----

----

| (Mark      One)                                                                                                                |                                                                                                                   |
|--------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------|
| x                                                                                                                              | ANNUAL      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES      EXCHANGE ACT OF 1934     |
| For      the fiscal year ended December 31, 2008                                                                          |
| or                                                                                                                             |
| o                                                                                                                              | TRANSITION      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES      EXCHANGE ACT OF 1934 |
| For      the transition period      from              to |

| Delaware(State      or Other Jurisdiction ofIncorporation      or Organization)                                    | 83-0221517(I.R.S.      EmployerIdentification      No.) |
|-------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------|
| 2600 Stemmons Freeway,      Suite 176, Dallas, TX(Address      of registrant’s principal executive offices)  | 75207(Zip      Code)                                    |
| Registrant’s      telephone number, including area code: (214) 905-5100                                 |
| Securities      registered pursuant to Section 12(b) of the      Act:  None                              |

| Title      of Each Class   |   | Name      of Each Exchange on Which Registered   |
|--------------------------------------|--------|------------------------------------------------------------|
| Common      Stock, $0.01 par value   |   | None                                                       |

| Large      accelerated filer o | Accelerated      filer o | Non-accelerated      filer o(Do      not check if a smaller reporting company) | Smaller      reporting company x |
|-------------------------------------|-------------------------------|-------------------------------------------------------------------------------------|---------------------------------------|

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----

|            |   | TABLE      OF CONTENTS                                                                         |             |
|-----------------|--------|------------------------------------------------------------------------------------------------|------------------|
|            |   |                                                                                           |             |
|            |   |                                                                                           |   Page |
| Part I          |   |                                                                                           |             |
| Item      1.    |   | Business                                                                                       | 2                |
| Item      1A.   |   | Risk      Factors                                                                              |             |
| Item      2.    |   | Properties                                                                                     | 30               |
| Item      3.    |   | Legal      Proceedings                                                                         | 30               |
| Item      4.    |   | Submission      of Matters to a Vote of Security Holders                                       | 30               |
|            |   |                                                                                           |             |
| Part II         |   |                                                                                           |             |
| Item      5.    |   | Market      for Registrant’s Common Equity, Related Stockholder Matters      and         |             |
|            |   | Issuer      Purchases of Equity Securities                                                     | 32               |
| Item      7.    |   | Management’s      Discussion and Analysis of Financial Condition and                     |             |
|            |   | Results      of Operations                                                                     | 35               |
| Item      8.    |   | Financial      Statements and Supplementary Data                                               | 45               |
| Item      9.    |   | Changes      In and Disagreements With Accountants on Accounting and Financial      Disclosure | 45               |
| Item      9A(T) |   | Controls      and Procedures                                                                   | 45               |
| Item      9B.   |   | Other      Information                                                                         | 46               |
|            |   |                                                                                           |             |
| Part III        |   |                                                                                           |             |
| Item      10.   |   | Directors,      Executive Officers and Corporate Governance                                    | 46               |
| Item      11.   |   | Executive      Compensation                                                                    | 47               |
| Item      12.   |   | Security      Ownership of Certain Beneficial Owners and Management and      Related           |             |
|            |   | Stockholder      Matters                                                                       | 47               |
| Item      13.   |   | Certain      Relationships and Related Transactions and Director      Independence             | 47               |
| Item      14.   |   | Principal      Accountant Fees and Services                                                    | 47               |
| Item      15.   |   | Exhibits                                                                                       | 48               |
|            |   |                                                                                           |             |
| Signatures      |   |                                                                                           | 51               |
|            |   |                                                                                           |             |

----

| ·   | MuGard™      is our approved product for the management of oral mucositis, a frequent      side-effect of cancer therapy for which there is no established treatment.      The market for mucositis treatment is estimated to be in excess of $1      billion world-wide. MuGard, a proprietary nanopolymer formulation, has      received marketing allowance in the U.S. from the Food & Drug      Administration (“FDA”) and we expect approval and sales by our licensee in      various EU countries in the first half of2009. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Our      lead development candidate for the treatment of cancer is ProLindac™, a      nanopolymer DACH-platinum prodrug. ProLindac just completed a Phase 2      clinical trial in the EU in patients with ovarian cancer patients. The      clinical study had positive safety and efficacy results. We are currently      planning a number of combination trials, looking at combining ProLindac      with other cancer agents such as taxol and gemcitabine, in solid tumor      indications including colorectal and ovarian. The DACH-platinum      incorporated in ProLindac is the same active moiety as that in oxaliplatin      (Eloxatin; Sanofi-Aventis), which has sales in excess of $2.0      billion. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Thiarabine,      or 4-thio Ara-C, is a next generation nucleoside analog licensed from      Southern Research Institute. Previously named SR9025 and OSI-7836, the      compound has been in two Phase 1/2 solid tumor human clinical trials and      was shown to have anti-tumor activity. We are working with leukemia and      lymphoma specialists at MD Anderson Cancer Center in Houston and intend to      initiate additional Phase 2 clinical trials in adult AML, ALL and other      indications. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | Pexiganan      is a novel topical broad-spectrum antibiotic being developed for the      treatment of mild-to-moderate diabetic foot ulcer infections. Pexiganan      has been through two Phase 3 clinical trials, and data from these trials      were presented last December 15, 2008 in the journal Clinical Infectious      Diseases. We are actively seeking co-development partners for      Pexiganan. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | EcoNail      is a proprietary lacquer formulation of the anti-fungal econazole and our      Soft Enhancement of Percutaneous Absorption (SEPA) technology for the      treatment of onychomycosis. EcoNail recently completed a Phase 2 clinical      trial and we are currently evaluating its development and partnering      strategy. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Phenylbutyrate      (PB), an HDAC inhibitor and a differentiating agent, has been investigated      in multiple Phase 1/2 NIH and clinician-sponsored trials, and is currently      approved by the FDA for the treatment of hyperuremia, a pediatric orphan      indication. For its use in cancer, phenylbutyrate is a Phase 2 clinical      candidate. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Cobalamin™      is our proprietary preclinical nanopolymer oral drug delivery technology      based on the natural vitamin B12 oral uptake mechanism. We are currently      developing a product for the oral delivery of insulin, and are conducting      sponsored development of a product for oral delivery of human growth      hormone. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Angiolix®      is our preclinical humanized monoclonal antibody which acts as an      anti-angiogenesis factor and is targeted to lactadherin, a glycoprotein      secreted by cancer cells, notably breast, ovarian and colorectal      cancers. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Prodrax®      is our non-toxic prodrug which is activated in the hypoxic zones of solid      tumors to kill cancer cells. This product is in preclinical      development. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Cobalamin-mediated      cancer targeted delivery is a preclinical technology which makes use of      the fact that cell surface receptors for vitamins such as B12 are often      overexpressed by cancer cells. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Compound                                                                           |   | Originator                                  |   |  Technology                        |   | Indication                                |   | ClinicalStage (1)                                         |
|------------------------------------------------------------------------------------|--------|---------------------------------------------|--------|-----------------------------------------|--------|-------------------------------------------|--------|-----------------------------------------------------------|
|                                                                               |   |                                        |   |                                    |   |                                      |   |                                                      |
| MuGard™                                                                      |   | Access                                      |   | Mucoadhesiveliquid                      |   | Mucositis                                 |   |  (510k)      Marketing clearance      received  |
| ProLindacTM      (Polymer    Platinate,      AP5346) (2)  |   | Access      /Univ      ofLondon             |   | Syntheticpolymer                        |   | Cancer                                    |   | Phase      2                                              |
| Thiarabine      (4-thio Ara-C)                                                     |   |  SouthernResearchInstitute        |   | Smallmolecule                           |   | Cancer                                    |   | Phase      1/2                                            |
| Pexiganan                                                                          |   |  GenaeraCorp.                     |   |  Smallpeptide                 |   |  Diabetic      foot ulcer infections |   | Phase      3                                              |
|  EcoNail                                                                 |   | Access                                      |   | SEPA                                    |   | Onychomycosis                             |   | Phase      2                                              |
| Phenylbutyrate      (PB)                                                      |   |  NationalInstituteof      Health  |   | Smallmolecule                           |   | Cancer                                    |   | Phase      2                                              |
|  Oral      Insulin                                                       |   | Access                                      |   | Cobalamin                               |   | Diabetes                                  |   | Pre-clinical                                              |
|  Oral      Delivery System                                               |   |  Access                                |   |  Cobalamin                         |   |  Various                             |   | Pre-clinical                                              |
|  Angiolix®                                                          |   |  Immunodex,Inc.                   |   |  Humanizedmonoclonalantibody  |   |  Cancer                              |   | Pre-clinical                                              |
|  Prodrax®                                                           |   |  Univ      ofLondon               |   |  Smallmolecule                     |   |  Cancer                              |   | Pre-clinical                                              |
|  Cobalamin-Targeted      Therapeutics                                         |   |  Access                                |   |  Cobalamin                         |   |  Anti-tumor                          |   |  Pre-clinical                                        |

----

----

----

----

----

| Sodium      Phenylbutyrate |
|----------------------------|

----

----

| ·   | Synthetic      Polymer Targeted Drug DeliveryTechnology; |
|--------------------|----------------------------------------------------------|

| ·   | Cobalamin™-Mediated      Oral Delivery Technology; |
|--------------------|----------------------------------------------------------|

| ·   | Cobalamin™-Mediated      Targeted Delivery Technology; |
|--------------------|--------------------------------------------------------------|

| ·   | Angiolix®;      and |
|--------------------|--------------------------|

| ·   | Prodrax®. |
|--------------------|----------------|

| ·   | Pexiganan;      and |
|--------------------|---------------------|

| ·   | EcoNail. |
|--------------------|----------|

----

----

|        •  | passive      tumor targeting involves transporting anti-cancer agents through the      bloodstream to tumor cells using a “carrier” molecule. Many different      carrier molecules, which can take a variety of forms (micelles,      nanoparticles, liposomes and polymers), are being investigated as each      provides advantages such as specificity and protection of the anti-cancer      drug from degradation due to their structure, size (molecular weights) and      particular interactions with tumor cells. Our polymer platinate program is      a passive tumor targetingtechnology. |
|---------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|        •  | active      tumor targeting involves attaching an additional fragment to the      anticancer drug and the carrier molecule to create a new “targeted” agent      that will actively seek a complementary surface receptor to which it binds      (preferentially located on the exterior of the tumor cells). The theory is      that the targeting of the anti-cancer agent through active means to the      affected cells should allow more of the anti-cancer drug to enter the      tumor cell, thus amplifying the response to the treatment and reducing the      toxic effect on bystander, normaltissue. |
|---------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| ·   | nail      discoloration; |
|--------------------|--------------------------|

| ·   | nail      thickening; |
|--------------------|-----------------------|

| ·   | cracking      and fissuring of the nail plate;and |
|--------------------|---------------------------------------------------|

| ·   | in      severe cases, inflammation, pain and secondary infection of the nail bed      and adjacent skin. |
|--------------------|----------------------------------------------------------------------------------------------------------|

