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| (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, 2010                                                                     |
| 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                              |
|  Securities registered pursuant to Section 12(g) of the Act:                                        |

| Common Stock, $0.01 par value  |
|-------------------------------------|
| Title of Each Class                 |

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| 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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|             |     |                                                                                 |   |  Page |   |
|------------------|----------|--------------------------------------------------------------------------------------|--------|------------|--------|
| Part I           |     |                                                                                 |   |       |   |
|             | Item 1.  | Business                                                                             | 2      |       |
|             | Item 1A. | Risk Factors                                                                         | 17     |       |
|             | Item 2.  | Properties                                                                           | 24     |       |
|             | Item 3.  | Legal Proceedings                                                                    | 24     |       |
|             | Item 4.  | Removed and Reserved                                                                 | 24     |       |
|             |     |                                                                                 |   |       |
| Part II          |     |                                                                                 |   |       |   |
|             | Item 5.  | Market for Registrant’s Common Equity, Related Stockholder Matters and         |   |       |
|             |     | Issuer Purchases of Equity Securities                                                | 26     |       |
|             | Item 7.  | Management’s Discussion and Analysis of Financial Condition and                |   |       |
|             |     | Results of Operations                                                                | 28     |       |
|             | Item 8.  | Financial Statements and Supplementary Data                                          | 32     |       |
|             | Item 9.  | Changes In and Disagreements With Accountants on Accounting and Financial Disclosure | 32     |       |
|             | Item 9A. | Controls and Procedures                                                              | 32     |       |
|             | Item 9B. | Other Information                                                                    | 34     |       |
|             |     |                                                                                 |   |       |
| Part III         |     |                                                                                 |   |       |   |
|             | Item 10. | Directors, Executive Officers and Corporate Governance                               | 35     |       |
|             | Item 11. | Executive Compensation                                                               | 35     |       |
|             | Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related 36        |   |       |
|             |     | Stockholder Matters                                                                  | 35     |       |
|             | Item 13. | Certain Relationships and Related Transactions and Director Independence             | 35     |       |
|             | Item 14. | Principal Accountant Fees and Services                                               | 35     |       |
|             | Item 15. | Exhibits                                                                             | 36     |       |
|             |     |                                                                                 |   |       |
|  Signatures |     |                                                                                 |   |   39  |   |

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| ·   | 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 FDA. MuGard has been launched in Germany, Italy, UK, Greece and the Nordic countries by our European commercial partner, SpePharm. We launched MuGard in the United States in September of 2010. We are working with our partners in Korea and China for registration and marketing. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Our lead development candidate for the treatment of cancer is ProLindac™, a nanopolymer DACH-platinum prodrug. We initiated a study of ProLindac combined with Paclitaxel in second line treatment of platinum pretreated advanced ovarian cancer patients in the fourth quarter of 2010. This multi-center study of up to 25 evaluable patients is being conducted in France. We are also currently planning a number of combination trials, looking at combining ProLindac with other cancer agents in solid tumor indications including colorectal and ovarian cancer. 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. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| ·   | 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 have initiated additional Phase 2 clinical trials in adult AML, ALL and other indications. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | CobOral™ 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 have conducted sponsored development of a product for oral delivery of human growth hormone. We have signed or are in discussion with several companies regarding the sponsored development of CobOral drug delivery formulations of proprietary and non-proprietary actives. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | CobaCyte™-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. This technology uses nanopolymer constructs to deliver more anti-cancer drug to tumors while protecting normal tissues. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Compound                                                                      |   | Originator                      |   |  Technology   |   | Indication |   | ClinicalStage (1)         |
|-------------------------------------------------------------------------------|--------|---------------------------------|--------|--------------------|--------|------------|--------|---------------------------|
|                                                                          |   |                            |   |               |   |       |   |                      |
| MuGard™                                                                 |   | Access                          |   | Mucoadhesiveliquid |   | Mucositis  |   | LaunchedU.S. and EU  |
| ProLindacTM (Polymer   Platinate, AP5346)  (2)  |   | Access /Univ ofLondon      |   | Syntheticpolymer   |   | Cancer     |   | Phase 2                   |
| Thiarabine (4-thio Ara-C) (3)                                                 |   | SouthernResearchInstitute  |   | Smallmolecule      |   | Cancer     |   | Phase 1/2                 |
| Oral Insulin                                                             |   | Access                          |   | Cobalamin          |   | Diabetes   |   | Pre-clinical              |
| CobOral™ Delivery System                                           |   | Access                          |   | Cobalamin          |   | Various    |   | Pre-clinical              |
| CobaCyte™-Targeted Therapeutics                                         |   | Access                          |   | Cobalamin          |   | Anti-tumor |   | Pre-clinical              |

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| ·   | Synthetic Polymer Targeted Drug Delivery Technology; |
|--------------------|------------------------------------------------------|

| ·   | CobOral™-Mediated Oral Delivery Technology; and |
|--------------------|-------------------------------------------------------|

| ·   | CobaCyte™-Mediated Targeted Delivery Technology. |
|--------------------|--------------------------------------------------------|

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----

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| -   | 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 four U.S. and four European patent applications; and |
|---------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| -   | 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 two U.S. and one European patent application. |
|---------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Mucoadhesive technology in 2030, |
|--------------------|----------------------------------|

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

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

| ·   | CobaCyte/CobOral mediated technology between 2011 and 2030. |
|--------------------|-------------------------------------------------------------|

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

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

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

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

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

| ·   | third parties may market superior or equivalent drugs. |
|--------------------|--------------------------------------------------------|

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

| ·   | the trend toward managed health care in the U.S. 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. |
|--------------------|-------------------------------------------------------------------------------------|

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|                                |   | Common Stock                                                                                               |
|-------------------------------------|--------|------------------------------------------------------------------------------------------------------------|
|                                |   | High                                                                                                       |   | Low |
| Fiscal Year Ended December 31, 2010 |   |                                                                                                       |   |   |
| First quarter                       |   | $             3.29                        |   | $             2.44 |
| Second quarter                      |   | 2.80                                                                                                       |   | 1.96 |
| Third quarter                       |   | 2.20                                                                                                       |   | 1.80 |
| Fourth quarter                      |   | 3.29                                                                                                       |   | 2.15 |
|                                |   |                                                                                                       |   |   |
| Fiscal Year Ended December 31, 2009 |   |                                                                                                       |   |   |
| First quarter                       |   | $             1.85                        |   | $             0.77 |
| Second quarter                      |   | 2.25                                                                                                       |   | 1.25 |
| Third quarter                       |   | 4.70                                                                                                       |   | 1.84 |
| Fourth quarter                      |   |                  3.50 |   |                   2.80 |

