##### 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 December 31, 2010
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to .
 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, 2010 and December 31, 2010 (unaudited)
    
    
    1Condensed Statements of Operations (unaudited) for the Three Months Ended December 31,
2009 and 2010 and for the period from December 3, 2003 (inception) to December 31, 2010
    
    
    2Condensed Statements of Stockholders Equity (unaudited) for the period from December 3,
2003 (inception) to December 31, 2010
    
    
    3Condensed Statements of Cash Flows (unaudited) for the Three Months Ended December 31,
2009 and 2010 and for the period from December 3, 2003 (inception) to December 31, 2010
    
    
    6Notes to Condensed Financial Statements
    
    
    8Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    17Item 3. Quantitative and Qualitative Disclosure About Market Risk
    
    
    24Item 4. Controls and Procedures
    
    
    24PART II  OTHER INFORMATIONItem 1A. Risk Factors
    
    
    25Item 6. Exhibits
    
    
    39Signatures
    
    
    40EX-10.1EX-31.01EX-31.02EX-32.01EX-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)
Condensed Balance Sheets
(in thousands, except share and per share amounts)
 September 30,
    
    
    December 31,2010
    
    
    2010(unaudited)ASSETSCurrent:Cash and cash equivalents
    
    $
    22,922
    
    
    $
    22,289Restricted cash
    
    
    150
    
    
    
    150Marketable securities, available for sale
    
    
    6,001
    
    
    
    Taxes receivable
    
    
    116
    
    
    
    116Other receivables
    
    
    11
    
    
    
    1,235Prepaid and other assets
    
    
    365
    
    
    
    971Total current assets
    
    
    29,565
    
    
    
    24,761Property and equipment, net
    
    
    2,998
    
    
    
    2,814Intellectual property, net
    
    
    53
    
    
    
    51Total assets
    
    $
    32,616
    
    
    $
    27,626LIABILITIES AND STOCKHOLDERS EQUITYCurrent:Accounts payable
    
    $
    1,989
    
    
    $
    2,822Accrued expenses:Clinical trial expenses
    
    
    1,362
    
    
    
    781Payroll and related
    
    
    357
    
    
    
    566Accounting and legal fees
    
    
    300
    
    
    
    172Severance
    
    
    
    
    
    
    692Other
    
    
    334
    
    
    
    273Income taxes payable
    
    
    45
    
    
    
    48Total current liabilities
    
    
    4,387
    
    
    
    5,354Common stock warrant liability
    
    
    4,169
    
    
    
    1,397Other long term liabilities
    
    
    
    
    
    
    638Total liabilities
    
    $
    8,556
    
    
    $
    7,389CommitmentsStockholders equity:Preferred stock, $.01 par value; 50,000,000 shares authorized, none outstandingCommon stock, $.01 par value; 100,000,000 shares authorized; 26,399,764 and
26,433,982 issued and outstanding
    
    
    264
    
    
    
    264Additional paid-in capital
    
    
    188,549
    
    
    
    190,035Accumulated other comprehensive income
    
    
    1
    
    
    
    Deficit accumulated during the development stage
    
    
    (164,754
    )
    
    
    (170,062
    )Total stockholders equity
    
    
    24,060
    
    
    
    20,237Total liabilities and stockholders equity
    
    $
    32,616
    
    
    $
    27,626
  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
    
    
    (inception) toDecember 31,
    
    
    December 31,2009
    
    
    2010
    
    
    2010Revenue
    
    $
    
    
    
    $
    
    
    
    $
    Operating expenses:Research and development
    
    
    8,754
    
    
    
    5,505
    
    
    
    121,733General and administrative
    
    
    2,417
    
    
    
    2,577
    
    
    
    50,202Total operating expenses
    
    
    11,171
    
    
    
    8,082
    
    
    
    171,935Other (income) and expense:Interest and other income
    
    
    (5
    )
    
    
    (5
    )
    
    
    (5,511
    )Interest expense
    
    
    
    
    
    
    
    
    
