the 17th day of March, 2009.

Leases
10.10	Lease, dated August 22, 1997, between Registrant and ARE-708 Quince Orchard, LLC.	S-1 (Exhibit 10.22)	October 7, 1997	333-37317
10.11	First Amendment, dated July 21, 2000, to Lease between Registrant and ARE-708 Quince Orchard, LLC.	10-K (Exhibit 10.22a)	March 29, 2001	000-23317
10.12	Lease Agreement for 620 Professional Drive, dated October 26, 2000, between TherImmune Research Corporation and Oxbridge Development at Crown Pointe, L.C.	10-Q (Exhibit 10.80)	August 14, 2003	000-23317
10.13	Guaranty of Lease for premises at 620 Professional Drive, dated April 1, 2003, between Registrant and Oxbridge Development at Crown Pointe, L.C.	10-Q (Exhibit 10.81b)	May 10, 2007	000-23317
10.14	Lease Agreement for 610 Professional Drive, dated June 22, 2001, between TherImmune Research Corporation and Oxbridge Development at Crown Pointe, L.C., including amendments thereto dated September 25, 2001 and December 20, 2002.	10-Q (Exhibit 10.81)	August 14, 2003	000-23317
10.15	Third Amendment, dated October 13, 2003, to Lease Agreement dated June 22, 2001, between TherImmune Research Corporation and Oxbridge Development at Crown Pointe II, L.C.	10-K (Exhibit 10.81a)	March 15, 2004	000-23317
10.16	Guaranty of Lease for premises at 610 Professional Drive, dated April 1, 2003, between Registrant and Oxbridge Development at Crown Pointe, L.C.	10-Q (Exhibit 10.80a)	May 10, 2007	000-23317
10.17	Lease, dated July 31, 2004, between Registrant and Thirty-Eight Sidney Street Limited Partnership.	10-Q (Exhibit 10.86)	November 9, 2004	000-23317
10.18	First Amendment of Lease, dated February 28, 2008, between Registrant and Thirty-Eight Sidney Street Limited Partnership.	10-Q (Exhibit 10.86a)	May 8, 2008	000-23317
10.19	Sublease, dated as of December 14, 2007, by and between Registrant and Ocimum Biosolutions, Inc.	8-K (Exhibit 10.103)	December 18, 2007	000-23317

ORE PHARMACEUTICALS INC. By: /s/ MARK J. GABRIELSON Mark J. Gabrielson Chief Executive Officer and President

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Name	Position	Date
/s/ MARK J. GABRIELSON	Chief Executive Officer,	March 17, 2009
(Mark J. Gabrielson)	President and Director
	(Principal Executive Officer)
/s/ PHILIP L. ROHRER, JR.	Chief Financial Officer	March 17, 2009
(Philip L. Rohrer, Jr.)	(Principal Financial and
	Accounting Officer)
/s/ MICHAEL J. BRENNAN	Director	March 17, 2009
(Michael J. Brennan, M.D., Ph.D.)
/s/ MARK D. GESSLER	Director	March 17, 2009
(Mark D. Gessler)
/s/ G. ANTHONY GORRY	Director	March 17, 2009
(G. Anthony Gorry, Ph.D.)
/s/ J. STARK THOMPSON	Chairman of the Board	March 17, 2009
(J. Stark Thompson, Ph.D.)
/s/ DAVID URDAL	Director	March 17, 2009
(David Urdal, Ph.D.)

~~Ore Pharmaceuticals~~Exhibit ~~Inc.~~Number Exhibit Description Filed with this Report Incorporated by Reference herein from Form or Schedule Filing Date SEC File / Registration Number

10.20	Lease, dated June 9, 2009, between Registrant and RREEF America REIT II Corp. PPP.		10-Q (Exhibit 10.117)	August 14, 2009	000-23317
10.21	Release of Further Performance Under Lease, dated as of July 31, 2009, between 50 West Watkins Mill Road, LLC and Registrant.		8-K (Exhibit 10.115)	August 6, 2009	000-23317
Equity Plans
*10.22	Registrant's 1997 Equity Incentive Plan, as amended and restated (the "1997 Stock Plan").		10-K (Exhibit 10.2)	March 17, 2009	000-23317
*10.23	Form of Stock Option Agreement under the 1997 Stock Plan.		S-1 (Exhibit 10.3)	October 7, 1997	333-37317
*10.24	Form of Stock Option Grant Notice under the 1997 Stock Plan.		S-1 (Exhibit 10.4)	October 7, 1997	333-37317
*10.25	Form of Restricted Stock Award Agreement under the 1997 Stock Plan.		10-Q (Exhibit 10.96)	May 10, 2007	000-23317
*10.26	Registrant's Employee Stock Purchase Plan, as amended, and related offering document.		DEF14A	April 25, 2003	000-23317
*10.27	Registrant's 1997 Non-Employee Directors' Stock Option Plan, as amended.		10-Q (Exhibit 10.6)	August 14, 2009	000-23317
*10.28	Form of Nonstatutory Stock Option Agreement under the 1997 Non-Employee Directors' Stock Option Plan.		S-1 (Exhibit 10.7)	October 7, 1997	333-37317
*10.29	2009 Omnibus Equity Incentive Plan (the “2009 Plan”).		S-8 (Exhibit 4.1)	November 16, 2009	333-163161
*10.30	Form of Stock Option Grant Notice and Agreement under the 2009 Plan.	X
Agreements with Executive Officers and Directors
*10.31	Form of Indemnity Agreement entered into between Registrant and its directors and officers.		S-1 (Exhibit 10.1)	October 7, 1997	333-37317
*10.32	Letter Agreement, dated February 26, 2009, between Registrant and Mark J. Gabrielson.		8-K (Exhibit 10.105)	March 3, 2009	000-23317
*10.33	Letter Agreement, dated July 15, 2009, between Registrant and Benjamin L. Palleiko.		8-K (Exhibit 10.114)	July 21, 2009	000-23317

Exhibit

Number

Exhibit Description

Filed

with

this

Report

Incorporated by

Reference herein

from Form

or Schedule

Filing Date

SEC File /

Registration

Number

*10.34	Executive Employment Agreement, as amended, dated July 23, 2007, between Registrant and Stephen Donahue.	10-Q (Exhibit 10.109)	May 15, 2009	000-23317
*10.35	Consulting Agreement, dated as of April 24, 2009, between Registrant and Michael J. Brennan.	10-Q (Exhibit 10.116)	August 14, 2009	000-23317
*10.36	Executive Employment Agreement, signed July 9, 2007, between Registrant and Charles L. Dimmler, III.	8-K/A (Exhibit 10.97)	July 12, 2007	000-23317
*10.37	Form of Amendment to Employment Agreement between Registrant and Charles L. Dimmler, III.	8-K (Exhibit 10.95a)	October 2, 2008	000-23317
*10.38	Consulting Agreement, dated as of July 23, 2009, between Registrant and Mark D. Gessler.	10-Q (Exhibit 10.118)	November 13, 2009	000-23317
*10.39	Executive Employment Agreement, dated as of December 31, 2008, between Registrant and Philip L. Rohrer, Jr.	8-K (Exhibit 10.58c)	January 15, 2009	000-23317
*10.40	Professional Services Agreement, dated March 25, 2009, between Registrant and Philip L. Rohrer, Jr.	10-Q (Exhibit 10.110)	May 15, 2009	000-23317
*10.41	Employment Agreement, dated May 30, 2002, between Registrant and F. Dudley Staples, Jr.	10-Q (Exhibit 10.75)	August 9, 2002	000-23317
*10.42	Form of Amendment to Employment Agreement, dated October 24, 2006, between Registrant and F. Dudley Staples.	8-K (Exhibit 99.1)	October 24, 2006	000-23317
*10.43	Professional Services Agreement, dated February 26, 2009, between Registrant and F. Dudley Staples.	10-Q (Exhibit 10.108)	May 15, 2009	000-23317
*10.44	Executive Severance Plan, as amended and restated as of September 29, 2008.	8-K (Exhibit 10.55a)	October 2, 2008	000-23317
*10.45	Amendment to Executive Severance Plan, effective as of April 30, 2009.	10-Q (Exhibit 10.55b)	August 14, 2009	000-23317

Exhibit

Number

Exhibit Description

Filed

with

this

Report

Incorporated by

Reference herein

from Form

or Schedule

Filing Date

SEC File /

Registration

Number

*10.46	Summary of 2009 Incentive Compensation Plan.		10-Q (Exhibit 10.92c)	November 13, 2009	000-23317
21	Subsidiaries of the Registrant.	X
23	Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm.	X
31.1	Certification of Principal Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002.	X
31.2	Certification of Principal Accounting and Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002.	X
32	Certification of the Principal Executive Officer and the Principal Accounting and Financial Officer under Section 906 of the Sarbanes-Oxley Act of 2002.	X

* Management compensatory plan, contract or arrangement.

† Confidential treatment has been granted with respect to portions of this exhibit by the Securities and Exchange Commission.

SIGNATURES

	ORE PHARMACEUTICAL HOLDINGS INC.

	By:	/s/ MARK J. GABRIELSON
	Mark J. Gabrielson
	Chief Executive Officer and President

Name	Position	Date

/s/ MARK J. GABRIELSON	Chief Executive Officer,	March 31, 2010
(Mark J. Gabrielson)	President and Director
	(Principal Executive Officer)

/s/ BENJAMIN L. PALLEIKO	Senior Vice President and Chief Financial Officer	March 31, 2010
(Benjamin L. Palleiko)	(Principal Financial and Accounting Officer)

/s/ G. ANTHONY GORRY	Director	March 31, 2010
(G. Anthony Gorry, Ph.D.)

/s/ J. STARK THOMPSON	Chairman of the Board	March 31, 2010
(J. Stark Thompson, Ph.D.)

/s/ DAVID URDAL	Director	March 31, 2010
(David Urdal, Ph.D.)

Ore Pharmaceutical Holdings Inc.

(formerly Ore Pharmaceuticals Inc.)

Index to Consolidated Financial Statements

	Page
Report of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets as of December 31, 2008 and 2007	F-3
Consolidated Balance Sheets as of December 31, 2009 and 2008	F-3
Consolidated Statements of Operations for the two years ended December 31, 2008	F-4
Consolidated Statements of Operations for the two years ended December 31, 2009	F-4
Consolidated Statements of Stockholders’ Equity for the two years ended December 31, 2008	F-5
Consolidated Statements of Stockholders’ Equity for the two years ended December 31, 2009	F-5
Consolidated Statements of Cash Flows for the two years ended December 31, 2008	F-6
Consolidated Statements of Cash Flows for the two years ended December 31, 2009	F-6
Notes to Consolidated Financial Statements	F-7

Report of Independent Registered Public Accounting Firm –

Consolidated Financial Statements

The Board of Directors and Stockholders Ore Pharmaceutical Holdings Inc. (formerly Ore Pharmaceuticals Inc.):

We have audited the accompanying consolidated balance sheets of Ore Pharmaceutical Holdings Inc. (formerly Ore Pharmaceuticals Inc. ) as of December 31, ~~2008~~2009 and ~~2007~~2008, and the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the two years in the period ended December 31, ~~2008~~2009. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these 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. We were not engaged to perform an audit of the Company’s 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 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, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Ore ~~Pharmaceuticals~~ Pharmaceutical Holdings Inc. at December 31, ~~2008~~2009 and ~~2007~~2008, and the consolidated results of their operations and their cash flows for each of the two years in the period ended December 31, ~~2008~~2009 in conformity with U.S. generally accepted accounting principles.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 2, the Company has incurred and continues to incur significant losses from operations and there is uncertainty as to its ability to obtain additional financing. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regards to these matters also are described in Note 2. The 2009 financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.

