##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
 For the quarterly period ended June 30, 2005
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
 For the transition period from  to
 Commission file number: 000-50642
 Memory Pharmaceuticals Corp.
 
  Delaware
    
    04-3363475(State or Other Jurisdiction of Incorporation or
Organization)
    
    (I.R.S. Employer Identification No.)100 Philips Parkway, Montvale, New Jersey
    
    07645(Address of Principal Executive Offices)
    
    (Zip Code)
  
   
   þ o
  o þ




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MEMORY PHARMACEUTICALS CORP.
 Table of Contents
  
 Part I. Financial Information
    
    
    3Item 1. Financial Statements (unaudited)
    
    
    3BALANCE SHEETS
    
    
    3STATEMENTS OF OPERATIONS
    
    
    4STATEMENTS OF CASH FLOWS
    
    
    5NOTES TO FINANCIAL STATEMENTS
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    13Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    33Item 4. Controls and Procedures
    
    
    33Part II. Other Information
    
    
    34Item 4. Submission of Matters to a Vote of Security Holders
    
    
    34Item 6. Exhibits
    
    
    35SIGNATURES
    
    
    36EX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32.1: CERTIFICATION
  2




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PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements (unaudited)
 MEMORY PHARMACEUTICALS CORP.
 
 BALANCE SHEETS
 (unaudited)
 (in thousands, except for share and per share amounts)
 June 30,
    
    December 31,2005
    
    2004ASSETSCurrent assets:Cash and cash equivalents
    
    $
    19,146
    
    
    $
    31,220Marketable securities
    
    
    6,054
    
    
    
    9,876Receivables
    
    
    875
    
    
    
    875Prepaid and other current assets
    
    
    1,115
    
    
    
    538Total current assets
    
    
    27,190
    
    
    
    42,509Property and equipment, net
    
    
    9,841
    
    
    
    10,376Restricted cash
    
    
    505
    
    
    
    505Other assets
    
    
    
    
    
    
    7Total assets
    
    $
    37,536
    
    
    $
    53,397LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    715
    
    
    $
    1,691Accrued expenses
    
    
    3,517
    
    
    
    3,177Current portion of equipment notes payable
    
    
    1,531
    
    
    
    1,806Deferred revenue  current
    
    
    7,338
    
    
    
    7,095Total current liabilities
    
    
    13,101
    
    
    
    13,769Equipment notes payable, less current portion
    
    
    1,459
    
    
    
    1,714Deferred revenue  long-term
    
    
    10,559
    
    
    
    10,472Total liabilities
    
    
    25,119
    
    
    
    25,955Stockholders equity:Common stock, $0.001 par value per share;
100,000,000 shares authorized; 21,008,961
issued and outstanding at June 30, 2005, and
20,547,442 issued and outstanding at
December 31, 2004;
    
    
    21
    
    
    
    21Additional paid-in capital
    
    
    149,933
    
    
    
    148,182Accumulated deficit
    
    
    (137,291
    )
    
    
    (120,434
    )Accumulated other comprehensive loss
    
    
    (36
    )
    
    
    (45
    )Deferred compensation
    
    
    (210
    )
    
    
    (282
    )Total stockholders equity
    
    
    12,417
    
    
    
    27,442Total liabilities and stockholders equity
    
    $
    37,536
    
    
    $
    53,397
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MEMORY PHARMACEUTICALS CORP.
 
 STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except for share and per share amounts)
 Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004Revenue
    
    $
    2,491
    
    
    $
    2,549
    
    
    $
    4,921
    
    
    $
    4,920Operating expenses:Research and development
    
    
    8,819
    
    
    
    5,983
    
    
    
    17,745
    
    
    

    11,798General and administrative
    
    
    2,196
    
    
    
    2,441
    
    
    
    4,282
    
    
    
    3,819Total operating expenses
    
    
    11,015
    
    
    
    8,424
    
    
    
    22,027
    
    
    
    15,617Loss from operations
    
    
    (8,524
    )
    
    
    (5,875
    )
    
    
    (17,106
    )
    
    
    (10,697
    )Interest:Income
    
    
    194
    
    
    
    170
    
    
    
    402
    
    
    
    267Expense
    
    
    (76
    )
    
    
    (111
    )
    
    
    (149
    )
    
    
    (216
    )Interest income, net
    
    
    118
    
    
    
    59
    
    
    
