##### 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 March 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  .
 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 a smaller reporting company)
 o þ




---



##### 



BIODEL INC.
 PagePART I  FINANCIAL INFORMATIONItem 1. Condensed Financial Statements
    
    
    1Condensed Balance Sheets at September 30, 2009 and March 31, 2010 (unaudited)
    
    
    1Condensed Statements of Operations (unaudited) for the Three and Six Months Ended
March 31, 2009 and 2010 and for the period from December 3, 2003 (inception) to
March 31, 2010
    
    
    2Condensed Statements of Stockholders Equity (unaudited) for the period from
December 3, 2003 (inception) to March 31, 2010
    
    
    3Condensed Statements of Cash Flows (unaudited) for the Six Months Ended March 31,
2009 and 2010 and for the period from December 3, 2003 (inception) to March 31, 2010
    
    
    6Notes to Condensed Financial Statements
    
    
    8Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    16Item 3. Quantitative and Qualitative Disclosure About Market Risk
    
    
    24Item 4. Controls and Procedures
    
    
    24PART II  OTHER INFORMATIONItem 1A. Risk Factors
    
    
    26Item 6. Exhibits
    
    
    40Signatures
    
    
    41EX-10.1EX-10.2EX-10.3EX-10.4EX-31.01EX-31.02EX-32.01




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1.   Condensed Financial Statements.
 Biodel Inc.
(A Development Stage Company)
 
 Balance Sheets
(in thousands, except share and per share amounts)
 September 30,
    
    
    March 31,2009
    
    
    2010(unaudited)ASSETSCurrent:Cash and cash equivalents
    
    $
    54,640
    
    
    $
    32,716Taxes receivable
    
    
    752
    
    
    
    766Other receivables
    
    
    
    
    
    
    1,406Prepaid and other assets
    
    
    482
    
    
    
    828Total current assets
    
    
    55,874
    
    
    
    35,716Property and equipment, net
    
    
    3,695
    
    
    
    3,255Intellectual property, net
    
    
    56
    
    
    
    54Total assets
    
    $
    59,625
    
    
    $
    39,025LIABILITIES AND STOCKHOLDERS EQUITYCurrent:Accounts payable
    
    $
    1,007
    
    
    $
    2,913Accrued expenses:Clinical trial expenses
    
    
    5,647
    
    
    
    1,777Regulatory
    
    
    359
    
    
    
    450Payroll and related
    
    
    1,117
    
    
    
    972Accounting and legal fees
    
    
    325
    
    
    
    444Severance
    
    
    183
    
    
    
    46Other
    
    
    284
    
    
    
    515Income taxes payable
    
    
    165
    
    
    
    153Total current liabilities
    
    
    9,087
    
    
    
    7,270CommitmentsStockholders equity:Preferred stock, $.01 par value; 50,000,000 shares authorized, none outstanding
    
    
    
    
    
    
    Common stock, $.01 par value; 100,000,000 shares authorized; 23,803,672 and 23,889,612 issued and outstanding
    
    
    238
    
    
    
    239Additional paid-in capital
    
    
    176,764
    
    
    
    179,537Deficit accumulated during the development stage
    
    
    (126,464
    )
    
    
    (148,021
    )Total stockholders equity
    
    
    50,538
    
    
    
    31,755Total liabilities and stockholders equity
    
    $
    59,625
    
    
    $
    39,025
  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
    
    
    Six Months Ended
    
    
    (inception) toMarch 31,
    
    
    March 31,
    
    
    March 31,2009
    
    
    2010
    
    
    2009
    
    
    2010
    
    
    2010Revenue
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Operating expenses:Research and development
    
    
    8,361
    
    
    
    7,014
    
    
    
    16,396
    
    
    
    15,768
    
    
    
    105,819General and administrative
    
    
    3,435
    
    
    
    3,377
    
    
    
    5,716
    
    
    
    5,793
    
    
    
    42,438Total operating expenses
    
    
    11,796
    
    
    
    10,391
    
    
    
    22,112
    
    
    
    21,561
    
    
    
    148,257Other (income) and expense:Interest and other income
    
    
    (78
    )
    
    
    (2
    )
    
    
    (320
    )
    
    
    (7
    )
    
    
    (5,496
    )Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    78Loss on settlement of debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    627Operating loss before tax provision (benefit)
    