/s/ Ernst & Young LLP

Baltimore, Maryland

March 1131, ~~2009~~ 2010

F-2

ORE ~~PHARMACEUTICALS~~ PHARMACEUTICAL HOLDINGS INC.

(formerly Ore Pharmaceuticals Inc.)

Consolidated Balance Sheets

as of December 31, ~~2008~~2009 and ~~2007~~2008

(in thousands, except share data)

	2008			2007
	2009			2008
ASSETS
Current assets:
Cash and cash equivalents	$	105,~~784~~756		$	2610,~~323~~784
Marketable securities available-for-sale		-			6,477
Accounts receivable		150			8
Accounts receivable		8			1,953
Prepaid expenses		175			200
Prepaid expenses		200			910
Current portion of notes receivable, net		432			3,252
Current portion of notes receivable, net		3,252			-
Other current assets		32			62
Other current assets		62			1,185
Total current assets		6,545			14,306
Total current assets		14,306			36,848
Property and equipment, net		33			483
Property and equipment, net		483			2,101
Intangibles, net		726			573
Long-term investment		-			2,964
Notes receivable, net		-			338
Goodwill		-			554
Other assets		25			-
Other intangibles, net		573			836
Total assets	$	7,329		$	15,700
Notes receivable, net		338			2,676
Total assets	$	15,700		$	45,979
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	~~623~~287		$	~~1,120~~623
Accrued compensation and employee benefits		~~1,185~~140			21,~~516~~185
Other accrued expenses		12,~~267~~510			21,~~912~~267
Current portion of long-term debt		~~477~~450			~~501~~477
Deferred revenue		-			1,500
Total current liabilities		3,387			3,552
Total current liabilities		3,552			8,549
Deferred rent		23			-
Long-term debt, net of current portion		-			27
Total liabilities		3,410			3,552
Deferred rent		-			32
Total liabilities		3,552			8,608
Commitments and contingencies		-			-
Stockholders' equity:
Preferred stock, $.01 par value; 10,000,000 shares authorized; and no shares issued
Preferred stock, $.01 par value; 2,000,000 shares authorized; and no shares issued
and outstanding as of December 31, 2008 and 2007		-			-
and outstanding as of December 31, 2009 and 2008		-			-
Common stock, $.01 par value; 60,000,000 shares authorized; 5,483,519 and
Common stock, $.01 par value; 15,000,000 shares authorized; 5,473,519 and
6,448,864 shares issued and outstanding as of December 31, 2008 and 2007, respectively		55			64
5,483,519 shares issued and outstanding as of December 31, 2009 and 2008, respectively		55			55
Additional paid-in-capital		~~384~~385,~~922~~076			~~387~~384,~~721~~922
Accumulated other comprehensive loss		-			(46	)
Accumulated deficit		(381,212	)		(372,829	)
Accumulated deficit		(372,829	)		(350,368	)
Total stockholders' equity		3,919			12,148
Total stockholders' equity		12,148			37,371
Total liabilities and stockholders' equity	$	7,329		$	15,700
Total liabilities and stockholders' equity	$	15,700		$	45,979
See accompanying notes.

See accompanying notes.

F-3

ORE ~~PHARMACEUTICALS~~ PHARMACEUTICAL HOLDINGS INC.

(formerly Ore Pharmaceuticals Inc.)

Consolidated Statements of Operations

For the Years Ended December 31, ~~2008~~2009 and ~~2007~~2008

(in thousands, except per share data)

	2008			2007
	2009			2008
Services revenue	$	1,950		$	1,596
Revenue	$	175		$	1,950
Expenses:
Research and development		92,~~676~~469			109,~~260~~676
Selling, general and administrative		127,~~686~~221			1112,~~101~~686
Total expenses		229,~~362~~690			2122,~~361~~362
Loss from operations		(209,~~412~~515	)		(1920,~~765~~412	)
Interest (income), net		(769	)		(1,988	)
Interest income, net		512			769
Write-down of long-term equity investment		2,964			-
Income/(loss) on equity investments		620			(2,964	)
Gain on sale of DioGenix Inc.		~~(146~~-	)		-146
Loss from continuing operations		(22,461	)		(17,777	)
Net loss	$	(8,383	)	$	(22,461	)
Loss from discontinued operations		-			(16,911	)
Basic and diluted net loss per share	$	(1.53	)	$	(3.97	)
Net loss	$	(22,461	)	$	(34,688	)
Shares used in computing basic and diluted net loss per share		5,474			5,659
Basic and diluted net loss per share:
Loss from continuing operations	$	(3.97	)	$	(2.79	)
Loss from discontinued operations		-			(2.65	)
Net loss	$	(3.97	)	$	(5.44	)
Shares used in computing basic and diluted net loss per share		5,659			6,375
See accompanying notes.

See accompanying notes.

F-4

ORE ~~PHARMACEUTICALS~~ PHARMACEUTICAL HOLDINGS INC.

(formerly Ore Pharmaceuticals Inc.)

Consolidated Statements of Stockholders’ Equity

For the Years Ended December 31, ~~2007~~2009 and 2008

(in thousands, except number of shares)

	Stockholders' Equity
										Accumulated
	Common Stock						Additional			Other
	Number			Par			Paid-In			Comprehensive			Accumulated			Comprehensive
	of Shares			Value			Capital			Income (Loss)			~~Defecit~~Deficit			Loss
Balance at January 1, 2007		6,~~364~~448,~~401~~864		$	6364		$	~~386~~387,~~785~~721		$	(7846	)	$	(~~315~~350,~~680~~368	)
Issuance of common stock in connection with
restricted stock awards (net of 18,380 resticted
restricted stock awards forfeited		(37,525	)
stock awards forfeited)		77,621			1			(1	)		-			-			-
Cancellation of other common stock		(7,394	)
Issuance of common stock in connection with
exercise of stock options		6,842			-			10			-			-			-
Non-cash stock-based compensation		-			-			927			-			-			-
Foreign currency translation adjustments		-			-			-			(7	)		-		$	(7	)
Net change in unrealized gains from
marketable securities		-			-			-			39			-			39
Net loss		-			-			-			-			(34,688	)		(34,688	)
Comprehensive loss		-			-			-			-			-		$	(34,656	)
Balance at December 31, 2007		6,448,864		$	64		$	387,721		$	(46	)	$	(350,368	)
Cancellation of common stock in connection with
restricted stock awards forfeited		(37,525	)		-			-			-			-			-
Cancellation of other common stock		(7,394	)		-			-			-			-			-
Purchase of common stock		(920,426	)		(9	)		(2,982	)		-			-			-
Non-cash stock-based compensation		-			-			183			-			-			-
Foreign currency translation adjustments		-			-			-			45			-		$	45
Net change in unrealized gains from
marketable securities		-			-			-			1			-			1
Net loss		-			-			-			-			(22,461	)		(22,461	)
Comprehensive loss		-			-			-			-			-		$	(22,415	)
Balance at December 31, 2008		5,483,519		$	55		$	384,922		$	-		$	(372,829	)
See accompanying notes.
Cancellation of common stock in connection with
forfeited restricted stock awards		(10,000	)		-			-			-			-			-
Non-cash stock-based compensation		-			-			154			-			-			-
Net loss		-			-			-			-			(8,383	)		(8,383	)
Comprehensive loss		-			-			-			-			-		$	(8,383	)
Balance at December 31, 2009		5,473,519		$	55		$	385,076		$	-		$	(381,212	)

See accompanying notes.

F-5

ORE ~~PHARMACEUTICALS~~ PHARMACEUTICAL HOLDINGS INC.

(formerly Ore Pharmaceuticals Inc.)

Consolidated Statements of Cash Flows

For the Years Ended December 31, ~~2008~~2009 and ~~2007~~2008

(in thousands)

	2008			2007
	2009			2008
Cash flows from operating activities:
Loss from continuing operations	$	(22,461	)	$	(17,777	)
Loss from operations	$	(8,383	)	$	(22,461	)
Adjustments to reconcile loss from continuing operations to net cash flows from continuing operating activities:
Adjustments to reconcile loss from operations to net cash flows from operating activities:
Depreciation and amortization		~~974~~109			~~1,114~~974
Non-cash stock-based compensation expense		~~183~~180			~~683~~183
Write-down of long-term equity investment		~~2,964~~-			-2,964
Gain on sale of DioGenix Inc.		(146	)		-
Gain on sale of equity investment		(620	)		-
Loss on sale of property and equipment		274			-
Gain on sale of DioGenix Inc.		-			(146	)
Other non-cash items		(32	)		-
Loss on sale of property and equipment		300			274
Changes in continuing operating assets and liabilities:
Other non-cash items		(174	)		(32	)
Accounts receivable		1,945			1,374
Changes in operating assets and liabilities:
Prepaids and other assets		899			(220	)
Accounts receivable		(142	)		1,945
Accounts payable		(483	)		(2,583	)
Prepaids and other assets		30			899
Accrued expenses and deferred rent		(2,918	)		147
Accounts payable		(336	)		(483	)
Accrued restructuring		-			(1,941	)
Accrued expenses and deferred rent		194			(2,918	)
Deferred revenue		~~(1,500~~-	)		(1,500	)
Net cash flows from continuing operating activities		(20,301	)		(17,703	)
Net cash flows from operating activities		(8,842	)		(20,301	)
Loss from discontiuned operations		-			(16,911	)
Adjustments to reconcile loss from discontinued operations to net cash flows from discontinued operating activities:
Loss on disposal, depreciation and amortization and other non-cash items		-			12,024
Changes in discontinued operating assets and liabilities		-			2,920
Net cash flows from discontinued operating activities		-			(1,967	)
Net cash flows from operating activities		(20,301	)		(19,670	)
Cash flows from investing activities:
Purchases of property and equipment		(~~171~~23	)		(~~552~~171	)
Proceeds from sale of property and equipment		~~700~~71			-700
Purchases of licenses and patent costs		(432	)		(276	)
Purchases of patent costs and licenses		(202	)		(432	)
Proceeds from sale of marketable securities available-for-sale		~~11,024~~620			3811,~~222~~024
Purchase of marketable securities available-for-sale		~~(4,501~~-	)		(204,~~250~~501	)
Proceeds received from sale of DioGenix Inc.		500			-
Proceeds received from notes receivables		3,375			-
Net proceeds received from sale of Genomics Assets		412			5,110
Proceeds received from sale of DioGenix Inc.		-			500
Net proceeds received from sale of Preclinical Division		272			1,146
Net proceeds received from sale of Genomics Assets		-			412
Payments related to the sale of Preclinical Division		-			(1,843	)
Net proceeds received from sale of Preclinical Division		-			272
Net investing activities of discontinued operations		-			(1,225	)
Net cash flows from investing activities		3,841			7,804
Net cash flows from investing activities		7,804			20,332
Cash flows from financing activities:
Proceeds from issuance (payments for purchase) of common stock		(2,991	)		10
Payments for purchase of common stock		-			(2,991	)
Repayments of long-term debt		(5127	)		(4951	)
Net cash flows from financing activities		(~~3,042~~27	)		(393,042	)
Net increase (decrease) in cash and cash equivalents		(15,539	)		623
Net decrease in cash and cash equivalents		(5,028	)		(15,539	)
Cash and cash equivalents, beginning of year		2610,~~323~~784			2526,~~700~~323
Cash and cash equivalents, end of year	$	105,~~784~~756		$	2610,~~323~~784
Supplemental disclosure:
Interest paid	$	32		$	63
Non-cash investing transaction:
Fair value of promissory note received in connection with the sale of Genomics Assets	$	-		$	2,668
Fair value of promissory note received in connection with the sale of DioGenix Inc.	$	-		$	673
Fair value of promissory note received in connection with the sale of DioGenix Inc.	$	673		$	-
See accompanying notes.

