UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-Q


(Mark
One)





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





For the quarterly period ended June 30,
2010





or





 ̈
            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:  001-15281





REPROS
THERAPEUTICS INC.


(Exact
Name of Registrant as Specified in its Charter)





Delaware
              
              2408
      Timberloch Place, Suite B-7
              
              76-0233274(State
      or other jurisdiction of
              
              The
      Woodlands, Texas 77380
              
              (IRS
      Employerincorporation
      or
              
              (Address
      of principal executive offices
              
              Identification
      No.)organization)
              
              and
      zip code)(281)
      719-3400(Registrant's
      telephone number,including
      area code)





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 whether the
registrant has submitted electronically and posted on its corporate Web site, if
any, every Interactive Data File required to be submitted and posted pursuant to
Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter
period that the registrant was required to submit and post such files). 
  Yes   ̈ 
  No   ̈





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





Large
      accelerated filer  ̈
              Accelerated
      filer x
              Non-accelerated
      filer  ̈
              Smaller
      reporting company  ̈





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of theExchange
Act).  Yes ̈No 
 x





As of August 4, 2010, there were
outstanding 35,720,232 sharesof Common Stock, par
value $.001 per share, of the Registrant.





REPROS
THERAPEUTICS INC.


(A
development stage company)





For the
Quarter Ended June 30, 2010





INDEX





PageFACTORS
      AFFECTING FORWARD-LOOKING STATEMENTS
                
                3PART
      I.  FINANCIAL INFORMATIONItem
      1.     Financial Statements (unaudited)
                
                4Unaudited
      Condensed Consolidated Balance Sheets as of June 30, 2010 and December 31,
      2009
                
                5Unaudited
      Condensed Consolidated Statements of Operations for the three months and
      six months ended June 30, 2010 and 2009 and from Inception (August 20,
      1987) through June 30, 2010
                
                6Unaudited
      Condensed Consolidated Statements of Stockholders' Equity for the six
      months ended June 30, 2010
                
                7Unaudited
      Condensed Consolidated Statements of Cash Flows for the six months ended
      June 30, 2010 and 2009 and from Inception (August 20, 1987) through June
      30, 2010
                
                8Notes
      to Unaudited Condensed Consolidated Financial Statements
                
                9Item
      2.     Management's Discussion and Analysis of Financial
      Condition and Results of Operations
                
                14Item
      3.     Quantitative and Qualitative Disclosures About
      Market Risk
                
                25Item
      4.     Controls and Procedures
                
                25PART
      II.  OTHER INFORMATIONItem
      1.     Legal Proceedings
                
                27Item
      1A.  Risk Factors
                
                28Item
      2.     Unregistered Sales of Equity Securities and Use of
      Proceeds
                
                28Item
      3.     Defaults Upon Senior Securities
                
                28Item
      4.     (Removed and Reserved)
                
                28Item
      5.     Other Information
                
                28Item
      6.     Exhibits
                
                28SIGNATURES
                
                29


2


FACTORS
AFFECTING FORWARD-LOOKING STATEMENTS





This
quarterly report on Form 10-Q includes "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended.  The words "may,"
"anticipate," "believe," "expect," "estimate," "project," "suggest," "intend"
and similar expressions are intended to identify forward-looking
statements.  Such statements are subject to certain risks, uncertainties
and assumptions.  Should one or more of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect, actual results
may vary materially from those anticipated, believed, expected, estimated,
projected, suggested or intended.  These risks and uncertainties include
risks associated with the Company's ability to continue as a going concern and
to continue to be able to raise additional capital on acceptable terms or at
all; its ability to successfully defend itself in the recently filed class
action lawsuits; its ability to  maintain its listing on the Nasdaq Capital
Market; the success of the clinical trials for Proellex® and thereestablishment of safe dosing in clinical trials for Proellex®; having available
funding for the continued development of Proellex®and Androxal®;uncertainty
related to the Company's ability to obtain approval of the Company's products by
the Food and Drug Administration, or FDA, and regulatory bodies in other
jurisdictions; uncertainty relating to the Company's patent portfolio and
license rights to such patents; and other risks and uncertainties described in
the Company's filings with the Securities and Exchange Commission.  For
additional discussion of such risks, uncertainties and assumptions, see "Part I.
Financial Information - Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations - Liquidity and Capital Resources"
included elsewhere in this quarterly report on Form 10-Q and “Item 1A. Risk
Factors” to Part I of Form 10-K for the fiscal year ended December 31,
2009.




3


PART
I.  FINANCIAL INFORMATION





Item
      1.
            Financial
      Statements




The
following unaudited condensed consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States of America for interim financial information and with the
instructions to Form 10-Q and Rule 10 of Regulation S-X.  Accordingly, they
do not include all of the information and footnotes required by accounting
principles generally accepted in the United States of America for complete
financial statements.  In the opinion of management, all adjustments (which
include only normal recurring adjustments) considered necessary for a fair
statement of the interim periods presented have been included.  The
year-end balance sheet data was derived from audited financial statements, but
does not include all the disclosures required by accounting principles generally
accepted in the United States of America.  Operating results for the three
month and six month periods ended June 30, 2010 are not necessarily indicative
of the results that may be expected for the year ended December 31, 2010. 
For further information, refer to the financial statements and footnotes thereto
included in the Company's Annual Report on Form 10-K for the year ended December
31, 2009.


4




REPROS THERAPEUTICS INC.
AND SUBSIDIARY
 (A
development stage company)
  CONDENSED
CONSOLIDATED BALANCE SHEETS
 (unaudited
and in thousands except share and per share
amounts)
 June 30,
                  
                  
                  December 31,2010
                  
                  
                  2009ASSETSCurrent
      AssetsCash
      and cash equivalents
                  
                  $
                  5,190
                  
                  
                  $
                  1,886Prepaid
      expenses and other current assets
                  
                  
                  227
                  
                  
                  
                  177Total
      current assets
                  
                  
                  5,417
                  
                  
                  
                  2,063Fixed assets,net
                  
                  
                  7
                  
                  
                  
                  12Other assets,
      net
                  
                  
                  995
                  
                  
                  
                  885Total
      assets
                  
                  $
                  6,419
                  
                  
                  $
                  2,960LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      LiabilitiesAccounts
      payable
                  
                  $
                  1,342
                  
                  
                  $
                  2,043Accrued
      expenses
                  
                  
                  206
                  
                  
                  
                  355Total
      current liabilities
                  
                  
                  1,548
                  
                  
                  
                  2,398Commitments
      and contingencies (note 5)Stockholders'
      EquityUndesignated
      Preferred Stock, $.001 par value, 5,000,000 shares authorized, none issued
      and outstanding
                  
                  
                  -
                  
                  
                  
                  -Common
      Stock, $.001 par value, 75,000,000 shares authorized, 35,060,975 and
      25,987,998 shares issued, respectively and 34,611,575 and 25,538,598
      shares outstanding, respectively
                  
                  
                  35
                  
                  
                  
                  26Additional
      paid-in capital
                  
                  
                  183,092
                  
                  
                  
                  176,392Cost
      of treasury stock, 449,400 shares
                  
                  
                  (1,380
                  )
                  
                  
                  (1,380
                  )Deficit
      accumulated during the development stage
                  
                  
                  (176,876
                  )
                  
                  
                  (174,476
                  )Total
      stockholders' equity
                  
                  
                  4,871
                  
                  
                  
                  562Total
      liabilities and stockholders' equity
                  
                  $
                  6,419
                  
                  
                  $
                  2,960
 
 The
accompanying notes are an integral part of these condensed consolidated
financial statements.


5




REPROS
THERAPEUTICS INC. AND SUBSIDIARY
 (A
development stage company)
  CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
 (unaudited
and in thousands except per share amounts)
 
 From Inception(August 20, 1987)throughThree Months Ended June 30,
                          
                          
                          Six Months Ended June 30,
                          
                          
                          June 30,2010
                          
                          
                          2009
                          
                          
                          2010
                          
                          
                          2009
                          
                          
                          2010RevenuesLicensing
      fees
                          
                          $
                          -
                          
                          
                          $
                          -
                          
                          
                          $
                          -
                          
                          
                          $
                          -
                          
                          
                          $
                          28,755Product
      royalties
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          627Research
      and development grants
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          1,219Interest
      income
                          
                          
                          -
                          
                          
                          
                          1
                          
                          
                          
                          -
                          
                          
                          
                          4
                          
                          
                          
                          16,297Gain
      on disposal of fixed assets
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          102Other
      Income
                          
                          
                          53
                          
                          
                          
                          -
                          
                          
                          
                          53
                          
                          
                          
                          -
                          
                          
                          
                          635Total
      revenues and other income
                          
                          
                          53
                          
                          
                          
                          1
                          
                          
                          
                          53
                          
                          
                          
                          4
                          
                          
                          
                          47,635ExpensesResearch
      and development
                          
                          
                          756
                          
                          
                          
                          7,784
                          
                          
                          
                          1,214
                          
                          
                          
                          13,482
                          
                          
                          
                          171,544General
      and administrative
                          
                          
                          570
                          
                          
                          
                          1,105
                          
                          
                          
                          1,239
                          
                          
                          
                          2,165
                          
                          
                          
                          43,236Interest
      expense and amortization of intangibles
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          388Total
      expenses
                          
                          
                          1,326
                          
                          
                          
                          8,889
                          
                          
                          
                          2,453
                          
                          
                          
                          15,647
                          
                          
                          
                          215,168Loss
      from continuing operations
                          
                          
                          (1,273
                          )
                          
                          
                          (8,888
                          )
                          
                          
                          (2,400
                          )
                          
                          
                          (15,643
                          )
                          
                          
                          (167,533
                          )Loss
      from discontinued operations
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          (1,828
                          )Gain
      on disposal of discontinued operation
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          939Net
      loss before cumulative effect of change in accounting
      principle
                          
                          
                          (1,273
                          )
                          
                          
                          (8,888
                          )
                          
                          
                          (2,400
                          )
                          
                          
                          (15,643
                          )
                          
                          
                          (168,422
                          )Cumulative
      effect of change in accounting principle
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          (8,454
                          )Net
      loss
                          
                          $
                          (1,273
                          )
                          
                          $
                          (8,888
                          )
                          
                          $
                          (2,400
                          )
                          
                          $
                          (15,643
                          )
                          
                          $
                          (176,876
                          )Loss
      per share - basic and diluted:
                          
                          $
                          (0.04
                          )
                          
                          $
                          (0.59
                          )
                          
                          $
                          (0.08
                          )
                          
                          $
                          (1.03
                          )Weighted
      average shares used in loss per share calculation:Basic
                          
                          
                          31,724
                          
                          
                          
                          15,175
                          
                          
                          
                          28,792
                          
                          
                          
                          15,175Diluted
                          
                          
                          31,724
                          
                          
                          