    253
    
    
    
    51Net loss before income taxes
    
    
    (8,406
    )
    
    
    (5,816
    )
    
    
    (16,853
    )
    
    
    (10,646
    )Income taxes
    
    
    2
    
    
    
    3
    
    
    
    4
    
    
    
    5Net loss
    
    
    (8,408
    )
    
    
    (5,819
    )
    
    
    (16,857
    )
    
    
    (10,651
    )Less redeemable convertible preferred stock dividends
and accretion
    
    
    
    
    
    
    105
    
    
    
    
    
    
    
    2,022Net loss attributable to common stockholders
    
    $
    (8,408
    )
    
    $
    (5,924
    )
    
    $
    (16,857
    )
    
    $
    (12,673
    )Basic and diluted net loss per share of common stock
    
    $
    (0.40
    )
    
    $
    (0.29
    )
    
    $
    (0.81
    )
    
    $
    (1.18
    )Basic and diluted weighted average number of shares
of common stock outstanding
    
    
    20,873,948
    
    
    
    20,347,093
    
    
    
    20,781,634
    
    
    
    10,746,740
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MEMORY PHARMACEUTICALS CORP.
 
 STATEMENTS OF CASH FLOWS
 (unaudited)
 (in thousands)
 Six Months EndedJune 30,2005
    
    2004Cash flows used in operating activities:Net loss
    
    $
    (16,857
    )
    
    $
    (10,651
    )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation and amortization
    
    
    1,072
    
    
    
    967Non-cash stock based compensation
    
    
    1,365
    
    
    
    966Changes in operating accounts:Receivables
    
    
    
    
    
    
    2,019Prepaid and other current assets
    
    
    (577
    )
    
    
    502Other assets
    
    
    7
    
    
    
    1Accounts payable
    
    
    (976
    )
    
    
    (600
    )Accrued expenses
    
    
    340
    
    
    
    (1,024
    )Deferred revenue
    
    
    330
    
    
    
    (1,670
    )Net cash used in operating activities
    
    
    (15,296
    )
    
    
    (9,490
    )Cash flows provided by / (used in) investing activities:Purchases of marketable securities
    
    
    
    
    
    
    (10,895
    )Sales of marketable securities
    
    
    3,831
    
    
    
    3,788Additions to property and equipment
    
    
    (537
    )
    
    
    (2,630
    )Net cash provided by / (used in) investing activities
    
    
    3,294
    
    
    
    (9,737
    )Cash flows (used in) / provided by financing activities:Proceeds from issuance of common stock
    
    
    458
    
    
    
    35,570Proceeds from equipment notes payable
    
    
    495
    
    
    
    1,745Principal repayment equipment notes payable
    
    
    (1,025
    )
    
    
    (1,101
    )Net cash (used in) / provided by financing activities
    
    
    (72
    )
    
    
    36,214Net (decrease) / increase in cash and cash equivalents
    
    
    (12,073
    )
    
    
    16,987Cash and cash equivalents, beginning of period
    
    
    31,220
    
    
    
    16,884Cash and cash equivalents, end of period
    
    $
    19,146
    
    
    $
    33,871Supplemental cash flow information:Cash paid for interest
    
    $
    149
    
    
    $
    216Cash paid for taxes
    
    
    2
    
    
    
    8Accrued dividends on redeemable convertible preferred stock
    
    
    
    
    
    
    1,862Accretion of redeemable convertible preferred stock to liquidation value
    
    
    
    
    
    
    160
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MEMORY PHARMACEUTICALS CORP.
 
 NOTES TO FINANCIAL STATEMENTS
 (unaudited)
 (1)
    
    Basis of Presentation
    (2)
    
    Recent Accounting Developments
 ), Share-Based Payment , , Stock-Based Payment, .
 (3)
    
    Stock-Based Compensation
 Accounting for Certain
Transactions involving Stock Compensation, an interpretation of APB Opinion No. 25 Accounting for Stock-Based
Compensation Accounting for Stock-Based Compensation, Transition
and Disclosure,
   6




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Three Months Ended June 30,
    
    Six Months Ended June 30,2005
    
    2004
    
    2005
    
    2004Net loss attributable to common stockholders, as reported
    
    $
    (8,408
    )
    
    $
    (5,924
    )
    
    $
    (16,857
    )
    
    $
    (12,673
    )Add: Stock-based employee compensation expense included in
reported net loss
    