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|                                                   |   |                                                                                  |                            |                                |                                                          | 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)) |
|                                                   |   | (a)                                                                                   |                            | (b)                                 |                                                          | (c)                                              |
|                                                   |   |                                                                                  |                            |                                |                                                          |                                             |
| Equity compensation plans                              |   |                                                                                  |                            |                                |                                                          |                                             |
|   approved by security                       |   |                                                                                  |                            |                                |                                                          |                                             |
|   holders:                                   |   |                                                                                  |                            |                                |                                                          |                                             |
|     2005 Equity Incentive Plan     |   | 1,748,733                                                                             |                            | $2.13                               |                                                          | 2,482,642                                        |
|     1995 Stock Awards Plan         |   | 59,500                                                                                |                            | 16.80                               |                                                          | -                                                |
|     2001 Restricted Stock Plan     |   | -                                                                                     |                            | -                                   |                                                          | 52,818                                           |
|                                                   |   |                                                                                  |                            |                                |                                                          |                                             |
| Equity compensation plans                              |   |                                                                                  |                            |                                |                                                          |                                             |
|   not approved by security                   |   |                                                                                  |                            |                                |                                                          |                                             |
|   holders:                                   |   |                                                                                  |                            |                                |                                                          |                                             |
|     2007 Special Stock Option Plan |   |               - |                            |                                |           - |                                             |   | 450,000 |
| Total                                                  |   |                                                                                  | 1,808,233                       |                                |                                                          | $2.61                                            |   |   | 2,985,460 |

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

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

| ·   | increased salary and related costs due to existing employees paid at full salary for the full year of 2010 while employees were paid at a reduced salary for seven months of 2009 plus the addition of a new employee ($499,000); |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | increased stock compensation expense due to additional option grants for research and development employees ($297,000); |
|--------------------|-------------------------------------------------------------------------------------------------------------------------|

| ·   | increased clinical development with the planned starts in trials for MuGard, ProLindac and Thiarabine ($242,000); and |
|--------------------|-----------------------------------------------------------------------------------------------------------------------|

| ·   | other net increases in research spending ($1,000); |
|--------------------|----------------------------------------------------|

| ·   | offset by decreased development costs ($235,000); and |
|--------------------|-------------------------------------------------------|

| ·   | offset by decreased scientific consulting expenses ($112,000). |
|--------------------|----------------------------------------------------------------|

| ·   | lower general business consulting expenses due to reduction in use of outside consultants ($1,921,000); |
|--------------------|---------------------------------------------------------------------------------------------------------|

| ·   | lower potential liquidated damages under an investor rights agreement with certain investors ($182,000); |
|--------------------|----------------------------------------------------------------------------------------------------------|

| ·   | lower stock compensation expense due to fewer option grants for general and administrative employees ($92,000); |
|--------------------|-----------------------------------------------------------------------------------------------------------------|

| ·   | lower patent and license fees ($222,000); |
|--------------------|-------------------------------------------|

| ·   | lower costs from MacroChem ($180,000); and |
|--------------------|--------------------------------------------|

| ·   | other net decreases in other general and administrative expenses ($4,000). |
|--------------------|----------------------------------------------------------------------------|

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

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

| ·   | 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 clinical trials; |
|--------------------|---------------------------------------------------|

| ·   | 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 To Date (1) |   |
|-------------------------------------------------|--------|---------------------------------------|-----------|--------|----------------------------|--------|
| Project                                         |   | 2010                                  |      |   | 2009                       |   |   |   |   |
| Polymer Platinate (ProLindac™)       |   | $                                     | 2,697     |   |                       | $      | 2,507 |   |   | $ | 30,823 |   |
| Mucoadhesive Liquid  Technology (MLT) |   |                                  |  329 |   |                       |   | 107 |   |   |   | 1,947 |   |
| Others (2)                                      |   |                                  | 323       |   |                       |   |  43 |   |   |   | 5,760 |   |
| Total                                           |   | $                                     | 3,349     |   |                       | $      | 2,657 |   |   | $ | 38,530 |   |
|                                            |   |                                  |      |   |                       |   |   |   |   |   |   |   |

| (1)   | Cumulative spending from inception of the Company or project through December 31, 2010. |
|-----------------|-----------------------------------------------------------------------------------------|

| (2)   | Includes:  CobOral, CobaCyte, Thiarabine and other projects. |
|-----------------|------------------------------------------------------------------------|

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|                                                                                                                      |     Page |
|--------------------------------------------------------------------------------------------------------------------------------|-------------------------|
|   a.  Financial Statements.  The following financial statements are submitted as part of this report: |                    |
|                                                                                                                           |                    |
| Report of Independent Registered Public Accounting Firm                                                                   | F-1                     |
|                                                                                                                           |                    |
| Consolidated Balance Sheets at December 31, 2010 and 2009                                                                      | F-2                     |
|                                                                                                                           |                    |
| Consolidated Statements of Operations for 2010 and 2009                                                                        | F-3                     |
|                                                                                                                           |                    |
| Consolidated Statements of Stockholders’ Deficit for 2010 and 2009                                                  | F-4                     |
|                                                                                                                           |                    |
| Consolidated Statements of Cash Flows for 2010 and 2009                                                                        | 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) |
|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

| 10.6 | Form of Convertible Note (Incorporated by reference to Exhibit 25 of our Form 10-Q for the quarter ended September 30, 2000) |
|------|------------------------------------------------------------------------------------------------------------------------------|

| 10.7 | 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) |
|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.8 | 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) |
|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.9 | Amendment to Rights Agreement dated as of November 9, 2007 between the Registrant and American Stock Transfer & Trust Company as Rights Agent |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.10* | 2001 Restricted Stock Plan (Incorporated by reference to Exhibit 1 of our Proxy Statement filed on April 16, 2001) |
|--------|--------------------------------------------------------------------------------------------------------------------|

| 10.11* | 2005 Equity Incentive Plan (Incorporated by reference to Exhibit 1 of our Proxy Statement filed on April 18, 2005) |
|--------|--------------------------------------------------------------------------------------------------------------------|

| 10.12 | 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) |
|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.13 | 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) |
|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.14 | 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) |
|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.15 | 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) |
|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.16 | 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) |
|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.17 | 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) |
|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.18* | 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) |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.19 | 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) |
|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.20 | 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) |
|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.21 | 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) |
|-------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.22 | 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) |
|-------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.23 | 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) |
|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.24 | 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) |
|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.25 | 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) |
|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.26* | 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) |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.27 | Form of Securities Purchase Agreement (Incorporated by reference to Exhibit 10.29 of our Form S-1 filed on January 15, 2010) |
|-------|------------------------------------------------------------------------------------------------------------------------------|

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| 10.28 | Form of Warrant (Incorporated by reference to Exhibit 10.30 of our Form S-1 filed on January 15, 2010) |
|-------|--------------------------------------------------------------------------------------------------------|

| 10.29* | Employment Agreement of David P. Nowotnik, PhD (Incorporated by reference to Exhibit 10.31 of our Form 8-K February 8, 2010) |
|--------|------------------------------------------------------------------------------------------------------------------------------|

| 10.30 | Form of Securities Purchase Agreement dated as of December 10, 2010 by and among us and the Purchasers named therein (Incorporated by reference to Exhibit 10.1 of our Form 8-K filed on December 14, 2010) |
|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.31 | Form of Common Stock Warrant issued by us (Incorporated by reference to Exhibit 10.1 of our Form 8-K filed on December 14, 2010) |
|-------|----------------------------------------------------------------------------------------------------------------------------------|

| 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 and 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 15c of the report. |
|---------------|------------------------------------------------------------------------------------------------------------------------------|