                          15,175
                          
                          
                          
                          28,792
                          
                          
                          
                          15,175
 
 The
accompanying notes are an integral part of these condensed consolidated
financial statements.
  6
 REPROS
THERAPEUTICS INC. AND SUBSIDIARY
 (A
development stage company)
 CONSOLIDATED
STATEMENTS OF STOCKHOLDERS' EQUITY
 (unaudited
and in thousands except share and per share
amounts)
 DeficitAccumulatedAdditional
                          
                          
                          
                          
                          
                          
                          
                          
                          During the
                          
                          
                          TotalCommon Stock
                          
                          
                          Paid-in
                          
                          
                          Treasury Stock
                          
                          
                          Development
                          
                          
                          Stockholders'Shares
                          
                          
                          Amount
                          
                          
                          Capital
                          
                          
                          Shares
                          
                          
                          Amount
                          
                          
                          Stage
                          
                          
                          EquityBalance
      at December 31, 2009
                          
                          
                          25,987,998
                          
                          
                          $
                          26
                          
                          
                          $
                          176,392
                          
                          
                          
                          449,400
                          
                          
                          $
                          (1,380
                          )
                          
                          $
                          (174,476
                          )
                          
                          $
                          562Stock
      based option compensation
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          326
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          326Issuance
      of 387,344 shares of common stock at $0.72 to $1.10 per share, as
      settlement with trade creditors
                          
                          
                          387,344
                          
                          
                          
                          -
                          
                          
                          
                          370
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          370Issuance
      of 8,685,633 shares of common stock at a weighted average share price of
      $0.73, net of offering costs of $343
                          
                          
                          8,685,633
                          
                          
                          
                          9
                          
                          
                          
                          6,004
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          6,013Net
      loss
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          (2,400
                          )
                          
                          
                          (2,400
                          )Balance
      at June 30, 2010
                          
                          
                          35,060,975
                          
                          
                          $
                          35
                          
                          
                          $
                          183,092
                          
                          
                          
                          449,400
                          
                          
                          $
                          (1,380
                          )
                          
                          $
                          (176,876
                          )
                          
                          $
                          4,871
 
 The
accompanying notes are an integral part of these condensed consolidated
financial statements.


7


REPROS
THERAPEUTICS INC. AND SUBSIDIARY
 (A
development stage company)
  CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
 (unaudited
and in thousands)
 
 From Inception(August 20, 1987)throughSix Months Ended June 30,
                    
                    
                    June 30,2010
                    
                    
                    2009
                    
                    
                    2010Cash
      Flows from Operating ActivitiesNet
      loss
                    
                    $
                    (2,400
                    )
                    
                    $
                    (15,643
                    )
                    
                    
                    (176,876
                    )Gain
      on disposal of discontinued operations
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (939
                    )Gain
      on disposal of fixed assets
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (102
                    )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Noncash
      financing costs
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    316Noncash
      inventory impairment
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    4,417Noncash
      patent impairment
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    2,614Noncash
      other income
                    
                    
                    (53
                    )
                    
                    
                    -
                    
                    
                    
                    (600
                    )Noncash
      decrease in accounts payable
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (1,308
                    )Depreciation
      and amortization
                    
                    
                    37
                    
                    
                    
                    34
                    
                    
                    
                    3,991Noncash
      stock-based compensation
                    
                    
                    326
                    
                    
                    
                    736
                    
                    
                    
                    6,967Common
      stock issued for agreement not to compete
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    200Series
      B Preferred Stock issued for consulting services
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    18Changes
      in operating assets and liabilities(net
      effects of purchase of businesses in 1988 and 1994):Increase
      in receivables
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (199
                    )Increase
      in inventory
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (4,447
                    )(Increase)
      decrease in prepaid expenses and other current assets
                    
                    
                    (50
                    )
                    
                    
                    (800
                    )
                    
                    
                    75Increase
      (decrease) in accounts payable and accrued expenses
                    
                    
                    (427
                    )
                    
                    
                    492
                    
                    
                    
                    9,611Net
      cash used in operating activities
                    
                    
                    (2,567
                    )
                    
                    
                    (15,181
                    )
                    
                    
                    (156,262
                    )Cash
      Flows from Investing ActivitiesChange
      in trading marketable securities
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (191
                    )Capital
      expenditures
                    
                    
                    (3
                    )
                    
                    
                    -
                    
                    
                    
                    (2,374
                    )Purchase
      of technology rights and other assets
                    
                    
                    (139
                    )
                    
                    
                    (321
                    )
                    
                    
                    (4,411
                    )Proceeds
      from sale of PP&E
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    225Cash
      acquired in purchase of FTI
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    3Proceeds
      from sale of subsidiary, less $12,345 for operating losses during 1990
      phase-out period
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    138Proceeds
      from sale of the assets of FTI
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    2,250Increase
      in net assets held for disposal
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (213
                    )Net
      cash used in investing activities
                    
                    
                    (142
                    )
                    
                    
                    (321
                    )
                    
                    
                    (4,573
                    )Cash
      Flows from Financing ActivitiesProceeds
      from issuance of common stock, net of offering costs
                    
                    
                    6,013
                    
                    
                    
                    -
                    
                    
                    
                    162,018Exercise
      of stock options
                    
                    
                    -
                    
                    
                    
                    9
                    
                    
                    
                    372Proceeds
      from a shareholder transaction
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    327Proceeds
      from issuance of preferred stock
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    23,688Purchase
      of treasury stock
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (21,487
                    )Proceeds
      from issuance of notes payable
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    2,839Principal
      payments on notes payable
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (1,732
                    )Net
      cash provided by financing activities
                    
                    
                    6,013
                    
                    
                    
                    9
                    
                    
                    
                    166,025Net
      increase (decrease) in cash and cash equivalents
                    
                    
                    3,304
                    
                    
                    
                    (15,493
                    )
                    
                    
                    5,190Cash
      and cash equivalents at beginning of period
                    
                    
                    1,886
                    
                    
                    
                    19,470
                    
                    
                    
                    -Cash
      and cash equivalents at end of period
                    
                    $
                    5,190
                    
                    
                    $
                    3,977
                    
                    
                    $
                    5,190


The
accompanying notes are an integral part of these condensed consolidated
financial statements.
  8


REPROS
THERAPEUTICS INC. AND SUBSIDIARY


(A
development stage company)





NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


June
30, 2010


(Unaudited)





NOTE
1  —  Organization, Operations and Liquidity




Repros
Therapeutics Inc. ("the Company", "Repros," or "we," "us" or "our"), was
organized on August 20, 1987.  We are a development stage biopharmaceutical
company focused on the development of oral small molecule drugs for major unmet
medical needs that treat male and female reproductive disorders.




Our
portfolio of products includes:





Androxal®





·
            A
      single isomer of clomiphene citrate, is being developed for men of
      reproductive age with low testosterone levels who want to maintain their
      fertility while being treated for low testosterone;
  and





·
            As
      a potential treatment for type 2
diabetes





Proellex®





·
            A
      new chemical entity that acts as a selective blocker of the progesterone
      receptor, is being developed for the treatment of symptoms associated with
      uterine fibroids and endometriosis, subject to the current FDA partial
      clinical hold on the Proellex® clinical trials; however, the FDA has
      allowed us to run a single study to explore both safety and signals of
      efficacy in an escalating dose fashion. The new study will test 5
      different doses of Proellex® (1, 3, 6, 9 and 12mg) with 1mg being the
      first dose tested.





As of
June 30, 2010, we had accumulated losses of $176.9 million, approximately $5.2
million in cash and cash equivalents, and our accounts payable and accrued
expenses were approximately $1.5 million.  The amount of cash on hand is
not sufficient to fund the escalating dose clinical trial for Proellex® and the
Phase 2 clinical trial for Androxal® as a potential treatment for type 2
diabetes.  Additionally, the FDA has recently notified us that they will
allow us to conduct two Phase 3 trials for Androxal® in men with low
testosterone who want to maintain their fertility while being treated for low
testosterone subject to protocol review by the FDA.  At the time we submit
our Phase 3 protocols to the FDA, we will also submit a Phase 2 protocol to
determine a minimum effective dose.  We will begin the search for an
appropriate Clinical Research Organization as well as commence screening of
clinical sites where such studies will be conducted.  Based on these
planned clinical trials, we will need to raise additional capital no later than
some time during the first quarter of 2011.  We continue to explore
potential additional financing alternatives that would provide sufficient funds
to enable us to continue to develop our two product candidates through
completion of clinical trials; however, there can be no assurance that we will
be successful in raising any such additional funds on a timely basis or at
all.  Significant additional capital will be required for us to complete
development of either of our product candidates.  The foregoing and other
matters raise substantial doubt about our ability to continue as a going
concern.




We also
continue to maintain our patent portfolio of our phentolamine-based products for
the treatment of sexual dysfunction and in order to create value from these
assets in various ways which includes product out-licensing.


9





NOTE 
2  —  Patents and Patent Applications




As of
June 30, 2010, the Company had approximately $995,000 in capitalized patent and
patent application costs reflected on its balance sheet.  This entire
amount relates to patent and patent application costs for
Androxal®.




Should
the Company not continue development of Androxal® or should the Company not
continue as a going concern, the remaining capitalized patent and patent
application costs may not be recoverable, which would result in charges to
operating results in future periods.




NOTE 
3  —  Accrued Expenses




Accrued
expenses consist of the following (in thousands):




June30,2010
                    
                    
                    December31,2009Personnel
      related costs
                    
                    $
                    102
                    
                    
                    $
                    181Other
                    
                    
                    74
                    
                    
                    
                    159Patent
      costs
                    
                    
                    30
                    
                    
                    
                    15Total
                    
                    $
                    206
                    
                    
                    $
                    355





NOTE
4  —  Loss Per Share




Basic
loss per share is computed by dividing net loss by the weighted average number
of shares of common stock outstanding during the period.  Diluted loss per
share is computed using the average share price for the period and applying the
treasury stock method to potentially dilutive outstanding options.  In all
applicable periods, all potential common stock equivalents were antidilutive
and, accordingly, were not included in the computation of diluted loss per
share.




The
following table presents information necessary to calculate loss per share for
the three month and six month periods ended June 30, 2010 and 2009 (in
thousands, except per share amounts):




Three Months Ended June 30,
                  
                  
                  Six Months Ended June 30,2010
                  
                  
                  2009
                  
                  
                  2010
                  
                  
                  2009Net
      Loss
                  
                  $
                  (1,273
                  )
                  
                  $
                  (8,888
                  )
                  
                  $
                  (2,400
                  )
                  
                  $
                  (15,643
                  )Average
      common shares outstanding
                  
                  
                  31,724
                  
                  
                  
                  15,175
                  
                  
                  
                  28,792
                  
                  
                  
                  15,175Basic
      and diluted loss per share
                  
                  $
                  (0.04
                  )
                  
                  $
                  (0.59
                  )
                  
                  $
                  (0.08
                  )
                  
                  $
                  (1.03
                  )




Other
potential common stock of 1,909,258 common shares underlying stock options for
the period ended June 30, 2010 were excluded from the above calculation of
diluted loss per share because they were not dilutive.  Additionally, other
potential common stock, consisting of stock options and warrants associated with
the October 2, 2008 offering, of 3,598,117 common shares underlying stock
options for the period ended June 30, 2009 were also excluded from the above
calculation of diluted loss per share because they were not dilutive.  The
warrants associated with the October 2, 2008 offering subsequently expired in
September 2009.