See accompanying notes.

F-6

ORE ~~PHARMACEUTICALS~~ PHARMACEUTICAL HOLDINGS INC.

(formerly Ore Pharmaceuticals Inc.)

Notes to Consolidated Financial Statements

December 31, ~~2008~~2009 and ~~2007~~2008

(in thousands, except share and per share data)

Note 1 – Organization and summary of significant accounting policies

Description of Business

Ore ~~Pharmaceuticals~~ Pharmaceutical Holdings Inc. (formerly Ore Pharmaceuticals Inc., the “Company”), is afocusing ~~drug development company focused~~ on ~~advancing~~ ~~its~~developing ~~pipeline~~and ofmonetizing ~~drug candidates for uses previously identified by~~ its ~~discontinued~~ ~~drug~~current ~~repositioning~~portfolio, ~~program. Over~~which ~~the~~includes ~~past~~ four ~~years, the~~clinical-stage ~~Company identified new therapeutic indications for a number of~~ compounds ~~using~~ ~~its~~in-licensed ~~drug~~from ~~repositioning~~major ~~technology~~pharmaceutical ~~and~~companies: ~~obtained~~ORE1001, ~~development rights to certain of those compounds. The Company is pursuing clinical development of~~ its ~~drug~~lead ~~candidates~~compound, ~~while it explores commercial arrangements to advance those drug candidates. In the fourth quarter of 2008~~ORE10002, ~~the Company~~ORE5002 ~~completed~~(tiapamil) aand ~~multiple~~ORE5007 ~~ascending dose Phase 1 clinical trial for its lead drug candidate, GL1001~~(romazarit).

InOn ~~2008~~October 20, 2009, Ore Pharmaceuticals Inc. completed a reorganization that was undertaken primarily in order to better protect the ~~Company~~value ~~sold~~of its ~~wholly~~approximately ~~owned subsidiary~~$329,000 ~~DioGenix~~in ~~Inc.,~~gross ~~its~~net ~~molecular diagnostics~~operating ~~business~~and ~~(see~~capital ~~Note~~loss 4)carryforwards that can be used to reduce the amount of income tax that it could be required to pay on future earnings from its business. InAs ~~2007~~a result of this reorganization, ~~the~~Ore ~~Company~~Pharmaceuticals ~~sold~~Inc. ~~the assets~~became a wholly owned subsidiary of ~~its~~a ~~Genomics~~new ~~Division~~company, ~~(“Genomics~~Ore ~~Assets”)~~Pharmaceutical ~~(see~~Holdings ~~Note~~Inc., 3)as of October 20, 2009. ~~In 2006,~~There ~~the~~were ~~Company~~no ~~sold~~changes ~~its~~in ~~Preclinical~~stockholders ~~Division~~at ~~(see~~the ~~Note~~date 3)of reorganization.

Principles of Consolidation

The consolidated financial statements include the accounts of Ore ~~Pharmaceuticals~~ Pharmaceutical Holdings Inc. and its wholly owned subsidiary, ~~DioGenix~~Ore Pharmaceuticals Inc.~~, through the date of its sale.~~ AtPrior ~~December~~to 31October 20, ~~2008~~2009, the Company was comprised of only Ore Pharmaceuticals Inc. All material inter-company accounts, transactions and profits have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Basis of Presentation

AsIn ~~a result~~2008, of the Company’s ~~sale~~sold of its ~~Genomics~~wholly ~~Assets~~owned ~~and~~subsidiary, inDioGenix ~~accordance with Statement of Financial Accounting Standards (“SFAS”) No~~Inc. ~~144~~, ~~“Accounting~~which ~~for the~~was ~~Impairment or Disposal of Long-Lived Assets,” the Company has classified the results of operations of the Genomics Division (not including~~ its molecular ~~diagnostic~~ ~~business)~~diagnostics ~~as a discontinued operation through the date of its sale (see Note 3)~~business. The results of operations ~~and associated assets~~ for the Company’s molecular ~~diagnostics~~diagnostic business ~~are~~were not considered material and, therefore, have not been classified as a discontinued operation. There was no revenue from the Company’s molecular diagnostics business.

Concentration of Credit Risk

Cash, cash equivalents and marketable securities available-for-sale are financial instruments that potentially subject the Company to concentrations of investment risk. The Company primarily invests its excess available funds in money market funds, commercial paper, corporate bonds and securities issued by the U.S. Government and its agencies and, by policy, seeks to ensure both liquidity and safety of principal. The policy also limits investments to certain types of instruments issued by institutions with strong investment grade credit ratings and places restrictions on their terms, geographic origin and concentrations by type and issuer.

F-7

Cash and Cash Equivalents

Cash and cash equivalents are defined as liquid investments with maturities of 90 days or less when purchased. All other investments are reported as marketable securities available-for-sale and are not reflected in the table below. Cash and cash equivalents as of December 31 are comprised of:

	2008		2007
	2009		2008
Cash	$	~~276~~358	$	~~763~~276
Money market funds		105,~~508~~398		1910,~~081~~508
Commercial paper		-		6,479
Total	$	5,756	$	10,784
Total	$	10,784	$	26,323

F-7

Marketable Securities Available-for-Sale

All marketable securities are classified as available-for-sale. Available-for-sale securities are carried at fair value, with unrealized gains and temporary losses reported as accumulated other comprehensive income (loss) included in stockholders’ equity. Realized gains and losses and declines in value judged to be other-than-temporary for available-for-sale securities are included in the Consolidated Statements of Operations. The cost of securities sold is based on the specific identification method. In ~~2008 and 2007~~2009, realized gains of $620 were recognized upon the sale of marketable securities and have been included in the income/or(loss) on equity investments within the consolidated statements of operations. In 2008, realized losses resulting from the sale of marketable securities were ~~immaterial~~not significant.

At December 31, 2009 and 2008, the Company’s investment portfolio did not include any marketable securities available-for-sale. At December 31, 2007, the Company’s investment portfolio consisted of commercial paper. All marketable securities had original maturities greater than 90 days, but less than two years. All marketable securities with a gross unrealized loss as of December 31, 2007 had been in an unrealized loss position for less than 12 months. The Company reviews marketable securities for impairment based on criteria that include the extent to which the investment’s carrying value exceeds its related market value, the duration of the market decline, the Company’s ability to hold the investment to recovery and the financial strength and specific prospects of the issuer of the security. At December 31, 2007, all of the Company’s investments were classified as current because the Company’s intent was not to hold its investments until maturity.

~~Marketable securities~~Allowance ~~available-~~for~~-sale~~ asDoubtful ~~of December 31, 2007 were comprised of:~~Accounts

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Commercial paper	$	6,478	$	-	$	(1	)	$	6,477
Total	$	6,478	$	-	$	(1	)	$	6,477

The Company uses estimates to determine the amount of the allowance for doubtful accounts necessary to reduce accounts receivable to their expected net realizable value. The Company estimates the amount of the required allowance by reviewing the status of past-due receivables and by establishing general provisions for estimated losses by analyzing current customer credit worthiness and historical bad debt trends. Actual collection experience has not varied significantly from the Company’s estimates, due primarily to collection policies and the financial strength of the Company’s customers. Accounts and notes receivables that are ultimately deemed uncollectible are written-off as a reduction of accounts receivable or notes receivables and the allowance for doubtful accounts.

The Company uses estimates to determine the amount of the allowance for doubtful accounts necessary to reduce accounts receivable to their expected net realizable value. The Company estimates the amount of the required allowance by reviewing the status of past-due receivables and by establishing general provisions for estimated losses by analyzing current customer credit worthiness and historical bad debt trends. Actual collection experience has not varied significantly from the Company’s estimates, due primarily to collection policies and the financial strength of the Company’s customers. Receivables that are ultimately deemed uncollectible are written-off as a reduction of accounts receivable and the allowance for doubtful accounts.

Property and Equipment

Property and equipment is carried at cost, less accumulated depreciation and amortization. Depreciation and amortization is recorded using the straight-line method over the estimated useful lives of the assets as follows:

Furniture	10 years
Computer and office equipment	1-5 years
Laboratory equipment	5 years
Leasehold improvements	Lesser of the lease term or the useful life

F-8

Long-Term Investments

The Company previously made equity investments in privately held companies whose businesses were complementary to the Company’s business. All of the Company’s ~~current~~ equity investments are accounted for under the cost method of accounting, as the Company held less than 20% of the voting stock outstanding under such arrangements and did not exert significant influence over these companies. The Company records an impairment to its investments when a decline in value in such investments is determined to be other-than-temporary.

~~Goodwill~~At of December 31, 2009, the Company had no long-term investments.

~~The Company accounted for goodwill under the provisions of SFAS No. 142, “Goodwill and Other~~ Intangible Assets” (“SFAS 142”). Under SFAS 142, the Company was required to perform an annual impairment test of its goodwill. The Company’s annual impairment test date was October 1. In addition, the Company was required to test for impairment at any point at which it had an indication that an impairment may exist. Goodwill at December 31, 2007 was allocated to DioGenix Inc., which was sold in 2008 (see Note 4).

The goodwill impairment test involves a two-step approach. Under the first step, the Company determines the fair value of the reporting unit to which goodwill has been assigned. Reporting units are defined as the Company’s operating segments. The Company then compares the fair value of the reporting unit to its carrying value, including goodwill. The Company estimates the fair value of the reporting unit by estimating the reporting unit’s future net cash flows. If the fair value exceeds the carrying value, no impairment loss is recognized. If the carrying value exceeds the fair value, the goodwill of the reporting unit is considered potentially impaired and the second step is to measure the impairment loss. Under the second step, the Company calculates the implied fair value of goodwill by deducting the fair value of all tangible and intangible net assets, including any unrecognized intangible assets, of the reporting unit from the fair value of the reporting unit, as determined in the first step. The Company then compares the implied fair value of goodwill to the carrying value of goodwill. If the implied fair value of goodwill is less than the carrying value of goodwill, the Company recognizes an impairment loss equal to the difference.