----

----

----

| -   | the      use of vitamin B12 to target the transcobalamin II receptor which is      upregulated in numerous diseases including cancer, rheumatoid arthritis,      certain neurological and autoimmune disorders with two U.S. patents and      three U.S. and four European patent applications;  and |
|---------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| -   | oral      delivery of a wide variety of molecules which cannot otherwise be orally      administered, utilizing the active transport mechanism which transports      vitamin B12 into the systemic circulation with six U.S. patents and two      European patents and one U.S. and one European patent      application. |
|---------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | Mucoadhesive      technology in 2021, |
|--------------------|---------------------------------------|

| ·   | ProLindac™      in 2021, |
|--------------------|--------------------------------|

| ·   | Thiarabine      in 2018, |
|--------------------|--------------------------|

| ·   | Pexiganan      in 2016, |
|--------------------|-------------------------|

| ·   | EcoNail      in 2019, |
|--------------------|-----------------------|

| ·   | Phenylbutyrate      between 2011 and 2016, |
|--------------------|--------------------------------------------|

| ·   | Angiolix®      in 2015, |
|--------------------|------------------------------|

| ·   | Prodrax      in 2023, |
|--------------------|-----------------------|

| ·   | Cobalamin      mediated technology between 2009 and2019 |
|--------------------|---------------------------------------------------------|

----

| •           Cisplatin, marketed by Bristol-Myers Squibb, the originator of the drug,      and several generic manufacturers; |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

| •           Carboplatin, marketed by Bristol-Myers Squibb in the US;    and |
|------------------------------------------------------------------------------------------------------------|

| •           Oxaliplatin, marketed exclusively by  Sanofi-Aventis. |
|--------------------------------------------------------------------------------------------------|

----

| •  | American      Pharmaceutical Partners, Cell Therapeutics, Daiichi, and Enzon are      developing alternate drugs in combination with polymers and other drug      delivery systems. |
|---------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|   | • |   | unanticipated      issues in integrating information, communications and other      systems; |
|--------|---------|--------|----------------------------------------------------------------------------------------------|

|   | • |   | consolidating      corporate and administrative infrastructures;  and |
|--------|---------|--------|-----------------------------------------------------------------------|

|   | • |   | the      diversion of management’s attention from ongoing business      concerns. |
|--------|---------|--------|-----------------------------------------------------------------------------------------|

| ·   | some      or all of its drug candidates may be found to be unsafe or ineffective or      otherwise fail to meet applicable regulatory standards or receive      necessary regulatory clearances; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | its      drug candidates, if safe and effective, may be too difficult to develop      into commercially viable drugs; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------|

| ·   | it      may be difficult to manufacture or market its drug candidates on a large      scale; |
|--------------------|----------------------------------------------------------------------------------------------|

| ·   | proprietary      rights of third parties may preclude it from marketing its drug      candidates; and |
|--------------------|-------------------------------------------------------------------------------------------------------|

| ·   | third      parties may market superior or equivalentdrugs. |
|--------------------|------------------------------------------------------------|

----

----

|        ● |   | A      mucoadhesive liquid technology product, MuGard™, has received marketing      approval by the FDA. |
|---------------------|--------|----------------------------------------------------------------------------------------------------------------|
|        ● |   | ProLindac™      is in the planning stage for a Phase 2 trial in China, Korea and      Europe.            |
|        ● |   | ProLindac™      has been approved for an additional Phase 1 trial in the US by the      FDA.             |
|        ● |   | Thiarabine      is in the planning stage for a Phase 2 trial in the United      States.                        |
|        ● |   | Pexiganan      clinical work will proceed with a commercial partner.                                           |
|        ● |   | EcoNail      will proceed with a commercial partner.                                                           |
|        ● |   | Phenylbutyrate      is in planning stage for a Phase 2 trial in the United    States.                          |
|        ● |   | Cobalamin™      mediated delivery technology is currently in the pre-clinical      phase.                |
|        ● |   | Angiolix®      is currently in the pre-clinical phase.                                                    |
|        ● |   | Prodrax®      is currently in the pre-clinical phase.                                                     |
|        ● |   | Access      also has other products in the preclinical  phase.                                                 |

----

|   | •           Cisplatin, marketed by Bristol-Myers Squibb, the originator of the drug,      and several generic manufacturers; |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | •           Carboplatin, marketed by Bristol-Myers Squibb in the US;    and |
|--------|------------------------------------------------------------------------------------------------------------|

|   | •           Oxaliplatin, marketed exclusively by  Sanofi-Aventis. |
|--------|--------------------------------------------------------------------------------------------------|

----

|   | •     American      Pharmaceutical Partners, Cell Therapeutics, Daiichi, and Enzon are      developing alternate drugs in combination with polymers and other drug      delivery systems. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | A      license for Thiarabine was acquired from Southern Research Institute of      Birmingham, Alabama. |
|--------------------|----------------------------------------------------------------------------------------------------------|

| ·   | A      license for Sodium Phenylbutyrate was acquired from the NIH. Thirteen key      use patents have been issued to the NIH and licensed by  us. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Exclusive      Patent and Know-how Sub-license Agreement between Somanta and      Immunodex, Inc. dated August 18, 2005, as amended;                                                                         |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |    |                                                                                                                                                                                                                   |
|   | • | Patent      and Know-how Assignment and License Agreement between Somanta and De      Montfort University dated March 20, 2003;                                                                              |
|   |    |                                                                                                                                                                                                                   |
|   | • | Patent      and Know-how Assignment and License Option Agreement between Somanta      and The School of Pharmacy, University of London dated March 16,      2004, as amended on September 21, 2005; and |
|   |    |                                                                                                                                                                                                                   |
|   | • | The      Phenylbutyrate Co-Development and Sublicense Agreement      between Somanta and Virium Pharmaceuticals, Inc. dated      February 16, 2005, as amended.                                              |

----

| ·   | third-party      payers' increasing challenges to the prices charged for medical products      and services; |
|--------------------|--------------------------------------------------------------------------------------------------------------|

| ·   | the      trend toward managed health care in the United States and the concurrent      growth of HMOs and similar organizations that can control or significantly      influence the purchase of healthcare services and products;      and |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | legislative      proposals to reform healthcare or reduce government insurance      programs. |
|--------------------|-----------------------------------------------------------------------------------------------|

| ·   | Mucoadhesive      technology in 2021, |
|--------------------|---------------------------------------|

| ·   | ProLindac™      in 2021, |
|--------------------|--------------------------------|

| ·   | Thiarabine      in 2018, |
|--------------------|--------------------------|

| ·   | Pexiganan      in 2016, |
|--------------------|-------------------------|

| ·   | EcoNail      in 2019, |
|--------------------|-----------------------|

| ·   | Phenylbutyrate      between 2011 and 2016, |
|--------------------|--------------------------------------------|

| ·   | Angiolix®      in 2015, |
|--------------------|------------------------------|

| ·   | Prodrax      in 2023, |
|--------------------|-----------------------|

| ·   | Cobalamin      mediated technology between 2009 and2019 |
|--------------------|---------------------------------------------------------|

----

----

----

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|                                      |   |   |  Common      Stock  |   |
|-------------------------------------------|--------|--------|-------------------------------|--------|
|                                      |   |   |                          |   |   |   |   |   |
|                                      |   |   | High                     |   |   |   | Low  |   |
|  Period Ended December 31,      2008 |   |   |                          |   |   |   |   |   |
|  First      quarter             |   | $      | 3.50                          |   |   | $ | 1.35 |   |
|  Second      quarter            |   |   | 3.30                          |   |   |   | 1.40 |   |
|  Third      quarter             |   |   | 3.49                          |   |   |   | 2.50 |   |
|  Fourth      quarter            |   |   | 2.75                          |   |   |   | 0.80 |   |

|                                           |   |   |   |   |   |   |   |   |
|------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|
|  Fiscal Year Ended December 31,      2007 |   |   |   |   |   |   |   |   |
|  First      quarter                  |   | $      | 10.66  |   |   | $      | 2.50   |   |
|  Second      quarter                 |   |   | 6.75   |   |   |   | 4.30   |   |
|  Third      quarter                  |   |   | 5.16   |   |   |   | 2.10   |   |
|  Fourth      quarter                 |   |   | 4.48   |   |   |   | 2.10   |   |

----

|                                                        |   |                         |      |   |                     |   |   | Number      of securities     |   |
|-------------------------------------------------------------|--------|------------------------------|-----------|--------|--------------------------|--------|--------|-------------------------------|--------|
|                                                        |   |                         |      |   |                     |   |   | remaining      available      |   |
|                                                        |   |                         |      |   |                     |   |   | for      future issuance      |   |
|                                                        |   | Number      of securities to |      |   | Weighted-average         |   |   | under      equity             |   |
|                                                        |   | be      issued upon exercise |      |   | exercise      price of   |   |   | compensation      plans       |   |
|                                                        |   | of      outstanding options  |      |   | outstanding      options |   |   | (excluding      securities    |   |
| Plan      Category                                          |   | warrants      and rights     |      |   | warrants      and rights |   |   | reflected      in column (a)) |   |
| Equity      compensation plans                              |   |                         |      |   |                     |   |   |                          |   |
|   approved      by security                       |   |                         |      |   |                     |   |   |                          |   |
|   holders                                         |   |                         |      |   |                     |   |   |                          |   |
|     2005      Equity Incentive Plan     |   |                         | 1,136,820 |   |                     | $      | 1.90   |                          |   |   | 1,956,644 |   |
|     1995      Stock Awards Plan         |   |                         | 118,000   |   |                     |   | 15.14  |                          |   |   | - |   |
|     2001      Restricted Stock Plan     |   |                         | -         |   |                     |   | -      |                          |   |   | 52,818 |   |
|                                                        |   |                         |      |   |                     |   |   |                          |   |   |   |   |
| Equity      compensation plans                              |   |                         |      |   |                     |   |   |                          |   |   |   |   |
|   not      approved by security                   |   |                         |      |   |                     |   |   |                          |   |   |   |   |
|   holders                                         |   |                         |      |   |                     |   |   |                          |   |   |   |   |
|     2007      Special Stock Option Plan |   |                         | 100,000   |   |                     |   | 2.90   |                          |   |   | 350,000 |   |
| Total                                                       |   |                         | 1,354,820 |   |                     | $      | 3.12   |                          |   |   | 2,359,462 |   |