    
    78Adjustments to fair value of common stock warrant liability
    
    
    
    
    
    
    (2,772
    )
    
    
    (1,518
    )Loss on settlement of debt
    
    
    
    
    
    
    
    
    
    
    627Operating loss before tax provision (benefit)
    
    
    (11,166
    )
    
    
    (5,305
    )
    
    
    (165,611
    )Tax provision (benefit)
    
    
    (18
    )
    
    
    3
    
    
    
    (609
    )Net loss
    
    
    (11,148
    )
    
    
    (5,308
    )
    
    
    (165,002
    )Charge for accretion of beneficial conversion rights
    
    
    
    
    
    
    
    
    
    
    (603
    )Deemed dividend  warrants
    
    
    
    
    
    
    
    
    
    
    (4,457
    )Net loss applicable to common stockholders
    
    $
    (11,148
    )
    
    $
    (5,308
    )
    
    $
    (170,062
    )Net loss per share  basic and diluted
    
    $
    (0.47
    )
    
    $
    (0.20
    )Weighted average shares outstanding  basic and diluted
    
    
    23,848,855
    
    
    
    26,419,105
  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
    )
    
    $
    50,538Registered direct financing
    
    
    2,398,200
    
    
    
    24
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,688
    
    
    
    
    
    
    
    
    
    
    
    8,712Initial value of warrants
issued in a registered
direct
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,915
    )
    
    
    
    
    
    
    
    
    
    
    (2,915
    )Share-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,621
    
    
    
    
    
    
    
    
    
    
    
    5,621Stock options exercised
    
    
    32,320
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    68
    
    
    
    
    
    
    
    
    
    
    
    68Net unrealized gain (loss) on marketable securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    1Sales of stock  ESPP
    
    
    165,572
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    323
    
    
    
    
    
    
    
    
    
    
    
    325Net Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (38,290
    )
    
    
    (38,290
    )Balance, September 30, 2010
    
    
    26,399,764
    
    
    $
    264
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    $
    188,549
    
    
    $
    1
    
    
    $
    (164,754
    )
    
    $
    24,060Net unrealized loss on marketable securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    (1
    )Share-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,428
    
    
    
    
    
    
    
    
    
    
    
    1,428Sales of stock  ESPP
    
    
    34,218
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    58
    
    
    
    
    
    
    
    
    
    
    
    58Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,308
    )
    
    
    (5,308
    )Balance, December 31, 2010
    
    
    26,433,982
    
    
    $
    264
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    $
    190,035
    
    
    $
    
    
    
    $
    (170,062
    )
    
    $
    20,237
  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 3,2003Three months ended
    
    
    (inception) toDecember 31,
    
    
    December 31,2009
    
    
    2010
    
    
    2010Cash flows from operating activities:Net loss
    
    $
    (11,148
    )
    
    $
    (5,308
    )
    
    $
    (165,002
    )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation and amortization
    
    
    245
    
    
    
    252
    
    
    
    3,392Founders compensation contributed to capital
    
    
    
    
    
    
    
    
    
    
    271Share-based compensation for employees and directors
    
    
    1,301
    
    
    
    1,472
    
    
    
    22,304Share-based compensation for non-employees
    
    
    (26
    )
    
    
    (44
    )
    
    
    2,274Loss on settlement of debt
    
    
    
    
    
    
    
    
    
    
    627Write-off of loan to related party
    
    
    
    
    
    
    
    
    
    
    41Write-off of capitalized patent expense
    
    
    
    
    
    
    
    
    
    
    208Adjustment to fair value of common stock warrant liability
    
    
    
    
    
    
    (2,772
    )
    
    
    (1,518
    )(Increase) decrease in:Income tax receivable
    
    
    (7
    )
    
    
    
    
    
    
    (116
    )Other receivables
    
    
    (1,406
    )
    
    
    (1,224
    )
    
    
    (1,235
    )Prepaid expenses
    
    
    (548
    )
    
    
    (606
    )
    
    
    (971
    )Increase (decrease) in:Accounts payable
    
    
    606
    
    
    