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| Date March 31, 2011 | By:    | /s/ Jeffrey B. Davis                       |
|---------------------|--------|--------------------------------------------|
|                |   | Jeffrey B. Davis                           |
|                |   | Chief Executive Officer                    |
|                |   | Principal Executive Officer                |
|                |   |                                       |
| Date March 31, 2011 | By:    | /s/ Stephen B. Thompson                    |
|                |   | Stephen B. Thompson                        |
|                |   | Vice President, Chief Financial            |
|                |   |  Officer and Treasurer                |
|                |   | Principal Financial and Accounting Officer |
|                |   |                                       |

| Date March 31, 2011 | By:    | /s/ Jeffrey B. Davis                       |
|---------------------|--------|--------------------------------------------|
|                |   | Jeffrey B. Davis, Director                 |
|                |   | Chief Executive Officer                    |
|                |   | Principal Executive Officer                |
|                |   |                                       |
| Date March 31, 2011 | By:    | /s/ Stephen B. Thompson                    |
|                |   | Stephen B. Thompson                        |
|                |   | Vice President, Chief Financial            |
|                |   |  Officer and Treasurer                |
|                |   | Principal Financial and Accounting Officer |
|                |   |                                       |
| Date March 31, 2011 | By:    | /s/ Mark J. Ahn                            |
|                |   | Mark J. Ahn, Director                      |
|                |   |                                       |
| Date March 31, 2011 | By:    | /s/ Mark J. Alvino                         |
|                |   | Mark J. Alvino, Director                   |
|                |   |                                       |
| Date March 31, 2011 | By:    | /s/ Esteban Cvitkovic                      |
|                |   | Esteban Cvitkovic, Director                |
|                |   |                                       |
| Date March 31, 2011 | By:    | /s/ Stephen B. Howell                      |
|                |   | Stephen B. Howell, Director                |
|                |   |                                       |
| Date March 31, 2011 | By:    | /s/ Steven H. Rouhandeh                    |
|                |   | Steven H. Rouhandeh, Chairman of           |
|                |   | the Board                                  |

----

----

|                           ASSETS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  December 31, 2010                                                                                             |   |  December 31, 2009                                                                                                                                                                                                                                                                  |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Current assetsCash and cash equivalents      ReceivablesPrepaid expenses and other current assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  $          7,033,0001,018,00070,000                         |   |  $             607,000               36,000               42,000  |
|                  Total current assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | 8,121,000                                                                                                           |   | 685,000                                                                                                                                                                                                                                                                                            |
|  Property and equipment, net                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  32,000                                                                                                        |   |  50,000                                                                                                                                                                                                                                                                                       |
|  Patents, net                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  574,000                                                                                                       |   |  787,000                                                                                                                                                                                                                                                                                      |
|  Other assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  44,000                                                                                                        |   |  61,000                                                                                                                                                                                                                                                                                       |
|             Total assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | $          8,771,000                                              |   | $          1,583,000                                                                                                                                                                                                                             |
|            LIABILITIES AND STOCKHOLDERS' DEFICIT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                |   |                                                                                                                                                                                                                                                                                               |
| Current liabilities  Accounts payable  Accrued expenses  Dividends payable  Accrued interest payable  Convertible debt, current portion  Current portion of deferred revenue                                                                                                                                                                                                                                                                                                                                                                                                              |  $          2,984,000857,0004,443,000126,0005,500,000347,000 |   |  $          4,094,000857,0002,773,000563,000-347,000                                                                                                                                                                                        |
|          Total current liabilities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | 14,257,000                                                                                                          |   | 8,634,000                                                                                                                                                                                                                                                                                          |
|  Derivative liability-warrants                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  5,087,000                                                                                                     |   |  9,708,000                                                                                                                                                                                                                                                                                    |
| Derivative liability-preferred stockLong-term deferred revenueLong-term convertible debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | 5,840,0004,382,000-                                                                                                 |   | -4,730,0005,500,000                                                                                                                                                                                                                                                                                |
|  Total liabilities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | 29,566,000                                                                                                          |   | 28,572,000                                                                                                                                                                                                                                                                                         |
|  Commitments and contingencies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                |   |                                                                                                                                                                                                                                                                                               |
| Stockholders' deficit  Convertible preferred stock - $.01 par value; authorized 2,000,000 shares;     2,978.3617 issued at December 31, 2010; 2,992.3617 issued at     December 31, 2009  Common stock - $.01 par value; authorized 100,000,000 shares;     issued 19,115,010 at December 31, 2010; issued 13,171,545      at December 31, 2009  Additional paid-in capital  Notes receivable from stockholders  Treasury stock, at cost – 163 shares  Accumulated deficit |    -  191,000230,153,000-(4,000)(251,135,000)                                              |   |    -  132,000215,735,000(1,045,000)(4,000)(241,807,000)                                                                                                                                                                                                                   |
|                 Total stockholders' deficit                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | (20,795,000)                                                                                                        |   | (26,989,000)                                                                                                                                                                                                                                                                                       |
|             Total liabilities and stockholders' deficit                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | $          8,771,000                                              |   | $          1,583,000                                                                                                                                                                                                                             |

----

|                                                                                |   | December 31, |       |
|-------------------------------------------------------------------------------------|--------|--------------|------------|
|                                                                                |   | 2010         |       |   | 2009 |   |
|                                                                                |   |         |       |   |   |   |
| Revenues                                                                            |   |         |       |   |   |   |
| License revenues                                                                    |   | $            | 347,000    |   |   | $ | 315,000 |   |
| Sponsored research and development                                                  |   |         | 58,000     |   |   |   | - |   |
| Royalties                                                                           |   |         | 76,000     |   |   |   | 37,000 |   |
| Total revenues                                                                      |   |         | 481,000    |   |   |   | 352,000 |   |
|                                                                                |   |         |       |   |   |   |   |   |
| Expenses                                                                            |   |         |       |   |   |   |   |   |
| Research and development                                                            |   |         | 3,349,000  |   |   |   | 2,657,000 |   |
| Product costs                                                                       |   |         | 140,000    |   |   |   | - |   |
| General and administrative                                                          |   |         | 4,511,000  |   |   |   | 7,112,000 |   |
| Depreciation and amortization                                                       |   |         | 238,000    |   |   |   | 259,000 |   |
| Total expenses                                                                      |   |         | 8,238,000  |   |   |   | 10,028,000 |   |
|                                                                                |   |         |       |   |   |   |   |   |
| Loss from operations                                                                |   |         | (7,757,000 | ) |   |   | (9,676,000 | ) |
|                                                                                |   |         |       |   |   |   |   |   |
| Interest and miscellaneous income                                                   |   |         | 2,046,000  |   |   |   | 29,000 |   |
| Interest and other expense                                                          |   |         | (607,000   | ) |   |   | (539,000 | ) |
| Gain (loss) on change in fair value of derivative-warrants                          |   |         | 4,621,000  |   |   |   | (7,154,000 | ) |
| Loss on change in fair value of derivative-preferred stock                          |   |         | (5,840,000 | ) |   |   | - |   |
|                                                                                |   |         | 220,000    |   |   |   | (7,664,000 | ) |
| Net loss                                                                            |   |         | (7,537,000 | ) |   |   | (17,340,000 | ) |
|                                                                                |   |         |       |   |   |   |   |   |
| Less preferred stock dividends                                                      |   |         | (1,791,000 | ) |   |   | (1,886,000 | ) |
| Net loss allocable to common stockholders                                           |   | $            | (9,328,000 | ) |   | $ | (19,226,000 | ) |
|                                                                                |   |         |       |   |   |   |   |   |
|                                                                                |   |         |       |   |   |   |   |   |
| Basic and diluted loss per common share                                             |   |         |       |   |   |   |   |   |
|     Net loss allocable to common stockholders                   |   | $            | (0.60      | ) |   | $ | (1.63 | ) |
|                                                                                |   |         |       |   |   |   |   |   |
| Weighted average basic and diluted common shares    outstanding |   |         | 15,633,110 |   |   |   | 11,818,530 |   |
|                                                                                |   |         |       |   |   |   |   |   |