----

| ITEM      7. | MANAGEMENT'S      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION  AND |
|--------------|-----------------------------------------------------------------------|

|   |  RESULTS      OF OPERATIONS |
|--------|----------------------------------|

| ·   | the      Somanta acquisition resulted in a one-time non-cash in-process research      and development expense in the first quarter of 2008      ($8,879,000); |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | costs      for product manufacturing for a new ProLindac clinical trial      expected  to start in early 2009  ($548,000); |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------|

| ·   | higher      scientific consulting expenses($278,000); |
|--------------------|-------------------------------------------------------|

| ·   | higher      salary and related cost due to the hiring of additional scientific staff      ($269,000); and |
|--------------------|-----------------------------------------------------------------------------------------------------------|

| ·   | other      net increases in research spending($86,000); |
|--------------------|---------------------------------------------------------|

| ·   | partially      offset by lower clinical development costs ($49,000) due to the winding      down of the ProLindac Phase 2 clinicaltrail. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | accrual      of potential liquidated damages under an investor rights agreement with      certain investors ($675,000); |
|--------------------|-------------------------------------------------------------------------------------------------------------------------|

| ·   | higher      patent expenses and license fees($453,000); |
|--------------------|---------------------------------------------------------|

| ·   | higher      professional fees ($29,000); |
|--------------------|------------------------------------------|

| ·   | lower      salary and other salary related expenses  ($469,000); |
|--------------------|------------------------------------------------------------------|

| ·   | lower      salary related expenses due to stock option expenses      ($325,000); |
|--------------------|----------------------------------------------------------------------------------|

| ·   | lower      investor relations expenses ($148,000);and |
|--------------------|-------------------------------------------------------|

| ·   | other      net increases in general and administrative expenses      ($49,000). |
|--------------------|---------------------------------------------------------------------------------|

----

----

| ·   | the      successful development and commercialization of ProLindac™, MuGard™ and      our other product candidates; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------|

| ·   | the      ability to convert, repay or restructure our outstanding convertible notes      and debentures; |
|--------------------|----------------------------------------------------------------------------------------------------------|

| ·   | the      ability to integrate MacroChem Corporation assets and programs with      ours; |
|--------------------|-----------------------------------------------------------------------------------------|

| ·   | the      ability to establish and maintain collaborative arrangements with      corporate partners for the research, development and commercialization of      products; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | continued      scientific progress in our research and development    programs; |
|--------------------|---------------------------------------------------------------------------------|

| ·   | the      magnitude, scope and results of preclinical testing and clinical      trials; |
|--------------------|----------------------------------------------------------------------------------------|

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

| ·   | the      costs involved in conducting clinicaltrials; |
|--------------------|-------------------------------------------------------|

| ·   | competing      technological developments; |
|--------------------|--------------------------------------------|

| ·   | the      cost of manufacturing and scale-up; |
|--------------------|----------------------------------------------|

| ·   | the      ability to establish and maintain effective commercialization arrangements      and activities; and |
|--------------------|--------------------------------------------------------------------------------------------------------------|

| ·   | successful      regulatory filings. |
|--------------------|-------------------------------------|

----

| (in      thousands) |   |   | Twelve      Months ended December 31, |   |   |   | Inception      ToDate (1)  |   |
|---------------------|--------|--------|--------------------------------------------|--------|--------|--------|---------------------------------|--------|
| Project             |   |   | 2008                                  |   |   |   | 2007                       |   |   |   |   |   |

| Polymer      Platinate (ProLindac™)            |   | $      | 3,402  |   |   | $      | 2,563  |   |   | $      | 25,619 |   |
|-----------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Mucoadhesive      Liquid  Technology      (MLT) |   |   | -      |   |   |   | 21     |   |   |   | 1,511  |   |
| Angiolix                                                  |   |   | 268    |   |   |   | -      |   |   |   | 268    |   |
| Others      (2)                                           |   |   | 64     |   |   |   | 18     |   |   |   | 5,126  |   |
| Total                                                     |   | $      | 3,734  |   |   | $      | 2,602  |   |   | $      | 32,524 |   |
|                                                      |   |   |   |   |   |   |   |   |   |   |   |   |

| (1)   | Cumulative      spending from inception of the Company or project through December 31,      2008. |
|-----------------|---------------------------------------------------------------------------------------------------|

| (2)   | Includes:  Vitamin      Mediated Targeted Delivery, carbohydrate targeting, amlexanox cream and      gel and other related projects. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|                                        |   | Payment Due by Period |      |
|---------------------------------------------|--------|-----------------------|-----------|
|                                        |   | Total                 |      |   | Less Than 1 Year |   |   | 1-4 Years |   |
|  Long-Term      Debt Obligations  |   | $                     | 5,500,000 |   |   | $ | - |   |   | $ | 5,500,000 |   |
| Interest                               |   |                  | 1,271,000 |   |   |   | 424,000 |   |   |   | 847,000 |   |
| Lease      Obligations                 |   |                  | 106,000   |   |   |   | 87,000 |   |   |   | 19,000 |   |
|  Total                            |   | $                     | 6,877,000 |   |   | $ | 511,000 |   |   | $ | 6,366,000 |   |

----

----

----

----

| a.   | Financial      Statements.  The following financial statements are      submitted as part of this report: |
|----------------|---------------------------------------------------------------------------------------------------------------------|

|  Report of Registered      Independent Public Accounting Firm                      |  F-1  |
|----------------------------------------------------------------------------------------------|-----------------|
|  Consolidated Balance Sheets at      December 31, 2008 and 2007                    |  F-2  |
|  Consolidated Statements of      Operations for 2008 and 2007                      |  F-3  |
|  Consolidated Statements of      Stockholders' Equity (Deficit) for 2008 and 2007  |  F-4  |
|  Consolidated Statements of      Cash Flows for 2008 and 2007                      |  F-5  |
|  Notes to Consolidated      Financial Statements                                   |  F-6  |

| 2.1 | Amended      and Restated Agreement of Merger and Plan of Reorganization between the      Registrant and Chemex Pharmaceuticals, Inc., dated as of October 31, 1995      (Incorporated by reference to Exhibit A of  our Registration      Statement on Form S-4 dated December 20, 1995, Commission File No.      33-64031) |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2.2 | Agreement      and Plan of Merger, by and among the Registrant, Somanta Acquisition      Corporation, Somanta Pharmaceuticals, Inc., Somanta Incorporated and      Somanta Limited, dated April 19, 2007 (Incorporated by reference to      Exhibit 2.1 to our Form 8-K dated April 18,  2007) |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2.3 | Agreement and Plan of Merger, by and among the      Registrant, MACM Acquisition Corporation and MacroChem Corporation, dated      July 9, 2008 (Incorporated by      reference to Exhibit 2.3 of our Form 10-Q for the quarter ended June 30,      2008) |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.1 | Certificate      of Incorporation (Incorporated by reference to Exhibit 3(a) of our Form      8-K dated July 12, 1989, Commission File Number  9-9134) |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.2 | Certificate      of Amendment of Certificate of Incorporation filed August 13, 1992      (Incorporated by reference to Exhibit 3.3 of our Form 10-K for year ended      December 31, 1995) |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.3 | Certificate      of Merger filed January 25, 1996 (Incorporated by reference to Exhibit E      of our Registration Statement on Form S-4 dated December 20, 1995,      Commission File No. 33-64031) |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.4 | Certificate      of Amendment of Certificate of Incorporation filed January 25, 1996      (Incorporated by reference to Exhibit E of our Registration Statement on      Form S-4 dated December 20, 1995, Commission File No.      33-64031) |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.5 | Certificate      of Amendment of Certificate of Incorporation filed July 18, 1996      (Incorporated by reference to Exhibit 3.7 of our Form 10-K for the year      ended December 31, 1996) |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.6 | Certificate      of Amendment of Certificate of Incorporation filed June 18, 1998.      (Incorporated by reference to Exhibit 3.8 of our Form 10-Q for the quarter      ended June 30, 1998) |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.7 | Certificate      of Amendment of Certificate of Incorporation filed July 31, 2000      (Incorporated by reference to Exhibit 3.8 of our Form 10-Q for the quarter      ended March 31, 2001) |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.8 | Certificate      of Designations of Series A Junior Participating Preferred Stock filed      November 7, 2001 (Incorporated by reference to Exhibit 4.1.H of our      Registration Statement on Form S-8 dated December 14, 2001, Commission      File No. 333-75136) |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.9 | Amended      and Restated Bylaws (Incorporated by reference to Exhibit 2.1 of our Form      10-Q for the quarter ended June 30,1996) |
|-----|--------------------------------------------------------------------------------------------------------------------------------------|

| 3.10 | Certificate      of Designation, Rights and Preferences of Series A Cumulative Convertible      Preferred Stock filed November 9, 2007 (Incorporated by reference to      Exhibit 3.10 to our Form SB-2 filed on December 10,  2007. |
|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.11 | Certificate      of Amendment to Certificate of Designations, Rights and Preferences of      Series A Cumulative Convertible Preferred Stock filed June 11, 2008      (Incorporated by reference to Exhibit 3.11 of our Form 10-Q for the      quarter ended June 30, 2008) |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.1* | 1995      Stock Option Plan (Incorporated by reference to Exhibit F of our      Registration Statement on Form S-4 dated December 20, 1995, Commission      File No. 33-64031) |
|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.2* | Amendment      to 1995 Stock Option Plan (Incorporated by reference to Exhibit 10.25 of      our Form 10-K for the year ended December 31,  2001) |
|-------|---------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 10.3 | Lease      Agreement between Pollock Realty Corporation and the Registrant dated July      25, 1996 (Incorporated by reference to Exhibit 10.19 of our Form 10-Q for      the quarter ended September 30,1996) |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.4 | Platinate      HPMA Copolymer Royalty Agreement between The School of Pharmacy,      University of London and the Registrant dated November 19, 1996      (Incorporated by reference to Exhibit 10.9 of our Form 10-K for the year      ended December 31, 1996) |
|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.5* | Employment      Agreement of David P. Nowotnik, PhD (Incorporated by reference to Exhibit      10.19 of our Form 10-K for the year ended December 31,    1999) |
|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.6* | 401(k)      Plan (Incorporated by reference to Exhibit 10.20 of our Form 10-K for the      year ended December 31, 1999) |
|-------|--------------------------------------------------------------------------------------------------------------------------|