10


NOTE 5  — 
 Commitments and Contingencies




Therapeutic
uses of our Androxal® product candidate are covered in the United States by four
issued U.S. patents and four pending patent applications.  Foreign coverage
of therapeutic uses of our Androxal® product candidate includes 37 issued
foreign patents and 78 foreign pending patent applications.  The issued
patents and pending applications relate to methods for treating certain
conditions including the treatment of testosterone deficiency in men, the
treatment of metabolic syndrome and conditions associated therewith, and the
treatment of infertility in hypogonadal men.  Androxal® (the trans-isomer
of clomiphene) is purified from clomiphene citrate.  A third party
individual holds two issued patents related to the use of an anti-estrogen such
as clomiphene citrate and others for use in the treatment of androgen deficiency
and disorders related thereto.  In our prior filings with the SEC, we have
described our request to the PTO for re-examination of one of these patents
based on prior art.  The third party amended the claims in the
re-examination proceedings, which led the PTO to determine that the amended
claims are patentable in view of those publications under consideration and a
re-examination certificate was issued.  However, we believe that the
amended claims are invalid based on additional prior art publications, and our
request for re-examination by the PTO in light of a number of these additional
publications and other publications cited by the PTO, was granted. All of the
claims have been finally rejected in the re-examination and the patent holder
has appealed the rejections to the PTO Board of Patent Appeals and Interferences
(“the Board”).  A decision has been rendered by the Board affirming the
rejection of all of the claims.  The patent holder has filed a request for
rehearing.  If the Board maintains the rejections on rehearing or the
request for rehearing is denied, the patent holder will have the opportunity to
appeal the rejections to the United States Court of Appeals for the Federal
Circuit.  We also believe that the second of these two patents is invalid
in view of published prior art not considered by the PTO.  Nevertheless,
there is no assurance that either patent will ultimately be found invalid over
the prior art. If such patents are not invalidated by the PTO we may be required
to obtain a license from the holder of such patents in order to develop
Androxal® further or attempts may be made to undertake further legal action to
invalidate such patents.  If such licenses were not available on acceptable
terms, or at all, we may not be able to successfully commercialize or
out-license Androxal®.




On August
7, 2009, R.M. Berry filed a putative class action lawsuit naming the Company,
Joseph Podolski, Paul Lammers, and Louis Ploth, Jr. as defendants.  The
lawsuit is pending in the United States District Court for the Southern District
of Texas, Houston Division.  The lawsuit, styled R.M. Berry, on Behalf of
Himself and all Others Similarly Situated v. Repros Therapeutics, Inc., Joseph
Podolski, Paul Lammers, and Louis Ploth, Jr., alleges that the defendants made
certain misleading statements related to the Company’s Proellex® drug. 
Among other claims, the lawsuit contends that the defendants misrepresented the
side effects of the drug related to liver function, and the risk that these side
effects could cause a suspension of clinical trials of Proellex®. The lawsuit
seeks to establish a class of shareholders allegedly harmed by the misleading
statements, and asserts causes of action under the Securities Exchange Act of
1934.  On August 14, 2009, a lawsuit making similar allegations and naming
the same defendants was also filed in the United States District Court for the
Southern District of Texas.  This suit is styled Josephine Medina,
Individually and On Behalf of all Others Similarly Situated v. Repros
Therapeutics, Inc., Joseph Podolski, Paul Lammers, and Louis Ploth, Jr.  On
September 25, 2009, a lawsuit also making allegations similar to those in the
Berry action, and naming the same defendants, was filed in the United States
District Court for the Southern District of Texas.  That lawsuit is styled
Shane Simpson, Paul Frank and Clayton Scobie, on Behalf of Themselves and all
Others Similarly Situated v. Repros Therapeutics, Inc., Joseph Podolski, Paul
Lammers, and Louis Ploth, Jr.    The lawsuits have now been
consolidated, and lead plaintiffs appointed.  On January 27, 2010, the lead
plaintiffs filed a Consolidated Class Action Complaint styled In re Repros
Therapeutics, Inc. Securities Litigation, Civil Action No. 09 Civ. 2530
(VDG).  The lawsuit names Repros Therapeutics, Inc., Joseph Podolski, Paul
Lammers, and Louis Ploth, Jr. as defendants.  The allegations in the
Consolidated Class Action Complaint are substantially the same as those
contained in the prior complaints, and focus on the claim that the defendants
deliberately withheld information concerning the negative side-effects of
Proellex® related to liver function.  Plaintiffs seek to establish a class
action for all persons who “purchased or otherwise acquired Repros common stock
between July 1, 2009, and August 2, 2009.”  No discovery has yet occurred
in the matter.  Defendants filed a motion to dismiss the Consolidated Class
Action Complaint on March 15, 2010.  Briefing has been completed on that
motion, but the court has not yet ruled on it.    An estimate of the
possible loss or range of losses in connection with the lawsuits cannot be made
at this time.


11


On March
1, 2010, we were served with a lawsuit where we were named as a co-defendant
along with one of our clinical regulatory service providers (“CRO”) relating to
the Proellex® clinical trial study.  The lawsuit was filed in the State of
Tennessee, 30th Judicial District Chancery Court at Memphis by an investigator
and claims that the CRO did not pay it amounts owing to it relating to the
Proellex® study.  We did not engage the investigator and under our
agreement with the CRO, we believe the CRO is responsible for any such
costs or damages regarding such lawsuit.  Pursuant to a Settlement
Agreement and Mutual Release entered into in October 2009, such CRO, on behalf
of itself and its agents, released us from all claims which could be asserted by
them against us.  We believe such release covers the claims set forth in
this lawsuit.  The CRO failed to respond to the lawsuit, and a default
judgment was entered against it in the amount of $172,901.29.  We intend to
vigorously defend any and all claims asserted by the investigator.  An
estimate of the possible costs or expenses to defend ourselves in this matter or
risk of exposure under the litigation cannot be made at this time.




NOTE
6  —   Other Recent Events, Including Subsequent
Events




Between
November 30, 2009 and March 31, 2010, we entered into settlement agreements and
mutual releases (the “Prior Settlement Agreements”) with certain of our
creditors, pursuant to which we issued an aggregate of 352,459 shares of common
stock and paid an aggregate of $140,572 in cash as payment in full for our
then-outstanding liabilities to such creditors.  On April 8, 2010, we
entered into an additional settlement agreement and mutual release (together
with the Prior Settlement Agreements, the “Settlement Agreements”) with a
creditor, pursuant to which we issued 34,885 shares of common stock (together
with the shares issued under the Prior Settlement Agreements, the “Settlement
Shares”) and paid $8,721 in cash as payment in full for our then-outstanding
liability to such creditor.  The Settlement Shares were issued by the
Company pursuant to Section 4(2) and /or Rule 506 of Regulation D promulgated
under the Securities Act of 1933, as amended.  Pursuant to the Settlement
Agreements, we filed a registration statement to register the Settlement Shares
on June 9, 2010, which was declared effective by the SEC on June 25, 2010, and
we agreed to use our best efforts to maintain such registration statement until
all such Settlement Shares registered thereunder to such creditors have been
sold or for a period of one year, whichever comes first.




In
addition to the Settlement Agreements, we settled with two of our creditors
during the second quarter of 2010 in an amount less than its then-outstanding
liabilities to such creditors.  These settlements resulted in recognition
of $53,000 in other income on the Condensed Consolidated Statement of
Operations.




On
February 12, 2010, we entered into an Equity Distribution Agreement (the “Equity
Distribution Agreement”) with Ladenburg Thalmann & Co. Inc. (“Ladenburg”),
pursuant to which we may issue and sell from time to time through Ladenburg, as
sales agent and/or principal, shares of our common stock having an aggregate
offering price of up to $10 million (the “ATM Shares”).  Ladenburg is
not required to sell on our behalf any specific number or dollar amount of the
ATM Shares, but Ladenburg, upon acceptance of written instructions from us,
agreed to use its commercially reasonable efforts consistent with its customary
trading and sales practices, to sell the ATM Shares up to the amount specified,
and otherwise in accordance with the terms of a placement notice delivered to
Ladenburg. We have no obligation to sell any ATM Shares under the Equity
Distribution Agreement, and may at any time suspend sales under the Equity
Distribution Agreement, provided that such suspension shall not affect either
party’s obligations with respect to the ATM Shares sold prior to the receipt of
notice of such suspension.  Ladenburg receives a commission of 4% of the
gross sales price of all ATM Shares sold through it under the Equity
Distribution Agreement. The ATM Shares are issued pursuant to our shelf
registration statement on Form S-3, as amended (File No. 333-163648). 
Between April 1, 2010 and June 30, 2010, we have sold an aggregate of 8,162,214
ATM Shares at a weighted average share price of $0.73,for proceeds of approximately $5.7 million, net of expenses. 
Cumulative through June 30, 2010, we have sold 8,685,633 ATM Shares at a
weighted average share price of $0.73,for proceeds of approximately $6.0 million, net of expenses. 
Between July 1, 2010 and August 4, 2010, we have sold an aggregate of 1,108,657
ATM Shares at a weighted average share price of $0.38,for proceeds of approximately $401,000, net of expenses.  Pursuant
to General Instruction I.B.6. of Form S-3, we may not sell more than one-third
of the aggregate market value of our common stock held by non-affiliates during
a period of 12 calendar months immediately prior to, and including, the date of
such sale of such common stock.  Due to this limitation, we announced on
August 3, 2010 that we have suspended this ATM offering of Company
securities.


12


On June
15, 2010, we received notification from the Nasdaq Stock Market that we had not
regained compliance with Nasdaq Listing Rule 5550(a)(2) and, as a result, our
securities will be delisted from the Nasdaq Capital Market. Pursuant to Nasdaq
procedural rules, we appealed such determination and on July 22, 2010, an oral
hearing was held to determine whether our securities will continue to be listed
on the Nasdaq Capital Market.  At such hearing, we requested additional
time to regain compliance with Nasdaq Listing Rule 5550(a)(2) in order to allow
adequate time for the FDA to respond to our pending submissions for our
Androxal® drug candidate. No decision has been delivered yet from the Nasdaq
Stock Market regarding our appeal.  There can be no assurance that our
appeal will be successful to allow our securities to continue to be traded on
the Nasdaq Capital Market.   At our annual stockholders' meeting held
on May 17, 2010, our stockholders approved a proposal to grant our board of
directors the authority to effect a reverse split of its common stock within one
year of such annual meeting on a basis not to exceed one share of common stock
for up to five shares of common stock outstanding, if necessary, in the sole
discretion of our board of directors, for purposes of maintaining its listing on
the Nasdaq Capital Market.