Other Intangible Assets

Other intangible assets consist of licenses and patent costs.

The Company has licensed from third parties certain proprietary rights and technical information covered by various patents and patent applications. These licenses will continue for the term of the agreement or the life of the respective patent, whichever is shorter. License costs are being amortized over their expected useful lives, but not greater than the lesser of the term of the agreement or the life of the respective patent. Certain agreements call for the payment of milestones, royalties and/or other fees.

Patent costs include issued patents and patent applications and are stated at cost. Amortization of costs for issued patents is recorded using the straight-line method over the shorter of their expected useful lives or the legal lives of the patents, generally for periods ranging up to 20 years.

Impairment of Long-Lived Assets

Long-lived assets, consisting principally of property and equipment and ~~other~~ intangible ~~assets~~ ~~(including licenses and patent costs)~~assets, are evaluated for possible impairment. If an impairment loss is indicated, the Company will measure the amount of the impairment by comparing the carrying value of the asset to the present value of the expected future cash flows associated with the use of the asset (or asset group).

F-8

Fair Value Measurements

The Company adopted Accounting Standard Codification (“ASC”) Topic 820 (“ASC 820”) previously referred to as Statement of Financial Accounting Standards (“SFAS”) No. 157 “Fair Value Measurements” ~~(“SFAS 157”)~~ for financial assets and liabilities on January 1, 2008. The adoption had no impact on the Company’s financial position or results of operations.

~~SFAS No. 157~~ASC 820 discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow) and the cost approach (cost to replace the service capacity of an asset or replacement cost). The statement utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:

Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.

F-9

Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

Level 3: Unobservable inputs that reflect the reporting entity’s own assumptions.

The Company’s financial assets subject to fair value measurements and the necessary disclosures are as follows:

	Fair Value
	as of		Fair Value Measurements at December 31, ~~2008~~2009
	December 31,		Using Fair Value Hierarchy
	2008		Level 1		Level 2		Level 3
	2009		Level 1		Level 2		Level 3
Cash and cash equivalents	$	105,~~784~~756	$	105,~~784~~756	$	-	$	-
Marketable securities available-for-sale		-		-		-		-
Total	$	5,756	$	5,756	$	-	$	-
Total	$	10,784	$	10,784	$	-	$	-

Research and Development

Research and development costs, including those costs previously incurred in acquiring and developing the Company’s drug repositioning technologies and analyzing and further developing its compounds, are charged to operations when incurred or acquired.

Revenue Recognition

Revenue associated with non-refundable license fees for which the Company is not obligated to provide continuing research and development activities is generally recognized when the license becomes effective. Revenue associated with non-refundable license fees under arrangements where the license fees and research and development activities cannot be accounted for as separate units of accounting are deferred and recognized as revenue over the expected term of the Company’s continued performance of such research and development activities.

Revenue recognized for any multiple-element contract is allocated to each element of the arrangement based on the relative fair value of the element. The determination of fair value of each element is based on the Company’s analysis of objective and reliable evidence from comparable internal or third-parties’ sales of the individual element. If the Company is unable to determine evidence of fair value for an undelivered element of the arrangement, revenue for the arrangement is deferred and recognized using the revenue recognition method appropriate to the predominant undelivered element.

In 2007, the Company entered into a contractual arrangement with multiple deliverables. The Company was unable to determine objectively and reliably the fair value of the undelivered elements. Therefore, the Company recognized revenue using the revenue recognition method appropriate to the predominant undelivered element. The Company also deferred the direct and incremental expenses associated with the arrangement for which revenue had been deferred and recognized these expenses as the Company recognized the related revenue. This arrangement resulted in an increase in the Company’s deferred costs and deferred revenue as of December 31, 2007, all of which was recognized in 2008. The timing of revenue recognition associated with future agreements may also be dependent on its ability to objectively and reliably determine the fair value of deliverables included in those agreements.

Deferred revenue is recorded for cash received from customers for whom services have not yet been performed or revenue recognition criteria has not been met as of the balance sheet date.

Income Taxes

The Company accounts for income taxes under the provisions of ASC 740, previously referred to as SFAS No. 109, “Accounting for Income Taxes” ~~(“SFAS 109”)~~. Under the asset and liability method of ~~SFAS~~ASC ~~109~~740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and net operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ~~SFAS~~ASC ~~109~~740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date.

F-109

Basic and Diluted Net Loss Per Share

Net loss per share is computed using the weighted average number of shares of Common Stock outstanding. Common equivalent shares from all outstanding stock options and unvested restricted stock awards are excluded from the computation, as their effect is anti-dilutive.

Stock-Based Compensation

Effective January 1, 2006, the Company adopted ASC 718, previously referred to as SFAS No. 123 (revised 2004), “Share-Based Payment,” which requires all share-based payments to employees, including grants of employee stock options and restricted stock awards, to be recognized in the financial statements based upon their respective grant-date fair values. The Company recognizes compensation expense on a straight-line basis over the requisite service period of the award, which typically occurs ratably over periods ranging from one to four years. See Note 13 12 for a further discussion on stock-based compensation.

Segment Information

Subsequent to ~~the sale of the Genomics Assets (see Note 3) and prior~~ to the sale of DioGenix Inc. ~~(see Note 4)~~, the Company managed its business as two operating segments: drug development and molecular diagnostics; however, because these operating segments meet the aggregation criteria of SFAS 131 “Disclosures about Segments of an Enterprise and Related Information,” the Company has ~~aggregated its~~managed ~~operating segments into one reporting segment. Subsequent to the sale of DioGenix Inc., the Company now manages~~ its business as one operating segment. For ~~2008~~2009, ~~two~~one ~~customers~~customer accounted for 9786% of the Company’s revenue from continuing operations. For ~~2007~~2008, ~~one~~two ~~customer~~customers accounted for 9497% of the Company’s revenue from continuing operations.

New Accounting Pronouncements

In ~~February~~ ~~2008~~June 2009, the Financial Accounting Standards Board (“FASB”) issued ~~a one-year~~an ~~deferral~~accounting ~~for~~pronouncement ~~non-financial~~found ~~assets~~under ~~and~~ASC ~~liabilities~~105, previously referred to ~~comply~~as ~~with~~ SFAS No. ~~157~~ 168, “~~Fair~~The ~~Value~~FASB ~~Measurements” (“SFAS~~ Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles, a replacement of FASB Statement No. ~~157~~ 162”~~). The~~, ~~Company~~which ~~adopted SFAS No. 157~~establishes ~~for~~the ~~financial~~FASB ~~assets~~Accounting ~~and~~Standards ~~liabilities~~Codification ~~effective January 1,~~as ~~2008~~the ~~(see~~source ~~Note 1,~~of ~~Fair~~authoritative ~~Value~~accounting ~~Measurements)~~principles ~~and~~ recognized by the ~~adoption~~FASB ~~had~~to nobe ~~impact~~applied onin the ~~Company’s~~preparation of financial ~~position~~statements orin ~~results~~conformity ~~of operations~~with GAAP. ~~The~~ASC ~~Company~~105 ~~does~~explicitly ~~not~~recognizes ~~expect~~rules ~~the~~and ~~adoption~~interpretive releases of ~~SFAS No. 157~~ the SEC under federal securities laws as itauthoritative ~~pertains~~GAAP tofor ~~non-~~SEC registrants. ASC 105 was effective for financial ~~assets~~statements issued for interim and ~~liabilities~~annual ~~to have~~reporting aperiods ~~material~~ending after September 15, 2009 and did not have an impact on ~~its~~the Company's financial position or results of operations.

In ~~December~~ ~~2007~~May 2009, the FASB issued ~~SFAS~~an ~~No.~~accounting ~~141~~pronouncement ~~Revised~~found under ASC 855-10, ~~“Business~~previously ~~Combinations” (“~~referred to as SFAS ~~141R”)~~No. ~~SFAS~~ ~~141R~~165, ~~requires~~“Subsequent anEvents”, ~~acquirer~~which toestablishes ~~determine~~general ~~the~~standards ~~fair value~~ of ~~the~~accounting ~~consideration~~for ~~exchanged~~and asdisclosure of ~~the~~events ~~acquisition~~that ~~date~~occur ~~(i.e.~~after the ~~date the~~balance ~~acquirer~~sheet ~~obtains control). Previously~~date, anbut ~~acquisition~~before ~~was~~financial ~~valued as~~statements ofare ~~the~~issued ~~date~~or ~~the~~are ~~parties~~available ~~agreed~~to ~~upon~~be ~~the terms of the transaction~~issued. ~~SFAS~~ASC ~~141R~~855-10 ~~also~~was ~~modifies,~~effective ~~among~~for ~~other~~financial ~~things,~~statements ~~the accounting~~issued for ~~direct~~interim ~~costs~~and ~~associated~~annual ~~with~~reporting anperiods ~~acquisition,~~ending ~~contingencies acquired~~after ~~and~~June ~~contingent~~15, ~~consideration~~2009. The ~~Company~~adoption ~~will~~of ~~adopt~~ASC ~~SFAS 141R~~855-10 ~~for~~did ~~business~~not ~~combinations~~have ~~for~~an ~~which~~impact on the ~~acquisition~~Company's ~~date~~financial ~~occurs~~position on or ~~after January~~results 1of operations. The Company has evaluated subsequent events through March 31, ~~2009~~2010.

In ~~December 2007~~ April 2009, the FASB ~~ratified~~issued ~~Emerging~~an ~~Issues~~accounting ~~Task~~pronouncement ~~Force~~under ASC 825-10-50 extending the disclosure requirements for financial instruments, previously referred to as FASB Staff Position (“FSP”) No. 07 107-1~~, “~~ and Accounting ~~for~~Principles ~~Collaborative~~Board ~~Agreements”~~Opinion ~~(“EITF~~No. 0728-1, “Interim Disclosures about Fair Value of Financial Instruments”). ~~EITF~~ASC 07825-~~1 provides~~10-50 ~~guidance~~requires disclosures in interim reporting periods and in financial statements for annual reporting periods regarding the fair value of all financial ~~statement~~instruments ~~presentation~~for which it is practicable to estimate that value, whether recognized or not on the company's balance sheet. ASC 825-10-50 requires entities to disclose the methods and ~~disclosure~~significant assumptions used to estimate the fair value of ~~collaborative~~ ~~arrangements~~financial instruments and describe changes in methods and significant assumptions, asin ~~defined~~both ~~therein~~interim and annual financial statements. ~~EITF~~ASC 07825-110-50 is was effective for ~~the~~interim ~~Company~~reporting asperiods ofending ~~January 1~~after June 15, 2009. ~~The~~While ~~Company does~~the ~~not~~adoption ~~expect~~of ASC 825-10-50 impacts the ~~adoption~~Company's ofdisclosures, ~~this~~it ~~statement~~did ~~will~~not have aan ~~material~~impact ~~effect~~ on ~~its~~ the Company's financial position ofor results of operations.