| 10.7 | Form      of Convertible Note (Incorporated by reference to Exhibit 25 of our Form      10-Q for the quarter ended September 30,2000) |
|------|---------------------------------------------------------------------------------------------------------------------------------------|

| 10.8 | Rights      Agreement dated as of October 31, 2001 between the Registrant and American      Stock Transfer & Trust Company, as Rights Agent (Incorporated by      reference to Exhibit 99.1 of our Current Report on Form 8-K dated November      7, 2001) |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.9 | Amendment      to Rights Agreement dated as of February 16, 2006 between the Registrant      and American Stock Transfer & Trust Company, as Rights Agent      (Incorporated by reference to Exhibit 10.33 of our Form 10-Q for the      quarter ended March 31, 2006) |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.10 | Amendment      to Rights Agreement dated as of November 9, 2007 between the Registrant      and American Stock Transfer & Trust Company as Rights      Agent |
|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.11* | 2001      Restricted Stock Plan (Incorporated by reference to Exhibit 1 of our Proxy      Statement filed on April 16, 2001) |
|--------|------------------------------------------------------------------------------------------------------------------------------|

| 10.12* | 2005      Equity Incentive Plan (Incorporated by reference to Exhibit 1 of our Proxy      Statement filed on April 18, 2005) |
|--------|------------------------------------------------------------------------------------------------------------------------------|

| 10.13* | Employment      Agreement dated as of June 1, 2005, by and between the Registrant and      Stephen B. Thompson (Incorporated by reference to Exhibit 10.24 of our      10-K for the year ended December 31,2005) |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.14 | Asset      Sale Agreement dated as of October 12, 2005, between the Registrant and      Uluru, Inc. (Incorporated by reference to Exhibit 10.25 of our 10-K for      the year ended December 31, 2005) |
|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.15 | Amendment      to Asset Sale Agreement dated as of December 8, 2006, between the      Registrant and Uluru, Inc. (Incorporated by reference to Exhibit 10.16 of      our Form 10-KSB filed on April 2,2007) |
|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.16 | License      Agreement dated as of October 12, 2005, between the Registrant and Uluru,      Inc. (Incorporated by reference to Exhibit 10.26 of our 10-K for the year      ended December 31, 2005) |
|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.17 | Form      of Warrant dated February 16, 2006, issued by the Registrant to certain      Purchasers (Incorporated by reference to Exhibit 10.31 of our Form 10-Q      for the quarter ended March 31,2006) |
|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.18 | Form      of Warrant dated October 24, 2006, issued by the Registrant to certain      Purchasers (Incorporated by reference to Exhibit 10.27 of our Form 10-KSB      filed on April 2, 2007) |
|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.19 | Form      of Warrant December 6, 2006, issued by the Registrant to certain      Purchasers (Incorporated by reference to Exhibit 10.32 of our Form 10-KSB      filed on April 2, 2007) |
|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.20* | 2007      Special Stock Option Plan and Agreement dated January 4, 2007, by and      between the Registrant and Stephen R. Seiler, President and Chief      Executive Officer (Incorporated by reference to Exhibit 10.35 of our Form      10-QSB filed on May 15, 2007) |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.21 | Note      Purchase Agreement dated April 26, 2007, between the Registrant and      Somanta Pharmaceuticals, Inc. (Incorporated by reference to Exhibit 10.42      of our Form 10-Q filed on August 14,2007) |
|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.22 | Preferred      Stock and Warrant Purchase Agreement, dated November 7, 2007, between the      Registrant and certain Purchasers (Incorporated by reference to Exhibit      10.23 of our Form S-1 filed on March 11,2008) |
|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.23 | Investor      Rights Agreement dated November 10, 2007, between the Registrant and      certain Purchasers (Incorporated by reference to Exhibit 10.24 of our Form      S-1 filed on March 11, 2008) |
|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.24 | Form      of Warrant Agreement dated November 10, 2007, between the Registrant and      certain Purchasers (Incorporated by reference to Exhibit 10.25 of our Form      S-1 filed on March 11, 2008) |
|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.25 | Board      Designation Agreement dated November 15, 2007, between the Registrant and      SCO Capital Partners LLC (Incorporated by reference to Exhibit 10.26 of      our Form S-1 filed on March 11,2008) |
|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.26 | Amendment      and Restated Purchase Agreement, dated February 4, 2008 between the      Registrant and certain Purchasers (Incorporated by reference to Exhibit      10.27 of our Form S-1 filed on March 11,2008) |
|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.27 | Amended      and Restated Investor Rights Agreement, dated February 4, 2008, between      the Registrant and certain Purchasers (Incorporated by reference to      Exhibit 10.28 of our Form S-1 filed on March 11,  2008) |
|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.28* | Employment      Agreement dated January 4, 2008, between the Registrant and Jeffrey B.      Davis (Incorporated by reference to Exhibit 10.29 of our Form S-1 filed on      March 11, 2008) |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 21 | Subsidiaries      of the Registrant |
|----|-------------------------------------|

| 31.1 | Chief      Executive Officer Certification Pursuant to 18 U.S.C. Section 1350, as      Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of      2002 |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 31.2 | Chief      Financial Officer Certification Pursuant to 18 U.S.C. Section 1350, as      Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of      2002 |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 32 | Chief      Executive Officer Certification Chief Financial Officer Certification      Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of      the Sarbanes-Oxley Act of 2002 |
|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| * | Management      contract or compensatory plan required to be filed as an Exhibit to this      Form pursuant to Item 15(c) of thereport. |
|---|-----------------------------------------------------------------------------------------------------------------------------------------|

----

|                     |   |   |   |   | ACCESS      PHARMACEUTICALS, INC.       |   |
|--------------------------|--------|--------|--------|--------|-----------------------------------------|--------|
|                     |   |   |   |   |                                    |   |
|                     |   |   |   |   |                                    |   |
| Date      March 31, 2009 |   |   | By:    |   | /s/ Jeffrey B. Davis                    |   |
|                     |   |   |   |   | Jeffrey      B. Davis                   |   |
|                     |   |   |   |   | Chief      Executive Officer            |   |
|                     |   |   |   |   | Principal      Executive Officer        |   |
|                     |   |   |   |   |                                    |   |
| Date      March 31, 2009 |   |   | By:    |   | /s/ Stephen B. Thompson                 |   |
|                     |   |   |   |   | Stephen      B. Thompson                |   |
|                     |   |   |   |   | Vice      President, Chief Financial    |   |
|                     |   |   |   |   |  Officer      and Treasurer        |   |
|                     |   |   |   |   | Principal      Financial and Accounting |   |
|                     |   |   |   |   | Officer                                 |   |

| Date      March 31, 2009 |   |   | By:    |   | /s/ Mark J. Ahn                       |   |
|--------------------------|--------|--------|--------|--------|---------------------------------------|--------|
|                     |   |   |   |   | Mark      J. Ahn, Director            |   |
|                     |   |   |   |   |                                  |   |
| Date      March 31, 2009 |   |   | By:    |   |                                  |   |
|                     |   |   |   |   | Mark      J. Alvino, Director         |   |
|                     |   |   |   |   |                                  |   |
| Date      March 31, 2009 |   |   | By:    |   | /s/ Esteban Cvitkovic                 |   |
|                     |   |   |   |   | Esteban      Cvitkovic, Director      |   |
|                     |   |   |   |   |                                  |   |
| Date      March 31, 2009 |   |   | By:    |   | /s/ Jeffrey B. Davis                  |   |
|                     |   |   |   |   | Jeffrey      B. Davis, Director,      |   |
|                     |   |   |   |   | Chief      Executive Officer          |   |
|                     |   |   |   |   |                                  |   |
| Date      March 31, 2009 |   |   | By:    |   | /s/ Stephen B. Howell                 |   |
|                     |   |   |   |   | Stephen      B. Howell, Director      |   |
|                     |   |   |   |   |                                  |   |
| Date      March 31, 2009 |   |   | By:    |   | /s/ David P. Luci                     |   |
|                     |   |   |   |   | David      P. Luci, Director          |   |
|                     |   |   |   |   |                                  |   |
| Date      March 31, 2009 |   |   | By:    |   | /s/ Steven H. Rouhandeh               |   |
|                     |   |   |   |   | Steven      H. Rouhandeh, Chairman of |   |
|                     |   |   |   |   | the      Board                        |   |