On July
22, 2010, we announced that we have received Institutional Review Board (“IRB”)
approval to commence the FDA approved low dose Proellex® study. The contract for
clinical services was previously awarded to ICON. The new low dose study is
designed to explore both safety and signals of efficacy in an escalating dose
fashion. The study will test 5 different doses of Proellex (1, 3, 6, 9 and 12
mg) with 1 mg being the first dose tested. In previous studies, a 12.5 mg dose
was well tolerated and yielded statistically significant efficacy signals for
both uterine fibroids and endometriosis.   Proellex® had been put on
clinical hold by the FDA in August 2009 as a result of liver toxicity exhibited
in our previous Phase 2 and 3 clinical trials for endometriosis and uterine
fibroids.   In June 2010, the FDA notified us that the full clinical
hold on Proellex® had been revised to a partial clinical hold to allow us to run
this single study.





On August
9, 2010, we announced that the FDA has recently notified us that they will allow
us to conduct two Phase 3 trials for Androxal® in men with low testosterone who
want to maintain their fertility while being treated for low testosterone
subject to protocol review by the FDA, subject to available funding.  At
the time we submit our Phase 3 protocols to the FDA, we will also submit a Phase
2 protocol to determine a minimum effective dose.  We will begin the search
for an appropriate Clinical Research Organization as well as commence screening
of clinical sites where such studies will be conducted.


13


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




The
following discussion contains forward-looking statements, within the meaning of
Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and
Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") that involve risk and uncertainties.  Any statements contained in
this quarterly report that are not statements of historical fact may be
forward-looking statements. When we use the words "may," "anticipates,"
"believes," "plans," "expects" and similar expressions, we are identifying
forward-looking statements. Forward-looking statements involve risks and
uncertainties which may cause our actual results, performance or achievements to
be materially different from those expressed or implied by forward-looking
statements. The following discussion of financial condition should be read in
conjunction with the accompanying consolidated financial statements and related
notes.




Repros
Therapeutics Inc.




Repros
Therapeutics Inc. ("the Company", "RPRX," “Repros”, or "we," "us" or "our") was
organized on August 20, 1987.  We are a development stage biopharmaceutical
company focused on the development of oral small molecule drugs for major unmet
medical needs.  As of June 30, 2010, we had accumulated losses of $176.9
million, approximately $5.2 million in cash and cash equivalents, and our
accounts payable and accrued expenses were approximately $1.5 million.  The
amount of cash on hand is not sufficient to fund each of the clinical trials
currently planned for our two drug candidates, Proellex® and Androxal®. 
Based on these planned clinical trials, we will need to raise additional capital
no later than some time during the first quarter of 2011.  We continue to
explore potential additional financing alternatives that would provide
sufficient funds to enable us to continue to develop our two product candidates
through completion of clinical trials; however, there can be no assurance that
we will be successful in raising any such additional funds on a timely basis or
at all.  Significant additional capital will be required for us to complete
development of either of our product candidates. The foregoing and other
matters raise substantial doubt about our ability to continue as a going
concern.





Our
current product pipeline (with the respective status of development) consists of
the following:





Androxal® (male reproductive
health):





 ̈
            The
      FDA has recently notified us that it will allow us to conduct two Phase 3
      trials for Androxal® in men with low testosterone who want to maintain
      their fertility while being treated for low testosterone subject to
      protocol review by the FDA.  We are in the process of submitting our
      Phase 3 protocols to the FDA and a Phase 2 protocol to determine a minimum
      effective dose; and





 ̈
            Our
      Investigational New Drug Application, or IND, for the study of oral
      Androxal® in the treatment of hypogonadal men with type 2 diabetes was
      accepted by the FDA and, thus, we are in the process of initiating a Phase
      2 trial.





Proellex® (female reproductive
health): All ongoing clinical trial activities for Proellex® have been put on partial
hold by the FDA; however, the FDA has allowed us to run a single study to
explore both safety and signals of efficacy in an escalating dose fashion.
The new study will test 5 different doses of Proellex® (1, 3, 6, 9 and
12mg) with 1mg being the first dose tested. Proellex® had been put on
clinical hold by the FDA in August 2009 as a result of liver toxicity exhibited
in our previous Phase 2 and 3 clinical trials for endometriosis and uterine
fibroids.   In June 2010, the FDA notified us that the full clinical
hold on Proellex® had been revised to a partial clinical hold to allow us to run
this single study.





We also
continue to maintain our patent portfolio of our phentolamine-based products for
the treatment of sexual dysfunction and in order to create value from these
assets in various ways which includes product out-licensing.


14


Androxal®





Product
Overview





Our
primary product candidate, Androxal® (thetrans isomer of clomiphene),
is a single isomer of clomiphene citrate and is an orally active proprietary
small molecule compound. We are developing Androxal® for men of
reproductive age with low testosterone levels who want to improve or maintain
their fertility and/or sperm function while being treated for low
testosterone. In addition, we are performing an investigation of Androxal®
as a potential treatment for type 2 diabetes.





Men with
AIHH (secondary hypogonadism) are characterized as having both low testosterone
and LH, often accompanied by obesity and elevated blood glucose, among other
signs.  Our clinical trial data suggests that Androxal® modifies the
endocrinologic profile in terms of both hormones and glucose.  There can be
no assurance that clinical trials performed for this new indication will be
successful. We believe Androxal® may have advantages over current therapies
for the treatment of low testosterone due to secondary hypogonadism because it
is designed as an oral therapy that acts centrally to restore testicular
function and hence normal testosterone in the body, as compared to
currently approved products that simply replace diminished testosterone either
through injections, nasal spray or the application of a gel or cream containing
testosterone over a percentage of body area. We believe Androxal® will be
superior to the existing administration of exogenous testosterone products used
to normalize testosterone as only Androxal® has the property of restoring both
LH and FSH levels. LH and FSH are the pituitary hormones that stimulate
testicular testosterone and sperm production, respectively.





Testosterone
is an important male hormone. Testosterone deficiency in men is linked to
several negative physical and mental conditions, including loss of muscle tone,
reduced sexual desire, and deterioration of memory and certain other cognitive
functions. Testosterone production normally decreases as men age, sometimes
leading to testosterone deficiency. According to the Urology Channel,
recent estimates show that approximately 13 million men in the United States
experience testosterone deficiency. The leading therapy is AndroGel®, a
commercially available testosterone replacement cream marketed by Abbott
Laboratories for the treatment of low testosterone, which we believe has had and
continues to have significant sales in North America.





Based on
our own clinical trial screening data, we believe over 70% of men that have low
testosterone suffer from secondary hypogonadism, caused by failure of the
pituitary to provide appropriate hormone signaling to the testes, which we
believe causes testosterone levels to drop to the point where pituitary
secretions fall under the influence of estrogen. In this state, we also
believe that estrogen further suppresses the testicular stimulation from the
pituitary. These men are readily distinguished from those that have primary
testicular failure via assessment of the levels of secretions of pituitary
hormones (i.e., men with primary testicular failure experience elevated
secretions of pituitary hormones). Secondary hypogonadism is not relegated
only to older men although the condition becomes more prevalent as men
age.





Androxal®
is considered a new chemical entity by the FDA which means that the compound
will be required to undergo the full regulatory approval process. We must
still meet additional clinical requirements including pre-clinical, Phase 1,
Phase 2, pivotal Phase 3 trials and long-term Open Label Safety Studies as well
as other requirements. Although Androxal® is considered a new chemical
entity for purposes of requirements for approval, it is closely related
chemically to the drug, Clomid®, which is approved for use in women to treat
certain infertility disorders. The FDA has indicated that testicular
tumors, gynecomastia and adverse ophthalmologic events, which have been reported
in males taking Clomid®, are potential risks that should be included in informed
consent forms for our Androxal® clinical trials. We do not believe that
Androxal® will present with the same adverse events given its reduced half-life
in the human body as compared to Clomid®. In our preclinical studies and
our clinical trials to date, we have observed no evidence of any of these events
except for certain ophthalmologic events in our preclinical dog study at doses
significantly higher than those administered in the clinical
trials.





All
clinical trial results are subject to review by the FDA, and the FDA may
disagree with our conclusions about safety and efficacy. We caution that
the results discussed herein are based on data from non-pivotal trials and that
our future Phase 2 trials, pivotal Phase 3 and long-term Open Label Safety Trial
data may not agree with these results which will be based upon significantly
larger and more diverse patient populations treated for longer periods of
time.


15


Secondary
Hypogonadism with Fertility Maintenance/Improvement





During
the second quarter of 2008, we initiated a 24-patient Phase 2b proof-of-concept
clinical trial (ZA-201) for a new indication in which we are monitoring the
effects of Androxal® on male fertility and testicular function in patients being
treated for low testosterone as compared to Testim®, a popular marketed topical
testosterone medication. On October 6, 2009 we announced that Androxal® was
able to maintain sperm counts in men being treated for their low testosterone
levels. Testim® resulted in suppressed sperm levels while men were being treated
with that topical gel. We requested a meeting with the FDA to discuss such
results. In correspondence leading up to such meeting, the FDA stated that
it could not agree with such proposed indication for Androxal® at that time
because the patient population had not been adequately defined and that it was
not aware of certain data to support our position. On January 25, 2010, we
participated in a teleconference with the FDA relating to the future clinical
path for Androxal®. During such teleconference, the FDA requested that we
(i) propose a label that better defines the population of individuals for whom
we believe will benefit from the use of Androxal®,and (ii) conduct a
literature review of the incidence of infertility associated with the use of
exogenous testosterone as supportive of our data. The FDA suggested that if
it finds the submission appropriate, no additional clarifying meeting regarding
this indication for Androxal®may be required.On February 8, 2010, we
announced that we submitted the requested information to the FDA.  On
August 9, 2010, we announced that the FDA has notified us that they will allow
us to conduct two Phase 3 trials for Androxal® in men with low testosterone who
want to maintain their fertility while being treated for low
testosterone subject to protocol review by the FDA.  At the time we
submit our Phase 3 protocols to the FDA, we will also submit a Phase 2 protocol
to determine a minimum effective dose.  We will begin the search for an
appropriate Clinical Research Organization as well as commence screening of
clinical sites where such studies will be conducted. Given that there is
currently an acceptable treatment regimen for men with low testosterone, there
is significant uncertainty as to whether or not an additional approach such as
Androxal® would be approved by the FDA or accepted in the market. At this
time it is too early in the clinical development process to estimate when or
even if an NDA for Androxal® will be submitted for this indication.