    
    (11,718
    )
    
    
    (10,389
    )
    
    
    (21,792
    )
    
    
    (21,554
    )
    
    
    (143,466
    )Tax provision (benefit)
    
    
    (89
    )
    
    
    20
    
    
    
    (139
    )
    
    
    3
    
    
    
    (505
    )Net loss
    
    
    (11,629
    )
    
    
    (10,409
    )
    
    
    (21,653
    )
    
    
    (21,557
    )
    
    
    (142,961
    )Charge for accretion of beneficial conversion rights
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (603
    )Deemed dividend  warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,457
    )Net loss applicable to common stockholders
    
    $
    (11,629
    )
    
    $
    (10,409
    )
    
    $
    (21,653
    )
    
    $
    (21,557
    )
    
    $
    (148,201
    )Net loss per share  basic and diluted
    
    $
    (0.49
    )
    
    $
    (0.44
    )
    
    $
    (0.91
    )
    
    $
    (0.90
    )Weighted average shares outstanding  basic and diluted
    
    
    23,717,800
    
    
    
    23,885,856
    
    
    
    23,698,558
    
    
    
    23,867,152
  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)
 DeficitAccumulated
    
    
    AccumulatedCommon Stock
    
    
    Series A Preferred stock
    
    
    Series B Preferred stock
    
    
    Additional
    
    
    Other
    
    
    During the
    
    
    Total$01 Par Value
    
    
    $.01 Par Value
    
    
    $.01 Par Value
    
    
    Paid in
    
    
    Comprehensive
    
    
    Development
    
    
    StockholdersShares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Income (loss)
    
    
    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
    
    
    
    
    
    
    
    
    
    
    
    514Share-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
    )
    
    
    654Share-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
    )
    
    
    16,348
 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)
 DeficitSeries A Preferred
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Accumulated
    
    
    AccumulatedCommon Stock
    
    
    stock
    
    
    Series B Preferred stock
    
    
    Additional
    
    
    Other
    
    
    During the
    
    
    Total$01 Par Value
    
    
    $.01 Par Value
    
    
    $.01 Par Value
    
    
    Paid in
    
    
    Comprehensive
    
    
    Development
    
    
    StockholdersShares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Income (loss)
    
    
    Stage
    
    
    EquityMay 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
    
    
    
    
    
    
    
    
    
    
    
    Share-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
    )Balance, 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
    
    
    
    
    
    
    
    
    
    
    
    172Share-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,503
    
    
    
    
    
    
    
    
    
    
    
    6,503Stock options exercised
    
    
    174,410
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    901
    
    
    
    
    
    
    
    
    
    
    
    902Warrants exercised
    
    
    79,210
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    111
    
    
    
    
    
    
    
    
    
    
    
    112Net unrealized (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
    )
    
    
    88,487
 4




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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)
 DeficitSeries A Preferred
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Accumulated
    
    
    AccumulatedCommon Stock
    
    
    stock
    
    
    Series B Preferred stock
    
    
    Additional
    
    
    Other
    
    
    During the
    
    
    Total$01 Par Value
    
    
    $.01 Par Value
    
    
    $.01 Par Value
    
    
    Paid in
    
    
    Comprehensive
    
    
    Development
    
    
    Stockholders'Shares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Income (loss)
    
    
    Stage
    
    
    EquityShare-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,064
    
    
    
    
    
    
    
    
    
    
    
    5,064Stock options exercised
    
    
    17,661
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25
    
    
    
    
    
    
    
    
    
    
    
    25Net unrealized gain on Marketable Securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    62
    
    
    
    
    
    
    
    62Proceeds from sale of stock  ESPP
    
    
    87,453
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    169
    
    
    
    
    
    
    
    
    
    
    
    170Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (43,270
    )
    
    
    (43,270
    )Balance, September 30, 2009
    
    
    23,803,672
    
    
    
    238
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    176,764
    
    
    
    
    
    
    
    (126,464
    )
    
    
    50,538Share-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,609
    
    
    
    
    
    
    
    
    
    
    
    2,609Stock options exercised
    
    
    6,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10
    
    
    
    
    
    
    
    
    
    
    
    10Proceeds from sale of stock  ESPP
    
    
    79,940
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    154
    
    
    
    
    
    
    
    
    
    
    
    155Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (21,557
    )
    
