##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2009
 ORo
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For
the transition period from
 to
 Commission File Number 001-33451
 BIODEL INC.
 (Exact name of registrant as specified in its charter)
 Delaware(State or other jurisdiction of incorporation or organization)
    
    90-0136863(IRS Employer Identification No.)100 Saw Mill Road 
Danbury, Connecticut(Address of principal executive offices)
    
    06810(Zip code)
 (203) 796-5000  (Registrants telephone number, including area code)
 Not Applicable
 (Former Name, Former Address, and Former Fiscal Year, if Changed Since Last Report)
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if smaller reporting company)
 o þ




---



##### 



BIODEL INC.
 PagePART I  FINANCIAL INFORMATIONItem 1. Condensed Financial Statements
    
    
    1Condensed Balance Sheets at September 30, 2008 and June 30, 2009 (unaudited)
    
    
    1Condensed Statements of Operations (unaudited) for the Three and Nine Months Ended
June 30, 2008 and 2009 and for the period from December 3, 2003 (inception) to June
30, 2009
    
    
    2Condensed Statements of Stockholders Equity (unaudited) for the period from
December 3, 2003 (inception) to June 30, 2009
    
    
    3Condensed Statements of Cash Flows (unaudited) for the Nine Months Ended June 30,
2008 and 2009 and for the period from December 3, 2003 (inception) to June 30, 2009
    
    
    5Notes to Condensed Financial Statements
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    15Item 3. Quantitative and Qualitative Disclosure About Market Risk
    
    
    23Item 4. Controls and Procedures
    
    
    23PART II  OTHER INFORMATIONItem 1A. Risk Factors
    
    
    24Item 6. Exhibits
    
    
    37Signatures
    
    
    38EX-31.01EX-31.02EX-32.01




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements. Biodel Inc.
(A Development Stage Company)
 
 Condensed Balance Sheets

(in thousands, except share and per share amounts)
 September 30,
    
    
    June 30,2008
    
    
    2009(unaudited)ASSETSCurrent:Cash and cash equivalents
    
    $
    64,731
    
    
    $
    63,567Marketable securities, available for sale
    
    
    25,552
    
    
    
    1,000Taxes receivable
    
    
    1,988
    
    
    
    580Prepaid and other assets
    
    
    1,130
    
    
    
    497Total current assets
    
    
    93,401
    
    
    
    65,644Property and equipment, net
    
    
    3,931
    
    
    
    3,461Intellectual property, net
    
    
    59
    
    
    
    57Other assets
    
    
    120
    
    
    
    Total assets
    
    $
    97,511
    
    
    $
    69,162LIABILITIES AND STOCKHOLDERS EQUITYCurrent:Accounts payable
    
    $
    813
    
    
    $
    273Accrued expenses:Clinical trial expenses
    
    
    4,163
    
    
    
    6,472Payroll and related
    
    
    1,420
    
    
    
    1,216Accounting and legal fees
    
    
    509
    
    
    
    432Severance expense
    
    
    268
    
    
    
    267Other
    
    
    839
    
    
    
    624Income taxes payable
    
    
    1,012
    
    
    
    37Total current liabilities
    
    
    9,024
    
    
    
    9,321CommitmentsStockholders equity:Preferred stock, $0.01 par value; 50,000,000 shares authorized
    
    
    
    
    
    
    Common stock, $0.01 par value; 100,000,000 shares authorized;
23,698,558 and 23,796,587 shares issued and outstanding
    
    
    237
    
    
    
    238Additional paid-in capital
    
    
    171,506
    
    
    
    175,598Accumulated other comprehensive (loss) income
    
    
    (62
    )
    
    
    Deficit accumulated during the development stage
    
    
    (83,194
    )
    
    
    (115,995
    )Total stockholders equity
    
    
    88,487
    
    
    
    59,841Total liabilities and stockholders equity
    
    $
    97,511
    
    
    $
    69,162
  -1




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##### Table of Contents



Biodel Inc.
(A Development Stage Company)
 
 Condensed Statements of Operations
(in thousands, except share and per share amounts)
(unaudited)
 December 3,2003Three Months Ended
    
    
    Nine Months Ended
    
    
    (inception) toJune 30,
    
    
    June 30,
    
    
    June 30,2008
    
    
    2009
    
    
    2008
    
    
    2009
    
    
    2009Revenue
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Operating expenses:Research and development
    
    
    6,884
    
    
    
    7,991
    
    
    
    21,525
    
    
    
    24,387
    
    
    
    82,113General and administrative
    
    
    4,161
    
    
    
    2,692
    
    
    
    11,836
    
    
    
    8,408
    
    
    
    34,059Total operating expenses
    
    
    11,045
    
    
    
    10,683
    
    
    
    33,361
    
    
    
    32,795
    
    
    
    116,172Other (income) and expense:Interest and other income
    
    
    (390
    )
    
    
    (54
    )
    
    
    (2,174
    )
    
    
    (374
    )
    
    
    (5,477
    )Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    78Loss on settlement of debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    627Operating loss before tax provision
(benefit)
    
    
    (10,655
    )
    
    
    (10,629
    )
    
    
    (31,187
    )
    
    
    (32,421
    )
    
    
    (111,400
    )Tax provision (benefit)
    
    
    (544
    )
    
    
    519
    
    
    
    (491
    )
    
    
    380
    
    
    
    (465
    )Net loss
    
    
    (10,111
    )
    
    
    (11,148
    )
    
    
    (30,696
    )
    
    
    (32,801
    )
    
    
    (110,935
    )Charge for accretion of beneficial
conversion rights
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (603
    )Deemed dividend  warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,457
    )Net loss applicable to common
stockholders
    
    $
    (10,111
    )
    
    $
    (11,148
    )
    
    $
    (30,696
    )
    
    $
    (32,801
    )
    
    $
    (115,995
    )Net loss per share  basic and diluted
    
    $
    (0.43
    )
    
    $
    (0.47
    )
    
    $
    (1.40
    )
    
    $
    (1.38
    )Weighted average shares outstanding 
basic and diluted
    
    
    23,653,956
    
    
    
    23,759,675
    
    
    
    21,959,335
    
    
    
    23,727,833
  -2




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##### Table of Contents



Biodel Inc.
(A Development Stage Company)
 
 Condensed Statements of Stockholders Equity
(in thousands, except share and per share amounts)
 DeficitAccumu-
    