    
    1,329
    
    
    
    106
    
    
    
    1,365
    
    
    
    303Deduct: Employee stock-based compensation expense under
fair-value based method
    
    
    (584
    )
    
    
    (577
    )
    
    
    (1,032
    )
    
    
    (792
    )Deduct: Employee compensation for 2004 Employee Stock
Purchase Plan under fair-value based method
    
    
    (21
    )
    
    
    
    
    
    
    (42
    )
    
    
    Pro forma net loss attributable to common stockholders
    
    $
    (7,684
    )
    
    $
    (6,395
    )
    
    $
    (16,584
    )
    
    $
    (13,162
    )Pro forma basic and diluted net loss per share of common
stock
    
    $
    (0.37
    )
    
    $
    (0.31
    )
    
    $
    (0.80
    )
    
    $
    (1.22
    )Basic and diluted net loss per share of common stock, as
reported
    
    $
    (0.40
    )
    
    $
    (0.29
    )
    
    $
    (0.81
    )
    
    $
    (1.18
    )
  For the Three Months Ended
    
    For the Six Months EndedJune 30, 2005
    
    June 30, 2004
    
    June 30, 2005
    
    June 30, 2004Expected stock price volatility
    
    
    70
    %
    
    
    60
    %
    
    
    70
    %
    
    
    60
    %Expected term until exercise
    
    5 years
    
    5 years
    
    5 years
    
    5 yearsRisk-free interest rate
    
    
    3.84
    %
    
    
    3.86
    %
    
    
    3.92
    %
    
    
    3.61
    %Expected dividend yield
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %
  Stock Options
   7




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(4)
    
    Net Loss Per Share
   Three Months Ended June 30,
    
    Six Months Ended June 30,2005
    
    2004
    
    2005
    
    2004Common stock options
    
    
    3,352,929
    
    
    
    2,898,754
    
    
    
    3,120,164
    
    
    
    2,692,890Warrants
    
    
    119,907
    
    
    
    119,907
    
    
    
    119,907
    
    
    
    141,840Redeemable convertible preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,648,481Total
    
    
    3,472,836
    
    
    
    3,018,661
    
    
    
    3,240,071
    
    
    
    9,483,211
 Pro Forma Net Loss Per Share
   Three Months Ended June 30,
    
    Six Months Ended June 30,2005
    
    2004
    
    2005
    
    2004Basic and Diluted:Net loss
    
    $
    (8,408
    )
    
    $
    (5,819
    )
    
    $
    (16,857
    )
    
    $
    (10,651
    )Dividends and accretion to redemption value
    
    
    
    
    
    
    (105
    )
    
    
    
    
    
    
    (2,022
    )Net loss attributable to common stockholders
    
    
    (8,308
    )
    
    
    (5,924
    )
    
    
    (16,857
    )
    
    
    (12,673
    )Basic and diluted weighted average number of
shares of common stock outstanding
    
    
    20,873,948
    
    
    
    20,347,093
    
    
    
    20,781,634
    
    
    
    10,746,740Basic and diluted net loss per share
    
    $
    (0.40
    )
    
    $
    (0.29
    )
    
    $
    (0.81
    )
    
    $
    (1.18
    )Pro forma basic and diluted:Net loss
    
    
    (8,408
    )
    
    
    (5,819
    )
    
    
    (16,857
    )
    
    
    (10,651
    )Basic and diluted weighted average number of
shares of common stock outstanding
    
    
    20,873,948
    
    
    
    20,347,093
    
    
    
    20,781,634
    
    
    
    10,746,740Weighted average number of shares of common
stock outstanding assuming the conversion of
all redeemable convertible preferred stock and
exercise of certain warrants at the date of
original issuance
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,648,481Pro forma basic and diluted weighted average
shares of common stock outstanding
    
    
    20,873,948
    
    
    
    20,347,093
    
    
    
    20,781,634
    
    
    
    17,395,221Pro forma basic and diluted net loss per share
    
    $
    (0.40
    )
    
    $
    (0.29
    )
    
    $
    (0.81
    )
    
    $
    (0.61
    )
 8




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(5)
    
    Initial Public Offering of Common Stock
  (6)
    