    
    (21,557
    )Balance, March 31, 2010 (unaudited)
    
    
    23,889,612
    
    
    $
    239
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    $
    179,537
    
    
    $
    
    
    
    $
    (148,021
    )
    
    $
    31,755
  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 3,2003Six months ended
    
    
    (inception) toMarch 31,
    
    
    March 31,2009
    
    
    2010
    
    
    2010Cash flows from operating activities:Net loss
    
    $
    (21,653
    )
    
    $
    (21,557
    )
    
    $
    (142,961
    )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation and amortization
    
    
    420
    
    
    
    487
    
    
    
    2,636Founders compensation contributed to capital
    
    
    
    
    
    
    
    
    
    
    271Share-based compensation for employees and directors
    
    
    2,525
    
    
    
    2,633
    
    
    
    17,837Share-based compensation for non-employees
    
    
    90
    
    
    
    (24
    )
    
    
    2,301Loss on settlement of debt
    
    
    
    
    
    
    
    
    
    
    627Write-off of loan to related party
    
    
    
    
    
    
    
    
    
    
    41Write-off of capitalized patent expense
    
    
    
    
    
    
    
    
    
    
    208(Increase) decrease in:Income tax receivable
    
    
    (157
    )
    
    
    (14
    )
    
    
    (766
    )Other receivables
    
    
    
    
    
    
    (1,406
    )
    
    
    (1,406
    )Prepaid expenses
    
    
    375
    
    
    
    (346
    )
    
    
    (828
    )Increase (decrease) in:Accounts payable
    
    
    (202
    )
    
    
    1,906
    
    
    
    2,913Income taxes payable
    
    
    104
    
    
    
    (12
    )
    
    
    153Accrued expenses
    
    
    235
    
    
    
    (3,710
    )
    
    
    4,423Total adjustments
    
    
    3,390
    
    
    
    (486
    )
    
    
    28,410Net cash used in operating activities
    
    
    (18,263
    )
    
    
    (22,043
    )
    
    
    (114,551
    )Cash flows from investing activities:Purchase of property and equipment
    
    
    (77
    )
    
    
    (46
    )
    
    
    (5,855
    )Purchase of marketable securities
    
    
    
    
    
    
    
    
    
    
    (25,614
    )Sale of marketable securities
    
    
    13,595
    
    
    
    
    
    
    
    25,614Acquisition of intellectual property
    
    
    
    
    
    
    
    
    
    
    (298
    )Loan to related party
    
    
    
    
    
    
    
    
    
    
    (41
    )Net cash provided by (used in) investing activities
    
    
    13,518
    
    
    
    (46
    )
    
    
    (6,194
    )Cash flows from financing activities:Options exercised
    
    
    12
    
    
    
    10
    
    
    
    942Warrants exercised
    
    
    
    
    
    
    
    
    
    
    535Employee stock purchase plan
    
    
    27
    
    
    
    155
    
    
    
    506Deferred 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
    
    
    
    
    
    
    
    
    
    
    127,030Proceeds from bridge financing
    
    
    
    
    
    
    
    
    
    
    2,575Net proceeds from sale of Series B preferred stock
    
    
    
    
    
    
    
    
    
    
    19,205Net cash provided by financing activities
    
    
    39
    
    
    
    165
    
    
    
    153,461Net (decrease) increase in cash and cash equivalents
    
    
    (4,706
    )
    
    
    (21,924
    )
    
    
    32,716Cash and cash equivalents, beginning of period
    
    
    64,731
    
    
    
    54,640
    
    
    
    Cash and cash equivalents, end of period
    
    $
    60,025
    
    
    $
    32,716
    
    
    $
    32,716
 6




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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 3,2003Six months ended
    
    
    (inception) toMarch 31,
    
    
    March 31,2009
    
    
    2010
    
    
    2010Supplemental disclosures of cash flow information:Cash paid for interest and income taxes was:Interest
    
    $
    
    
    
    $
    
    
    
    $
    9Income taxes
    
    
    85
    
    
    
    30
    
    
    
    276Non-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
  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)
 1. Business and Basis of Presentation
 Business
 ®
 Basis of Presentation
   Recently Adopted and Recently Issued Accounting Pronouncements
 Adopted Accounting Pronouncements
 Fair Value Measurement
  Share-based Compensation
  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)
 2. Pre-Launch Inventory
 ® ®
 3. Share-Based Compensation
        9