----

----

|                           ASSETS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  December 31, 2008                                                                                            |   |  December 31, 2007                                                                                                                                                                                                                                                    |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  Current      assetsCash and cash      equivalents      ReceivablesReceivables due from MacroChem      Corp.Receivables due from Somanta      Pharmaceuticals, Inc.   Prepaid      expenses and other current assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   $          2,663,000147,000635,000-105,000                |   |   $          6,921,000               35,000-931,000             410,000 |
|  Total      current assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | 3,550,000                                                                                                               |   |  8,297,000                                                                                                                                                                                                                                                                 |
|  Property      and equipment, net                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  87,000                                                                                                            |   |  130,000                                                                                                                                                                                                                                                                   |
|  Patents,      net                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  542,000                                                                                                           |   |  710,000                                                                                                                                                                                                                                                                   |
|  Other      assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  78,000                                                                                                            |   |  12,000                                                                                                                                                                                                                                                                    |
|              Total      assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  $          4,257,000                                       |   |  $          9,149,000                                                                                                                                                                                               |
|          LIABILITIES      AND STOCKHOLDERS' EQUITY (DEFICIT)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                                                                                    |   |                                                                                                                                                                                                                                                                            |
|  Current      liabilities  Accounts      payable  Accrued      expenses  Dividends      payable  Accrued      interest payable  Current      portion of deferred revenue  Current      portion of convertible long-term debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |    $          1,970,000748,0001,896,000128,000164,000- |   |   $          1,506,00030,000260,000130,00068,00064,000                                                                                                                                                              |
| Total      current liabilities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | 4,906,000                                                                                                               |   | 2,058,000                                                                                                                                                                                                                                                                       |
| Long-term      deferred revenueLong-term      convertible debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | 2,245,0005,500,000                                                                                                      |   | 910,0005,500,000                                                                                                                                                                                                                                                                |
|   Total      liabilities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  12,651,000                                                                                                        |   |  8,468,000                                                                                                                                                                                                                                                                 |
|  Commitments      and contingencies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                    |   |                                                                                                                                                                                                                                                                            |
| Stockholders'      equity (deficit)  Convertible      preferred stock - $.01 par value; authorized 2,000,000shares;     3,242.8617      issued at December 31, 2008; 3,227.3617 issued at     December      31, 2007  Common      stock - $.01 par value; authorized 100,000,000 shares;     issued,      6,967,474 at December 31, 2008; issued 3,585,458      at      December 31, 2007  Additional      paid-in capital  Notes      receivable from stockholders  Treasury      stock, at cost – 163 shares  Accumulated      deficit            Total      stockholders' equity (deficit) |    -  70,000127,482,000(1,045,000)(4,000)(134,897,000)(8,394,000)                              |   |    -  36,000116,018,000(1,045,000)(4,000)(114,324,000)681,000                                                                                                                                                                                          |
|              Total      liabilities and stockholders' equity (deficit)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  $          4,257,000                                       |   |  $          9,149,000                                                                                                                                                                                               |

----

|                                                                                               |   | December      31, |        |
|----------------------------------------------------------------------------------------------------|--------|-------------------|-------------|
|                                                                                               |   | 2008              |        |   | 2007 |   |
|                                                                                               |   |              |        |   |   |   |
| Revenues                                                                                           |   |              |        |   |   |   |
| Licenserevenues                                                                                    |   | $                 | 118,000     |   |   | $ | 23,000 |   |
| Sponsored research and      development                                                            |   |              | 173,000     |   |   |   | 34,000 |   |
| Total revenues                                                                                     |   |              | 291,000     |   |   |   | 57,000 |   |
|                                                                                               |   |              |        |   |   |   |   |   |
| Expenses                                                                                           |   |              |        |   |   |   |   |   |
| Research and      development                                                                      |   |              | 12,613,000  |   |   |   | 2,602,000 |   |
| General and      administrative                                                                    |   |              | 4,340,000   |   |   |   | 4,076,000 |   |
| Depreciation and      amortization                                                                 |   |              | 253,000     |   |   |   | 279,000 |   |
| Total expenses                                                                                     |   |              | 17,206,000  |   |   |   | 6,957,000 |   |
|                                                                                               |   |              |        |   |   |   |   |   |
| Loss      from operations                                                                          |   |              | (16,915,000 | ) |   |   | (6,900,000 | ) |
|                                                                                               |   |              |        |   |   |   |   |   |
| Interest      and miscellaneous income                                                             |   |              | 178,000     |   |   |   | 125,000 |   |
| Interest      and other expense                                                                    |   |              | (478,000    | ) |   |   | (3,514,000 | ) |
| Loss      on extinguishment of debt                                                                |   |              | -           |   |   |   | (11,628,000 | ) |
|                                                                                               |   |              | (300,000    | ) |   |   | (15,017,000 | ) |
| Loss      before discontinued operations and before tax benefit                                    |   |              | (17,215,000 | ) |   |   | (21,917,000 | ) |
| Income      tax benefit                                                                            |   |              | -           |   |   |   | 61,000 |   |
| Loss      from continuing operations                                                               |   |              | (17,215,000 | ) |   |   | (21,856,000 | ) |
|                                                                                               |   |              |        |   |   |   |   |   |
| Less      preferred stock dividends                                                                |   |              | (3,358,000  | ) |   |   | (14,908,000 | ) |
| Loss      from continuing operations allocable to commonstockholders                               |   |              | (20,573,000 | ) |   |   | (36,764,000 | ) |
|                                                                                               |   |              |        |   |   |   |   |   |
| Discontinued      operations, net of taxes of $0 in 2008 and   $61,000      in 2007 |   |              | -           |   |   |   | 112,000 |   |
| Net      loss allocable to common stockholders                                                     |   | $                 | (20,573,000 | ) |   | $ | (36,652,000 | ) |
|                                                                                               |   |              |        |   |   |   |   |   |
|                                                                                               |   |              |        |   |   |   |   |   |
| Basic      and diluted loss per common share                                                       |   |              |        |   |   |   |   |   |
|    Loss      from continuing operations allocable to commonstockholders             |   | $                 | (3.51       | ) |   | $ | (10.35 | ) |
|     Discontinued      operations                                               |   |              | -           |   |   |   | 0.03 |   |
|     Net      loss allocable to common stockholders                             |   | $                 | (3.51       | ) |   | $ | (10.32 | ) |
|                                                                                               |   |              |        |   |   |   |   |   |
| Weighted      average basic and diluted common shares    outstanding           |   |              | 5,854,031   |   |   |   | 3,552,006 |   |
|                                                                                               |   |              |        |   |   |   |   |   |

----

|                                                                                                   |   |   | Common      Stock  |   |   |   | Preferred      Stock  |   |   |   |         |   |   |   | Notes   |   |   |   |                                 |   |   |   |                                          |   |
|--------------------------------------------------------------------------------------------------------|--------|--------|-------------------------|--------|--------|--------|----------------------------|--------|--------|--------|--------------|--------|--------|--------|--------------|--------|--------|--------|--------------------------------------|--------|--------|--------|-----------------------------------------------|--------|
|                                                                                                   |   |   | Shares             |   |   |   | Amount                |   |   |   | Shares  |   |   |   | Amount  |   |   |   | Additionalpaid-incapital   |   |   |   |  receivable from      stockholders  |   |   |   | Treasury stock   |   |   |   | Accumulated deficit   |   |
|                                                                                                   |   |   |                    |   |   |   |                       |   |   |   |         |   |   |   |         |   |   |   |                                 |   |   |   |                                          |   |   |   |   |   |   |   |   |   |
| Balance,      December 31,   2006                                                       |   |   | 3,535,000               |   |   | $      | 35,000                     |   |   |   |  -      |   |   | $      | -            |   |   | $      | 68,799,000                           |   |   | $      | (1,045,000                                    | )      |   | $ | (4,000 | ) |   | $ | (77,672,000 | ) |
| Common      stock issued for  services                                                       |   |   | 19,000                  |   |   |   | -                          |   |   |   | -            |   |   |   | -            |   |   |   | 83,000                               |   |   |   | -                                             |   |   |   | - |   |   |   | - |   |
|    Options      exercised                                                               |   |   | 31,000                  |   |   |   | 1,000                      |   |   |   | -            |   |   |   | -            |   |   |   | 35,000                               |   |   |   | -                                             |   |   |   | - |   |   |   | - |   |
| Stock      option   compensation      expense                                           |   |   | -                       |   |   |   | -                          |   |   |   | -            |   |   |   | -            |   |   |   | 1,048,000                            |   |   |   | -                                             |   |   |   | - |   |   |   | - |   |
| Preferred      stock issuances                                                                         |   |   | -                       |   |   |   | -                          |   |   |   | 954.0001     |   |   |   | -            |   |   |   | 5,560,000                            |   |   |   | -                                             |   |   |   | - |   |   |   | - |   |
| Warrants      issued with   preferred      stock                                        |   |   | -                       |   |   |   | -                          |   |   |   | -            |   |   |   | -            |   |   |   | 3,980,000                            |   |   |   | -                                             |   |   |   | - |   |   |   | - |   |
| Costs      of stock issuances                                                                          |   |   |                    |   |   |   |                       |   |   |   |         |   |   |   |         |   |   |   | (868,000                             | )      |   |   | -                                             |   |   |   | - |   |   |   | - |   |
| Beneficial      conversion   feature                                                    |   |   | -                       |   |   |   | -                          |   |   |   | -            |   |   |   | -            |   |   |   | 14,648,000                           |   |   |   | -                                             |   |   |   | - |   |   |   | - |   |
| Preferred      stock dividend   beneficial      conversion                              |   |   |  -                 |   |   |   |  -                    |   |   |   |  -      |   |   |   |  -      |   |   |   |  -                              |   |   |   |  -                                       |   |   |   |  - |   |   |   | (14,648,000 | ) |
| Conversion      of convertible   debt      into preferred stock                         |   |   | -                       |   |   |   | -                          |   |   |   | 2,273.3616   |   |   |   | -            |   |   |   | 6,472,000                            |   |   |   | -                                             |   |   |   | - |   |   |   | - |   |
| Warrants      issued with   preferred      stock                                        |   |   | -                       |   |   |   | -                          |   |   |   | -            |   |   |   | -            |   |   |   | 4,633,000                            |   |   |   | -                                             |   |   |   | - |   |   |   | - |   |
| Loss      on extinguishment  of      debt – preferred stock                            |   |   | -                       |   |   |   | -                          |   |   |   | -            |   |   |   | -            |   |   |   | 6,777,000                            |   |   |   | -                                             |   |   |   | - |   |   |   | - |   |
| Loss      on extinguishment  of      debt – warrants                                   |   |   | -                       |   |   |   | -                          |   |   |   | -            |   |   |   | -            |   |   |   | 4,851,000                            |   |   |   | -                                             |   |   |   | - |   |   |   | - |   |
| Preferred      dividends                                                                               |   |   | -                       |   |   |   | -                          |   |   |   | -            |   |   |   | -            |   |   |   | -                                    |   |   |   | -                                             |   |   |   | - |   |   |   | (260,000 | ) |
| Net      loss                                                                                          |   |   | -                       |   |   |   | -                          |   |   |   | -            |   |   |   | -            |   |   |   | -                                    |   |   |   | -                                             |   |   |   | - |   |   |   | (21,744,000 | ) |
| Balance,      December 31,   2007                                                       |   |   | 3,585,000               |   |   |   | 36,000                     |   |   |   | 3,227.3617   |   |   |   |  -      |   |   |   | 116,018,000                          |   |   |   | (1,045,000                                    | )      |   |   | (4,000 | ) |   |   | (114,324,000 | ) |
|                                                                                                   |   |   |                    |   |   |   |                       |   |   |   |         |   |   |   |         |   |   |   |                                 |   |   |   |                                          |   |   |   |   |   |   |   |   |   |
| Common      stock issued for   services                                                 |   |   | 10,000                  |   |   |   | -                          |   |   |   | -            |   |   |   | -            |   |   |   | 27,000                               |   |   |   | -                                             |   |   |   | - |   |   |   | - |   |
| Warrants      issued for   services                                                     |   |   | -                       |   |   |   | -                          |   |   |   | -            |   |   |   | -            |   |   |   | 350,000                              |   |   |   | -                                             |   |   |   | - |   |   |   | - |   |
| Options      exercised                                                                                 |   |   | 25,000                  |   |   |   | -                          |   |   |   | -            |   |   |   | -            |   |   |   | 15,000                               |   |   |   | -                                             |   |   |   | - |   |   |   | - |   |
| Stock      option   compensation      expense                                           |   |   | -                       |   |   |   | -                          |   |   |   | -            |   |   |   | -            |   |   |   | 415,000                              |   |   |   | -                                             |   |   |   | - |   |   |   | - |   |
| Preferred      stock issuances                                                                         |   |   | -                       |   |   |   | -                          |   |   |   | 272.5000     |   |   |   | -            |   |   |   | 1,687,000                            |   |   |   | -                                             |   |   |   | - |   |   |   | - |   |
| Warrants      issued with    preferred      stock                                  |   |   | -                       |   |   |   | -                          |   |   |   | -            |   |   |   | -            |   |   |   | 1,142,000                            |   |   |   | -                                             |   |   |   | - |   |   |   | - |   |
|  Costs      of stock issuances                                                                    |   |   | -                       |   |   |   | -                          |   |   |   | -            |   |   |   | -            |   |   |   | (385,000                             | )      |   |   | -                                             |   |   |   | - |   |   |   | - |   |
| Preferred      stock dividend   beneficial      conversion   feature     |   |   |   -                |   |   |   |   -                   |   |   |   |   -     |   |   |   |   -     |   |   |   |   1,308,000                     |   |   |   |   -                                      |   |   |   |   - |   |   |   | (1,308,000 | ) |
| Common      stock and warrants issued      to   Somanta      shareholders          |   |   | 1,500,000               |   |   |   | 15,000                     |   |   |   | -            |   |   |   | -            |   |   |   | 4,916,000                            |   |   |   | -                                             |   |   |   | - |   |   |   | - |   |
| Common      stock and   warrants      issued to   Somanta      creditors |   |   |   538,000          |   |   |   |   5,000               |   |   |   |   -     |   |   |   |   -     |   |   |   |   1,571,000                     |   |   |   |   -                                      |   |   |   |   - |   |   |   |   - |   |
| Preferred      stock converted   into      common stock                                 |   |   | 857,000                 |   |   |   | 9,000                      |   |   |   | (257.0000    | )      |   |   | -            |   |   |   | (9,000                               | )      |   |   | -                                             |   |   |   | - |   |   |   | - |   |
| Common      stock issued for   preferred      dividends                                 |   |   | 452,000                 |   |   |   | 5,000                      |   |   |   | -            |   |   |   | -            |   |   |   | 427,000                              |   |   |   | -                                             |   |   |   | - |   |   |   | - |   |
| Preferred      dividends                                                                               |   |   | -                       |   |   |   | -                          |   |   |   | -            |   |   |   | -            |   |   |   | -                                    |   |   |   | -                                             |   |   |   | - |   |   |   | (2,050,000 | ) |
| Net      loss                                                                                          |   |   | -                       |   |   |   | -                          |   |   |   | -            |   |   |   | -            |   |   |   | -                                    |   |   |   | -                                             |   |   |   | - |   |   |   | (17,215,000 | ) |
| Balance,      December 31,   2008                                                       |   |   | 6,967,000               |   |   | $      | 70,000                     |   |   |   | 3,242.8617   |   |   | $      | -            |   |   | $      | 127,482,000                          |   |   | $      | (1,045,000                                    | )      |   | $ | (4,000 | ) |   | $ | (134,897,000 | ) |