    
    Accumu-lated
    
    
    latedOther
    
    
    During theCommon Stock
    
    
    Series A Preferred Stock
    
    
    Series B Preferred Stock
    
    
    Additional
    
    
    Compre-
    
    
    Develop-
    
    
    Total$.01 Par Value
    
    
    $.01 Par Value
    
    
    $.01 Par Value
    
    
    Paid in
    
    
    hensive
    
    
    ment
    
    
    StockholdersShares
    
    
    Amt
    
    
    Shares
    
    
    Amt
    
    
    Shares
    
    
    Amt
    
    
    Capital
    
    
    Income
    
    
    Stage
    
    
    EquityShares issued to employees
    
    
    732,504
    
    
    $
    7
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    $
    (7
    )
    
    $
    
    
    
    $
    
    
    
    $
    January 2004 Proceeds from sale of common stock
    
    
    4,581,240
    
    
    
    46
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,308
    
    
    
    
    
    
    
    
    
    
    
    1,354Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (774
    )
    
    
    (774
    )Balance, September 30, 2004
    
    
    5,313,744
    
    
    
    53
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,301
    
    
    
    
    
    
    
    (774
    )
    
    
    580Additional stockholder contributions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    514
    
    
    
    
    
    
    
    
    
    
    
    514Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    353
    
    
    
    
    
    
    
    
    
    
    
    353Shares issued to employees and directors for services
    
    
    42,656
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    60
    
    
    
    
    
    
    
    
    
    
    
    61July 2005 Private placement  Sale of Series A
preferred stock, net of issuance costs of $379
    
    
    
    
    
    
    
    
    
    
    569,000
    
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    2,460
    
    
    
    
    
    
    
    
    
    
    
    2,466Founders compensation contributed to capital
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    63
    
    
    
    
    
    
    
    
    
    
    
    63Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,383
    )
    
    
    (3,383
    )Balance, September 30, 2005
    
    
    5,356,400
    
    
    
    54
    
    
    
    569,000
    
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    4,751
    
    
    
    
    
    
    
    (4,157
    )
    
    
    654Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,132
    
    
    
    
    
    
    
    
    
    
    
    1,132July 2006 Private placement  Sale of Series B
preferred stock, net of issuance costs of $1,795
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,380,711
    
    
    
    54
    
    
    
    19,351
    
    
    
    
    
    
    
    
    
    
    
    19,405July 2006  Series B preferred stock units issued
July 2006 to settle debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    817,468
    
    
    
    8
    
    
    
    3,194
    
    
    
    
    
    
    
    
    
    
    
    3,202Shares issued to employees and directors for services
    
    
    4,030
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23
    
    
    
    
    
    
    
    
    
    
    
    23Accretion of fair value of beneficial conversion
charge
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    603
    
    
    
    
    
    
    
    (603
    )
    
    
    Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,068
    )
    
    
    (8,068
    )Balance, September 30, 2006
    
    
    5,360,430
    
    
    
    54
    
    
    
    569,000
    
    
    
    6
    
    
    
    6,198,179
    
    
    
    62
    
    
    
    29,054
    
    
    
    
    
    
    
    (12,828
    )
    
    
    16,348May 2007 Proceeds from sale of common stock
    
    
    5,750,000
    
    
    
    58
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    78,697
    
    
    
    
    
    
    
    
    
    
    
    78,755Conversion of preferred stock on May 16, 2007
    
    
    6,407,008
    
    
    
    64
    
    
    
    (569,000
    )
    
    
    (6
    )
    
    
    (6,198,179
    )
    
    
    (62
    )
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,224
    
    
    
    
    
    
    
    
    
    
    
    4,224Shares issued to employees, non-employees and
directors for services
    
    
    2,949
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16
    
    
    
    
    
    
    
    
    
    
    
    16Stock options exercised
    
    
    3,542
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    5March 2007 Warrants exercised
    
    
    2,636,907
    
    
    
    26
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    397
    
    
    
    
    
    
    
    
    
    
    
    423Deemed dividend  warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,457
    
    
    
    
    
    
    
    (4,457
    )
    
    
    Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (22,548
    )
    
    
    (22,548
    )
 -3




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##### Table of Contents



Biodel Inc.
(A Development Stage Company)
Condensed Statements of Stockholders Equity
(in thousands, except share and per share amounts)
 DeficitAccumu-
    
    
    Accumu-lated
    
    
    latedOther
    
    
    During theCommon Stock
    
    
    Series A Preferred Stock
    
    
    Series B Preferred Stock
    
    
    Additional
    
    
    Compre-
    
    
    Develop-
    
    
    Total$.01 Par Value
    
    
    $.01 Par Value
    
    
    $.01 Par Value
    
    
    Paid in
    
    
    hensive
    
    
    ment
    
    
    StockholdersShares
    
    
    Amt
    
    
    Shares
    
    
    Amt
    
    
    Shares
    
    
    Amt
    
    
    Capital
    
    
    Income
    
    
    Stage
    
    
    EquityBalance, September 30, 2007
    
    
    20,160,836
    
    
    
    202
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    116,854
    
    
    
    
    
    
    
    (39,833
    )
    
    
    77,223Proceeds from sale of common stock
    
    
    3,260,000
    
    
    
    32
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    46,785
    
    
    
    
    
    
    
    
    
    
    
    46,817Issuance of restricted stock
    
    
    9,714
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    172
    
    
    
    
    
    
    
    
    
    
    
    172Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,503
    
    
    
    
    
    
    
    
    
    
    
    6,503Stock options exercised
    
    
    174,410
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    901
    
    
    
    
    
    
    
    
    
    
    
    902Warrants exercised
    
    
    79,210
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    111
    
    
    
    
    
    
    
    
    
    
    
    112Net unrealized gain/(loss) on Marketable Securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (62
    )
    
    
    
    
    
    
    (62
    )Proceeds from sale of stock  ESPP
    
    
    14,388
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    180
    
    
    
    
    
    
    
    
    
    
    
    181Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (43,361
    )
    
    
    (43,361
    )Balance, September 30, 2008
    
    
    23,698,558
    
    
    
    237
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    171,506
    
    
    
    (62
    )
    
    
    (83,194
    )
    
    
    88,487Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,908
    
    
    
    
    
    
    
    
    
    
    
    3,908Net unrealized gain/(loss) on Marketable Securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    62
    
    
    
    
    
    
    
    62Stock options exercised
    
    
    10,577
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15
    
    
    
    
    
    
    
    
    
    
    
    15Proceeds from sale of stock  ESPP
    
    
    87,452
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    169
    
    
    
    
    
    
    
    
    
    
    
    170Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (32,801
    )
    
    
    (32,801
    )Balance, June 30, 2009 (unaudited)
    