    833
    
    
    
    2,822Income taxes payable
    
    
    (10
    )
    
    
    3
    
    
    
    48Accrued expenses
    
    
    (4,211
    )
    
    
    769
    
    
    
    3,341Total adjustments
    
    
    (4,056
    )
    
    
    (1,317
    )
    
    
    31,488Net cash used in operating activities
    
    
    (15,204
    )
    
    
    (6,625
    )
    
    
    (133,514
    )Cash flows from investing activities:Purchase of property and equipment
    
    
    (40
    )
    
    
    (66
    )
    
    
    (6,167
    )Purchase of marketable securities
    
    
    
    
    
    
    
    
    
    
    (31,614
    )Sale of marketable securities
    
    
    
    
    
    
    6,000
    
    
    
    31,614Acquisition of intellectual property
    
    
    
    
    
    
    
    
    
    
    (298
    )Loan to related party
    
    
    
    
    
    
    
    
    
    
    (41
    )Net cash provided by (used in) investing activities
    
    
    (40
    )
    
    
    5,934
    
    
    
    (6,506
    )Cash flows from financing activities:Restricted cash
    
    
    
    
    
    
    
    
    
    
    (150
    )Options exercised
    
    
    
    
    
    
    
    
    
    
    1,000Warrants exercised
    
    
    
    
    
    
    
    
    
    
    535Employee stock purchase plan
    
    
    155
    
    
    
    58
    
    
    
    735Deferred 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
    
    
    
    
    
    
    
    
    
    
    135,742Proceeds from bridge financing
    
    
    
    
    
    
    
    
    
    
    2,575Net proceeds from sale of Series B preferred stock
    
    
    
    
    
    
    
    
    
    
    19,205Net cash provided by financing activities
    
    
    155
    
    
    
    58
    
    
    
    162,309Net (decrease) increase in cash and cash equivalents
    
    
    (15,089
    )
    
    
    (633
    )
    
    
    22,289Cash and cash equivalents, beginning of period
    
    
    54,640
    
    
    
    22,922
    
    
    
    Cash and cash equivalents, end of period
    
    $
    39,551
    
    
    $
    22,289
    
    
    $
    22,289
 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 3,2003Three months ended
    
    
    (inception) toDecember 31,
    
    
    December 31,2009
    
    
    2010
    
    
    2010Supplemental disclosures of cash flow information:Cash paid for interest and income taxes was:Interest
    
    $
    
    
    
    $
    
    
    
    $
    9Income taxes
    
    
    
    
    
    
    
    
    
    
    306Non-cash financing and investing activities:Warrants issued in connection with registered direct offering
    
    
    
    
    
    
    
    
    
    
    2,915Settlement 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
   2. Restricted Cash
  3. Other Receivable
  4. Fair Value of Financial Instruments
     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)
    Quoted Prices in
    
    
    Significant Other
    
    
    SignificantFair Value at
    
    
    Active Markets for
    
    
    Observable
    
    
    UnobservableDecember 31,
    
    
    Identical Assets
    
    
    Market Inputs
    
    
    InputsDescription
    
    2010
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Assets:Cash and cash equivalents
    
    $
    22,289
    
    
    $
    22,289
    
    
    $
    
    
    
    $
    Restricted cash
    
    
    150
    
    
    
    150
    
    
    
    
    
    
    
    Subtotal
    
    
    22,439
    
    
    
    22,439
    
    
    
    
    
    
    
    Liabilities:Common stock warrant liability (see Note 9)
    
    
    (1,397
    )
    
    
    
    
    
    
    
    
    
    
    (1,397
    )Subtotal
    
    
    (1,397
    )
    
    
    
    
    
    
    
    
    
    
    (1,397
    )Total
    
    $
    21,042
    
    
    $
    22,439
    
    
    $
    
    
    
    $
    (1,397
    )
  Fair ValuesMeasurement UsingSignificantUnobservable Inputs(Level 3)Balance at September 30, 2010
    