Type
2 Diabetes





Our
findings from a retrospective review of the clinical data from our
200 patient non-pivotal Phase 2 clinical trial (ZA-003) showed that
Androxal® therapy resulted in a significant reduction in mean glucose levels in
men with glucose levels >104 mg/dL, an outcome not seen in the placebo or
AndroGel® arms of this study.  Based on these results, in April 2008, we
submitted a White Paper to the Division of Reproductive and Urology
Products. The data we believe demonstrated that in subjects with a serum
glucose of greater than or equal to 105mg/dL, there was a statistically
significant reduction in fasting serum glucose and a higher response rate to
treatment in the Androxal® group than the placebo or Androgel® groups. In
November 2008, after the FDA reviewed this paper we received guidance from them
suggesting that we open a new IND with the Division of Metabolic and Endocrine
Products, or DMEP, for the investigation of Androxal® as a potential treatment
for type 2 diabetes in mellitus. In December 2009, we submitted a new IND
to the DMEP for the investigation of Androxal® for such purpose. On February 1,
2010, we received confirmation from the DMEP that our new IND was accepted and,
as a result, we are in the process of initiating a Phase 2 trial, subject to
available funding.





Proellex®





Proellex®,
our product candidate for female reproductive health, is a new chemical entity
that acts as a selective blocker of the progesterone receptor and is being
developed for the treatment of symptoms associated with uterine fibroids and
endometriosis. There is currently no FDA-approved orally administered drug
treatment for the long-term treatment of uterine fibroids or
endometriosis.


16


As a
result of the previous liver toxicity exhibited by Proellex® in our
previous Phase 2 and 3 clinical trials to endometriosis and uterine fibroids,
respectively, all ongoing clinical trial activities have been put on partial
hold by the FDA. Pursuant to the terms of such partial clinical hold, the
FDA has allowed us to run a single study under the new partial clinical hold
status. The new low dose study is designed to explore both safety and signals of
efficacy in an escalating dose fashion. The new study will test 5 different
doses of Proellex® (1, 3, 6, 9 and 12 mg) with 1 mg being the first dose tested.
Each dose will be compared to placebo with weekly assessments of liver function
during both the placebo and drug period. Higher doses will not be studied until
we are confident that it is safe to proceed to the next dose and have reported
the safety findings to the FDA. Subjects will be dosed with the active drug for
10 weeks, which will allow for adequate time to determine the impact of a given
dose on trends in liver function. Each dose will be tested in 12 different
subjects and assessment of pharmacokinetic parameters will be obtained at start
of dosing and end of the dosing period to determine overall and maximum drug
exposure for a given dose. We will also monitor changes in menstrual bleeding
patterns and ovulation as well as changes in endometrial thickness. The FDA
requires that an independent Drug Safety Monitoring Board be established and
that the informed consent clearly state the liver toxicity previously
experienced with Proellex®.





In a 120
patient study of Proellex® as a treatment of uterine fibroids conducted in the
United States (roughly 40 subjects per arm) both a 12.5 and 25 mg dose of
Proellex® were compared to placebo. In this study both the 12.5 and 25 mg doses
achieved highly statistically significant results when compared to placebo when
menstrual bleeding was assessed (p< 0.0001). The two doses also achieved
highly statistically significant improvement in quality of life measures using
the Uterine Fibroid Symptom Quality of Life questionnaire developed and
validated by Georgetown University and used in the development of device like
treatments of uterine fibroids such as uterine artery embolization. There was no
statistical difference in efficacy measures between the two doses. Importantly
in the Phase II US trial a significant percentage of women stopped menstruating.
Over 80% of women on both the 12.5 and 25 mg doses exhibited no menses during
the three month trial whereas all women on placebo exhibited at least one
menses. We believe that the evaluation of ovulation and menstrual bleeding
patterns in the low dose trial will provide strong evidence for efficacy
warranting further development.





We plan
to proceed with the manufacture of the lower doses of Proellex® capsules and
intend to begin dosing subjects in the third quarter of 2010.  Though the
new study is more complex than that originally submitted to the FDA, we believe
we can complete the trial within approximately 18 months after first dose.
Presuming a safe and effective dose is identified and the FDA is in agreement,
we anticipate that we will be able to proceed with large efficacy trials for
both uterine fibroids and endometriosis, subject to available funds, or
outlicense of the product to a major pharmaceutical company.





Other
Products





We
continue limited out-licensing efforts for our phentolamine-based product
candidates, including VASOMAX®, which had previously been approved for marketing
in several countries in Latin America for the treatment of male erectile
dysfunction under the brand name, Z-Max. VASOMAX® is currently on partial
clinical hold in the U.S.





Business
Strategy





We plan
to focus our clinical program on the (i) new escalating dose study for Proellex®
permitted by the FDA, (ii) Phase 3 fertility trials for Androxal®, subject to
protocol review by the FDA, and (iii)  type 2 diabetes trial for
Androxal®.  Based on our currently available funds and outstanding
obligations, we will need to raise additional funds no later than some time
during the first quarter 2011 in order to continue development ourselves of
such product candidates.  We will continue to explore corporate partnering
opportunities for assistance in the clinical development funding and
commercialization of our products, as appropriate; however, there can be no
assurance that an acceptable corporate partnering opportunity will be
successfully completed.


17


Risks
Affecting Us





Our
business is subject to numerous risks as discussed more fully in “Item 1A. Risk
Factors" in our annual report on Form 10-K for the year ended December 31, 2009
and the section entitled “Risk Factors” in this quarterly report.  We are
investigating a variety of sources for raising capital.  We also may use
the Equity Distribution Agreement with Ladenburg for short term funding, to the
extent allowed, if appropriate. No assurance can be given that we will be
successful in obtaining financing on acceptable terms or at all.  We
anticipate that if we are able to secure financing, that such financing will
result in significant dilution of the ownership interests of our current
stockholders and may provide certain rights to the new investors senior to the
rights of our current stockholders, including but not limited to voting rights
and rights to proceeds in the event of a sale or liquidation of the
Company.  In the event that we are unable to obtain adequate financing to
meet our future needs, we will pursue other options, including but not limited
to, reductions of expenses, sale of the Company, sale or license of a portion or
all of our assets or the liquidation of the Company.





In
addition, we have not received regulatory approval for any of our product
candidates, have not successfully earned any significant commercial revenues
from any of our product candidates and may never launch either of our product
candidates.  If we do not successfully commercialize any of our product
candidates, we will be unable to achieve our business objectives.  In
addition, the reported results of our clinical trials completed to date may not
be indicative of results that will be achieved in later-stage clinical trials
involving larger and more diverse patient populations.  As of June 30,
2010, we had accumulated losses of $176.9 million, approximately $5.2 million in
cash and cash equivalents, and our accounts payable and accrued expenses were
approximately $1.5 million.  The amount of cash on hand is not sufficient
to fund each of the clinical trials currently planned for our two drug
candidates, Proellex® and Androxal®.  Based on these planned clinical
trials, we will need to raise additional capital no later than some time during
the first quarter of 2011.  The foregoing and other
matters raise substantial doubt about our ability to continue as a going concern
and we expect to continue to incur significant losses over the next several
years, and we may never become profitable.  Our financial statements do not
include any adjustments that might result from the outcome of these
uncertainties.





Corporate
Information





We were
organized as a Delaware corporation in August 1987.  Our principal
executive offices are located at 2408 Timberloch Place, Suite B-7, The
Woodlands, Texas, 77380, and our telephone number is (281) 719-3400. We maintain
an internet website at www.reprosrx.com.  The information on our website or
any other website is not incorporated by reference into this quarterly report
and does not constitute a part of this quarterly report. Our Annual Report on
Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K and
all amendments to such reports are made available free of charge through the
Investor Relations section of our website as soon as reasonably practicable
after they have been filed or furnished with the Securities and Exchange
Commission.





Recent
Developments





On June
15, 2010, we received notification from the Nasdaq Stock Market that we had not
regained compliance with Nasdaq Listing Rule 5550(a)(2) and, as a result, our
securities will be delisted from the Nasdaq Capital Market. Pursuant to Nasdaq
procedural rules, we appealed such determination and on July 22, 2010, an oral
hearing was held to determine whether our securities will continue to be listed
on the Nasdaq Capital Market.  At such hearing, we requested additional
time to regain compliance with Nasdaq Listing Rule 5550(a)(2) in order to allow
adequate time for the FDA to respond to our pending submissions for our
Androxal® drug candidate. No decision has been delivered yet regarding our
appeal.  There can be no assurance that our appeal will be successful to
remain on the Nasdaq Capital Market. At our annual stockholders' meeting
held on May 17, 2010, our stockholders approved a proposal to grant our board of
directors the authority to effect a reverse split of its common stock within one
year of such annual meeting on a basis not to exceed one share of common stock
for up to five shares of common stock outstanding, if necessary, in the sole
discretion of our board of directors, for purposes of maintaining its listing on
the Nasdaq Capital Market.


18


General




The
clinical development of pharmaceutical products is a complex undertaking, and
many products that begin the clinical development process do not obtain
regulatory approval.  The costs associated with our clinical trials may be
impacted by a number of internal and external factors, including the recent
clinical hold put on our clinical trials relating to Proellex® by the FDA, the
number and complexity of clinical trials necessary to obtain regulatory
approval, the number of eligible patients necessary to complete our clinical
trials and any difficulty in enrolling these patients, and the length of time to
complete our clinical trials.  Given the uncertainty of these potential
costs, we recognize that the total costs we will incur for the clinical
development of our product candidates may exceed our current estimates. 
Any failure by us to reestablish safe dosing in the clinical trials of
Proellex®, to obtain, or
any delay in obtaining, regulatory approvals could cause our research and
development expenditures to increase and, in turn, have a material adverse
effect on our results of operations.




As with
most biotechnology companies with drug candidates in development, the path to
marketing approval by the FDA, and comparable foreign agencies for each such
candidate, is long and uncertain. The regulatory process, both domestically and
abroad, is a multi-year process with no certainty when and if a drug candidate
will be approved for commercial use. The development path for a particular drug
candidate typically includes a variety of clinical trials. While we have a
general estimate of the timeframe for our clinical trials, the actual
anticipated completion dates for each of our drug candidates are uncertain. The
length of time for a clinical trial may vary substantially according to factors
relating to the particular clinical trial, such as the type and intended use of
the drug candidate, the clinical trial design and the ability to enroll suitable
patients.  A product may be put on clinical hold by the FDA in order for
them to assess the safety of the product, similar to that which has happened
with respect to Proellex®, with the result that previous estimates for clinical
trial completion and related NDA filings get missed.  In addition, it may
be necessary to undertake additional unanticipated clinical trials during the
development path, particularly with respect to the recent findings relating to
the increase in liver enzymes observed in our Proellex®clinical
trials.  Alternatively, many products that are placed on clinical hold by
the FDA may never be released from such hold.