    
    23,796,587
    
    
    $
    238
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    $
    175,598
    
    
    $
    
    
    
    $
    (115,995
    )
    
    $
    59,841
  -4




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##### Table of Contents



Biodel Inc.
(A Development Stage Company)
 
 Condensed Statements of Cash Flows
(in thousands, except share and per share amounts)
(unaudited)
 December 3,2003Nine months ended
    
    
    (inception) toJune 30,
    
    
    June 30,2008
    
    
    2009
    
    
    2009Cash flows from operating activities:Net loss
    
    $
    (30,696
    )
    
    $
    (32,801
    )
    
    $
    (110,935
    )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation and amortization
    
    
    386
    
    
    
    643
    
    
    
    1,915Founders compensation contributed to capital
    
    
    
    
    
    
    
    
    
    
    271Stock-based compensation for employees and directors
    
    
    5,484
    
    
    
    3,827
    
    
    
    14,061Stock-based compensation for non-employees
    
    
    615
    
    
    
    81
    
    
    
    2,312Loss on settlement of debt
    
    
    
    
    
    
    
    
    
    
    627Write-off of capitalized patent expense
    
    
    
    
    
    
    
    
    
    
    208Write-off of loan to related party
    
    
    
    
    
    
    
    
    
    
    41(Increase) decrease in:Prepaid expenses
    
    
    239
    
    
    
    753
    
    
    
    (497
    )Income taxes receivable
    
    
    (1,132
    )
    
    
    1,408
    
    
    
    (580
    )Increase (decrease) in:Accounts payable
    
    
    (1,777
    )
    
    
    (540
    )
    
    
    273Income taxes payable
    
    
    490
    
    
    
    (975
    )
    
    
    37Accrued expenses
    
    
    2,487
    
    
    
    1,812
    
    
    
    9,230Total adjustments
    
    
    6,792
    
    
    
    7,009
    
    
    
    27,898Net cash used in operating activities
    
    
    (23,904
    )
    
    
    (25,792
    )
    
    
    (83,037
    )Cash flows from investing activities:Purchase of property and equipment
    
    
    (2,191
    )
    
    
    (171
    )
    
    
    (5,343
    )Purchase of marketable securities
    
    
    (31,007
    )
    
    
    
    
    
    
    (25,614
    )Sale of marketable securities
    
    
    
    
    
    
    24,614
    
    
    
    24,614Acquisition of intellectual property
    
    
    (31
    )
    
    
    
    
    
    
    (298
    )Loan to related party
    
    
    
    
    
    
    
    
    
    
    (41
    )Net cash provided by (used in) investing activities
    
    
    (33,229
    )
    
    
    24,443
    
    
    
    (6,682
    )Cash flows from financing activities:Options exercised
    
    
    866
    
    
    
    15
    
    
    
    922Warrants exercised
    
    
    112
    
    
    
    
    
    
    
    535Employee stock purchase plan
    
    
    183
    
    
    
    170
    
    
    
    351Deferred public offering costs
    
    
    
    
    
    
    
    
    
    
    (1,458
    )Stockholder contribution
    
    
    
    
    
    
    
    
    
    
    1,660Net proceeds from sale of Series A preferred stock
    
    
    
    
    
    
    
    
    
    
    2,466Net proceeds from sale of common stock
    
    
    46,817
    
    
    
    
    
    
    
    127,030Proceeds from bridge financing
    
    
    
    
    
    
    
    
    
    
    2,575Net proceeds from sale of Series B preferred stock
    
    
    
    
    
    
    
    
    
    
    19,205Net cash provided by financing activities
    
    
    47,978
    
    
    
    185
    
    
    
    153,286Net (decrease) increase in cash and cash equivalents
    
    
    (9,155
    )
    
    
    (1,164
    )
    
    
    63,567Cash and cash equivalents, beginning of period
    
    
    80,022
    
    
    
    64,731
    
    
    
    Cash and cash equivalents, end of period
    
    $
    70,867
    
    
    $
    63,567
    
    
    $
    63,567
 -5




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##### Table of Contents



Biodel Inc.
(A Development Stage Company)
 Condensed Statements of Cash Flows
(in thousands, except share and per share amounts)
(unaudited)
 December 3,2003Nine months ended
    
    
    (inception) toJune 30,
    
    
    June 30,2008
    
    
    2009
    
    
    2009Supplemental disclosures of cash flow information:Cash paid for interest and income taxes was:Interest
    
    $
    
    
    
    $
    
    
    
    $
    9Income taxes
    
    
    88
    
    
    
    110
    
    
    
    245Non-cash financing and investing activities:Settlement of debt with Series B preferred stock
    
    
    
    
    
    
    
    
    
    
    3,202Accrued expenses settled with Series B preferred stock
    
    
    
    
    
    
    
    
    
    
    150Deemed dividend  warrants
    
    
    
    
    
    
    
    
    
    
    4,457Accretion of fair value of beneficial charge on preferred stock
    
    
    
    
    
    
    
    
    
    
    603Conversion of convertible preferred stock to common stock
    
    
    
    
    
    
    
    
    
    
    68
  -6




---



##### Table of Contents



Biodel Inc.
(A Development Stage Company)
 
 Notes to Condensed Financial Statements
(in thousands, except share and per share amounts)
(unaudited)
 1. Business and Basis of Presentation
 Business
 ®
 ® ® ® ® ® ® ® ®
 ® ® ®
 ® ® ® ® ®
 Basis of Presentation
   -7




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##### Table of Contents



Biodel Inc.
(A Development Stage Company)
Notes to Condensed Financial Statements
(in thousands, except share and per share amounts)
(unaudited)
 Recently Adopted and Recently Issued Accounting Pronouncements
 Adopted Accounting Pronouncements
 Fair Value Measurement
         -8




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##### Table of Contents



Biodel Inc.
(A Development Stage Company)
Notes to Condensed Financial Statements
(in thousands, except share and per share amounts)
(unaudited)
 Derivatives
  Business Combinations
  Subsequent Event
  Recent Accounting Pronouncements
   2. Marketable Securities
  -9




---



##### Table of Contents



Biodel Inc.
(A Development Stage Company)
Notes to Condensed Financial Statements
(in thousands, except share and per share amounts)
(unaudited)
    June 30, 2009Amortized
    
    
    Gross Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    ValueShort term marketable securitiesCorporate and agency bonds
    
    $
    1,000
    
    
    
    
    
    
    
    
    
    
    $
    1,000Total
    
    $
    1,000
    
    
    $
    
    
    