    $
    4,169Adjustments to fair value of common stock warrant liability
    
    
    (2,772
    )Balance at December 31, 2010
    
    $
    1,397
 5. Pre-Launch Inventory
  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)
  6. Share-Based Compensation
        WeightedWeighted
    
    
    AverageAverage
    
    
    Remaining
    
    
    AggregateExercise
    
    
    Contractual
    
    
    IntrinsicNumber
    
    
    Price
    
    
    Life in Years
    
    
    ValueOutstanding options, September 30, 2010
    
    
    4,635,532
    
    
    $
    9.68
    
    
    
    
    
    
    $
    93Granted
    
    
    1,055,000
    
    
    
    1.63
    
    
    
    
    
    
    $
    211Forfeited, expired
    
    
    19,377
    
    
    
    12.54
    
    
    
    
    
    
    
    Outstanding options, December 31, 2010
    
    
    5,671,155
    
    
    $
    6.32
    
    
    
    6
    
    
    $
    304Exercisable options, December 31, 2010
    
    
    2,772,922
    
    
    $
    11.31
    
    
    
    5
    
    
    $
    93
 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)
  December 31,2009
    
    
    2010Expected life (in years)
    
    
    5.25
    
    
    
    3.00-5.25Expected volatility
    
    
    64-76
    %
    
    
    65-70
    %Expected dividend yield
    
    
    0
    %
    
    
    0
    %Risk-free interest rate
    
    
    1.38-2.69
    %
    
    
    0.09-2.08
    %Weighted average grant date fair value
    
    $
    3.71
    
    
    $
    1.63
 Restricted Stock Units
        Three Months EndedDecember 31,2009
    
    
    2010Stock compensation expense  RSUs
    
    $
    21
    
    
    $
    119
 11




---



##### Table of Contents



Biodel Inc.
(A Development Stage Company)
Notes to Condensed Financial Statements
(in thousands, except share and per share amounts)
(unaudited)
   WeightedAverageGrant-DateShares
    
    
    Fair ValueNonvested balance at October 1, 2010
    
    
    249,020
    
    
    $
    3.95Changes
during the period:Shares granted
    
    
    362,562
    
    
    $
    1.89Shares vested
    
    
    62,157
    
    
    $
    3.95Shares forfeited or expired
    
    
    390
    
    
    
    3.95Nonvested balance at December 31, 2010
    
    
    549,035
    
    
    $
    2.59
 2005 Employee Stock Purchase Plan
    7. 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)
 8. Net Loss per Share
   Three months endedDecember 31,2009
    
    
    2010Common shares underlying warrants issued in registered direct offering
    
    
    
    
    
    
    2,398,200Common shares underlying warrants for Series A Preferred Stock
    
    
    118,815
    
    
    
    118,815Stock options
    
    
    3,801,883
    
    
    
    5,671,155RSUs
    
    
    250,000
    
    
    
    611,192
 9. August 2010 Financing
       Balance at September 30, 2010
    
    $
    4,169Adjustment to fair value of common stock warrant liability
    
    
    2,772Balance at December 31, 2010
    
    $
    1,397
 Fair Value Assumptions Used in Accounting for Warrant Liability
  13




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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)
   December 31,2010Risk-free interest rate
    
    
    .26
    %Expected remaining term
    
    .66 yearsExpected volatility
    
    
    100
    %Dividend yield
    
    
    0
    %
 Risk-Free Interest Rate.
 Expected Remaining Term.
 Expected Volatility.
 Dividend Yield.
 Change of Control.
 Participating Securities
   10. Commitments
 Former
Chief Scientific Officer General Release
  14




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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)
 Leases
      11. Subsequent Event
  15