----

|                                                       |   |   | Year      ended December 31,   |   |
|------------------------------------------------------------|--------|--------|-------------------------------------|--------|
|                                                       |   |   | 2008                           |   |   |   | 2007  |   |
|  Cash      flows from operating activities:      |   |   |                                |   |   |   |   |   |
| Net      loss                                              |   | $      | (17,215,000                         | )      |   | $ | (21,744,000 | ) |
| Adjustments      to reconcile net loss to net cash used    |   |   |                                |   |   |   |   |   |
| in      operating activities:                              |   |   |                                |   |   |   |   |   |
| Loss      on extinguishment of debt                        |   |   | -                                   |   |   |   | 11,628,000 |   |
| Stock      option expense                                  |   |   | 415,000                             |   |   |   | 1,048,000 |   |
| Stock      and warrants issued for services                |   |   | 377,000                             |   |   |   | 83,000 |   |
| Acquired      in-process research & development        |   |   | 8,879,000                           |   |   |   | - |   |
| Depreciation      and amortization                         |   |   | 253,000                             |   |   |   | 279,000 |   |
| Amortization      of debt costs and discounts              |   |   | -                                   |   |   |   | 2,316,000 |   |
| Loss      on sale of assets                                |   |   | -                                   |   |   |   | 2,000 |   |
| Change      in operating assets and liabilities:           |   |   |                                |   |   |   |   |   |
| Receivables                                                |   |   | (747,000                            | )      |   |   | (607,000 | ) |
| Prepaid      expenses and other current assets             |   |   | (80,000                             | )      |   |   | (127,000 | ) |
| Other      assets                                          |   |   | (66,000                             | )      |   |   | 14,000 |   |
| Accounts      payable and accrued expenses                 |   |   | 176,000                             |   |   |   | 310,000 |   |
| Dividends      payable                                     |   |   | 19,000                              |   |   |   | - |   |
| Accrued      interest payable                              |   |   | (2,000                              | )      |   |   | 1,150,000 |   |
| Deferred      revenue                                      |   |   | 1,431,000                           |   |   |   | 805,000 |   |
| Net      cash used in operating activities                 |   |   | (6,560,000                          | )      |   |   | (4,843,000 | ) |
|                                                       |   |   |                                |   |   |   |   |   |
| Cash      flows from investing activities:                 |   |   |                                |   |   |   |   |   |
| Capital      expenditures                                  |   |   | (28,000                             | )      |   |   | (18,000 | ) |
| Somanta      acquisition, net of cash acquired             |   |   | (65,000                             | )      |   |   | - |   |
| Proceeds      from sale of asset                           |   |   | -                                   |   |   |   | 13,000 |   |
| Net      cash used in investing activities                 |   |   | (93,000                             | )      |   |   | (5,000 | ) |
|                                                       |   |   |                                |   |   |   |   |   |
| Cash      flows from financing activities:                 |   |   |                                |   |   |   |   |   |
| Payments      of notes payable                             |   |   | (64,000                             | )      |   |   | (1,327,000 | ) |
| Proceeds      from preferred stock issuances, net of costs |   |   | 2,444,000                           |   |   |   | 8,672,000 |   |
| Proceeds      from exercise of stock options               |   |   | 15,000                              |   |   |   | 35,000 |   |
| Net      cash provided by financing activities             |   |   | 2,395,000                           |   |   |   | 7,380,000 |   |
|                                                       |   |   |                                |   |   |   |   |   |
| Net      increase (decrease) in cash and cash equivalents  |   |   | (4,258,000                          | )      |   |   | 2,532,000 |   |
| Cash      and cash equivalents at beginning of year        |   |   | 6,921,000                           |   |   |   | 4,389,000 |   |
| Cash      and cash equivalents at end of year              |   | $      | 2,663,000                           |   |   | $ | 6,921,000 |   |
|                                                       |   |   |                                |   |   |   |   |   |
| Supplemental      cash flow information:                   |   |   |                                |   |   |   |   |   |
| Cash      paid for interest                                |   | $      | 435,000                             |   |   | $ | 34,000 |   |
|                                                       |   |   |                                |   |   |   |   |   |
| Supplemental      disclosure of noncash transactions       |   |   |                                |   |   |
| Shares      issued for payables                            |   |   | 1,576,000                           |   |   |   | - |   |
| Preferred      stock dividends in dividends payable        |   |   | 1,896,000                           |   |   |   | 260,000 |   |
| Accrued      interest capitalized                          |   |   | -                                   |   |   |   | 511,000 |   |
| Warrants      issued for placement agent fees              |   |   | 104,000                             |   |   |   | 523,000 |   |
| Beneficial      conversion feature -                       |   |   |                                |   |   |   |   |   |
| February      2008 preferred stock dividends               |   |   | 857,000                             |   |   |   | - |   |
| November      2007 preferred stock dividends               |   |   | 451,000                             |   |   |   | 14,648,000 |   |
| Preferred      stock issuance costs paid in cash           |   |   | 281,000                             |   |   |   | 345,000 |   |
| Debt      exchanged for preferred stock                    |   |   | -                                   |   |   |   | 10,015,000 |   |
| Accrued      interest exchanges for preferred stock        |   |   | -                                   |   |   |   | 1,090,000 |   |
| Stock      issued for preferred dividends                  |   |   | 432,000                             |   |   |   |   |   |

----

----

----

|   | Intangible      assets consist of the following (inthousands): |
|--------|----------------------------------------------------------------|

|                                         |   | December 31, 2008  |        |   | December 31, 2007  |   |
|----------------------------------------------|--------|-------------------------|-------------|--------|-------------------------|--------|
|                                         |   | Grosscarryingvalue      |        |   | Accumulatedamortization |   |   | Grosscarryingvalue |   |   | Accumulatedamortization |   |
| Amortizable      intangible assets - Patents |   | $                       |  1,680 |   |                    | $      | 1,138 |   |   | $ |  1,680 |   |   | $ |  970 |   |

|  2009                |    $           168 |
|------------------------------------------|------------------------------------------------------------------------------------------|
|  2010      |  168                                                                                |
|  2011                          |    168                                                                    |
|  2012                               | 38                                                                                       |
|  Total                         |   $           542       |