    $
    
    
    
    $
    1,000
  EstimatedFair ValueWithin one year
    
    $
    1,000Total
    
    $
    1,000
  3. Fair Value Measurement
      -10




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##### Table of Contents



Biodel Inc.
(A Development Stage Company)
Notes to Condensed Financial Statements
(in thousands, except share and per share amounts)
(unaudited)
  Quoted Pricesin Active
    
    
    SignificantMarkets for
    
    
    Other
    
    
    SignificantFair Value at
    
    
    Identical
    
    
    Observable
    
    
    UnobservableJune 30,
    
    
    Assets
    
    
    Market Inputs
    
    
    InputsDescription
    
    2009
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Assets:Corporate and agency bonds
    
    $
    1,000
    
    
    $
    1,000
    
    
    
    
    
    
    
    Total
    
    $
    1,000
    
    
    $
    1,000
    
    
    $
    
    
    
    $
    
 4. Stock-Based Compensation
      WeightedWeighted
    
    
    AverageAverage
    
    
    RemainingExercise
    
    
    Contractual
    
    
    AggregateNumber
    
    
    Price
    
    
    Life in Years
    
    
    Intrinsic ValueOutstanding options, September 30, 2008
    
    
    3,135,390
    
    
    $
    13.92
    
    
    
    
    
    
    $
    815,000Granted
    
    
    611,500
    
    
    
    2.69
    
    
    
    
    
    
    
    1,575,000Exercised
    
    
    10,577
    
    
    
    1.41
    
    
    
    
    
    
    
    40,000Forfeited, expired
    
    
    (223,882
    )
    
    
    14.40Outstanding options, June 30, 2009
    
    
    3,512,431
    
    
    $
    11.92
    
    
    
    6
    
    
    $
    2,390,000Exercisable options, June 30, 2009
    
    
    1,768,909
    
    
    $
    10.63
    
    
    
    4
    
    
    $
    1,380,000
 -11




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##### Table of Contents



Biodel Inc.
(A Development Stage Company)
Notes to Condensed Financial Statements
(in thousands, except share and per share amounts)
(unaudited)
  Three Months ended
    
    Nine Months EndedJune 30,
    
    June 30,2008
    
    2008
    
    2009Expected life (in years)
    
    
    5.25
    
    
    
    5.25
    
    
    
    5.25Expected volatility
    
    
    58%66
    %
    
    
    58%66
    %
    
    
    59%68
    %Expected dividend yield
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %Risk-free interest rate
    
    
    2.57%3.73
    %
    
    
    2.46%4.23
    %
    
    
    1%-3.19
    %Weighted average grant date fair value
    
    $
    15.07
    
    
    $
    16.88
    
    
    $
    2.69
 2005 Employee Stock Purchase Plan
    5. Income Taxes
    -12




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##### Table of Contents



Biodel Inc.
(A Development Stage Company)
Notes to Condensed Financial Statements
(in thousands, except share and per share amounts)
(unaudited)
  6. Net Loss per Share
   Three Months Ended
    
    Nine Months EndedJune 30,
    
    June 30,2008
    
    2009
    
    2008
    
    2009Common shares underlying warrants for Series APreferred Stock
    
    
    118,815
    
    
    
    118,815
    
    
    
    118,815
    
    
    
    118,815Stock options
    
    
    3,139,958
    
    
    
    3,512,431
    
    
    
    3,139,958
    
    
    
    3,512,431
 7. Commitments
 Former General Counsel Severance Agreement
  Former Chief Financial Officer Severance Agreement
  Leases
  -13




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##### Table of Contents



FORWARD-LOOKING STATEMENTS
   
    
    our ability to secure approval by the U.S. Food and Drug Administration, or FDA,
for our product candidates under Section 505(b)(2) of the Federal Food, Drug and Cosmetic
Act, or FFDCA;
    
    our ability to file our New Drug Application, or NDA, for VIAject® by the end of
the calendar year 2009 as planned and, once filed, the length of time that will elapse
before our NDA is fully reviewed by the FDA;
    
    our ability to secure approval by the FDA for VIAject® without conducting
additional pivotal clinical trials;
    
    the FDAs findings regarding data anomalies observed in India in our Phase 3
clinical trial of VIAject® for patients with Type 1 diabetes;
    
    our ability to market, commercialize and achieve market acceptance for product
candidates, particularly VIAject®, developed using our VIAdel technology;
    
    the progress, timing or success of our product candidates, particularly VIAject®,
and that of our research, development and clinical programs, including any resulting data
analyses;
    
    our ability to enter into collaboration arrangements for the commercialization of
our product candidates and the success or failure of any such collaborations that we
enter, or our ability to commercialize our product candidates ourselves;
    
    our ability to enforce our patent for VIAject® and secure patents for our other
product candidates;
    
    our ability to protect our intellectual property and operate our business without
infringing upon the intellectual property rights of others;
    
    the rate and degree of market acceptance and clinical utility of our products;
    
    the ability of our major suppliers, including our supplier of insulin, to produce
our product or products in our final dosage form;
    
    our commercialization, marketing and manufacturing capabilities and strategy; and
    
    our ability to accurately estimate anticipated operating losses, future revenues,
capital requirements and our needs for additional financing.
   -14




---



##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
 You should read the following discussion and analysis of our financial condition
and results of operations together with our financial statements and the related notes included
elsewhere in this Quarterly Report on Form 10-Q . Some of the information contained in this
discussion and analysis or set forth elsewhere in this Form 10-Q , including information with
respect to our plans and strategy for our business and related financing, includes forward-looking
statements that involve risks and uncertainties. You should read the Risk Factors section of this
Form 10-Q (see Part II-Item 1A below) for a discussion of important factors that could cause actual
results to differ materially from the results described in or implied by the forward-looking
statements contained in the following discussion and analysis.
 Overview
  ® ® ® ® ®
  Recent Developments
 ® ® ® ®
 ® ® ®
 ® ® ® ®
  ®
 -15




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##### Table of Contents



Financial Operations Overview
 Revenues
  Research and Development Expenses
  
    
    external research and development expenses incurred under agreements with
third-party contract research organizations and investigative sites, third-party
manufacturing organizations and consultants;
    
    employee-related expenses, which include salaries and benefits for the personnel
involved in our preclinical and clinical drug development and manufacturing activities;
and
    
    facilities, depreciation and other allocated expenses, which include direct and
allocated expenses for rent and maintenance of facilities, depreciation of leasehold
improvements and equipment and laboratory and other supplies.
 ®
 
    
    continue our clinical trial extension program for the pivotal Phase 3 clinical
trials of VIAject®, which is designed to run through the eighteenth month of patient
treatment, subject to compassionate use exceptions, if any;
    
    conduct additional clinical trials of VIAject® to support our commercialization
efforts and, potentially, FDA approval; and
    
    purchase recombinant human insulin and other materials to build commercial supply
inventory for VIAject®.
 ® ®
 ®
  December 3, 2003(Inception) toThree Months Ended June 30,
    