----

|   | Common Stock | Preferred Stock |  Additionalpaid-incapital | Notes receivable from stockholders |   Treasury stock |   Accumulated deficit |
|--------|--------------|-----------------|--------------------------------|------------------------------------|----------------------------|---------------------------------|
|   | Shares       | Amount          | Shares                         | Amount                             |
| Balance, December 31, 2008                                                                                                                                                                      | 9,467,000                                         | $95,000                                            | 3,242.8617                                | $              -                 |  $225,753,000                                                       | $(1,045,000)                                                                                                           | $(4,000)                                                  | $(235,985,000)                               |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------|----------------------------------------------------|-------------------------------------------|---------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------|----------------------------------------------|
| Cumulative effect of a  change in accounting  principle (See Note 9)                                                                                                             |   -                                     |   -                                      |   -                             |   -                                                                                     |   (15,957,000)                                                 |   -                                                                                                          |   -                                             |   13,404,000                       |
| Restricted common stock   issued for services                                                                                                                                         |  687,000                                     |  8,000                                        |  -                                   |  -                                                                                           |  2,199,000                                                          |  -                                                                                                                |  -                                                   |  -                                      |
| Warrants issued for   services                                                                                                                                                        |  -                                           |  -                                            |  -                                   |  -                                                                                           |  796,000                                                            |  -                                                                                                                |  -                                                   |  -                                      |
| Common stock issued   for cash exercise   of options                                                                                                                   |   250,000                               |   2,000                                  |   -                             |   -                                                                                     |   177,000                                                      |   -                                                                                                          |   -                                             |   -                                |
| Common stock issued   for cashless warrant   exercises                                                                                                                 |   33,000                                |   -                                      |   -                             |   -                                                                                     |   -                                                            |   -                                                                                                          |   -                                             |   -                                |
| Preferred stock converted   into common stock                                                                                                                                         |  836,000                                     |  9,000                                        |  (250.5000)                          |  -                                                                                           |  (9,000)                                                            |  -                                                                                                                |  -                                                   |  -                                      |
| Common stock issued   for preferred dividends                                                                                                                                         |  915,000                                     |  9,000                                        |  -                                   |  -                                                                                           |  918,000                                                            |  -                                                                                                                |  -                                                   |  -                                      |
| Stock option   compensation expense                                                                                                                                                   |  -                                           |  -                                            |  -                                   |  -                                                                                           |  811,000                                                            |  -                                                                                                                |  -                                                   |  -                                      |
| Common stock issued to  MacroChem noteholders  for notes and accrued  interest                                                                                         |    859,000                         |    8,000                            |    -                       |    -                                                                               |    851,000                                                |    -                                                                                                    |    -                                       |    -                          |
| Common stock issued to  former MacroChem  executives                                                                                                                             |   125,000                               |   1,000                                  |   -                             |   -                                                                                     |   196,000                                                      |   -                                                                                                          |   -                                             |   -                                |
| Preferred dividends                                                                                                                                                                                  | -                                                 | -                                                  | -                                         | -                                                                                                 | -                                                                        | -                                                                                                                      | -                                                         | (1,886,000)                                  |
| Net loss                                                                                                                                                                                             | -                                                 | -                                                  | -                                         | -                                                                                                 | -                                                                        | -                                                                                                                      | -                                                         | (17,340,000)                                 |
| Balance, December 31, 2009                                                                                                                                                                      | 13,172,000                                        |         132,000 | 2,992.3617                                |                 - |            215,735,000 |     (1,045,000)                                                                                         |       (4,000)                    |       (241,807,000) |
|                                                                                                                                                                                                 |                                              |                                               |                                      |                                                                                              |                                                                     |                                                                                                                   |                                                      |                                         |
| Restricted common stock  issued for services                                                                                                                                               |  427,000                                     |  4,000                                        |  -                                   |  -                                                                                           |  847,000                                                            |  -                                                                                                                |  -                                                   |  -                                      |
| Warrants issued for  services                                                                                                                                                              |  -                                           |  -                                            |  -                                   |  -                                                                                           |  74,000                                                             |  -                                                                                                                |  -                                                   |  -                                      |
| Common stock issued  for cash exercise  of optionsCommon stock issued  for cashless warrant  exercisesPreferred stock converted  into common stock |   153,000  42,000 47,000 |   2,000  - -              |   -  - (14.0000) |   -  - -                                                                 |   191,000  - -                                  |   -  - -                                                                                      |   -  - -                         |   -  - -            |
| Common stock issued  for preferred dividends                                                                                                                                               |  127,000                                     |  1,000                                        |  -                                   |  -                                                                                           |  287,000                                                            |  -                                                                                                                |  -                                                   |  -                                      |
| Stock option  compensation expense                                                                                                                                                         |  -                                           |  -                                            |  -                                   |  -                                                                                           |  1,015,000                                                          |  -                                                                                                                |  -                                                   |  -                                      |
| Common stock issued  $3.00 share, net of costs                                                                                                                                             |  2,083,000                                   |  21,000                                       |  -                                   |  -                                                                                           |  5,827,000                                                          |  -                                                                                                                |  -                                                   |  -                                      |
| Common stock issued  $2.55 share, net of costs                                                                                                                                             |  3,102,000                                   |  31,000                                       |  -                                   |  -                                                                                           |  7,222,000                                                          |  -                                                                                                                |  -                                                   |  -                                      |
| Cancellation of  notes receivable                                                                                                                                                          |  (38,000)                                    |  -                                            |  -                                   |  -                                                                                           |  (1,045,000)                                                        |  1,045,000                                                                                                        |  -                                                   |  -                                      |
| Preferred dividends                                                                                                                                                                                  | -                                                 | -                                                  | -                                         | -                                                                                                 | -                                                                        | -                                                                                                                      | -                                                         | (1,791,000)                                  |
| Net loss                                                                                                                                                                                             | -                                                 | -                                                  | -                                         | -                                                                                                 | -                                                                        | -                                                                                                                      | -                                                         | (7,537,000)                                  |
|                                                                                                                                                                                                 |                                              |                                               |                                      |                                                                                              |                                                                     |                                                                                                                   |                                                      |                                         |
| Balance, December 31,2010                                                                                                                                                                            | 19,115,000                                        | $191,000                                           | 2,978.3617                                | $                -          |  $        230,153,000       | $                     - | $         (4,000) | $      251,135,000) |