---



##### Table of Contents



FORWARD-LOOKING STATEMENTS
   
    
    our ability to respond to the complete response letter regarding our NDA for Linjeta
(formerly known as VIAject®) in a timely manner and the possibility that information we
provide in response to the letter may not be sufficient for the approval of Linjeta or
another rapid-acting insulin or insulin analog by the U.S. Food and Drug Administration, or
FDA;
    
    our ability to secure approval by the FDA for our product candidates under Section
505(b)(2) of the Federal Food, Drug and Cosmetic Act, or FFDCA, and the degree to which we
are able to clarify with the FDA related regulatory requirements;
    
    our ability to conduct the additional pivotal clinical trials the FDA requested in the
complete response letter or other tests or analyses required by the FDA to secure approval
to commercialize Linjeta;
    
    our ability to develop and commercialize formulations of Linjeta or other rapid-acting
insulin or insulin analog formulations that may be associated with less injection site
discomfort than the formulation that is the subject of the complete response letter we
received from the FDA;
    
    the progress, timing or success of our product candidates, particularly Linjeta, 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 Linjeta and our ability to secure additional
patents for Linjeta 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 to produce our 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.
   16




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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
 ®
 ®
     17




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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 preclinical studies and Phase 1 clinical trials to determine whether one or more
of our newer insulin formulations is likely to offer a combination of pharmacokinetic,
stability and tolerability characteristics that is preferable to Linjeta ;
    
    determine our preferred development, clinical and regulatory program for a proprietary
rapid-acting insulin or insulin analog formulation following our meeting with the FDA
regarding Linjeta, and based on our analysis of the preclinical and Phase 1 clinical data
for our alternate insulin formulations;
    
    conduct preclinical studies with earlier stage product candidates and make limited
investments in order to advance proof-of-concept formulations;
    
    purchase recombinant human insulin and other materials as required under existing
contractual commitments; and
    
    advance a preferred formulation toward pivotal Phase 3 clinical trials.
  18




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##### Table of Contents



December 3,2003Three Months Ended
    
    
    (Inception) toDecember 31,
    
    
    December 31,2009
    
    
    2010
    
    
    2010(in thousands)Research and development expenses:Pre-clinical expenses
    
    $
    600
    
    
    $
    1,019
    
    
    $
    16,019Manufacturing expenses
    
    
    2,817
    
    
    
    3,252
    
    
    
    34,207Clinical/regulatory expenses
    
    
    5,337
    
    
    
    1,234
    
    
    
    71,507Total
    
    $
    8,754
    
    
    $
    5,505
    
    
    $
    121,733
  
    
    our ability to respond to the complete response letter regarding our NDA for Linjeta in
a timely manner and the possibility that information we provide in response to the letter
may not be sufficient for the approval of Linjeta or another rapid-acting insulin or
insulin analog by the FDA;
    
    our ability to secure approval by the FDA for our product candidates under Section
505(b)(2) of the FFDCA and the degree to which we are able to clarify with the FDA related
regulatory requirements;
    
    our ability to conduct the additional pivotal clinical trials the FDA requested in the
complete response letter or other tests or analyses required by the FDA to secure approval
to commercialize Linjeta ;
    
    our ability to develop and commercialize formulations of Linjeta or other rapid-acting
insulin or insulin analog formulations that may be associated with less injection site
discomfort than the formulation that is the subject of the complete response letter we
received from the FDA;
    
    the progress, timing or success of our product candidates, particularly Linjeta
formulation, and that of our research, development and clinical programs, including any
resulting data analyses;
    
    the cost to develop an insulin pen for use with Linjeta and a formulation of Linjeta
for use in insulin pumps;
    
    the costs of pre-commercialization activities, if any;
    
    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.
  Restricted Cash
  General and Administrative Expenses
   19




---



##### Table of Contents



Pre-Launch Inventory
  Restricted Stock Units
  Warrant Liability
  Critical Accounting Policies and Significant Judgments and Estimates
   20




---



##### Table of Contents



Results of Operations
 Three Months Ended December 31, 2009 Compared to Three Months Ended December 31, 2010
 Revenue.
 Research and Development Expenses.
 Three Months EndedDecember 31,
    
    
    Decrease2009
    
    
    2010
    
    
    $
    
    
    %(in thousands)Research and Development
    
    $
    8,754
    
    
    $
    5,505
    
    
    $
    3,249
    
    
    