We will
not receive any revenue from commercial sales unless we, or a potential partner,
complete the clinical development process, obtain regulatory approval, and
successfully commercialize one or more of our product candidates. 
Similarly, we do not have a reasonable basis to predict when or if material net
cash inflows from the commercialization and sale of our drug candidates will
occur.  To date, we have not commercialized any of our drug candidates to
any material extent and in fact may never do so.




Our
results of operations may vary significantly from quarter to quarter and year to
year, and depend on, among other factors, our ability to be successful in our
clinical trials, the regulatory approval process in the United States and other
foreign jurisdictions and the ability to complete new licenses and product
development agreements.  The timing of our revenues may not match the
timing of our associated product development expenses.  To date, research
and development expenses have usually exceeded revenue in any particular period
and/or fiscal year.




For a
discussion of the risks and uncertainties associated with the timing and costs
of completing the development and commercialization of the Company's drug
candidates, see the section titled "Item 1A.  Risk Factors" in this
quarterly report.




We have
experienced negative cash flows from operations since inception and have funded
our activities to date primarily from equity financings and corporate
collaborations.  Based on our planned clinical trials, we will need to
raise additional capital under our Equity Distribution Agreement with Ladenburg,
to the extent allowed, or otherwise no later than some time during the first
quarter of 2011 in order to continue our development activities. It is possible
that our current planned clinical trial activities will be more costly and take
longer than we anticipate; accordingly, there can be no assurance that
additional capital will not be necessary prior to the time anticipated. We
believe that we will secure sufficient capital to continue our ongoing and
planned clinical programs assuming that the results of our current or planned
clinical trials with Androxal® and Proellex® are
favorable.  If the results of these trials are unfavorable, there can be no
assurance that the Company will be successful in obtaining additional capital in
amounts sufficient to continue to fund its operations, which outcome would have
a material adverse effect on the Company. The uncertainties relating to the
foregoing matters raise substantial doubt about our ability to continue as a
going concern. Our financial statements do not include any adjustments that
might result from the outcome of these uncertainties.


19


We have 5
full time employees.  We utilize the services of contract research
organizations, contract manufacturers and various consultants to assist us in
performing clinical and regulatory services for the clinical development of our
products.  The current salary reduction program we adopted during 2009 and
which we revised in May 2010 to 25% of salary, other than the CEO who is at 50%,
could have a negative impact on our ability to retain our employees.  We
are substantially dependent on our various contract groups to adequately perform
the activities required to obtain regulatory approval of our
products.




We have
accumulated net operating losses through June 30, 2010 and the value of the tax
asset associated with these accumulated net operating losses can be
substantially diminished in value due to various tax regulations, including
change in control provisions in the tax code.   The Company’s public
offerings completed on February 5, 2007, October 2, 2008, September 11, 2009,
October 13, 2009, the sale and issuance of the ATM Shares and the issuance of
unregistered shares as part of the settlement agreements we have entered into
with certain of our creditors since October of 2009 may have created a change of
ownership for Federal Income tax purposes.  The Company has not undertaken
a study to determine if this has occurred.  A change in ownership for
Federal Income tax purposes may result in a limitation on the use of net
operating loss and tax credit carryforwards in future periods.




Losses
have resulted principally from costs incurred in conducting clinical trials for
our product candidates, in research and development activities related to
efforts to develop our products and from the associated administrative costs
required to support those efforts.  There can be no assurance that we will
be able to successfully complete the transition from a development stage company
to the successful introduction of commercially viable products.  Our
ability to achieve profitability will depend on, among other things,
successfully completing the clinical development of our products in a reasonable
time frame and at a reasonable cost, obtaining regulatory approvals,
establishing marketing, sales and manufacturing capabilities or collaborative
arrangements with others that possess such capabilities, our and, if applicable,
our partners' ability to realize value from our research and development
programs through the commercialization of those products and raise sufficient
funds to finance our activities.  There can be no assurance that we will be
able to achieve profitability or that profitability, if achieved, can be
sustained.




Critical
Accounting Policies and the Use of Estimates




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




Capitalized
Patent and Patent Application Costs




We
capitalize the cost associated with building our patent library for
Androxal®.  As of June 30, 2010, other assets consist of capitalized patent
and patent application costs in the amount of $995,000.  Patent costs,
which include legal and application costs related to the patent portfolio, are
being amortized over 20 years, or the lesser of the legal or the estimated
economic life of the patent.  Amortization of patent costs was $15,000 and
$13,000 for the three month periods ended June, 30, 2010 and 2009, respectively,
and was 29,000 and 25,000 for the six month periods ended June 30, 2010 and
2009, respectively.  The entire $995,000 in capitalized patents and patent
applications relates to Androxal®.


20


We review
capitalized patent and patent application costs for impairment whenever events
or changes in circumstances indicate that the carrying amount of an asset may
not be recoverable.  An impairment exists when estimated undiscounted cash
flows expected to result from the patent are less than its carrying
amount.  The impairment loss recognized represents the excess of the patent
cost as compared to its estimated fair value.  We believe that our
remaining capitalized patent and patent application costs are not impaired as of
June 30, 2010.




Should
the Company not continue development of Androxal® or should the Company not
continue as a going concern, capitalized patent and patent application costs may
not be recoverable, which would result in a charge to operating results in
future periods.




Accrued
Expenses




We
estimate accrued expenses as part of our process of preparing financial
statements. Examples of areas in which subjective judgments may be required
include costs associated with services provided by contract organizations for
clinical trials, preclinical development and manufacturing of clinical
materials.  We accrue for costs incurred as the services are being provided
by monitoring the status of the trials or services provided and the invoices
received from our external service providers.  In the case of clinical
trials, a portion of the estimated cost normally relates to the projected cost
to treat a patient in our trials, and we recognize this cost over the estimated
term of the study based on the number of patients enrolled in the trial on an
ongoing basis, beginning with patient enrollment.  As actual costs become
known to us, we adjust our accruals.  To date, our estimates have not
differed significantly from the actual costs incurred.  Due to the partial
clinical hold on Proellex®and our current
financial condition, other than the dose escalating study for Proellex®
permitted by the FDA, any further development of our product candidates is
dependent on our ability to raise additional capital.  As a result, we
anticipate that our estimated accruals for clinical services will be
significantly reduced in future periods.  However, subsequent changes in
estimates may result in a material change in our accruals, which could also
materially affect our balance sheet and results of operations.




R&D
Expense




Research
and development, or R&D, expenses include salaries and related employee
expenses, contracted regulatory affairs activities, insurance coverage for
clinical trials and prior product sales, contracted research and consulting
fees, facility costs, amortization of capitalized patent costs and internal
research and development supplies.  We expense research and development
costs in the period they are incurred.  These costs consist of direct and
indirect costs associated with specific projects as well as fees paid to various
entities that perform research on our behalf.




Share-Based
Compensation




We had
two stock-based compensation plans at June 30, 2010, the 2000 Non-Employee
Directors' Stock Option Plan, or 2000 Director Plan and the 2004 Stock Option
Plan, or 2004 Plan.  Accounting for stock based compensation generally
requires the recognition of the cost of employee services for share-based
compensation based on the grant date fair value of the equity or liability
instruments issued.  We use the Black-Scholes option pricing model to
estimate the fair value of our stock options.  Expected volatility is
determined using historical volatilities based on historical stock prices for a
period equal to the expected term.  The expected volatility assumption is
adjusted if future volatility is expected to vary from historical
experience.  The expected term of options represents the period of time
that options granted are expected to be outstanding and falls between the
options' vesting and contractual expiration dates.  The risk-free interest
rate is based on the yield at the date of grant of a zero-coupon U.S. Treasury
bond whose maturity period equals the option's expected term.


21


Income
Taxes




Our
losses from inception to date have resulted principally from costs incurred in
conducting clinical trials and in research and development activities related to
efforts to develop our products and from the associated administrative costs
required to support those efforts.  We have recorded a deferred tax asset
for our net operating losses (“NOL”); however, as the Company has incurred
losses since inception, and since there is no certainty of future profits, a
valuation allowance has been provided in full on our deferred tax assets in the
accompanying consolidated financial statements.  If the Company has an
opportunity to use this NOL to off-set tax liabilities in the future, the use of
this asset would be restricted based on Internal Revenue Service, state and
local NOL use guidelines.  The Company’s public offerings completed on
February 5, 2007, October 2, 2008, September 11, 2009, October 13, 2009, the
sale and issuance of the ATM Shares and the issuance of unregistered shares as
part of the settlement agreements we entered into with certain of our creditors
since October of 2009 may have created a change of ownership for Federal Income
tax purposes.  The Company has not undertaken a study to determine if this
has occurred.  A change in ownership for Federal Income tax purposes may
result in a limitation on the use of net operating loss and tax credit
carryforwards in future periods.




Results
of Operations




Comparison
of the three-month periods ended June 30, 2010 and 2009




Revenues
and Other Income




Total
revenues and other income increased to $53,000 for the three month period ended
June 30, 2010 as compared to $1,000 for the same period in the prior and
increased to $53,000 for the six month period ended June 30, 2010 as compared to
$4,000 for the same period in the prior year.  The increase for the three
month and six month periods ended June 30, 2010 was primarily due to an increase
of $53,000 in non-cash other income related to debt relief from settlements with
certain vendors in the second quarter of 2010.