----

|                                                            |   |  Year ended December 31, |       |
|-----------------------------------------------------------------|--------|-------------------------------|------------|
|                                                            |   |                          |       |   |   |   |
|                                                            |   | 2010                          |       |   | 2009 |   |
|                                                            |   |                          |       |   |   |   |
| Cash flows from operating activities:                           |   |                          |       |   |   |   |
| Net loss                                                        |   | $                             | (7,537,000 | ) |   | $ | (17,340,000 | ) |
| Adjustments to reconcile net loss to net cash used              |   |                          |       |   |   |   |   |   |
| in operating activities:                                        |   |                          |       |   |   |   |   |   |
| Loss (gain) on change in fair value of derivative-warrants |   |                          | (4,621,000 | ) |   |   | 7,154,000 |   |
| Loss on change in fair value of derivative-preferred stock      |   |                          | 5,840,000  |   |   |   | - |   |
| Gain on negotiated payables                                     |   |                          | (509,000   | ) |   |   | - |   |
| Depreciation and amortization                                   |   |                          | 238,000    |   |   |   | 259,000 |   |
| Stock option compensation expense                               |   |                          | 1,015,000  |   |   |   | 811,000 |   |
| Stock and warrants issued for services                          |   |                          | 925,000    |   |   |   | 3,200,000 |   |
| Change in operating assets and liabilities:                     |   |                          |       |   |   |   |   |   |
| Receivables                                                     |   |                          | (982,000   | ) |   |   | 111,000 |   |
| Prepaid expenses and other current assets                       |   |                          | (28,000    | ) |   |   | 133,000 |   |
| Other assets                                                    |   |                          | 17,000     |   |   |   | 17,000 |   |
| Accounts payable and accrued expenses                           |   |                          | (601,000   | ) |   |   | 369,000 |   |
| Dividends payable                                               |   |                          | 168,000    |   |   |   | (82,000 | ) |
| Accrued interest payable                                        |   |                          | (437,000   | )  |   |   | 452,000 |   |
| Deferred revenue                                                |   |                          | (348,000   | ) |   |   | 2,668,000 |   |
| Net cash used in operating activities                           |   |                          | (6,860,000 | ) |   |   | (2,248,000 | ) |
|                                                            |   |                          |       |   |   |   |   |   |
| Cash flows from investing activities:                           |   |                          |       |   |   |   |   |   |
| Capital expenditures                                            |   |                          | (7,000     | ) |   |   | (2,000 | ) |
| Proceeds from sale of asset                                     |   |                          | -          |   |   |   | 1,000 |   |
| Net cash used in investing activities                           |   |                          | (7,000     | ) |   |   | (1,000 | ) |
|                                                            |   |                          |       |   |   |   |   |   |
| Cash flows from financing activities:                           |   |                          |       |   |   |   |   |   |
| Proceeds from exercise of stock options                         |   |                          | 192,000    |   |   |   | 179,000 |   |
| Proceeds from common stock issuances, net of costs              |   |                          | 13,101,000 |   |   |   | - |   |
| Net cash provided by financing activities                       |   |                          | 13,293,000 |   |   |   | 179,000 |   |
|                                                            |   |                          |       |   |   |   |   |   |
| Net increase (decrease) in cash and cash equivalents            |   |                          | 6,426,000  |   |   |   | (2,070,000 | ) |
| Cash and cash equivalents at beginning of year                  |   |                          | 607,000    |   |   |   | 2,677,000 |   |
| Cash and cash equivalents at end of year                        |   | $                             | 7,033,000  |   |   | $ | 607,000 |   |
|                                                            |   |                          |       |   |   |   |   |   |
| Supplemental cash flow information:                             |   |                          |       |   |   |   |   |   |
| Cash paid for interest                                          |   | $                             | 874,000    |   |   | $ | 1,000 |   |
|                                                            |   |                          |       |   |   |   |   |   |
| Supplemental disclosure of noncash transactions                 |   |                          |       |   |   |   |   |   |
| Shares issued for payables, notes payable and accrued interest  |   |                          | -          |   |   |   | 859,000 |   |
| Shares issued for dividends on preferred stock                  |   |                          | 288,000    |   |   |   | 927,000 |   |
| Warrants issued for placement agent fees                        |   |                          | 274,000    |   |   |   | - |   |
| Preferred stock dividends in dividends payable                  |   |                          | 1,791,000  |   |   |   | 1,886,000 |   |

----

----

|   | Intangible assets consist of the following (in thousands): |
|--------|------------------------------------------------------------|

----

|                                    | December 31, 2010                                      |   | December 31, 2009                                                  |
|-----------------------------------------|--------------------------------------------------------|--------|--------------------------------------------------------------------|
|                                    | Grosscarryingvalue                                     |   |  Accumulatedamortization                                      |   | Grosscarryingvalue |   |  Accumulatedamortization |
| Amortizable intangible assets - Patents |   $      2,624 |   |   $        2,050 |   |   $      2,624 |   |   $             1,837 |

|  2011       |   | $      | 212       |   |
|------------------|--------|--------|-----------|--------|
|  2012       |   |   | 82        |   |
|  2013       |   |   | 44        |   |
|  2014       |   |   | 44        |   |
|  2015       |   |   | 44        |   |
|  Thereafter |   |   | 148       |   |
|  Total      |   | $      |  574 |   |

|                                                                                                                                                                                               |   | 2010            |   | 2009            |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------|--------|-----------------|
| Expected volatility assumption was based upon a combination of historical stock price volatility measured on a weekly basis and is considered a reasonable indicator of expected volatility.  |   |  123%      |   |  115%      |
| Risk-free interest rate assumption is based upon U.S. Treasury bond interest rates appropriate for the term of the our employee stock options.                                                |   |  2.32%     |   |  2.37%     |
| 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 as we do not have sufficient information to calculate an expected term.           |   |  5.7 years |   |  5.5 years |

----

|                                                                                   |   | Year endedDecember 31, 2010 |   |   | Year endedDecember 31, 2009 |   |
|----------------------------------------------------------------------------------------|--------|-----------------------------|--------|--------|-----------------------------|--------|
| Research and development                                                               |   | $                           | 678    |   |                        | $      | 381 |   |
| General and administrative                                                             |   |                        | 337    |   |                        |   | 430 |   |
|     Stock-based compensation expense included in operating expense |   |                        | 1,015  |   |                        |   | 811 |   |
|                                                                                   |   |                        |   |   |                        |   |   |   |
| Total stock-based compensation expense                                                 |   |                        | 1,015  |   |                        |   | 811 |   |
| Tax benefit                                                                            |   |                        | -      |   |                        |   | - |   |
|     Stock-based compensation expense, net of tax                   |   | $                           | 1,015  |   |                        | $      | 811 |   |