In April 2009, the FASB issued an accounting pronouncement found under ASC 320-10-65, previously referred to as FSP SFAS 115-2 and SFAS 124-2, “Recognition and Presentation of Other-Than-Temporary Impairments,” which modifies the recognition requirements for other-than-temporary impairments of debt securities and enhances existing disclosures with respect to other-than-temporary impairments of debt and equity securities. ASC 320-10-65 was effective for interim and annual reporting periods ending after June 15, 2009. The adoption of ASC 320-10-65 had no impact on the Company’s financial position or results of operations.

In February 2008, the FASB issued a one-year deferral for non-financial assets and liabilities to comply with ASC 820, previously referred to as SFAS No. 157. The Company adopted ASC 820 for financial assets and liabilities effective January 1, 2008 (see Note 1, Fair Value Measurements). The Company adopted ASC 820 as it pertains to non-financial assets and liabilities effective January 1, 2009 and the adoption had no impact on the Company’s financial position or results of operations.

F-10

In December 2007, the FASB issued an accounting pronouncement found under ASC 805, previously referred to as SFAS No. 141 Revised, “Business Combinations”. ASC 805 requires an acquirer to determine the fair value of the consideration exchanged as of the acquisition date (i.e. the date the acquirer obtains control). Previously, an acquisition was valued as of the date the parties agreed upon the terms of the transaction. ASC 805 also modifies, among other things, the accounting for direct costs associated with an acquisition, contingencies acquired and contingent consideration. The Company adopted ASC 805 effective January 1, 2009 for business combinations occurring after the effective date. The adoption of ASC 805 had no impact on the Company’s financial position or results of operations.

In December 2007, the FASB ratified an accounting pronouncement found under ASC 808-10-15, previously referred to as Emerging Issues Task Force No. 07-1, “Accounting for Collaborative Agreements”. ASC 808-10-15 provides guidance regarding financial statement presentation and disclosure of collaborative arrangements, as defined therein. The Company adopted ASC 808-10-15 effective January 1, 2009 and the adoption had no impact on the Company’s financial position or results of operations.

Note 2 – Liquidity and management’s plans

Since inception, the Company has incurred, and continues to incur, significant losses from operations. At December 31, ~~2008~~2009, the Company had $105,~~784~~756 in cash and cash equivalents. InThe ~~2008, the~~ Company has realigned its corporate resources and as a result significantly reduced its workforce from 71 employees on December 31, 2007 to 147 employees as of December 31, ~~2008~~ 2009. In addition, the Company assigned its original Cambridge, Massachusetts lease and ~~subleased~~leased ~~back~~new aspace ~~smaller~~in ~~portion~~Cambridge, ~~(see~~Massachusetts ~~Note~~at ~~11)~~a lower cost. The Company believes ~~through~~that its ~~ongoing~~existing ~~realignment~~cash ~~efforts~~ and cash ~~conservation programs~~equivalents, ~~including~~ ~~further~~continuing ~~employee~~cash ~~reductions~~savings ~~expected~~resulting infrom ~~2009,~~its ~~nine~~ongoing ofcash ~~which~~conservation ~~are expected~~efforts toand ~~occur~~proceeds ~~prior~~from tothe ~~May 2009, and anticipated~~ collection of its remaining outstanding ~~notes~~note receivable, ~~that~~will be sufficient to allow the Company ~~would~~to ~~have~~operate into the ~~resources~~first ~~to initiate~~quarter ~~and~~of ~~complete~~2011, including the costs to fund the ongoing Phase Ib/IIa clinical trial for ~~GL1001,~~ORE1001 ~~which~~but assuming that the Company is ~~expected~~ not required to bepay ~~completed~~more under its guarantees for two lease obligations discussed in ~~mid~~Notes to10 ~~late~~and ~~2010. However,~~13 ~~there~~than the Company has established as a reserve. There can be no assurance that the Company will be successful in achieving its ~~realignment~~objectives ~~efforts,~~ of continuing cash conservation ~~programs~~efforts, orthe collection of its remaining outstanding ~~notes~~note receivable, attracting additional financing, and resolution of the potential lease guarantee obligations in a manner favorable to ~~allow~~ the Company. Furthermore, the Company anticipates that it may not have sufficient resources to complete the ongoing trial for ORE1001 without further financing. There is also no assurance if the Company completes its Phase Ib/IIa clinical trial of ORE1001 that the results will be satisfactory or will enable the Company to successfully out-license ORE1001. If the Company is not successful in achieving its objectives, although not currently anticipated, it might be necessary to substantially reduce or discontinue operations and liquidate the Company. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The balance sheet at December 31, ~~2008~~2009 does not include any adjustments relating to recoverability and classification of recorded asset amounts or the amounts and classifications of liabilities that might be necessary ~~should~~in the event that the Company beis unable to ~~complete the~~continue ~~clinical~~as ~~trial~~a orgoing ~~attract additional financing~~concern.

Note 3 – Sale of DioGenix Inc.

In 2008, the Company sold to Nerveda, Inc. (“Nerveda”) the Company’s wholly owned subsidiary, DioGenix Inc., its molecular diagnostics business, for a sales price of $1,250, of which $500 was received at closing and the balance is payable pursuant to a $750 promissory note from Nerveda bearing interest at 2.38%, with two principal payments of $375 plus interest due December 2009 and June 2010. The first principal payment of $375 was received by the Company in December 2009. Payments due under the note are subject to acceleration if DioGenix secures institutional investment or reaches a certain development milestone. The remaining portion of the note has been recorded net of a discount of $11 for imputed interest as of December 31, 2009. In addition, if DioGenix commercializes a diagnostic product or service for multiple sclerosis, DioGenix would pay the Company a royalty equal to 3.5% on net sales of such tests and services, capped at an aggregate of $1,500. The Company and Nerveda have each agreed to indemnify the other for the breach by either of any representation, warranty, covenant or obligation made or undertaken pursuant to the agreement. During 2008, the Company recorded a gain on the sale of DioGenix Inc. of $146. Expenses and associated assets are not considered material and there was no revenue from this business recorded for during 2008. The results for the Company’s molecular diagnostic business are included in the Company’s operating expenses from operations for 2008 up to the date of sale.

Note 4 – Property and equipment

Property and equipment includes the following as of December 31:

	2009			2008
Furniture	$	3		$	301
Computer and office equipment		345			857
Laboratory equipment		-			26
Leasehold improvements		10			316
		358			1,500
Less -- accumulated depreciation and amortization		(325	)		(1,017	)
Property and equipment, net	$	33		$	483

F-11

~~Note 3~~Depreciation –expense ~~Discontinued~~was ~~operations~~$102 and $772 for the years ended December 31, 2009 and 2008, respectively.

~~Genomics Assets~~Note 5 – Long-term investments

In ~~2007~~November 2003, the Company’s ~~sold its Genomics Assets to Ocimum Biosolutions Ltd. (“Ocimum”) for a sales price of $10~~subsidiary,~~000,~~ ofthen ~~which~~named $7MetriGenix,~~000~~ ~~was received at closing~~Inc., ~~less transaction~~sold ~~costs~~substantially ofall ~~$1,890, and the balance~~ of ~~the~~its ~~sales~~assets ~~price is payable pursuant~~ to a ~~$3,000~~privately ~~non-interest~~held ~~bearing~~company ~~promissory~~(the ~~note~~“Buyer”, ~~due~~referred ~~June 2009. The~~to ~~note~~herein ~~has~~as ~~been~~“Xceed ~~recorded~~Molecular ~~net~~Inc,” ofor ~~a discount of $103 for imputed interest as of December 31~~“Xceed”, ~~2008~~formerly MetriGenix). In connection with the sale ~~of its Genomics Assets~~, the Company ~~agreed~~received toconvertible ~~indemnify~~preferred ~~Ocimum~~stock ~~in the event~~ of ~~a breach~~Xceed ofat ~~its~~the ~~representations~~time ~~and~~representing ~~warranties~~15% ~~to,~~of ~~and~~the ~~agreements~~equity ~~with, Ocimum~~of Xceed. ~~Ocimum~~The Company also ~~assumed~~received ~~certain~~the ~~liabilities~~right ~~relating~~ to ~~the Genomics~~appoint ~~Assets~~a ~~and~~person to the ~~lease~~Board ~~obligations~~of Directors of the Buyer. The Company’s ~~former~~accounted ~~Genomics laboratory~~for ~~and~~its ~~office~~investment ~~facility,~~in ~~subject~~Xceed tousing the ~~Company’s~~cost ~~agreement~~method ~~to reimburse Ocimum for 50%~~ of ~~the lease obligations for 2008~~accounting. InDuring ~~the event of Ocimum’s default under the lease~~2008, the Company ~~could~~recorded bea ~~liable for amounts due under the lease that could total~~ $2,~~218~~964 atwrite-down ~~December~~of ~~31,~~the ~~2008. The Company’s~~remaining ~~liability~~book ~~expires~~value ~~for~~of ~~obligations~~its ~~under~~investment ~~this lease~~ in ~~February 2011. At December 31~~Xceed, ~~2008,~~due ~~Ocimum~~to ~~had~~an onother-than-temporary ~~deposit~~decline in ~~escrow~~its ~~$750~~estimated ~~to partially~~fair ~~secure~~value ~~both~~caused ~~Ocimum~~by Xceed’s ~~performance~~difficulty ~~under~~in ~~the~~obtaining ~~lease~~capital, ~~and~~which ~~payment~~significantly ofimpacted the ~~$3,000~~ ~~promissory~~fair ~~note~~value of Xceed. ~~The~~As ~~Company retained full rights in perpetuity to use the databases~~ of ~~its~~December ~~former Genomics business~~31, ~~existing~~2009 asand ~~of closing~~2008, ~~for~~all ~~its~~of ~~drug~~the ~~development business. The~~ Company’s ~~also~~long-term ~~retained certain~~investments ~~assets~~have ~~associated~~been ~~with~~written ~~its~~down ~~molecular~~to ~~diagnostic business, which it sold in 2008 (see Note 4)~~zero.

AsNote ~~a result~~6 of– ~~the~~Intangible ~~Company’s sale of its Genomics Assets, the Company recorded a loss on disposal of $3,880, which represented the excess carrying value of the net~~ assets ~~of the Genomics Assets over the net sales proceeds, which is included in the loss from discontinued operations for the year ended December 31, 2007.~~

~~Due~~Information toregarding the Company’s ~~sale~~intangible ofassets ~~its~~at ~~Genomics~~December ~~Assets~~31, ~~the~~comprised ~~results~~fully of ~~operations~~patent ofcosts, ~~the~~is ~~former Genomics Division have been classified~~ as ~~discontinued operations. Summarized operating results for the discontinued operations included in the Company’s Consolidated Statements of Operations are as~~ follows:

	2007
	2009			2008
Revenue	$	16,738
Carrying amount	$	735		$	575
Loss from discontinued operations (1)	$	(16,911	)
Accumulated amortization		9			2
(1) Includes $3,880 loss on disposal.
Net carrying value	$	726		$	573

~~During 2006,~~Amortization ~~the~~expense ~~Company~~for ~~initiated~~the ayears ~~restructuring~~ended ofDecember ~~its Genomics Division~~31, ~~which~~2009 ~~was completed~~ and ~~the~~2008 ~~restructuring~~was ~~liabilities~~$7 ~~paid~~and ~~as of December 31~~$202, ~~2007~~ respectively.