    Redeemable Convertible Preferred Stock
   CommonShares


    Carrying
    
    Conversion
    
    StockSeries
    
    Date Issued
    
    Issued


    Amount
    
    Ratio
    
    IssuedA
    
    April 1998
    
    1,000,000

    $
    987,000
    
    0.3333
    
    
    333,332B
    
    December 1998, March 1999
    
    6,142,857

    
    10,732,000
    
    0.3333
    
    
    2,047,615C (1)
    
    June, August 2000
    
    10,000,000

    
    24,976,000
    
    0.3559
    
    
    3,558,521D
    
    March, April 2002
    
    19,290,130

    
    40,541,000
    
    0.3333
    
    
    6,430,033Roche (2)
    
    September 2003
    
    2,777,778

    
    9,522,000
    
    0.3333
    
    
    925,926$
    86,758,000
    
    
    
    
    13,295,427
 
 (1)
    
    As a result of our issuance of Series D redeemable convertible preferred stock at a price per
share less than $2.50, the conversion ratio of the number of shares of common stock into which each
share of Series C is convertible was adjusted so that each share of Series C is convertible into
0.3559 shares of common stock. Pursuant to this anti-dilution provision, the conversion of Series C
would have resulted in the issuance of an additional 225,195 shares of common stock. However, we
recorded a deemed dividend of $169,000 during 2002 to recognize the value attributable to the
increase in conversion ratio based on an estimated fair value of the common stock.(2)
    
    We issued 2,777,778 shares of Series Roche redeemable convertible preferred stock and 115,740
warrants to purchase common stock at $12.96 per share to Roche for $10.0 million. The proceeds of
$10.0 million were allocated to redeemable convertible preferred stock and additional paid-in capital
based on the relative fair value of the preferred stock and the warrants. We also recorded a
beneficial conversion feature of $584,000, which increased the net loss attributable to common
stockholders during the year ended December 31, 2003. 9




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(7)
    
    Marketable Securities
  June 30,
    
    December 31,2005
    
    2004Fair Value
    
    Unrealized Loss
    
    Fair Value
    
    Unrealized Loss(in thousands)Corporate debt securities
    
    $
    2,369
    
    
    $
    20
    
    
    $
    5,360
    
    
    $
    27Obligations of US government agencies
    
    $
    1,200
    
    
    
    3
    
    
    
    1,302
    
    
    
    2Mortgage-backed and asset-backed
securities
    
    $
    2,485
    
    
    
    13
    
    
    
    3,214
    
    
    
    16$
    6,054
    
    
    $
    36
    
    
    $
    9,876
    
    
    $
    45
  (8)
    
    Comprehensive Loss
  (9)
    
    License Agreements and Collaborations
 Bayer AG
  Hoffmann-LaRoche (2002 PDE4 Inhibitor Collaboration)
   10




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Hoffmann-LaRoche (2003 Nicotinic Alpha-7 Agonist Collaboration)
    (10)
    
    Research and Development Costs
  11




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(11)
    
    Consulting Agreements
   12




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
   OVERVIEW
     13




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RESULTS OF OPERATIONS
 Three Months Ended June 30, 2005 compared to Three Months Ended June 30, 2004
 Revenue
   Research and development expense
  General and administrative expense
  14




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Interest income and interest expense
  Income taxes
  Preferred stock dividends and accretion
  Six Months Ended June 30, 2005 compared to Six Months Ended June 30, 2004
 Revenue
   Research and development expense
  General and administrative expense
  Interest income and interest expense
  Income taxes
  15




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Preferred stock dividends and accretion
  Liquidity and capital resources
      Ø
    
    the number of compounds and drug candidates that we advance through the development process;Ø
    
    the funding from our two collaborations with Roche;Ø
    
    whether we are able to enter into a collaboration with regard to MEM 1003 or our PDE10A
inhibitor program, and the terms of any such collaborations;Ø
    
    whether, following the finalization of an amendment to our 2002 Roche Agreement
relating to MEM 1414 and MEM 1917, we choose to proceed with the clinical development of
MEM 1414 and/or MEM 1917;
 16




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Ø
    
    the scope and results of our and our collaborators clinical trials;Ø
    
    potential in-licensing or acquisition of other compounds or technologies;Ø
    
    the costs involved in utilizing third party contract research organizations for preclinical studies and clinical trials;Ø
    
    the timing of, and the costs involved in, obtaining regulatory approvals;Ø
    
    the availability of third parties, and the cost, to manufacture compounds for clinical trial supply;Ø
    
    the costs involved in preparing, filing, prosecuting, maintaining and enforcing patent
claims and other patent-related costs, including litigation costs and the results of such
litigation; andØ
    
    the cost of commercialization activities, including product marketing, sales and
distribution.
  CRITICAL ACCOUNTING POLICIES
   Revenue recognition
 Revenue Recognition
  17