----

|       |   |       |    |   |     |   |   |          |   |   | Fair Value     |   |
|------------|--------|------------|---------|--------|----------|--------|--------|---------------|--------|--------|----------------|--------|
|       |   | Consulting |    |   | Office   |   |   | Expense       |   |   | of exercisable |   |
|  Year |   | Fees       |    |   | Expenses |   |   | Reimbursement |   |   | Warrants       |   |
|  2010 |   | $          | 132,000 |   |     | $      | -      |          |   | $      | -              |   |   | $ | - |   |
|  2009 |   | $          | 132,000 |   |     | $      | 18,000 |          |   | $      | 10,000         |   |   | $ | 86,000 |   |
|       |   |       |    |   |     |   |   |          |   |   |           |   |   |   |   |   |

|                   |   |       |   |   |          |   |   | Fair Value    |   |
|------------------------|--------|------------|--------|--------|---------------|--------|--------|---------------|--------|
|                   |   | Consulting |   |   | Expense       |   |   | of Restricted |   |
|  Year   |   | Fees       |   |   | Reimbursement |   |   | Stock         |   |
|  2010             |   | $          | 5,000  |   |          | $      | 4,000  |          |   | $ | 23,000 |   |

| Property and equipment consists of the following:                 |   | December 31, |    |
|------------------------------------------------------------------------|--------|--------------|---------|
|                                                                   |   |         | 2010    |   |   | 2009 |   |
|  Laboratory equipment                                        |   |         | $       | 788,000 |   |   | $ | 786,000 |   |
|  Laboratory and building improvements              |   |         | 58,000  |   |   |   | 58,000 |   |
|  Furniture and equipment                                |   |         |    | 56,000 |   |   |   | 567,000 |   |
|                                                                   |   |         |    | 902,000 |   |   |   | 1,411,000 |   |
|  Less accumulated depreciation and amortization    |   |         | 870,000 |   |   |   | 1,361,000 |   |
|  Property and equipment, net                                      |   |         | $       |   32,000 |   |   | $ |  50,000 |   |

----

| ·   | Level 1 – Quoted prices in active markets for identical assets or liabilities. |
|--------------------|--------------------------------------------------------------------------------------|

| ·   | Level 2 – Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar valuation techniques that use significant unobservable inputs. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (in thousands)                                |   |                   |   |   |          |   |   |          |   |   |          |   |   |                |   |
|-----------------------------------------------|--------|------------------------|--------|--------|---------------|--------|--------|---------------|--------|--------|---------------|--------|--------|---------------------|--------|
|   Description                       |   | As ofDecember 31, 2010 |   |   |  Level 1 |   |   |  Level 2 |   |   |  Level 3 |   |   | Total Gains(Losses) |   |
| Liabilities:  Derivative liability- |   |                   |   |   |          |   |   |          |   |   |          |   |   |                |   |
|     warrants              |   | $                      | 5,087  |   |          | $      | -      |          |   | $      | 5,087         |   |   | $                   | -      |   |   | $ | 4,621 |   |
|     preferred stock       |   | $                      | 5,840  |   |          | $      | -      |          |   | $      | -             |   |   | $                   | 5,840  |   |   | $ | (5,840 | ) |

| (in thousands)                                |   |                   |   |   |          |   |   |    |   |   |          |   |   |                |   |
|-----------------------------------------------|--------|------------------------|--------|--------|---------------|--------|--------|---------|--------|--------|---------------|--------|--------|---------------------|--------|
|   Description                       |   | As ofDecember 31, 2009 |   |   |  Level 1 |   |   | Level 2 |   |   |  Level 3 |   |   | Total Gains(Losses) |   |
| Liabilities:  Derivative liability- |   |                   |   |   |          |   |   |    |   |   |          |   |   |                |   |
|     warrants              |   | $                      | 9,708  |   |          | $      | -      |    |   | $      | 9,708         |   |   | $                   | -      |   |   | $ | (7,154 | ) |
|     preferred stock       |   | $                      | -      |   |          | $      | -      |    |   | $      | -             |   |   | $                   | -      |   |   | $ | - |   |

----

----

|                     |   | January 1, 2009 |   | December 31, 2009 |
|--------------------------|--------|-----------------|--------|-------------------|
| Risk-free interest rate  |   |            | 1.55   | %                 |   |   | 2.69 | % |
| Expected volatility      |   |            | 116.31 | %                 |   |   | 117.43 | % |
| Expected life (in years) |   |            | 4.88   |              |   |   | 3.88 |   |
| Dividend yield           |   |            | 0.00   | %                 |   |   | 0.00 | % |

----

----

|                                                                | Warrants                |   |   Exercise                                        |   | Expiration |
|---------------------------------------------------------------------|-------------------------|--------|-------------------------------------------------------------|--------|------------|
|         Summary of Warrants | Outstanding   |   |      Price     |   |  Date |
| 2010 December registered direct offering (a)                        | 930,664                 | $      | 3.06                                                        |   | 12/14/15   |
| 2010 January registered direct offering (b)                         | 1,041,432               |   | 3.00                                                        |   | 1/26/15    |
| 2010 January placement agent warrants (b)                           | 125,109                 |   | 3.75                                                        |   | 1/26/15    |
| 2010 investor relations advisor (c)                                 | 169,000                 |   | 2.16                                                        |   | 10/1/13    |
| 2010 investor relations advisor (d)                                 | 55,000                  |   | 2.63                                                        |   | 10/14/13   |
| 2009 investor relations advisor (e)                                 | 30,000                  |   | 3.45                                                        |   | 9/15/12    |
| 2009 business consultant (f)                                        | 150,000                 |   | 2.07                                                        |   | 7/23/14    |
| 2009 investor relations advisor (g)                                 | 50,000                  |   | 6.00                                                        |   | 8/27/12    |
| 2008 preferred stock offering (h)                                   | 499,584                 |   | 2.55                                                        |   | 2/24/14    |
| 2008 Somanta accounts payable (i)                                   | 246,753                 |   | 3.50                                                        |   | 1/4/14     |
| 2008 warrants assumed on acquisition (j)                            | 191,668                 |   | 18.55-23.19                                                 |   | 1/31/12    |
| 2008 investor relations advisor (k)                                 | 50,000                  |   | 3.15                                                        |   | 1/3/13     |
| 2008 investor relations advisor (l)                                 | 40,000                  |   | 3.00                                                        |   | 9/1/13     |
| 2008 scientific consultant (m)                                      | 200,000                 |   | 3.15                                                        |   | 1/4/12     |
| 2007 preferred stock offering (n)                                   | 3,649,880               |   | 2.55                                                        |   | 11/10/13   |
| 2006 convertible note (o)                                           | 3,818,180               |   | 1.32                                                        |   | 2/16/12    |
| 2006 convertible note (o)                                           | 386,364                 |   | 1.32                                                        |   | 10/24/12   |
| 2006 convertible note (o)                                           | 377,273                 |   | 1.32                                                        |   | 12/6/12    |
| 2006 investor relations advisor (p)                                 | 50,000                  |   | 2.70                                                        |   | 12/27/11   |
| Total                                                               |  12,060,907        |   |                                                        |   |       |