----

|                                                                                                                                                                                                          | 2008                 | 2007                 |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------|----------------------|
| Expected      volatility assumption was based upon a combination of historical stock      price volatility measured on a twice a month basis and is a reasonable      indicator of expected volatility.  |  133%           |  136%           |
| Risk-free      interest rate assumption is based upon U.S. Treasury bond interest rates      appropriate for the term of the Company’s employee stock      options.                                |  2.97%          |  4.65%          |
| Dividend      yield assumption is based on our history and expectation of dividend      payments.                                                                                                        |  None           |  None           |
| Estimated      expected term (average of number years) is based on the simplified method      as prescribed by SAB 107/110.                                                                                   |  6.2      years |  5.7      years |

----

|                                                                                        |   | Year      endedDecember 31, 2008 |   |   | Year      endedDecember 31, 2007 |   |
|---------------------------------------------------------------------------------------------|--------|----------------------------------|--------|--------|----------------------------------|--------|
| Research      and development                                                               |   | $                                | 108    |   |                             | $      | 91 |   |
| General      and administrative                                                             |   |                             | 307    |   |                             |   | 957 |   |
|     Stock-based      compensation expense included in operating expense |   |                             | 415    |   |                             |   | 1,048 |   |
|                                                                                        |   |                             |   |   |                             |   |   |   |
| Total      stock-based compensation expense                                                 |   |                             | 415    |   |                             |   | 1,048 |   |
| Tax      benefit                                                                            |   |                             | -      |   |                             |   | - |   |
|     Stock-based      compensation expense, net of tax                   |   | $                                | 415    |   |                             | $      | 1,048 |   |
|                                                                                        |   |                             |   |   |                             |   |   |   |

----

----

|       |   |       |    |   |     |   |   |          |   |   |  Fair Value    |   |
|------------|--------|------------|---------|--------|----------|--------|--------|---------------|--------|--------|---------------------|--------|
|       |   | Consulting |    |   | Office   |   |   | Expense       |   |   | of      exercisable |   |
|  Year |   | Fees       |    |   | Expenses |   |   | Reimbursement |   |   | Options/Warrants    |   |
|  2008 |   | $          | 320,000 |   |     | $      | 30,000 |          |   | $      | 71,000              |   |   | $ | 164,000 |   |
|  2007 |   | $          | 153,000 |   |     | $      | 15,000 |          |   | $      | 12,000              |   |   | $ | 76,000 |   |

|            |   | Consulting |         |   | Expense       |   |        |   |
|------------|--------|------------|--------------|--------|---------------|--------|-------------|--------|
|  Year |   | Fees       |         |   | Reimbursement |   |        |   |
|  2008 |   | $          | 31,000       |   |          | $      |  3,000 |   |   |   |
|  2007 |   | $          | 70,000  |   |          | $      | 2,000       |   |   |

|  Property and      equipment consists of the following:   |   | December    31, |         |
|--------------------------------------------------------------------------|--------|-----------------|--------------|
|                                                                     |   | 2008            |         |   | 2007 |   |
|  Laboratory      equipment                                     |   | $               | 831,000      |   |   | $ |  824,000 |   |
|  Laboratory and      building improvements                          |   |            | 58,000       |   |   |   | 58,000 |   |
|  Furniture and      equipment         |   |            | 75,000  |   |   |   | 40,000 |   |
|                                                                     |   |            | 964,000      |   |   |   | 922,000 |   |
|  Less      accumulated depreciation and amortization           |   |            | 877,000      |   |   |   | 792,000 |   |
|  Net property      and equipment                                    |   | $               | 87,000       |   |   | $ | 130,000 |   |

----

----

|  Future                  |            |
|------------------------------------|-----------------|
|  Maturities    |  Debt      |
|  2011                         |  5,500,000 |

----

----

|                                                                     |   | Warrants                            |   |     Exercise                                                                     |   | Expiration             |
|--------------------------------------------------------------------------|--------|-------------------------------------|--------|------------------------------------------------------------------------------------------------------|--------|------------------------|
|         Summary of      Warrants |   |   Outstanding   |   |      Price                                              |   |    Date |
| 2008      preferred stock offering (a)                                   |   | 499,584                             |   | $                     3.5 |   | 2/24/14                |
| 2008      Somanta accounts payable (b)                                   |   | 246,753                             |   | 3.5                                                                                                  |   | 1/04/14                |
| 2008      Warrants assumed on acquisition (c)                            |   | 191,991                             |   | 18.55-69.57                                                                                          |   | 6/9/10-1/31/12         |
| 2008      investor relations advisor (d)                                 |   | 50,000                              |   | 3.15                                                                                                 |   | 1/3/13                 |
| 2008      investor relations advisor (e)                                 |   | 40,000                              |   | 3                                                                                                    |   | 9/1/13                 |
| 2008      scientific consultant (f)                                      |   | 200,000                             |   | 3.15                                                                                                 |   | 1/4/12                 |
| 2007      preferred stock offering (g)                                   |   | 3,649,880                           |   | 3.5                                                                                                  |   | 11/10/13               |
| 2006      convertible note (h)                                           |   | 3,863,634                           |   | 1.32                                                                                                 |   | 2/16/12                |
| 2006      convertible note (h)                                           |   | 386,364                             |   | 1.32                                                                                                 |   | 10/24/12               |
| 2006      convertible note (h)                                           |   | 386,364                             |   | 1.32                                                                                                 |   | 12/06/12               |
| 2006      investor relations advisor (i)                                 |   | 50,000                              |   | 2.7                                                                                                  |   | 12/27/11               |
| 2004      offering (j)                                                   |   | 89,461                              |   | 35.5                                                                                                 |   | 2/24/09                |
| 2004      offering (j)                                                   |   | 31,295                              |   | 27                                                                                                   |   | 2/24/2009              |
| 2002      scientific consultant (k)                                      |   | 2,000                               |   | 24.8                                                                                                 |   | 2/01/2009              |
|         Total                    |   |    9,687,326         |   |                                                                                                 |   |                   |

----

| a)   | In      connection with the preferred stock offering in February 2008, warrants to      purchase a total of 499,584 shares of common stock were issued. All of the      warrants are exercisable immediately and expire six years from date of      issue. The fair value of the warrants was $2.29 per share on the date of      the grant using the Black-Scholes pricing model with the following      assumptions: expected dividend yield 0.0%, risk-free interest rate 2.75%,      expected volatility 110% and a term of 6  years. |
|----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| b)   | In      exchange for $1,576,000 due Somanta vendors, the vendors were given      538,508 shares of common stock and warrants to purchase 246,753 shares of      common stock at $3.50. The warrants expire January 4,  2014. |
|----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| c)   | We      assumed three warrants in the Somanta  acquisition: |
|----------------|-------------------------------------------------------------|

|   | -Warrant      #2 – 31,943 shares of our common stock at $18.55 per share and expires      January 31, 2012. |
|--------|-------------------------------------------------------------------------------------------------------------------|

|   | -Warrant      #3 – 159,725 shares of our common stock at $23.19 per share and expires      January 31, 2012. |
|--------|--------------------------------------------------------------------------------------------------------------------|

| d)   | During      2008, an investor relations advisor received warrants to purchase 50,000      shares of common stock at an exercise price of $3.15 per share at any time      until January 3, 2013, for investor relations consulting services to be      rendered in 2008. 25,000 of the warrants were exercisable on July 3, 2008      and 25,000 of the warrants will be exercisable January 3, 2009. The fair      value of the warrants was $2.24 per share on the date of the grant using      the Black-Scholes pricing model with the following assumptions: expected      dividend yield 0.0%, risk-free interest rate 3.13%, expected volatility      127% and a term of 5 years. |
|----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| e)   | During      2008, an investor relations advisor received warrants to purchase 40,000      shares of common stock at an exercise price of $3.00 per share at any time      until September 1, 2013, for investor relations consulting services. All      of the warrants are exercisable. The fair value of the warrants was $2.61      per share on the date of the grant using the Black-Scholes pricing model      with the following assumptions: expected dividend yield 0.0%, risk-free      interest rate 2.37%, expected volatility 132% and a term of 5      years. |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| f)   | During      2008, a director who is also a scientific advisor received warrants to      purchase 200,000 shares of common stock at an exercise price of $3.15 per      share at any time until January 4, 2012, for scientific consulting      services rendered in 2008. The warrants vest over two years in 50,000      share blocks with vesting on July 4, 2008, January 4, 2009, July 4, 2009      and the remaining shares on January 4, 2010. The fair value of the      warrants was $1.78 per share on the date of the grant using the      Black-Scholes pricing model with the following assumptions: expected      dividend yield 0.0%, risk-free interest rate 2.01%, expected volatility      92% and a term of 4 years. |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| g)   | In      connection with the preferred stock offering in November 2007, warrants to      purchase a total of 3,649,880 shares of common stock were issued. All of      the warrants are exercisable immediately and expire six years from      date of issue. The fair value of the warrants was $2.50 per share on the      date of the grant using the Black-Scholes pricing model with the following      assumptions: expected dividend yield 0.0%, risk-free interest rate 3.84%,      expected volatility 114% and a term of 6  years. |
|----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| h)   | In      connection with the convertible note offerings in 2006, warrants to      purchase a total of 4,636,362 shares of common stock were issued. All of      the warrants are exercisable immediately and expire six years from date of      issue. |
|----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| i)   | During      2006, an investor relations advisor received warrants to purchase 50,000      shares of common stock at an exercise price of $2.70 per share at any time      from December 27, 2006 until December 27, 2011, for investor relations      consulting services rendered in 2007. All of the warrants are      exercisable. |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| j)   | In      connection with offering of common stock in 2004, warrants to purchase a      total of 120,756 shares of common stock were issued. All of the warrants      are exercisable and expire five years from date of    issuance. |
|----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| k)   | During      2002, a director who is also a scientific advisor received warrants to      purchase 2,000 shares of common stock at an exercise price of $24.55 per      share at any time until February 1, 2009, for scientific consulting      services rendered in 2002. |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                          |   |    |      |    | Weighted- |   |
|-----------------------------------------------|--------|---------|-----------|---------|-----------|--------|
|                                          |   |    |      |    | average   |   |
|                                          |   |    |      |    | exercise  |   |
|                                          |   | Options |      |    | price     |   |
| Outstanding      options at January 1, 2007   |   |    | 802,672   |    |      | $      | 1.04 |   |
| Granted,      fair value of $ 3.27 per share  |   |    | 230,000   |    |      |   | 3.62 |   |
| Exercised                                     |   |    | (31,286   | )  |      |   | 1.11 |   |
| Expired                                       |   |    | (75,000   | )       |      |   | 2.14 |   |
| Outstanding      options at December 31, 2007 |   |    | 926,386   |    |      |   | 1.59 |   |
|                                          |   |    |      |    |      |   |   |   |
|                                          |   |    |      |    |      |   |   |   |
| Granted,      fair value of $ 2.73 per share  |   |    | 305,000   |    |      |   | 3.00 |   |
| Exercised                                     |   |    | (25,250   | )       |      |   | 0.63 |   |
| Expired                                       |   |    | (69,316   | )  |      |   | 3.17 |   |
| Outstanding      options at December 31, 2008 |   |    | 1,136,820 |    |      |   | 1.90 |   |
|                                          |   |    |      |    |      |   |   |   |
| Exercisable      at December 31, 2008         |   |    | 859,112   |    |      |   | 1.53 |   |