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Accrued expenses
  Ø
    
    professional service fees, such as lawyers and accountants fees;Ø
    
    preclinical and clinical contract research organization fees;Ø
    
    fees paid to data management organizations and investigators in conjunction with clinical trials; andØ
    
    fees paid to manufacturers in conjunction with the production of clinical materials.
  Research and development expense
   Stock-based compensation
 Accounting for Stock Issued to Employees Accounting for
Stock-Based Compensation. Accounting for Stock-Based
Compensation, Transition and Disclosure
 18




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RISK FACTORS
 Investing in our common stock involves a high degree of risk. You should consider carefully
the risks and uncertainties described below and the other information contained in this report. If
any of the following risks or uncertainties actually occur, our business, prospects, financial
condition and operating results would likely suffer, possibly materially. In that event, the
market price of our common stock could decline and you could lose part or all of your investment.
 Risks Relating to our Business
 We expect to continue to incur substantial losses, and we may never achieve profitability.
   We will need additional financing, which may be difficult to obtain. Our failure to obtain
necessary financing would adversely affect our development programs and other operations.
    Ø
    
    the number of compounds and drug candidates that we advance through the development process;Ø
    
    the funding from our two collaborations with Roche;Ø
    
    whether we are able to enter into a collaboration with regard to MEM 1003 or our PDE10A
inhibitor program and the terms of any such collaborations;Ø
    
    whether, following the finalization of an amendment to our 2002 Roche Agreement
relating to MEM 1414 and MEM 1917,
 20




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Ø
    
    the scope and results of our and our collaborators clinical trials;Ø
    
    potential in-licensing or acquisition of other compounds or technologies;Ø
    
    the costs involved in utilizing third party contract research organizations for preclinical studies and clinical trials;Ø
    
    the timing of, and the costs involved in, obtaining regulatory approvals;Ø
    
    the availability of third parties, and the cost, to manufacture compounds for clinical trial supply;Ø
    
    the costs involved in preparing, filing, prosecuting, maintaining and enforcing patent
claims and other patent-related costs, including litigation costs and the results of such
litigation; andØ
    
    the cost of commercialization activities, including product marketing, sales and
distribution.
   Our drug candidates and programs are novel and in the early stages of development. As a result, it
is difficult to predict accurately if and when we will achieve the development goals we establish
for these compounds and drug candidates.
   The diseases we are targeting are poorly understood, which increases our chances of failure.
  21




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We may not be able to succeed in our business model of seeking to enter into collaborations at
early stages of development. We currently do not have a collaboration partner for MEM 1003, our
most clinically advanced drug candidate, or for our PDE10A inhibitor program, our earliest stage
development program.
   We are dependent upon Roche and will be dependent upon any other companies with which we enter into
collaborations to conduct clinical trials and to manufacture, market and sell our products.
    22




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Our collaborations are subject to many risks, which could prevent us from developing and
commercializing our drug candidates.
  Ø
    
    our collaborators may develop and commercialize, either alone or with others, products
and services that are similar to or competitive with the products that are the subject of
the collaboration with us;Ø
    
    collaborators may underfund or not commit sufficient resources to the testing,
marketing, distribution or other development of our products;Ø
    
    our collaborators may not properly maintain or defend our intellectual property rights
or they may utilize our proprietary information in such a way as to invite litigation that
could jeopardize or potentially invalidate our proprietary information or expose us to
potential liability;Ø
    
    our collaborators may encounter conflicts of interest, changes in business strategy or
other business issues which could adversely affect their willingness or ability to fulfill
their obligations to us (for example, pharmaceutical and biotechnology companies
historically have re-evaluated their priorities following mergers and consolidations,
which have been common in recent years in these industries); andØ
    