| a)   | In connection with a registered direct offering on December 14, 2010, warrants to purchase 930,664 shares of common stock at $3.06 per share were issued. All of the warrants are exercisable immediately and expire five years from the date of issue. |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| b)   | In connection with a registered direct offering on January 26, 2010, warrants to purchase 1,041,432 shares of common stock at $3.00 per share were issued. All of the warrants are exercisable immediately and expire five years from the date of issue. |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| c)   | During 2010, an investor relations advisor received warrants to purchase 194,000 shares of common stock at an exercise price of $2.16 per share at any time until October 1, 2013, for investor relations consulting services rendered in 2010 and 2011. The expense recorded for the year ended December 31, 2010 was $55,000. Our common stock did not reach a target price by February 28, 2011 and according to the agreement 25,000 warrants expired. |
|----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| d)   | During 2010, an investor relations advisor received warrants to purchase 55,000 shares of common stock at an exercise price of $2.63 per share at any time until October 14, 2013, for investor relations consulting services rendered in 2010. The warrants did not vest and expired January 31, 2011. No expense was recorded. |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| e)   | During 2009, an investor relations advisor received warrants to purchase 30,000 shares of common stock at an exercise price of $3.45 per share at any time until September 15, 2012, for investor relations consulting services rendered from October 2009 through March 2010. As of December 31, 2010 all 30,000 warrants were exercisable. The expense recorded for the years ended December 31, 2010 and 2009 was $19,000 and $24,000, respectively. |
|----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| f)   | During 2009, a business consultant received warrants to purchase 150,000 shares of common stock at an exercise price of $2.07 per share at any time until July 23, 2014, for business consulting services rendered in 2009. 60,000 of the warrants were exercisable on December 31, 2009. The remaining 90,000 warrants expired July 23, 2010 because our stock did not reach specified trading prices. The expense recorded for the years ended December 31, 2009 was $238,000. |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| g)   | During 2009, an investor relations advisor received warrants to purchase 50,000 shares of common stock at an exercise price of $6.00 per share at any time until August 27, 2012, for investor relations consulting services rendered in 2009. All 50,000 of the warrants were exercisable at December 31, 2009. The fair value of the warrants was $2.04 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 1.58%, expected volatility 119% and a term of 3 years. The expense recorded for the year ended December 31, 2009 was $102,000. |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| h)   | 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. The exercise price of $3.50 was decreased to $3.00 after the January 2010 placement and to $2.55 after the December 2010 placement. |
|----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| i)   | In connection with our acquisition of Somanta Pharmaceuticals, Inc. (Somanta) we exchanged for $1,576,000 due to Somanta vendors, for 538,508 shares of our common stock and warrants to purchase 246,753 shares of common stock at $3.50. The warrants expire January 4, 2014. |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| j)   | We assumed two warrants in the Somanta acquisition: |
|----------------|-----------------------------------------------------|

| k)   | 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 rendered in 2008. 25,000 of the warrants were exercisable on July 3, 2008 and 25,000 of the warrants were exercisable January 3, 2009. |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| l)   | 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. |
|----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| m)   | 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 January 4, 2010. |
|----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| n)   | 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. The exercise price of $3.50 was decreased to $3.00 after the January 2010 placement and to $2.55 after the December 2010 placement. |
|----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| o)   | In connection with the convertible note offerings in 2006, warrants to purchase a total of 4,581,817 shares of common stock at $1.32 per share were issued. All of the warrants are exercisable immediately and expire six years from date of issue. |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| p)   | 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. |
|----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                         |   |    |      |   | Weighted- |   |
|----------------------------------------------|--------|---------|-----------|--------|-----------|--------|
|                                         |   |    |      |   | average   |   |
|                                         |   |    |      |   | exercise  |   |
|                                         |   | Options |      |   | price     |   |
| Outstanding options at January 1, 2009       |   |    | 1,136,820 |   |      |   | 1.90 |   |
| Granted, fair value of $ 1.31 per share      |   |    | 565,000   |   |      |   | 1.38 |   |
| Exercised                                    |   |    | (249,916  | )      |      |   | 0.73 |   |
| Expired                                      |   |    | (16,667   | )      |      |   | 3.00 |   |
| Outstanding options at December 31, 2009     |   |    | 1,435,237 |   |      |   | 1.99 |   |
|                                         |   |    |      |   |      |   |   |   |
| Granted, fair value of $ 2.23 per share |   |    | 640,000   |   |      |   | 2.57 |   |
| Exercised                                    |   |    | (153,051  | )      |      |   | 1.26 |   |
| Expired                                      |   |    | (173,453  | )      |      |   | 3.51 |   |
| Outstanding options at December 31, 2010     |   |    | 1,748,733 |   |      |   | 2.13 |   |
|                                         |   |    |      |   |      |   |   |   |
| Exercisable at December 31, 2010             |   |    | 1,249,580 |   |      |   | 1.88 |   |

|                     |   | 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             |   | 387,500     |   | 5.6                 |   |      | $0.64  |             | 387,500 |   | 5.6 |   |   | $0.64 |
| $1.38                    |   | 306,949     |   |  8.4           |   |      | $1.38  |             | 306,949 |   |  8.4 |   |   | $1.38 |
| $2.45-2.79               |   | 640,000     |   |  9.3           |   |      | $2.57  |             | 272,500 |   |  9.4 |   |   | $2.46 |
| $3.00 - 7.23             |   | 414,284     |   |  7.3           |   |      | $3.39  |             | 282,631 |   |  7.2 |   |   | $3.57 |
|                     |   | 1,748,733   |   |                |   |      |   |   1,249,580 |   |   |   |   |

----

|   | 2007 Special Stock Option Plan |
|--------|--------------------------------|

|                                     |   |    |    |   | Weighted- |    |
|------------------------------------------|--------|---------|---------|--------|-----------|---------|
|                                     |   |    |    |   | average   |    |
|                                     |   |    |    |   | exercise  |    |
|                                     |   | Options |    |   | price     |    |
| Outstanding options at January 1, 2009   |   |    | 118,000 |   |      |  $ | 15.14 |   |
| Expired                                  |   |    | (15,000 | )      |      |    | 10.00 |   |
| Outstanding options at December 31, 2009 |   |    | 103,000 |   |      |    | 15.89 |   |
|                                     |   |    |    |   |      |    |   |   |
| Expired                                  |   |    | (43,500 | )      |      |    | 14.65 |   |
| Outstanding options at December 31, 2010 |   |    | 59,500  |   |      |    | 16.80 |   |
|                                     |   |    |    |   |      |    |   |   |
| Exercisable at December 31, 2010         |   |    | 59,500  |   |      |    | 16.80 |   |
|                                     |   |    |    |   |      |    |   |   |
|                                     |   |    |    |   |      |    |   |   |

|                     |   |        |   |                               |   |      |   |                         |   |          |   |     |
|--------------------------|--------|-------------|--------|------------------------------------|--------|-----------|--------|------------------------------|--------|---------------|--------|----------|
|                     |   | 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    |
|                     |   |        |   |                               |   |      |   |                         |   |          |   |     |
| $10.10 - 12.40           |   | 29,000      |   | 3.4                                |   | $11.09    |   | 29,000                       |   | 3.4           |   | $11.09   |
| $14.05 - 18.65           |   | 18,000      |   | 1.2                                |   | $18.14    |   | 18,000                       |   | 1.2           |   | $18.14   |
| $23.05 – 29.25     |   | 12,500      |   | 2.8                                |   | $28.11    |   | 12,500                       |   | 2.8           |   | $28.10   |
|                     |   | 59,500      |   |                               |   |      |   | 59,500                       |   |          |   |     |