~~Preclinical Division~~Estimated future amortization expense for existing intangible assets is not significant since most patents costs are not related to issued patents as of December 31, 2009 and 2008 and therefore are not subject to amortization.

InNote ~~2006, the~~7 ~~Company~~– sold its Preclinical Division for a sales price of $15,000, including $13,500 received at closing, less transaction costs of $1,383, and $1,500 held in escrow for 12 months to guarantee certain obligations under the agreement. Of the amount held in escrow, $1,418 has been paid and the remaining amount of $82 is pending resolution between the parties. In connection with the sale of its Preclinical Division, the Company agreed to indemnify the purchaser in the event of a breach of its representations and warranties to, and agreements with, the purchaser and retained certain liabilities relating to the activities of the business prior to the sale. The Company’s guarantees of two leases formerly used by the Company’s Preclinical Division also continue in effect. In the event the purchaser defaults under these leases, which expire in February 2011 and December 2013, the Company could be liable for amounts due under the leases totaling $1,206 and $3,551, respectively, at December 31, 2008.Debt

~~Note~~Debt 4as –of ~~Sale~~December 31 consists of ~~DioGenix Inc.~~the following:

In 2008, the Company sold to Nerveda, Inc. (“Nerveda”) the Company’s wholly owned subsidiary, DioGenix Inc., its molecular diagnostics business, for a sales price of $1,250, of which $500 was received at closing and the balance is payable pursuant to a $750 promissory note from Nerveda bearing interest at 2.38%, with two principal payments of $375 plus interest due December 2009 and June 2010. Payments due under the note are subject to acceleration if DioGenix secures institutional investment or reaches a certain development milestone. The note has been recorded net of a discount of $62 for imputed interest as of December 31, 2008. In addition, if DioGenix commercializes a diagnostic product or service for multiple sclerosis, DioGenix would pay the Company a royalty equal to 3.5% on net sales of such tests and services, capped at an aggregate of $1,500. The Company and Nerveda have each agreed to indemnify the other for the breach by either of any representation, warranty, covenant or obligation made or undertaken pursuant to the agreement. During 2008, the Company recorded a gain on the sale of DioGenix Inc. of $146. Expenses and associated assets are not considered material and there was no revenue from this business recorded for the periods presented. The results for the Company’s molecular diagnostic business are included in the Company’s operating expenses from continuing operations.

	2009		2008
Loan bearing interest at 5.0% per annum and due in
quarterly installments of $14 through June 2009	$	-	$	27
Loan bearing interest at 4.5% and due upon demand		450		450
Current debt	$	450	$	477

In January 2010, the Company reached a settlement agreement with the lender concerning repayment of the entire amounts due to the lender by the Company as of December 31, 2009 of $719, which consisted of a loan of $450 that was currently due upon demand, as well as repayment of a training program grant of $111 and accrued interest of $158 both of which are included in Other Accrued Expenses. Under the settlement agreement, the Company will repay a total of $383, of which $200 has been paid in February 2010 and the remaining $183 will be paid in September 2010, subject to the Company making the final payment by September 30, 2010. If the Company does not repay the total $383 by September 30, 2010, the total amount due will revert to $719. As the settlement was executed in 2010, no adjustment to the December 31, 2009 financial statements have been made herein.

Interest expense was $20 and $10 for the years ended December 31, 2009 and 2008, respectively.

F-12

Note 5 8 – ~~Property~~Stockholders’ ~~and equipment~~equity

~~Property~~ In 2008, the Company entered into an agreement with a then member of its Board of Directors to purchase 920,426 shares owned directly or indirectly by that director for $3,263 (the “Share Purchase”). In addition, the Company agreed to pay the director $126 for certain fees and ~~equipment~~expenses. In ~~includes~~connection with the ~~following~~Share Purchase, the director resigned from the Company’s Board of Directors and surrendered stock options for 6,000 shares of the Company’s Common Stock. Of the purchase price of $3,263, the Company allocated $272 to the price paid in excess of the fair value of the shares, which was recorded as a Selling, General and Administrative expense. The remaining $2,991 was recorded as a reduction to Common Stock, based on the par value, and to Additional Paid-in Capital. The shares purchased were cancelled and returned to the status of ~~December~~authorized ~~31:~~and unissued shares.

	2008			2007
Furniture	$	301		$	985
Computer and office equipment		857			855
Laboratory equipment		26			2,750
Leasehold improvements		316			754
		1,500			5,344
Less -- accumulated depreciation and amortization		(1,017	)		(3,243	)
Property and equipment, net	$	483		$	2,101

As a result of the reorganization of the Company approved by the shareholders in October 2009, the authorized shares of Common Stock and Preferred Stock of the Company were reduced to 15,000,000 and 2,000,000, respectively. In addition, all of the outstanding shares of Ore Pharmaceuticals Inc. were converted into shares of the Company.

~~Depreciation expense~~Note ~~was~~9 ~~$772~~– ~~and~~Income ~~$922 for the years ended December 31, 2008 and 2007, respectively.~~taxes

~~Note 6~~The –actual ~~Long-term~~income ~~investments~~tax expense for the years ended December 31, 2009 and 2008 is different from the amount computed by applying the statutory federal income tax rates to loss before income tax expense. The reconciliation of these differences for the years ended December 31 is as follows:

In November 2003, the Company’s subsidiary, then named MetriGenix, Inc., sold substantially all of its assets to a privately held company (the “Buyer”, referred to herein as “Xceed”, formerly MetriGenix). In connection with the sale, the Company received convertible preferred stock of Xceed at the time representing 15% of the equity of Xceed. The Company also received the right to appoint a person to the Board of Directors of the Buyer. The Company accounts for its investment in Xceed using the cost method of accounting. During 2008, the Company recorded a $2,964 write-down of the remaining book value of its investment in Xceed, due to an other-than-temporary decline in its estimated fair value caused by Xceed’s difficulty in obtaining capital, which significantly impacted the fair value of Xceed.

	2009			2008
Tax benefit at federal statutory rate	$	(2,850	)	$	(7,637	)
State income taxes, net of federal income tax effect		(503	)		(509	)
Change in state tax rate		1,578			-
Other		120			113
Increase in valuation allowance		1,655			8,033
Income tax expense	$	-		$	-

Note 7 – Other intangible assets

Information regarding the Company’s other intangible assets at December 31 is as follows:

	2008		2007
Carrying amount:
Licenses	$	-	$	144
Patent costs		575		890
Total carrying amount	$	575	$	1,034
Accumulated amortization:
Licenses	$	-	$	120
Patent costs		2		78
Total accumulated amortization	$	2	$	198
Net carrying value:
Licenses	$	-	$	24
Patent costs		573		812
Total net carrying value	$	573	$	836

F-13

Note 8 – Long-term debt

Long-term debt as of December 31 consists of the following:

	2008			2007
Loan bearing interest at 5.0% per annum and due in
quarterly installments of $14 through June 2009	$	27		$	78
Loan bearing interest at 4.5% and due upon demand		450			450
		477			528
Less -- current portion		(477	)		(501	)
Long-term debt	$	-		$	27

The Company has had discussions with the lender concerning repayment and/or forgiveness of the loan that is currently due upon demand, as well as $139 of accrued interest that has been recorded in Other Accrued Expenses.

Interest expense was $10 and $53 for the years ended December 31, 2008 and 2007, respectively.

Note 9 – Stockholders’ equity

In 2008, the Company entered into an agreement with a then member of its Board of Directors to purchase 920,426 shares owned directly or indirectly by that Director for $3,263 (the “Share Purchase”). In addition, the Company agreed to pay the director $126 for certain fees and expenses. In connection with the Share Purchase, the director resigned from the Company’s Board of Directors and surrendered stock options for 6,000 shares of the Company’s Common Stock. Of the purchase price of $3,263, the Company allocated $272 to the price paid in excess of the fair value of the shares, which was recorded as a Selling, General and Administrative expense. The remaining $2,991 was recorded as a reduction to Common Stock, based on the par value, and to Additional Paid-in Capital. The shares purchased were cancelled and returned to the status of authorized and unissued shares.

On May 23, 2008, the Company’s stockholders of record as of April 17, 2008 approved a one-for-five reverse stock split of the Company’s outstanding Common Stock. The number of authorized shares of Common Stock and Preferred Stock of the Company was not affected and remains at 60,000,000 and 10,000,000, respectively, but the number of shares of Common Stock outstanding was reduced from 27,515,461 to 5,503,438. The aggregate par value of the issued Common Stock was reduced by reclassifying a portion of the par value amount of the outstanding common shares from Common Stock to Additional Paid-in-Capital for all periods presented. In addition, all per share and share amounts, including stock options and restricted stock awards, have been retroactively restated in the accompanying Consolidated Financial Statements and Notes to Consolidated Financial Statements for all periods presented to reflect the reverse stock split.

Note 10 – Income taxes

The actual income tax expense for the years ended December 31, 2008 and 2007 is different from the amount computed by applying the statutory federal income tax rates to loss before income tax expense. The reconciliation of these differences for the years ended December 31 is as follows:

	2008			2007
Tax benefit at federal statutory rate	$	(7,637	)	$	(11,806	)
State income taxes, net of federal income tax effect		(509	)		(1,860	)
Change in state tax rate		-			(3,309	)
Other		113			221
Increase in valuation allowance		8,033			16,754
Income tax expense	$	-		$	-

F-14

The tax effect of cumulative temporary differences at December 31 is as follows:

	2008			2007
	2009			2008
Deferred tax assets:
NOL and tax credit carryforwards	$	123,~~471~~603		$	~~127~~123,~~130~~471
Net loss in unconsolidated investee		3,259			3,581
Capital loss carryforwards		2,894			286
Purchased research and development		2,244			2,685
Net loss in unconsolidated investee		-			3,259
Depreciation		2,527			2,353
Purchased research and development		2,249			2,244
Other		2,337			2,739
Stock based compensation		681			571
		133,838			138,488
Depreciation		185			2,527
Less -- valuation allowance		(133,838	)		(138,488	)
Other		1,955			1,480
		131,567			133,838
Less -- valuation allowance		(131,567	)		(133,838	)
Net deferred tax assets	$	-		$	-
Deferred tax liabilities:
Other	$	-		$	-
Deferred tax liabilities	$	-		$	-

At December 31, ~~2008~~2009, net operating loss carryforwards (“NOLs”) for income tax purposes were $~~324~~329,~~148~~325. The Company also has research and development tax credit carryforwards of $5,~~630~~454 as of December 31, ~~2008~~2009. The carryforwards, if not utilized, will expire in increments from ~~2009~~2010 through ~~2028~~ 2029. Utilization of the net operating losses and credits may be subject to an annual limitation as provided by the Internal Revenue Code of 1986, and there can be no guarantee that such NOLs and tax credits will ever be fully utilized. As a result of cumulative losses, the Company has recorded a full valuation allowance against its net deferred tax assets as management believes it is more likely than not that the assets will not be realizable.