    
    Nine Months Ended June 30,
    
    
    June 30,2008
    
    
    2009
    
    
    2008
    
    
    2009
    
    
    2009(in thousands)Research and development expenses:Preclinical expenses
    
    $
    1,410
    
    
    $
    542
    
    
    $
    3,150
    
    
    $
    2,122
    
    
    $
    11,666Manufacturing expenses
    
    
    1,789
    
    
    
    3,454
    
    
    
    3,557
    
    
    
    8,736
    
    
    
    19,123Clinical/regulatory expenses
    
    
    3,685
    
    
    
    3,995
    
    
    
    14,818
    
    
    
    13,529
    
    
    
    51,324Total
    
    $
    6,884
    
    
    $
    7,991
    
    
    $
    21,525
    
    
    $
    24,387
    
    
    $
    82,113
 -16




---



##### Table of Contents




    
    our ability to secure approval by the FDA for our product candidates under Section
505(b)(2) of the FFDCA;
    
    our ability to file our NDA for VIAject® by the end of the calendar year 2009 as
planned and, once filed, the length of time that will elapse before our NDA is fully
reviewed by the FDA;
    
    our ability to secure approval by the FDA for VIAject® without conducting
additional pivotal clinical trials;
    
    the FDAs findings regarding data anomalies observed in India in our Phase 3
clinical trial of VIAject® for patients with Type 1 diabetes;
    
    the size, endpoints and duration of additional clinical trials of VIAject® to
support our commercialization efforts and, potentially, FDA approval;
    
    the cost to fully develop the 100 IU/cc liquid formulation of VIAject®;
    
    the cost to develop an insulin pen program for use with VIAject®;
    
    the costs of pre-commercialization activities, including increased insulin
purchases;
    
    the costs associated with qualifying and obtaining regulatory approval of suppliers
of insulin and manufacturers of our product candidates;
    
    the costs of preparing, filing and prosecuting patent applications and maintaining,
enforcing and defending intellectual property-related claims;
    
    the emergence of competing technologies and products and other adverse market
developments; and
    
    our ability to establish and maintain collaborations and the terms and success of the
collaborations, including the timing and amount of payments that we might receive from
potential strategic collaborators.
 ® ®
 General and Administrative Expenses
  ® ®
 Marketable Securities
  Comprehensive Income (Loss)
  Interest Income
  -17




---



##### Table of Contents



Critical Accounting Policies and Significant Judgments and Estimates
   Adopted Accounting Pronouncements
 Derivatives
  Business Combinations
  Fair Value Measurement
     -18




---



##### Table of Contents



Subsequent Event
  Recent Accounting Pronouncements
   Results of Operations
 Three Months Ended June 30, 2008 Compared to Three Months Ended June 30, 2009
 Revenue.
 Research and Development Expenses.
 Three Months EndedJune 30,
    
    
    Increase2008
    
    
    2009
    
    
    $
    
    
    %(in thousands)Research and Development
    
    $
    6,884
    
    
    $
    7,991
    
    
    $
    1,107
    
    
    
    16.1
    %Percentage of net loss
    
    
    68
    %
    
    
    72
    %
 ®
 General and Administrative Expenses.
 Three Months EndedJune 30,
    
    
    Decrease2008
    
    
    2009
    
    
    $
    
    
    %(in thousands)General and Administrative
    
    $
    4,161
    
    
    $
    2,692
    
    
    $
    1,469
    
    
    
    35.3
    %Percentage of net loss
    
    
    41
    %
    
    
    24
    %
 -19




---



##### Table of Contents



Interest and Other Income.
 Three Months EndedJune 30,
    
    
    Decrease2008
    
    
    2009
    
    
    $
    
    
    %(in thousands)Interest and Other Income
    
    $
    390
    
    
    $
    54
    
    
    $
    336
    
    
    
    86.2
    %Percentage of net loss
    
    
    4
    %
    
    
    1
    %
  Net Loss and Net Loss per Share.
 Three Months EndedJune 30,
    
    
    Increase2008
    
    
    2009
    
    
    $
    
    
    %(in thousands, except per share amounts)Net loss
    
    $
    (10,111
    )
    
    $
    (11,148
    )
    
    $
    1,037
    
    
    
    10.3
    %Net loss per share
    
    $
    (0.43
    )
    
    $
    (0.47
    )
  Nine Months Ended June 30, 2008 Compared to Nine Months Ended June 30, 2009
 Revenue.
 Research and Development Expenses
 Nine Months EndedJune 30,
    
    
    Increase2008
    
    
    2009
    
    
    $
    
    
    %(in thousands)Research and Development
    
    $
    21,525
    
    
    $
    24,387
    
    
    $
    2,862
    
    
    
    13.3
    %Percentage of net loss
    
    
    70
    %
    
    
    74
    %
 ®
 General and Administrative Expenses
 Nine Months EndedJune 30,
    
    
    Decrease2008
    
    
    2009
    
    
    $
    
    
    %(in thousands)General and Administrative
    
    $
    11,836
    
    
    $
    8,408
    
    
    $
    3,428
    
    
    
    29.0
    %Percentage of net loss
    
    
    39
    %
    
    
    26
    %
 -20




---



##### Table of Contents



Interest and Other Income
 Nine Months EndedJune 30,
    
    
    Decrease2008
    
    
    2009
    
    
    $
    
    
    %(in thousands)Interest and Other Income
    
    $
    2,174
    
    
    $
    374
    
    
    $
    1,800
    
    
    
    82.8
    %Percentage of net loss
    
    
    7
    %
    
    
    1
    %
  Net Loss and Net Loss per Share
 Nine Months EndedJune 30,
    
    
    Increase2008
    
    
    2009
    
    
    $
    
    
    %(in thousands, except per share amounts)Net Loss
    
    $
    (30,696
    )
    
    $
    (32,801
    )
    
    $
    2,105
    
    
    
    6.9
    %Net loss per share
    
    $
    (1.40
    )
    
    $
    (1.38
    )
 ® ®
 Liquidity and Capital Resources
 Sources of Liquidity and Cash Flows
      -21