----

|                                                                    |   | 2010   |       |   | 2009   |   |
|-------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|
|                                                                    |   |   |       |   |   |   |
| Income taxes at U.S. statutory rate                                     |   | $      | (3,172,000 | )      |   | $      | (6,537,000 | ) |
| Change in valuation allowance                                           |   |   | 3,100,000  |   |   |   | 5,182,000 |   |
| Benefit of foreign losses not recognized                                |   |   | 30,000     |   |   |   | 57,000 |   |
| Expenses not deductible                                                 |   |   | 109,000    |   |   |   | 623,000 |   |
| Expiration of net operating loss and general                            |   |   |       |   |   |   |   |   |
|     business credit carryforwards, net of revisions |   |   | (67,000    | )      |   |   | 675,000 |   |
|                                                                    |   |   |       |   |   |   |   |   |
| Total tax expense                                                       |   | $      | -          |   |   | $      | - |   |

|                                  |   | December 31, |        |
|---------------------------------------|--------|--------------|-------------|
|                                  |   | 2010         |        |   | 2009 |   |
| Deferred tax assets                   |   |         |        |   |   |   |
| Net operating loss carryforwards      |   |  $      | 62,760,000  |   |   |  $ | 62,358,000 |   |
| General business credit carryforwards |   |         | 2,315,000   |   |   |   | 2,371,000 |   |
| State credits                         |   |         | 3,101,000   |   |   |   | 3,126,000 |   |
| Property and equipment                |   |         | 49,000      |   |   |   |    51,000 |   |
| Stock options                         |   |         | 1,118,000   |   |   |   | 773,000 |   |
| Derivatives                           |   |         | 3,715,000   |   |   |   | 2,432,000 |   |
| Deferred revenue                      |   |         | 1,622,000   |   |   |   | 748,000 |   |
| Intangible assets                     |   |         | 409,000     |   |   |   | 383,000 |   |
| Accrued interest                      |   |         | 253,000     |   |   |   | - |   |
| Other                                 |   |         | 270,000     |   |   |   | 270,000 |   |
| Gross deferred tax assets             |   |         | 75,612,000  |   |   |   | 72,512,000 |   |
| Valuation allowance                   |   |         | (75,612,000 | ) |   |   | (72,512,000 | ) |
| Net deferred taxes                    |   | $            | -           |   |   | $ | - |   |

|       |   | Net operating      |        |   | General business     |   |
|------------|--------|--------------------|-------------|--------|----------------------|--------|
|       |   | loss carryforwards |        |   | credit carryforwards |   |
| 2011       |   | $                  | 4,488,000   |   |                 | $      | 13,000 |   |
| 2012       |   |               | 4,212,000   |   |                 |   | 77,000 |   |
| 2013       |   |               | -           |   |                 |   | - |   |
| 2014       |   |               | -           |   |                 |   | - |   |
| 2015       |   |               | -           |   |                 |   | - |   |
| Thereafter |   |               | 175,888,000 |   |                 |   | 2,225,000 |   |
|       |   | $                  | 184,588,000 |   |                 | $      | 2,315,000 |   |

----

----

|                                                                                                                               |   | For the year ended December 31, 2009 |        |
|------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------|-------------|
|                                                                                                                               |   | Access Pharmaceuticals               |        |   | MacroChem Corporation |   |   | Combined |   |
| Total revenues                                                                                                                     |   | $                                    | 352,000     |   |   | $ | - |   |   | $ | 352,000 |   |
|                                                                                                                               |   |                                 |        |   |   |   |   |   |   |   |   |   |
| Expenses                                                                                                                           |   |                                 |        |   |   |   |   |   |   |   |   |   |
| Research and development                                                                                                           |   |                                 | 2,645,000   |   |   |   | 12,000 |   |   |   | 2,657,000 |   |
| General and administrative                                                                                                         |   |                                 | 6,932,000   |   |   |   | 180,000 |   |   |   | 7,112,000 |   |
| Depreciation and   amortization                                                                                     |   |                                 | 207,000     |   |   |   | 52,000 |   |   |   | 259,000 |   |
|       Total expenses                                                                                 |   |                                 | 9,784,000   |   |   |   | 244,000 |   |   |   | 10,028,000 |   |
|                                                                                                                               |   |                                 |        |   |   |   |   |   |   |   |   |   |
| Loss from operations                                                                                                               |   |                                 | (9,432,000  | ) |   |   | (244,000 | ) |   |   | (9,676,000 | ) |
|                                                                                                                               |   |                                 |        |   |   |   |   |   |   |   |   |   |
| Interest and miscellaneous   Income                                                                                 |   |                                 | 29,000      |   |   |   | - |   |   |   | 29,000 |   |
|    Interest and other expense                                                                                       |   |                                 | (513,000    | ) |   |   | (26,000 | ) |   |   | (539,000 | ) |
|    Change in fair value of      derivative                                            |   |                                 | (7,154,000  | ) |   |   | - |   |   |   | (7,154,000 | ) |
|                                                                                                                               |   |                                 | (7,638,000  | ) |   |   | (26,000 | ) |   |   | (7,664,000 | ) |
| Loss from operations                                                                                                               |   |                                 | (17,070,000 | ) |   |   | (270,000 | ) |   |   | (17,340,000 | ) |
| Less preferred stock   Dividends                                                                                    |   |                                 | (1,886,000  | ) |   |   | - |   |   |   | (1,886,000 | ) |
| Net loss allocable to   common stockholders                                                                         |   | $                                    | (18,956,000 | ) |   | $ | (270,000 | ) |   | $ | (19,226,000 | ) |
|                                                                                                                               |   |                                 |        |   |   |   |   |   |   |   |   |   |
| Basic and diluted loss per   common share                                                                           |   |                                 |        |   |   |   |   |   |   |   |   |   |
|    Net loss allocable to     common stockholders                                           |   |                                 | -           |   |   |   | - |   |   | $ | (1.63 | ) |
|   Weighted average basic     and diluted common     shares outstanding |   |                                 | -           |   |   |   | - |   |   |   | 11,818,530 |   |

----