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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)
  WeightedWeighted
    
    
    AverageAverage
    
    
    Remaining
    
    
    AggregateExercise
    
    
    Contractual
    
    
    IntrinsicNumber
    
    
    Price
    
    
    Life in Years
    
    
    ValueOutstanding options, September 30, 2009
    
    
    3,407,633
    
    
    $
    11.81
    
    
    
    
    
    
    $
    1,590Granted
    
    
    1,252,500
    
    
    
    4.09
    
    
    
    
    
    
    $
    231Exercised
    
    
    6,000
    
    
    
    1.70
    
    
    
    
    
    
    $
    15Forfeited, expired
    
    
    34,896
    
    
    
    14.40
    
    
    
    
    
    
    
    Outstanding options, March 31, 2010
    
    
    4,619,237
    
    
    $
    9.71
    
    
    
    6
    
    
    $
    1,821Exercisable options, March 31, 2010
    
    
    2,463,243
    
    
    $
    10.65
    
    
    
    5
    
    
    $
    1,288
  Three Months Ended
    
    
    Six Months EndedMarch 31,
    
    March 31,2009
    
    2010
    
    2009
    
    2010Expected life (in years)
    
    
    5.25
    
    
    
    3.77-5.25
    
    
    
    5.25
    
    
    
    3.77-5.25Expected volatility
    
    
    61%-62
    %
    
    
    65
    %
    
    
    59-62
    %
    
    
    64-76%
    %Expected dividend yield
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %Risk-free interest rate
    
    
    1.51  1.99
    %
    
    
    2.30  2.55
    %
    
    
    1.00-1.99
    %
    
    
    1.38-2.69
    %Weighted average grant date fair value
    
    $
    3.75
    
    
    $
    2.30
    
    
    $
    2.69
    
    
    $
    2.30
 Restricted Stock Units
    Three Months Ended
    
    
    Six Months EndedMarch 31,
    
    
    March 31,2009
    
    
    2010
    
    
    2009
    
    
    2010Stock compensation expense  RSUs
    
    $
    
    
    
    $
    61
    
    
    $
    
    
    
    $
    82
 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)
   WeightedAverageGrant-DateFair ValueShares
    
    
    Per ShareNonvested balance at October 1, 2009
    
    
    
    
    
    $
    Changes during the periodShares granted
    
    
    250,000
    
    
    
    3.95Shares vested
    
    
    
    
    
    
    Shares forfeited or expired
    
    
    (90
    )
    
    
    3.95Nonvested balance at March 31, 2010
    
    
    249,910
    
    
    $
    3.95
 2005 Employee Stock Purchase Plan
    4. Income Taxes
   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)
   5. Net Loss per Share
   Three Months Ended
    
    Six Months EndedMarch 31,
    
    March 31,2009
    
    2010
    
    2009
    
    2010Common shares underlying warrants for Series A Preferred Stock
    
    
    118,815
    
    
    
    118,815
    
    
    
    118,815
    
    
    
    118,815Stock options
    
    
    3,595,129
    
    
    
    4,619,237
    
    
    
    3,595,129
    
    
    
    4,619,237Restricted stock units
    
    
    
    
    
    
    249,910
    
    
    
    
    
    
    
    249,910
 6. Commitments
 Chief Executive Officer Employment Agreement
   
    
    two times his then current salary, plus two times his target annual bonus for the fiscal
year in which he is terminated, plus the pro rata amount of his target annual bonus for the
fiscal year in which he is terminated;
    
    COBRA benefits until the earlier of the end of the 24th month after the date his
employment with the Company ends or the date his COBRA coverage expires;
    
    24 months of acceleration of his outstanding equity compensation awards; and
    
    full vesting of his outstanding equity compensation awards, if the Company terminates
his employment without cause, or he terminates his employment with the Company for good
reason within 12 months following a change in control, as defined in the agreement.
 Chief Scientific Officer Employment Agreement
  12




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##### Table of Contents




    
    two times his then current salary, plus two times his target annual bonus for the fiscal
year in which he is terminated, plus the pro rata amount of his target annual bonus for the
fiscal year in which he is terminated;
    
    COBRA benefits until the earlier of the end of the 24th month after the date his
employment with the Company ends or the date his COBRA coverage expires;
    