Research
and Development Expenses




Research
and development, or R&D, expenses include contracted services relating to
our clinical product development activities which include preclinical studies,
clinical trials, regulatory affairs and bulk manufacturing scale-up activities
and bulk active ingredient purchases for preclinical and clinical trials
primarily relating to our two products in clinical development, which are
Androxal® and Proellex®.  Research and development expenses also include
internal operating expenses relating to our general research and development
activities.  R&D expenses decreased 90% or approximately $7.0 million
to $756,000 for the three month period ended June 30, 2010 as compared to $7.8
million for the same period in the prior year.  Our primary R&D
expenses for the three month periods ended June 30, 2010 and 2009 are shown in
the following table (in thousands):




Research and Development
                    
                    Three-months
                      ended
                      June 30, 2010
                    
                    
                    Three-months
                      ended
                      June 30, 2009
                    
                    
                    Variance
                    
                    
                    Change
                      (%)Operating
      and occupancy
                    
                    $
                    179
                    
                    
                    $
                    257
                    
                    
                    $
                    (78
                    )
                    
                    
                    (30
                    )%Payroll
      and benefits
                    
                    
                    142
                    
                    
                    
                    410
                    
                    
                    
                    (268
                    )
                    
                    
                    (65
                    )%Androxal®
      clinical development
                    
                    
                    —
                    
                    
                    
                    363
                    
                    
                    
                    (363
                    )
                    
                    
                    (100
                    )%Proellex®
      clinical development
                    
                    
                    435
                    
                    
                    
                    6,754
                    
                    
                    
                    (6,319
                    )
                    
                    
                    (94
                    )%Total
                    
                    $
                    756
                    
                    
                    
                    7,784
                    
                    
                    $
                    (7,028
                    )
                    
                    
                    (90
                    )%





R&D expenses decreased 91% or
approximately $12.3 million to $1.2 million for the six month period ended June
30, 2010 as compared to $13.5 million for the same period in the prior
year.  Our primary R&D expenses for the six month periods ended June
30, 2010 and 2009 are shown in the following table (in thousands):




Research and Development
                    
                    Six-months
                      ended
                      June 30, 2010
                    
                    
                    Six-months
                      ended
                      June 30, 2009
                    
                    
                    Variance
                    
                    
                    Change
                      (%)Operating
      and occupancy
                    
                    $
                    356
                    
                    
                    $
                    475
                    
                    
                    $
                    (119
                    )
                    
                    
                    (25
                    )%Payroll
      and benefits
                    
                    
                    262
                    
                    
                    
                    826
                    
                    
                    
                    (564
                    )
                    
                    
                    (68
                    )%Androxal®
      clinical development
                    
                    
                    14
                    
                    
                    
                    710
                    
                    
                    
                    (696
                    )
                    
                    
                    (98
                    )%Proellex®
      clinical development
                    
                    
                    582
                    
                    
                    
                    11,471
                    
                    
                    
                    (10,889
                    )
                    
                    
                    (95
                    )%Total
                    
                    $
                    1,214
                    
                    
                    
                    13,482
                    
                    
                    $
                    (12,268
                    )
                    
                    
                    (91
                    )%


22


The
decrease in R&D expenses is primarily due to the decreased clinical
development expenses related to Proellex® as a result of the discontinuation of
all clinical trials due to the FDA’s clinical hold on Proellex®.  R&D
expenses were further decreased by the decreased clinical development expenses
related to Androxal® due to the completion of a Phase 2b proof-of-concept
clinical trial in 2009.   Additionally, payroll and benefits expenses
decreased due to reduced headcount and the salary reduction program put in place
in August 2009 and revised in May 2010.




To date
through June 30, 2010 we have incurred approximately $14.4 million for the
development of Androxal® and approximately $55.8 million for the development of
Proellex®.  These accumulated costs exclude any internal operating
expenses.  We have received confirmation from the DMEP that our new IND was
accepted for the investigation of Androxal® as a potential treatment for type 2
diabetes.  As a result, we are in the process of initiating a Phase 2
trial, subject to available funding.  We are currently in the process of
selecting clinical sites for this type 2 diabetes study for Androxal® and
bidding CRO services to support the study.  In addition, we are developing
Androxal® as a treatment for men with low testosterone that want to maintain
their fertility.  The FDA has recently notified us that they will allow us
to conduct two Phase 3 trials for Androxal® in men with low testosterone who
want to maintain their fertility while being treated for low
testosterone subject to protocol review by the FDA.  At the time we
submit our Phase 3 protocols to the FDA, we will also submit a Phase 2 protocol
to determine a minimum effective dose.  We will begin the search for an
appropriate Clinical Research Organization (“CRO”) as well as commence screening
of clinical sites where such studies will be conducted.  Prior to the
clinical hold on further Proellex® development in August 2009, we were
developing Proellex® for three indications which included a pre-surgical
treatment of anemia associated with uterine fibroids, a chronic treatment of
symptoms associated with uterine fibroids and as a chronic treatment of symptoms
associated with endometriosis. In June 2010, the FDA notified us that the
full clinical hold on Proellex® had been revised to a partial clinical hold to
allow us to run a single study to explore both safety and signals of efficacy in
an escalating dose fashion.




General
and Administrative Expenses




General
and administrative expenses, or G&A, decreased 48% to approximately $570,000
for the three month period ended June 30, 2010 as compared to $1.1 million for
the same period in the prior year.  Our primary G&A expenses for the
three month period ended June 30, 2010 and 2009 are shown in the following table
(in thousands):




GeneralandAdministrative
                  
                  Three-months
                    ended
                    June30,2010
                  
                  
                  Three-months
                    ended
                    June30,2009
                  
                  
                  Variance
                  
                  
                  Change
                    (%)Payroll
      and benefits
                  
                  $
                  153
                  
                  
                  $
                  620
                  
                  
                  $
                  (467
                  )
                  
                  
                  (75
                  )%Operating
      and occupancy
                  
                  
                  417
                  
                  
                  
                  485
                  
                  
                  
                  (68
                  )
                  
                  
                  (14
                  )%Total
                  
                  $
                  570
                  
                  
                  $
                  1,105
                  
                  
                  $
                  (535
                  )
                  
                  
                  (48
                  )%




G&A
payroll and benefits expenses include salaries, bonuses, relocation expense,
severance costs, non-cash stock option compensation expense and fringe
benefits.  Included in payroll and benefits expense is a charge for
non-cash stock option expense of $77,000 for the three month period ended June
30, 2010 as compared to $253,000 for the same period in the prior year. 
Additionally, salaries for the three month period ended June 30, 2010 were
$66,000 as compared to $325,000 for the same period in the prior year.  The
decrease in salaries is primarily due to a decrease in headcount and the salary
reduction program put in place in August 2009 and revised in May
2010.


23


G&A
operating and occupancy expenses, which include expenses to operate as a public
company, decreased 14% to $417,000 for the three month period ended June 30,
2010 as compared to $485,000 for the same period in the prior year.  The
decrease is primarily due to a decrease in travel and consulting
expenses.




G&Aexpenses
decreased 43% to approximately $1.2 million for the six month period ended June
30, 2010 as compared to $2.2 million for the same period in the prior
year.  Our primary G&A expenses for the six month period ended June 30,
2010 and 2009 are shown in the following table (in thousands):




General and Administrative
                      
                      Six-months
                        ended
                        June 30, 2010
                      
                      
                      Six-months
                        ended
                        June 30, 2009
                      
                      
                      Variance
                      
                      
                      Change
                        (%)Payroll
      and benefits
                      
                      $
                      305
                      
                      
                      $
                      1,094
                      
                      
                      $
                      (789
                      )
                      
                      
                      (72
                      )%Operating
      and occupancy
                      
                      
                      934
                      
                      
                      
                      1,071
                      
                      
                      
                      (137
                      )
                      
                      
                      (13
                      )%Total
                      
                      $
                      1,239
                      
                      
                      $
                      2,165
                      
                      
                      $
                      (926
                      )
                      
                      
                      (43
                      )%




Included
in payroll and benefits expense is a charge for non-cash stock option expense of
$151,000 for the six month period ended June 30, 2010 as compared to $445,000
for the same period in the prior year.  Additionally, salaries for the six
month period ended June 30, 2010 were $129,000 as compared to $563,000 for the
same period in the prior year.  The decrease in salaries is primarily due
to a decrease in headcount and the salary reduction program put in place in
August 2009 and revised in May 2010.




G&A
operating and occupancy expenses decreased 13% to $934,000 for the six month
period ended June 30, 2010 as compared to $1.1 million for the same period in
the prior year.  The decrease is primarily due to a decrease in travel and
consulting expenses, partially offset by an increase in legal
expenses.




Off-Balance
Sheet Arrangements




As of
June 30, 2010, the only off-balance sheet arrangement we have is the operating
lease relating to our facility.




Liquidity
and Capital Resources




Since our
inception, we have financed our operations primarily with proceeds from private
placements and public offerings of equity securities and with funds received
under collaborative agreements.




On
February 12, 2010, we entered into an Equity Distribution Agreement (the “Equity
Distribution Agreement”) with Ladenburg Thalmann & Co. Inc. (“Ladenburg”),
pursuant to which we may issue and sell from time to time through Ladenburg, as
sales agent and/or principal, shares of our common stock having an aggregate
offering price of up to $10 million (the “ATM Shares”).  Ladenburg is
not required to sell on our behalf any specific number or dollar amount of the
ATM Shares, but Ladenburg, upon acceptance of written instructions from us,
agreed to use its commercially reasonable efforts consistent with its customary
trading and sales practices, to sell the ATM Shares up to the amount specified,
and otherwise in accordance with the terms of a placement notice delivered to
Ladenburg. We have no obligation to sell any ATM Shares under the Equity
Distribution Agreement, and may at any time suspend sales under the Equity
Distribution Agreement, provided that such suspension shall not affect either
party’s obligations with respect to the ATM Shares sold prior to the receipt of
notice of such suspension.  Ladenburg receives a commission of 4% of the
gross sales price of all ATM Shares sold through it under the Equity
Distribution Agreement. The ATM Shares are issued pursuant to our shelf
registration statement on Form S-3, as amended (File No. 333-163648). 
Between April 1, 2010 and June 30, 2010, we have sold an aggregate of 8,162,214
ATM Shares at a weighted average share price of $0.73,for proceeds of approximately $5.7 million, net of expenses. 
Cumulative through June 30, 2010, we have sold 8,685,633 ATM Shares at a
weighted average share price of $0.73,for proceeds of approximately $6.0 million, net of expenses. 
Between July 1, 2010 and August 4, 2010, we have sold an aggregate of 1,108,657
ATM Shares at a weighted average share price of $0.38,for proceeds of approximately $401,000, net of expenses.  Pursuant
to General Instruction I.B.6. of Form S-3, we may not sell more than one-third
of the aggregate market value of our common stock held by non-affiliates during
a period of 12 calendar months immediately prior to, and including, the date of
such sale of such common stock.  Due to this limitation, we announced on
August 3, 2010 that we have suspended this ATM offering of Company
securities.


24


Our
primary use of cash to date has been in operating activities to fund research
and development, including preclinical studies and clinical trials, and general
and administrative expenses.  We had cash and cash equivalents of
approximately $5.2 million as of June 30, 2010 as compared to $1.9 million as of
December 31, 2009.




Net cash
of approximately $2.6 million and $15.2 million was used in operating activities
during the six month period ended June 30, 2010 and 2009, respectively. 
The major use of cash for operating activities through the second quarter of
2010 was to fund our operations and pay down our accounts payable and accrued
expenses.  Cash used in investing activities through the second quarter of
2010 was approximately $142,000 primarily for capitalized patent and patent
application costs for Androxal®.  Cash provided by financing activities
through the second quarter of 2010 was approximately $6.0 million due to the
8,685,633 ATM Shares sold at a weighted average share price of
$0.73.