    37.1
    %Percentage of net loss
    
    
    78.5
    %
    
    
    103.7
    %
 .
 General and Administrative Expenses.
 Three Months EndedDecember 31,
    
    
    Increase2009
    
    
    2010
    
    
    $
    
    
    %(in thousands)General and Administrative
    
    $
    2,417
    
    
    $
    2,577
    
    
    $
    160
    
    
    
    6.6
    %Percentage of net loss
    
    
    21.7
    %
    
    
    48.6
    %
  Interest and Other Income.
 Three Months EndedDecember 31,2009
    
    
    2010
    
    
    $
    
    
    %(in thousands)Interest and Other Income
    
    $
    5
    
    
    $
    5
    
    
    $
    0
    
    
    
    0
    %Percentage of net loss
    
    
    
    %
    
    
    
 21




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##### Table of Contents



Adjustments to Fair Value of Common Stock Warrant Liability.
 Three Months EndedDecember 31,
    
    
    Decrease2009
    
    
    2010
    
    
    $
    
    
    %(in thousands)Adjustments to fair value of common stock warrant liability
    
    $
    
    
    
    $
    (2,772
    )
    
    $
    2,772
    
    
    
    100
    %Percentage of net loss
    
    
    
    %
    
    
    52.2
  Net Loss per Share.
 Three Months EndedDecember 31,
    
    
    Decrease2009
    
    
    2010
    
    
    $
    
    
    %(in thousands, except per share amounts)Net loss
    
    $
    (11,148
    )
    
    $
    (5,308
    )
    
    $
    5,840
    
    
    
    52.4
    %Net loss per share
    
    $
    (0.47
    )
    
    $
    (0.20
    )
  Liquidity and Capital Resources
 Sources of Liquidity and Cash Flows
     22




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##### Table of Contents



Funding Requirements
   
    
    our ability to respond to the complete response letter regarding our NDA for Linjeta in
a timely manner and the possibility that information we provide in response to the letter
may not be sufficient for the approval of Linjeta or another rapid-acting insulin or
insulin analog by the FDA;
    
    our ability to secure approval by the FDA for our product candidates under Section
505(b)(2) of the FFDCA and the degree to which we are able to clarify with the FDA related
regulatory requirements;
    
    our ability to conduct the additional pivotal clinical trials the FDA requested in the
complete response letter or other tests or analyses required by the FDA to secure approval
to commercialize Linjeta ;
    
    our ability to develop and commercialize formulations of Linjeta or other rapid-acting
insulin or insulin analog formulations that may be associated with less injection site
discomfort than the formulation that is the subject of the complete response letter we
received from the FDA;
    
    the progress, timing or success of our product candidates, particularly Linjeta, and
that of our research, development and clinical programs, including any resulting data
analyses;
    
    the cost to develop an insulin pen for use with Linjeta and a formulation of Linjeta
for use in insulin pumps;
    
    the costs of pre-commercialization activities, if any;
    
    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;
    
    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
    
    our ability to accurately estimate anticipated operating losses, future revenues,
capital requirements and our needs for additional financing.
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##### Table of Contents



Off-Balance Sheet Arrangements
  Contractual Obligations
  Less
    
    
    
    
    
    
    
    
    
    
    MoreThan
    
    
    
    
    
    
    
    
    
    
    ThanTotal
    
    
    1 Year
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    5 YearsOperating lease obligations
    
    $
    2,188
    
    
    $
    639
    
    
    $
    1,549
    
    
    $
    
    
    
    $
    Purchase commitments
    
    
    4,035
    
    
    
    4,035
    
    
    
    
    
    
    
    
    
    
    
    Total fixed contractual obligations
    
    $
    6,223
    
    
    $
    4,674
    
    
    $
    1,549
    
    
    $
    
    
    
    $
    
 
 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
  24




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##### 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.
  