    24 months of acceleration of his outstanding equity compensation awards; and
    
    full vesting of his outstanding equity compensation awards, if the Company terminates
his employment without cause, or he resigns within 12 months following a change in control,
as defined in the agreement.
 13




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##### Table of Contents



Former General Counsel Severance Agreement
  Leases
      14




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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;
 ·
    
    the length of time that will elapse before our NDA for VIAject® is fully
reviewed by the FDA;
 ·
    
    our ability to secure approval by the FDA for VIAject® without conducting
additional pivotal clinical trials;
 ·
    
    our ability to market, commercialize and achieve market acceptance for
VIAject® ;
 ·
    
    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 into which we
enter, or our ability to commercialize our product candidates ourselves;
 ·
    
    our ability to enforce our patent for VIAject® and our ability to secure
additional patents for VIAject® and 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 degree of clinical utility of our products;
 ·
    
    the ability of our major suppliers, including suppliers of insulin, to produce our
product or products in our final dosage form;
 ·
    
    our commercialization, marketing and manufacturing capabilities and strategies; and
 ·
    
    our ability to accurately estimate anticipated operating losses, future revenues,
capital requirements and our needs for additional financing.
   15




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##### 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
 ®
 ® ® ® ® ®
 ®
 ® ® ® ® ®
  ®
 ·
    
    A line of adjustable basal insulins with durations that can be tailored to individual
patients:Current basal insulins have a duration of activity that varies patient by
patient; what may be an adequate duration for one patient may be too short or too long in
another. We are developing a technology that may shorten or lengthen the duration of a
basal insulin to best suit the individual needs of patients.
 ·
    
    A smart basal insulin:We are developing a basal insulin formulation that may
sufficiently react to a patients blood glucose levels to meaningfully lessen the risk of
hyper or hypoglycemia compared to currently available basal insulin products, although we
anticipate that prandial insulin injections would still be necessary in many instances.
 ·
    
    Stabilized glucagon:Glucagon is a protein released by the pancreas that signals the
liver to release glucose. Glucagon is currently approved and marketed for use as a rescue
therapy in cases where patients become severely hypoglycemic. It is an unstable protein and
therefore must be stored lyophilized and reconstituted prior to use. We are developing a
more stable formulation of glucagon that may allow it to be stored as a refrigerated
liquid. Such a formulation may offer certain advantages in the rescue market and may also
enable the development of a bi-hormonal pump, which might better mimic the normal function
of the human pancreas.
  16




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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.
  ·
    
    conduct additional clinical trials of VIAject® to support our
commercialization efforts and, potentially, FDA approval;
 ·
    
    purchase recombinant human insulin and other materials to build commercial supply
inventory for VIAject®; and
 ·
    
    continue pre-clinical and limited clinical development of earlier-stage product
candidates.
 ® ®
 ®
  December 3,2003Three Months Ended
    
    
    Six Months Ended
    
    
    Inception toMarch 31,
    
    
    March 31,
    
    
    March 31,2009
    
    
    2010
    
    
    2009
    
    
    2010
    
    
    2010(in thousands)Research and development expenses:Preclinical expenses
    
    $
    623
    
    
    $
    752
    
    
    $
    1,580
    
    
    $
    1,353
    
    
    $
    13,606Manufacturing expenses
    
    
    2,652
    
    
    
    2,334
    
    
    
    5,283
    
    
    
    5,151
    
    
    
    27,212Clinical/regulatory expenses
    
    
    5,086
    
    
    
    3,928
    
    
    
    9,533
    
    
    
    9,264
    
    
    
    65,001Total
    
    $
    8,361
    
    
    $
    7,014
    
    
    $
    16,396
    
    
    $
    15,768
    
    
    $
    105,819
 17




---



##### 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 wait the length of time that will elapse before our NDA is fully reviewed
by the FDA;
 ·
    
    the costs associated with preparing and submitting our Market Authorization Application
(MAA) for VIAject® to the European Medicines Agency (EMEA);
 ·
    
    our ability to market, commercialize and achieve market acceptance for product
candidates, particularly VIAject®;
 ·
    
    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 and the impact of those
findings on the timing of a regulatory approval;
 ·
    