~~Note 11~~On –October ~~Commitments~~20, 2009, the Company entered into a Corporate Reorganization Transaction. This Reorganization was tax free under the Internal Revenue Code and ~~contingencies~~resulted in the formation of a Holding Company with restrictions on ownership changes. The purpose of these restrictions is to hinder the possibility of an ownership change under Section 382 by limiting 5% ownership changes over a three year period.

The Company has considered its income tax positions, including any positions that may be considered uncertain by the relevant authorities in the jurisdictions in which the Company operates. As of December 31, 2009 and 2008, the Company had no uncertain tax positions and no unrecognized tax benefits. Potential interest and penalties associated with uncertain tax positions are recorded as a component of income tax expense. The Company has not incurred any penalties relating to income taxes recognized in the consolidated financial statements as of and for the years ended December 31, 2009 and 2008.

F-13

Note 10 – Commitments and contingencies

Operating Leases

The Company currently conducts its operations from ~~two~~a leased facility in Cambridge, Massachusetts, but remains liable for another subleased ~~facilities~~facility in Gaithersburg, ~~with~~Maryland, ~~terms expiring~~which it closed in 2009. The term for the Cambridge, Massachusetts ~~and~~facility ~~2013~~expires in June 2012 and for the Gaithersburg, Maryland facility the term expires in December 2013. ~~These~~ ~~subleases~~The lease and sublease obligate the Company to pay rent and building operating costs.

Future minimum lease payments under sublease agreements for the years ending December 31 are as follows:

2009	$	229
2010		308
2010		134
2011		316
2011		137
2012		231
2012		141
2013		144
	$	~~785~~999

Rent expense for the years ended December 31, 2009 and 2008 was $220 and $1,245, respectively.

~~Rent expense~~In ~~for~~March 2009, the ~~years~~Company ~~ended~~decided ~~December~~to 31close its Gaithersburg, ~~2008~~Maryland facility. In the second quarter of 2009, the Company vacated substantially all of that facility and ~~2007~~recorded ~~was~~a non-cash accelerated lease expense and write-down of leasehold improvements and other related assets of $1749. In the fourth quarter,~~245~~ the Company completely vacated the facility and recorded non-cash accelerated lease expense of $~~1,315, respectively~~43.

In ~~March 2009~~2008, the Company ~~decided~~assigned its lease in Cambridge, Massachusetts to ~~close~~Agios ~~its~~Pharmaceuticals, ~~Gaithersburg~~Inc. (“Agios”), ~~Maryland facility~~a privately held biopharmaceuticals company, and subleased from Agios a smaller space at that location for a term to expire on or before, at the Company’s election, June 30, 2009. ~~Upon~~The ~~closing~~Company remains liable under the ~~facility~~lease in the event of Agios’ default on the balance of the term of the lease, which isends ~~anticipated~~August 2013, that could amount to ~~occur~~$4,195 in at December 31, 2009. At the ~~second~~end ~~quarter~~of the term of its sublease with Agios on June 30, 2009, the Company ~~expects~~relocated to ~~record~~another aleased ~~non-cash~~facility ~~accelerated lease~~in ~~expense~~Cambridge, ~~and~~Massachusetts. The ~~write-down~~new ofleased ~~leasehold~~space ~~improvements~~carries ~~and~~a ~~other~~three ~~related~~year ~~assets of~~term, ~~approximately~~with ~~$900~~an option to extend for another three years.

In 2008, the Company assigned its lease in Cambridge, Massachusetts to Agios Pharmaceuticals, Inc. (“Agios”), a privately held biopharmaceuticals company, and subleased from Agios a smaller space at that location for a term to expire on or before, at the Company’s election, June 30, 2009. The Company will remain liable under the lease in the event of Agios’ default for the balance of the term of the lease, which ends August 2013, that could amount to $5,210 at December 31, 2008.

In connection with this arrangement, the Company received $700 for the sale of laboratory equipment associated with drug repositioning not required to further advance the Company’s drug candidates. As a result, the Company recorded a loss on disposal of $274 related to the sale.

F-15

Contingencies

The Company is subject to certain contingencies associated with DioGenix Inc. (see Note 3 – Sale of DioGenix Inc.) as well as the ~~sales~~assignment of ~~its Genomics~~the ~~Assets~~Agios ~~and~~lease. ~~Preclinical~~In ~~Division~~addition, ~~(see~~the ~~Note~~Company 3is the guarantor of two leases on properties in Gaithersburg, MD that are related to operations that the Company sold to Bridge Laboratories (“Bridge”) in 2006 and ~~DioGenix~~which ~~Inc.~~are ~~(see~~ described below in Litigation as well as in Note 4)13 – Subsequent event.

Litigation

~~The~~ On January 28 and February 1, 2010, the Company received demand letters from the landlords of the properties located at 620 and 610 Professional Drive in Gaithersburg, Maryland, respectively (the “620 Landlord” and the “610 Landlord,” respectively, and collectively the “Landlords”), stating that Bridge Global Pharmaceutical Services, Inc. (“Bridge”), which is ~~not~~the ~~currently~~lessee aunder ~~party~~the leases for both properties, had appeared to ~~any~~have ~~legal~~vacated ~~proceedings~~the premises and had stopped paying rent on those properties and demanding that ~~could~~the ~~have~~Company pay the amounts due pursuant to its guaranties of Bridge’s obligations under the leases. On February 9, 2010, the Company received notice of service of process informing the Company that the 620 Landlord had filed a ~~material~~ ~~adverse~~complaint ~~effect~~with onthe Circuit Court for Montgomery County, Maryland. The complaint alleges that the Company breached its guaranty of Bridge’s ~~financial~~obligations ~~condition~~to pay rent due under the leases and alleges current damages of $116,497.69 plus interest and further costs and expenses. On March 1, 2010, the Company received notice of a service of process informing the Company that the 610 Landlord had filed a complaint with the Circuit Court for Montgomery County, Maryland, alleging breach of contract by the Company and asserting current damages in an amount to be determined. The Company estimates that the total potential rent payable to the Landlords through the end of the leases, including the past due rents, is approximately $4.1 million. The Company intends to actively pursue all available avenues to hold Bridge or ~~results~~other affiliated entities responsible for obligations under the leases or to otherwise recoup amounts owed by Bridge or other affiliated entities for non-payment of ~~operations~~ rent under the leases and other costs and expenses. This litigation is discussed further in Note 13 – Subsequent event.

~~Note 12 – 401(k) retirement plan~~F-14

~~The Company~~Note ~~has~~11 an– ~~Ore Pharmaceuticals Inc.~~ 401(k) ~~Retirement~~retirement Plan (the “401(k) Plan”) for its employees under Section 401(k) of the Internal Revenue Code, as amended. Under the 401(k) Plan, all employees 18 years of age or older are eligible, starting on the calendar quarter, to contribute up to 100% of their eligible compensation and, in the case of employees age 50 or older, make certain catch-up contributions, subject to maximum deferrals allowed under IRS regulations. Employee contributions are 100% vested. Beginning in 2008, the Company matching contributions increased to 100% of up to 3% of an employee’s eligible compensation and 50% of up to the next 2%. For 2007, the Company’s matching contributions were 50% of up to 6% of an employee’s eligible compensation. Employees hired before January 1, 2004 and after January 1, 2008 are fully vested in the Company’s matching contributions. For employees hired between these dates, the Company’s matching contributions are subject to variable vesting. These matching contributions, which are expensed, amounted to $229 and $171 in 2008 and 2007, respectively.plan

~~Note~~The 13Company –has ~~Stock~~an Ore Pharmaceuticals Inc. 401(k) Retirement Plan (the “401(k) Plan”) for its employees under Section 401(k) of the Internal Revenue Code, as amended. Under the 401(k) Plan, all employees 18 years of age or older are eligible, starting on the calendar quarter, to contribute up to 100% of their eligible compensation and, in the case of employees age 50 or older, make certain catch-~~based~~up contributions, subject to maximum deferrals allowed under IRS regulations. Employee contributions are 100% vested. Beginning in 2008, the Company matching contributions increased to 100% of up to 3% of an employee’s eligible compensation and 50% of up to the next 2%. Employees hired after January 1, 2008 are fully vested in the Company’s matching contributions. The matching contributions, which are expensed, amounted to $56 and $229 in 2009 and 2008, respectively.

~~At December~~Note ~~31,~~12 ~~2008,~~– ~~the Company has the following stock~~Stock-based compensation ~~plans: 1997 Equity Incentive Plan (the “Stock Plan”) and 1997 Non-Employee Directors’ Stock Option Plan (the “Directors’ Plan”).~~

At the Company’s annual meeting of stockholders held on October 20, 2009, the stockholders approved the 2009 Omnibus Equity Incentive Plan (“2009 Plan”). The 2009 Plan replaces both the Company’s prior stock plans: 1997 Equity Incentive Plan and 1997 Non-Employee Directors’ Stock Option Plan (the “Prior Plans”).

~~The Company~~2009 ~~has a Stock~~ Plan, under which the Compensation Committee (the “Committee”) of the Company’s Board of Directors, at its discretion, can grant stock options and, beginning in 2006, restricted stock awards, to employees of the Company and its affiliates. The Stock Plan currently authorizes the grant of stock options for up to 2,120,000 shares of Common Stock, of which only 600,000 shares may be issued as restricted stock awards. The stock options granted under the Stock Plan generally expire at the earlier of a specified period after termination of service or the date specified by the Committee at the date of grant, but not more than ten years from such grant date. Grants of restricted stock awards are generally subject to conditions for vesting within a specified time period. Such awards are generally forfeited at the earlier of not meeting such vesting conditions or upon termination of service. At December 31, 2008, there were 786,245 shares available for issuance under the Stock Plan.

~~Directors~~The 2009 Plan is administered by the Compensation Committee (the “Committee”) of the Company’ s Board of Directors. The Committee has full and final authority to grant stock options to employees, officers, directors, consultants and advisors providing service to the Company or an affiliate of the Company. The 2009 Plan authorizes the following types of discretionary awards: annual incentive awards, incentive stock options, non-qualified stock options, performance awards (shares or units), restricted stock and stock appreciation rights. The 2009 Plan currently authorizes grants for up to 700,000 shares of Common Stock, in addition to the number of shares remaining available under the Prior Plans or the number of shares that may become available due to expiration, cancellation or forfeiture under the Prior Plans. The stock options granted under the 2009 Plan generally expire at the earlier of a specified period after termination of service or the date specified by the Committee at the date of grant, but not more than ten years from the date of grant. At December 31, 2009, there were 310,000 shares available for issuance under the 2009 Plan and a total of 214,772 shares available for issuance under the Prior Plans.