---



##### Table of Contents



Funding Requirements
 ®
  
    
    our ability to secure approval by the FDA for VIAject® under Section 505(b)(2) of the FFDCA;
    
    the costs associated with preparing and submitting our NDA for VIAject®, and our
ability to submit the NDA as planned by the end of calendar year 2009;
    
    the costs associated with preparing and submitting our Marketing Authorization Application, or MAA, for VIAject® to the
European Medicines Agency, or EMEA;
    
    our ability to market, commercialize and achieve market acceptance for product
candidates, particularly VIAject®, developed using our VIAdel technology;
    
    our ability to secure approval by the FDA for VIAject® without conducting
additional pivotal clinical trials;
    
    the FDAs findings regarding data anomalies observed in India in our Phase 3
clinical trial of VIAject® for patients with Type 1 diabetes;
    
    the size, endpoints and duration of additional clinical trials of VIAject® in
patients with Type 1 diabetes to support our commercialization efforts and, potentially,
FDA approval;
    
    the cost to fully develop the 100 IU/cc liquid formulation of VIAject®;
    
    the cost to develop an insulin pen program for use with VIAject®;
    
    purchasing recombinant human insulin and other materials to build commercial supply
inventory for VIAject®;
    
    the costs of preparing, filing and prosecuting patent applications and maintaining,
enforcing and defending intellectual property-related claims;
    
    the cost associated with qualifying and obtaining regulatory approval of suppliers
of insulin and manufacturers of our product candidates;
    
    our ability to establish and maintain collaborations and the terms and success of
the collaborations, including the timing and amount of payments that we might receive from
potential strategic collaborators; and
    
    the continued participation of patients in our VIAject® Phase 3 clinical trial
extension program, which is designed to run through the eighteenth month of patient
treatment, subject to compassionate use exceptions, if any.
   -22




---



##### Table of Contents



Off-Balance Sheet Arrangements
  Contractual Obligations
  Less
    
    
    
    
    
    
    
    
    
    
    MoreThan
    
    
    
    
    
    
    
    
    
    
    Than(in thousands, except per share amounts)
    
    Total
    
    
    1 Year
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    5 YearsOperating lease obligations
    
    $
    2,717
    
    
    $
    566
    
    
    $
    1,549
    
    
    $
    602
    
    
    $
    Purchase commitments
    
    
    18,682
    
    
    
    5,937
    
    
    
    12,745
    
    
    
    
    
    
    
    Total fixed contractual obligations
    
    $
    21,399
    
    
    $
    6,503
    
    
    $
    14,294
    
    
    $
    602
    
    
    $
    
 
 Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
   
 Item 4.
    
    Controls and Procedures
 Managements Evaluation of Disclosure Controls and Procedures
  Changes in internal controls
  -23




---



##### Table of Contents



PART II-OTHER INFORMATION
 
 Item 1A.
    
    Risk Factors
 Risks Related to Our Financial Position and Need for Additional Capital
 We have incurred significant losses since our inception. We expect to incur losses for the
foreseeable future and may never achieve or maintain profitability.
 ® ® ®
 
    
    prepare for the submission of our NDA for VIAject® as planned by the end of calendar
year 2009;
 
    
    continue our clinical trial extension program for the pivotal Phase 3 clinical
trials of VIAject®, which is designed to run through the eighteenth month of patient
treatment, subject to compassionate use exceptions, if any;
 
    
    conduct additional clinical trials of VIAject® to support our commercialization
efforts and, potentially, FDA approval;
 
    
    produce required registration and validation batches of VIAject® vials and
cartridges to support our NDA for VIAject®;
 
    
    purchase recombinant human insulin and other materials to build commercial supply
inventory for VIAject®; and
 
    
    conduct additional clinical development of our other product candidates.
  We will need substantial additional funding and may be unable to raise capital when needed, which
would force us to delay, reduce or eliminate our product development programs or commercialization
efforts.
 ®
 ® ® ® ®
  
    
    our ability to secure approval by the FDA for VIAject® under Section 505(b)(2) of
the FFDCA;
 
    
    the costs associated with preparing and submitting our NDA for VIAject®, and our
ability to submit the NDA as planned by the end of calendar year 2009;
 
    
    the costs associated with preparing and submitting our MAA for VIAject® to EMEA;
 
    
    our ability to market, commercialize and achieve market acceptance for product
candidates, particularly VIAject®, developed using our VIAdel technology;
 
    
    our ability to secure approval by the FDA for VIAject® without conducting
additional pivotal clinical trials;
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
    
    the FDAs findings regarding data anomalies observed in India in our Phase 3
clinical trial of VIAject® for patients with Type 1 diabetes;
    
    the size, endpoints and duration of additional clinical trials of VIAject® in
patients with Type 1 diabetes to support our commercialization efforts and, potentially,
FDA approval;
    
    the cost to fully develop the 100 IU/cc liquid formulation of VIAject®;
    
    the cost to develop an insulin pen program for use with VIAject®;
    
    purchasing recombinant human insulin and other materials to build commercial supply
inventory for VIAject®;
    
    the costs of preparing, filing and prosecuting patent applications and maintaining,
enforcing and defending intellectual property-related claims;
    
    the cost associated with qualifying and obtaining regulatory approval of suppliers
of insulin and manufacturers of our product candidates;
    
    our ability to establish and maintain collaborations and the terms and success of
the collaborations, including the timing and amount of payments that we might receive from
potential strategic collaborators; and
    
    the continued participation of patients in our VIAject® Phase 3 clinical trial
extension program, which is designed to run through the eighteenth month of patient
treatment, subject to compassionate use exceptions, if any.
  Our short operating history may make it difficult for you to evaluate the success of our business
to date and to assess our future viability.
   Risks Related to the Development and Commercialization of Our Product Candidates
 We depend heavily on the success of our most advanced product candidate, VIAject® . The results from
our completed pivotal Phase 3 clinical trials of VIAject® may not be sufficient to file an NDA for
VIAject® or to obtain marketing approval from the FDA. If we are unable to commercialize VIAject®
or experience significant delays in doing so, our business will be materially harmed.
 ® ® ® ® ®
 We may never reinitiate development of VIAtab, VIAmass or VIAcal
 ® ®
 The results of clinical trials do not ensure success in future clinical trials or commercial
success.
 ®
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® ® ®
 
    
    successful completion of preclinical development and clinical trials;
 
    
    our ability to identify and enroll patients who meet clinical trial eligibility
criteria;
 
    
    receipt of marketing approvals from the FDA and similar regulatory authorities
outside the United States, including for the liquid formulation of VIAject® ;
 