    disputes may arise between us and our collaborators delaying or terminating the
research, development or commercialization of our drug candidates, resulting in
significant litigation or arbitration that could be time-consuming and expensive, or
causing collaborators to act in their own self-interest and not in the interest of our
stockholders.
  In addition to our collaborations, we are dependent on certain license relationships.
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Our preclinical and clinical testing results may not be predictive of future trial results and may
not be sufficient to support regulatory approval of future clinical trials. If subsequent study or
trial results are unfavorable or insufficient, we may be forced to stop developing drug candidates
that we currently believe are important to our future.
 in vitro
  If our clinical trials or those of our collaborators are unsuccessful, or if we experience
significant delays in these trials, our ability to commercialize our products will be impaired.
    Ø
    
    any preclinical test or clinical trial may fail to produce safety and efficacy results
satisfactory to the FDA or foreign regulatory authorities;
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Ø
    
    preclinical and clinical data could be interpreted in different ways, which could
delay, limit or prevent regulatory approval;Ø
    
    negative or inconclusive results from a preclinical test or clinical trial or adverse
medical events during a clinical trial could cause delays in the completion of the
preclinical test or clinical study, or could cause a preclinical study or clinical trial
to be repeated, additional tests to be conducted or a program to be terminated, even if
other studies or trials relating to the program are successful;Ø
    
    the FDA or foreign regulatory authority could impose conditions on the scope or design
of a clinical trial;Ø
    
    the FDA or foreign regulatory authority could place a clinical hold on a trial if,
among other reasons, it requires further information regarding certain results or events
during preclinical tests or clinical trials, or it finds that patients enrolled in the
trial are or would be exposed to an unreasonable and significant risk of illness or
injury;Ø
    
    the FDA or foreign regulatory authority might not approve the manufacturing processes
or facilities that we utilize, or the processes or facilities of our collaborators;Ø
    
    we may encounter delays in obtaining IRB approval to conduct a clinical trial at a
prospective study site or to revise a clinical trial protocol after the clinical trial has
commenced;Ø
    
    any regulatory approval we ultimately obtain may be limited or subject to restrictions
or post-approval commitments that render the product not commercially viable;Ø
    
    we or our collaborators may encounter delays based on changes in regulatory agency
policies during the period in which we develop a drug or the period required for review of
any application for regulatory agency approval;Ø
    
    our clinical trials may not demonstrate the safety and efficacy of our compounds or
result in marketable products; andØ
    
    we or our collaborators may encounter delays in obtaining a sufficient supply of a drug
candidate for use in our clinical trials as a result of manufacturing or quality assurance
issues.
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We face intense competition in the development and commercialization of our drug candidates.
   We depend on our key scientific and other key personnel and have recently experienced turnover in
our key senior management. If we are not able to retain our key scientific and other key personnel
or recruit additional scientific and technical personnel, our business will suffer.
    If third-party contract research organizations do not perform in an acceptable and timely manner,
our preclinical testing or clinical trials could be delayed or unsuccessful.
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If we or our collaborators fail to obtain regulatory clearance for our current or future drug
candidates, we will be unable to market and sell any products and therefore may never be able to
generate product revenue or be profitable.
 , ,
  Failure to obtain regulatory approval in foreign jurisdictions would prevent us from marketing our
products abroad.
  Our potential products may not be commercially viable if we or our collaborators fail to obtain an
adequate level of reimbursement for these products by Medicare and other third-party payors or if
the pricing for these products is set at unsatisfactory levels by foreign countries.
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If physicians and patients do not accept our product candidates, we may be unable to generate
significant revenue.
  We have no manufacturing capacity and depend on third parties to supply us with the compounds under
development, to develop effective formulations and to manufacture our products.
  Manufacturing of our products must meet applicable regulatory standards.
  We face the risk of product liability claims and may not be able to obtain insurance.
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Our or our collaborators products could be subject to restrictions or withdrawal from the market.
We or they may be subject to penalties if we or they fail to comply with post-approval regulatory
requirements or experience unanticipated problems with any approved products.
  Ø
    
    product recalls;Ø
    
    revocation of previously granted approvals;Ø
    
    the need to conduct additional clinical trials; andØ
    
    fines and other censures.
  Our business activities require compliance with environmental laws. If we violate these laws, we
could be subject to significant fines, liabilities or other adverse consequences.
  Risks Relating to Intellectual Property
 If we are unable to obtain intellectual property protection for our chemical compounds and research
tools, the value of our technology and products will be adversely affected.
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We rely on trade secrets and other confidential information to maintain our proprietary position.
   We may be involved in lawsuits to protect or enforce our patents or the patents of our
collaborators or licensors, which could be expensive and time consuming.
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Third parties may own or control patents or proprietary rights that are infringed by our
technologies or drug candidates.
    Risks Related to our Common Stock
 Our executive officers, directors and their affiliates have the ability to significantly influence
all matters submitted to stockholders for approval.
  Our stock price is subject to fluctuation, which may cause an investment in our stock to suffer a
decline in value.
  Ø
    