We have
experienced negative cash flows from operations since inception.  We will
require substantial funds for research and development, including preclinical
studies and clinical trials of our product candidates, and to commence sales and
marketing efforts if appropriate, if the FDA or other regulatory approvals are
obtained.  Based on our current planned clinical activities, we will need
to raise additional capital no later than some time during the first quarter of
2011 under our Equity Distribution Agreement with Ladenburg, to the extent
allowed, or seek additional funding in the public or private capital markets
through corporate collaborations or other financing vehicles in order to
continue our development activities. There can be no assurance that any such
funding will be available to us on favorable terms or at all. If we are
successful in obtaining additional financing, the terms of such financing may
have the effect of diluting or adversely affecting the holdings or the rights of
holders of our common stock. It is possible that our planned clinical trial
activities will be more costly and take longer than we anticipate; accordingly,
there can be no assurance that additional capital will not be necessary prior to
the time anticipated.  Our capital requirements will depend on many
factors, which are discussed in detail in “Item 1A. Risk Factors” to Part I of
Form 10-K for the fiscal year ended December 31, 2009. The uncertainties
relating to the foregoing matters raise substantial doubt about our ability to
continue as a going concern.




Our
results of operations may vary significantly from quarter to quarter and year to
year, and depend on, among other factors, our ability to raise additional
capital on acceptable terms or at all, on our ability to be successful in our
clinical trials, the regulatory approval process in the United States and other
foreign jurisdictions and the ability to complete new licenses and product
development agreements.  The timing of our revenues may not match the
timing of our associated product development expenses.  To date, research
and development expenses have usually exceeded revenue in any particular period
and/or fiscal year.




Item 3.
            Quantitative
      and Qualitative Disclosures About Market
Risk




Interest Rate Risk.We had
cash and cash equivalents of approximately $5.2 million at June 30, 2010 which
is held in an account backed by U.S. government securities.  Although this
cash account is subject to fluctuations in interest rates and market conditions,
no significant gain or loss on this account is expected to be recognized in
earnings.  We do not invest in derivative securities.




Item 4.
            Controls
      and Procedures




Disclosure
Controls and Procedures




Based on
their evaluation as of the end of the period covered by this Quarterly Report on
Form 10-Q, our Chief Executive Officer and Chief Accounting Officer have
concluded that our disclosure controls and procedures (as defined in Rule
13a-15(e)) under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), were effective as of June 30, 2010.


25


Changes
in Internal Control over Financial Reporting




In
connection with the evaluation described above, we identified no change in
internal control over financial reporting that occurred during the quarter ended
June 30, 2010 that has materially affected, or is reasonably likely to
materially affect, our internal control over financial
reporting.


26


PART
II - OTHER INFORMATION





Item 1.
            Legal
      Proceedings




On August
7, 2009, R.M. Berry filed a putative class action lawsuit naming the Company,
Joseph Podolski, Paul Lammers, and Louis Ploth, Jr. as defendants.  The
lawsuit is pending in the United States District Court for the Southern District
of Texas, Houston Division.  The lawsuit, styled R.M. Berry, on Behalf of
Himself and all Others Similarly Situated v. Repros Therapeutics, Inc., Joseph
Podolski, Paul Lammers, and Louis Ploth, Jr., alleges that the defendants made
certain misleading statements related to the Company’s Proellex® drug. 
Among other claims, the lawsuit contends that the defendants misrepresented the
side effects of the drug related to liver function, and the risk that these side
effects could cause a suspension of clinical trials of Proellex®. The lawsuit
seeks to establish a class of shareholders allegedly harmed by the misleading
statements, and asserts causes of action under the Securities Exchange Act of
1934.  On August 14, 2009, a lawsuit making similar allegations and naming
the same defendants was also filed in the United States District Court for the
Southern District of Texas.  This suit is styled Josephine Medina,
Individually and On Behalf of all Others Similarly Situated v. Repros
Therapeutics, Inc., Joseph Podolski, Paul Lammers, and Louis Ploth, Jr.  On
September 25, 2009, a lawsuit also making allegations similar to those in the
Berry action, and naming the same defendants, was filed in the United States
District Court for the Southern District of Texas.  That lawsuit is styled
Shane Simpson, Paul Frank and Clayton Scobie, on Behalf of Themselves and all
Others Similarly Situated v. Repros Therapeutics, Inc., Joseph Podolski, Paul
Lammers, and Louis Ploth, Jr.    The lawsuits have now been
consolidated, and lead plaintiffs appointed.  On January 27, 2010, the lead
plaintiffs filed a Consolidated Class Action Complaint styled In re Repros
Therapeutics, Inc. Securities Litigation, Civil Action No. 09 Civ. 2530
(VDG).  The lawsuit names Repros Therapeutics, Inc., Joseph Podolski, Paul
Lammers, and Louis Ploth, Jr. as defendants.  The allegations in the
Consolidated Class Action Complaint are substantially the same as those
contained in the prior complaints, and focus on the claim that the defendants
deliberately withheld information concerning the negative side-effects of
Proellex® related to liver function.  Plaintiffs seek to establish a class
action for all persons who “purchased or otherwise acquired Repros common stock
between July 1, 2009, and August 2, 2009.”  No discovery has yet occurred
in the matter.  Defendants filed a motion to dismiss the Consolidated Class
Action Complaint on March 15, 2010.  Briefing has been completed on that
motion, but the court has not yet ruled on it.    An estimate of the
possible loss or range of losses in connection with the lawsuits cannot be made
at this time.




On March
1, 2010, we were served with a lawsuit where we were named as a co-defendant
along with one of our clinical regulatory service providers (“CRO”) relating to
the Proellex® clinical trial study.  The lawsuit was filed in the State of
Tennessee, 30th Judicial District Chancery Court at Memphis by an investigator
and claims that the CRO did not pay it amounts owing to it relating to the
Proellex® study.  We did not engage the investigator and under our
agreement with the CRO, we believe the CRO is responsible for any such
costs or damages regarding such lawsuit.  Pursuant to a Settlement
Agreement and Mutual Release entered into in October 2009, such CRO, on behalf
of itself and its agents, released us from all claims which could be asserted by
them against us.  We believe such release covers the claims set forth in
this lawsuit.  The CRO failed to respond to the lawsuit, and a default
judgment was entered against it in the amount of $172,901.29.  We intend to
vigorously defend any and all claims asserted by the investigator.  An
estimate of the possible costs or expenses to defend ourselves in this matter or
risk of exposure under the litigation cannot be made at this
time.


27


Therapeutic
uses of our Androxal® product candidate are covered in the United States by four
issued U.S. patents and four pending patent applications.  Foreign coverage
of therapeutic uses of our Androxal® product candidate includes 37 issued
foreign patents and 78 foreign pending patent applications.  The issued
patents and pending applications relate to methods for treating certain
conditions including the treatment of testosterone deficiency in men, the
treatment of metabolic syndrome and conditions associated therewith, and the
treatment of infertility in hypogonadal men.  Androxal® (the trans-isomer
of clomiphene) is purified from clomiphene citrate.  A third party
individual holds two issued patents related to the use of an anti-estrogen such
as clomiphene citrate and others for use in the treatment of androgen deficiency
and disorders related thereto.  In our prior filings with the SEC, we have
described our request to the PTO for re-examination of one of these patents
based on prior art.  The third party amended the claims in the
re-examination proceedings, which led the PTO to determine that the amended
claims are patentable in view of those publications under consideration and a
re-examination certificate was issued.  However, we believe that the
amended claims are invalid based on additional prior art publications, and our
request for re-examination by the PTO in light of a number of these additional
publications and other publications cited by the PTO, was granted. All of the
claims have been finally rejected in the re-examination and the patent holder
has appealed the rejections to the PTO Board of Patent Appeals and Interferences
(“the Board”).  A decision has been rendered by the Board affirming the
rejection of all of the claims.  The patent holder has filed a request for
rehearing.  If the Board maintains the rejections on rehearing or the
request for rehearing is denied, the patent holder will have the opportunity to
appeal the rejections to the United States Court of Appeals for the Federal
Circuit.  We also believe that the second of these two patents is invalid
in view of published prior art not considered by the PTO.  Nevertheless,
there is no assurance that either patent will ultimately be found invalid over
the prior art. If such patents are not invalidated by the PTO we may be required
to obtain a license from the holder of such patents in order to develop
Androxal® further or attempts may be made to undertake further legal action to
invalidate such patents.  If such licenses were not available on acceptable
terms, or at all, we may not be able to successfully commercialize or
out-license Androxal®.




Item 1A.
            Risk
      Factors




There
were no material changes from the risk factors previously disclosed in the
registrant’s Form 10-K for the fiscal year ended December 31, 2009 in response
to “Item 1A. Risk Factors” to Part I of Form 10-K.




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




See the
first paragraph in Note 6 to Item 1 to Part I of this quarterly
report.




Item
      3.
            Defaults
      Upon Senior Securities.




None




Item
      4.
            (Removed
      and Reserved).




Item
      5.
            Other
      Information




None




Item
      6.
            Exhibits




3.1(a)
                  
                  Restated
      Certificate of Incorporation (incorporated by reference to Exhibit 3.3 to
      the Company's Registration Statement on Form SB-2 (No. 33-57728-FW), as
      amended ("Registration Statement")).3.1(b)
                  
                  Certificate
      of Amendment to the Company's Restated Certificate of Incorporation, dated
      as of May 2, 2006 (incorporated by reference to Exhibit 3.1 to the
      Company's Current Report on Form 8-K as filed with the Securities and
      Exchange Commission (the "Commission") on May 2, 2006).3.1(c)
                  
                  Certificate
      of Amendment to the Company's Restated Certificate of Incorporation, as
      amended, dated as of December 16, 2008 (incorporated by reference to
      Exhibit 3.1(d) to the Company's Current Report on Form 8-K as filed with
      the Commission on December 23, 2008).3.1(d)
                  
                  Certificate
      of Designation of Series One Junior Participating Preferred Stock dated
      September 2, 1999 (incorporated by reference to Exhibit A to Exhibit 4.1
      to the Company's Registration Statement on Form 8-A as filed with the
      Commission on September 3, 1999).3.2
                  
                  Restated
      Bylaws of the Company (incorporated by reference to Exhibit 3.4 to the
      Registration Statement).31.1*
                  
                  Certification
      pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of
      the Sarbanes-Oxley Act of 2002 (Chief Executive
  Officer).31.2*
                  
                  Certification
      pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of
      the Sarbanes-Oxley Act of 2002 (Chief Accounting
  Officer).32.1*
                  
                  Certification
      furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
      Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Executive
      Officer).32.2*
                  
                  Certification
      furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
      Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Accounting
      Officer).*
                  
                  Filed
      herewith.


28


SIGNATURES





In
accordance with the requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.




REPROS
      THERAPEUTICS INC.Date:  August
      9, 2010By:
              /s/ Joseph S. PodolskiJoseph
      S. PodolskiChief
      Executive Officer and Director(Principal
      Executive Officer)Date:  August
      9, 2010By:
              /s/ Katherine A.
AndersonKatherine
      A. AndersonChief
      Accounting Officer(Principal
      Financial Officer)


29