    
    establishing commercial manufacturing capabilities through arrangements with
third-party manufacturers;
 
    
    launching commercial sales of the products, whether alone or in collaboration with
others;
 
    
    competition from other products; and
 
    
    a continued acceptable safety profile of the products following approval.
 If the FDA does not approve our NDA, or if our clinical trials are delayed or do not produce
positive results, we may incur additional costs and ultimately be unable to commercialize our
product candidates.
 ® ®
 
    
    the FDA may require us to conduct additional clinical trials of VIAject® prior to
accepting our NDA for filing or following its review of our NDA based on data from India
in one of our pivotal Phase 3 clinical trials that we found to be anomalous when compared
to data from the United States and Germany for the same clinical trial;
    
    our preclinical tests or other clinical trials may produce negative or inconclusive
results, and we may decide, or regulators may require us, to conduct additional
preclinical testing or clinical trials or we may abandon projects that we had expected to
be promising;
    
    the number of patients required for our clinical trials may be larger than we
anticipate, enrollment in our clinical trials may be slower than we currently anticipate,
or participants may drop out of our clinical trials at a higher rate than we anticipate,
any of which would result in significant delays;
    
    our third-party contractors may fail to comply with regulatory requirements or meet
their contractual obligations to us in a timely manner;
    
    we might have to suspend or terminate our clinical trials if the participants are
being exposed to unacceptable health risks;
    
    regulators or institutional review boards may require that we hold, suspend or
terminate clinical research for various reasons, including noncompliance with regulatory
requirements;
    
    the cost of our clinical trials may be greater than we anticipate;
    
    the supply or quality of our product candidates or other materials necessary to
conduct our clinical trials may be insufficient or inadequate; and
    
    the effects of our product candidates may not be the desired effects or may include
undesirable side effects or the product candidates may have other unexpected
characteristics.
  
    
    be delayed in obtaining marketing approval for our product candidates;
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
    
    not be able to obtain marketing approval;
 
    
    obtain approval for indications that are not as broad as intended; or
 
    
    have the product removed from the market after obtaining marketing approval.
  If our product candidates are found to cause undesirable side effects we may need to delay or
abandon our development and commercialization efforts.
  
    
    a change in the labeling statements or withdrawal of FDA or other regulatory
approval of the product;
 
    
    a change in the way the product is administered; or
 
    
    the need to conduct additional clinical trials.
  ® ® ® ® ®
 The commercial success of any product candidates that we may develop, including VIAject®, VIAtab  ,
VIAmass  and VIAcal  will depend upon the degree of market acceptance by physicians, patients,
healthcare payors and others in the medical community.
 ®
  
    
    the willingness and ability of patients and the healthcare community to adopt our
technology;
 
    
    the ability to manufacture our product candidates in sufficient quantities with
acceptable quality and to offer our product candidates for sale at competitive prices;
 
    
    the perception of patients and the healthcare community, including third-party
payors, regarding the safety, efficacy and benefits of our product candidates compared to
those of competing products or therapies;
 
    
    the convenience and ease of administration of our product candidates relative to
existing treatment methods, such as our ability to gain regulatory approval for our liquid
100 IU/cc formulation of VIAject® and the degree to which injection site pain may be
associated with this formulation, if at all;
 
    
    the label and promotional claims allowed by the FDA, such as, in the case of
VIAject®, claims relating to glycemic control, hypoglycemia, weight gain, injection site
pain, expiry dating and required handling conditions;
 
    
    the pricing and reimbursement of our product candidates relative to existing
treatments; and
    
    marketing and distribution support for our product candidates.
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If we fail to enter into strategic collaborations for the commercialization of our product
candidates or if our collaborations are unsuccessful, we may be required to establish our own
sales, marketing, manufacturing and distribution capabilities which will be expensive, require
additional capital we do not currently have, and could delay the commercialization of our product
candidates and have a material and adverse affect on our business.
   If we are unable to obtain adequate reimbursement from governments or third-party payors for any
products that we may develop or if we are unable to obtain acceptable prices for those products,
they may not be purchased or used and our revenues and prospects for profitability will suffer.
  
    
    a covered benefit under its health plan;
 
    
    safe, effective and medically necessary;
 
    
    appropriate for the specific patient;
 
    
    cost-effective; and
 
    
    neither experimental nor investigational.
  We are subject to pricing pressures and uncertainties regarding Medicare reimbursement and reform.
  Governments outside the United States tend to impose strict price controls, which may adversely
affect our revenues, if any.
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Product liability lawsuits against us could cause us to incur substantial liabilities and to limit
commercialization of any products that we may develop.
  
    
    decreased demand for any product candidates or products that we may develop;
    
    injury to our reputation;
    
    withdrawal of clinical trial participants;
    
    costs to defend the related litigation;
    
    substantial monetary awards to trial participants or patients;
    
    loss of revenue; and
    
    the inability to commercialize any products that we may develop.
 ® .
 We face substantial competition in the development of our product candidates which may result in
others developing or commercializing products before or more successfully than we do.
 ® ® ® ® ® ® ® ®
   
    
    significantly greater financial, technical and human resources than we have and may
be better equipped to discover, develop, manufacture and commercialize product candidates;
    
    more extensive experience in preclinical testing and clinical trials, obtaining
regulatory approvals and manufacturing and marketing pharmaceutical products;
    
    product candidates that have been approved or are in late-stage clinical
development; or
    
    collaborative arrangements in our target markets with leading companies and
research institutions.
 Our product candidates may be rendered obsolete by technological change.
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Our business activities involve the storage and use of hazardous materials, which require
compliance with environmental and occupational safety laws regulating the use of such materials. If
we violate these laws, we could be subject to significant fines, liabilities or other adverse
consequences.
  Risks Related to Our Dependence on Third Parties
 Use of third parties to manufacture our product candidates may increase the risks that we will not
have sufficient quantities of our product candidates or such quantities at an acceptable cost, or
that our suppliers will not be able to manufacture our products in their final dosage form. In any
such case, clinical development and commercialization of our product candidates could be delayed,
prevented or impaired.
 ®
 ®
  
    
    reliance on the third party for regulatory compliance and quality assurance;
 
    
    the possible breach of the manufacturing agreement by the third party because of
factors beyond our control; and
 
    
    the possible refusal by the third party to support our manufacturing programs,
based on its own business priorities, at a time that is costly or inconvenient for us.
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We rely on third parties to conduct our clinical trials and those third parties may not perform
satisfactorily, including failing to meet established deadlines for the completion of such trials.
  If our suppliers, principally our sole insulin supplier, fail to deliver materials and provide
services needed for the production of VIAject® and VIAtab in a timely and sufficient manner, or
if they fail to comply with applicable regulations, clinical development or regulatory approval of
our product candidates or commercialization of our products could be delayed, producing additional
losses and depriving us of potential product revenue.
  ®
 ® ® ® ,
 Risks Related to Our Intellectual Property
 If we are unable to protect our intellectual property rights, our competitors may develop and
market similar or identical products that may reduce demand for our products, and we may be
prevented from establishing collaborative relationships on favorable terms.
  