    announcements regarding the results of preclinical tests or clinical studies involving our product candidates;Ø
    
    disputes, modifications, terminations or other developments regarding our collaborations with Roche;Ø
    
    announcements regarding new collaborations or changes to current collaborations;Ø
    
    announcements regarding technological innovations or new products by us, our collaborators or our competitors;Ø
    
    changes in the market valuations of similar companies;Ø
    
    conditions or trends in the biotechnology and pharmaceutical industries;
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Ø
    
    developments relating to patents and other intellectual property rights, including
disputes with licensors or other third parties, litigation matters and our ability to
obtain patent protection for our chemical compounds or technologies;Ø
    
    FDA or international regulatory actions;Ø
    
    additions to or departures of our key personnel;Ø
    
    actual or anticipated variations in quarterly operating results;Ø
    
    changes in financial estimates by securities analysts; andØ
    
    sales of our common stock.
  Antitakeover provisions that we have in place could entrench our management team and delay or
prevent an acquisition. These provisions could adversely affect the price of our common stock
because purchasers cannot acquire a controlling interest.
  Ø
    
    a classified board of directors;Ø
    
    limitations on the removal of directors;Ø
    
    limitations on stockholder proposals at meetings of stockholders;Ø
    
    the inability of stockholders to act by written consent or to call special meetings; andØ
    
    the ability of our board of directors to designate the terms of and issue new series of
preferred stock without stockholder approval.
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An active trading market for our common stock may not develop and if there are substantial sales of
our common stock, our stock price could decline.
  Because we do not intend to pay dividends, you will benefit from an investment in our common stock
only if it appreciates in value.
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
  
 Item 4. Controls and Procedures
 Evaluation of disclosure controls and procedures
  Change in internal control over financial reporting
  Limitations on the effectiveness of controls
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PART II. OTHER INFORMATION
 
 Item 4. Submission of Matters to a Vote of Security Holders.
  Proposal One.
 Name of Nominee
    
    Total Votes For
    
    Total Votes WithheldRobert I. Kriebel
    
    
    16,800,820
    
    
    
    12,298Michael E. Meyers
    
    
    16,740,428
    
    
    
    72,690James R. Sulat
    
    
    14,904,678
    
    
    
    1,908,440
  Proposal Two.
 Total Votes
    
    Total Votes
    
    Total Votes
    
    Broker Non-For
    
    Against
    
    Abstained
    
    votesTotal Shares Voted
    
    
    8,890,080
    
    
    
    4,302,114
    
    
    
    700
    
    
    
    3,620,225
  Proposal Three.
 Total Votes
    
    Total Votes
    
    Total Votes
    
    Broker Non-For
    
    Against
    
    Abstained
    
    votesTotal Shares Voted
    
    
    8,181,888
    
    
    
    5,005,938
    
    
    
    5,068
    
    
    
    3,620,225
  Proposal Four.
 Total Votes For
    
    Total Votes Against
    
    Total Votes AbstainedTotal Shares Voted
    
    
    16,807,428
    
    
    
    515
    
    
    
    5,176
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Item 6. Exhibits
 31.1
    
    Certification by the Chief Executive Officer pursuant to Rule
13a-14(a) under the Securities Exchange Act of 193431.2
    
    Certification by the Principal Financial Officer pursuant to Rule
13a-14(a) under the Securities Exchange Act of 193432.1
    
    Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002
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SIGNATURES
  MEMORY PHARMACEUTICALS CORP.By:
    
    /s/ Joseph M. DonabauerJoseph M. DonabauerVice President & Controller(Principal Financial and Accounting Officer andDuly Authorized Officer)Date: August 12, 2005
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EXHIBIT INDEX
 Exhibit Number
    
    Description31.1
    
    Certification by the Chief Executive Officer pursuant
to Rule 13a-14(a) under the Securities Exchange Act of
193431.2
    
    Certification by the Principal Financial Officer
pursuant to Rule 13a-14(a) under the Securities
Exchange Act of 193432.1
    
    Certification Pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002
 37