    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®;
 ·
    
    our ability to establish that the 100 IU/cc liquid formulation of VIAject® is
well-tolerated in chronic use;
 ·
    
    the cost to develop and secure approval from the FDA for our disposable pen;
 ·
    
    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
  ® ®
 Pre-Launch Inventory
 ® ®
 2010 Stock Incentive Plan
  18




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##### Table of Contents



Restricted Stock Units
  Interest Income
  Critical Accounting Policies and Significant Judgments and Estimates
   19




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##### Table of Contents



Adopted Accounting Pronouncements
 Fair Value Measurement
  Share-based Compensation
  Results of Operations
 Three Months Ended March 31, 2009 Compared to Three Months Ended March 31, 2010
 Revenue. We did not recognize any revenue during the three months ended March 31, 2009 or
2010.
 Research and Development Expenses.
 Three Months EndedMarch 31,
    
    
    Decrease2009
    
    
    2010
    
    
    $
    
    
    %(in thousands)Research and Development
    
    $
    8,361
    
    
    $
    7,014
    
    
    $
    1,347
    
    
    
    16.1
    %Percentage of net loss
    
    
    72
    %
    
    
    67
    %
 ®
 General and Administrative Expenses.
 Three Months EndedMarch 31,
    
    
    Decrease2009
    
    
    2010
    
    
    $
    
    
    %(in thousands)General and Administrative
    
    $
    3,435
    
    
    $
    3,377
    
    
    $
    58
    
    
    
    1.7
    %Percentage of net loss
    
    
    30
    %
    
    
    32
    %
  20




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##### Table of Contents



Interest and Other Income.
 Three Months EndedMarch 31,
    
    
    Decrease2009
    
    
    2010
    
    
    $
    
    
    %(in thousands)Interest and Other Income
    
    $
    78
    
    
    $
    2
    
    
    $
    76
    
    
    
    97.4
    %Percentage of net loss
    
    
    1
    %
    
    
    0
    %
  Net Loss and Net Loss per Share
 Three Months EndedMarch 31,
    
    
    Decrease2009
    
    
    2010
    
    
    $
    
    
    %(in thousands, except per share amounts)Net loss
    
    $
    (11,629
    )
    
    $
    (10,409
    )
    
    $
    1,220
    
    
    
    10.5
    %Net loss per share
    
    $
    (0.49
    )
    
    $
    (0.44
    )
 ® ®
 Six Months Ended March 31, 2009 Compared to Six Months Ended March 31, 2010
 Revenue.
 Research and Development Expenses
 Six Months EndedMarch 31,
    
    
    Decrease2009
    
    
    2010
    
    
    $
    
    
    %(in thousands)Research and Development
    
    $
    16,396
    
    
    $
    15,768
    
    
    $
    628
    
    
    
    3.8
    %Percentage of net loss
    
    
    76
    %
    
    
    73
    %
  21




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##### Table of Contents



General and Administrative Expenses
 Six Months EndedMarch 31,
    
    
    Increase2009
    
    
    2010
    
    
    $
    
    
    %(in thousands)General and Administrative
    
    $
    5,716
    
    
    $
    5,793
    
    
    $
    77
    
    
    
    1.4
    %Percentage of net loss
    
    
    26
    %
    
    
    27
    %
  Interest and Other Income
 Six Months EndedMarch 31,
    
    
    Decrease2009
    
    
    2010
    
    
    $
    
    
    %(in thousands)Interest and Other Income
    
    $
    320
    
    
    $
    7
    
    
    $
    313
    
    
    
    97.8
    %Percentage of net loss
    
    
    2
    %
    
    
    0
    %
  Net Loss and Net Loss per Share
 Six Months EndedMarch 31,
    
    
    Decrease2009
    
    
    2010
    
    
    $
    
    
    %(in thousands, except per share amounts)Net Loss
    
    $
    (21,653
    )
    
    $
    (21,557
    )
    
    $
    96
    
    
    
    0.4
    %Net loss per share
    
    $
    (0.91
    )
    
    $
    (0.90
    )
 ® ®
 22




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##### Table of Contents



Liquidity and Capital Resources
 Sources of Liquidity and Cash Flows
      Funding Requirements
 ®
  ·
    
    our ability to secure approval by the FDA for VIAject® under
Section 505(b)(2) of the FFDCA;
 ·
    
    our ability to wait the length of time that will elapse before our NDA is fully reviewed
by the FDA;
 ·
    
    the costs associated with preparing and submitting our MAA for VIAject® to
the EMEA;
 ·
    
    our ability to market, commercialize and achieve market acceptance for product
candidates, particularly VIAject® ;
 ·
    