    
    conduct pre-clinical studies and Phase 1 clinical trials to study formulations of
Linjeta and other related rapid-acting insulin and insulin analog formulations that that
may be associated with less injection site discomfort than the formulation that is the
subject of the complete response letter we received from the FDA;
    
    commence a stability program to determine whether any of our alternate formulations of
rapid-acting insulins or insulin analogs are likely to present a commercially acceptable
stability profile;
    
    conduct additional clinical trials of Linjeta, including two potential pivotal Phase 3
clinical trials requested by the FDA to support approval;
    
    produce additional validation batches of Linjeta vials, cartridges, and disposable pens
to support our NDA for Linjeta ;
    
    purchase recombinant human insulin and other materials consistent with our existing
contractual obligations; 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.
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##### Table of Contents




    
    our ability to respond to the complete response letter regarding our NDA for Linjeta in
a timely manner and the possibility that information we provide in response to the letter
may not be sufficient for the approval of Linjeta or another rapid-acting insulin or
insulin analog by the FDA;
    
    our ability to secure approval by the FDA for our product candidates under Section
505(b)(2) of the FFDCA and the degree to which we are able to clarify with the FDA related
regulatory requirements;
    
    our ability to conduct the additional pivotal clinical trials that the FDA requested in
the complete response letter or other tests or analyses required by the FDA to secure
approval to commercialize Linjeta ;
    
    our ability to develop and commercialize formulations of Linjeta or other rapid-acting
insulin or insulin analog formulations that may be associated with less injection site
discomfort than the formulation that is the subject of the complete response letter we
received from the FDA;
    
    the progress, timing or success of our product candidates, particularly Linjeta, and
that of our research, development and clinical programs, including any resulting data
analyses;
    
    the cost to develop an insulin pen for use with Linjeta and a formulation of Linjeta
for use in insulin pumps;
    
    the costs of pre-commercialization activities, if any;
    
    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.
  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 have depended heavily on the success of our most advanced product candidate, Linjeta.
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Our development of alternate formulations of Linjeta or other rapid-acting mealtime insulins or
insulin analogs may not be successful; some formulations may have different regulatory
requirements to obtain marketing approval from the FDA.
  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.
   
    
    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;
    
    establishing that, with regard to Linjeta or any rapid or long-acting insulin or
insulin analog, the formulation 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
    
    continued acceptable safety and tolerability profiles 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;
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
    
    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, 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.
  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 Linjeta, 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
products;
 28




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
    
    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;
    
    the label and promotional claims allowed by the FDA, such as, in the case of Linjeta,
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 expensive, require
additional capital we do not currently have, and could delay the commercialization of our
product candidates and have a material and adverse effect 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.
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We may be 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.
   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.
 ® ® ® ® ® ® ®
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® ® ® ® ®
   
    
    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.
  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.
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
    
    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.
    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 Linjeta or any alternative rapid-acting
insulin or insulin analog 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.
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##### Table of Contents



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.
     If the FDA does not believe that our product candidates satisfy the requirements for the
Section 505(b)(2) approval procedure, or if the requirements for Linjeta under Section
5 05(b)(2) are not as we expect, the approval pathway will take longer and cost more than
anticipated and in either case may not be successful.
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##### Table of Contents



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;
    
    requirements that we conduct new studies, make labeling changes, and implement Risk
Evaluation and Mitigation Strategies;
    
    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 embargo and/or seizure;
    
    injunctions; or
    
    imposition of civil or criminal penalties.
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Changes in law, regulations, and policies legislation may preclude approval of our
product under a 505(b)(2) or 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.
  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.
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##### Table of Contents



Risks Related to Our Common Stock
 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;
    
    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.
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Our outstanding warrants may be exercised in the future, which would increase the number
of shares in the public market and result in dilution to our stockholders.
  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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##### Table of Contents



Item 6. Exhibits
 Exhibit No.
    
    Description10.1
    
    Form Restricted Stock Unit Agreement for 2004 Amended and Restated Stock Incentive Plan.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: February 7, 2011
    By:
    /s/ Gerard MichelGerard Michel, Chief Financial Officer,VP Corporate Development, and Treasurer 40




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##### Table of Contents



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.
 41