    
    receiving patent protection for our product candidates;
 
    
    maintaining our trade secrets;
 
    
    not infringing on the proprietary rights of others; and
 
    
    preventing others from infringing our proprietary rights.
  ®
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®
   We may become involved in lawsuits and administrative proceedings to protect, defend or enforce our
patents that would be expensive and time-consuming.
   Claims by other parties that we infringe or have misappropriated their proprietary technology may
result in liability for damages, royalties, or other payments, or stop our development and
commercialization efforts.
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Risks Related to Regulatory Approval of Our Product Candidates
 If we fail to submit our NDA for VIAject® by the end of calendar year 2009, as we intend, or if we
are unable to obtain required regulatory approvals, we will not be able to commercialize VIAject®
as planned, if at all, and our ability to generate revenue will be materially impaired.
 ® ® ®
 ® ® ® ® ® ® ®
 If the FDA does not believe that our product candidates satisfy the requirements for the Section
505(b)(2) approval procedure, the approval pathway will take longer and cost more than anticipated
and in either case may not be successful.
 ®
  ®
 Any product for which we obtain marketing approval could be subject to restrictions or withdrawal
from the market and we may be subject to penalties if we fail to comply with regulatory
requirements or if we experience unanticipated problems with our products, when and if any of them
are approved.
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
    
    restrictions on such products manufacturers or manufacturing processes;
    
    restrictions on the marketing or distribution of a product;
    
    warning letters;
    
    withdrawal of the products from the market;
    
    refusal to approve pending applications or supplements to approved applications
that we submit;
    
    recall of products;
    
    fines, restitution or disgorgement of profits or revenue;
    
    suspension or withdrawal of regulatory approvals;
    
    refusal to permit the import or export of our products;
    
    product seizure;
    
    injunctions; or
    
    imposition of civil or criminal penalties.
 Legislation may make it more difficult and costly for us to obtain regulatory approval of our
product candidates and to produce, market and distribute our existing products.
   Failure to obtain regulatory approval in international jurisdictions would prevent us from
marketing our products abroad.
  Reports of side effects or safety concerns in related technology fields or in other companies
clinical trials could delay or prevent us from obtaining regulatory approval or negatively impact
public perception of our product candidates.
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Risks Related to Employee Matters and Managing Growth
 Our future success depends on our ability to retain our chief executive officer and other key
executives and to attract, retain and motivate qualified personnel.
   We may expand our development, regulatory and sales and marketing capabilities, and as a result, we
may encounter difficulties in managing our growth, which could disrupt our operations.
 ®
 Risks Related to Our Common Stock
 Our executive officers, directors and principal stockholders have significant ability to control
all matters submitted to stockholders for approval.
  Provisions in our corporate charter documents and under Delaware law could make an acquisition of
us, which may be beneficial to our stockholders, more difficult and may prevent attempts by our
stockholders to replace or remove our current management.
   
    
    establish a classified board of directors such that not all members of the board
are elected at one time;
    
    allow the authorized number of our directors to be changed only by resolution of
our board of directors;
    
    limit the manner in which stockholders can remove directors from the board;
    
    establish advance notice requirements for stockholder proposals that can be acted
on at stockholder meetings and nominations to our board of directors;
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
    
    require that stockholder actions must be effected at a duly called stockholder
meeting and prohibit actions by our stockholders by written consent;
    
    limit who may call stockholder meetings;
    
    authorize our board of directors to issue preferred stock without stockholder
approval, which could be used to institute a stockholder rights plan or poison pill that
would work to dilute the stock ownership of a potential hostile acquirer, effectively
preventing acquisitions that have not been approved by our board of directors; and
    
    require the approval of the holders of at least 75% of the votes that all our
stockholders would be entitled to cast to amend or repeal certain provisions of our
charter or bylaws.
  If our stock price is volatile, purchasers of our common stock could incur substantial losses.
  
    
    results of clinical trials of our product candidates or those of our competitors;
    
    regulatory or legal developments in the United States and other countries;
    
    variations in our financial results or those of companies that are perceived to be
similar to us;
    
    developments or disputes concerning patents or other proprietary rights;
    
    the recruitment or departure of key personnel;
    
    changes in the structure of healthcare payment systems;
    
    market conditions in the pharmaceutical and biotechnology sectors and issuance of
new or changed securities analysts reports or recommendations;
    
    general economic, industry and market conditions; and
    
    the other factors described in this Risk Factors section.
 We have never paid any cash dividends on our capital stock and we do not anticipate paying any cash
dividends in the foreseeable future.
  A significant portion of our total outstanding shares are restricted from immediate resale but may
be sold into the market in the near future. This could cause the market price of our common stock
to drop significantly, even if our business is doing well.
  We incur substantial costs as a result of operating as a public company, and our management is
required to devote substantial time to comply with public company regulations.
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Item 6.
    
    Exhibits
 Exhibit No.
    
    Description31.01
    
    Chief Executive OfficerCertification pursuant to Rule
13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act
of 1934, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.31.02
    
    Chief Financial OfficerCertification pursuant to Rule
13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act
of 1934, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.32.01
    
    Chief Executive Officer and Chief Financial
OfficerCertification pursuant to Rule 13a-14(b) or Rule
15d-14(b) of the Securities Exchange Act of 1934 and 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
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SIGNATURES
  BIODEL INC.Dated: August 7, 2009
    By:
    /s/ Gerard MichelGerard Michel, Chief Financial Officer,VP Corporate Development, and Treasurer -38




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Exhibit No.
    
    Description31.01
    
    Chief Executive OfficerCertification pursuant to Rule
13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act
of 1934, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.31.02
    
    Chief Financial OfficerCertification pursuant to Rule
13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act
of 1934, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.32.01
    
    Chief Executive Officer and Chief Financial
OfficerCertification pursuant to Rule 13a-14(b) or Rule
15d-14(b) of the Securities Exchange Act of 1934 and 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
 -39