    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 and the impact of those
findings on the timing of a regulatory approval;
 ·
    
    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®;
 ·
    
    our ability to establish that the 100 IU/cc liquid formulation of VIAject® is
well-tolerated in chronic use;
 ·
    
    the cost to develop an insulin pen program for use with VIAject®;
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·
    
    the cost of purchasing recombinant human insulin and other materials to build commercial
supply inventory for VIAject®, taking into account currency exchange rate
fluctuations;
 ·
    
    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; 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.
   Off-Balance Sheet Arrangements
  Contractual Obligations
  LessThanTotal
    
    
    1 Year
    
    
    1-3 Years
    
    
    3-5 YearsOperating lease obligations
    
    $
    2,490
    
    
    $
    628
    
    
    $
    1,816
    
    
    $
    46Purchase commitments
    
    
    8,688
    
    
    
    5,094
    
    
    
    3,594
    
    
    
    Total fixed contractual obligations
    
    $
    11,178
    
    
    $
    5,722
    
    
    $
    5,410
    
    
    $
    46
 
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
   
 Item 4. Controls and Procedures
 Managements Evaluation of Disclosure Controls and Procedures
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Changes in internal controls
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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.
 ® ® ®
 ·
    
    continue to incur expenses without the ability to generate income for the period during
which our NDA is fully reviewed by the FDA, if not longer;
 ·
    
    conduct additional clinical trials of VIAject® to support our
commercialization efforts and, potentially, FDA approval;
 ·
    
    produce required validation batches of VIAject® vials, cartridges, and
disposable pens 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;
 ·
    
    our ability to wait the length of time that will elapse before our NDA is fully reviewed
by the FDA;
 ·
    
    the costs associated with preparing and submitting our MAA, for VIAject® to
the EMEA;
 ·
    
    our ability to market, commercialize and achieve market acceptance for product
candidates, particularly VIAject®;
 ·
    
    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 and the impact of those
findings on the timing of a regulatory approval;·
    
    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;
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·
    
    the cost to fully develop the 100 IU/cc liquid formulation of VIAject®;
 ·
    
    our ability to establish that the 100 IU/cc liquid formulation of VIAject® is
well-tolerated in chronic use;
 ·
    
    the cost to develop an insulin pen program for use with VIAject®;
 ·
    
    the cost of purchasing recombinant human insulin and other materials to build commercial
supply inventory for VIAject®, taking into account currency exchange rate
fluctuations;
 ·
    
    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; 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.
  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
pass the initial review and acceptance of our NDA submission 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 significant expenditures on our earlier stage product candidates.
 ® ®
 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 that our liquid formulation of VIAject® is well-tolerated in
chronic use;
 ·
    
    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 and tolerability profile of the products following
approval.
 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 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;
 ·
    
    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.
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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.
  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.
  The commercial success of any product candidates that we may develop, including
VIAject ® and VIAtab  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®;·
    
    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 discomfort,
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.
 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
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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.
 Ò Ò ®
 ®
  ·
    
    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 are unable to obtain required regulatory approvals, we will not be able to commercialize
VIAject ® as planned, or 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
5 05(b)(2) approval procedure, the approval pathway will take longer and cost more than anticipated
and in either case may not be successful.
 ®
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®
 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.
   ·
    
    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.
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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;
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·
    
    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;·
    
    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.
    
    Description10.1
    
    2010 Stock Incentive Plan.10.2
    
    2010 Incentive Stock Option Agreement.10.3
    
    2010 Non Statutory Stock Option Agreement10.4
    
    2010 Restricted Stock Unit Agreement.31.01
    
    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: May 7, 2010
    By:
    /s/ Gerard MichelGerard Michel, Chief Financial Officer,VP Corporate Development, and Treasurer 41




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Exhibit No.
    
    Description10.1
    
    2010 Stock Incentive Plan.10.2
    
    2010 Incentive Stock Option Agreement.10.3
    
    2010 Non Statutory Stock Option Agreement10.4
    
    2010 Restricted Stock Unit Agreement.31.01
    
    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.
 42