The Company has a Directors’ Plan to provide for granting of stock options to purchase up to 180,000 shares of Common Stock to non-employee directors of the Company. Stock options are to be granted at the fair market value of the Common Stock at the grant date. The stock options granted under the Directors’ Plan expire at the earlier of a specified period after termination of service or ten years from such grant date. At December 31, 2008, there were 44,000 shares available for issuance under the Director’s Plan.

F-16

Stock Option Awards

The following is a summary of option activity for the year ended December 31, ~~2008~~ 2009:

	Shares Subject to
	Outstanding Options
						Weighted
				Per Share		Average
				Weighted		Remaining		Aggregate
				Average		Contractual		Intrinsic
	Shares			Exercise Price		Life (Years)		Value
Balance at January 1, 2008		904,856		$	28.60
Balance at January 1, 2009		683,847		$	24.10
Options granted		~~317~~1,~~140~~426,100		$	20.1853
Options exercised		-		$	-
Options cancelled		(~~538~~410,~~149~~627	)	$	1817.7598
Balance at December 31, 2008		683,847		$	24.10
Balance at December 31, 2009		1,699,320		$	5.80	6.3	$	15
Vested and expected to vest at December 31, 2008		647,714		$	25.16	5.2	$	-
Vested and expected to vest at December 31, 2009		1,653,320		$	5.94	8.5	$	76

Options to purchase a total of ~~532~~459,~~096~~730 and ~~647~~532,~~866~~096 shares at December 31, ~~2008~~2009 and ~~2007~~2008, respectively, were exercisable. The weighted-average grant-date fair value of options granted during the years ended December 31, ~~2008~~2009 and ~~2007~~2008 was $0.9728 and $30.6497, respectively.

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model for the years ended December 31, ~~2008~~2009 and ~~2007~~ 2008 with the following assumptions:

	2008	2007
	2009	2008
Expected volatility	6369%-85%	5961%-65%
Risk-free interest rate	20.5344% ~~to 3~~-2.0475%	2.53%-3.04% ~~to 4.51%~~
Expected lives	35 years	3 years
Dividend rate	0%	0%

The aggregate intrinsic value in the table above represents the total intrinsic value (the excess of the Company’s closing stock price on the last trading day of 2008 over the exercise price, multiplied by the number of inF-the-money options) that would have been received by the option holders had all option holders exercised their options on December 31, 2008. This amount is subject to change based on changes to the fair market value of the Company’s Common Stock. Total intrinsic value of options exercised for 2008 and 2007 was not significant.15

NoThe ~~option exercises~~aggregate ~~occurred~~intrinsic value in ~~2008. Cash~~the table above represents the total intrinsic value (the excess of the Company’s closing stock price on the last trading day of 2009 over the exercise price, multiplied by the number of in-the-money options) that would have been received ~~from~~by the option ~~exercises~~holders ~~in 2007~~had ~~was~~all ~~$10~~option holders exercised their options on December 31, 2009. This amount is subject to change based on changes to the fair market value of the Company’s Common Stock.

~~The~~ ~~following~~No ~~table~~stock ~~summarizes~~option ~~information~~exercises ~~about~~occurred ~~stock~~in ~~options~~2009 ~~outstanding~~or ~~at December 31,~~ 2008:.

		Options Outstanding					Options Exercisable
				Weighted	Per Share				Per Share
		Number		Average	Weighted		Number		Weighted
		Outstanding at		Remaining	Average		Exercisable at		Average
Range of		December 31,		Contractual	Exercise		December 31,		Exercise
Exercise Price		2008		Life	Price		2008		Price
$	1.70--$10.00		278,429	8.7 Years	$	4.51		142,446	$	5.02
$	10.01--$20.00		113,465	5.4 Years	$	16.47		97,709	$	17.12
$	20.01--$30.00		139,257	2.2 Years	$	25.72		139,245	$	25.72
$	30.01--$314.38		152,696	2.3 Years	$	64.01		152,696	$	64.01
$	1.70--$314.38		683,847	5.4 Years	$	24.10		532,096	$	29.59

The following table summarizes information about stock options outstanding at December 31, 2009:

F-17

		Options Outstanding					Options Exercisable
				Weighted	Per Share				Per Share
		Number		Average	Weighted		Number		Weighted
		Outstanding at		Remaining	Average		Exercisable at		Average
Range of		December 31,		Contractual	Exercise		December 31,		Exercise
Exercise Price		2009		Life	Price		2009		Price
$	0.35--$0.40		550,000	9.2 Years	$	0.40		125,000	$	0.40
$	0.51--$0.66		561,100	9.5 Years	$	0.56		-	$	-
$	0.73--$0.73		315,000	9.8 Years	$	0.73		75,000	$	0.73
$	1.70--$314.38		273,220	4.0 Years	$	33.30		259,730	$	34.57
$	0.35--$314.38		1,699,320	8.6 Years	$	5.80		459,730	$	19.76

As of December 31, 2009, $316 of total unrecognized compensation cost related to stock option awards is expected to be recognized over a weighted-average period of 1.6 years. This estimate does not include the impact of other possible stock-based awards that may be made during future periods.

Restricted Stock Awards

During 2007, the Committee approved grants for shares of restricted stock under the ~~Stock~~ ~~Plan~~Prior Plans subject to certain performance- or time-based vesting conditions which, if not met, would result in forfeiture of the shares and reversal of any previously recognized related stock-based compensation expense.

The following is a summary of restricted stock awards activity for the year ended December 31, ~~2008~~2009:

				Per Share
				Weighted-
				Average
	Number of			Grant-Date
	Shares			Fair Value
Outstanding at January 1, 2008		61,525		$	6.53
Outstanding at January 1, 2009		10,000		$	6.15
Restricted stock granted		-		$	-
Restricted stock vested		~~(14,000~~-	)	$	~~6.65~~-
Restricted stock forfeited		(3710,~~525~~000	)	$	6.5915
Outstanding at December 31, 2008		10,000		$	6.15
Outstanding at December 31, 2009		-		$	-

Performance-based ~~nonvested~~ non-vested share awards are recognized as compensation expense over the expected vesting period based on the fair value at the date of grant and the number of shares ultimately expected to vest. The shares of restricted stock outstanding at December 31, 2008 ~~will~~would only vest if certain performance milestones are achieved, which the Company ~~does~~did not believe is was probable. During ~~2008~~2009, 3710,~~525~~000 shares of restricted stock ~~awards~~award ~~were~~ forfeited as the performance milestones ~~were~~was not achieved. AsThe ~~a result, the Company recognized the~~ reversal of ~~$148~~the stock-based compensation expense ~~during 2008~~associated ~~related~~with tothe ~~these~~10,000 ~~awards~~shares was recognized during 2008 since the Company had previously considered the vesting of these awards not to be probable.

~~As of December 31, 2008, $156 of total unrecognized compensation cost related to stock option and restricted stock awards is expected to be recognized over a weighted~~F-~~average period of 1.7 years. This estimate does not include the impact of other possible stock-based awards that may be made during future periods.~~16

~~F-18~~Note 13 – Subsequent event

Litigation

On April 1, 2003, a predecessor entity to the Company executed two Guaranties of Lease (the “Guaranties”), pursuant to which it guaranteed the payment and performance obligations of its wholly owned subsidiary, GLA II Corp. (“GLA”), under two office leases (the “GLA Leases”) with GLA’s landlords (the “610 Landlord” and the “620 Landlord” and together, the “Landlords”). The GLA leases were ultimately assigned to the Company’s wholly owned subsidiary, Gene Logic Laboratories Inc. (“GLL”).

As previously disclosed in a Current Report on Form 8-K filed with the Securities and Exchange Commission on December 21, 2006, on December 15, 2006, the Company entered into a stock purchase agreement with Bridge Pharmaceuticals Inc. (“Bridge”) pursuant to which the Company sold all of the outstanding capital stock of GLL to Bridge (the “Stock Purchase Agreement”). In connection with the Stock Purchase Agreement, GLL became a wholly owned subsidiary of Bridge and the GLA Leases were assigned to Bridge.

In connection with the Stock Purchase Agreement, the Company agreed to continue to guarantee the obligations of Bridge pursuant to the Guaranties until such time as replacement guaranties acceptable to the Landlords were delivered to the Landlords. In the event replacement guaranties were not accepted by the Landlords, then Bridge agreed to indemnify the Company against any action by the Landlords to assert claims against the Company under the Guaranties. The Company believes that its Guaranties remain in effect and that Bridge remains obligated to provide indemnification to the Company in relation to the Guaranties.

On January 28 and February 1, 2010, the Company received demand letters from the Landlords, stating that Bridge Global Pharmaceutical Services, Inc. (“Bridge”), which is the lessee under the leases for both properties, had appeared to have vacated the premises and had stopped paying rent on those properties and demanding that the Company pay the amounts due pursuant to the Company’s guaranties of Bridge’s obligations under the leases. On February 9, 2010, the Company received notice of service of process informing the Company that the 620 Landlord had filed a complaint with the Circuit Court for Montgomery County, Maryland. The complaint alleges that the Company breached its guaranty of Bridge’s obligations to pay rent due under the leases and alleges current damages of $116,497.69 plus interest and further costs and expenses. On March 1, 2010, the Company received notice of a service of process informing the Company that the 610 Landlord had filed a complaint with the Circuit Court for Montgomery County, Maryland, alleging breach of contract by the Company and asserting current damages in an amount to be determined. The Company estimates that the total potential rent payable to the Landlords through the end of the leases, including the past due rents, is approximately $4.1 million. The Company intends to actively pursue all available avenues to hold Bridge or other affiliated entities responsible for obligations under the leases or to otherwise recoup amounts owed by Bridge or other affiliated entities for non-payment of rent under the leases and other costs and expenses.

The Company has established a loss reserve as of December 31, 2009 to account for the estimated potential costs related to these Guarantees. The Company intends to defend itself as well as to actively pursue all available avenues to hold Bridge or other affiliated entities responsible for obligations under the GLA Leases or to otherwise recoup amounts owed by Bridge or other affiliated entities for non-payment of rent under the GLA Leases and other costs and expenses.

Delisting from NASDAQ Capital Market

In September 2009, the Company received notice from The NASDAQ Stock Market (“Nasdaq”) that its stock would be subject to delisting if it did not regain compliance by having a closing bid price equal or above $1.00 per share for a minimum of 10 consecutive trading days prior to March 15, 2010. On March 16, 2010, the Company was further notified by Nasdaq that it had not regained compliance and that trading in the Company’s stock would be suspended on March 25, 2010 in the event it did not submit an appeal to Nasdaq. The Company determined not to submit an appeal and, as a result, trading in its stock on The Nasdaq Capital Market was suspended on March 25, 2010, and will be delisted thereafter. The Company is currently undertaking efforts to have its stock publicly traded on the OTC Bulletin Board or in the “Pink Sheets”, although there is no assurance it will be able to accomplish that goal.

F-17

Filing Compare · ORE PHARMACEUTICAL HOLDINGS INC.