|                          | Number      of    | Weighted      average | Number      of | Weighted-average |
|-------------------------------|-------------------|-----------------------|----------------|------------------|
|                          | options           | Remaining             | Exercise       | options          | Remaining | Exercise |
| Range      of exercise prices |  outstanding | life      in years    | price          | exercisable      | life      in years | price |
| $0.63      - 0.85             | 641,500           | 8.0                   | $0.63          | 641,500          | 8.0 | $0.63 |
| $2.90      - 7.23             | 495,320           | 9.2                   | $3.53          | 217,612          | 8.5 | 4.16 |
|                          | 1,136,820         |                  |           | 859,112          |   |   |

----

|                                          |   |     |   |   | Weighted- |   |
|-----------------------------------------------|--------|----------|--------|--------|-----------|--------|
|                                          |   |     |   |   | average   |   |
|                                          |   |     |   |   | exercise  |   |
|                                          |   | Options  |   |   | price     |   |
| Outstanding      options at January 1, 2007   |   | 360,917  |   |   | $         | 18.03  |   |
| Expired                                       |   | (198,500 | )      |   |      | 20.07  |   |
| Outstanding      options at December 31, 2007 |   | 162,417  |   |   |      | 15.53  |   |
|                                          |   |     |   |   |      |   |   |
| Expired                                       |   | (44,417  | )      |   |      | 16.57  |   |
| Outstanding      options at December 31, 2008 |   | 118,000  |   |   |      | 15.14  |   |
|                                          |   |     |   |   |      |   |   |
| Exercisable      at December 31, 2008         |   | 116,558  |   |   |      | 15.18  |   |

|                          | Number      of | Weighted      average | Number      of | Weighted-average  |
|-------------------------------|----------------|-----------------------|----------------|-------------------|
|                          | Options        | Remaining             | Exercise       | options           | Remaining | Exercise |
| Range      of exercise prices | outstanding    | life      in years    | price          |  exercisable | life      in years | price |
| $10.00      - 12.50           | 75,640         | 4.2                   | $11.39         | 74,198            | 4.1 | $11.39 |
| $14.05      - 18.65           | 22,800         | 3.9                   | $17,76         | 22,800            | 3.9 | $17.76 |
| $20.25      – 29.25     | 19,560         | 5.3                   | $26.58         | 19,560            | 5.3 | $26.58 |
|                          | 118,000        |                  |           | 116,558           |   |   |

| ·   | Approximately      1.5 million shares of Access common stock were issued to the common and      preferred shareholders of Somanta as consideration having a value of      approximately $4,650,000 (the value was calculated using Access’ stock      price on January 4, 2008, times the number of shares    issued); |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | exchange      of all outstanding warrants for Somanta common stock for warrants to      purchase 191,991 shares of Access common stock at exercise prices ranging      between $18.55 and $69.57 per share. The warrants were valued at      approximately $281,000. All of the warrants are exercisable immediately      and expire approximately four years from date of issue. The weighted      average fair value of the warrants was $1.46 per share on the date of the      grant using the Black-Scholes pricing model with the following      assumptions: expected dividend yield 0.0%, risk-free interest rate 3.26%,      expected volatility 114% and an expected term of approximately 4      years; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | paid      an aggregate of $475,000 in direct transaction costs;  and |
|--------------------|----------------------------------------------------------------------|

| ·   | cancelled      receivable from Somanta of$931,000. |
|--------------------|----------------------------------------------------|

----

| Cash                                       |   | $      | 1      |   |
|--------------------------------------------|--------|--------|--------|--------|
| Prepaid      expenses                      |   |   | 25     |   |
| Office      equipment                      |   |   | 14     |   |
| Accounts      payable                      |   |   | (2,582 | )      |
| In-process      research & development |   |   | 8,879  |   |
|                                       |   | $      | 6,337  |   |

|                                                                                      |   | Twelve      months endedDecember 31, |    |
|-------------------------------------------------------------------------------------------|--------|--------------------------------------|---------|
|                                                                                      |   | 2008                                 |    |   | 2007 |   |
| Net      loss allocable      to common stockholders                                       |   | $                                    | (20,573 | ) |   | $ | (33,902 | ) |
|                                                                                      |   |                                 |    |   |   |   |   |   |
| Net      loss per common shares (basic and diluted)                                       |   | $                                    | (3.51   | ) |   | $ | (6.71 | ) |
|                                                                                      |   |                                 |    |   |   |   |   |   |
| Weighted      average common shares outstanding   (basic      and diluted) |   |                                 | 5,854   |   |   |   | 5,052 |   |

|                                                                         |      2008                                              |   |      2007                                              |
|------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------|
|                                                                         |                                                                                                     |   |                                                                                                     |
| Income      taxes at U.S. statutory rate                                     | ($6,995,000)                                                                                             |   | ($7,393,000)                                                                                             |
| Change      in valuation allowance                                           | 2,155,000                                                                                                |   | 3,015,000                                                                                                |
| Change      in miscellaneous items                                           | -                                                                                                        |   | -                                                                                                        |
| Benefit      of foreign losses not recognized                                | 59,000                                                                                                   |   | 56,000                                                                                                   |
| Expenses      not deductible                                                 | 4,224,000                                                                                                |   |      3,957,000                                                                  |
| Expiration      of net operating loss and general                            |                                                                                                     |   |
|     business      credit carryforwards, net of revisions | 557,000                                                                                                  |   | 365,000                                                                                                  |
|       Total      tax expense                   | $               -   |   | $               -   |
|                                                                         |                                                                                                     |   |                                                                                                     |

----

|                                       |   | December 31, |        |
|--------------------------------------------|--------|--------------|-------------|
|                                       |   | 2008         |        |   | 2007 |   |
| Deferred      tax assets                   |   |         |        |   |   |   |
| Net      operating loss carryforwards      |   | $            | 26,289,000  |   |   | $ | 25,693,000 |   |
| General      business credit carryforwards |   |         | 3,217,000   |   |   |   | 2,469,000 |   |
| Property,      equipment and goodwill      |   |         | 54,000      |   |   |   |         87,000 |   |
| Deferred      revenue                      |   |         | 310,000     |   |   |   | - |   |
| Other                                      |   |         | 534,000     |   |   |   | - |   |
|                                       |   |         |        |   |   |   |   |   |
| Gross      deferred tax assets             |   |         | 30,404,000  |   |   |   | 28,249,000 |   |
| Valuation      allowance                   |   |         | (30,404,000 | ) |   |   | (28,249,000 | ) |
|                                       |   |         |        |   |   |   |   |   |
| Net      deferred taxes                    |   | $            | -           |   |   | $ | - |   |

|       |   | Net      operating |       |   | General      business |   |
|------------|--------|--------------------|------------|--------|-----------------------|--------|
|       |   | loss carryforwards |       |   | credit carryforwards  |   |
| 2009       |   | $                  | 1,661,000  |   |                  | $      | 193,000 |   |
| 2010       |   |               | 2,171,000  |   |                  |   | 157,000 |   |
| 2012       |   |               | 4,488,000  |   |                  |   | 30,000 |   |
| 2013       |   |               | 4,212,000  |   |                  |   | 94,000 |   |
| 2014       |   |               | 3,324,000  |   |                  |   | 129,000 |   |
| Thereafter |   |               | 61,464,000 |   |                  |   | 2,614,000 |   |
|       |   |               | 77,320,000 |   |                  |   | 3,217,000 |   |
|       |   |               |       |   |                  |   |   |   |

----

|                                                           |   | 2008      Quarter Ended |    |
|----------------------------------------------------------------|--------|-------------------------|---------|
|                                                           |   | March 31                |    |   | June 30 |   |   | September 30 |   |   | December 31 |   |
| Loss      from continuing operations                           |   | $                       | (10,595 | ) |   | $ | (2,243 | ) |   | $ | (2,806 | ) |   | $ | (1,571 | ) |
| Preferred      stock dividends                                 |   |                    | (1,833  | ) |   |   | (517 | ) |   |   | (523 | ) |   |   | (485 | ) |
| Net      loss allocable to common   Stockholder |   | $                       | (12,428 | ) |   | $ | (2,760 | ) |   | $ | (3,329 | ) |   | $ | (2,056 | ) |
| Basic      and diluted loss per  common      share   |   | $                       | (2.31   | ) |   | $ | (0.49 | ) |   | $ | (0.57 | ) |   | $ | (0.31 | ) |
|                                                           |   |                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                           |   |                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                           |   | 2007      Quarter Ended |    |
|                                                           |   | March 31                |    |   | June 30 |   |   | September 30 |   |   | December 31 |   |
| Loss      from continuing operations                           |   | $                       | (4,127  | ) |   | $ | (2,109 | ) |   | $ | (1,957 | ) |   | $ | (13,663 | ) |
| Preferred      stock dividends                                 |   |                    | -       |   |   |   | - |   |   |   | - |   |   |   | (14,908 | ) |
| Discontinued      operations, net   of      tax |   |                    | -       |   |   |   | - |   |   |   | - |   |   |   | 112 |   |
| Net      loss allocable to common   Stockholder |   | $                       | (4,127  | ) |   | $ | (2,109 | ) |   | $ | (1,957 | ) |   | $ | (28,459 | ) |
| Basic      and diluted loss per  common      share   |   | $                       | (1.17   | ) |   | $ | (0.60 | ) |   | $ | (0.55 | ) |   | $ | (8.00 | ) |
|                                                           |   |                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                           |   |                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |

----